nejra: good morning from bloomberg's european headquarters in london. i am nejra cehic. this is "bloomberg daybreak: europe." a weaker outlook could mean a softer rate path after the ecb slashed its growth outlook. growth concerns mean a bad day for asian equities. china is trying to slow its equity rally. trades exports slump has war uncertainty continues, but the ambassador to china is optimistic a deal can be done. >> significant progress has been made, and i am more hopeful than i have been in a long time.

nejra: good morning. welcome to "bloomberg daybreak: europe." we are under two hours until cash trading in europe. risk of global growth, but do policymakers have the tools to deal with that? s&p futures coming under pressure. the 10 year yield after dropping five basis points, it continues lower. for a third day, down 0.4%. pauseerg dollar index on of the several days of strength. mario draghi with a new round downgrading glows and inflation

forecasts, and says rates will stay on hold until the end of the year. the euro hit a 20 month low, holding there now. at onedrop below 112 point, and bond yields plummeted. you can see the risk picture in the commodity markets. oil is in a tight range and coming under pressure. let's get bloomberg first word news. >> the european union is emerging the trump administration to stop imposing tariffs if he wants to partner with china. he has threatened to hit eu with theffs as much as 25% if u.s. imposes auto tariffs, the eu would have to retaliate. to imposed have rebalancing measures.

and our relationship in other areas would be difficult. >> president trump's former campaign chairman paul manafort has been given almost four years in prison, far less than 20 years. it could still get worse. he faces another decade in prison when he is sentenced on further accounts next week. the outcome of the next week's brexit vote is what theresa may is set to say as she tries to make progress. the eu has made a new offer to break the impasse, but it fell short of what britain wants. may hopes to get changes ahead of the vote. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. bloomberg. nejra: thank you so much. let's get a check on the markets in asia. juliette saly in singapore has

more. off inseeing risk assets, but the losses are pronounced across the asian spectrum, particularly in china. juliette: they certainly are, but few are saying it is not much of a surprise given the run-up we have seen in the chinese markets over the last few weeks. today, a lot of selling. the ecb dovishness and weaker than expected chinese trade data. in u.s. dollar% terms in the month of february when we were expecting a drop of 5%. it is heavily exacerbating losses in the latter part of the session. shanghai will ratchet up a weekly gain. let's have a look at some of the stocks we have been watching in detail. on a has been a downgrade

darling in the chinese market, the insurance company which had been rising substantially. be declining could 50% this year. chalco falling in the hong kong a warning on aluminum demand slowdown. getting a good bid on speculation of a rail project in thailand. a surge in terms of asian stocks, you can see how much downward pressure in equities today. saly. thank you juliette let's kick off today with the global growth story that mario draghi has joined the club of central bankers reconciling themselves too low rates. ratesan central bank says

will stay at a record low year. weakeningter a economy. >> on account of the persistence of uncertainties related to geopolitical factors, protectionism, and vulnerabilities in the emerging markets. guests for brings my the hour. we are joined by henrietta pacquement, head investment grade credit, ecm asset headement and janet mui, investment grade credit, ecm asset management. mario draghi delivered more than expected. expected,und not saying rates could stay on hold through the end of the year. by givingrdeliver less ammunition if things get worse? be thei think that will

case. markets were expecting some easing, but not that soon. the ecb concern on slowing growth. i do not think that is a good sign. nejra: do you think these outlooks for growth and inflation could get worse? bloomberg put out a story since the decision yesterday saying some officials doubt the 2019 outlook. henrietta: what we saw yesterday is an ecb that was trying to be proactive. that is following in the footsteps of what the fed has done, and easing in china. they are looking to give the economy a boost. membersat you have some of the governing council more concerned about growth? i think the market was surprised how much was delivered yesterday, and that is why we got the reactions we did in the rates market and the softness on equity side. nejra: and the euro plunged to a 20 month low.

well below the 200 day moving average. the chart has dropped below its november level. the euro reacting to what happened yesterday, or is it already pricing in worse to come for the euro zone economy? janet: i think a bit of both. the ecb delivered more than expected, so it was a dovish tilt. that is why the euro is reacting so much, and it shows that the ecb is concerned about the slowing economy. that is why markets are pricing in a slowdown were downside risk to growth. nejra: we keep saying dovish draghi delivered more than expected, but initially you saw banks rise on the decision, then european bank shares drop as the terms were less favorable. where do you sit on that side of the debate? henrietta: as much as they can, the ecb wants to wean the banks

off of these exceptional liquidity conditions. the term has been shortened from , that was to two expected. and ecb has given itself optionality in terms of the pricing. they want the banks to lend, the details of how that will work. nejra: one thing one of our columnists pointed out yesterday, the cost of funding the current plan will jump. a new round will not be in place until september. is that mean a mini credit crunch over the summer? henrietta: i doubt it. if there is one organization that knows about it, it would be the ecb. they want to give the message to the banking systems that this is not a permanent state of things, and they need to wean themselves

off of this exceptional liquidity. in your assessment, how bad are negative rates for banks? people do not agree on it. there is discussion about the reversal rates, and that we should see rates raise, and loosen rather than tighten. and not necessarily the way you would think. do you think negative rates have been a net positive? say a netould negative. you have to look at how the banks have been doing the past two years, and the reaction yesterday. when you have a flattened yield curve it is not possible for the banks to lend money to the economy no matter how much the ecb is trying to help liquidity. you can look at the profitability and the market reaction, and it is a net negative. i am surprised the ecb does not sound concerned about it. nejra: how does everything we heard yesterday impact the way

you allocate credit in europe? henrietta: i think what the market is grappling with is prolonging the cycle. as a result we have had a nice rally in terms of equities and spreads yesterday. it has been softer the last couple of days, but the market in terms, where are we of the credit cycle? arguably you have not had the excesses in europe that you had andhe u.s. in terms of m&a shareholders from a behavior. investors are questioning where we are in the cycle, and what that means for portfolios. we are making sure we are focusing on companies and their balance sheets, and use this yield environment to extend their maturities and have proven access to the capital market. nejra: final question, in terms of the overall stimulus, bloomberg intelligence and the

economics take on it is that drawdy has not offered any new mario draghi has not offered any new stimulus. janet: they pushed about their rate hike guidance, and markets have been pricing in no rate hike at all in 2019 anyway, so that was not helpful in trimming the financial conditions in terms of rates expectations. extension and the rates could be higher than previous programs. the financing rate could rise in the two year horizon they are looking for. i think it is not as substantial or dovish as the ecb was thinking of. nejra: could we see a reversal in bond yields? henrietta: we will see.

investors need to see more out of the economy, more on the problem issues affecting the market, trade discussions, brexit. great to have you both with me. janet mui, head investment grade credit, ecm asset management and henrietta pacquement, head investment grade credit, ecm asset management. they both stay with us. most, theks slump the nation's trying to slow its equity rally. -- when youraveling are traveling to work, tune into bloomberg on digital radio. this is bloomberg. ♪

nejra: let's get a check on the markets. we are seeing red across the screen in asia, chinese stocks

underperforming. -- the government wants to slow down the rally. dollar-yen, we are seeing a bid. yesterday we saw u.s. equities and s&p 500 drop below the 200 day moving average. concerns around global growth. do policymakers have the tools to fight it? europe banks underperformed as the new round from the ecb, terms not as good. the euro bouncing back after hitting a 20 month low following the ecb decision yesterday. european trade commissioner says the eu would have to retaliate if washington imposed car tariff

s. the comments were made in an exclusive interview with bloomberg. report,ve not seen the we hope it will not recommend tariffs on cars for the european union. it would be harmful to our economy and the global economy, and for the u.s. economy because many cars are produced here in the u.s. with car parts from europe. they sustain many jobs. trade and investment supports 7 million jobs in the u.s. we have a strong relationship and we do not want to jeopardize it. it would have an effect on the global economy. nobody is asking for these car tariffs in the u.s. if that were to happen, we would have to impose rebalancing measures, and our relationship

on other areas would be difficult. >> talk to us about retaliatory tariffs. which sectors would you look to? >> we have started to prepare a list, not public yet, we have to consult with the eu member states. it will have the value around 20 billion euros in total but i hope we do not have to do so. onshould not impose tariffs each other, we should work together. with the worklly that u.s. wants to do, working on china, addressing market , and thats there would be more difficult if this happens. , and anard mario draghi investment slow down, we know sell a lot tonies china. to what degree would trumps trade threats these are the

china have contributed to the slowdown in the economy? >> most international organizations, the world bank, imf, many think tanks have warned these escalating possible trade war and protectionism is bad for global economy. is not making us richer in any way. we are so interlinked, the big economies, so it has an effect on all of us. if it deteriorates, it would be worse. nejra: that was the eu trade to ussioner speaking exclusively. america's top diplomat in china says the sides have made headway in trade talks but stresses there are plenty of issues to work on. we spoke to him exclusively. >> i think the president is

interested in doing what previous administrations have not been able to do, and that is suchss fundamental issues as the transfer of technology, and enforcing intellectual toperty rights, and access certain aspects of this market that have been closed. we have talked about that, and we helped china get into the world trade organization in 2001. they would do these things and failed to. president trump wants to be the one to get something significant and lasting accomplished. i know the people negotiating this are strongly focused on those issues. is onedor lighthizer that is tenacious and focused on getting something that will be significant and enforceable.

>> if we get a deal made up primarily of reducing trade barriers, huge purchases of agricultural products and energy from the u.s., but promises on structural reform, is that still a win? of the is the problem past. we have gotten these promises time and time again through administration after administration, and they have not followed through, it has not been accomplished. what secretary mnuchin and ambassador lighthizer are focusing on is an enforcement mechanism that makes it possible to enforce it or penalize china if they don't. >> that mechanism will involve the use of tariffs? >> i am not sure what that is. hasuse of tariffs is what brought china to the bargaining

table, and convinced them there needs to be fundamental changes made, but i do not know the details. obviously, i have confidence the , the lead negotiator being ambassador lighthizer is focusing on those things, and the things he thinks have not been addressed in the past. >> in terms of enforcement mechanism, is that the key sticking point? >> it is one of the most important aspects of it. addressing these fundamental issues and having an enforcement china doeso see that fulfill promises they make. the u.s.at was ambassador to china, terry branstad. traders took a rest from the largest brokerage as a sign the government wants to slow down the rally.

janet mui, head investment grade credit, ecm asset management and henrietta pacquement, head investment grade credit, ecm asset management are still with us. are the markets interpreting this correctly? this bearish securities move? janet: i think the previous was the government wanting to support the stock market, and i think the government wants to slow it down at it. and howook at the rates much the stock market has rallied in china is impressive. as the leverage has gone up substantially, it is a problem the chinese government is aware of. i think that is why they want to slow it down a little bit. if you look at the technical overbought it is in territory. it makes sense for the rally to make it more sustainable. nejra: we have a chart showing

chinese stock market looking most overbought in four years. is this rally based on more than sentiment around trade? think the sentiment around trade, and the potential for a deal helps the rally we have seen since the beginning of the year. there is also a sense that the movement we saw in the stock market and credit markets, at the end of last year, that amplified the moves we saw toward the end of the year. you had a normalization of that. i do think the chinese government does want to improve the growth prospects, but they are conscious that they want to keep the stability as much as they can on the economic side. nejra: in terms of any move higher in chinese equities, on progress in trade, is the upside limited?

some deal is priced in, there is a lot of room for downside disappointment? janet: i think partially that is right, a lot of prospects has been priced in, but there is still uncertainty what the eventual agreement is. it can surprise to the upside and potentially the previous tariffs could be removed. upside, andm for room for downside surprise as well, but i'm do not think it is priced in. nejra: janet mui, head investment grade credit, ecm asset management and henrietta pacquement, head investment grade credit, ecm asset management stay with us. we have a lot more to discuss. traveling to work, tune into bloomberg radio, live on your mobile device or on dab digital radio in the london

area. this is bloomberg. ♪

this isn't just any moving day. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today.

it is a clear risk off day in asian equity markets, extending the slide in europe and the u.s. yesterday. a lot of red on the screen, china underperforming. and here inn mumbai london. india's equity benchmark heading for its longest stretch of weekly gain since november, and it is giving up some of those gains today. what is behind the move today? good morning.

thinking, we are flat right now. the markets are flat. index you never know india may end up in the green. pauseday was a bit of a after a fairly decent start to the trading week. it is one of those days where the markets are sluggish. to be fair, india is outperforming. the losses are nothing compared to the drop in the nikkei.

dani, you are looking at losses in chinese equities? in a investors are pricing slump in global growth. we had that discussion about china falling the most this year. the euro bouncing back from some losses yesterday with all eyes on the ecb and their concerns over global growth. today, bouncing back from the november low. in a risk off move, the yen is heading for its best two week gain in two months. this is under a lot of focus. america said -- it is underperforming in the msci world index. according to blackrock, they think emerging markets will be the trade of the decade.

this to turn for around. they think china growth will get better. we need to see eight better picture for that to be a reality. nejra: thank you so much. it is international women's day. the annual ranking of the representation of welfare of women in the workplace across 33 nations. one, iceland's welfare for women in the workplace. billion is the boost to the u.k. economy if it raised female -- 14, the number of places the united states has dropped since 2000. this is the number of nordic countries in the top 10 spots, five.

increasing female employment across all nations could lift gdp by this amount. 27, this is where china would rank if it was included in the survey. better balance, i am pleased to welcome head personal investing, legal & general investment management, helena morrissey. you did achieve your aim, that is great. elsewhere, it is not looking so great. helena: international women's day is a day to celebrate, but a time to reflect things we still have to do. your colleagues talked about emerging markets, women with a trade of the decade. if we invest more in women, we will see significant returns. nejra: are you getting a sense that even though we are not at that point were we have true gender parity and equality,

diversity is setting in. helena: definitely, and that is the irony. results is frustrating a lot of people, not just women. a lot of men in investment to seey are very keen more women and diverse talents make its way through to improve diversity of thinking. everybody,rating for the change needs to be more radical and holistic. we have little initiatives, but not a rethink of how to promote people when we assess their performance. nejra: how do you deal with that frustration so women and men are on board and working toward the same goal? helena: it has to be a clever bit of exercise. we were talking to women about

issues, the men are the ones with the power. all -- it know it is is not all their fault, this is not a blame game. we all know it is a problem, let's do something about it. we need to make sure they feel it is an inclusive culture to thrive in. henrietta: it is an interesting question, what you can do to get women in these industries more than they are at the moment. there is still a gender imbalance in asset management where i belong. what do you think needs to happen from an educational perspective? would that be more appealing? helena: we need to get out and about more. we need a cross industry initiative to gather together to

make this more impactful. and trying to go to universities to talk more about what we do, and showcase role models. if someone is thinking about a seeer, they want to somebody close to them in age who does what they want to do, and that they can relate to. how you think the increasing focus in investing would drive diversity and inclusion in the workplace? ways, it iswo notable that the majority of teams and asset managers are comprised of women. you can say there are stereotypes going on, but we do tend to care about longer-term issues. that has changed the dynamic, and also holding companies to account more. having dialogues about how

companies are following through with their commitments to have women on their boards and close the gender pay gap. and to break to the frustrations, we need to make we keep pursuing things that are not working. some done in the if somethingsity, is not working, we review it. in the wrongoing direction, you will never score. just to be more open-minded and hear what the women experience. sense men in get a the top positions might be listening to women but not understanding their day to day experiences? helena: definitely. one thing i am most proud of over half ofclub,

them every year are men, and they say women are more candid with them because they can talk freely. men say it opens their eyes to the issues women are facing but would not tell them if they were working directly for them. it is this question of breaking through this impasse and getting men to mentor women. nejra: you talked about things that were not working. -- we have to not be afraid to make the change. give us an example of what approaches do not work. suggests --the data there is a great report written , theharvard professor actual statistics in simplistic

training programs, it is counterproductive because people feel they are part of the problem and not the solution. there is nothing they can really because they are unconscious. that is the sort of thing i think we should not bother with anymore, and work more on real classroom-based training and using virtual reality. i will have something where people see what it is like to be a woman in a different situation. i am intrigued if it works or not. just saying you are making mistakes in treating people badly is not going to work. nejra: we keep coming back to the issue of the pipeline.

how do you get around that issue? you mentioned in your research in the hiring process is where problems are. helena: there is a huge amount of fine talk, but each week across the industry, women send me emails or talk to me about their actual experiences of , and people bias are not walking the walk. that has to change. hiring,e focusing on really enjoy the experience and aople give their all and be woman and not have to fit in with masculine definitions. for me, it is not just the companies that need to be involved in that kind of deception.

-- in that kind of discussion. , for instance, to facilitate women in the workplace. in a country like the u.k., i have friends with me who dropped out of the workforce, part of the due to childcare concerns. nejra: this has been a great conversation. helena morrissey, head personal investing, legal & general investment management joining us as well. let's get first word news. to a 20uro plunged month low as the ecb downgraded the european economy. policymakers said even this cut is too optimistic. they think the project the pickup in the second half of the year might not materialize. mario draghi says it is still to the downside. michael colin is suing the trumpet organization, saying

they cost him millions of dollars in legal costs. cohen says he previously pleaded guilty to nine felonies stemming from a federal probe. may triesster theresa to make progress toward a deal, the eu has made a new offer to break the impasse, but it fell short of what britain want. may hopes to get binding changes ahead of next week's vote. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. a quick check on the chinese markets. 4%, the mostoss to since october. it was on track for a ninth week of gains, no more. boardt the red across the

in chinese equities. this is bloomberg. ♪

nejra: let's check in on what is trending across the bloomberg universe. the pentagon is reviewing elon musk's security clearance. smoke.ll going up in blackrock ceo larry fink says modern monetary theory is garbage. which high profile people disagree with him. amazon.com has stopped buying products of wholesalers. a study suggests china's gdp growth was inflated for nine years, but by how much? new york is considering taxing nonresident owners of non-luxury

apartments. it is all on the terminal. could the widening muttering laundering scandal be a problem? it is estimated the amount of dirty cash inside the eu looking for loopholes to get in. cases heunder says the has so far is a fraction of this amount. he spoke to bloomberg's guy johnson. >> i am going to the process, and for me, and activist, you never look at the endpoint because you get frustrated. the best thing is to look at what i have accomplished this day, this week, this month. guy: you cannot see yourself saying, we know what happened, we will shut it down? you and your team have the information and a great deal of skill in the route these moneys have taken?

>> we have the most effective money laundering investigators in europe. windows were that will take us, but we continue to focus on who got the money. andawyer was killed over, nobody who got that money or laundered it gets away with it. guy: as you continue that process of trying to figure out where that money came from, went to, and ultimately resides now, you broadened it out from the nordic region through the baltics and into the netherlands and austria. is there a path of europe being left unscathed by this? >> here is what i would say, propernks have anti-money laundering principles and mechanisms, and some banks that were attracted by the process.

you will see, you will put a manage their that operation cleanly, and banks that did not. it is not a question of everybody involved, some got greedy and did bad business, and some people had strict right syria and did not. criteria and did not. that will all emerge. banks that smaller did this more than larger banks? criteria what makes somebody to come to the enticement of crooked money. one of the biggest banks in the , and i have seen small banks in switzerland shut down for the same thing. there is no way you could know as an investor, if you cut off these banks you would not be

affected by this. it comes down to the character of the people managing the banks, and how fearful they were of getting in trouble, and how greedy they were to return profits to their shareholders. is appropriate for one institution versus another? finesmy opinion, these are the wrong punishment. the people who committed the crimes are the management and employees of the banks, but the fines are punishing shareholders. what needs to happen is the employees involved in this and the people who had responsibilities to the employees should be prosecuted and go to jail. if people go to jail, this will stop in two seconds. right now, what is the consequence? you run a bank, collect bonuses, you lose your job and keep your bonuses, and in the shareholders get a billion dollar fine. >> do you think people will go

to jail? >> i fear in europe nobody will go to jail, and in 10 years time we will have another of these conversations. nejra: bill browder speaking exclusively to bloomberg. tomorrow marks the 10 year anniversary of the u.s. bull market. as of the market 300% in the longest run without a 20% decline. historic advances now threatened, how much longer can that they enjoy easy gains? janet mui, head investment grade credit, ecm asset management and henrietta pacquement, head investment grade credit, ecm asset management are still with us. year anniversary of the crisis low, we have not seen that 20% drawdown. is that coming soon? henrietta: i think we are closer to it inevitably. saying the we are

banks in the markets, and that is here to stay. when we get to 20%, the question is out there. areink the central banks working to extend the cycle, the fed, the ecb, and the activity in china. we will see. nejra: are central banks successfully going to extend the cycle, or storing up problems for the next downturn? janet: central banks can extend the cycle. most of the recessions are caused by the fed tightening too much. if the fed does stay put were remain patient, i think it can sustain the cycle, especially if other central banks, the ecb, the bank of china continue to be in using mode. nejra: china has the most dry powder to be able to stimulate monetary and fiscal terms. janet: that is absolutely true.

the chinese monetary policy is in easing mode. the authorities have cut the times lastio four year, and they have room to cut further. more liquidity can be released into the system. they announced tax cuts in the people's congress, so it does seem they have more dry powder to stimulate the economy. nejra: if we turn back to the u.s. and ahead to the jobs out",s, there is a column he focuses on the participation rate. he says markets should hope for greater participation by countering inflationary pressures even though they are moderate, and suggesting residual slack and a higher reading of the participation rate would encourage the fed to maintain the highly dovish stance, agree? yes, i think they are

willing to let inflation run a little bit. , frankly, at the end of last year. one thing to take into consideration is the quiddity. we touched on it earlier. markets on thee equity side is amplifying moves we are saying at the moment. was sensitive to the tightening conditions at the end of last year. they are willing to be more patient, let inflation run a little bit before they change their mind. nejra: earlier you were saying at the end of 2018 a lot of moves in the credit markets had to do with liquidity. we see the spread tightening in the u.s. and europe. are you positioning investment

grade credit in a way that would enable you to take positions off the table if you get a squeeze in the quiddity? -- in liquidity? henrietta: basically building up dry powder. we will have opportunities later in the year. want to be able to participate when that happens. , sohe more generic spread it is a question of being patient at the moment and not taking on too much risk. nejra: janet mui, head investment grade credit, ecm asset management and henrietta pacquement, head investment grade credit, ecm asset management, fantastic to have you with me. janet will continue the conversation with us on bloomberg radio. coming up, worries about global growth. most shanghai drops the since september. bloomberg users can interact

vith the charts using gt , this is bloomberg. ♪

good morning from bloomberg's european headquarters, i am nejra cehic. weaker outlook could mean a softer rate path. its after the ecb slashed forecast. chinese stocks drop the most since october. europe and the usa to open lower. trade war uncertainty continues but the u.s. ambassador to china is optimistic a deal can be done. significant progress has been made. i am more hopeful now and i have been in a long time. >>

>> good morning. london.. in chinese equities getting punished in the asian session. european equities dropping yesterday. thanks underperforming as the markets digested the news on the ecb decision. terms not quite as favorable. overall, ending in the red. futures are on the back foot and so are others. 0.6%.s lower by german data coming through. factory orders drop 2.6%.

the estimate was for 0.5 percent gain. that data is not going to help with sentiment around the eurozone. the inflation forecast downgraded. rate hike, not likely to come this year. the bond market took it not in stride. 10-year yields dropping. a low.d yield hit we are either going to see a steady open or a continuation of yields moving lower. btp futures.into treasuries, the 10 year yield dropping five basis points. a drop spurred by what was happening in europe. we trade on a handle. soli has more. particularly in china.

lower.csi 300 closing biggest one-day drop since october 11. it was looking so positive for these markets that had been rolling along in bull market territory. couple that with the business from the ecb. and then disappointing china trade data. exports dropping the most in three years. down inxports, february. even when you factor in the lunar new year. by 2%.kei closing down australia's market off by 1%. weakness in india as well. let's take a look at what

currency markets are doing. you are seeing money going into the yen. against the dollar, 0.5%. little bit of movement, kyle bass remaining a there, saying his positions. weakness in the indonesian rupiah. one bank saying they might be intervening and buying bonds. the biggest loss against the dollar in terms of the rupiah. >> juliette soli in singapore. let's get more on the stock sell off. the biggest one-day loss since october. traders took a rare rating as a

sign the government wants to slow down the rally. , will asking the question chinese stocks have a healthy the world after beating rally? or will it morph into something more serious? you can join the debate and reach out to us on your bloomberg. joining us now, the head of investment strategy. that question to you. are we going to see a healthy correction in chinese equities or potentially sub it worse -- something worse? >> a lot has been discounted in stock market since january. .he fed dovishness the potential of the u.s. china deal and perhaps some complacency. unraveling.g

we will have to take it from there. the economy is slowing. most economies are experiencing this slowdown. most central banks are becoming more dovish and that should help the cycle to expand. >> if we look at chinese equities, i have a chart showing the most overbought and four years. how much more potential upside is there specifically if we get a trade deal? >> a lot has been priced in. beenes seem there has complacency. people are also -- almost taking for granted the deal will be done. we think there will be structural issues.

they could continue. it is difficult to see with structuring of state agencies in china. think it could be extended. >> i am inclined to agree with you. feeling the market has been jumping on positive headlines. potentially a lot more downside risk if we don't get in all-encompassing structural deal. >> we would agree with that. globalese equities and equities? this correction could morph into something more important if that were the case. >> the mood in china, it is being interpreted as the fact we got this rating in the market seems to be reading that. does that seem like something

that could be true to you? aboutt year, it was all deleveraging. this year, it is more about balance support. there is a recognition there is a softening of the economy and stimulus measures have been taken. >> are they going to be enough growth to thenese extent they also support global growth? if you look at the deficit, it looks like a tiny increase. there is probably more to the story. off-balance-sheet borrowing could be used. you could have a bigger stimulus than is currently discounted. we need to see the evidence. you say it is difficult to be very positive, despite the

stimulus measures by the authorities. were expecting that and saying this is a target, oneowth that can be managed. if you look at the granular's of chinese equities, are you not positive about them in aggregate or are there areas you might like like china is shares -- a-shares? >> we are concerned about the current downgrades of earnings estimates. we are seeing that across all industries. tableion levels are not pounding attractive career that is why it is difficult to be positive about chinese equities. technology, there could be some opportunities coming up. >> health care and technology you are potentially positive on. play intohe yuan this?

does that pose a risk? currency, we think because growth is being cap, we have a neutral view. >> we will talk more in a second. she stays with us. let's get the first word news. the european union is urging the trump administration to stop imposing tariffs. the president has threatened to hit eu vehicles with tariffs as much as 25%. impose autodoes tariffs, the eu would have to retaliate. >> we will have to impose rebalancing measures. then our relationship on other areas would be very difficult. trump's former

campaign chairman paul montfort has been given almost four years in prison. that is a larger -- lighter -- he faces a longer sentence when he is sentenced next week on conspiracy counts. is the biggest slump in exports since february, 2016 and was not helped by the lunar holiday. there are signs feud between china and the u.s. is increasingly hurting the u.s. economy. significant progress has been made. i am more hopeful now than i have been in a long time. >> global news, 24 hours a day. than 100y more journalists and analysts. >> coming up, trump's top blasts huawei's

lawsuit. that is next. tune in to bloomberg radio come alive. life.io, a this is bloomberg. ♪

a lower open today.

there are global risks out there. risks to global growth. do policy makers have the tools to deal with them? mario draghi brought more tools than some expecting. not everyone is expecting that. no rate hikes for the rest of this year. the euro hit a 20 month low. 112.e just below dollar-yen, the bid for the safe haven is clear. howe. olivia health -- >> the investor says the case brought against banks only represents a tiny fraction of the laundering in europe. alleged there was 170 $6

million connected. >> our investigation continues leads to new evidence and information. we will take that and follow it where it leads. beenere have allegedly resumed merger discussions. the ceos have been in intense talks for some days. and that is your bloomberg business flash. the let ins top china has described the huawei lawsuit as bizarre. he said it sounds like retaliation. we gave bloomberg an exclusive interview. >> people have expressed concerns about huawei and some

of their activities. everything from australia to poland. .t goes on and on i think it is interesting long huawei sues the united states. it sounds like retaliation and a little bit like what happened with canada. seizing a couple of canadians, one of which is a former diplomat. what they did with the individual who appealed a 15 year drug sentence and then gets the death penalty. that would never happened in canada or the u.s. and i think that is not in my mind, a very smart strategy. >> they are damaging their cause. have with thenly canadians. i don't know the details. our.st seems kind of is

>> looking forward in this relationship, there is of you around artificial intelligence, 5g, that is inevitably going to be a point at which you are going to see rising tensions between the two sides. is that a reasonable view from your position? >> i think every country wants to protect its own national security and technology. -- there isyou see going to be competition and concern protecting those very valuable important assets. you are going to be able to prevent tension but you need to recognize every country has a right to protect their own security.

>> that was the u.s. ambassador to china speaking exclusively to bloomberg. world'scus on the slowing growth story. data showing nonfarm payrolls expanding. president the ecb joined the club of central bankers reconciling themselves to a historically low rate. slashing the forecast for growth. rates will stay at record lows into next year. management isalth still with us. a look at some of your thoughts, european equities, the cycle is to reassert itself. i was asking whether draghi over delivered and then left himself no ammunition if things go

wrong. you think it is the right amount of stimulus? >> it should be able to be sustained and sustain the expansion. he has brought forward a lot of things he could use. central banks can be very creative. we will have to see whether his successor continues with the policy but it looks to be the case. the inflationwere downgrades. of9, getting a lot attention. could we get more downgrades from here? >> it is a significant downgrade. with laboragain to get betteruing despite the slowdown, we think this growth should be achieved

this year. ask what does that mean for bond yields? we have a chart that says, all fall down. yield go upg the two basis points. it is not five basis points. will these be moving higher if you expect a cyclical pickup? yes but not in the short term. i am wondering what you are overweighting and under waiting. given what we have heard on the extension yesterday, a lot of discussion over whether the terms are not as favorable. waitingu be under banks? to dismiss not want them, with the economy growing, so it is warranted.

>> are you favoring cyclical stocks in europe? and somek health care industrial companies which benefit. >> in terms of where you see the european equity market growing, what sort of gains are you expecting? is it staying where it is now or more significant? >> we will expect some modest gains. a strong rally. we would expect some retrenchment given complacency has been built and in terms of dovish this of the fed in particular. the chinese trade deal, almost taken for granted. >> some retracement likely. tomorrow as well, also the 10 year anniversary of the bull run

in u.s. equities. u.s., europe. will the u.s. continue to outperform? >> like the u.s., we think shares in general will reach new highs. in a 6-12 month time. well corporate earnings will be more modest than last year, we believe the problem which caused , these are not there at the moment. this should give room to advance. can talk about lower for longer. people saying that is a reason to buy bonds. would you say equities over bonds globally, does it depend on the region? upgraded bonds

recently. because of where we are in the interest rate cycles. we will focus on quality in terms of credit. >> both in the u.s. and europe? because of the late cycle of the stage we are in. >> do expect a significant stage widening >> important to keep your powder dry. bank set to talks.fy merger imc if i can get details. it has been a big discussion point. consolidating in the german banking sector. to we know is they are set intensify merger talks.

the top executive of deutsche bank and commerce bank have resumed discussions of a possible merger. this is according to a german magazine. citing unidentified people familiar with the matter. the merger has been pushed by the german finance minister as a way of keeping a national champion. thank you so much. that is it. open is next. we are keeping an eye on the latest from the spacex crew. and setnestly undocking to return to earth in about five hours time. it could be used as a primary

means of transport. we will talk more markets next. back.an futures on the one of the sectors underperforming following the ecb. this is bloomberg.

>> good morning. welcome to european markets open. the cash trade is less than 30 minutes away. ♪ claxton the devil is then the data. german factory orders disappoint. even as the trade for whi -- the ambassador, is optimistic a deal can b