out of china in the middle of a trade war. italy strikes again. deputy premier matteo salvini goes on the offense. german tenure bund yields hits a 10 year low. [no audio] alix: -- in the middle east and persian gulf. we don't really know what the stance is with that. i don't know if the market knows how to price that in yet. david: i'm not sure anybody knows. the president was saying if we have to send troops, it's a lot of troops.

this differences in intelligence showing what iran is up to right now. alix: when we had that selloff in the overall market, oil was able to hold on. there could be a lot of things iran could do we don't know about. and there are offshoots that we can't hold them responsible for. david: which is part of what the iran,blem with they fund things like hezbollah. quarterrmany's first growth surprising to the upside, but italy is shaking out here. salvini talks about the budget deficit. you are seeing a bid into all bonds, with the exception of btp's. crude just a little weaker. david: time now for the bloomberg first take. we are joined by rachel evans

and michael mckee. we've got numbers out of china overnight that basically we are disappointing, below estimates, for retail sales, industrial production, and investment. this is over a long period of time, going back to 2008. retail is the lowest it's been since 2008. michael: the chinese economy seems to be in a double-dip kind of situation. this comes before trump raised the stakes in the tariff war's, so it is not a good starting point for the chinese. that is why you saw a rally in chinese stocks today because people think they are going to have to do something about this and bring about some additional fiscal expansion to try to boost the economy going forward. alix: those numbers are just for alibaba.t now

the stock in premarket up by almost 2.5%. that is some serious money they are making just in earnings making,n -- they are adjusted earnings coming in. david: by the way, tencent came out earlier. missed on revenue, but beat handily on earnings-per-share. what does it tell us about the overall economy in china? rachel: we are seeing a shift from this industrial complex into modernizing in the next century. i think this suggests they are on the right track. just as we have the same issue, you can't necessarily see one or two companies driving the economy forward. things have to be broader based. earnings this time around within the u.s. -- that is something folks have been grappling with on earnings this time around

within the u.s. alix: i feel like the story a couple of weeks ago that the good stimulus we had last year finally filtered into china, and now it is very different with the trade war and the potential for the hard data not catching up with the soft data. what is the right narrative? michael: the right narrative is that china was slumming anyway. it stimulated its economy, brought it back to about level, and now the trade war is really starting to take a bite out of the manufacturing sector. exports much more important to them than the united states, so we are really seeing the impact their. it is starting to spread to other countries. you saw germany, industrial production difficult. they rebounded on other aspects of the economy. this is something investors want to keep an eye on around the world. alix: we also want to recap alibaba for you. solid numbers. revenue coming in at 93.5 billion you want for the first

yuan for the first quarter. active users, seven to 21 million. they want to diversify -- 721 million. they want to diversify into many things. david: and places like india. this gives them the power to expand geographically, which the united states will not be too happy about. alix: our second story has to do with germany. one, it's the spread. the btp bone spread is -- the btp bund spread is slowing down. you have the lowest bunds since 2016. michael: people are moving out of italy into german bunds. the question is what does salvini really mean? european parliamentary elections are coming up.

alix: i think we know what he means. michael: his party is starting to fracture the coalition with the five-star movement, so at this point he sort of pushing the other side away and saying i'm going to take the leap forward and start appealing to the populist base again. where have we heard that in politics lately? we's been pushing this idea. it doesn't mean they are really going to go out and spend more. it is hard to know exactly what they can get through parliament, but it does worry investors because with the size of italy's bond market, and the weakness of its banks, it is a particular systemic risk. people keep an eye on that, and you shift the risk from italy to germany. -11 basis points is where we sit for the 10 year bund yield. the iea came out and warned on a supply risk, saying production in iran was down to 2.6 million barrels of oil in april, but in

may it could fall down to the lowest level since the 1980's. then you hear all of the headlines over the last 24 hours, but the oil market seems to take that in stride. what are you noticing about investor sentiment? we've been seeing significant outflows over the last few days. at the same time, i've noticed short interest has been creeping higher. i was interested to see the headlines out of the iea suggesting we could see demand rebounding, and that this is kind of a temporary issue in terms of entering tory growing -- in terms of inventory growing. i will be curious to look at flows tomorrow and volume today, and see if there is any change of sentiment. michael: -- david: i wonder if there is some lesson we can learn from china trade negotiations with respect to iran. when president trump says he wants to get mean with somebody, he has the capability of getting mean. we shouldn't take him lightly

when he's really -- when he says he's really serious about going after around. michael: he's said all kinds of nasty things about china, but he says he loves xi jinping. he doesn't say anything about that with iran. it is these are bad guys and we are going to take steps. now we've got extra naval ships headed towards the straits of hormuz. you've got the potential for an accident very high, and that should probably weigh on oil market sentiment as well. we've seen various attacks on installations in saudi arabia. they may not be related, but the field is getting opened to things that could happen. that is one of the scarier prospect out there right now. .lix: there's a pipeline issue you can't get the oil over here, and you have the straits of hormuz, so you are constricting oil. there's intelligence

suggesting iran has positioned themselves to go after u.s. interests, and others saying they are wrong. michael: i don't want to say that something is going to happen, but it is always the thing you don't expect that census into recession or something like that. there is the possibility something would go wrong in the middle east, and everyone's been focused on china. alix: and the thing you can't price. thank you very much. coming up, more on china's april slump. what it means for trade negotiations. we will speak to northern trust's cio. before we go to break, we want to recap alibaba. they have 721 million mobile customersive annual 654 million. the company making a lot of money. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." president donald trump planning to oppose a major restriction on foreign telecom companies. bloomberg learning american firms would be banned from using gear made by overseas companies that pose a security threat. -- theinistering has administration has already singled out china's huawei. china says the possible new restrictions would have little impact. its as the unit sdathe u.k. public -- its a unit in the u.k. public. last month, british antitrust a planned block merger with rival sainsbury.

about 62% of the flow of lyft -- lyft down since its debut in march. david: china economic data disappointed overnight, with industrial output, retail sales, and investment all slowing more analysts expected. we will put this chart back up for you. this is over a 10 year period of time. retail sales is down to the lowest in 10 years. industrial production took a big step down as well. this is before the tariff effect. what are the tariffs going to do? >> it is not going to help. that data should reinforce the need for both president trump and president xi to get together

and work something out. our long-term view is what we went through the last two weeks is par for the course. there will be some temporary resolutions and agreement, but we are not going back to where we were. investors really have to get used to this geopolitical risk between the u.s. and china on trade issues being an ongoing theme for the next several years. alix: on the flipside, you say you see more fiscal stimulus out of china. which stance did you take? >> it gives the market a little bit of solace because it was hoping for some of that stimulus. you saw after better numbers in april came outcome of the markets weakened in china because it looked like they wouldn't get that stimulus. it putserm, i think into play the fact that you have all of these polit necessarily e just economics at play within their discussions.

this certainly changes potentially how aggressive the u.s. could get if they see that china is a little bit weaker going into these discussions. david: it certainly seems that both sides are feeling pretty aggressive when it comes to trade. we can put up a chart that shows something interesting. total take the volume of imports and track at against msci global index, look at how well they track together. that would suggest that if we cut down imports, it is not a good thing for stocks. >> without a doubt, trade is important for earnings. s&p 500 earnings have much larger exposure to the non-us side of the world and what is going on there. having said all that, we don't think this is a catalyst for a recession or severe slowdown. we are still overweight risk. we think we are in a modest but sustained rose environment for a variety of reasons. we think u.s. growth bounces between 2% and 3%.

we are not overreacting to this bad news. it kinda fits our expectation that it will be one thing or another that drives us closer to 2% growth rather than 3%. right now the trade restriction is more of the former. alix: marvin, do you agree with that? marvin: i think we are decelerating down to this new normal sort of growth. i think we see slower growth coming out of the u.s., and rest of the developed world is having trouble after two or three years of the best synchronized growth on getting any traction. are put in.s. assets strongest of those g10 countries at this point. having said that, we are looking for any kind of slower growth as the new norm and positioning around it. david: does that change your allocation within equities?

bob: we are positive u.s. equities in particular. we don't take large sector positions. we think it is an uncompensated risk. we would rather get the risk off trade right and asset location, and then in cross asset, really thick about where we want to be positioned. we continue to like high-yield bonds because we don't think a recession is happening. we think this reach for yield will once again get reenergized. if you pull up the work function, markets are already discounting about an 80% probability of a cut by january. our view is that the fed should cut by the end of the year. alix: so where do you want to go in asset allocating? marvin: i do like a lot of the trades bob talked about. i do think there's going to be a reach for yields. i think real assets perform well in this kind of slower growth environment.

high-yield certainly makes sense. real estate makes sense to me. concept that everyone ultimately loves, u.s. stocks still have the best r.o.e.'s in the world, and money needs to go someplace, but becomes a very stock picker asset allocation kind of world. alix: thank you. i want to point out that theresa may and jeremy corbyn yet again trading barbs in parliament. we have prime minister's questions underway as the brexit charity -- the brexit secretary steve barclay talking earlier that a decision needs to be taken. david: he doesn't want any more indicative votes. we've had enough of those. alix: good stuff. you have the cable rate at 1.29. ining up, mounting tensions the persian gulf as the u.s. orders nonemergency staff to leave iran immediately.

that is coming up next. if you have a bloomberg terminal, check out tv . you can interact with us directly. check it out. this is bloomberg. ♪

alix: the u.s. ordering all nonemergency staff to leave the iraq embassy amid rising tensions with ron. -- with iran. pres. trump: we have not planned for that. if we did that, we would send a helluva lot more troops than that. alix: joining us is bloomberg's and marie horton. how did -- bloomberg's annmarie hordern. how did we get here over the past when he for hours -- the past 72 hours?

annmarie: this comes after mike pompeo's visit over the weekend. just yesterday we had the key oil pipeline in saudi be attacked by drone. all of this information is coming from the saudi government that this was from yemeni rebels backed by the iranians. it was reported that this group was going to be targeting them. this oil pipeline in saudi is so very crucial, the right now there's a lot of tension in the middle east. this begs the question, what does this mean for oil, supply and demand? alix: that pipeline is crucial. it also leaves the straits of hormuz at risk and really squeezes saudi arabia. what is the readthrough to the oil price your hearing?

a bitie: prices are softer today. people are focusing on the behemoth of u.s. shale. on ave inventories rising report recently. on top of that, many people are worried about the short-term, what is going on with saudi. they will make up for the loss of any iranian crude, as well as venezuela. their production has been falling off a cliff. there's a lot of tension outside the middle east, but inger-term, wti is degradation. is the problems because of iran. they were saying that iranian exports could drop to levels we haven't seen since the 1980's. alix: thank you very much. i'm not the only one the talksck rotation -- that backwardation before 8:00 a.m.

how do you factor in this developments? marvin: we think the regime you are in important. that is, if you are in a bull market, the market tends to look through these geopolitical risks. we think right now, it is more of the first situation then the second. david: what kind of market are we in right now? is the market pretty confident of where it is, or looking for excuses to selloff? bob: we had a great year, but i don't think anybody would think that equities were up double digits. it is a good reason to know that being under invested in being too conservative, you end up leaving a lot of money on the table. alix: marvin, how do you look at that when energy equities are going to be awesome, but have not moved when oil has moved?

there: it just shows that are global growth backdrop stories that have to be a part of this larger discussion. certainly from a supply perspective, what we heard from the iea, what we are seeing on the shale side of things in the u.s. makes the supply part of the story much more resilient than it had been in the past. risk is something i have no idea how to approach, ultimately. we have a lot of troops and what will wind up being one of the most strategically significant volatile parts of the world. it is a completely different equation we are trying to understand. us for a supply and demand, i think the market is being quite measured in how it is interpreting all of this. david: global growth is coming back before we had betrayed to speak. , is thatit continues driven by china or the united states? bob: you need both. it is hard for global growth to

be solid if the u.s. is not at least 2% and china is between 4.5% and 6%. they are both necessary. of course, china has been the number one contributor to dollar growth, dollar gdp for the last 10 years or so. both ofal economy needs these countries working together and growing in order to be robust. it is hard for just one country to pull the rest of the world with it. alix: thank you very much. marvin will be sticking with us. coming up, how companies are reacting to all of these concerns over global growth, trade, and geopolitical risk. 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. alix: this is "bloomberg daybreak." a risk off day developing in the markets. the s&p right off the lows of the session. european banks getting hit.

higher costs are weighing on the banks. in other asset classes, the safe haven story developing. euro-dollar down 1/10 of 1%. 11 basis points negative yielding for 10 years over in germany, the lowest since 2016. the three months 10 year spread went negative yesterday, 240 three basis points to the negative side. no one really cares about that unless it feeds threw two financial conditions and lending. david: the question is whether it is an indicator are not. hot dispute about that. viviana hurtado is here with the first word news. viviana: in the u.k. come of the date is set for theresa may's final showdown over brexit. we are taking a live look right now i what is going on in the chamber in the u.k. the prime minister promising to bring her deal back to parliament at the start of june. she is answering questions right

now before the body. may has not been able to reach a deal with the opposition labour party yet, but she told lawmakers she is determined to deliver on her brexit promises. reboundedeconomy has from stagnation at the beginning of the year, gdp growing 4/10 of 1% in the first quarter, matching estimates after two quarters of no growth. assumer spending rising, well as sentiment. industrial output, retail sales, moren investment slowed .han expected last month 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 viviana hurtado. this is bloomberg. david: thanks so much.

the china tariffs might not yet be hitting the economy but chief globaln, economist for citi, told us that might be affecting investment decisions. protractedthis policy uncertainty is weighing on investor decisions on what i'm going to do with my supply chain and purchases. david: rich lesser is the ceo of the boston consulting group, a global consulting firm with over 90 offices around the world. marvin loh of state street is still with us. how are they addressing the uncertainty we are seeing over the chinese situation? want to talkoften about it in terms of macroeconomic uncertainty. i think the macroeconomics of

the world are generally on the more positive side. oft we've got is a period much higher uncertainty than even a few years ago. trade in china, all of the political discourse, that brings what is going on in europe come of the flareups in the middle east in the energy part of the economy. worldre now living in a the inverse of three years ago, where people didn't think about the geopolitics. they thought about the macroeconomics. now people feel pretty good about the macroeconomics, less about the geopolitics. leaves less resilience in the business model. david: talk about supply chains specifically. you deal with companies who have had china and a graded into the supply chain. are they regarding this trade risk is something that is

transitory, or are they saying we have to start looking at vietnam or other places and really restructure our supply chain given what is going on? rich: i think ceos have to be thinking about a world of uncertainty and having resilience built into their model, and they have to be able to thing about different scenarios that play out. we don't know how the trade negotiations pan out, and you just bet on one outcome, and you are not acting responsibly. alix: what we've heard from a lot of companies on conference calls exposed to trade risks is they are dealing with cost-cutting and looking at maybe diversifying some of their supply chains come about really managing operations. how much more upside do they get out of those tools? marvin: these by chain discussion certainly is a very important part of how these businesses ultimately evolve, but in the immediate term

response, we can't ultimately just turn on new factories the next day. if these trade tensions continue, if these tariffs come into play, there's going to be either a margin squeeze rate is going to get passed off to the consumer. the way the tariffs have evolved, there's more consumer impact. inid: everyone's got to be favor of resilience. it costs money. my first question is are ceos sitting on their pocketbooks? where are they spending more money to build in resilience? rich: it is interesting. the conversations we are having with many ceos right now is about advantage and diversity. no one knows if a recession is coming. i am on the more positive side of that, but there are certainly many ways adversity could play out in different sectors of the economy. how do you build advantage in that? advantage comes from being prepared, understanding where you really stand.

are you likely to be pray or predator -- to be prey or predator? growth is the big differentiator of coming for difficult periods in a sector, and using it as an opportunity to transform. that conversation of prepare, preempt, look for growth, and where the transformation opportunities are, that is the conversation ceos want to engage in right now. alix: if they do, is it safer to do m&a then to try to grow organically at this point? rich: it is such a sector and company specific discussion, it is hard to come up with a generic answer. at this point i think the organic growth vector is what most companies are thinking about,ougher, and may be startig some conversations and starting to make sure you have enough

powder available should opportunities arise, they know that if the economy turns down, they are going to be vulnerable. the job is to strengthen themselves, drive productivity. stronghave really balance sheets, great positions, and they need to think about how they would use a difficult period to really build competitive advantage. they should be thinking about what their mna agenda could be, not to the exclusion of organic growth, but taking advantage of a slower period. david: we are so focused on china right now because of these trade disputes. let's go to europe now, though. we have concern about german growth. we also have a european parliamentary election. talk about uncertainty. how does europe look to you right now? marvin: certainly germans numbers -- certainly germany's

numbers took a little bit of concern off of the market. manufacturing was driven a little more by the consumer, which is positive. elections, then fact that the better numbers we saw today didn't move the arrow, and the euro has been in this range for an extended time. i think europe has a lot of wood to chop before people in grace it again -- before people embrace it again. weimately, i think that once get better indications of what the ecb is going to do, and one of the challenges for the macro world is that none of the central banks have anything firmly out there in the market. expectations for the u.s. are negative, but there aren't any expectations for moves. until you get an idea that the ecb is going to start to stimulate again, you've got a challenge with the fact that

italy, during election season, is going to be pushing this more dovish agenda. david: europe seems to be in a perpetual election season, whether it is referendum on brexit or france. alix: as opposed to the u.s.. [laughter] david: you see some company's making strategic decisions. gm said brexit was taking is nowhere fast. are you seeing company saying right now it is ok to go easy on europe? rich: i think it is important to come back to europe because obviously, if there is a trade war between the u.s. and china, that is a drag on both economies. if that gets resolved in some way, the biggest challenge sits in europe right now. the political destruction continue will it harder to a brace -- harder to embrace the real agenda of reform, encouraging investment, and encouraging growth. willnk different companies

-- certainly, finding growth in europe is hard, and as companies prioritize, depending on the underlying strength of their business, it will be one of the places that is at risk of seeing scaled-back investment. the quality of the workforce is terrific. it is all of the things that go around it that make it really tough. alix: is there a distinction to be made between international and domestic focus for companies within europe? gdp and germany came in better-than-expected because of domestic reasons. that is not bad for to domestic focused companies. do you have to distinguish between the two? marvin: i think so. europe has dealt with a lot over the last six months, or even the last year given how weak last summer was. given that, markets have performed reasonably well.

people are making bets. i don't know if they are wise given the flareup of tariffs and trade talks again, but having said that, people are making those distinctions. david: take alix's question more broadly. do you see companies tend to borders, thate they are not interested in cross-border acquisitions? rich: i talked to some silly who were in exactly that position, who saw their -- to some recently who are in the exact position. with global opportunities, that is a step too far. there was talk years ago about a two speed world. we are so far from a two speed world now. companies have to look very

deeply at where they can unlock growth. the challenge for underlying growth in europe has made it more of a challenging issue. david: rich lesser and marvin loh, thank you both very much for being with us today. monet's $110 million painting is showing haystacks in wall street beat. this is bloomberg.

♪ viviana: this is "bloomberg daybreak." coming up in the next hour, mobius capital partners co-founder and partner.

♪ viviana: this is "bloomberg daybreak." strikecurity firm cross has joined the crowd of u.s. tech companies that want to go public. the company has filed for an ipo. said it crowd strike raised $200 billion. aston martin reporting lower first-quarter earnings. the british luxury automaker boosting spending on new models. meanwhile, sales in the u.k. and mainland europe declined. aston martin is trying to replicate ferrari's success in moving toward higher volume car making schemes. lloyd blankfein says raising tariffs might be the appropriate tactic to use against china if the latest sign of widening american support for president trump's approach.

"china relies more on trade and loses more." that is your bloomberg business flash. alix: thanks so much. we turn now to cover three things wall street is buzzing about this morning. first up, ing unicredit tapping some advisors as they i german lender -- as they eye german lender commerzbank. depend my papers lead to a wave of raids -- and the panama papers lead to a wave of raids. joining us now is peggy collins, who leads bloomberg's u.s. investment coverage. peggy: we've talked a lot about how deutsche bank and commerzbank were potential he going to merge, and in those emerged, asedit

well as ing. now it looks as though ing and unicredit are pushing forward in terms of due diligence around commerzbank. ceo saydn't unicredit's cross merger -- say cross-border mergers are superhard? david: you never know. one of the questions is how do you take commerzbank and make money out of it without laying off people? peggy: that is one of the big hurdles to getting a deal done. there's been a lot of pushback from workers and unions saying we don't want to merge because we don't want jobs laid off, but in terms of these companies, potentially it could expand their presence in germany, and i could be really helpful long-term in terms of their client base. unicredit doesn't have that kind of retail presence in germany, celeste synergy in that way. david: it is very different from

, where they have branches, but they are in for an parts of the country. alix: i see. peggy: and maybe there wouldn't be amu overlap in terms of layoffs, so that might make it possible. alix: let's go to deutsche bank and some raids for individuals that happened last november. deutsche bank offices were rated because they were looking into ere -- offices because they were looking into possible money laundering. peggy: one of the things that dates back to the panama papers is the synergy between global tax authorities. the u.s. has been cracking down on people in terms of making sure you disclose offshore accounts, and working with the atss and others to look

these accounts that say if the individuals haven't paid taxes, they should on their assets. this looks like, from the reporting we are seeing this morning, that companies are saying this isn't about us. it is about files or information we may have about these wealthy individuals that may have evaded taxes. alix: it's not us. it's just those guys. peggy: exactly. david: the third story is this monet painting. alix: thanks for the birthday present, by the way. [laughter] david: what would you do with it? if you spent $110 million, where would you hang it? peggy: it is a record for monet as well. really extraordinary.

art has become an incredible investment for people. these prices have ballooned over the last several years taylor: we saw -- several years. we saw a da vinci painting sell for a record 450 million dollars. i have to say, i saw one of the haystacks earlier this year, and it really is extraordinary. alix: this kind of dovetails with our james bond car thing from yesterday. it goes to show the amount of doesn't mean you're going to go sell this, but you want to preserve wealth. that is why you might want to think about these sort of things instead of high-yield. david: when with think about how money billionaires are being created in asia, they are going to figure out something to do with that money. as long as wealth creation continues, they are going to be in the market. peggy: that is a great point, but you do have to have a place to hang it. alix: do you hang it or have it encased in glass and something? guards?nd do you have

i think it took a total of eight minutes to auction. alix: we mention other you wind upoo, but having central banks continue to be dovish, and this spurs those kind of investments worldwide. peggy: to your point, where do you get some return on your money? a lot of people have seen these r in value, so you have investors saying if i get my hands on a monet, it could be worth a lot more. alix: how big is it, by the way? david: in terms of dimensions? peggy: i think it is on the larger side, no? david: i don't have. -- i don't know. i think it is four and a half or five feet wide. are things to bloomberg's peggy

collins for being here today. coming up, retirement warnings for baby boomers. half of the people who could live to 85 years old may not have enough money to live on. my conversation with roger ferguson is next. this is bloomberg. ♪

david: a growing crisis in providing for retirement. roger ferguson, the head of tiaa, says it is not necessarily a crisis yet, but it is getting to that point. he says that is why he we has the job he has and why tiaa exists. roger: about half of the people that can live to 85 will run out of money before that point. we are having an increase in life expectancy in this country

that creates an increasing risk that somebody may run out of money before they run out of time, and that is one of the reasons why tiaa exists, to make sure people have money as long as they have time. david: we are living longer, and that means retirement will be 20, even 30 years for a lot of people, and they haven't provided for that kind of money at all. alix: not at all. life expectancy has grown, yet the ag retire really hasn't -- yet the age you retire really hasn't. 64 and 65 is still the average retirement age in the u.s., and you could live to 100. david: take a look at this chart. to 84 we think of as quite elderly. that is going to be like 50 million people. it is very interesting on how that could affect things. alix: you also have some senators talking about this to.

there was a bipartisan bill trying to reform the retirement system. they did the 401(k) changes that actually did make a difference and saw more people contribute. david: and they want to make it more flexible, but one of the things roger ferguson said it would give people too many choices. yes, looking forward to that tonight. david: you can see the full decisions." "big alix: coming up, who is left to buy u.s. equities? this is bloomberg. ♪

♪ news?china's good bad news?

market expects more stimulus in the middle of a trade war. oil vulnerable. iea warns of tighter markets as iranian exports shrink and tensions rub in the persian gulf -- tensions erupt in the persian gulf. on retail sales and macy's earnings on deck. david: those are out right now. welcome to "bloomberg daybreak." macy's out with adjusting ratings per share. there you go. i'm looking for revenue, which i do not see right now. reaffirms tonight -- reaffirms 2019 sales guidance. earnings-per-share appears to be a nice beat for macy's. alix: that stock moving up by almost 7% in premarket. i was digging through the press

release to see if there is anything on china or more color on margins, but i didn't see it, so we may have to wait for the call. the big question is going to wind up being for the retailers that sell into macy's. to china,ve exposure how they are going to mitigate that and any kind of margin/labor impact. david: we want to bring in david kostin, goldman sachs chief u.s. equity strategist. let's start with retail at macy's since we are there at the moment. a lot of questions with this. you went through a lot of the earnings calls. what you came up with were things like margin pressure and supply chains. what do you see in the equity world? guest: one of the big issues is input costs, broadly speaking. labor costs are another big issue. there's a social positive to that, clearly people making more money, but with the on the plummet rate at 3.6%, that is

putting -- the unemployment rate at 3.6%, that is putting pressure on labor costs. there's pressure on wages and downward pressure on margins. the expectation is you get modest earnings growth this year. alix: not to mention retail in particular had more money from online sales, and then you will have more input costs f your supply chain comes from china. area wehat is not an are focused on right now. we would prefer to have more technology in some of the media or communication services companies. they are somewhat less exposed to the goods side of the inflationary pressures, which we are seeing. we want to think about a way of attacking the market right now, to separate services companies compared to goods producers. you want to belong on the

services end and short, underweight, or avoiding companies or industries in the goods focused areas. think about that specifically. softwarewould be companies, media companies, banks and financials. those are areas where they are less exposed to tariffs, input costs, et cetera. from a goods perspective, you look at concern about some of the pharmaceuticals, energy. david: we are putting of a chart that you provided showing the outperformance of services versus goods. you also have charts indicating the s&p is shifting over increasingly towards services from goods as a larger portion of the population. guest: this is a multi-decade evolution for not just the index, but the economy, to become more service oriented. 80% of the revenues of these

industries are domestically based as opposed to the goods producing companies, something around the order of less than 50% of the revenue exposure. that is certainly one issue at risk from tariffs. alix: another chart shows u.s. equities that have exposure to china, that sell into china, and what their performance have been. you get the company selling into china and buying from china, and you see the underperformance of those that sell into the country. yes, the chart is certainly a big area of risk. what we see here, the lower line is the relative performance of chinese stocks that are selling premier league to the united states. --t is relative performance selling primarily to the united states. that is relative performance. that index went down 30%.

thee prices are down 55% in wake of going into the discussion of tariffs last year. as the discussion in beijing and washington was about reducing trade tensions, those stocks started to recover. of course, that has now reversed more recently with the increased trade tensions. david: if i my services company, i may not need to worry about it as much. one of the things we find really helpful, you go through a lot of earnings calls and say, what are the patterns? what are people talking about? one in your report was, with respect to tariffs, we running trackck -- we remain on to neutralize costs through supply chain changes and negotiation's with vendors. there you have it, we are going to change our supply chain perhaps, as well as absorb some of the costs and pass them on. are they changing their supply

chains? guest: there are many companies in the process of exploring that and implementing that, but some of those changes take time. you can't just pick up your factory and move it to a different location. that is basically diversifying your supply chain. companies are absolutely focused on this because the tariffs are a legitimate issue, and could be here for some time. alix: if everything gets resolved tomorrow, does this conversation from earnings companies change? or do we imply that the tariffs will just be ongoing and some of these companies have to factor in medium-term? guest: the tariff issue is a very specific issue. it could persist, it could not. it is very difficult to model donald trump as a variable. you can look at fundamentals, but he could into the tariffs, he could not. that is its own issue. but the broad issue of labor inflation is going to continue to be here as long as the unemployment rate remains at

these very low levels. again, that is a good thing from a social point of view, but it is a pressure on margins. some companies are better able to absorb that, and that development of more services oriented index is a positive for those companies that are less challenged i higher margins, less variable margins. that is a better business model for dealing in this environment. keeping able to adopt margins high. companies have been successful for years in slowly increasing margins. lower tax rates has offered companies another boost, about 100 basis points in margins in the last year. alix: david kostin will be sticking with us. it's a little but of a risk off day developing. on futures down four of 1% trade and geopolitics -- down for tenths of 1% on trade and

of 1%itics -- down 4/10 on trade and geopolitics. italyve election risk in bubbling up, money flying into safe haven assets like treasuries. 1%.e off by 7/10 of crude should be higher because of the geopolitical tensions, but it is almost like investors are looking at weaker demand or something going forward as a global growth commentary. and that 2.3 on 10 year, where were the calls that we were going all the way to three? alix: it is actually a real question now. david: exactly. let's find out what is going on outside the business world. viviana hurtado is here with first word news. viviana: china's economy losing momentum even before president trump imposes new tariffs. last month, industrial output,

retail sales, and investment slowed more than economists forecast, leading to speculation the chinese government will boost stimulus to cushion the blow from the ongoing trade dispute. over to the state of alabama, where the legislature has set up a direct challenge to the u.s. supreme court case that recognized a woman's right to an abortion. lawmakers approving a measure that would outlaw almost all abortions in the state, even in the case of rape or insist. support -- or incest. challenges toe the law will be an opportunity to overturn roe v. wade. consumptiong fuel in china, japan, and brazil tims supply may tighten because of u.s. sanctions on iran. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 i'm the vienna art out of.

this -- i'm viviana hurtado. this is bloomberg. alix: coming up, buybacks under attack. more on corporate spending and finding safe haven assets in the market with outperformance coming from companies that buy back. david: macy's shares are popping. they had adjusted earnings of $.40 per share, and have reaffirmed their 2019 sales and earnings guidance. they are up almost 5% in the premarket. live from new york, this is bloomberg. ♪

viviana: this is "bloomberg

daybreak." president donald trump plans to impose a major restriction on foreign telecom companies. american firms would be banned from using gear made by overseas companies that pose a security threat. they've already signaled out -- they've already singled out chinese company huawei. takert may tickets -- may its asda unit in the u.k. public. walmart saying profits could take years. last month, british antitrust regulators blocked a -- blocked asda's planned merger with rival sainsbury. the s&p 500 has its worst week since december. b of a had its largest equity inflows of the year, totaling $4.7 billion.

overseas exposed and cyclical shares fell the largest net purchases -- overseas, exposed and cyclical shares felt the largest net purchases. that is your blumberg business flash. -- that is your bloomberg business flash. alix: who is buying? aret: corporations consistently the dominant source of demand. if you didn't have corporate buybacks, the overall market would be more vulnerable. funds,look at net mutual foreign investors, pension funds, all of those different sources of demand for shares, it is corporations that overwhelm. likeumbers around that is $800 billion of buybacks last year. david: just to put a picture with what you've just said, we've got a chart here that shows corporate by berks -- corporate buybacks in the white

s&p.n the it should be no surprise that they are correlated. they spent a significant amount of capital in 2007 buying back stock, and in 2009 at a generational low in the market, they spent very little in terms of share of their cash spending, as well as the overall dollar amounts. the market timing isn't necessarily great, but there is a high quality problem. margins for corporations are very high. when you ask a corporate executive what he or she is looking to do with that money, the number one source of spending is typically capital spending and research and develop it. that usually -- and development. that usually has the largest share of spending. then you have some, day -- some residuals, and buybacks

have been a use of that cash for some time. alix: you've completely describe what is happening in the energy sector. the underperformance of the energy sector in the white line, the oil price is the blue line. they are putting more money into buybacks. they are still doing some capex spending. is not to say that buybacks are necessarily good or any individual industry. invest roughly 10% of their sales back in their business year in, year out. you look at sales, and you get the dollars spent on capex and research and develop it, that is about 10% of overall revenue. as margins have gone higher, they've used that to invest in their business, which is a good thing.

but it is a high quality problem. there's a lot of cash. the issue that has come up is in congress, there's been some bills introduced in the senate, discussions in the house on both sides to restrict or perhaps prohibit corporate repurchasing of stock. david: does that mean that it is reasonably constant over time? that it is not an indication that the ceo is saying i would rather buy back stock that invest in my business because i don't believe demand is going to there? i've always wondered whether it is the ceo telling us i've looked at the business and think i am better off giving money back to the shareholders than investing in my business. guest: i think companies are facing that question. how long is an economic expansion likely to last? is one ahead of the demand, or constraining that ahead of time? my colleagues in goldman sachs economics expect the u.s. economy to grow in 2019 and 2020 and 2021, so this would still be

a reasonably good time to be investing in the business. but companies are already doing that, so what do you do greater than 10% of your revenue? what do you do with some of the extra cash you still have around? that has basically been contributing in part to earnings-per-share growth. overall earnings have been growing on average around 8% annually, but if you look at earnings-per-share, which benefits from buybacks, around 11%. 2.5 percent faster growth in earnings-per-share then underlying earnings growth. that is also supportive of a higher equity market. if you are growing earnings-per-share faster, that says a higher valuation. alix: is that how you get your 3000 s&p target for the end of the year even with macro issues? guest: the baseline forecast is the u.s. equity market will rise toward 3000 at the end of this year.

that is on the back of earnings growth between 3% at 6%. that looks at earnings-per-share for the s&p 500 somewhere between one had to $68 -- wondered $78 -- and $178 per share. in the first quarter we saw year-over-year growth of around 2%. alix: so great to catch up with you. thank you so much for joining us. david: coming up, macy's ounces back. the retailer surges after posting earnings that beat estimates. this is bloomberg. ♪

david: time now for the bottom line, where we look at three companies worth watching this morning. macy's just came out was earnings about 21 minutes ago

now. the stock is up very nicely because they really beat on earnings-per-share by 40% -- $.41.gs-per-share, macy's is doing better than expected. alix: the stock is up 27% this year, so that is something good. 33%aba is forecasting organic growth for fiscal 2020. the take away is that potentially come of the u.s./china trade issue is going to have very minimal impact on its business. this is the business we were talking about earlier in the program. it is domestic it was -- it is domestic. it is digitalization. david: that one data point tended to confirm what president xi has been trying to do, which is to make it about an internal economy instead of an export

driven economy. i should point out it was like 39% organic growth in the year that ended for march, the fiscal year, so it is going to be a little slower. david: but coming off of a very high base. the third company we are watching is boeing. for more, brooke sutherland joins us now. more news from boeing, not necessarily good news. brooke: it just never stops. there's going to be a hearing today with the house. boeing executives are actually not going to be testifying, but we will hear from the acting administrator of the faa and representatives from the national transportation safety board. i would affect questions along the same line of the senate hearing last month, but obviously we've had some new information come out. reports that the senior faa officials were actually not involved in serious testing of that software system that is being linked to those fatal accidents. david: my understanding is

basically they delegated. a were notified there was an issue and said you go ahead and handle it, boeing. brooke: boeing did not like that software system as causing a catastrophic event. that is a very significant classification. you have that label, you have the faa involved to a much greater degree. so as officials delegated it to the bone representatives, they would do that safety analysis on their own. the question is did boeing know that that should be considered a catastrophic event possibly? good the faa pushback any on that? what were the -- did the faa pushback any on that? we've heard from some of the other carriers in europe saying this is not our problem, these are brand-new planes. this is a boeing issue and we expect to be compensated for our costs.

it is not unexpected that chinese airlines would look to get in on this as well, but obviously it is different when you have a sort of consortium. that gives you more leverage. kinda is willing to act as a group, but obviously in the context of the trade war and all of this talk about is china going to reduce orders, that also gives the company more leverage. david: and what about orders overall? we had the china issue where maybe they are not going to buy as many boeings. they're backlog is down a little bit, about in-line line with what you would expect. some of that is tied to jet airways, which is having financial issues and can't afford the planes that once. it wants.nes lion air wants to cancel its orders after its plane was involved in the crash. we've not seen a mass uprising of cancellations, but i think a lot of these carriers are waiting to see what happens not

only with the max, but also air travel demand. alix: in the meantime, isn't the max 737 built in texas or something? brooke: there's not enough space in seattle. you have these planes stockpiling, and texas has a lot of space. alix: brooke sutherland, thank you very much. coming up on the program, retailers reporting. macy's bouncing back from a tough holiday retail sales season. green, speak to drew indo chino ceo, on the state of retail and the supply chain. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. is the moveght now to safe haven and a flood to the bond market. s&p futures near the lows of the session.

that in the next board. part of that will be a rush into safe haven assets like bunds. -12 basis points is where we sit. euro-dollar rating near lows. the beneficiaries of the risk off feels. retail sales dropping right now. almost. we are waiting for retail sales in the u.s.. part of the rhetoric is if retail sales are good, it will be ok, we can weather any kind of trade war. david: a huge beat. now your retail sales are trickling out. alix: month on month basis they are down .2%. that would be a miss. sequentially down quite a bit. david: that is the headline. we are waiting for what it means if you take out autos and gas.

alix: still waiting for that. orders looking at new stronger, hours worked were stronger, inventory fell. we did see inventory buildup overall. the question is there enough demand to draw the inventory. for manufacturing, it feels like yes, for now. it is a question of when that will filter into retail sales. david: the headline number on retail sales is a big miss. down .2%. projected to be up on 2%. .2% --rojected to be up projected to be up .2%. alix: if you back out autos, also a miss. this is not going to be helping the risk of field. dollar-yen extending its decline. the g10 space,

the dollar is still the safe haven currency and the move into the bond market continuing with yields in germany -12 basis points as they fall by five basis points on the day. david: as you point out, this is before any of the tariff consequences. there is concern about what effect that might have on the consumer as prices go up because of increased input costs. before that happens, week numbers for the month of april. alix: those numbers still trickling out. street us is state global advisors senior economist. what you make of the weakness? >> we were already biased to the downside because there was a big thatpointment on sales bush in a weak position to begin with and that is confirmed in today's numbers. coming also say we are

off of a strong bond in march coming -- starting with the week december number. it is hard to make a story around one data point. fundamentally, i would argue that the u.s. consumer is in good place. the labor market is strong. get service ratios are at multi-decade lows. there should be some resilience but you cannot count on every print being exactly in line with expectations. alix: fairpoint, we are seeing retail sales acting out auto and gas down when 1%. for april, all the numbers were exaggerated higher. how much of this can you stock off to lumbee buying? if you smooth it out going forward, what is your forecast to the consumer? >> the forecast rests on assumptions we need to be straightforward about. we are concerned about the

impact of broad-based tariffs. supply chains can adjust to some extent and they will adjust. experience has shown that as long as there is an alternative lower cost producer, things do not have to deteriorate too much in terms of the price paid by consumers. that is a risk on the horizon. absent that, i am quite confident we can see more positive or stronger contributions from household consumption in the second quarter than what we have seen in the first quarter. david: one of the issues when we talk about household consumption, it is not only retail. are we seeing a shift away from retail and toward other forms of consumption? the worker is making more money. >> i do not know if you can make a definitive trend. certainly, various types of services, we are looking at spending related to housing.

that is an area of the economy where interest rates is quite helpful. from there you can have additional trickle down purchases that will show up in retail sales down the line. i think you come back to this idea there is money in the consumers park it. pocket.e consumer's when you look at the gdp calculations, as long as the money is spent, it is good. alix: thank you so much for joining us from state street global advisors. david: the retail sector is at the intersection of major issues , the possible effect of trade disruption and the switch to an online economy. we welcome someone who's trying to take advantage of both of those. drew green is the ceo of indo chino, a new approach to buying men's suits.

we welcome drew green to bloomberg. good to have you here. as we look at the soft numbers for one given month, how much of indo chino success is tied to the marketplace growing as well -- as opposed to taking market share from existing retailers? drew: the numbers speak to a lot of change in retail at large. for us, we are re-creating how generating -- our generation shops for apparel. the last water years we transition from an online only ran to it on the channel brand in 45 showrooms across north america because we wanted to an experience model to transaction. david: you say showrooms. you do not say stores. there is an important distinction. drew: we wanted to re-create the traditional store.

we are appointment base. we have over 400,000 pre-booked appointments before we open the door this year. we are virtual inventory, so every garment we make is made after the inventory. we do not have inventory in the store. it is focused on experience. each customer spends an hour with a style guide. david: you have an arrangement with a major manufacturer in china who is also an investor. how vulnerable could you be to what is going on with u.s. china trade dispute right now? drew: we are a little bit different than it traditional retailer in terms of how they manage inventory. we do not know how everything is going to settle between the countries. for us, we delivered direct to consumer. we just moved to two week delivery. that partnership was enhancing the consumer experience from product side.

we will sell, produce, and ship over half a million one-of-a-kind garments. that is done in china and then shipped directly to the consumer. if the trade war the u.s. and china gets worse, doesn't that affect your business? drew: not all of our fabric comes from china. we feel like we have a good diversified portfolio from a fabrics perspective. that is the number one cost to our business. ofbuy tens and millions dollars worth of fabric every year. we feel we are in good shape their. from a labor perspective, we have been the partnership with our shareholders in china. on producing the product are stable and will be stable for the next five years. of the advantages of

your model is to reduce capital cost. you do not have a lot of money tied up in inventory. how you win over customers? for most of us we're used to going into a men's store and buying a suit. if something is wrong you can take it back and have an altered. how much is your business is repeated business? drew: it is pretty incredible. we feel like we are one of the fastest-growing apparel brands in the world. 50%watcher year is close to over the past year -- our four years close to 50% over the past year. last year over half of our purchases were repeat customers. the business is growing rapidly. we feel we are doing it in a sustainable way and not just about new customer acquisition, which to us is important. david: thank you so much for being here. drew green, indo chino ceo. alix: let's update you on what

is happening in the role markets. yields continue to grind lower as equities move lower. changes in impact from the retail sales and also the risk off. euro-dollar 1.1172. -13 basis points on the bund yield. dropping like a stone. the two-year the lowest level since 2018. crude getting wrapped into the risk off. retail sales to not help that risk up sentiment. david: i should say not. let's find out what is happening outside the business world with viviana hurtado and first word news. in turkey, the foreign minister says delaying the purchase of a russian air defense system is not on the agenda. the u.s. does not want the turks to buy the system at all and broached the idea of a delay to resolve the dispute. the u.s. argues the russian system was designed to shoot down american and allied aircraft. 53 billiona's

dollars lifeline to its non-oil economy may be in place longer than planned. the head of the private sector stimulus operas says the financing could continue beyond the end date of 2021. a number of industries are struggling to cope with reform. call it ceos behaving badly. last year, a record 18% of ceos were replaced. pwc,ding to a study from more were forced out for ethical lapses then were fired for disagreeing with boards. about 39% were let go for ethical shortcomings. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. isn't this a great chart? ceos behaving badly. how many people were fired for

what things. the ethical lapses jumping. david: the orange part of the bar. we've always known the ceo job is a hard job. they have short life spans. it is a tough job, but it is not so much the finances report struggles, it is the ethical lapses. alix: how do you define ethical lapse? david: it is a great question. does raise a question for investors. to what extent you have to take into account the governing structure if the board is looking for ethical lapses and enforcing the rules? alix: accountability. it seems like maybe last couple of years it is actually coming to some kind of fruition. david: we have seen this with some of these companies were there have been ethical lapses, particularly the me too movement, and the stocks have gone down. alix: also the pressure on the board to react quickly.

moonves in at cbs until they actually moved. then you look at the college scandal. it was in does go seconds. two seconds. a change in how you have to react. merging inng up, you the cross hairs of the u.s. china trade war. we'll discuss with veteran investor mark mobius. that is next in today's follow the lead. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i'm viviana hurtado. bloomberglater on

markets, michael spence, nyu stern school professor of economics. in the markets, it is all about the big moves within bonds. if you look at the u.k. to germany to italy, the risk off fell across the board. yields up five basis points in italy yet down seven in the u k and down six in germany with the 10 year yield in germany and -13 basis points. joining us is ira jersey, bloomberg intelligence chief interest-rate strategist. what are you making of this move? ira: continued risk off. stock futures down. bit intoeen a slight government assets. that is why you see europe rallying and why you see u.s. treasuries rallying to the lowest they have been in every year in terms of yield. how much more downside in what on to we see the most?

how much more investors -- ira: in u.s. treasuries, which is what i cover, 2.30% on the 10 year is an important level. below that, you are probably looking at 2%. to get there, you need to have some confirmation that the global economy and the u.s. economy were slowing to an even greater degree than we've been projecting with some of the data. with at the retail sales data that came out and it looks like some of the trade negotiations and a lot of the global angst is feeding into the u.s. economic environment. alix: at the same time we have the data after the bell today. what will be the conversation, is china dumping, are they not buying treasuries? ira: china has not been a net buyer treasuries for six years,

so them reducing their holdings were not be a major surprise. the more important numbers i would look at is the private buyers. central banks by short-term treasuries, not usually long-term, not a lot of market risk that central banks by. 10vate investors will buy years or 30 year bonds. that is where you see the market driven from those private investors who are more portfolio managers rather than central banks doing things for foreign-exchange reserve reasons. alix: great point. ira jersery, bloomberg intelligence. thank you. david: as we look at the remarkable development in the bond market, it raises questions about where one should go for yields. we will target with mark mobius from mobius capital partners next. this is bloomberg. ♪

david: in the middle of a risk off day and chinese data is

coming down, we welcome mark mobius, mobius capital partners cofounder. it is great to have you with us. we are not seeing a dramatic move in the u.s. treasuries. at the same time we get china data that has weakened. where do you go for yields? mark: that is a good question because at the end of the day it is in the emerging markets space we have better yields. it is in those most risky countries, whether it be turkey or argentina, that is where you will get yields. unfortunately, it is also aligned with a lot of risk. it is getting difficult to find good yields in these markets. david: it seems like -- alix: it seems like part of that these as six months ago was by southeast asia, but if you want up having china data rollover, how do you buy southeast asia? tradeif you look at the in asia generally, the biggest trading partner is china.

if china is going to be importing less, all of these countries will be hit. we have to be very cautious in looking at each and every company in the country's to see whether they will be affected by the situation in china. david: give us a sense of the timeframe you think about when you talk about investing, particularly in the china-u.s. trade dispute. if this goes on indefinitely, are there opportunities in southeast asia countries where there might be supply chains altered? mark: we are looking at places like vietnam, bangladesh, where a lot of the chinese manufacturers are moving their production. you have an interesting of lowon where exports goods from china to the u.s. are going down because of the tariffs but that is being moved to these lower-cost countries. that is where we would be looking to see opportunities for exporters, at least, and these

weak currency countries. then further appealed, we are interested in places like brazil because there is reform going on there, and india. those are the countries were you want not be much affected by what is happening in china. david: what is your base case -- alix: was your base case for what happens to the u.n. and -- to the yuan and how are you playing that? mark: the situation is so liquid and so difficult with regards to china, you will have to be cautious when you look at individual companies that depend on exports to china or exports from china to the u.s.. that is the reason why we are cautious. you can see the chinese market is down as a result of this. the emerging markets index will be continuing down if this continues because china now represents about 30% of the index. david: when you talk about the opportunities in emerging markets, we are seeing a lot of funds flowing out of emerging

markets. a dramatic shift. how you take advantage of that without trying to catch a falling knife? mark: that is a good question. the problem is most of the funds are index funds, etf's, and etf's depends on the index and the index depends on china. 30% is china. it china goes down, the index goes down which is what has happened. it is understandable. what we do is active investors is say we will not follow any index. we will go after these countries and companies that will not be affected and therefore we can escape from this downturn. alix: do you escape in africa? mark: yes. africa is very interesting. there are a lot of countries there that are beginning to look much better than before. the problem with africa is liquidity. you do not have good liquidity. it is only for specialized investments and private equity investments.

with the exception of south africa. david: as you look for these opportunities as an active investor, do you differentiate between services oriented companies and manufacturing? , -- you talk about engle -- when you talk about bangladesh, are you talking about manufacturing question mark mark: export oriented manufacturing and consumer goods. interested in low-cost consumer goods. , cheaplike hair oil cosmetics, that sort of thing. alix: to round it out in africa, what countries do you like? mark: south africa to begin with. egypt very interesting. further a field, kenya, the ivory coast, and ghana. those of the interesting ones at this stage. alix: great to get your perspective on this day as we

are seeing a big move down in the bond market. mark mobius, mobius capital partners joining us. a pretty exciting day as we head into the open. david: it looks like it is shifting from equities and bonds. alix: that is right. very accurate. i want to see what happens to the move index today. that does it for us. coming up on bloomberg markets -- the open, keith parker, ubs global strategist. in the markets, it is risk off. two-year yields in the u.s., 2018 low. bund yields -13 basis points as the yen surges. this is bloomberg. ♪

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

up, a little sign of weakness in the u.s. consumer. treasury yields to new lows for 2019. the latest data showing chinese economy losing steam even before the latest round of tariffs begins to bite as president trump files on the pressure. president xi says it is full is to reshape other nations. your wednesday price action as follows. down 19 on the s&p 500. softer .7%. there is your bid on the 10 year. yields lower for basis points. more signs of weakness in the global economy. >> it is concerning for the domestic chinese economy. >> china has had a relatively prolonged slowdown. >> china weakness. >> the trade war is simply the icing on the