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. consumers and producers. lisa: he was saying they would

bring far more wealth into our country then even a nominal deal. six hours earlier, he said republicans need to stick together. clearly there are some who are pushing back against these that represent farming states. we will be discussing that coming up. david: those of the groups he has to keep with them, and they are getting pretty nervous. lisa: as you watch these tweets come, you can see futures going a little deeper into the red ahead of the u.s. open. markets havepart, shrugged off additional tariffs. this has raised concern, the concept of patience and how much more wealth these tariffs will bring to the united states, not talking like someone who is ready to remove them anytime soon. we will continue to stick on this. this is the major story of this friday. sort of interesting, given the fact that last night we were talking about jobs. let's take a look at the

markets' response. the s&p futures just a bit down, 3/10 of 1%. they were off a little less ahead of these tweets. crude gaining a bit. one of the main proxies for rising over a trade war a bit, and 10-year gilts rising just a basis point. david: we are joined by rachel evans and michael mckee. it really strikes me that in president trump's tweets this morning, he's really going through his economic theory over whether this could be good for farmers and the u.s. treasury. michael: it is a theory held widely by one person. no one else agrees with donald trump. maybe peter navarro. risenrevenue has

dramatically. the problem is there have been a number of studies released in the last couple of weeks by the federal reserve and others that show that tariffs are being paid by american consumers and companies, which is exactly what you would expect. one study by the new york fed suggests it is costing the economy $1.4 billion a month, and those are being paid by the people who import the stuff, not the people who sell the stuff. david: a lot of economists say this is effectively a tax raise. let's talk about exactly what the goods are. let's put up a chart of some of the goods that now have to any 5% tariffs -- now have 25% tariffs. michael: the problem is they had been absorbing the 15% tariffs. they probably can't do that at 25%.

they will be figuring out who is going to lose money on this and who is going to be in trouble. you're talking about goods facing possible tariffs. 320 $5 additional billion in tariffs that might not hit until august. that is when it would really hit the consumer. you look at cell phones and things like that but have been exhibited so far. lisa: and of course, there is the question of how kind i will retaliate with respect to these tariffs. meanwhile, we do have market response right now. certainly we have seen withdrawals from global stocks, the biggest week of withdrawals in 2019. how much is this pricing in at this point? are we had a point where people are pricing in a full-blown break in these trade talks, or just a little bit of an increased chance of that? rachel: that is a great

question. that is what everyone is trying to digest over the last week. it turned out to be they really did mean to bring in these tariffs. it is interesting we are not seeing a huge selloff. i think that relates to the fact that we saw a massive selloff earlier in the week when people digested it. it doesn't hurt that china was encouraged to step in later in the trading day. lisa: encouraged. [laughter] rachel: i think that buoyed prices in asia, and to a lesser extent in europe. we haven't seen a huge impact in etf land on specific u.s. exposed stocks. we have been seeing it on chinese stocks. fx i lost its biggest outflow this week since december 2016. lisa: we did get the plunge patrol stepping in with the state owned enterprises in china buying the stocks, but where are

you looking to determine where the most fear, potentially the biggest hit from some sort of trade war would be? rachel: we are looking across industrials. anything that's got exposure to china is an interesting play here. boeing is always a bellwether in these situations. i'm looking at the impact across earnings. an estimate out from bloomberg intelligence suggest these extra tariffs could have a 23 basis point hit on margins. it looks like we are just going to squeak into positive territory this quarter. next quarter we are looking at negative, and it is looking pretty anemic. any positive we were going to see in earnings coming through starts to fade away. then you look at the inflation perspective and it starts to look like a pretty sketchy picture for growth going forward. and you've got moody's saying recession in 2020.

david: let's go to the third story. uber went out and sold its stock yesterday in the middle of this market turmoil, and actually did pretty well. it was at the bottom of the range, but is still going to be one of the top 10 in the united states. what does this say about the marketplace? michael: imichael: didn't buy any, unfortunately. [laughter] michael: it is both a story of the strength of the marketplace and the appetite for tech. they looked at what happened to lyft. lyft got hammered on its first day. they don't want that. they are hoping they will have a lot of institutional investors that will hold this for a long time, believing in the uber strategy. are you willing to put up with losses forever because you think the strategy is good? it works for amazon. will it work for uber? to rachely thanks

evans and michael mckee. we will speak with over's -- with uber's ceo at 12:30 today here in new york. you can find all of the charts we just used and more i running gtv -- by running gtv on your terminal. coming up, no need to rush. we discuss what trade talks with china mean for markets with tfolioted investors' por manager. this is bloomberg. ♪ rg. ♪

david: overnight, the u.s. imposed new tariffs on chinese imports. president trump tweets this morning that he is in no particular big rush to come to

an agreement because all of those tariffs are coming into the u.s. treasury. overnight, we also heard from the chinese government they are considering countermeasures. chiefcome bloomberg's asia correspondent reporting from hong kong. what did we learn? reporter: they really left us guessing. we did not get any details other than being told to stay tuned. we have seen previous tariffs where they held back for a little while until the calibrated things. the view is perhaps they are waiting to see how talks go in washington today between the vice premier and his u.s. counterparts. when you see those tweets, i think the message from the westside is very clear -- from the u.s. side is clear. it doesn't sound like a deal is imminent. lisa: we've been reading stories about the types of measures that

china could take because they don't import enough from the united states to exactly match tariffs. what are the other measures that china might be thinking about at this point? enda: they can't match the u.s. so thefor dollar, obvious one would be stopping outright purchases of u.s. goods, in particular the farm goods. we had a bit of that last year with the soybean story. china could easily pull that lever again, but also make business much more complicated for american companies operating in china. they could slow down investment approval, ramp-up inspections, renege on whatever promises they've made so far to open up the economy to foreign competition. then we get into the world of financial markets. if you put treasuries to one side for the moment, they could probably let the yuan soften a little bit, but the question is by how much before that starts

to trigger broader instability. they have some options up their sleeve, but it certainly can't match the u.s. dollar for dollar on the terror front -- on the terrace front -- on the tariff front. david: what about the yuan? it seems to have strengthened. equitiestainly on the side, you are absolutely right. our colleagues were reporting stock team did come into support stock prices. we have seen that before with episodes of severe volatility. but the yuan is still an unknown and all of this. it is up over the past year despite having a pretty horrid week. the currency could start to weaken over coming weeks and months, and china would be happy to let it soften a bit, but then

the question becomes how far. will they let it go past to the seven mark against the dollar? that is a big psychological thel where you could see capital flows story start to emerge again. lisa: i want to talk about the whole idea of buy the news, sell the rumor. it is three weeks before the tariffs get implement it. do you see anything of domestic -- anything optimistic coming trump china or president that we are going to get some sort of truce here? enda: i've seen that line as well. investors are still saying that the three weeks that it will take goods to get to the u.s. leaving china today could be a window to get a deal done, but the mood music isn't pointing that way. china would have sent their vice premier to

washington with a material offer. that clearly hasn't worked. it is quite a rebuff for china to have their vice premier in washington at a time when tariffs have gone up and this latest stream of comments from president trump. i would say we are looking at something of a recalibration on the china side. we are not yet at the point where negotiations have fallen through, but you'd have to say the next few hours in washington will be pretty critical to determine where the phase goes. can these talks continue, or are we at something of a rupture point? lisa: and the karen, -- enda curran, thank you so much for that update. markets going further in the red as they digest the president's twitter post. it becomes clear that he views the tariffs as a positive for the u.s. economy. >> i think he's projecting

strength with those comments, or at least trying to. clearly it looked as though there was a deal to be had. the chinese, at the last minute, either through trump's trade tweets or some comments from biden, decided to play hardball and get some additional concessions. interest in the u.s.'s to make this play out over a longer period of time. let china feel it for a little bit, see how their economy responds, and maybe they come back to the table with a little more humility. in terms of what is priced into the market, we never subscribed to the idea that there was a whole lot priced in. our idea was that this market rally was primarily fueled by the about-face at the fed. when you look at where we are today compared to december, you had a trade war december, and aggressive fed, and interior rating acro economic

fundamentals here and abroad. we don't think you have a recipe for retesting what we saw in december. you may have kept the upside, but we don't have major downside. david: what if they destabilize again? if we have a protracted dispute over trade, you could have global growth issues we thought maybe were stabilizing. that could reverse. steve: that is going to have a bigger effect probably in europe and asia to start, and it probably does keep you more range bound. our view is that the markets were in a positioned where, with the about-face from central banks and trade progress, we could move significantly higher between now and the end of the year. that progress has certainly slowed, and there's more opportunities for volatility until we can get some resolution. lisa: your take is actually quite contrarian. a lot of people i've spoken with think there is a lot of downside in markets right now if there is

some sort of dissolution of trade negotiations. you think there isn't. what gives you confidence that right now, a lack of some sort of trade deal and the potential for that to crimp future expectations for corporate profitability won't affect markets? it assumes the setback you have today leads to a dissolution of all talks, and then you are entering into a long, protracted trade war between now and the end of time. i don't think you jump to that conclusion to start. i think you are dealing with a very delicate negotiation here. you have an industrial revolution of technologies, ai, robotics, 5g. we are the incumbent power. they are a rising power. we are negotiating with the terms of peace are going to be. we are going to work as come mentoring economies or trying to crush each other. that doesn't get solved over tea. it takes time, and this is part of that dance. david: time is one thing.

substance is another. is there a world you can see in which both sides can win on this, or is this a zero-sum game? the chinese point of view is you are trying to keep us from advancing on technology, which is our lifeblood. is this a zero-sum game? steve: i don't get is. when you go back to the last industrial revolution between the u.s. and u.k., both sides can work. we have the technological lead. we want to benefit from that. they are a complement three economy. if there are fear rules of trade, we can both benefit. we are not going to give up that advantage. stance.not unreasonable from the chinese perspective, i think there is a lack of trust, so we will see how this plays out. i don't think they can out weight the president because i don't think the left is going to be any more generous. david: i think the president would agree with you. races ap, uber

little over $8 billion in its initial public offering. more on that next. this is bloomberg. ♪

♪ uber sold eight put $1 billion of his shares yesterday, towards the lower and of its range. mandeep singh is here with us. is that a smart thing given the market place? deep: lyft is now trading at five times, trailing five month sales. on the food delivery side, we have grubhub. come in about 6.5 times. what it tells me is probably there is a premium to their

autonomous end, but it seems reasonable. lisa: it priced below the private valuation in its last round of private funding. lyft shares are down nearly 2% ahead of the open in futures trading. i am wondering what this says about private valuations, and that some of the other -- and about some of the other tech ipos coming later this year's. mandeep: you have to remember this is a late stage ipo. they have over $7 billion in revenue already. it is not going to grow at 100% like other ipos. in this case, the growth will be more around when he 5%, and i hope they keep up with that -- around 25%, and i hope they keep up with that. david: there are no earnings. with amazon, we always thought if they wanted earnings, they could just get them. is that true of lyft? is that true of uber? steve: i don't think it is to

the same extent. with amazon, you have people locked into an ecosystem with prime. every day at my house. with lyft, what you are playing for is the potential for what happens once you can get to autonomous. you're not paying for the driver at that point. they potentially on the vehicle. it is more ubiquitous. that is the long-term end game. there is a much longer lead time for that. it is a less certain outcome. lisa: would you be buying into this? steve: we don't talk specific stocks from my perch. ipo: ok, but from an standpoint, are you excited about the ipos coming to market? steve: we talk a lot about industrial revolution. my oldest son is in second grade. when he was born, uber was in beta. now it is going to come to market that is going to rival some of the biggest blue chips

in the world. they've progressed pretty well. you have a series of new technologies disrupting current businesses, solving problems, and creating economic opportunity. that is great. whether one has a better opportunity that another, that is for the market to decide. as a general call, i think this is great. david: do you agree that the earnings are dependent upon autonomous? if that is true, does uber get that, or do they share it with car manufacturers and other people? mandeep: that is one part of it, but in the near term, the street is going to value them on their core ridesharing business. the plane to take it percent margins. i think they have to -- they plaintiff ticket to 40% margins -- they plan to take it to 40% margins. effective?hat

can you say promise you will hold this for a while? mandeep: the single ownership structure is a good thing. the lyft structure heard them. if institutional investors are looking for structure, i think it is a good bet. david: thank you both very much for being with us. stay with bloomberg television for an interview with uber's ceo at 12:30 this afternoon, new york time. rush."d to that is what president trump said this morning about trade talks with china. we will talk to republican rick scott of florida. this is bloomberg. ♪

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into the red. nasdaq down about 5/10 of 1%. ftse still up, dax still up. .sci also still up two year yields unchanged. copper getting a bid as people buy the news, sell the rumor. the dollar we getting versus you yuan and the south african. toid: let's turn back u.s./china trade talks. president trump tweeted this morning that talks continue at what he called a very congenial manner, and that there is no need to rush. this is after the u.s. upped tariffs to $25 billion -- to $250 billion of goods to 25%.

us is michael mckee. michael: it is such a broad impact. it is hard to know where to begin. actually, not. after those tweets, let's look at agriculture. that has what has been affected the most. crop prices were going down. the color line on all three of those represent corn, wheat, and soybeans. they've been going down for a while. drought and other problems having an impact. then you can see the red line when trump comes in. it doesn't get any better, and now they are starting to fall again. the white line is farm income, severely depressed, and it isn't going to get better now that these tariffs are getting. increased that is going to be a problem for problems -- are getting increased. that is going to be a problem performers. -- problem for farmers.

lisa: is this more the red states or the blue states? michael: interestingly enough, a bunch of red states are affected by the farm aspect of it. one of the biggest critics of the tariffs is senator chuck grassley from iowa. we are seeing the same sort of reaction from the legislators from pleases like pennsylvania because of the steel tariffs. let me take you inside a look at some of the jobs being affected by all of this. that are three industries have been affected by tariffs. the number of jobs in pharmaceutical preparations, stuff that goes into the medicines, metals production, which is steel and aluminum, and auto manufacturing. these all were growing, and over the last couple of months as the tariffs begin to bite, they are starting to roll over and see jobs lost in those industries. people are pretty thing that is going to continue, and certainly if you raise the tariffs, that

is going to be an ongoing problem. david: we talk about states. what about companies? michael: there are so many of them. it all depends on what you are talking about in terms of the tariffs and when, but i think four that represent four different industries. you can see the stock prices for john deere. they make farm equipment and construction equipment. china a very big cat.mer for deere and delphi auto parts makers. to point out here is the aqua line, apple. they haven't been as affected so far, but if the president goes ahead with the $325 billion, that adds consumer products like cell phones, and companies like apple, which makes almost all of its product in china, are really going to have a hard time.

you can imagine the impact on their bottom line. their stock not as badly hit as the others, but starting to roll over as well. lisa: michael mckee, thank you so much for that rundown. david: the president implements trade policy, but the constitution gives congress the power to oppose and collect taxes, tariffs and duties -- to impose and collect taxes, tariffs and duties. we welcome now republican senator rick scott of florida. thank you for being with us. sen. scott: good morning. david: we woke up to an interesting morning with tariffs going into effect. we just heard a lot of states and come at he's are being expected. explain how -- and companies are being affected. explain how it affects florida. sen. scott: most of our crops we sell in the united states, so it won't have as much of an impact on us. i personally never believed we would get a deal. this is a country that has never lived up to their side of the

bargain. they've been stealing our technology. they are not our friend. they are building aim a military against hours. here's what we ought to be doing. the tariff money we received, we should give that back to the people impacted, whether it is the consumer or our farmers. companiesng to have that their products are going to be more competitive now, and they are going to do much better. you look at our overall economy, record unemployment, wage growth, great gdp growth. our economy overall is doing well. i know it is difficult to get a deal done. i don't believe we will get a deal done. i think it is important that bob lighthizer and president trump don't blink. this is a country that is not our friend. we ought to be very careful about what we buy from china. david: one thing there is bipartisan support on is that china has not been behaving itself, and we need to do something to get them in line.

but if you are right and there is no hope of getting a deal, then what is the point? you pointed out these tariffs are a tax on our own people, so we just tax them and give back the money. what have we accomplished? sen. scott: ultimately we will build up american businesses. we've got to do everything we can to help the manufacturers and our country do better. when china is stealing our technology, it takes money to create that technology, and in they steal it and sell those products back to us. that is not right. we've got to help build up our own economy, and i think short-term it is going to be a pain, but long-term we are going to build our economy instead of the chinese economy. concernedtor, are you that a number of republican senators disagree with you and are pushing back against president trump when it comes to tariffs because of the impact on

their local economies? sen. scott: i completely understand it. if our farmers are hurt, whatever we receive in tariff dollars, we've got to do whatever we can to help those farmers. we shouldn't be taking that money and putting it into the government coffers. let's help the people who have been impacted. when the tariffs go in, there's going to be american businesses that are in a better position because chinese products are going to be mark's pensive. lisa: i just want --lisa: going to be more expensive. lisa: i just want to understand the mechanism. are you saying it would just be farmers?fusion for the sen. scott: we should do everything we can to make sure we keep them whole. whether it is a subsidy or whatever mechanism we can. we ought to help them build markets in other parts of the world. i completely understand the individual senators that are concerned about their farmers,

and i know it has impacted some come but we've got to understand that china is stealing our technology, building a military to compete with us, supporting places like venezuela that are genocideng against their citizens, so they have not been a good partner. and by the way, if using about business for a second, if you are negotiating a deal and the other side agrees to something and then takes it back, you are not going to get a deal done. there is no trust after that. i never believed we could get a deal done with the chinese. david: when i talk to people on both sides of the aisle, they agree something has got to be done, but i want to come back to this idea of giving money back to the farmers. they say we don't want a subsidy from the government. we want to be able to export our grain. it really strikes me. you are well known as a true conservative. is that a conservative doctrine? that would put a lot of american farmers on a welfare system to

charge tariffs and give the money back to the farmers. that doesn't feel conservative to me. sen. scott: i don't believe it would be a long-term solution because american farmers are still productive. we will find other markets to deal with. if china has to import whatever the product is, soybeans, whatever, that changes the entire world market. they are going to have to buy from someplace else, which opens up a market for american products. if we are impacting our farmers through this trade negotiation, we got to help them make it through this and help increase their sales and other parts of the world. david: just one last thought. we also have the usmca, the successor to nafta. are you in favor of that deal? sen. scott: i look forward to spending more time on it. i'm concerned about our farmers in florida because the mexican farmers have been dumping products in america.

we are the primary place for winter crops in this country, so i am concerned about that. it has just got to be fair to our farmers, just like everybody else once every contract to be fair to them. lisa: i just want to bring you this. president trump has deleted the twitter post he put out earlier today, which did say there was no need to rush china talks. we are seeing futures come off some of the deepest losses ahead of the u.s. open. senator, i would love your sense of how president trump communicates about some of these trade negotiations via twitter. does it make you uneasy that perhaps there are mixed messages being sent or calibrated depending on the market response? sen. scott: president trump is always going to tweet. that's who he is. he's got a big following and he gets his message out that way. he's not going to change. people say he will change once he became president. he's not going to change.

look, he's confronting issues that we know we had to confront and president obama wouldn't do it. north korea, china, venezuela, iran. he's got a lot of issues he's dealing with. my goal is he stays the course and he doesn't blink. we've got to change our relationship with china. david: as i understand you, you agree with the notion that there is no rush because you don't think ultimately we will get a deal. that is a different position from some of your fellow republican senators. your position is it is important that we keep up the pressure. is that correct? sen. scott: i would love to make the other side do a deal. you can't make them do a deal. if the chinese don't feel the pressure to do a deal, if they want to continue to still technology and build a military to compete with us, you just can't do it that way. that's not how business works.

the other side has to come to the table and get something done. david: really appreciate your time today. that is senator rick scott of florida reporting from the capitol. we started out the morning with president trump tweeting that there was no need to rush on the china trade talks. now, within the last few minutes, he has withdrawn that tweet. i'm not sure if you now think there is a need to rush or whether things are moving in the negotiations. we were supposed to start in about an hour and 20 minutes from now. now let's get some world headlines from kailey leinz. kailey: president trump will nominate acting defense secretary patrick shanahan to get the job permanently. he replaced jim mattis, who december. you quit in in venezuela, president nicolas maduro's exacting his revenge for last week's up the rising --

for last week's uprising by issuing arrest warrants and sending opposition leaders into hiding. the head of the opposition has again called supporters back into the streets, but they run the risk of being rounded up. in china, car sales fell for the 11th month in a row, and there is little relief in sight for automakers. trade tensions, a slowing hurting and trends are the demand. 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. i'm kailey leinz. this is bloomberg. lisa: thank you so much. coming up, the new music kingmaker. we will look at how tictoc is changing the path to fame. this is bloomberg. ♪

♪ kailey: this is "bloomberg daybreak." coming up in the next hour, craig allen, u.s. business council president. ♪ "bloomberghis week's businessweek," three streaming stories. tiktok is a music kingmaker. joining us is bloomberg business reporter lucas shaw. we've been talking about disney+. is this going to transform their company and the media world?

reporter: it is going to transform the company in the sense that disney, for the past decade or so, has relied on espn to power its profits and really be seen as the engineer of growth for the future. now, especially in recent years as espn growth has sputtered, ceo bob iger has seen the success netflix has had and said we could do this to. lisa: disney was rewarded by shareholders not for saying we will be profitable in the near with streaming, but we will double down and make sure the streaming is a success because that is where they see the future of media. in,rter: netflix, 22 years still is barely profitable, spending more money every year than it makes. bob iger benefits from the fact that disney makes money and a whole lot of ways netlist doesn't, whether it is theme parks or movie studios. bought a children's

media brand and is going further into children's programming in china and more broadly. i am just wondering, is netflix feeling somewhat friend right now by what we are seeing with disney? lucas: i think netflix feels a little threatened, but not a lot. hastingsf netflix reed believes the market can accommodate multiple players. my guess is the sea disney is the most potent competitor because of the different shows and movies they can offer. david: you have a piece out right now on tiktok. i know spotify and pandora. i didn't know tiktok. lucas: instead of being an on-demand music service, it is more of a social video app like .ine or music.ly tiktok has hundreds of millions of users around the world. 15 second videos in loops you

can make set to a song. the number one song in the u.s. right now, "old town road," became popular because of tiktok by an artist no one had heard of. that is why the music industry is trying to figure out what to do with this thing. lisa: i am trying to understand the intersection of china and streaming. we just talked about disney and netflix, both american companies, both really trying to plow into china right now at a time when there are a lot of tensions about intellectual property and other concerns. why do they see an opportunity in china right now? lucas: they see an opportunity to be china adjacent, i would say. netflix has pretty much said we can't get into china. , and netflix saw that experience and said if disney can do it, we have no shot. but there is a growing amount of chinese entertainment that

people around asia want to see. there's some 60 million or 70 million members of the chinese diaspora living in other countries taylor: -- in other countries. david: china trade. we've got a big dispute going on you may have heard about. how does that affect disney, who's got theme parks and real substantial business operations in mainland china? how could this blowback against them potentially? lucas: disney is the most exposed because of the scale of their operations. most other media companies have had such a hard time that they don't do a whole lot. taxif china were to try to the movie business in some way or further limit the movies -- david: as china said, we are going to take countermeasures. lisa: to wrap up the concept of streaming, who is going to be the big winner? lucas: after netflix, i would say disney.

david: but can disney be netflix? lucas: i think the gap will be closer then it is between netflix and hulu right now. david: lucas, really great to have you. that is lucas shaw from bloomberg. the latest issue of "bloomberg businessweek" is now available on newsstands and online. lisa: coming up, we are going to be speaking about those twitter posts. there was some deleting, some re-tweeting. david: it is a little unclear what is going on. president trump has had a busy morning tweeting updates on the trade talks. that is next. this is bloomberg. lisa: if you have a bloomberg terminal, check out tv . terminal,go> under ask us a question, or reach us on twitter. this is bloomberg. ♪

david: this is what i'm watching this morning, but you are, too, and basically everybody. president trump's tweets about u.s./china trade talks, and then withdrew all the tweets. then he's reposted them because it turns out he had a typo in them, where he basically said we have 25% tariffs on $325 billion in goods. it is actually $250 billion. the three into $25 billion is still to come, so that -- the 325 billion dollars is still to come. in another world, you would say why would the markets move on this, but markets are right. the president is governing by tweet. the markets would be foolish to just ignore it. lisa: absolutely. senator scott, who was just on with us, really took a hard line, saying this is not our ally.

this is not a country that has been a good actor in a lot of things. if that represents what president trump's thinking, the likelihood of a deal in the near-term is looking dimmer and him are. david: he said i don't think we are ever going to get a deal, but still want to have tariffs. does president trump want tariffs for tariffs' sake? it is sort of suggested in the tweets that it is a good thing for us. or is he using it to get a deal on important things like an >> will property? that is an important -- like intellectual property? that is an important question we don't really know the answer to. lisa: we are not looking at a wholesale exit us -- wholesale fromus -- wholesale exodus u.s. equities. you are also still seeing emerging markets gaining, another proxy for how concerned people are.

you are not seeing a mass hysteria over a breakdown in trade talks. meanwhile, two-year yields unchanged. copper a bit off of earlier highs. dollar weakening against the yuan. retracing some of the gains. south african rand gaining on the election. news. as you say, buy the coming up, much more on the trade story. stay with bloomberg television later today for an interview with uber's ceo at 12:30 eastern time. live from new york, 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. ♪ david: "no need to rush."

president trump says talks with china continue in a "congenial manner" as tariffs go up to 25% on $250 billion of goods. markets have a mixed reaction at the end of a turbulent week. have they priced in the trade breakdown, or are they still counting on a deal coming through? and one less unicorn. uber goes public in a turbulent market with a price that still mix it one of the biggest ipo's in you because history -- in u.s. history. welcome to "bloomberg daybreak." day withretty active president trump tweeting right now, definitely a lot of concerns about whether or not this is just talk and negotiating posturing or a real breach in some of the trade discussions. david: the five premier came to town last night and met with rob lighthizer very briefly. then the tariffs went into effect.

the president has no need to rush. we are making money on the steel. lisa: overnight, you seem to see people shrugging off some of these tariffs, basically saying there is time before they go into effect. we are seeing the potential losses deepening ahead of the u.s. open. let's take a look at those markets. president trump deleted tweets, then reposted them with corrected figures. currencies catching a bid. what you are looking at here is people were thinking i don't know if this will end so quickly, and perhaps the optimism might be changing. david: more on that big story of the day, china/u.s. trade. this morning we face higher

tariffs with the possibility of more to come, and president trump tweeting, "there is no need to rush." with us is the president of u.s. /china business council. thank you for being with us. the president says there is no need to rush. is he right? guest: thank you very much for having me on. it is important that the president address the structural issues within the chinese economy that are impeding american exports and investment therefore, he's right. it is better to do this thoroughly rather than quickly. david: fair enough come of it is the best way to do that to impose deadlines as of midnight last night, if it is going to take a long time anyway? craig: trade negotiators have probably been working all night, and i am sure they are working now. they are both very able, very experienced, and i am hopeful that over the course of the day, or perhaps into the weekend,

they may be able to reach some compromises. breath.ke a deep no imports to the united states or exports from the united states have been affected yet. that will take approximately three weeks until the first shipments arrive from china by boat. markets, people are taking a deep breath. there is not hysteria we can perceive. i am just wondering, what are you looking for when it comes to the chinese response to the u.s. tariffs to indicate whether we are moving more towards a conciliatory approach or moving further apart when it comes to u.s./chinese relations? craig: i think there are a couple of key things to look for. .ne is state owned enterprises what will come out of these negotiations with regard to the preferential policies given to chinese state owned enterprises?

the sachsen -- the second is subsidies. at the bare minimum, the chinese should live up to their wto commitments on subsidies. the third is intellectual property rights and forced technology transfer. the chinese need to protect foreign intellectual property rights in a more secure manner. -- the seconda is area -- the third area is industrial policy. they need to not force through policies that are aimed at making china dominant in the industries in the future. it is not too much to ask. david: even as you were speaking, we had a viewer right in and ask which products are affected. if we could put that up again to see exactly what is being affected by the increase in , how did we get to this point? apparently we thought we had

something of a deal with the chinese to deal with some of the major issues you've identified. they came back with a draft that said sorry, we can't do that. is it possible that reflects a more structural problem with china that they don't feel they can give the united states what it needs on things like knology transfer and intellectual property -- like technology transfer and intellectual property? craig: from a technical perspective, it is difficult to take an agreement in abstract and turn it into chinese law. let's not underestimate the complexity of that. at the same time, there are thatinly parties in china would be reluctant to make the commitment that it appears vice premier liu he has made verbally. there's politics, too, and special interest groups in china that would love to block this. the important thing to keep in mind is it is entries -- is it

is in the interest of the chinese people and economy to progress with economic reform, to open up their economy to investment, to make their economy more competitive, and this is a wonderful opportunity both for china and the united states, and indeed the world, to set right some of the obstacles that have been in place for too long. wonder, on the political aspect from the u.s. front, is china saying he may be easier to deal with than any potential democratic successor, so we should get a deal done now? or are they waiting for president trump to possibly no longer be in office before stepping in and trying to actually solidify a deal? craig: i will be honest, i think the chinese are agnostic on democrat or republican. they know that there's going to be tension and conflict either way.

they realize that president trump be the u.s. president for at least the next two years, possibly the next six years. i think the president is committed to doing a deal. president xi has also committed to doing a deal. now is the time to do that. the chinese are too smart to get into a guessing game and play partisan politics in the united states. there's no percentage in it for them. i suspect they are looking at this and negotiating as hard as they can for the best deal they can get. david: to wrap this up and ask the simple question, who needs this deal more, the chinese or the united states? and the second part, do they know it? craig: well, both sides are hurting. we recently completed a survey of u.s. exports. the entire center part of the country, the entire agricultural

sector of the united states, is hurting. a lot of manufacturers are hurting. in china, a lot of people are hurting. therefore, we both need this agreement. i would say over the shorter term, the u.s. economy looks great. over the longer-term, the chinese economy is very strong. do not underestimate the chinese economy. they will produce 30% of global growth for the next 10 years, and american companies need to be a part of that growth story. if american companies are not leaders in china, they cannot be global leaders. this is an important market. we must settle these differences as soon as possible. lisa: craig allen, u.s.-china business council president, thank you for being with us. let's get a sense of what the market response has been throughout this morning. taylor riggs has more. taylor: we heard reports overnight that china stepped in dip on the shanghai

composite. the index pushing up about 3%. that translated over into the shenzhen, and carrying over into hong kong and other european equities. at least for the day, chinese equities are seeing some strength. that is not quite translating into the currency. we did initially see you on strength, but overall it has been dollar strength, you on weakness -- dollar strength, yuan weakness. interestingwas very we have briefly dipped into an inversion on the 10 year yield curve. we know that is the fed's preferred gauge when they are looking at a nice side a recession. we know all of the equity volatility means buyers are coming into the long end of the yield curve. we are just under two basis points on that yield curve. folding that into equities, a

very different story from a week ago, when we had record highs. we are looking at our worst weekly losses going back since the december 24 volatility rout. for theaq off about 6% week, seeing the worst weekly losses since september. we will see how futures open up. david: thanks so much to taylor riggs. joining us now are mark howard of bnp. -- of bnpnce hunter paribas and constance hunter. you need to think look at both the direct effects and the indirect effects. the direct effects are the impact from higher prices that u.s. customers pay on these goods that have tariffs. the cost of increasing these goods and possibly raising

inflation overall not because of increased demand, but because of this shock to the system. that is the first effect. the second effect is the indirect, which i thing is much more significant. we seen the market reaction. we seen the reaction in the shape of the yield curve. we seen the reaction in the vix. we did analysis of this when this all started. , ife get a shock to the vix it sustains at 25 for a quarter, you get a market impact on baa bond threats. the cost of capital for u.s. companies goes up across the board when you have an elevated fix. -- an elevated vix. that to me is the most pernicious impact. lisa: we were talking earlier about whether or not's market -- whether or not markets have baked in optimism for a break deal.

mark: what we saw over the last week was not any real capitulation on the part of or institutions. what we saw was hedging by the street and some pastor funds. but there was no real capitulation. so the answer is yes, we would see further downside as people take risk off if they feel there is a sharp break in negotiations. david: constance hunter and mark howard will be staying with us. coming up, more on the market impact of trade uncertainty and what it means for investors' risk appetite. that's coming up next. this is bloomberg. ♪

lisa: trade in focus this morning as president trump is tweeting on a potential trade deal with china. we are seeing futures in the u.s. move further into the red, although still not looking at hysteria or exodus. still with us is mark howard of bnp paribas and constance hunter of kpmg. my question is are we looking at a 5% downturn, or at something that is more substantial and protracted? mark: obviously there is a decision tree. if we have a breakdown, is it just posturing to get better terms, or a structural breakdown we are not going to be able to regain any momentum? i don't think the latter is likely, so i think the downside in the equity market in the short-term is more of a minor correction, 4% to 5%. obviously if they went separate directions, and hostilities escalated, particularly in nontariff restraints on trade, then i think it would be much more problematic and you could see a bigger correction.

david: how much can the market withstand some really bad news on trade? there are other things going well, particularly the u.s. economy. cannot support the markets? constance: we are obviously at the late stage of this expansion. the real question is how long can this expansion continue. we are sort of in a sweet spot. we have low inflation, which i think we'll get confirmed later this morning. we have very low unemployment and 103 consecutive months of jobs growth. we saw productivity pickup in the first quarter. those are all things that auger very well for an elongated expansion, but with that said, we are not growing at a really robust rate because our potential gdp is relatively low. we are vulnerable to shocks either of our own making her external, so getting back to reals point, there is a

structural difference between the way china thinks an economy should be run and the way the and and most of our oecd emerging-market counterparts think an economy should be run. there is this fundamental structural problem that underpins this whole process that i think is at the root of the problem. lisa: although i think one thing buoying the stock markets globally is this faith in themselves, this idea that they are the ultimate check on the federal reserve and president trump. president trump tweeting about 401(k)s and how well they have done since he took office, and the federal reserve capitulating to the market by pulling back and putting any further rate hikes on hold. how much power do markets have to keep some of these tensions and a potential rate hike in check? mark: my comment earlier about the markets having 3% to 5%

potential downdraft is a temporary thing. it is transitory. the underlying orthodoxy, as you say, is that not only is this administration closely attuned to the equity market and is going to act in support of it, and the central banks globally are open to it, market sentiment is likely to rebound. this going to be a buy the dip at some point because there is so much demand. there is so much dry powder across asset classes in our opinion. david: should that make me feel good or worried? the markets and the economy demand doesn't be able to support itself without the central bank coming back in on an emergency basis, whether it is the fed or the ecb, or whatever. should this take off on its own without the central banks being so accommodative? constance: first of all, let's separate the ecb from the fed because we are in a very different situation. the fed was able to raise rates.

ok. wow.: 2.5%, this is getting scary. [laughter] david: historically, that is a pretty low rate. constance: but you need to look at it in relative terms. we have a positive interest rate on the fed funds. we are receiving positive interest rates in the market if you are a saver. that is the important thing. where is it relative to inflation and growth we are having? lisa: i do have to wonder at this idea that president trump and the federal reserve are willing to step in and support these markets. does that raise concerns about bubbles? constance: that is not supporting the markets. that is supporting the economy. the fed did its pause because it made an assessment of what was going on with global liquidity conditions. there were no high-yield bond issuances in the summer 2018. we had severe -- in december

2018. we had a severe tightening, and that is what the fed responded to, along with other data from that thed china economy was slowing down. i don't think a little pullback from a strong rally -- your to date 20 .t the beginning of the week david: ok, mark howard of bnp paribas and constance hunter of kpmg will be staying with us. ber begins u trading after listing at $45 a share. users can interact with the , catchshown at gtv

up on key analysis, and save charts for future reference. live in new york, this is bloomberg. ♪

david: time now for the bottom line, where we look at three comedies worth watching. everyone -- three companies worth watching. everyone will be watching trading, they start selling over $8 billion today. i don't envy them in this marketplace with all of the uncertainty over trade. lisa: you had the phrase of the day, "profiles in courage." we will speak with uber's ceo dara khosrowshahi at 12:30 eastern time. up 18% inng zillow,

premarket after reporting better than excited revenue in their home flipping operations. where are we, 2006? there was correlated data out this week saying that 6.5% of u.s. sales in the first quarter were flips or homes sold within a year of their purchase, the highest share seasonally adjusted going back to thousand two -- back to 2002. david: the third we are watching today is general electric. for that, we will go to brooke sutherland. they are moving their headquarters to boston. brooke: there was this grand fanfare of leaving connecticut to go to boston. there were a bunch of different states in the bidding. it was not like the amazon competition, but this was a big get for the city of boston, and ge thought it would be a better fit for the company's digital operations.

of course, those operations are now more or less defunct. wellis sort of on all's that ends well outcome for me. they will repay the state for all of the incentives they were given to build their offices there, and then have a little bit left over in terms of proceeds. every little bit helps if you are ge, but they are getting about $11.2 million in proceeds each for the city of boston and for ge, roughly half of annual compensation last year. it is not that much in the grand scheme of things, but at least you are getting a profit. lisa: shares are down 2/10 of 1% ahead of the u.s. open. i am wondering what this says about them that they are going to these granular levels at a time when they need to be thick a lot bigger. brooke: i think that is actually what you need to do. it is very much about the operations and getting into the nitty-gritty. how do we make these businesses run better?

how do we make them generate cash flow? it is not glamorous, but i think that is where you need to start if you want true turnaround. the problem is it just takes time. david: i agree. everything is on the table, even where i live. that's larry culp. lisa: but not his compensation. david: that's a different matter. [laughter] david: coming up, the latest read on inflation. will april cpi measures signal tepid inflation? this is bloomberg. ♪

lisa: this is "bloomberg daybreak." alix steel is on assignment. we are seeing losses deepen on

president trump's tweets. in europe, holding onto gains. msci emerging market index holding on to gains. that is something to watch. bit ofassets, there is a a dip in treasury yields as people prepare for a little bit of her risk off. we are getting breaking news, cpi data on inflation. it is year-over-year, 2.0% as opposed to 2.1%. if you take out energy it is exactly what the survey was. it does not indicate inflation is picking up. lisa: the actual inflation reads came in under the survey month over month, coming in at 0.3% versus a survey of 0.4%. a slight touch where the survey also was, confirming the fed view that inflation is not

picking up anytime soon and sure enough you are seeing yields on the 10 year falling lower, confirming the idea that the fed can remain on hold and we are not seeing inflation pick up. david: nothing these numbers would say the fed has to reassess its position. lisa: even low expectations for inflation might not be low enough. david: still with us, constance hunter and mark howard. what is the inflation story? constance: i think it is a good story. atave not been able to look the details, there may be some things moving up at a faster pace. gasoline prices probably went higher and that is why the core is so important at 2.5%. another piece of data that came out is real earnings. they are at 1.2% year-over-year. america,ouseholds of the average consumer, they are

earning wage increases above inflation and that is important. lisa: constance is saying this is goldilocks. is it? how long can this goldilocks period be withstood before something breaks down? mark: there are transitory factors. a number of things have gone down and other things have gone up. i think it can continue for a wild. i think it is constructive. the big risk for markets is a move up in inflationary pressures that would cause the fed to pivot like we saw in the fourth quarter last year when the markets had to deal with the potential withdrawal accommodation. that to me would be a big risk to the leveraged financial market, and with inflation numbers like this david: i have to come back to the trade dispute. 25% on ae imposed this total $200 billion, and now he

is talking about another 20% on the remaining part, at what point do -- does this have to be passed on to consumers and will it show up in cpi? constance: it will. it will not be hugely significant, the fed will probably look through that because after a year it will pass. you will get the year-over-year of facts. -- the year-over-year effects. it is not demand driven. the other thing is when we have an increase in prices on terror -- on tariffs goods. inflation across the board which ultimately slows growth because it is shocked driven. we are seeing

markets price in a greater chance of a rate cut by january of 2020. you can see that in general markets have been lowering their expectations, increasingly expecting there could be a rate cut. even without a downturn this idea of an insurance cut. expect the federal reserve to make a year lower before your end and you think the market has gotten ahead of itself? mark: we think the market has gotten ahead of itself and we do not see a cut this year or next year. we believe we will get to a trade deal and resume some of the growth trends, not just in the u.s. but globally, such as asia, that will then filter into europe. we will be in this goldilocks scenario. we do not see rate hikes. what the market may be telling you is if we get a slowdown, the fed will move aggressively, as opposed to a cut imminent this year. said more than

once he believes there will be a trade deal. the likely -- mark has said more than once you believe there be a trade deal, but the likelihood is less than a week ago. i disagree. the fundamental differences between the u.s. and china have fundamentally shifted. it used to be we would have conversations with china. we and our allies around the world would have conversations where we can make an argument this is in your interest to make moves in this direction and they said we agree. now they are not saying we agree. they are saying there's a benefit to state owned enterprises. they are saying we need to have local champions. it is a different conversation. lisa: if we are going to see these tariffs for the longer term, does that affect the inflation picture? people will be spending more on goods and there have to be higher costs. constance: even though there are fundamental differences, there may be a veneer of a deal that

swings is over. tariffs hurt the american consumer, the american consumer pays for them. there is every reason to make a deal, but do not be full that if that if at be fooled deal is made the structural differences have been resolved. david: what is the ultimate potential upside of the deal does get done? will the game have been worth the candle? we've gone through a lot of turmoil in the markets went up and down. a lot of money has been made and lost. if we get a deal with china, will we say 10 years from now that was worth it? mark: there are deep structural issues and are all different levels of deal. there is a big deal, a ,eal-light, a cosmetic deal they're all different. we are in a. of de-globalization.

there will be fits and starts. i think it is a long series of events that will play out over time. lisa: do you think the next move in equity markets is materially higher or materially lower? constance: if i were to forecast over the next six months, i think i would vote in favor of slightly lower rather than slightly higher. mark: i would not say this material. we will trade in range. not much volatility. lisa: happy friday. david: constance hunter and mark howard, thank you for being with us. numberso recap the cp -- the cpi numbers. month over month, a little bit overall, .4 expected. an overall numbers it is basically on where the consensus was. lisa: you are seeing equity

futures go a little bit lower. you are seeing bond yields go lower. we are not to a point where negative data is a positive for equities and risk assets, meeting the fed will remain on hold. we know the fed will remain on hold. it indicates the economy is weaker than people have expected. david: it goes to the spread we inverted yesterday and your point about the likelihood of a cut. that is what is driving the action. now it is time to find out what is going on outside the business world with renita young. president has ended the trade truce in china. he has raised tariffs and is preparing to impose more. beijing says it will retaliate but there is no word how. president trump tweeted there is no need for a rush to the trade deal, though he later deleted that week. trade talks resumed in washington yesterday.

iran says there will not be any talk with the u.s. a day after president trump said he would like iran's leaders to call him, a top military leaders of their be no negotiation with america. the u.s. has been ratcheting up economic pressure on iran. it also sent an aircraft carrier and a bomber group to the region. in venezuela, president nicolas maduro's exacting revenge for last week's uprising. he is cracking down on those he holds responsible by searching homes, issuing arrest warrants, and sending opposition leaders in the higher. the head of venezuela's opposition, juan guaido, has called his supporters back into the street but they run the 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. young.nita this is bloomberg. lisa: thank you so much. coming up, uber's public ride

begins. we discussed the company's conservative approach. that is next in today's follow the lead. from new york, this is bloomberg. ♪

renita: this is "bloomberg daybreak." coming up, stacy cunningham, new york stock exchange president and ceo. this is "bloomberg daybreak." iagish airways parent managed to post a first-quarter profit despite the european fare war. that pushed its biggest rivals

to a loss. the ceo expect pricing will revive later. shares of iag are higher after hitting a two-year low yesterday. india is buying more u.s. oil. the country has been squeezed by opec cutbacks and pressure to reduce venezuelan imports. almostoducers sent india 13 million barrels of crude in march. that is the most since washington ended restrictions on exports at the end of 2015. india is now the second largest buyer of u.s. oil. shares of security software maker symantec are plunging in the market -- in premarket trading. the ceo is stepping down and leaving the board. symantecforecasts -- forecasts profits that fell short of analyst estimates. a captone group has set on its latest flagship buyout fund.

the firm has attracted more interest for its eighth private equity fund that it is willing to handle. at $25 billion, blackstone would exceed apollo global management's fund, an industry record. that is your bloomberg business flash. lisa: thank you so much. i cannot get enough of how easily some of these private equity investors are raising money. people are throwing money at them. they are throwing up their hands and saying we do not know what to do with your money. david: you know who else cannot believe it? warren buffett. he talked about throwing money at private equities. lisa: when you talk about restraint, blackstone is showing her state at 20 -- showing restraint at $25 billion. david: it is time for paul the lead. a deep dive into headlines making stories and moving markets. today we are taking a closer look at one of the largest ipos

in u.s. history, uber, which sold over a billion dollars in stock yesterday and will begin public trading today. we welcome kathleen's myth -- kathleen smith and ygal arounian. he has an outperform rating on $85 with a price target of -- $65, i misread that. do not want to push it too far. welcome. they did get it out and they sold it, but at the lower end. ygal: that makes sense. you have to put in the context of what happened with lyft. they took a good lesson from lyft's experience. shares trading up and then being weak since then, even weaker after the report of the first quarter earnings and then later on the choppy trading we have had this week from the macro noise. it was a smart and prudent move to come out the lower end of the range. lisa: do you think uber

executives were tearing their hair out as they watched the market selloff ahead of this open? ygal: it is difficult to time the market perfectly. i'm sure they were not thrilled about the news and the way the market has been training. they were more focused on lyft and learning their lessons from how lyft came out of the gate than some of the noises week, but it certainly did not help. david: besides the absolute dollars, we are evaluating on a multiple of revenue. how does lyft compare with uber on multiple of revenue? ygal: right now it is trading below where uber is. we value on a sum of the parts basis. it is still trading around five times revenue. lyft is well below that. timestrading below four revenue. we think uber received -- deserves a premium for its global nature. david: it has more parts to sum

up. ygal: that is true. lyft only has one part. uber is global and is in multiple businesses and is the leader in every business it is in. lisa: the parts are not adding up to profit. it is burning through cash at some of the fastest pace ever seen in an ipo. from an investment standpoint, is this a good by? kathleen: our study of the ipo at the we have looked most money-losing ipos that have ever been done in history. that is you have lost the most money prior to the ipo in that year. at the top of that list is uber. the second company is lyft. snap is on that list. groupon is on that list. we studied how the stocks performed to date from the ipo price and it is not a pretty picture. a lot of losses are hard for investors to absorb in their

thinking on valuation. i do agree that lyft is just a very important little brother to uber's biggestnk disappointment is lyft, when they announced earnings, took another 10% drop because investors were concerned about their continuing losses and their significant. one billion for 2019. ipo.will be a hard just looking at overall ipo activity, it is a large ipo, one of the top 10 ipos in terms of size. large ipos are challenging to absorb in the market. we know what happened when facebook first came out, we know google. we know from looking at the ipo market at large ipos can be problematic. as trump said today about china trade, there is no need to rush. i would apply that to the ipo

for uber. nevertheless, you have an outperform on the stock. you think it should be $65 instead of $45. how does one separate out is a good deal, it is a company that will make money at some point, from people searching for someplace to put their cash. it goes back to private equity. people are searching for yield anywhere they can find it. ygal: that is a really good question. i think that was part of the problem with lyft. people were not necessarily searching for a place to put their cash right away. maybe initially, but after the noise from the trading for the first couple of weeks, i do not think investors have a big rush to put their money into lyft. people are waiting to see what happens with uber. that gives uber a little bit of a benefit. lyft felt like it had to come out first because it was the little brother and needed to set

the precedent. uber had the benefit of being a modest step back and let that play out before they got in. that will help them. talk aboutwe blackstone and private capital, that is what allowed uber to come to market with an initial public offering as late in its cycle as it did. i wonder what we have seen with lyft and uber means for the other tech ipos. what do you think? kathleen: the important point is where there is a lot of capital is in the private market. because there has been so much capital showered on this company, the valuations from a public market perspective and say how is it possible that these companies can be valued at these levels? we are seeing the way they come out of the public market that disconnect resolve itself. we continue to think there are work is on theeo

calendar. they are losing so much money and have such a high valuation. how will the public market figure this out? i think this is the time for the maybe asarket to say little overvalued and we should be careful about how much money we are throwing into this market when i cannot get liquidity unless i come out at a lower price and cut out last rounds evaluation. david: kathleen smith of renaissance capital and ygal arounian with wedbush. thank you for being with us. stay with us for our interview with the uber ceo at 12:30 eastern times. lisa: president trump announcing trade talk progress over twitter. how this is at affecting emerging market investors. they may be the most shook up. this is bloomberg.

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lisa: here is what i am watching. as we talk about some of these issues with trade, the question is which asset class will get hit hardest. a growing number of investors are saying it is the emerging markets. currency volatility in emerging markets is on track for the biggest weekly increase this year. debts out of ukraine, argentina, and indonesia to experience the biggest losses should a trade dear fall apart between the u.s. and china. michael mckee is with us. do you think that is right that em will be the most affected? willel: it could be but it be complex because a lot of things fold in. the countries hit the hardest immediately would be in asia, tried as -- china's trading partners. johnny uses a me products from those countries and if they cut back production it will hurt

those country -- china uses so many products from those countries and if they cut back production it will hurt those countries. the president is trying to get companies out of china. if they moved to other emerging markets, that could give them a longer run boost. david: that is the question. what happened last time? there had already been tariffs put in place. did they come back to united states or go to other asian countries? michael: we have seen both. we have seen some companies come back to the united states and not creating jobs, using automation. other countries, a lot of countries have -- a lot of companies have moved to vietnam and other less expensive countries. lisa: there are two aspects. there is the idea of supply chains moving out of china and in general the global economy slowing down in their study showing the chinese economy

would declined by 0.6 percentage points following the implementation of these terrorists. that would have a magnified effect on some of the developing economies, no? michael: absolutely. i'm glad you are here because if alix was here she would yell at me because i do not bring my chart. if you have a bloomberg terminal, you can look up the jpmorgan global pmi index has rolled over over the last year. we have seen this in many countries. manufacturing is starting to fall in many places and really see that in places like south korea and asian countries. david: bloombergs michael mckee. coming up on bloomberg the open, kate moore, blackrock chief equity strategist. this is bloomberg. jonathan: -- this is bloomberg. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪

jonathan: coming up, the president unleashing higher tariffs on china. day two of talks said to begin in washington. the uncertainty forcing uber to take a conservative ipo approach. soft inflation adding fuel to inflation fears. chairman powell facing a test. good morning. 17 and headeddown for the biggest weekly loss of the year. futures down .6%. in the fx market, it is a dollar weaker story. 1.1243 on euro-dollar. 2.44 is your yield on the 10 year. investors reacting to another round of tariffs. >> this trade wars getting more serious. >> the market will get worse from here. >> this is not going to be decided over one week. >> hard to work out where you come out.