francine: trump hits of the tariff button. beijing thousand to retaliate. the market shrugs, the market fluctuating. chinese equities rally into the close. raises $8.1rs, uber billion, pricing shares at the lower end. trading starts today. welcome to "bloomberg: surveillance."

these are your markets. against all odds, european stocks are gaining 0.7%. a lot of concern about where the trade war will end but also an underlying belief in the markets that it should not get uglier from now. s&p futures are down 0.3% and the u.s. 10 treasury yield -- 10 year yield is at 2.45. the auction last night was the worst in years. some were worried china would not buy treasuries as the trade war ratchets up. bonds,up, we talk trade, and the european economy. to thek exclusively chair of the french banking giant societe generale. don't miss that conversation. let's get straight to bloomberg first word news. uber has raised over $8

billion after pricing shares near the bottom of their market rate -- range. this is just below their latest valuation. they're hoping to avoid what lyft saw in the first few weeks and is reportedly looking for shareholders that will hold stopped for a long time. administration is expanding the countries scrutinized for currency manipulation. the latest report could raise the numbers of nations to 20. the economic maybe named a manipulative for artificially holding down their currencies value. race isate space heating up and jeff bezos's says it is time to go back to the moon, unveiling blue origin's potential lunar lander. he held a presentation saying it has been too long. he hopes missions can start by 2024.

a breakthrough in europe, not brexit, but british football. for the first time in history, the finalists of the biggest tournaments hail from england. cap theresa may learn something from this success? she says that when it looks like your european opposition has you beat, you can still succeed if everyone comes together. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: thanks. let's get straight to our top story. on u.s. has hiked tariffs over $200 billion of chinese goods. this is the most dramatic step from president trump's push. it has deepened the conflict that has roiled financial markets and cast a shadow over the global economy. china immediately bowed -- vowed to retaliate. joining us from beijing is our china correspondent tom mackenzie.

first of all, how can china retaliate? tom: this is the key question. we have just had a press conference from the ministry of commerce that has been reiterating that they will retaliate but says they will have to wait and see. havehave also said they not heard any details around a presidential phone call, something some have pinned their hopes on. in terms of the retaliatory response, what we may be looking at is an increase in the tariffs they have already imposed as part of this long-running trade spat. they have tariffs imposed on $110 billion of goods. they could raise those. 5-20%.evels are between the other thing they could do is to reimpose tariffs on american cars.

another thing is soybeans. they have pledged to buy 7 million tons of soybeans. they could now decide not to follow through and look to latin america. of whethera question or not the devalue the yuan. there are many who think that is an unlikely step because they are concerned about triggering capital outflows. there are a number of steps they could take. maybe we will get some clarity once liu he lands back in beijing. francine: if you look at the negotiations, is the most important one between the u.s. and china? saysstarted because china that because trump says china did not meet up to their agreements. will they get closer together to find an agreement? tom: that is a good point.

there are divisions within china when it comes to how to approach these negotiations. we also have hawks and doves here in beijing. play andsions are at it is difficult to know how it plays out. we have beenysts speaking to think that, essentially, china still wants a deal. they want to continue these conversations and get to an endpoint. equally, they do not want to come back with a one-sided deal. there are nationalist forces and president xi jinping wants to make sure he stands up with a decent deal. that he has not now -- bowed to pressure. francine: thank you. joining us for the hour is the chief economic advisor at credit suisse and patrick armstrong, chief investment officer at clarida wealth -- plurimi wealth. if you look at the tools china

has to retaliate, they are powerful. will they ever use them? >> definitely. they are going to find trumps pressure points. soybeans, his base in the u.s. and the farmers who produce them. trump has talked about pushing 10 year yields higher and will have an impact on the economy. these are pressure points they will put if they need to. they're still a window of 5-7 days with the goods are already on ships and gives a small window with there is some negotiation. francine: what they actually devalue the yuan? >> i think that would be a last resort. that, inbe considered the u.s., there seems to be perception the u.s. imports more , that china has more to lose, but that is not necessarily so. the imports china sources are

much more easily sourced somewhere else, like soybeans. whereas the chinese exports into the u.s. are much more diversified. and when we look at the numbers , u.s. andast month imports -- u.s. imports into china fell much faster. i'm quite surprised by the strategy of negotiation. is this a sign of good faith negotiations while they are in town? francine: we understand they are worried about intellectual property. maybe this is the art of the deal. why are the markets so cool about it? patrick: it is a bit of a recovery from an overreaction, potentially. we're still at a point where not much has changed. there are still negotiations going on. the knock on impact's for different equities are marginal to quite significant, depending

on the industry. i do not think we should be moving into panic mode, but it is probably time for's -- for pause. first, another question on the markets. this is what we are trying to figure out. which assets look enticing after trade tensions this week? patrick: germany and japan get hit hard whenever there is a trade war. these countries could be big beneficiaries because they're not going to stop trading completely. they will have the five new trade partners -- have to find new trade partners. they are very sensitive, but they may be net beneficiaries. francine: does this have the potential to tip over the world economy to a recession or significant slowdown? mortiz: probably not. clearly, there is a negative

impact, but some of the impacts i have seen are not that massive. for example, job losses in the u.s., i see numbers around 200 or 250,000. this is the number of jobs created in april alone, this is quite digestible. the bigger question is what will it do after this transition? the markets are still half thinking about a rate cut as being the next move. but of course, we have a wage pressure potentially. and then, on top of that, you have consumer goods being slapped with 25% tariffs, prices will increase. the balance of factors and risks for the fed might look quite different and surprised the market. francine: we actually have an interview from the fed.

we lookto my chart, if at bonds, there was an ugly auction in the u.s.. it is partly related to china. but overall, what is the attraction? i don't seeatrick: much attraction and have not in a number of years. in the u.s., you're getting a real yield of .3 or .4, the rest of the world, it is negative. not attracted to bonds. global equities are now giving dividend yields. sorry,s giving 2.6%, japan is giving 2.6% versus a zero interest rate. ,here are pockets of quality that is still an attraction versus bonds. francine: thank you both. both stay with us for the hour. coming up, cheaper than expected. 's talk about numbers -- uber listing next.

this is bloomberg. ♪

francine: economics, finance, politics, this is "bloomberg: surveillance." uber has sold 180 million shares for $45 each, raising $8.1 billion. the price gives them a market valuation of $75.5 billion, just below its last private market value. end, the listing is said to be amongst the 10 largest ipos of all-time and the biggest since alibaba in 2014. joining us now is alex webb to covers opinion. still with us are our guests.

thank you for sticking around. alex, welcome. uber is a lot more cautious. is it a trade war are they just looking at lyft? yeah, they are looking across the road at lyft. they were at the top range and has subsequently seen value fall by more than 20%. yeah, they are looking across the road atthat is obviof you are a uber investor. they have prices just below the last private evaluation. that is significant because they are looking for upside but if you look at softbank in particular with something like 25% of its investment in ride-hailing, if there is a significant decline that has significant implications for the rest of its ride-hailing assets. francine: but they made something like $4 billion off

that state -- stake. alex: but if you look at the book value, you don't know what they have come in and given companies like grab. if they were to then suffer a 20% drop, don't forget softbank did come in in the later rounds. if they were to suffer a decline , maybe they would have to look at the valuation of other assets. francine: it is going to start trading today. do they change strategies in any way? they are trying not to be disrupted and they need to be different. alex: i don't know how much patience investors will have and when it starts to get the point when they say you have got to deliver. they have talked a lot about adjacent markets delivering food or offering other logistics solutions. but if i look at bloomberg eats eats, i don't see a

path to exceptional profitability. you are eating into other margins. uber is keen to tell that story about being more than just a people delivering company, but i'm not sure how the path to profitability looks. that is a story i would like to hear told more effectively. francine: patrick, did you by any shares? patrick: know, when you talk about path to profitability, i don't see how they get there. there is the analogy of amazon i hear all the time. they built a monopoly, the barriers to entry are very high. you cannot build up everything amazon has in place. uber is a company that will be disrupted in the future. they are already facing hyper competition. consumers love them, prices are

great, technology is good. but there is significant competition. francine: why could they basically build a company when there were barriers to entry? have the times changed? patrick: just different industries, basically. you want to have spoke and wheel hubs, get clients used to using the system. it took years of making no money at all to get to the point with a started to extract small profits. i don't see how uber will do that. if i am a taxi driver, i can move to a different company, there are lots of things to do -- things to do. amazon makes out, his money through retail web services. they don't really make money from amazon. francine: how does this cross into your world? mortiz: what we have seen is the

expansion of the gig economy, of which uber is the best example. what that does is create a pressure on wages. that is exactly what we have see the macroeconomic with. -- macroeconomicly. wages, historically, would have gone hand in hand with that. this creates all sorts of implications for aggregate demand, which is part of the explanation why interest rates are relatively low. it also has wider implications on society in terms of distribution of income. but i would agree with patrick. there's only so much you can do in terms of squeezing the wages of drivers even further. there is also only so much you can do in rising prices.

there are clear substitutes. the road to profitability maybe a little bit longer than is currently envisioned. francine: thank you all for a scintillating conversation. all stay with us. we will have a lot more on markets and trade. and of course, the impact this could have on not only margins but the central banks. you can see european stocks barely budging. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." let's talk about the u.s.. hours before president trump's 25% tariff hike, the atlanta fed president warned of the impact on prices. he calls increase tariffs a whole other game. -- are ourus is guests. we were talking about the price -- the markets being for cut forecut. is there a communication problem? mortiz: i think it is a

reflection of the uncertainty we are facing. particularly, we are talking about those tariffs. if those tariffs stay, inflation will go up. onyou have a 25% increase the price of chinese imports or imports from china, this will not be absorbed able by retailers -- be absorbed by retailers. , someion will rise estimates would say the average american family have an additional cost of around $700 per year. it depends on consumption patterns but that is not trivial. it could change the balance of thinking and the fed. they say what they mean, which is that they are going to be patient. i think they are sitting on the fence seeing which way this thing with the trade war does. -- goes. what you are saying is

probably accidentally right -- is probably absolutely right, but that is not what the markets are pricing. patrick: i'm surprised there is only one cut priced in. you have got cpi out today around 2%. that is not the sign of a trend that needs to cut. you got the economy growing, that is above capacity. there is no output gap, no reason to be cutting with those numbers. francine: thank you so much, we will come back and talk a little bit more about reasons to be cutting. africa, we talk south the vote, and what it means for the rant -- rand. this is bloomberg. ♪

trump hits the tariff

button and washington raises duties on $250 billion of percent.mports to 25 beijing about to retaliate. shrugging off trade concerns as equities rally to the close. in shifting gears, over raises $18.1 billion in the much-anticipated ipo. giant pricesing shares at the lower end and trading starts today. we are just getting a little bit of u.k. data. for the first quarter, the economy in the u.k. is at 0.5%. i don't know if we were seeing any pound movement. looking at the u.k. growing 0.5% in the first quarter. gdp from march to february actually falling to 0.1%. no change in estimate. a little bit of the gdp which seems to be exactly in line with what economists were expecting.

1.30 per pound. up more than 9% this morning, this is -- as the company is mulling a plan to ipo the elevator or lift unit. like thatcertainly stock popping at the 8:00 hour. also on to the upside, one of the biggest gainers this morning, a german farm company. they had earnings that met expectations. the market may be moving on the fact that they are announcing restructuring. we should get details in june. and adp to the downside. down 9.4%. the french constitutional court says the government has put their plans on hold for privatization of adp. it might go to a referendum. it could be on hold for nine months, francine. francine: getting for a third

day willing the african national congress, on track for a convincing win in national election. over 55%s set to win of the vote. it could mean a substantial reduction from the last contest in 2014. joining us is bloomberg news managing editor for sub-saharan africa. what is the threshold? 55% to 57%. what does it mean for general ramaphosa and the reform agenda? >> it is right in range. he took over as president in february last year. given the strength of his party, it could be a lot of unpopular decisions that have far too many staff and large debts. appointing his own cabinet with people that he trusts to implement his agenda and

era.ing the scandal of the francine: what does the economy need right now? are investors subdued with the reform agenda or are they sasappointed that mr. ramapho did not go quickly enough with what he promised when he came to power? >> i think they are a little bit disappointed. he took over a year ago. the president is very methodical and relied on legal processes. he builds consensus and it takes time. there have been improvements and some of it has been tackled but i think investors wanted more action so far. as soon as he gets election out of the way and assuming that he has a strong mandate, and he does, he will be able to make some big decisions. we look to those in the coming weeks. the first is him appointing a new cabinet.

a lot of the political figures had portfolios removed. the world bank has two thirds too many staff. and it has more than $130 billion in debt with regular outages this year. so he's got a lot on his plate. francine: thank you so much, anthony. it still with us, morris cramer and patrick armstrong. look at the south african economy and what we were hearing there from our managing editor, is there value for investors to go in? >> this is been a disappointing story for the last decade of growth. the administration of public --erprises coming in trivial in trivial -- becoming intravenal in nature.

you would be happy if you were the conservative party and in the u.k. to have 57%, for sure. is a veryer the anc broad church. he has to the various selections. he only got the presidency by a very narrow margin against his competitor who was more representing the other wing. tread somewhat carefully and that is where the process is slower. it is good news. it is a clear mandate. but it is not an overwhelming mandate. participation, especially younger people that have been disenchanted is rather disappointing. spurt.ll not be a this will be gradual. but he needs to keep moving. he needs to keep the direction. if he moves too slowly

with reforms, it will keep the party together and investors will be automatically disappointed? or is that the best they can hope for? >> he has his own mandate. elected by popular vote. so i think he has a stronger hand now. i have no doubt that he will try to use it and try to move quickly early on. cabinettitution of the is an important factor here. much of theto get unpleasant positions out of the way. statereversing the capture of the corrupt elite, that is priority number one. otherwise, you will not get the growth rate that you need to create social cohesion and stabilize the social contract which is totally under threat in south africa because of inequality in the nation. francine: what is your take on emerging markets?

>> we started building position in emerging market bonds and equities last year. we have not sold them in march, april, or made. they have had a nice run and they are still relatively cheap. it has gone where everyone was worried about emerging markets to be a bit of a pause -- to being a bit of applause. francine: was that because of fed policy and the trade war? that hurts. >> it does. the trade war will be a significant headwind for emerging markets. , think that is attractive pricing a significant amount of risk from potential trade wars. you might have a 1% hit. 5%,s still growing above maybe 5.5% in a very negative environment. francine: thank you both, patrick armstrong and morris cramer, both stay with us.

let's get straight to bloomberg first word news. over via -- olivia: the u.s. has hiked tariffs on $200 billion of chinese goods. it deepens the conflict that has a world -- embroiled financial markets and cast a shadow over the economy. retaliate.to occidental will move forward with its takeover of anadarko. it is the oil industry's biggest deal in four years after chevron bows out singing it will not up the offer. the company says they are not desperate to do a deal. in any environment doesn't mean winning at any cost. cost always matter. an increased offer would have eroded value to shareholders and diminished returns on capital. : australia's central bank has cut its outlook.

the rba says the economy is expected to expand 1.75% through june, a downward revision from three months earlier. the central bank opted against easing policy this week. it is waiting to see if consistent job strength is maintained. a breakthrough in europe for british football. all hail from england. can theresa may learn anything from their success? when it looks like your european opposition has you beat, you can still succeed if everyone comes together. 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. francine? francine: stay with surveillance. plenty coming up including asmodities in the crossfire -- and as trump unleashes a 25%

tariff, we will discuss how it will affect china. this is bloomberg. ♪

this is bloomberg surveillance. i'm francine lacqua in london. commodities have been caught in the crossfire of the u.s. china trade war. investors are bracing for disrupted trade flows and economic fallout. dani burger is standing by to break down the numbers for us. dani: commodities have been interesting this week. week can see some dirt -- we can see some direct effects of the fallout and disruption of trade and -- from the disruption of trade talks.

the largest net short position on record. china has 7.6 million tons of soybeans from the u.s. they have yet to buy even though they pledged. traders are pricing the turmoil to continue. these asl use some of retaliation in order to combat the trade. other commodities under pressure as well. this is an index of raw materials very close to the early stages of reduction. this is an economic concern. the indexes at the lowest since 2016. slowdown. growth indicator of the boom bust indicator.

the fundamental start to lag even more so than what we see in the s&p 500. it does tend to be a leading indicator. there is a chance that the fall we have seen in u.s. shares is underpinned by a lack of good fundamentals. and that could even the cap returns for the s&p. ecap returns for the s&p. guests are still with us. it we were trying to figure out who has to gain in terms of the impact or the sectors that could be impacted. but talk to me about the chinese economy. moree going to see much pboc stimulus to counteract some of these tariffs? >> in china, what we have seen over the years is the pendulum swinging back and forth. they try to achieve to targets

at the same time. one is high-growth and the other is financial stability. it has been quite extraordinary. but whenever there's a conflict between the two, they offer growth. the trade will see if conflict will lead to a market slowdown of the chinese economy, they will put the foot on the gas pedal again. they could do this to the pboc that deal to the budget. what they have chosen to do earlier this year, rather than another stimulus investment program, they decided to cut taxes. they have this stimulus investment program still up their sleeve. if this is profitable leading to , the marginal productivity has decreased over the years. to stimulatel have

the economy in the short term. they will lean against the wind if there is a slow down. to chief executive interview on oil. norwegian industrial investment reportedccor has first-quarter earnings come increasing 35% in the first three months. they warn activity levels remain subdued. joining us is the chief executive of accor. first of all, you have grown quite a lot through deal. how much more m&a can you do? >> m&a is a core business of aker. we control stimulus in recent years. so we will continue to pursue

transaction opportunities in the portfolio. and potentially outside norway. francine: we have political developments when it comes to norway becoming more green. orld the country turn back turn its back on oil? the country has benefited a of arom the strong support , dialogue with norwegian authorities about the regulatory framework. there the future development of oil and gas. climate change is obviously an important part of that dialogue. my indication is that we will find a way to balance climate for the oil and gas

industry in norway and also in the years to come. trying to play an important role andhat transformation creating a more sustainable future for society. francine: what should we expect aker to do? in renewable energy, we have already entered offshore wind. and haver solutions already executed developments.

solutions are focusing on the foundation technologies. prioritized a foundation for farms. will go through organic transactions to grow our capabilities. the company has said it is open to oil service companies. now that the industry is recovering, what does it mean for strategic partnerships that you are possibly thinking about.

>> they're trying to achieve the best priorities. they want to improve competitiveness and improve transaction opportunities. those priorities have not changed. we think about the fact that the company has been awarded contracts. and there is a level of activity. it seems prosperous. francine: let's take a look at

the markets as the u.s. has hiked tariffs on china. it little bit of fluctuation. high-volume with european stocks gaining 0.8%. this is bloomberg. ♪

economics, finance, politics. this is bloomberg surveillance. let's get back to china, trade, and the tariffs that were raised this morning. we also have china car sale figures, selling more than 60% for the 11th straight month of contraction. so with us are our guests. abouting i was reading his cars. if the chinese economy is slowing, they may not offer tax breaks to help people buy cars. >> it may not. anytime there are tariffs that china, the first order is a hit on manufacturing, industrial production, and that falls to the consumer.

the second is the chinese government is going to stimulate. there will be tax cuts, government spending, getting credit flowing again. the tariffs look like a big issue, but if you have the government offset come of those things can offset a significant perfect -- significant portion of that. there is definitely a headwind for the economy. there is enough slack with services. i don't think that people should overreact to this right now. will attachcine: seven? what happens psychologically if it gets to seven? >> the white house would have an opinion on that. this could intensify the conflict. the conflict is not only about trade. trade is the tip of the iceberg. the issue that's a bipartisan issue in the u.s. is about

investment level playing field, intellectual property, technology transfer. these are the issues that really bother -- bother businesses in the u.s. resolved inget this the trade, this will not be over. this is a long game. and we will probably have lots of setbacks on that. francine: think you both for joining us. both for joining us. merck surveillance continues in the next hour. we will have more on china. this is bloomberg. ♪

♪ francine: trump hits the tariffs

button. washington raises duties on $200 billion of chinese imports to 25%. beijing bows to retaliate. chinese equities rally to the close. raises thears, uber lower end of the range in trading. surveillance.erg tom keene in new york. a lot of questions on trade and a lot of questions about how negotiations are going. and also how they are going internally in china. you really wonder on the schedule of retaliation by china. all waiting for that with the chinese still in washington. also the german two-year will not give it up this morning.

francine: we will talk about german bunds. we will join bloomberg live ater the ridesharing company 12:30 p.m. new york, 5:30 p.m. in london. >> president trump has fired the first shot in the trade war with china, carrying out a threat to raise tariffs on chinese products. beijing is vowing to retaliate. this came hours after the countries resumed talks on a new trade deal. there was little progress. negotiations continue this morning. the largest ipo of the year. the ride-hailing company pricing shares at the bottom of the market range. they are trying to avoid the the previousl lyft

month. atwill talk to the uber ceo 1250 new york time here on bloomberg tv. the trump administration will expand the number of countries for currency manipulation. countries were listed in the report. he is cracking down on those responsible by issuing arrest warrants. the this was when opposition leader juan guaido runs the risk of being rounded up. 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. tom: equities, bonds, currencies, commodities.

it is such an odd marketing here. we will get to that in a minute. at the curve steepening. the vix 19.08, showing that closing yesterday. it backs up as well in the german two-year which is flat-out ugly. i am watching all of the china news. francine: i'm watching that as well tom. the fact that the countermeasures is promising. it is at 19.12. let's get back to that stock

story. the u.s. hiked tariffs on more than $200 billion of chinese goods. it deepened the conflict which has financial markets casting a shadow over the global economy. mackenzie, bloomberg markets the china market. china could retaliate through but that would be a full on trade war. >> i don't think that we are at that stage yet. scenario willy will imposehe back on $110 billion of u.s. imports.

those were suspended after the meeting and bono sarazen december. made and youe they may expect that pledge to disintegrate on the back of this news. they don't want to go too far down that road. that is something of a nuclear option. francine: we have the vice premier in washington who spoke to the trade representative. there are more negotiations today. will it give something to the u.s.? >> one of the experts we spoke

to his very close to the policymaker. it could come down to a meeting between the two presidents to deescalate that. it seems a phone call is not on and it may come back to beijing. there are different forces at play here. u.s. wants to the codify something of intellectual property. if you can make progress on that, that is a key question. the tariffs really start to take place in one week to two weeks time. we are advantaged by stephen bannon washington -- writing in the washington post today. this really encapsulates trump

trade theory as well. it will be showing -- we will be showing this through all of surveillance this morning. an important summary of the core theory. it is a temporary truce in a war withg strategic china, the fundamental clash between two fundamentally different economic models. the best result is a detailed document. the best communist party result is to run out the clock on the trump administration. he goes on to call china's such grand theft. this is history in real-time and the world is a house divided, half slave and half free. how does china respond to this other than to do exactly what mr. bannon says, run out the clock on the trump ?dministration >> it might be their best

strategy, and now this is a bipartisan issue in d.c. republicans, democrats, the groups. security they need to be challenged on the technology front and security front as well. the clampdown on visas, and this goes well beyond trade. many would argue that china does the to come to some sort of understanding that this is a threat and a challenge that will go well beyond the current discussions. waiting out the clock potentially, but does that solve things? these tensions remain according to the people that we have been speaking to. tom mackenzie from beijing. joining us is global head of fixed income research. it away from politics and what is happening in trade.

this had an impact on the markets. what is fair value for treasuries right now? >> this probably matters for some of the sectors. that is why there is a huge attention to the announcement. to me, the overall impact on global growth is not good. and if you think about what the 10 year treasury is, it is it is counting can is an, building interview for growth in the coming years, not just the next few months. don't forget the global growth position is pretty weak. forecast will come down globally by about 1%. it is not as positive as it was a year ago. about what is not

good for global growth. and you have a 10 year treasury yield that yields a lot less than it did six months ago. let me ask the question everybody wants to know. reaffirm your trajectory of the u.s. 10 year yield. can we get under 2%? is 2.1% for the year end but it could easily go lower, tom. of howeally a function the market starts to build and expectations for rate cuts that might come in 2020. and for me, looking at bonds, if i think the rate cut is coming next year, i want to start buying bonds ahead of that. that is why we think the yields would be lower rather than higher by the year end. and wee: stay with us

will talk about the treasury option on wednesday. coming up next, we speak exclusively to the chairman of societe generale. we will talk about global growth and the banking sector. this is bloomberg. ♪

morning, everyone. bloomberg surveillance from silicon valley through much of the day. uber needs to get open and this will be the most interesting open. everyone at morgan stanley in the underwriters really worried about not doing a lyft. we will become wiser in the news chiefhen the over executive officer joins us. i assume that is post opening is a.

right now, it is a joy to have one of the finest gentleman of europe, someone who has great academic and financial credibility. generaleman of societe , but so much more than that. he joins us from italy this morning. chairman, wonderful to have you. i must point directly to the new impulse of negative interest rates in europe. what does it signal to see the down ever-year come weaker and ever more negative? it is the confirmation of an environment that we are living in of low interest rates for much longer than expected. and on the other side, a totally different type of volatility in the market compared to the past. low interest rates, low alltility, this is forcing

banks to revise their business model to adapt to ensure profitability. tom: to ensure profitability, what is the immediate urgency for the commercial banking system to finally clear itself of the challenges of the last 10 years? how urgent is it going to the summer of 2019? >> the job has been done. if it think about europe cleaning up the balance sheets and underperforming loans, this has been done quite defensively. cutting costs,ng investing in technology, this is an ongoing process. we have launched a new initiative in this respect. and in the capital markets, focusing on areas where we are more profitable.

selecting businesses where we are best at. it can do everything as a capital markets bank. the structuring is ongoing and the results, we have seen that during the first quarter. and it will be consolidated in the next two quarters. francine: good morning from london. i'm going to ask you an unfair question because i know you are expecting it. you are probably looking at consolidation. are you looking at commerzbank know that they are not marching with deutsche bank? to be frank, we are very much focused on our own plan and delivering on our plan. the first quarter results were in line with that, even surprising markets on the one ratio being above what is expected. issues will come at a later stage and like any bank, we're

looking at opportunities. is goingey in europe to create investors when you have consolidation. , what theticular regulator is going to do now that they are going to react. investors would like to have more consolidation, but when you look at the regulatory environment, just a very fragmented. we need more actions. and we have a lot of hope in the new commission that will start work during the summer. it will have a vision of europe which is a bit different from the past. really pushing national regulators to uniform and look for capital market unions which

is real and not only on paper. all the things that will develop over the coming years, we coming after that. i want to go back to the world economy in a second, but there are rumors about needing to raise capital. a lot of questions about what assets you will dispose of. how different will societe generale be in the next few months? i think we have announced, to refocus on the businesses we are good at, which we are the best. not raise capital. we're disposing a certain amount of assets that we've already done. we don't have any other big plans.

to ensure the equity that is in line with our cost of equity, we don't see any other capital issues. the last number was 11.7. the target is to be above 12% at the end of 2020. we're nearly there. we don't see major issues at this point. francine: stay with us and we will talk a little bit about opal trade. and of course, the eurozone. from the paris conference titled "the future of europe." hour, thein the next bank of america merrill lynch head of global strategy in the 6:00 a.m. and 11 a.m. new -- 11:00 a.m. london time. this is bloomberg. ♪

francine: tom at francine from london and new york. the world from the central bank perspective. we were talking about negative rates. our guests are still with us. we were talking about treasuries and talking about the fed. what is the most difficult decision a central bank today has to do? is it inflation? >> i was looking at a recent piece and it's becoming more

complicated. if you take the example of somewhere far away like australia, they've had to stop thinking about the potential impact of asset price deflation because of the pumping up of asset prices due to the various policies. it is a very difficult job. are trying to land on these inflation targets, you have so many forces at work at the same time. require aon would conference. conference i'm sure there are having in paris. what is the most difficult job of the ecb right now? how hard is it to set policy where you have a new ecb president by the end of the year and this trade war looming? the new president, we will see. that is later ron and i don't think it will change a lot on strategy.

the issue is that in europe, there is an excessive savings that is not fully exploited. , for instance, at the amount of debt that was issued by aaa countries, this that is going down. anmaking monetary policy in environment where fiscal policy is anues to be quite tight problem. interest rates cannot go up and inflation doesn't go up. the risk is that monetary policy has to bear all the burden. and what else can you do? .eep the interest rates low and eventually have to go back to qe or the other policies? francine: we talk about into the -- about mt. will that resurface?

will that happen? >> i don't think it will happen in europe. mt is an extension of qe. indefinite qe. and there will be a ratio of what kind of assets to buy because the kind of assets in europe are quite limited. mt requires much more active fiscal policy. in the room to maneuver in europe, there is a lot of room to maneuver for more active fiscal policy. i, we mustini smagh leave it there. this is bloomberg. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity.

♪ ♪ every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ bloomberg "surveillance." francine lacqua in london, i am tom keene in new york. the uber chief executive officer

will darken the door in the 12:00 hour, looking forward to that. there is a whole tone of do you do a lyft or not? hands, whos, weak will open, who will flip it, and where will the shares land? some of the key questions on uber. kailey: it is president trump's out his threat to raise tariffs on over $200 billion worth of chinese products. beijing vowed to retaliate it has not said how. this happened hours after trade talks resumed in washington. china is eroding the u.s. dominance in technology with an avalanche of patents, according

to patent filings over the last decade. control theill large portion of the nation's passions -- patents but the number is starting to decrease. shanahan spent 30 years as an executive at boeing. showed favoritism toward his former employer. new government reports show billions in dirty cash fueled the housing boom in vancouver. soared 70%ces have in the last five years. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. with, without

question the key story this morning, the chinese trade story. there are two tranches of tariffs, the present tariffs of some 200 billion dollars and the idea of a new fresh imposed set of 350 of how -- 350 billion of value. i want to focus now on the new tariffs threatened by the president. how are they different from the present 200 billion tariffs? were the goods today dominated by intermediate goods in the electronics chain. areas such as timber and wood furnishings, vinyl floor mats, and metal furniture, that kind of a product line. if mr. trump goes ahead with his threat to put a tariff onto the

remain there of goods -- remainder of goods, you are getting into consumer goods, clothing that people wear, toys the children play with. he would be switching the consumer sector more broadly. tom: it is a little "game of thrones" toy at your latest fast food place, there is a tariff on it. where does currency fit into this? usecan president xi currency that president trump not understand? enda: we are still waiting for the details. china said it would retaliate and they were pretty quick to say that, but we have had a briefing from the foreign ministry and no details on how they will respond. the currency, it has strengthened over the past year. the market has been pushing it down over the last few days.

how far can china allow it to weaken? some weakness will help exporters and offset the tariffs, but at what threshold does it cause greater pain and instability, trigger capital outflows, and because the government to spend their own funds? it is a tool they have to play carefully with. curran, thank you so much. we want to go to steven major of hsbc in london. this is the major chart. lawrence kudlow has this tattooed to his brain. up we go with the new capitalism of the 1990's in china, and a historic moment in 2005, the long-term appreciation of renminbi and it levels out. synthesizing your david bloom's

work on what china can do to soften the tariff effect by using currency. steven: that was mentioned in the previous segment that the currency markets move real-time, to factor in the terms of trade. the terms of trade may be changing or may not be. everyone is waiting to find out the real details. currency is naturally moving according to this. there is not an obvious direction from here. it is stuck in a range. i know people will want a big but the way or another, currency is reflecting the probabilities of this conflict. touches seven, as the psychological? what does it mean for the chinese economy? steven: it is just a number and there are so many forces to contend with.

psychologically, it is not likely to break out much of the current range. francine: talk about the auction of treasuries on wednesday. how much does that have to do with china? steven: people want to get the trade dispute into a discussion around fx and bonds. as the currency being weaponized? is the bond auction not being sponsored like usual? this is like business as usual for me. questions, allet the chinese stop buying? the marginal buyer of treasuries is domestic. china is small in that context. , the treasury market is efficiently pricing all this in, so it is the least of my worries. role-play orf you

look at the various scenarios that might occur, it is unlikely that this is serious. tom: this is so important to synthesize in lower economic growth, the moving parts of interest rates, and what they describe. bill gross always talked about financial repression. world,et a steven major does that identify financial repression for savers? steven: it is no longer a forecast. low for longer is something we are living with. tom: exactly. steven: maybe we should look at reversing the causalities. people want to look at low rates as a reason to buy risky assets. we see that every day. people say if the rates are low and the policy is accommodative, then we should buy risky assets. if you reverse it, you have an explanation for low yields.

risky assets are risky and one day might implode. this kind of thing seems to happen every now and then periodically. we have a gap risk in the volatility charts and this happened in december. this year, we have had a risk on rally of sorts and every now and again that corrects. is hong kong and shanghai banking organization with london -- i can ask you this with more confidence -- the negative rates , part of that is the x axis, the chronic nature of negative rates. how does that affect british banks, american banks, and em banks? banks makeyou know, money in all kinds of different ways and that is one sector. he avoided the question very well. tom: yes, he did. steven: if the curve is steep,

it presents opportunities. the european curve is very steep as a function of the rates. if you have two-year rates at -60 and positive rates of curve, you have a steep yield curve. that is something american banks would like. u.s. banks have been doing all right for a while, but the steep curve is in europe and that is good. it is carry trade opportunities. the conversation we had with james dimon in asia earlier this week, pushing against mr. major, perhaps the chief financial officer of commerzbank. he would like the rates to come up now. a lot more to talk about .ncluding that uber dash what will it close at. senator rick scott is in

florida, looking at the most interesting politics of his florida and washington. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance." theree group and tata say thyssenkrupp and tata proposehyssenkrupp will an ipo for its elevator operations. we are keeping an eye on some of the market movers with that news out in the last two to three minutes. tom: it is a small transaction, but there is all sorts of

indicators in these corporate stores coming out about what the strategies will be into 2 -- 2020. steven major with us, with hsbc. if we could pivot to the united states, what a polarity we saw earlier this week with one guest calling for a rate cut and a slowing american economy, and another guest next to him calling for rate stability and rising rates over time. where is your shop on this call? steven: i can imagine the guy who was calling for rate hikes is gradually moving to unchanged, and the guy previously unchanged is talking about rate cuts. for us, the rate hikes probably .ent too far already the next move is probably downwards and at his next year. havee changed my view --

not really changed my view. our forecast has been study. central banks have recognized that they are kind of trapped. the example i gave earlier of australia is one that you could use all over the world. you have this threat of asset price deflation. in many ways, we have the wrong kind of debt in the wrong places at the wrong time, and that makes it difficult to normalize rates in the context of previous cycles. the way people are looking at timeseries, trying to guess without thetes go, impact of qed becoming q t -- qe becoming qt -- and the debt. tom: on the value of assets, can you say that assets are now as a general statement overvalued and

inflated? steven: if you start at the top end of the highest quality collateral, talking about treasuries, treasuries are not expensive. they are priced to a low policy rate. at the moment, if you have 2.4%, 2.5% on tens, it is not rich but unknown -- in line with policy rate. i would argue that as time goes on, treasuries look cheap. i cannot say the same about credit because spreads have been tightening all year, partly because they were too wide at the beginning of the year after what happened in q4 2018. we were not paid for the incremental few basis points you get for going into risky triple b corporate's, for example. that is a big challenge. i think that is the right thing to look at reversing the

causalities. taking low case of for longer and saying it is risk on. it is worrying about we are low for longer. francine: why are we? steven: we cannot afford to put rates up. it is a completely different picture. to use the low for longer picture as a reason to buy risky assets is the wrong way around. francine: is the market expectation of a cut, which was 50/50 for september, christ right? -- priced right? steven: once we have some confidence in june from the fed, there might be more information about the targeting. by september, we should have some clarity on what things look like for 2020, and our out view is rates will probably come down. it is probably too early to think about rate cuts into

thousand 19, but the bond market 2019,paring for 2020 -- but the bond market is preparing for 2020. francine: when jay powell took power, he wanted to speak simply so there was more clarity. steven: that was a good point, and it is fair to say we have had powerful speeches from others that have been pointing to the undershirt on inflation -- under shoot on inflation and the anchoring. maybe the fed wants to give a more balanced view that they are staying unchanged. it is a challenge because it seems to me the longer term structural view is down, but the near-term view is unchanged. francine: steven major of hsbc joining us. the uber chief executive joins bloomberg live after the

ridesharing company starts trading at the new york stock yorknge, at 12:30 p.m. new , 5:30 p.m. london. this is bloomberg. ♪

♪ this is bloomberg

"surveillance." let's get the bloomberg business flash. anheuser-busch filed for an ipo for its asia unit. they plan to sell a stake in a deal that could value the business up to $70 billion. it would reduce debt and pursue acquisitions. the company has cornered the premium beer market in china. atst quarter earnings british airways' parent fell 60% because of a fair war. ceo expects full-year profits to be flat. lowes of aig hit a yesterday. plunging.s the ceo is stepping down and leaving the board. the first quarter profit is short of estimates. that is the bloomberg business

flash. francine: let's talk uber. they have sold 180 million shares, and the highly them aated ipo, giving market valuation of $75.5 billion. even at the low end of the price uber is set to be one of the biggest on the exchange since alibaba. uber, howook at telling is it that they are at the lower price range, and does this have to do with softbank? they are tied in with uber. matt: it is more about the realities of demand in the marketplace and where people are prepared to pay for this asset. it is not making money so you

are taking upon some big future growth. they did not want the share price to come under any pressure to the aftermarket so they will have to pitch it where there is high quality demand for the shares. francine: when will they make money? matt: good question. it took amazon a long time to make money but this could be a similar story. extending into a range of complementary areas like uber eats which they already do, scooters, freight, these things could take time to grow. in the prospectus, they warned we may never make a profit. tom: this beast opens for trading today. who will be selling and who will be buying shares? matt: i guess they are hoping that at $45 there will not be too many people that end up with

allocation than they expected or wanted, and they will be hoping they have left institutional shareholders disappointed on how much stock they got, and they will be looking to pick that up to get to the allocations they were hoping for. there is perhaps private investments that believe in the long-term story and want to get in on the action. tom: one of the acclaimed tech barometers worldwide is the matthew block some -- bloxome arrogance meter. have these guys been humbled by lyft? matt: i think this is more the humbling and, -- end, if they would see this as a champagne moment. francine: i just wanted to see how they stop others from entering this market. they are contending with lyft

but other people want to get into the business. can you start a disruptor to uber tomorrow? matt: due to the internet, yes, you can. i have a big brand and that starts to count for something. that marketng to now has to see something quite different -- do something quite different to get noticed. it is tough, given that market is so well-established. the internet, you can build an app and in a few years, you could have a billion-dollar business. tom: pray that lyft comes to london, although the cap service in london is the best in the world. later today, a chit chat, most interesting, the chief executive offer of uber. he will know the bid and the ask , and we will know the conversation in the 12:00 hour. please stay with us. this is bloomberg.

woo comingming up -- up. ♪

♪ tom: this morning, how will

china respond to new trump tariffs? will there be tariffs on whiskey or iphones? depreciate the renminbi. what volatility? the vix crisis over. we are not going to crater. enough about uber. silicon valley and morgan stanley will take a victory lap. call lyft. this is bloomberg "surveillance," live from world headquarters in new york. with me is francine lacqua in london. uber has no competition in london except for the fabulous taxis. francine: there is also an app sponsored by volkswagen. you see a lot of the established carmakers trying to get in, because evaluations from lyft

and mover. it is all -- uber. it is all about pricing. it is difficult to compete on pricing at the moment. we do not have lyft yet. the interview of the day at some point. emily speaks with the uber chief executive. startsesharing company trading at the new york stock exchange. tom: we will see the dynamics at that moment. kailey: president trump fired the latest shot in the trade war with china and carried out his threat to raise tariffs on more than $200 billion of chinese products. beijing is vowing to retaliate. there was little progress on trade negotiations. they resume this morning. onres of uber begin trading

the stock exchange after the likely largest ipo of the year. uber is trying to avoid the which --fered by lyft, we will talk with the uber ceo later at 12:30 new york time. the trumplearned administration will expand the number of countries labeled as currency manipulator's. 12 countries were listed and the last report. the one this month names 20 nations. president nicolas maduro is exacting revenge for last week's uprising, cracking down on those he believes responsible. called his has supporters back into the streets

, but they run a risk of being rounded up. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. tom: equities, bonds, currencies, commodities, i was going to do one screen. euro up, vix under 20. the vix with all the latest volatility, back under 20. , -0.62.an two-year ugly francine: it is interesting to look at vix. it is also interesting to see that chinese state backed funds were active in buying domestic equities, which explains the fact that chinese equities ended on a high. treasuries study after the 10 year yields dipped on wednesday

for the first inversion since march. a look at inversion m renminbi desk and renminbi. -- and renminbi. tom: we have two guests to get you into your weekend. we are thrilled to bring you this morning david woo of bank of america merrill lynch. he has a visceral understanding of asia and getting the call right, including being modestly accurate on the trump election. well,schenker joins us as wired in as best he can to washington. what will you look for from washington? do the chinese respond now or wait to save face when they get home? marty: there was a suggestion the chinese would retaliate immediately. that did not happen. there is speculation they will

wait until the end of the talks today before announcing how they retaliate, but it is coming. tom: take the synthesis of bank of america merrill lynch, and there is a tranche of tariffs, 200 value, and a fresh tranche, a new set of 350 billion. what is the difference between tariffs now and potential tariffs to come? david: i think the important data i'm trying to remember is november 22. trump met with liu he he it went so well that stayed an extra day. what is important is not watching what happens today but

sunday into monday. generally speaking, i am optimistic for three reasons. both xi and trump have invested so much political capital that it will pay a heavy political crisis. they want to sell this deal to their constituents at home as tough. that is why they are playing hard to get. what are the chances this will spiral out of control? this has been going on for 18 months. by now, they know each other intimately well. if they have not made a mistake until now, i do not expect them to do that. francine: china provides 92% of bicycles in the u.s. how does that place with the trump base? marty: i don't know that the trump base uses bicycles all that much. francine: fair. marty: it is interesting that the markets have taken this

quite calmly the last few days, notwithstanding as tom pointed out, markets are essentially unchanged from six months ago. failure in these talks immediately will cost donald trump anything with his base. many democrats support the tough stand he is taking with china. is armed witha some powerful market weapons, including renminbi, devaluation, and treasuries. will they use that? david: certainly. if there is no deal in the next they go four days, if back with nothing to show for, the chinese will have no choice but to retaliate. given that they do not import quite as much for the u.s., it will have more limited implications.

this is why the rmb is interested in trade. i think rmb has limited upside because the u.s. is only insisting on stability, however if there is no deal, i think the chinese will probably likely resort to rmb weakness. tom: give me a percent. david: 2%, 3% move. tom: we are advantage by a recapitulation of trumps theology -- trump's theology in the post this morning. , this essay is extraordinary in its clarity. a temporary truce in a year-long war with china, a fundamental clash between two radically different economic models. the best u.s. result is a detailed document. best communist result is to run out the clock on the trump

administration, going on to call it such grand theft. this is history in real time and the world is a house divided -- half slave, half free. steve bannon has been beating the drum on this issue for the last two years. bannon thinks any deal they have with china is just a temporary pause in a long-term epic battle between the chinese and u.s. for domination. he thinks this is just one moment in time. tom: i feel like a total amateur. i will say this with immense respect for you, david woo, and scarlet fu. there is a visceral understanding you have of how the chinese will respond to what mr. bannon wrote. how do they respond?

david: it is interesting. last week, i must have gotten 10 different emails from asia-based clients including china investors, wondering how to make sense of the steve bannon article early in the week when he sounded clearly nationalistic. people in asia are taking steve bannon seriously and they are worried that people who were traditional supporters of trump are moving to the right. i am much less concerned because i think the u.s. political dynamics are evolving in such a way that trump has to become more moderate. especially with biden running, trump needs to win over the moderate democrats and the independents. they will be much more impressed with him striking a deal with china rather than continuing the trade war. francine: david woo stays with us. thank you, marty schenker,

bloomberg chief executive -- uber had a conservative approach to their initial public offering. market investors will decide if that is a good idea. that interview at 5:30 p.m. in london, 12:30 p.m. in new york. ♪

♪ francine: this is bloomberg "surveillance," tom and francine from london and new york. inflation data out of the u.s. later on the day that the u.s. hikes tariffs on $200 billion worth of chinese goods. consumers may feel the impact from the increase and it could

push businesses to push higher costs to consumers. i thought it was incredible when you looked at that treasury option, linked to what china was doing with treasury buying. it was the worst one in 10 years. does that give us anything or is that about what the fed does next? david: there is something to do that, no doubt. the pace of accumulations of reserves for china has slowed dramatically. given how strong the dollar has been, we have been seeing persistent dollars selling from reserve managers. i am not pointing at china in particular, but our proprietary flows will indicate why the euro selloff has not been sustained, because we have seen central banks into the dollar rally. i do not know to what extent this is a big story.

unfortunately, the investor community, particularly the fixed income market continues to be gripped by the sense that recession is around the corner. the market is still pricing in two cuts from the fed over the next two years. the market has been in some sense, toasts by the -- comatose by the fed. the market is in super dependency mode and has not been pricing in much opportunity for a u.s.-china trade deal. deal, the most straightforward trade in the world is higher u.s. rates. francine: i have a great chart looking at u.s. core cpi, the fact that it cooled down. is the fed going to cut or not? david: personally, i think not. , the vice chair

of the fed, he was the first ever international economist to be appointed in such a senior position at the fed, and that is great. richard knows there is a world economy outside the u.s. and how the rest of the world can affect u.s.. to believeina have that uncertainty will weigh on him. last year he was more dovish. i think this will be an important thing. if we get a deal, there is no reason for the fed to not continue to sound dovish. is: it is friday and woo throwing around his phd from columbia. stuff matter anymore? if the vice-chairman was sitting here, he would say he has been

humbled by the certitude of clarida girt learner, the xyz dynamic of guys like you. does it work in the million we are in today? david: probably not, and that is what we found out in the last six months, the fed does not have any greater visibility for the outlook of the u.s. economy or world economy then my sister. tom: the technology overlay today is incalculable. good or bad, we don't know. completed a road trip across the u.s. seeing mostly corporate clients. you sit in the boardroom with some of the biggest companies in the world tell you they are not worried about economic risk. ,here concern is political risk the u.s.-china trade deal, brexit, 2020 elections.

economists are not trained to forecast political risk and that is what makes the market so fascinating. tom: we are thrilled bank of america let david woo be here today, this historic day. a lot of news flow. we are waiting to see what a chinese response will be. coming up, this guy is really interesting, twisted. ands with alliancebernstein is more than opinionated. he will be in the 1:00 p.m. our on "real yield." jon ferro scheduled to attend. this is bloomberg. ♪

♪ this is bloomberg "surveillance." surprised investors with a better than expected sales forecast. they estimate sales will rise as much as 2% this year, up from previous guidance. for cut prices on cameras wider appeal to fend off rivals. -- u.s. buying more oil 13 millionent india barrels of crude in march. india is the second largest buyer of u.s. oil. --many's teasing group

thyssenkrupp well abandon plans to spit -- split in two. shares are trading at their lowest levels since 2003. that is the bloomberg business flash. tom: we are getting ready for uneventful friday reading into the weekend, and we are thrilled to bring you david woo of bank of america merrill lynch. right now, i want to talk about my number one x axis thing, the chronic nature of the negative interest rate pricing in europe. you were way out front on this. it is not only that we are negative, but the timeline of negative. discuss what it means that it has been so long. david: i think the big thing this year, ironically, for marx

-- markets has been about the japanification. the best way to express that is to sell breakeven and real yields will remain negative for a long time. tom: how do they clear the system? goodfriendmarvin will suggest they need a higher amplitude to clear out the system. will that work? david: that is not the big story. the big story is about why plungecontinues to relative to the u.s. and china that are seeing more moderate slowdowns. brexit. i cannot oh-fer emphasize. desh over emphasize. -- over emphasize. it is a perfect excuse to sit on our hands. one ceo was telling me his isndmother of 92 years old

calling every day to get an update on brexit. you are talking about the deadline to brexit was supposed to be the end of march. francine: let's get his grandmother a bloomberg terminal, with bloomberg tv so she can keep up-to-date with brexit. this is soft indicators. in europe, soft indicators are going down, but the underlying strength of the economy is not as bad as people make it out. what lessons can we learn from japan so we do not make the same mistakes? david: the big lesson from japan -- and i wrote about this when i was at the imf -- when the banks are not healthy, the rest of the economy will be unhealthy. the big difference between the u.s. and european economies are the u.s. corporate bond market is much more developed. after the 2008 crisis, borrowers

that were struggling to borrow from banks turned to the corporate bond market. europe is much more developed and you have large enterprises that are dependent on the bank. -- thee banks are sick european banks have not completely woken up to that reality. trying to punish the banks, that is a major issue. tom: david woo with us on this historic day. and john, woo mickelthwait. stacey cunningham of the new york stock exchange. this is bloomberg. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪

every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. ♪ francine: this is bloomberg "surveillance," tom and francine from london and new york. the interview of the day with

the hoover chief executive. the ride -- uber chief executive. they deliberately priced at the lower range after seeing what lyft happened. tom: the interview of the day is coming up in one minute 12 seconds. francine: the corporate interview of the day i meant, of course. here is kailey leinz. kailey: it is president trump's most dramatic step in trying to get trade concessions from china , carrying out his threat to raise tariffs on $200 billion of chinese products. beijing vowed to retaliate. this happened hours after negotiations resumed in washington. progress little reported and talks resumed today. president trump will nominate patrick shanahan to get the job permanently. shanahan spent 30 years as an

executive at boeing. generalagon inspector cleared him of allegations of showing favor to his former employer. bernie sanders and alexandria ocasio-cortez are calling for -- should not be higher than 15%. they want post offices to offer low-cost basic financial services such as checking and savings accounts. history,irst time in the finalists of the two biggest european clubs hail from england. ken theresa may learn anything from their success? when it looks like you're european opposition has you beat, you can still succeed if you stay together. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. leinz.ley this is bloomberg. tom: you are telling me.

the producers in london are killing me. why don't you bring in our esteemed guest and he can explain why the premier league is so superior? francine: the fact that theresa may comes out and says, i can make a liverpool style come back, she has been taken to toll. how dare she compare herself to liverpool? one man understands football more than anyone -- at least more than tom and i, john mickelthwait. we will get to him in a second. our top story is the u.s. hiking tariffs on more than $200 billion of chinese goods, the most dramatic step from president trump's push to extract trade concessions. this has roiled financial markets and cast a shadow. china vowed to retaliate.

us. mickelthwait is with great to have you. understand about how china is dealing with this internally? john: that is a brilliant question. it is hard, because china is sitting and waiting, and they are stuck in this perpetual thing about whether this is yet another bit of real estate negotiation when you throw a tantrum at the last minute, or whether it is something bigger. i am of the school the trump has taken a fundamental decision to push the chinese back. he has taken that decision partly for personal reasons. he has been a protectionist. partly, he senses politically all the attacks that will come on him from china will not, you have been to tough but you have been too nice desh too tough -- too tough but you have been too

nice. notcine: the markets are reacting because they are frozen and do not know how to take this, interpret this. if you assume that both sides are doing the right thing, at the end of the day, they will choose a win-win situation as opposed to a lose lose situation. tweet tweet desh trump's strategy, tweet was a if we do not come to a deal i will swallow a poison pill and you will swallow a poison pill. are you prepared? i think the reality is the only reason why after dragging their feet for most of 2018desh and 2019, they are willing desh 2018

and 2019, they are willing to make concessions. i think this is the most important thing. in the last 10 years, every time the chinese economy has a pickup, they flood the system with credit. they have not done that because xi jinping is presumably trying to extend his terms. he can no longer ignore the long-term consequences of short-term stimulus. trump israde deal with preferable to doing a crest -- credit expansion. .ohn: i agree i began thinking i would disagree with david saying there is an imbalance, and the imbalance is tougher on china. trump somewhere does understand that. from his point of view, he thinks he has a negotiating partner he wants to push and get

more concessions from. he stands quite a good chance of getting that so i think he will keep going. there is a longer-term thing behind this over the past year, the pens on where you measure it. america -- depends on where you measure it. america has become much more fed up with china. tom: let's take it back to the founding volume. jonathan spence is one volume out of yale university, 20, 30 years ago, we had to read it at gunpoint. of the an appendix making of modern china. is this the china we knew about years ago? john: it has changed. he described it as the country that wanted to come back, wanted to reestablish itself because that is the way the chinese look at it. it is not a question of them rising. it is a question of them

recovering a position they had a long time. in india, you get the same sensation. this time, it is a very different economy trying to make the transition to services, and that is different. he has to balance a number of things. basically, if you are a nationalist leader like xi jinping, you have to be careful where you are seen giving concessions. tom: you look at jonathan spence and the reach of china. grossly underestimate president xi's fertility. david: i think you are exactly right. if you look at jonathan spence's books, the 21st century is a battle between the reformers and status quo. somebody told me this week in china that there is an important client -- china, an important

client, the first father of economic reform may turn out to be -- second father of economic reform may turn out to be donald trump. trump is not only forcing them into doing things they probably should have been done 20 years imf wasemember the always a fig leaf for governments to say, we are doing this because we are being forced. trump is putting that pressure on china and ultimately, i think china will be the biggest beneficiary of this deal with trump. francine: john? john: i agree. the idea of christine lagarde morphing into donald trump is an interesting thing. authoritarian regimes, if you look through history, have an interesting reaction with public opinion.

public opinion does not matter a long time and suddenly it matters much more than democratic ones. the odds are much greater you only have to -- much greater -- you only have to look through the history of china -- the worst that could happen for donald trump as he retires and lives on a golf course in new jersey. xi jinping will look back on history and should be slightly scared. there is a sense of the pressure, a rising threat in china. francine: what does it tell us about how the chinese will react in the more immediate term? they have a huge financial arsenals with treasuries and renminbi, or will they round the corners? john: china's original strategy was they would love to get a deal and once they had a deal, they would keep doing this stuff with intellectual-property and stuff they got used to doing. they met a fundamental

miscalculation when they thought it was just about donald, and this is not true. it goes deeper, to american business leaders and to voters. there is no sign of american voters punishing trump for this. francine: we also have a viewer question, and we urge all of our viewers to write in using the bloomberg terminal app. button thatk the says ask a question. if we do not get a deal, while much higher tariffs lead to inflation and force the fed to hike rates, therefore rates will be higher on a deal or no deal? does it pushback inflation or increase inflation? david: that is a good question. it will be a one-shot inflation. tariff means a one-shot inflation as opposed to

sustainable inflation, so the fed will likely see that as a negative supply shock. tom: come on, david. a soybean farmer in iowa is not chairman powell. for him, it is not a one-off price change. david: it is not like the tariff will go up every single month. there will not be sustainable runaway inflation. we keep saying trump is unreasonable. what lesson can we learn from the nafta negotiations? was the1 last year deadline to do a deal with trudeau so that the new nafta does not die. the two men were not even talking for two months and there was no deal six hours into the thing. trump, three hours from midnight trump told kushner to send an email to trudeau about his redline. three hours later, they had a

deal. if you think about where things matter down the stretch, he has been willing to make concessions to close the deal. tom: we will look for that through friday and into the weekend to see if we get the trump of dr. woo. david woontinue with and john mickelthwait. rick scott of florida will not be asked about cotton ham liverpool. asked.ckelthwait will be man city, english football. ♪

"surveillance," live worldwide.

we are thrilled to bring you david woo and john mickelthwait, just back from india, in london in our studios was francine. single best chart, this is exceptionally important, pointed out to me by young ferro. ajix.s a dutch stock by up we go in our single best chart, comes down. we need a prediction now to get to june 1, liverpool or the tota s? john: i think liverpool. this program is becoming an elongated tom keene and football. if: i am calling the spurs we get kenneth branagh on to talk about this important match.

he is a giant fan. francine: i am going to redirect the conversation and go back to global trade. youd woo, let me come to with a question from another viewer. keep sending those questions. this person is writing in asking -- if there is a deal between xi and trump, what will china have had to give the u.s. to get it through? think the main crux -- one second. trump has made two important concessions in the last month. he has backed off on cyber theft and subsidies, so china won on those fronts. the u.s. wants a deal on i.t. ip.ink china also -- i think china also wants a deal

on ip. the biggest infrastructure that will be built as 5g, which will change our lives fundamentally. contrast,ly put in intel and qualcomm control only 15%. china has a huge incentive doing a deal on ip to make sure the potential hundreds of billions of dollars of royalties to zteei and cte will be -- will be honored. i will be particularly focused on this. francine: let me bring in john for a final important question. do we underestimate the impact of a fall blown trade war? john: the previous question when we were asked about the fed, investors still have this angle,

looking at what the effect on interest rates will be in the short-term. a trade war is a trade war and that is an enormous thing. it will have an effect on markets everywhere if it happens, and there is a rather big imbalance between how the markets are looking at this, even rallying this morning, and the way that people who follow politics are looking at it. most people still think there will be a deal, but the scale is much bigger about the question thehether powell shifts interest rate. it is a bigger deal than that. this will affect the whole economy. tom: john mickelthwait, editor-in-chief of bloomberg, and we continue with david woo. markets,around the market response, and the uber chief executive officer, we will

do that later. this is bloomberg. ♪

♪ "surveillance." francine lacqua in london, tom

keene in new york. there is a time interviews are frozen in time. when i spoke to david kirkpatrick. we are thrilled he had time to be with us today. the uber effect, how would the book be written? david: it is one of those yen and yang stories. uber the next -- is uber the next great story or is it a period when we have gone haywire for silicon valley to do things that should not have done? we all vendor fit -- benefit tremendously from uber yet we might not want to own the stock. positive ebit.of

and free cash flow. guys like you are out much farther than that. where are you when they go to -- when they tap and go cash positive? david: i am not sure they will go cash positive. tom: where will they go? david: raising prices is the only way. self driving cars are too far out for investors to believe that will save the company from its massive, endless losses. the only way is raising prices. they have loyal customers and a spectacular brand. will this be the next facebook? i do not think it is conceivable. francine: is it the next amazon? david: that is what they say but i don't see it that way. it might be more like amazon in terms of the profit level they get. when i look at this idea, in a way you could call it a

strategic win for lyft because by going public first, their willst fear is that uber outwork them in the united states markets. they could not have done anything more effectively to handicap uber then to have performed so poorly in their ipo. francine: they have uber eats. will they go into other stuff? david: they will go into lots of stuff. that is their promise. they will throw a lot of things at the wall. how many things can you --nsport and match the mark interest to facebook? tom: within a duopoly if they raise price, does the unit dynamics change or are they a monopoly? david: they are a monopoly when you think of cap based transport

-- app based transportation systems. taxis still exist in a lot of cities. uber and lyft took off because they are cheaper and more convenient. uber has been fantastic with software. they will do great software, but is that enough? francine: david kirkpatrick. we have five tweets from president talking about china, saying the talks continue in a very congenial matter. he says there is no need to rush as tariffs are now being paid to the u.s. by china. , thelks about the process second tweet talks about agricultural products. this is almost like an earnings release from one of the big banks to see if there is news we need to keep people abreast of. tom: this is a five tweet string

or a thread. substantial statement from the president of the united states, much more than the usual casual morning tweet. we will have much more on that analysis on bloomberg radio with jonathan ferro, david woo, and others. david kirkpatrick, you have not been up before 9:00 a.m. since when? david: i love you so much, i did it. tom: kirkpatrick on radio with us as well on the uber effect. more on that at 12:00 noon today. this is bloomberg. ♪

u.s. tariffs go up to

25% on 200 billion dollars of chinese goods. last-minute trade talks go nowhere, but president trump says it is all congenial. markets have a mixed reaction at the end of a turbulent reeked. -- turbulent week. and uber goes public in a turbulent market with a modest price that still makes it one of the biggest ipo's in u.s. history. "elcome to "bloomberg daybreak on this busy friday. , here with lisa abramowicz. alix steel is on assignment. president trump says in tweets we are getting money in the u.s. treasury, so he likes the tariffs. it is not quite so clear where the money is coming from. it is coming from u.s. consums