>> good morning. edwards.the shockwaves with new imports and beijing says they will retaliate. >> down and not out. ter themain in the red af

initial selloff. talks about moscow ahead of key meetings. we live in brussels. a very good morning here in london and we will have plenty of coverage of what could be a stormy meeting. the equity markets are down in areasian pacific and there still some substantial selling happening in asia and it isn't just an equity markets. we are seeing money coming out of potentially risky assets

affecting the global growth story and we could have put in the oil price and it could have stockown with a falling and we havekpile seen this in equity and a little seemore sanguine and we did we seee bit of this and administration talking about the trade war. >> the chinese are shocked and they are preparing a retaliatory

list and we are talking about the weaponization of the basket performs and there is a burden of potential escalation and it comes through and there aren't even any plans to talk and they make substantial progress and there is a potential not to have a where the currency collapses and you have the the reserves. they go on buyer's strike and

that is the question. they are running the numbers and uan is underpriced and the mexican peso is overpriced and that is the state of play. do you weaponize? this could be the next take discussion we have. >> that is interesting and you they seem tos and be there for a number of times on this road or journey in this trade war. how do you get off the motorway andthe futures are down

there is a loss expected with trade. they are not entirely immune. another thing at the center of things is brexit. about a host of theects and let's go to first alert update. >> in the united states, the administration has pushed to with theariffs on goods release of a list. china has said they will retaliate. they have not given details of retaliatory measures. donald trump has arrived in

europe. said thatresident this may be the easiest. be an interesting and in the united kingdom it is too much and they paid too little. we will work it out. happy.ntries will be those considering a move that could bring down the minority government. the tories have a choice left aheaderesa may is pushing with a blueprint to keep britain in a close partnership, despite

the resignation of cabinet ministers in protest. oil production will climb next year, even with the logjams and crudeministration expects up from the estimates in the june outlook. it would make this the world's leading crude producer. dayal news 24 hours a powered by journalists and analysts in 120 countries. theking in on the markets, chinese market was on the lunch break when we heard the comments that they had shocked with what they had put in with the planned tariffs.

there was this and you could see the broad selling with the the indian markets and most analysts have said that that has not taken a back seat as the trade fears bring down the estimates. this with theg they are down and almost 3% and the air-conditioners have been targeted. the consumer commission has come down with recommendations to bring down equity prices in the session. >> thank you.

they were detailing the impact on the chinese markets and the u.s. pushed ahead on a tom to impose tariffs and .ckenzie joins us here it is not entirely consumer facing. >> and accurate characterization and there are the rounds of and this is the withbroader range of items they have said

and youh the goods might get the tariffs than impost and the trade representative says that this is a response to what they said was unlawful retaliation to the initial round and they highlighted with a said was addressing key united states concerns about industrial property theft and what they describe as a forced to transfer. and theye this running can catch up on all the responses. are shocked and they are saying the list is not acceptable.

>> the list was published after the extra 60 billion is put into play and will we're looking for is the details of how china goes because they cannot match the number and you are now looking at regulatory restrictions and we have not got more details and it is possible they will flesh it in theirr keep back pocket for one the plan is initiated, but there are strong words from china, who do not want to back down and are looking for a response to this. >> thank you for the latest from beijing. .et's bring in our guest good to see you this morning.

so, the equities react and it is together we put this for you on who is really ready for this. overcompensated. do you think there is an escalation at this juncture? and you can'tme and we have to see andthey want to retaliate

they have to be able to control there is a control in the short term. >> trump says that it is easy to win a trade or. >> you think about where this is coming from and they would have ofn it coming on the back it is pretty much that they have not theyd fairly and i think

gained up against china and they will have to give in and show some sign that they are willing to compromise. >> if there was an agreement, and people say that we are nearer to the end of this game than the start. >> if there is this, how much of a relief rally could we have? >> you could see material relief , bolo people this miss the impact it already had on the economy and it isn't just about tariffs and numbers, it is impactnce and we see the from all of the trade war on the marketand there is

exhaustion and people are tired with the rhetoric. you could see a rally and we are now later in a cycle and people are worried about concerns. istever rally there is, it limited in time and people have to project further down the line and it isn't as rosie as it was. >> it doesn't really take a lot to create the upside in the market and we could see this with a signal of one talks take place way framework. that could be a positive. is not a lot of detail wondering what it ward take to stop the trade

signal that the end is near. >> i like the way you almost sound as exhausted over everything with this rhetoric. there is exhaustion in your voice. the stocks are, to a certain earnings.boldened by gap close and do stocks nadir of thethe metals market? they are not doing well and they have some sectors in the

u.s. who are moving the market the related sectors that do not have to close and cyclical cycle on the gross outlooks. thank you very much. up, bringing down the minority government and we have the latest on brexit. this is bloomberg.

of singaporet here. and ittom line is here could wreck the equity market downou are seeing this 1.4% and let's get your first word news and your business flash. >> facebook could get fined hundreds of thousands of pounds

after they fell into the hands of a political consultancy that u.k. office offered threats into the social network and is you the first findings in the probe. ofre is an implementation price increases a day after donald trump launch an attack and they said they would be rolling back price hikes. launching the next global private equity fund after gathering $18 billion and bloomberg has learned that they expected to seek this from the buyout fund later this year and this comes as they are returning

to market. that is your bloomberg business flash. >> thank you very much. they are considering a radical last-ditch move. left,is only one choice voting down the final withdrawal agreement. with us in this studio and i have this shot of we have seen and the yields have been down and up on the back of the let meous situation and and thereere they had softerbe a brexit.

play.is a risk aversion >> i would agree with that and ands in economic terms ande is a risk premium theresa may is in power and you and there ise news and itement with europe andmes more conciliatory

you could see this hire based on fundamentals. >> with all of those in mind, my question to you is simple. there is a probably of a rate hike and could that be his moment in 2011 of raising rates at the right moment for the wrong reasons? >> i do not think it would there is the global and there is a lot of

inflation concerns and good andlience from the economy the reason why it would hike is justified. >> there will be a softer deal crafted. do you think that will get well-received? they also suggest there is room for more flexibility and casting doubt. >> for many months, it is and she hasstarting clarified the line she wants to

take. >> it is stamped on my four head. it is not a friend or a foe and just a competitor. has warming words for vladimir putin and his friends at nato could be bracing for a lashing. this is bloomberg. oomberg.

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daybreak. 630 a.m. in london and 2:30 p.m. in tokyo. we see weakness in the asian equity session, japanese stocks falling. investors shifting their focus back to developing trade wars, the loading of the trade visitor by the trump administration. let's talk -- check out the broad rocket reaction. declines seeing resumed across equity markets gains aree days of trading unchanged. the msci pacific index lower overall. you can see that china and hong

kong are leading the losses but we are seeing losses in japan kospi and australia. if we switch to the next chart and have a look at what we're looking at across assets, we have talked about equities. beingof asian currencies hit, some dollar strength coming through in the session. the chinese yuan leading some of the losses among asian currency. toward 6.7 which is the key point where we saw the verbal intervention from the pboc. the south korean won is down and the aussie dollar. we are seeing metal hit it -- it as well. switching the chart and talking about the aussie dollar to talk about some technicals, where we risksading, 74 .13, it breaking below the line of the chart.

we drop belowh if that. there is where we are with the aussie dollar. and mention, it hit its lowest this year on the london metal exchange. look at the exchange how is it -- it has been hit your today. 4% sop 500 is up investors are expressing risk off. u.s. futures pointing lower for today's session. thank you. the latest on the market and the charts. let's get a first word news. in the u.s., the trump administration has pushed ahead with lance to impose tariffs on an additional $200 billion in chinese goods by releasing a list of targeted products. the commerce ministry has described the move as "totally an acceptable" and said it will

be forced to retaliate. no details of what retaliatory measures of plants. in the u.k. eurosceptics and conservatives are considering a radical last-ditch move that could bring down the minority government. brexit -- they want a more split, they have one choice left. pushes as theresa may forward keeping britain and a close trading partnership. despite the resignations of two cabinet ministers in protest area and investors pulled a total of $580 million from bond funds in the first half of this year and he turned in the worst performance among his peers during the time. according to bloomberg estimates during march, the fourth ,traight month of withdrawals the outflows have dragged assets down to $1.48 billion. the go anywhere fund declined

6.2% through june. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you. donald trump in brussels for what promises to be a crunch nato meeting. he had this to say about his european trip. president trump: i have nato, i have the u.k. which has been somewhat turmoil and i have put -- put in, the easiest of the mall. who would thing? to grantmp declined him his friend or foe ahead of the first one-on-one summit between the two in helsinki. that is coming up shortly. this comes amid criticism he has in harsher toward america's nato allies than toward the kremlin.

summit.st on this good morning. what to expect from the nato gathering? it depends on which trump shows up to mother one who wants to rip up nato or who wants more money. >> that is exactly right. while the meetings have been ritual, these are contentious. the question is will trump act on his grievances to impair the alliance when they meet here today or what kind of messaging will he bring? the main thing he has been pushing for an his tweets and in the past is other members meet the 2% cargo -- target for gp -- spending. the only countries doing it besides the u.s. is the u.k., poland, estonia, and greece.

this is what he will be messaging, it will be about funding and reaching these -- targets.in manus: never far from a comment on trade. we are seeing the lightning fuse lit again. what is the latest from trump on this? rings out the tariffs to china this morning, trade is on the agenda. trump is melding the two together. he is merging the conversations just before he left in a tweet. he said the european union makes it impossible for our farmers and workers and companies to do business in europe. the u.s. has a 151 billion trade dollar -- trade deficit and they want us to defend them through nato and nicely pay for it. just does not work. francine lacqua spoke to the german defense minister and she said it was immature to link

these two and another analyst said it is like linking apples and oranges but it is likely trump will link them as they -- he arrives at the nato headquarters. manus: thank you. summit,st on the nato and the prospect is this, that anybody gets on board and spends up to 2% of their gdp which has gone from a handshake to a gentleman's agreement. that would be $110 billion. would you even countenance extending your reach into some of the european defense itpanies, error or not companies based on an escalation of a nato commitment? guest: you have to look at the european countries and where they stand, it is going to be hard for them to commit to such an end -- an increase in

spending. the fiscal situation is not that great apart from germany and i do not think you will get a consensus that all those countries are going to want to spend more in the next three years. it is too much money now and it is not the priority. maybe some companies would bounce on the back of it but on the european market it remains a cyclical market. it is not one we like to much at the moment. we cut down a little bit. precisely because it is exposed to trade wars and exposed to slow down and growth. all these things you're saying is linked with trade. and it does not amount to well for european stocks. anna: let's talk about the trade story. the trade impact we will see on the u.s. economy. this is a opinion piece where he talks about the context, the

size of the tariff we have seen impose so far or that could be. if you add up all the tariffs that could be imposed including the 10% on $200 billion we heard of overnight, that adds up to a number that is a quarter of the size of the fiscal stimulus. been given to u.s. corporate spy the trump administration. that is something that boosts the u.s. equities, they went up with the prospect of lower tax rates but are they going to come down on this? >> it was smart the way trump did it. it started by boosting the u.s. economy and corporate profits and then he tackled the tariffs and going after other countries. i do not think if you look at valuation multi-and profit expectations, it is conservative now. the market that you rated which is typical in late cycle, so i do not think the market will

necessarily, based on those tariff numbers. this would be more sentiment and growth beer slowdown. manus: added into that are the share buybacks. that is what is expected for this year. this is the earnings upgrades and downgrades. right now the market is cutting its earnings estimates. they are outnumbering the upgrades. you are seeing this global revision as we go into this earnings season. -- that is a slightly tempered view in terms of the earnings outlook as we go into the huge earnings season we are about to have. >> it is clear and you have to look at it those ways, the revision ratios of upgrades minus downgrades and the actual epscast number of the

level. that is not moving too much. analysts are being more conservative and more prone to downgrade and upgrade. it is fairly stable. i am not too worried about earnings. but clearly as we get later on this year, we would expect earnings to come down a little bit. that is for sure. anna: thanks for your time. we appreciate that. are continuing the conversation with him. you can listen to his further thoughts. if you would like, you could interact with the charts. go to the tv function and catch up on the analysis and save the charts for future reference. i was going to show one but no time. i will do that tomorrow. manus: yes trillions are confident -- the australians are

confident. racing ahead. china iton audubon in at what cost? -- but at what cost? this is bloomberg. ♪

manus stocks are lower as we have the prospect of a heightened trade were between china and the u.s. can the earnings numbers put a floor under the tremors in the market? that is the question we put to ourselves. let's get to juliette saly in our singapore numbered studio.

juliette: jetblue airways is placing a big batch on airbus's newest went to -- the carrier is ordering 68 to 20 jets. 60 eight to 20 jets. real madrid has agreed to transfer cristiano ronaldo following a request for the player to leave. yearg another 12 million euros to sign the player on a four-year contract. but did not disclose terms of the contract. speculation of a deal has sent the stock soaring over the past week. leadersst episode of with flacco is tonight. ofaking to the chairman

[indiscernible] talked about the growth of slow roasters in the industry. >> we are in the so-called third wave where the so-called specialty coffee is overcome by this micro-roasters in little shops in town operated by coffee geeks. they are very numerous. of fact that the number brands and possibilities for consumers is growing. it is only beneficial. showtte: you can watch the 730esday at 9:30 p.m. and london time. let's get to caroline conan, she knows a good coffee. good morning.

caroline: good morning. i am happy to be joined by the from paris.energy good morning. theresa may, the u.k. per minister has had a couple of difficult days on her brexit plan. do you think the eu should go easy on may for now? guest: i am not sure. i considered the present situation increasing the probability of not having an march 2019. next we tend to remain in the eu and there has been a referendum. but now in need clarity. we need clarity and

[indiscernible] the freedoms are indivisible. theeed clarity and possibility of a hard exit is increasing. caroline: do you see the --dline should be expended extended, are you in favor of an extension? need clarity as soon as possible. the degree of authenticity in the eu as it appears today is too important. we see in the coming decisions of the institutions, they need clarity. see the divisions we have with them more and more.

once we decide to transform -- transfer more people from london to the continent. caroline: we heard a lot of banks saying they might relocate some staff to paris. we have hsbc saying they would relocate 1000 people. we heard bank of america saying they would relocate 400 and jpmorgan, morgan stanley, goldman sachs. what else has been done so far? for the decisions already taken, very clearly, between 300 and 500 people. it has been decided. some of them are in the process for the transfer. more are to and come.

because precisely the on theinty and the issue negotiations between britain and moreu are pushing more and simply to follow their clients. carolyn: we could be far from the 20,000 possible relocations from london to paris that we were talking about a couple of years ago. >> not at all. we are in the right track. welcomehe intention to ,ere in paris 10,000 transferred from london to paris with 20,000 of 30000 and direct jumps. are 3500hin 10,000 we area and it is a -- more and

more we have come. what is important for us here at we consider that these measures, fiscal measures on labor and having been taken by this government. caroline: our taxes too high in france to attract all the jobs? guest: the regime is the most attractive in europe. we are competitive with the flat tax. the tax for the financial assets. we are competitive. we are also we have a government which is friendly. caroline: did you watch the game last night? >> that would be positive for paris. it increases confidence of

french people. caroline: do you believe france will win the final? guest: of course. i do not know. caroline: thank you. no frenchre are people in the office here. but when england one, they all turned up. ine connan there. and securing an agreement with shanghai. the initial deal is a major development in tesla's effort to open china's first production facility that will be wholly-owned by a foreign carmaker. it raises the question of how they will pay for it.

let's get to our bloomberg transport editor for asia. good to see you this morning. what is the cost we looking at here? >> there are various estimates, goldman sachs is saying this could be a plant costing $5 billion and that is a major question for tesla because the company had $2.7 billion of cash at the end of the first quarter. it has been burning through billions of dollars lately and are trying to ramp up production for its latest models, the model three. the company has not reported a profit in its 15 years of existence. so the cost will be a big question. he can go to investors who could give the company more funds through a capital increase that at what terms and what cost to shareholders?

that if finance is our tight, cash is a big concern, why the urgency to expand in china? this is to do with regulation, i suppose. >> that is part of the picture. china is the biggest market for electric cars in the world. it is growing fast so tesla cannot afford not to be there. at the moment tesla ranks 10th in china in terms of unit sales. that is partly because every withcan made tesla is flat an import -- slapped with an import tariff increased to 40%. that is a major disadvantage for tesla from a pricing perspective. that is the reason they are looking at local production like all the other major global car manufacturers. the one thing the market

is going to want to know is how they make this investment less risky my we have covered the cash earn and the debt side. >> one way is to look at potential partners, that is what the company did in nevada with their factory there. they partnered with panasonic for their artery manufacturers. the company did not have much details in terms of potential partners or the cost for its shanghai operation. but it is going to need a battery partner. potentialcould be one option. china obviously has some homegrown battery partners as well. that could be one way to split the bill. anna: thanks for joining us for the latest on tesla. our transport editor for asia in

our singapore studios. next, escalating the trade war. trump reloads the trade bazooka. we will talk about the market fallout. 1% in a number of markets in asia. ♪

manus: good morning from dubai. this is "bloomberg daybreak: europe." i am anna edwards in the city of london. these are today's top stories. manus: trumps new tariff list targets an additional $200 billion of chinese imports. are shocked they and would be forced to retaliate. the down but not out. asian equities remain deep in the red, s&p futures hearing some of the losses from an initial selloff. friend or foe. trump defends his stance toward moscow ahead of key meetings putinato and the u.k. and . we are live in brussels.

warm welcome to daybreak era. theworld is waking up to possibility of $200 billion worth of goods to be slapped with tariffs. the risk is that there are no scheduled talks. the chinese are shocked, equity markets are less than stoic, they are down and s&p futures were lower. you have a certain amount of stoicism in the fx market. is notn -- the yen rating and pacing. the august 30 cut off point is when the additional tariffs could happen. equity markets are lower. commodities are taking a punch

and you are seeing a slap on steel, copper, aluminum. the commodity complex will weigh heavily on these parts of the market. you have sales numbers from one of those beautiful luxury goods companies. that they are saying have given us their first quarter retail numbers up 3% in line with estimates and no change to guidance. one year into the job the new ceo, we're watching out for anything has to say about the dated trenchcoat range and other products. their first collection under the new leadership, not until september. we will keep an eye on how that responds to the sales figures. let's get to some other breaking news. twice for century fox ups they recommended cash offer for sky, increasing the recommended cash offer, fox offers 14 pounds per

share for sky. fox agrees to buy skype at an increase of 14 pounds per share. the latest on this from the u.k. governort, they take -- government will give its final ruling for the bid. by july 12. that is a decision that could set the trigger for a bidding contest with comcast. this might not be the end of the story. we will wait to hear from the regulators. and consolidation of the u.s. media space and the u.k. media space is interesting. is interesting that the big picture on markets is inescapable, it is risk off in the asian session, down more than 1% on a number of these markets and we are down more than 1% on the nikkei, the

shanghai composite, down by 2.3%. we see the trump administration reloading their weaponry in the trade war. the asian equity session down by ,hy of 1% and not just equities we are seeing metals go lower. , wti alsodone -- down down despite the latest data on stockpiles in the u.s.. not much move in the yen. a little bit of comfort to investors as they look at this picture in equities. not much -- not so much in the fx market. manus: that contention factor seems to be muted. new have named a nonexecutive chairman. martin saluna. the senior independent director has leading the search,

sainsbury is going through a few changes, he will join the new executive chairman from the first of november 2018. he will work closely with david tyler and sainsbury's anticipates he will assume the role of chairman in march 2019. there is a few other things to consider. sky and sainsbury's will be in focus as the morning goes on. let's get to juliette saly. she is in singapore with the bloomberg first word news. the u.s., the trump administration has pushed ahead with plans to impose tariffs on an additional 200 billion dollars in chinese goods by releasing a list of targeted product. china's commerce ministry has ascribed the move as totally acceptable and senate will be forced to retaliate. a statement on its website did not give details of what

measures it plans. donald trump has arrived in europe ahead of a nato meeting, a visit to the u.k., and a one-on-one summit for -- with vladimir putin. he said talks with the russian leader may be the easiest art of his trip. he repeated his demand that nato members contribute a larger share of the alliance's budget. skeptics areeuro conservative -- are considering a move that could bring down the government. they want a more decisive split from the block and have one choice let -- yet, vote down the final agreement when it comes to parliament. that is as theresa may keeps -- [indiscernible] despite the resignation of two cabinet ministers in protest. fund, it turned in

the worst performance. according to bloomberg the outflows drag assets down to 1.48 in dollars. the go anywhere fund declined 6.3% this year through june. this is bloomberg. ♪ we are seeing the shanghai composite extend into bear market territory. the csi 300 down by 2.3%. japan closing out the session --er by 1.2% and japan under australia under pressure. investors have put the earnings season to one side and focused on the u.s. new plan to list and

the -- china said it was a shock, the latest repose love 200 billion dollars further in tariffs. having a look at the stocks, you can see that impact in hong kong and china. they make home products including bedsheets. this is the offshore, the u.s. dollar higher. interesting to see if we will see some more movement coming through if we get back to that 6.7 line which is considered a line in the sand for the pboc to act. still seeing a lot of movement coming in and positive territory in terms of japanese refiners announcing the merger yesterday. and upgrading both the stocks today. manus: thank you. juliette saly in zynga or. with the latest on the markets. donald trump's trade war escalation. the u.s. has pushed ahead with plans to impose tariffs on an additional $200 billion in

chinese goods. the world's second-largest economy will fight back. told bloomberg we are in uncharted waters. in uncharted waters. the previous american administration is -- has endorsed world trade, freedom of trade, the wto and all of these other agreements, multilateral agreements, trump is going in the opposite direction. he wants bilateral agreements. he is upsetting the apple cart, so to speak area -- so to speak. tom mackenzie joins us from beijing. good to see you again. we have the tliv running, all the summation of what the americans and chinese have said and i like the way you phrased it. you are shocked that the chinese are shocked. why?

tom cole and the fact that they come out with a statement saying they are shocked is surprising, it maybe it is part of their gamesmanship. they have come out and said we are going to fight back. we will take countermeasures. what they have not said is what the measures are going to be. they cannot match this $200 billion number in terms of tariffs and maybe they can look at other measures. we have been discussing those and when you talk to businesses, we have talked to [indiscernible] anecdotal evidence that some regulatory measures are being put into place to slow some licensing. it has not been a top-down approach. what you could get after the $200 billion is implemented, you could see a coordinated response

. they have a multipronged approach. they are trying to form this alliance and push back against washington, we will see top european leaders with their chinese counterparts and they are hoping the corporate world and consumers will push back against what is happening from washington. about thes talk chinese response. we had the announcement by the u.s. administration of what it is they plan to target with tariffs on $200 billion of chinese imports if they decide to do so. what types of products? tom cole and it is a much broader range of products that billionor the first $34 . this includes everything from things like seafood and textiles and wearers, everything

downstream to upstream. the impact on the u.s. consumer apparently will be greater. $10ing about 10% billion -- billion. the representative putting out a statement, they described it as unlawful retaliation. it was a response to years of intellectual property theft. they have not been addressed and that is why a are drawing up this list. august 3 is the deadline. after that you may get them impose. interesting you talked about the the blog.od -- the you, tom mackenzie giving us great analysis. joining us with the latest of that chinese tariff story.

joining us is the chinese economist at societe generale. you have been saying in your research that the tariffs we are talking about would be painful but manageable for china. does that still stand of we see 10% tariffs imposed on $200 billion worth of products by the u.s., is that still manageable for the chinese economy? yes.: we do think so because we -- our estimate is if we have a total be250 billion goods to tariff, the impact on the chinese economy would eat half a percentage of gdp. it is not nothing but it does they have no tool to offset the impact. we will see if that goes through. the first batch of 50 billion, we have 34. it takes time to -- for the u.s.

to reach agreement among themselves. the chinese government is waiting to see if -- where this $200 billion will go. manus: good morning. you're clearly talking about the contagion impact. within some of the asian economies. give us your worst-case an area. we do manage to get to $200 billion from the u.s., the kind of contagion and growth to australasia. guest: there are two bank channels of contagion. one is through the decline in the chinese economy. i expect the chinese government to respond with policy stimulus if there is damage from the tariffs. the other channel is through the global value chain production, everybody contributes to this

value chain that ends up in china and china ships the goods to the u.s. through that we think for economies like taiwan's, their total exposure to the u.s. through china is 2% of gdp. in the apply a decline export flow. there is impact but it is not at the end of the day. anna: which of the countries are most honorable? the exposure to the global value chain, to the x -- chinese economy, then there is the individual country and its own phone abilities. -- its own vulnerabilities. have: the economies who most exposed through the value taiwan, malaysia, singapore, korea. that is clear.

if we are talking about as a percent of gdp but do not forget if we look at the dollar number, there is a lot of contributions companies, german and u.s. companies to this global value chain. even if it does not drag down the economies, it would be painful for companies all over the world. seen, one thing we have an interesting characteristic of china's response is for chinese nationalists to stop eyeing products from the conflict country and they are going up again. many people have written that this is the greater long-term risk. if chinese [indiscernible] it is a long time to get back online to buy those products. is that a bigger potential second-round effect that we are not anticipating? possible, but i

think most want to avoid that. when we talk about chinese response, think about what is proportional. tariff is a mean of changing prices. you do not know what will happen in terms of the decline in trade loss. but china, yes, the government has the ability to say we cut down imports from the u.s. by this much. that can be more powerful than tariffs. we are talking about temporary impact. we still do not think we will get to the worst scenario. we think they can reach common ground in the middle. anna: we will be that with her in paris shortly.

pfeiffer century fox has increased its recommended cash offer to sky for 14 pounds a share. there is an increase on a rival bid from comcast. let's get the latest with our media and telecom reporter. good morning. this is part of a broader contest. let's deal with the specifics around sky. this is 21st century fox coming bigger offer. will comcast come back, what we hear the end of that story? >> comcast expects them to come back. the markets think the contest is not over and comcast will come back and we could see this price be pushed up higher. juncture atere a which comcast could be stymied from counter bidding? i go back to the debt story. many people have written the

winner in this contest will have deep pockets. comcast are going to have to want to take on a big bit of debt if they want to counter this bid, don't they? >> exactly. this is where the two battles come into play. the wider battle between comcast and disney for fox and that could be pushed up higher. that contest could affect the extent. they have to make up some big decisions. and where he wants to target his cash. the government still has to have its final say. we have been through this process so many times. to murdoch ands what they are likely to say by tomorrow, we are supposed to hear. -- we have been looking at the question rupert murdoch will gain too much influence over written -- britain's media

because acquiring sky news would give him that. the question has been about media influence but the government has not indicated it is happy with those concerns. -- we expecte had a decision tomorrow. anna: with the u.k. government rely on the parts of the process? >> yes. fox has offered to sell sky news to disney and that is a pre-done deal -- pretty done deal. manus: one aspect is cash versus stock. and all cash offer to rupert murdoch versus the cash and stock offer. this could play an element in terms of decision-making.

if -- this could be the trump-like bid. favoredt murdoch has the offer from disney for fox because of that stock aliment as you pointed out. it will be interesting to see if comcast comes back and changes the composition of its bid and makes it more attract. -- attractive. for being withu us there. our media reporter on the battle fox agreeing to buy sky for an increased offer of 14 pounds a share. on the trade story from china. when we look at one of the conversations anna and i have forliterally every day now the past three months, we talk about the yuan, the onshore and

offshore yuan is being challenged. everything -- everyone we have spoken to say they will not weaponize the yuan. that is an extreme scenario. would you agree that they do not a rerun ofe 2015-2016 weaponize and the yuan? guest: we agree. we do not think they will want to go back to that painful experience. capital controls are more effective but they are not 100% would approve. , how muchons also would it hurt the u.s. and how much would it hurt china? it is not worth it. what happened at the beginning pboc easingou have monetary policy. you have the monetary policy that [indiscernible] and the fear of a trade war and you have the pboc becoming more tolerant of volatility. these are the three factors.

are trying to stabilize the market and they did. it is stabilized for now. it would be depreciation pressure but it is more of the market forces rather than what the government wanted. talked a lot about the reaction we might see from china. they said they would retaliate. how does the trade war impact the reform momentum in china? this is something you talked about. where are you concerned? concernhat is a bigger of us. if the cause of the trade war -- the chinese government put aside their reform or deleveraging reform, which should be very positive for china's media outlet. if they go back to big stimulus plans, that would be much more

damaging to china's long-term prospects than otherwise. let's hope we do not get there. anna: thank you. a great day to have chinese expertise on the program. the u.s. ratcheting up the trade tensions. sticking with u.s. themes, let's talk about nato. manus: donald trump is an brussels for what promises to be a crunch nato meeting. he had this to say about his european trip. >> i have nato, i have the u.k., which has been so much turmoil, putin,ave put -- i have he is the easiest to fall. who would think? manus: there he is. -- and his first

fully fledged 121 summit between the two in helsinki. this comes amid criticism that he has been harsher toward american nato allies and -- and then toward the kremlin. the latest on the nato summit. what can we expect? >> good morning. to come to brussels with, speaking glowingly of vladimir putin -- which donald trump will show up, one that and to him defense spending is boosted by 40% or one who has called nato obsolete. that is the deal with nafta. check out this map that shows what countries are meeting the 2% target that he is urging. he sent the letters to defense ministers and his counterparts and he is here and person to

urge them to meet this target and boost spending. the only ones doing it are the u.k., greece, estonia, and poland. he wants to late -- link defense and trade. >> that is what he is doing and what a day as the picture as the threat of more chinese tariffs linger. take a look at what he tweeted before arriving, merging the two together, defense spending and trade area the eu makes it impossible for farmers and workers and companies to do business in europe and they want us to happily defend them through nato. the german defense minister said it is immature to link the two but you can bet he will do it in brussels. manus: let's see what comes out from that. i have regained my voice.

we have the futures taking a punching as the fears from tariffs do reassert themselves. of 1% on s&p futures. make sure you join us on radio.

manus: we are live from our european headquarters in london. cash trade now less than 30 minutes away. g y: welcome. you're watching bloomberg markets. this is the european open. investors are dumping stocks and commodities in response.