anna: good morning from bloomberg european headquarters in the city of london. manus: live in dubai, this is "bloomberg daybreak: europe." and these are today's top stories. +xi reiterates his promise for greater openness amid the trade dispute with washington. investigators seize records from president trump personal attorney as part of a probe into possible financial crimes. the president tells bloomberg of the potential damage of -- if the trade dispute between the

u.s. and china is not resolved soon. ♪ >> good morning and welcome to the program everyone. we have heard from president xi today. risk assets on the front foot were being gained in asian equities but it largely by hong kong. up .5%a-pacific index over raw. raised.eeing risk you are seeing oil gain, you are seeing metal gain in this session and also classically this risk on environment, you are seeing movie -- money moving out of bonds. we trade at 2.8%. thes: let's have a look at

various things that are going on in market. you have risk in equities. it could be bonds and it could be the currency trade wars, currency wars, that is the debate in the market. this is traders abetting on you one devaluation. -- yuan devaluation. this is in gdp. option traders are betting. this is the one-month put options relative to the core options. you can see that they are beginning to turn based on the view that china could, if they so chose to use currency policy literally to hit back at the u.s. at 9% sinces hit trump took charge of the united states of america. option very speculative trading because the chinese have

just come out of a major devaluation. fx reserves were battered. the international private wind up when they devalue the last time. this kind of hubris is probably the last thing that xi jinping once on the market. the market is beginning to turn a little bit. yuan is interesting because we are seeing it again today. the forward market is saying that something -- futures asat u.s. well because we saw the s&p 500 raise some two thirds of its gains yesterday on it news of this fbi probe into one of trump's lawyers. it looks like we're going to have a stronger open later on. is this relief around of traded story? it certainly looks like it at this point. coming up later, the chief uscutive of prudential joins

shortly after 8:00 a.m. u.k. time. bloomberg's get this first word news with juliette saly. tte: u.s. president donald trump has deemed disgraceful the raid on his longtime lawyer and fixer. michael cohen paid $130,000 to point star stormy daniels and has been accused of in the russian meddling. he blasted a special counsel robert mueller's probe as a blast on our country. >> this is an attack on our country in the true sense and an attack on what we all stand for. when i saw this and when i heard it, i heard it like you did, i said that is really now a whole new level of unfairness. the u.s. special counsel is also reportedly investigating a payment made to

president trump's foundation by eight you craning steelmaker -- ukrainian steel mecca. the newspaper says that came as investigators subpoenaed at the trump organization this year for an array of records about business with foreign nationals. malaysia has announced that its election will take place on may 9. the campaign for the showdown between the current prime minister and the nation's longest-serving premier will be shortened to just 11 days. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . checking in on the markets here in asia, stocks are rising for a second consecutive session. have seen a stronger showing

a coming through from the asian markets. hong kong once again leading these it gains. around .4%.aising in terms of stocks we have been watching and the session, a lot of focus on these aluminum players. interesting, according to hong kong exchanges, data is down another 7% in the hong kong session. also watching these property players in hong kong. property stocks up 2.5% after we heard of the ceo of the company bought around $1.8 million of the shares on april 4. you have seen the rival here in

pharmaceuticals. it is the worst performer in terms of ranks on the index. manus: thank you very much. china past president has pledged greater openness as the country's trade dispute with the u.s. titans. he delivered a keynote address this morning. i'm confident that with these efforts, china's financial sector will be much more competitive and capital market will continue to develop. our market environment will be greatly improved. in short, china will enter a new phase of opening up. our chief asia correspondent is with us. you can catch up on all the various points that he made.

i said it to an hour ago, this man has a credibility gap. did he close the global credibility gap? >> if you look at the market reaction perhaps just a little bit, again, we are looking on the specifics on a lot of these reforms. this was the president's first opportunity to have a direct response, if you wanted to give one, to the trade action of the latest additional terror proposals coming from the white house. he pretty much took the high road. the as to the credibility globally and he is a champion of globalization. throughoutwery words saying that globalization is a shared future for mankind. also pledging more opening of its market. keep in mind, they already pledged to open up the insurance market to foreigners by 2020 51% and remove -- to

remove those caps. not only is he saying that they are going to likely remove the joint venture restrictions for foreign automakers and domestic automakers in the china market because the chinese automakers are already be mature and the technology transfers have already happened. they're also going to remove or reduce the tariffs on imported vehicles. that has been a key complaint of the trump administration is that he did not do that. he did give something. >> he did, indeed worried the market reaction would suggest that the answer to this question is yes. did she pinching go far enough to ease tensions with trade with the u.s.? >> no. i think this is going to be ongoing. we will hear when president

trump, if he has some tweets on this matter whether he got enough. this is going to be a long process because you have a two-month consultation period on the proposals that trump has on the $50 billion in goods that they want to issue these tariffs possiblyother proposed $100 billion that could have another form of consultation period on top of that. there is going to be a long, hard fought battle and all indications here, even no xi jinping said that we think dialogue is the way to solve these issues, the feeling i am getting here is that we are not ready for official negotiations. we are done with negotiations and we are preparing for a fight if we must. manus: very different interpretation there from the rest of the market. simon is joining us.

good to see you. look at the btv library. this is in the retaliation back. -- bag. simon: i certainly think it would be a difficult weapon for them to use. it is easy to see why the story has come up. it has appeared in the global times any reported -- it was reported that a was being looked at. the first thing that you do with the devaluation currency is you increase inflation. inflation has always been an issue for china. you're going to have to start increasing your foreign

reserves. china has said clearly over the last two years that it has too much in the fx reserves. what are you going to do with those extra reserves? we are getting it loud and clear why it doesn't make sense. the fx market seems to be taking a different view on this. we just saw it again there were options of traded -- traders seem to be betting on you one evaluation.-- yuan my chart seems to be showing something different. one is showing the foreign market that the fx space does not see as likely as happening, which is different than what we are seeing in the risk reversal. charts coming up.

what would you look at as a betting indicator? simon: i think that the foreign market is probably right in the way this goes, but in terms of where market sentiment is right i think that risk reversal does tell you where the market sentiment is. .t is understandable why if you have a ministry saying they will do whatever it takes, then maybe one of the best things to live with is a weaker yuan. people are going to ignore that. the question is actually what generally does china have to fight because the alternatives to devaluing your currency have just as uncomfortable for china. there were talks to selling it

to the treasury which is even more unlikely because of the damage it would do to itself and the damage it would to two global markets. from a purely foreign exchange perspective, we will have to see what it can really do. manus: the view is maybe to not sell bonds, but to not live bonds. bonds. one story just blew me away. the ruble, the biggest drop since 2016 are the sanctions. the rubles plans has not gone far enough to trigger interventions. the simon derrick of view, have we seen enough to warrant that? what do you reckon? mon: i think we go back 2014 and the holes out of then, they

recognized how difficult it was to try and actively oppose a line for the ruble. unless they are forced into this, i think that they would allow the market to tank. i don't think they would do any smoothing anymore. the interesting thing about this is when you look at the ruble over the course of the last 20 odd years, how big the moves can get. if you look in the summer of 1998 or the end of 2014, one or or days where you had 25% more in moves. the interesting part in that is that both cases, it did fee through broader market unrest. it clearly isn't right now. you had them rest in the brazilian market yesterday as well. here we had broad global markets seeming comfortable.

i think we should give a closer eye on that. >> a post was written about the fact that recent fiscal to tradents have led and other types of wars and possibly even shooting wars. i want to go back to the fx reaction. -- notyen breaking out dollar-yen i am sorry. is the end across you are watching in terms of a possible trade war or something else? simon: i think it is as good an indicator as you will get. thing is thatg once you start to look at it and want to start to take away the possible support from china growth, there is very little there. you have yields against the yen

and yields against the dollar that are multi-decade lows. the last time we were at these kind of levels against the dollar, it was trading with a 70 handle. if that dissipates, there's an awful lot downside to the aussie. the trading side were there is low volatility. chief currencyk, strategist stays with us. coming up, the saudi grand tour continues. a little bit later on, mr. kaplan says the u.s.-china trade dispute will not be resolved soon. we hear exclusively from the man himself. this is bloomberg. ♪

>> let's go to bloomberg business flash, this is juliette saly. tte: mark zuckerberg will tell congress later that facebook problems are his responsibility. he is giving testimony of the worst crisis in the company's industry and saying it did not do enough to prevent fake news and potential harm to users. aluminum has added to its biggest two-day gain in more than six years. theld'sf the biggest -- lose half of its value. commodities traded and stopped

buying aluminum from the group. manus: the saudi crown prince continues his international to ur. joining us now from paris is our correspondent. good to see you this morning. are we going to get any big blockbuster contract on defense. >> major contracts because we of nonbinding and ou's. the saudi energy and trade ministers will both be there along with a few selected the ceos. mou.pect some

[indiscernible] could actually sign as many as eight contracts with french companies worth more than $10 billion. we expect no military contracts because of the situation in yemen. it is going to be a balancing act tonight as the press -- at the press conference because between condemning saudi and keeping him on his side to try and say one last time the ukrainian nuclear agreement. simon is still with us. thatnd your colleagues say

the euro ball has been frustrated since january. can the euro withstand any more economic disappointment from the eurozone? simon: i have to say that i think the euro has gone astonishingly well. i would say that the view is that the foreign-exchange market is in some kind of bollocks. f bottom. though seemed to dissipate a lot better and the interest rate story seems to be coming back and. if that starts to build and the euro does not look quite exposed. gh we know the euro

is moving for the ecb, it is a slow process. propensity on the the euro-dollar, you also make a point that they have been long and patient since january and have not been returned. we have this chart in the library and it shows the falling over of german industrial production, retail sales, the annual growth in this is a global story. when do the loans of bail because this could hurt the ecb's trajectory. imon: i think the first thing you have to say is that the ecb is straightening out. from that perspective, a weaker currency would help the story somewhat. in terms of the bail, i would make the point that foreign-exchange markets can be real feast or famine. i think over the course of three

months, you have seen -- of a breakout of this rate that we have been at versus the start of the year could create -- it could be something as simple i a little bit of risk off. would say when the move comes, it will be rough. nejra: euro weakens it against the dollar or other currencies? simon: i would probably reckon others. weaken against take that away, the story does not look that great. you still have political issues, particularly in italy that have not been resolved. manus: simon, stay with us. we have much more value to get this morning. next, the home of trump's

personal attorney. we will talk about the latest twists and turns and what it means for the president of the united states. this is bloomberg. ♪ welcome to the xfinity store.

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manus: it is 9:30 here in downtown dubai. what a beautiful day it is an tokyo. we have seen dollar-yen on the move and markets are gobbling up xi jinping. are we really that shocked? to be think he was going to announce a trade war? he did say cold war mentalities are out of place and dialogue is new. nejra: some of the concessions that xi jinping making, the markets perhaps taking as a sign

that they can add at risk. it has been one of the best performers against the greenback in this session. you can see it there at 7731. we've been focusing on the yuan as well. big questions over whether china might possibly use yuan devaluation in this trade dispute. simon says that will not be a good idea, but we of course will keep an idea. we are looking at the ruble as well. it looks like we are seeing the ruble come back just a touch after he dropped the most since 2015 yesterday on the news of these further u.s. sanctions on certain russian billionaires. to tv you just have to go and you can pick up simon's reference points. it will still remain free.

let's have a look at the asian equity market because it all goes back to the xi-trump dynamic. -- goldman sachs is the asian equities are cheap and fundamentals are solid. you have a volatile first quarter. chunky has a nice big core on the asian markets. we put on it nearly 2% and gave quite a lot about back on that trump story that his personal attorney's office have been rated. -- raided. nejra: political risk resurfaced overnight and took another turn as a special counsel robert mueller's investigation into the russian meddling into the election resurfaced. you also pointed to that fbi

raid. a lot of people saying the u.s. looks attractive at the moment and it looks like we are going to see a higher open, quite significant higher open today. those features pointing higher at more than 1%. also anthat is expression of traders overnight seeing some relief in these trade tensions. manus: let's get to our most read story on the bloomberg in the past eight hours. of -- in the hotel or him hotel room of president trump's longtime lawyer and fixer. trump assails the fbi for the raid on cohen as disgraceful. what is the connection between of the raid and trump's allegation of the affair with stormy daniels?

michael: has a said that he paid a stormy daniels $130,000. he said also that he was not reimbursed for this and that trump did not know anything about that payment. with the fbi took for michael:'s 's office wereen personal documents, his computer, and his personal financial records. he is also being investigated for bank fraud and for possibly campaign finance violation. nejra: what are the wiser implications of this. does the raid put michael cohen in legal jeopardy? what are the other implications for the white house? been filed,s have but it is extremely rare for an office to be rate -- a lawyer's

office to be rated in this kind in this kindided of form. gosecutors would have had to in front of a judge and have ample evidence that a crime has committed. this certainly puts michael cohen inconsiderable hot water. manus: hot water and we will see where that goes. this is one of those pivotal moments in this story of where our attentions are diverted again. there is a process, isn't there? a process of requests and it goes up the chain of command before anything like this actually happens. there is quite a robust process before raids like this happen. >> that is exactly right. they would've had to have been approved by a federal magistrate judge. this could not have been a simple fishing expedition.

they would've had to have been ample evidence. lawyerichael cohen's said this was referred to by robert mueller's investigation, this is actually not conducted by robert dealer's team -- robert mueller's team. this is the attorney general's office in manhattan. these men are trump appointees. that is also probably related to the fact that trump last out at his attorney general jeff sessions once again and said that if he had known the jeff sessions was not going to recuse himself from these russian investigations, he would have appointed a different attorney general. nejra: thank you so much to brett. our bloomberg editor for us tokyo.n robert kaplan said that trade

issues between the u.s. and china will not get resolved in damage.ed of potential >> i would say that i would guess that both sides might be well served to lower the heat on the rhetoric because there have to be very fundamental private discussions not only on reciprocal trade and tariffs, but also on issues like intellectual property, technology transfer, the ability of foreign companies to do business in china. all of that requires pretty direct conversations that i would guess that leaders around the world will be well served to set the stage to lower the heat on the rhetoric so they can have those private discussions. for thes it interesting federal reserve, coming into 2018, the consensus was pretty solid. what did we get? tariffs on aluminum and steel

and we get $50 billion of tariffs on china. trump raises the possibility of $100 billion more. it was easy at the beginning for officials to say aluminum and steel, that is a small part of the economy. it has escalated. at what point is it an issue for policy? it is important to emphasize the only tariffs that have actually been implemented or announced are on steel and aluminum. the others are threatened tariffs. i would still be hopeful that when we look on this a year or two years from now there will be very little in the way of tariffs actually implemented. i really do think that it is too early to judge how this is going to affect the economy, but i do think the rhetoric, if it goes on for long enough at this level is having somewhat of a chilling effect. robert kaplans

speaking exclusively to bloomberg's kathleen. this brings assignment back into the conversation. the rollcall of calm from the , they don't seem to stress about trade worth yet. what does it mean for the dollar? -- fax that they aren't -- fact that they aren't stressed yet. if we move into a world where maybe just for the moment, people are a little more focused on it yields, you should see a dollar that is significantly higher. fed historically has been concerned when things have come along to disturb markets. think about how cautious they were at the end of 2014, the

start of 2015 and the start of 2016. i would argue that if you start to see the trade tensions start to feed into rather more attitude, i would say the fed starts to make more of a difference. nejra: you said the dollar is likely to move significantly higher. this that mean that yields moves higher from here or does the dollar need to play catch-up? simon: i think the dollar needs to play catch-up. another great example of this is sterling. if you look at where the yield , yourentials are across have not seen the since 1985 when sterling was trading in the low 120. the last time we saw sterling longer, it was trading at 170.

there is a real gap between people are seeing this. if people start to move back and start to focus more on the dollar or start to focus on yield again, the dollar can do up from here. i'm waiting for you to sing the star-spangled banner next. office,ressional budget i know, i am far away so you e -- theump m congressional budget office says of $1l have a debt trillion by 2020. curve bye dollar deficits? on: the dollar for the last

12 months has curbed by deficits. we spent our entire time worrying about the size of the fiscal deficit. when the trade number was the largest number out there. we have not quite got to the point where trade is the more important number there. last week was a perfect example of that. people barely responded to the trade. the question is whether people are prepared to fund those deficits. it is a question really of whether the yield is strong enough to start bringing the money back in. so far, there was a bias fight emerging from last year. or possibly about reserves of the attitude toward the dollar. for the moment, it seems that the attitude toward the dollar

has become stronger and people are prepared to take the yield. maybe it is the fight that we have those incredible yield differentials. nejra: simon, you make the point that it is fine having a deficit as long as you have got those foreign investors willing to fund it. is the dollar status as a global reserve currency at a risk now or in the near future? i think what you have seen over the last 15 years as a resetting. you can see that closely by looking at the reserve numbers. it has gone from being posed to 70% to now about 60%. it has been pretty stable at that number because what else are you going to buy? unless the cmy comes up euro was at- the 20% and has come back to 20%. sterling yen, about 4% each.

does anybody really believe that four --ee or the dollar is still the dominant gain. nejra: dollar is the dominant gain in town. thank you so much for joining us. always a pleasure to have you with us. it remember, bloomberg users can interact with the charts that we have been showing. you can also download and save the charts for future reference and even play around with them a little bit. manus: it is all about maneuverability. up next, oil refines as trade tensions. open for business. a message from the chinese president reiterating the pledge

to open sectors from baking to auto manufacturing. we're live in beijing with the very latest. this is bloomberg. ♪

nejra: it is 6:48 a.m. in london. 1:48 in the morning in new york. u.s. futures pointing significantly higher after the s&p 500 did close a little bit high yesterday. a gained about two thirds of its gains on the reemergence of political risk. juliette: mark zuckerberg will tell congress later that facebook problems are his responsibility. he is due to give it two days of testimony over the worst crisis and the company's history and will say that facebook did not do enough to prevent fake news and potential harm to users. he has already met with the

senate commerce committee. >> he said to me very for rightly, we were lied to and we should have caught that. inelieve that, but i think today's world, that is naive. juliette: we find that has canceled half of today's is scheduled flights. the company said it more than 800 out of a six -- 1600 trips will take place today. they said that they will change a warning strike of staff and grounds. said it will take .very legal action necessary italia's second-largest

shareholder he wants to replace six directors and form monopoly with its own candidates. telecom italia besides its auditor's decision saying that the vote should go ahead. nejra: juliette saly, thank you so much. president xi jinping struck a conciliatory tone. this donald donald trump's optimistic comments about it could take -- potential trade deal with china. the chairman of china's national petroleum corporation said he was confident that the country's entergy corporation --h the u.s. is no china and the u.s. has a certain disagreements over trade issues, i'm still very

confident about china-u.s. currency operation as their see npc continues to has great cooperation with many asrican companies, including an mobile's. going forward, i am positive that china u.s. energy collaboration will only become better and deeper. manus: that was the chairman of see npc -- cnpc. paris.to london from ?here are we he did not seem to be too stressed about trade wars, tariffs. he said we have lived through many things in this region and this is just another moment in the on market's history. how much of it has dominated your conversation in the past 14-20 days.

as bloomberg was just reporting, -- there seems to be a slight tone coming from both sides of the moment. going back a few weeks, one of the things we did not gary basket very interested in with a steel tariffs. a lot of those deals are specialty seals -- steals which are imported. since then, we have had other secondary development. the patch may be some sort of negotiation that will make both sides feel better. nejra: that is interesting that you talk about the cost of steel impacting production. >> i don't think we should get

too excited about this because obviously, this issue is very recent. it is not affecting production currently. it is also the dolby to move on and around. it is more a question of the impact of my have the future as opposed to today. in theone of the things region is that we are building up toward that technical meeting, but there is this debate over where the weather opec should use the five year average or seven year. how much material difference would it be if we moved from five to seven? what is your take on the current story? >> as far as the five-year average it's concerned, in the original opec outfit agreement, made at the end of 2016, they explicitly mentioned the five-year average and said that they wanted to see global stocks

returned to normal. we have taken as a five-year average. has gone by as stocks have started to fall, it has become quite clear that the five-year average is within sight and it may only be another two or three months or so before we stop reaching the five-year average. or they moved to another target, which is obviously a decision .or the if they were to move to a ten-year average number, there would still be someplace to go before stocks fall to that level. we are not recommending anything, it is not our job to tell them what to do. said, given what you just if they were to change that five-year average to something else, isn't that a design -- signed by their not happy how well it has gone. about --t so sure

there was no specific price target launched into the original agreement. and of different views course is not precision engineering. you cannot move demand and supply around and get some sort of precise outcome. at the moment, it is happy that prices have appeared to be settled. -- ifre waiting to see there were to be a serious corruption to global trade, that might negatively affect our economic growth which would impact global demand group. are still various moving parts out there. manus: time is always going to run against us. drop ind a military u.s. shale production at the

start of the year. are we at peak shale production in the near time in the u.s.? in 2019, weare not. -- there was a slow drop off at the beginning of the year. nejra: you mentioned the demand as well, what is your outlook? >> we see demand going up in 2018. it was about the same level in 2017. demand growth is pretty steady and i think that is encouraging for the producers and we will wait to see how the global economy plays outl nejra: thank you so much for joining us. up next, a new phase of opening -- this is bloomberg.

manus: good morning from dubai. this is "bloomberg daybreak: europe." live from bloomberg's european headquarters in the city of london, these are today's top stories. says -- equity futures climb. russia's breakfast use 50 billion -- $15 billion.

♪ manus: warm welcome to you. it is just 10:00 a.m. in dubai and 7:00 a.m. in london. he spoke, they applauded. they lapped it up. he ruminated about things that are out of place, the cold war and mentalities you can have. these things are giving the equity market it big -- russia last 16 million dollars yesterday. equity markets are rising near, there is a release -- relief yesterday, thein s&p futures were up 2%. they gave a lot of that back on the politics story.

there are a variety of sources at play here. the resource elements are going to rise so you are not going to see that. year, --ttended government wrong across the board. trump tariff tantrum could keep these here. the cbs says it will be $1 trillion by 2020. jpmorgan's climb has shifted from neutral to short on u.s. bonds. there are some pretty interesting -- we keep an eye on the bond markets for the most -- moment. it is a better bid because it trump's more or less indicated

that he is keen to do is. >> take a look at the risk a radar in terms of all of that manus. inhave certainly seen the the asian equities. it has been led largely by the hang seng. being -- space, it is we are seeing oil gazing as well and a mental gaining. that brokered above a down trend and we are now seeing moving to a safe haven. --are also seeing moving you are just looking at the bonds of their. i have the 10 year yields up to basis points. 2.8% is where we trade.

looking ahead to the chief executive of potential -- prudential joins us. before all of that, let's get to --bloomberg first world president trump has deemed it disgraceful in the hotel room of his longtime lawyer and fixer. has been a key figure into the investigation and russian election-meddling.. >> it is an attack on our country and what we all stand for. when i saw this and when i heard it, i heard it like you did. said that is really now on a whole new level of unfairness worriedjul -- unfairness.

ette: and a deadly assault -- that weekend, then never happened or was orchestrated by the united states. >> the monster who is us that responsible for these attacks have no conscience. not even to be shocked by pictures of dead children. juliette: malaysia has announced a its election will take place on may 9. this because we shortened to --t 11

nejra: the nikkei closing of the see the-- session as we yen weaker against the dollar. some a very strong support coming through from materials plans in australia. hong kong also leading these gains that we have seen across the region. the asia-pacific index up for a second day. in terms of stocks, we are watching materials, but also particularly those aluminum players. there have been a surge in aluminum a players in the announcement of sanctions. shell code is up by almost 8%. also a huge by coming through in property stocks in hong kong

after we heard that the company's ceo bought $1.8 million worth of shares last week. gaming company. it has fallen quite significantly after the president backtracked on, t have made earlier saying that he does not want a casino to be built on the island in the philippines. this after we have already seen a license being given to hong kong. manus: breaking news coming in across the bloomberg terminal. divine is the polish impact. terms of it is going to add about 90 basis points to the holy grail in terms of being dividends and a robust institution. id the sale price and

r.b.i. was see a positive impact. theyys on the tape that will close the sale by the fourth quarter. this is of course the core banking operations. for xl keep the f mortgages in terms of the sale. china's president xi jinping has pledged to grace openness with the country. he delivered the keynote address. confident that with these efforts, tiny's financial sector .ill it be much more market environment will be greatly improved.

intellectual property rights will be effectively protected. in short, china will enter into phase of opening up. nejra: joining us now from beijing is lubricant tom mackenzie. it is not the first time we have heard about a new phase of opening up from she was there anything surprising in his speech today? >> essentially, no. we did not see was president she punching back against trump. we did not see any major concessions from the chinese president particularly when it comes to the trade tensions. the toughest line he took on top with whenever he warmed against the return of a cold war mentality. these were already on the table. for example, he said the north would see a significant reduction in paris. he said for foreign imported

cars, paris is that 25%. he also said we would increase foreign ownership of auto jv. sector financial .ector he also said there would be an annual event to increase import into china. something of a not to president trump's concerns. nothing major, nothing new, it was really about the tone for presidency. of course now, we will looking -- be looking forward to plugging in on this. president trump i just to that and give a note to the as well by saying his policies opening up would need to be sooner rather than later. manus: stephen was tired by hearing these promises for over 30 years, but here we are. he has expedite something unconvinced the market that he

does mean business. he has to close this credibility gap that we have tagged here at bloomberg. that is a key thing. do think and it -- any of it with any way to decrease some tensions. i think the town was taken as a pot of by the -- positive by the markets. the key issues remain that china 20-25used on its made in -- that is a key concern for the trump administration. this import shows they are pointed be putting on every year and may chip away at that. no, we are going to need to see if we can follow -- borrow. also on top's reaction by this

resident. henry joins us now. great to have you with us. we begin -- we have just been listening to tom talking about the rhetoric and the different rhetoric in action. it is a global issue between trump and she -- xi. -- this is the risk to the rest of the world. global growth is back in negative because of what we gave the citigroup input prices. all of this is adding to another story, isn't it? it is certainly having to some of the negative. i think it would be premature to say that global growth is a

negative territory. the global pmi and global seems to beite, rolling over to some degree and the european data has been particularly week. most people would suggest that maybe the pm potential growth is at 1.5% at this level, it is hard to see if we're moving toward a more sustained downturn. the u.s. state they will be more resilient against this. is china toone guess where we go from here in terms of escalation and of the trade tensions. --ders are betting on we could see the u.n. weekend here.

do you think that more --ruption >> i think this traits that is going to be a very medium to long-term story. i think they will be overly optimistic. as soon as there is any positive word in any direction, they tend to take it very positively. for the white house, it is the imbalance is a big concern. at the u.s. bilateral balance, no matter what happened on the trade front is likely to widen over the course of the next couple of years. terms of the speech overnight, it was very much in saying we don't want to still work with a multilateral framework.

they want their trade but they are going to come down. protection, requirements, which countriesof developed , but the bilateral imbalance is unlikely to narrow. are there always bilateral imbalances. is the u.s. focusing too much on this and therefore, might it all dissipate because the argument is not strong enough. >> the u.s. has a bilateral imbalance with many countries. there are all always imbalances. for the major drive, relative to demand and competitiveness. the element is not going to dissipate quickly and you have to remember that some of these trade measures have taken place bylowing executive orders

the white house and some of the other elements of the tray questions that have been coming through. this is where the intellectual property greeters come in and this is where the comments overnight in terms of clamping is certainly a step in the right direction. manus: one of the most interesting things i read about this morning when i got in was a he is veryay dalio much like you saying that this is going to go on, the real risk is that you have geopolitical developments that led him to raise the possibility of a trade war. capital worth, cyber wars. capital wars, cyber wars. there could be a bond by oestreich --by strike.

is a bilateral spat at the moment, but he used the devaluation method. >> i think china has a whole range of options it can take for bilateral action. based on china's response, it has been very measured. the u.s. announced pterosaur goods up to $50 billion. no timeline, it is clean and matched. there's a whole range of options on trade and investment before we get into the realms of five thekes in treasury and or moves on the exchange rate. i think we have got to realize that the weight of the global , there was asis

huge reduction in china's current-account. they had that big domestic adjustment. the have actually globally bilateral angle with the u.s. and china trade deficits have not really moved. in fact, it is beginning to widen. what does this all mean for central bank because we talk about that next. janet stays with us. up next, we are talking about .he moscow slump we're live in the capital for the very latest. billionaires, suspect

placement

you andhe latest sanctions send shockwaves. the ruble is sliding. moscow.oined from it was actually a pasty day on the currency. in terms ofnctions, the different from the ones that we have seen in 2014, they are having quite a genetic impact. what is the structural difference here? >> you are absolutely right. these sanctions are different. the u.s. imposed a new sanctions

on russia's oligarchs and state officials and basically people putine seen as close to on friday. there was not much of a market reaction until monday. you can't hold or trade or have any connection to the people on the sanction list or their companies. this is a completely new set of sanctions and escalation from what we have seen being imposed since 2014 because russia's biggest companies have been under sanctioned since 2014. the previous sanctions never applied to the current debt or the current shares while these new sanctions apply to any kind of instrument of the companies on the list. it is very serious. are investors saying? how scared are they? >> investors were really panicking yesterday, just like you said. the stock market crash, the most

since crimea cents march of 2014. very dramatic. today, wee time, might see rebound as the market reopens and about 40 minutes. some people are saying actually it is a good opportunity to buy because the russian economy is actually recovering very well and the oil is strong. oil is russia's main export earner so that really matters. with these companies that are close to the government, even if they are hybrid, the government has already said they are going to rush to their rescue to help beenthem because they have warned that because of the new sanctions, it my default on its debt. the government is coming up with a plan to help them. nejra: thank you so much. a very important story. janet henry is a still with us. we have been talking about all kinds of risks.

this is not a goldilocks economy. it is certainly not the late 1990's when we had very strong productivity growth. the global economy has been in a very sweet spot. inflation has the been relatively low. i think, even this week, the data we get will lead us to question whether we should be worried about growth or inflation. weeke likely to get more states. i think we will still have these geopolitical concerns and we still won't know where we are on trade. will also be worrying if inflation is going to pick up as well. there's a lot to be worried .bout at this point manus: many things keep me awake at night the congressional

office says there will be one chilean dollars worth of debt in the united states by 2020. it is a bleak look out for the united states. $1 trillion, who is in charge, democrats or republicans? >> it is far enough away as an issue for markets to kind of park it for now. we got the fiscal stimulus. u.s. growth is recently solid. if it were to feed through and improvements in productivity in the coming years, then -- and interest rates were going to rise, it may will be sustainable. love the idea that we have to park the fiscal risk at the long grass. time has run against us. great to get your input this morning.

the global chief economist. we bring them in, they are the most important mines in the market. this is bloomberg. ♪

♪ guy:, you are watching "bloomberg markets: the european open." i'm guy johnson in london and matt miller is in berlin. cash trade is less than 30 minutes away. ♪ guy: the chinese leader's conciliatory speech drives global stocks higher. willie effect be short-lived? russian markets open in less than 30 minutes after yesterday's big selloff. can i get worse?