think it has already happened in the last couple quarters. it is just that the impact from the tax cut last year was so large, it sort of obfuscated what is going on on the bottom line. -- caroline: we haven't seen such a day as this since december, the christmas eve selloff we saw. nasdaq has not seen a poorer day since december 4. volume is much heavier than average. volume in the dow jones industrial average, up 34% from the average. the nasdaq up 18%.

even with today's selloff, the nasdaq up 15% for the year. emma: 25 basis point cut before 2019. here is a chart showing that expectation. fed chair jay powell said at the end of the last fed meeting that risks to the economy have moderated, but unresolved trade concerns were something that were still a risk. today we did hear from dallas fed president robert kaplan, saying that trade is certainly something that is creating uncertainty. he also said it depends how long these things persist. interestingwill be to see what the influence of those trade tensions continue to be on s&p 500. we are back down in the range, the s&p 500 having its worst day since january 3, narrowly escaping the worst day of the year. aer the last 18 months, battle between the bulls and the bears. neither side winning.

moving up and down between 2600 and 2900. now we are closer to the 2800 level. the 200-day moving average, close to the s&p 500. we see rsi is plunging south, down toward oversold territory. this chart suggests we will see the s&p 500 dive deeper into its range. romaine: thanks. that's where cooper closed today, the number one -- where uber close to today, the number one ride-hailing service in the world. you can see it down about 17% from its ipo, including the twin -- the 10% drop today. in fairness, nobody was really buying much of anything today, with about 90% of the s&p 500 in the red. analyst dan ives at wedbush now looking at uber stock, saying it is entering the white knuckle territory.

khosrowshahi says uber will be judged by long-term performance. when you look at the history of a lot of stocks that have had weak debuts, it has been pretty -- has not been pretty. a lot of companies like that never quite recovered, never found their footing. you only stock of note that had a huge downturn right out of the gate -- the only stock of note that had a huge downturn right out of the gate but managed, to recove -- but managed to recover was a video company out of china. you.ine: thank scarlet: shares down 3.25%. company will be report -- the company will be reporting earnings this afternoon. caroline: doug ramsey and blue-collar -- luke. how much of people talking about uber's underperformance?

they are hurting more than the general. luke: super -- uber is a great source of relief for fund managers who don't own uber right now. there is a sense that this is a bit overblown. when you look at the ipo etf and how it has performed during this downdraft, it is outperforming the nasdaq in general. it is up about 30% year to date. this is like going to a concert where all the lead ascts knock your socks off and the headliner is kind of disappointing. joe: are there any parts of the market that look interesting or with the selloff that are looking more interesting than a couple weeks ago? doug: it's interesting that we run quantitative strategy focused on industry groups and sectors and we've seen the financials steadily improve. that would be, in terms of movers within our quantitative work, they look pretty good. what's been mystifying with the

commodities just getting hit so hard on a relative basis again year to date. the values starting to look compelling. they are just not moving up yet. i would still avoid the commodity stocks. as a matter of fact, we have a short strategy we run where we are short a lot of energy stocks, in particular. that just looks like an opportunity that has not yet fully developed. financials are perking up. --are talking consumer consumer discretionary have been there quite a while. they have been a leader throughout the entire bull market. scarlet: when it comes to these sectors, you said financials look kind of interesting right now, is it something you want to move on or do you want to wait till the dust settles? we are in for a long ride of what could be much more volatility. luke was talking about the shape of the vix futures curve, and how people are pricing more in a year from now -- are pricing in

more swings a year from now. doug: we have some hedges. officially we are neutral in terms of our market stance, sort of a balance between very high valuations, questionable economic and policy fundamentals. but there has been such momentum, until the last six trading days, that it was enough to pull us up to neutral. we don't really let that market view impinge upon what we buy. we have already done some nibbling within the financial sector, like the consumer finance stocks would be the top rated industry group within financials. so, it's not traditional, big regional banks or insurance companies at this point. joe: something that you notice is that it took a while. it wasn't until the middle of last week or late last week that people started to really get freaked out about emerging markets, e.m. implied vol. e.m. taking it on the chin today.

extreme is the volatility there versus the rest of the world? luke: it's starting to pick up on the bottom edges. this is what looks like a trade war, in terms of that ratio between the u.s. domestic sensitive volatility and e.m. it's above its 2018 average, not near the peaks we have seen when trade talks -- when we were talking about 200, 200 more around mid last summer. it hasn't quite evened up to that level. when things -- what you see last week was essentially a who's who of the reach for yields. emb, emlc. u.s. high-yield and emerging-market debt are kind of what people wanted to get out of as trade talks deteriorated. they were flooding more into generic bond yield.

caroline: i'm looking at a story on the bloomberg today saying a fed cut this year is now being priced in as a near certainty. has the fed -- is the fed going to ride to the rescue here? the ideaean towards that they will be cutting in the second half of the year, whether that's riding to the rescue -- let's go back to what i mentioned about confidence. we've done some statistical work on this, and the reaction of the market and the economy to the fed stimulus is very dependent on investors' emotional states. if that consumer confidence series, one we like in particular, i will throw it out there, is the conference board's -- consumer confidence in their present situation. that has taken a hit in the last few months. that is the one that is historically the most tightly correlated with stock prices. it will be interesting to see

whether this -- it's not till the end of the month when we get that number, but whether that continues to roll over. if it does, it says, look, confidence is fading. even if the fed were to cut rates at this point, which would surprise people, i don't think it will be a surprise later in the year -- hard to see the dollar being really strong in that environment. it's been strong because the u.s. economy has been sort of the best house in a rough neighborhood. scarlet: doug ramsey joining us from minneapolis and bloomberg's luke kawa. we have results from take two. shares were halted before the release of these results. fourth-quarter earnings topped analyst estimates. the revenue trailed. analysts were looking for $508 million. the outlook for the full year is a big mess.

-- miss. $4.84.s were looking for caroline: in their overall statement, they are saying on april 1, 2018, the company adopted revenue for contracts, significantly changing how the company recognizes the revenue and net income. it doesn't impact net booking. scarlet: let's see what happens when the stock resumes trading. it is halted for after hours trading. that does it for the closing bell. romaine bostick is stepping in next to continue our coverage of the selloff. this is bloomberg. ♪

caroline: this is special

coverage of the u.s. market selloff. i'm caroline hyde in new york. romaine: i'm romaine bostick. joe: i'm joe weisenthal. caroline: president trump said he will speak with xi next month, while warning beijing against retaliation. time to cut. investors are more concerned -- convinced the fed will deliver a rate cut this year. and, collateral damage, from the u.s. consumer to big china tech, a roundup of who stands to lose the most in an all-out trade war. trade talks weighing heavily on markets today. here is what some of the biggest voices on bloomberg television had to say about the ongoing discussion. >> we hope that the u.s. and the china -- and china can settle their conflict. >> it's a high-stakes, dangerous game. it's going to directly affect the u.s. economy. >> there is nothing that has happened that can't be pulled back.

i think that's something the market is missing. >> escalation of the trade conflict is bad for the whole world. >> whether we get these consumer boycotts, angry patriotic chinese targeting u.s. companies -- if that happens, it can get very ugly. they did threaten to go much further. >> -- >> they did threaten to go much further. i think they are trying to deescalate this. >> they could take virtually everything that comes out of the white house with more than a proverbial grain of salt. caroline: for more, let's talk peter.rty and a pinch of salt. china don't seem to be taking with a pinch of salt for the retaliation. >> they did hold back from more significant action, which they still hold in their pocket and could take at any time. this is something that everybody has derided, and it is -- dreaded, and it has finally hit the market that this is a real issue for the economy going

forward. joe: it's a real issue, but of course we've had volatility spikes before. we had a couple really big ones last year. is there any reason to think this one feels any different? it becomes a real issue when you have someone who has been around and has the prestige of -- to say we should take what the white house says with a grain of salt. it doesn't help in terms of credibility. i have been saying for a long time listen to the markets. bloomberg agricultural index. cotton. it's all going down. thingsen saying that underneath the surface are a lot rougher. the equity market is held up. some indices were driven close or almost two new all-time highs -- almost to new all-time highs. the russell is a domestic index. if things were really good in the u.s., why was there such

tremendous underperformance by the russell relative to everything else? look at the financials, the regional banks, all suffering. they went to commodity producers. this is -- this -- they lent to commodity producers. this doesn't get noticed until it is too late. that's our job as risk managers. we measure things so quickly day-to-day in terms of stock market performance, but we do think this is spreading, primarily because game theory says the chinese, to lower -- the lower the u.s. market is, more pressure on the u.s. administration to make a deal, that's more favorable to china. romaine: how do we stop this from spreading? there's a sense that the longer this drags on, whatever deal you get isn't going to have the kind of pop that some people thought. >> you are not going to get any help from congress here. you will notice that there has been very little, if any criticism of the trade policy from either side of the aisle. yes, on the margin, some

agricultural senators have complained, but there isn't a groundswell of opinion in the political realm that this is bad policy and it should stop. so, i don't see any short-term fix for this. caroline: talking short-term, why didn't we hear from the ustr today about the remaining chinese imports? >> he kind of held back on that today. i don't know if this is strategic. what we do know or think we know is that there are no discussions going on. steve mnuchin said the treasury -- said, the treasury secretary, that there were no plans for him to go to china. you wonder if there is a negotiating ploy, who is doing the negotiating. joe: i've noticed people click on stories about soybeans. i think the idea is that the farm belt is a big part of trump's base. the idea of farmers getting hit by trump's on policies, there is

a tension that is interesting to people. you are the only guest we ever have who always brings up the beans unprompted. >> it's the first thing. then you have to look at dee -- john deere and caterpillar and the related banks. farmland prices have been weak. it's an indicator. it's easily seen because it is traded in the futures markets as part of your index. the spinoff effects from it are significant. those related -- caterpillar just made new lows today, 3m. deere was hammered today. those matter because they are in the indices and people own them. it's an easy way to take your temperature. if i could just respond quickly, the definition -- a definite possibility of a firm maybe doesn't seem like an outstanding policy to me. romaine: when you look at some of the flight to the haven

assets, like treasuries. gold had one of its best days since january. what is that telling you about the general sentiment and how people are reading this? >> we don't just look at gold. we look at the gold, silver -- gold-silver ratio. silver is more economically sensitive. it tends to go up much more relative to gold. recently that has collapsed. if you pulled that up on your bloomberg, that's telling you there is a lot more uncertainty. and the fact is, if we add to these tariffs, that tends to be depreciating for the dollar. stronger dollar, again, further leads to deflationary pressures, and that leads to non-downward further pressure on commodity prices. we are in a negative feedback loop. caroline: to a certain extent, the u.s. remains a sort of haven, because it had been the out performer in terms of economic growth.

a global slowdown comes back and perspective. how much does the u.s. stock market underperform the rest of the market if it doesn't keep the least dirty shirt halo effect? >> in this sort of "game of thrones" environment, in the land of the blind, the one eyed man is king. the u.s. is sort of the king right here. it will be, but if we get weaker, the rest of the world is going to go down a lot faster. the rest of the world is a beta relative to the u.s. joe: we know trump likes higher stock prices. most people do. at what point do the voices or does the selloff actually force something to happen? there is tension between these multiple priorities. he didn't seem particularly concerned about it today when he was talking. he just said i'm going to meet xi at the g20. when might that change? >> we are not close to that

point yet, in my view. and don't forget the g20 is not until the end of june. we are talking about six weeks to eight weeks before there is going to be this meeting and the prospect of a deal. i think the whole notion of trump and xi meeting is somehow going to resolve his trade dispute is kind of insane. those deals are done at a lower level with tons of negotiation and great detail. so trump and xi, unless we are talking in the background, is not going to solve anything. romaine: who is going to be in charge here? i felt like there was more balance between the hawks and the free markets. i get the sense that the hawks are just driving the show. >> there's no one else there but the hawks. so, i think they are definitely -- stephen bannon, from the sidelines, is given trump -- giving trump high marks. the democrats are silent. they think this is good policy. joe: we are going to leave it

there. we want to thank peter and marty . coming up, we are going to continue talking about the trade tensions between the u.s. and china and how they may impact the fed's rate hike path. more on our special coverage is ahead. this is bloomberg. ♪

joe: amid worries about the u.s.-china trade spat and the economy, traders are more convinced a rate cut from the fed is coming this year. chairman powell noted previously that negotiations were a potential risk. hrere is more. tradersy, risk-off, predicting a cut this year. that's clear enough to

understand. but is it so easy for the fed to cut in a downturn if the source of attention -- tension are tariffs and potentially inflationary tack -- catalysts? >> for that to filter into the domestic economy -- so far, the domestic economy has been doing really well. consumer stocks, doing just fine. what worries me is what happens to business sentiment. if we get a crisis of confidence and companies stop hiring and investing, that's what could trigger some sort of reaction from the fed. romaine: when you talk about how it reflects on the economy, most to thees put the gdp hit u.s. at something like less than 0.5 percentage points. yelena: with the measures currently in place, we think that the impact to gdp growth is 0.3% in terms of

overall growth for this year. obviously, if we move on and remainingiffs on the $325 billion, that's a different story. that could be an impact of roughly half a percentage point or even more, depending on what happens to financial markets and how financial markets react. caroline: that's where the next set of tariffs come into play, because they are much more consumer focused, consumer goods focused. where are you seeing inflation going in that scenario? yelena: if we go on and put tariffs on the remaining set of goods, that would actually hurt the consumers. the earlier tariffs, they were impacting the producers' sector more. this time around we are talking about cell phones, and things like that, where he will see the impact in prices -- where we

will see the impact in prices. that would have an inflationary impact, at least temporarily. joe: when does market volatility like this start trickling into real confidence? fcona: if you look at the function on the bloomberg terminal, from the peak, you will see we have some tightening already. it is down almost 50% from the peak just 10 days ago. december, we saw some financial market tightening, and the fed hiked. that exacerbated the decline. we don't want to see anything like that. right now, it is already a little bit concerning. if it continues, that will be a concern. romaine: we have to leave it there. thank you, yelena. don't miss our exclusive interview tomorrow with the new york fed president at 5:30 a.m. new york time all on "bloomberg

surveillance." this is bloomberg. ♪

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romaine: the u.s.-china trade war topping the list of worries for investors as the standoff is excited to create swings in developing nation currencies. the next guest did predict that the president would follow through on his threat of tariffs. we welcome the director of economic policy and a managing partner at vita partners. also joining us, chief emerging markets credit strategist damian . henrietta, you made this call and i am wondering when you look at the market reaction over the past couple of days related to this, do you think it is overdone? >> no, i definitely do not think

it is overdone. i don't think it is fully baked in. we are down 2.5% last time i saw. i imagine we have at least double that to go. i don't think it is priced in remotely. joe: we were talking about this earlier, but does there get to be a view where the feedback mechanism from falling stocks curbs the administration at all? henrietta: i don't buy it. i'm much more focused on how this trade war is very helpful to the president's reelection campaign. his ability to have a bogeyman. his ability to run against a joe biden on the left. he is not well served by releasing any major proposal at this major juncture. he would only get pummeled by the democrats as we spend the next 18 months if china is living up to the expectations. i think that the dow is something the president sees. director kudlow is in his ear,

but i don't think it is the primary motivator for the president. caroline: more pain eventually to come. we have seen emerging market etf outflows reaching the most in 11 months. it dropped, the main trading guage below the average. how much pain will be factored in? >> i agree, there is more pain to come, but i think we are in a different data regime. if you look at last year, we have a dovish fed now. the central banks and emerging markets have the capacity to stimulate, whereas before they didn't with the fed rate -- hiking rates. overshoot the downside and upside as well. i definitely think there is more pain ahead. romaine: we are linking this pretty heavily to the direction of the dollar, right? another general trajectory is the dollar will strengthen but

that depends on what measures china takes. damian: there are certain assets you want to buy. all these low yield emerging-market currencies like the israeli shekel, they are rallying today. it is not like emerging markets are all going in one direction. some will actually benefit. the u.s. dollar pegs, the oil producers, exports -- i know there is a lot of talk about oil coming off, but there is a lot to like what is going on fundamentally. there are some save haven buying going on. joe: i want to go back to this idea that the trade war might help president trump for 2020. we have been talking about the impact it is having on commodities and hitting farmers in certain key states. and then you think there is a lot of middle-class, potentially swing voters who have their 401(k)s and don't like seeing stocks fall. why is it good to have days like

this when you think there are certain factions of trump voters that are worse today than friday? ietta: if you look at the map of the u.s., the states that have been hit by the tariffs are the only states that still support president trump. maybe the exception would be i'll up where he lost a little iowa where he lost a little bit of ground. sounds, itcal as it makes a lot of sense. if you can have a document -- i compare china in this cycle to what pfizer has been in the past with repatriation issues. obama and hillary clinton slammed. let's say he wants down the trade war and settled for a bunch of soybean purchases, but china does not enforce any of its rules. then you are giving all of this

ammunition to the left who can pummel you for being in support of this new trade deal that now you own. the only thing president trump has ever done and who he was before is be against things. he is against nafta. very difficult to be with the usmca. he cannot sell his new nafta. it is much easier to be against stuff. i think being against china and continuing to lambast them as the american enemy is a great way for him to manifest a bogeyman and a blank slate with no legislation passing. caroline: i like the fact that you bring up usmca and nafta. can thereogeymen be that are helpful towards trump? we have not had usmca signed on. can more trade attacking fronts work for him as well? henrietta: i think you walk a

fine line between not supporting the usmca, which is the new nafta, but being very fearful that he will pull us out of nafta. that is the republican caucus' number one fear that the president will not get his usmca because nobody supports it. instead, he will trigger a withdrawal from nafta and send the markets absolutely tanking and infuriating the farmers. on the scale of what those things voters care about, just making sure we stay in nafta first and foremost. they don't care if we don't pass the usmca. ae auto tariffs can be different ball of wax. the workers, the auto workers do not even support that auto tariffs. that is a decision he will make by saturday. joe: it has been kind of cliche when you talk to em fund managers, they are like we don't look at em overall. they are different. and then you get a washout of

people dumping everything. this being said, is this a good time to look at who really is exposed in a trade war and who might be getting unfairly punished? you are having the old u.s.-china trade war playbook but i think this is different. i think this is a different element in how you want to position. do you want to pick up all your beta and go all low risk? i don't think so. i have been saying you take with the market gives you. asia fx has been overvalued. you are getting paid as a dollar investor to hedge against a sharp dollar of move against many asian currencies for such a quite time. you look at these opportunities and look at where the pockets of where you are, i think people are waiting for the selloff and my look for an opportunity. some of these asian trade currencies that got beat up here. romaine: when we talk about the

economy and economic effects, so far, one plus that trump has had on his side is the economy has held up pretty well. i guess there is a long game here at least until the election that he can potentially play, as long as there is not significant deterioration. do you see the possibility of any significant deterioration between now and november 2020? henrietta: that is the most important question. your previous guest was talking about this. arenext round of tariffs going to go into effect likely in the next four to six weeks. that is your prime point because this is a very regressive, consumer facing tariff that is on everything you buy at walmart and target. when you start to see consumer confidence decline, you get the back-to-school season up and moms and dads have to abide three different backpacks and different pairs of sneakers and

socks and all that stuff you get from china that is for sale at your local target, that becomes a problem. i think the market will factor that in before the economy does. when you look at the economy and layer it over the presidential and political sphere, you want to look at quarter over quarter growth and you probably need to have two consecutive pretty significant declines in gdp, employment upticks before you see the administration really respond and say maybe this was a bad idea. i think it will go for quite some time. two quarters at least is my experience from having gone through the last recession to get members to care about this and attract attention from other issues. i think you have plenty of room. i hear a lot about march of 2020 being the deadline for president trump to truly end this war, stop putting on new tariffs and think about the escalating to save the economy before the 2020 election. caroline: another front that trump has been fighting has been the fed.

thatuch are you expecting we will see more certainty to a rate cut as soon as this year? emerging markets that investors are looking at and the impact on the dollar. damian: we are looking to high-frequency trades, something that south korea, taiwan -- we have yet to see this china stimulus really trickle into the broader emerging-market complex. so, this next round of tariffs really starts to impact that one thing that has -- nobody has talked about -- inflation. we see that spread to the real economy not just in the u.s. but in emerging markets. you will see a lot of potential banks handcuffed in how much they can ease rates if inflation is running hot. that is a very good point and one that we have been conditioned not to think that much about because where is inflation? we have not seen much. romaine: you guys are wonderful, by the way. damian of bloomberg intelligence

and henrietta joining us from new orleans. we just want to bring you breaking news. tencent music is out with earnings. the share is moving higher after hours. their 1q adjusted revenue coming in slightly above estimates at 5.7 4 billion yuan. the adjusted gps above estimates. 654 million users. caroline: alibaba, tencent. joe: big week for china related earnings. this is bloomberg. ♪

joe: this is special coverage of the u.s. markets selloff. let's zero in on the currency market. joining us is eric nelson,

currency strategist at wells fargo security. great to have you joining us. we have seen the yuan selloff quite a bit. how much of this is china essentially using its currency as a way to get back to the u.s.? what do you make of the move? eric: initially, it is mostly a sentiment driven play. i don't think china is weaponizing their currency at this point. i think any more weakness orards the sveven level beyond becomes destabilizing and that is more of a concern for them than the tariffs. romaine: do you really think there is a fear that china would weaponizing because it seems like they are content to keep it in this range. romaine: i don't think weaponizing is a real concern. erik: marty blaked at the headlines that they would sell treasuries. i don't think it is in any interest to destabilize the market, but to see more impact.

caroline: i'm looking at wcrs which monitors how the performance of key performers are. you are looking at the g10, japanese yen a standout performer. these two your havens of choice? the dollar has been too. erik: that is what we have seen especially relative to emerging markets, especially the high data currencies, even the brazilian. the euro has been a little more align as a funding currency. we have seen some euro strength on the back of the trade sanctions. we actually saw the opposite last year. that dynamic has shifted. joe: overall, especially prior to best week, a constant refrain that there is so little currency volatility. there was some analyst that came out and said we don't even have an idea this week because currencies don't move anymore. we have seen action over the last couple of days, but is this

going to be a new regime where currency volatility will be elevated or is there something fundamental because of how central banks are positioned where it will go back to the way it was? erik: i don't think it will be permanent but it could last a little while longer, especially when central banks remain accommodative outside the u.s. whether that be in the u.s. or the euro area or the u.k., it seems like it is not coming back. that is always how it seems when all of a sudden its next you in the face. romaine what is the first couple of currency pairs are you looking at? erik: circulate, i have focused -- certainly, i have focused cna has beenollar really influential. it has become a more market price as opposed to be a much more control variable. of course, the euro dollar is at

the heart of the fx market. joe: i want to point out the deutsche bank currency volatility index. it barely touched -- budged. it was higher a few days ago and fairly back to it in march. what explains this? currency and rate volatility, not much going on. erik: for one thing, you have not really seen a lot of speculation in the data. europe had a pretty good first quarter, u.k. as well. the u.s. is pretty good. i think the data looks pretty good despite the sentiment we see on the back of the tariffs. caroline: you were saying the thing that could rocket is inflation. one next step everyone is looking to is as our previous guests were saying, will we see the next set of tariffs come onto the billions left? 60% consumer goods. how much is that going into your thinking of the forecast?

erik: for right now, we are not seeing a huge impact. maybe .3%. the next round is the big one. that is where you are talking about .5 or above impact. for the fed, it will be about inflation expectations. as long as those remain anchored, they can look through temporary target inflation. romaine: in order to get that kind of reaction, whether it is in the fx market or markets, do you think that would have to go into effect? only going to get a severe reaction if there is a sense we are getting closer to that deadline and there is no resolution? erik: you have to see them go into effect. we have seen threats before and i don't think the markets are buying into the threats. but if it goes into effect, you talk about a much bigger market impact. joe: there is this theory that maybe one thing china would do is sell treasuries. i don't understand that because i think that would strengthen the yuan.

the u.s. would probably like a weaker dollar. erik: a little bit. if you look at the effect of exchange rates, it looks a little rich right now and that is not great for exporters who are feeling the brunt of retaliatory tariffs from china. it would help, but i think they are more concerned about the impact as they are seeing a wider deficit on higher rates. caroline: a lot of auctions they have to get through. your view on the dollar. it is stubbornly high. erik: it is, but it is really not making an impressive move higher. it is kind of grinding higher and higher. the positioning is so high right now. a lot of dollar longs out there. we're still negative on the dollar over a 12 month period, but we are not ready to sell it yet partly because it is extremely expensive to short the dollar right now. caroline: good point. erik nelson, great to have your perspective. thank you. coming up, several trade

sensitive companies including alibaba and tencent are set to report earnings. how tensions will affect the al outlook. that is next as our special coverage continues. this is bloomberg. ♪

caroline: business special coverage of the u.s. market selloff. an escalating u.s.-china trade tension. let's get a deep dive of asia. we will see at how those trade tensions are hitting tencent, alibaba. many of china's biggest firms releasing earnings. let's bring in shery ahn. is there any affects of this quarter from the previous tariffs or are we looking for the future forecast for what these companies talk about in terms of sentiment? shery: we have to take a look at future forecast because we saw the chinese economy stabilize at the beginning of the year so these companies will see the

benefit of that. for alibaba, we saw the stock rally more than 2% your today. analysts are respecting them to meet their 2019 sales guidance. that is because online retail sales in china have grown more than 20% at the beginning of this year compared to last year. joe: i recall talking six months ago about when the chinese economy looked the bleakest, people are saying this is not just about trade. domestic deleveraging, policy choices. could it be for these companies, particularly their inward facing operations, even if you have trade were issues, maybe the chinese economy can still pick up? shery: it is all about the chinese economy because when it comes to alibaba, 76% of the revenue comes on the chinese market. they only rely on international sales by about 20% or so.

the problem with the trade tensions is that it may dampen consumer sentiment within china. we have seen the chinese economy slowdown last year and so forth, but given the deleveraging efforts and we have seen for the last few years still with the trade tensions coming into play, the chinese policymakers have again boosted those stimulus measures we saw. tax cuts is one of them. they have now filtered it into the economy. romaine: when we talk about tencent, a lot of the problems they had in previous quarters was because of that crackdown on video games and the moratorium on new licenses. have they work through that? shery: they have. right now, the expectation is the 2019 mobile game recovery will lead tencent higher. we saw this year year to date the stock gaining more than 20% as chinese regulators have now

resumed approvals on games. we also have the seasonality factor for the first quarter when it comes to gain sales. you are going to see a boost, but there are deeper concerns with tencent because we have seen them shift the revenue mix. what that meant is that costs are increasing as they try to market these new sectors of growth. even if we see this, the consensus seems to be that they might have a challenging time translating that into long-term growth as they shift revenue. caroline: things do not look too bad for these inwardly focused companies. which companies are you focusing on with the biggest hits on the chinese-u.s. trade tensions? shery: we are looking at the domestically focused one. reportedjb.com, they earnings already. 30% this year as we saw them beat expectations because the

chinese economy started to do better. there are different sectors on the chinese economy, especially with the property sectors that can take a hit. joe: a quick question i was thinking about. this morning, there was a tweet from the global times editor and chief -- in chief that they might dump treasuries. how significant is this? everybody is following this guy's tweets. shery: they are. as soon as we are trying to figure out what we are thinking, we are looking at media that is controlled by the people that is also controlled by the communist party. we have been looking at the response even before chinese officials came out to talk about retaliation. caroline: great perspective. we thank you. you want to be tuning in to her stories starting at 6 p.m. eastern. tomorrow, don't miss our exclusive interview with the new york fed president john williams

on bloomberg surveillance. that is all for our special coverage. romaine: bloomberg technology is up next in the u.s. joe: have a great evening. this is bloomberg. ♪

♪ i'm carol massar and this is bloomberg technology. coming up in the next hour all week long, we are looking at the best of boston's tech hub has to offer. we discussed what is on the cutting edge in some of the city's biggest industries. the trade war escalates. trump tweet threats and china hitting back. we break down