manus:. daybreak: europe. i am manus cranny. nejra: i am nejra cehic. these are today's top stories. presidentfor you trump escalates tensions with china by moving to curb always access to the u.s. market but he could delay auto tariffs on the eu and japan by six months. flight to safety. china cuts it treasury holdings to the lowest level since 2017, but a global rush to sovereign debt sends treasury yields tumbling. middle east friction. the u.s. orders nonemergency [inaudible] as tensions climb. the u.s. minister of foreign affairs gives his take.

>> at the same time not to be [indiscernible] into a crisis. it is very important. manus: it is daybreak europe, it has gone 6:00 a.m. in london, 9:00 a.m. in dubai. all right sleep to bonds. two-year yields trading at levels you have not seen since february 2018. is there a value there? you could see sub-2% in terms of the yield. the only way to save the yield curve my last guest said is for a rate cut. how much of a rate cut, that is the aussie dollar dropped, rate cuts risk is

rising on the aussie, unemployment took the market. you're looking at a former flow. the dollar yuan, the cavalry i can tell you are present in the form of intervention. stabilization, that is what the chinese want to have area they orientednterventionist poc. we will put that question to jeremy stretch. nejra: good morning. opposing threads are dominating headlines. we saw a positive session yesterday. the biggest two-day gain. futures on the back foot back five point two of 3%. not feedingiffs here to futures markets. yield getting the lowest since march. i put it there because globally received 10 year yields dropped.

basically, italy signaling willingness to breach the deficit. we saw the tenure and yield hit -13 basis points. bund spreads widening out and oil on the front foot for a third day ahead of an opec plus meeting this weekend. manus: let's talk about the trade banks. president trump must differing approaches to two of his top concerns. the white house has moved to curve the access to the long way to the u.s. market three of the department of commerce is it put the tech giant on a blacklist. the eu and japan have been giving six-month grace that given six months grace to reach a deal that would restrict or limit auto imports and it -- in return,s. the u.s. would deal a new tariffs. jodi schneider joins us. what are the specifics of this executive order? what could that mean for the companies involved? bmw lord higher on this news yesterday.

jodi: the executive order would ztet or block huawei and from selling equipment in the u.s.. after that order the commerce department confirmed it had put huawei on what it calls a blacklist that would not allow it to do business in the u.s. so combined, those moves really in terms with a can doing business in the u.s.. we saw last year when cte had similar action taken against it. it must had to shut down and president trump intervened and it was allowed to continue doing business. they are being done under an

order of national emergency saying that if they need to limit it under that kind of the national defense kind of argument. give us some of the details briefly on the executive order president trump is considering on autos and auto parts from the eu and japan. what is behind it? expect them to sign the executive order later this it would give six months to the eu and japan to severely limit, restrict the auto parts and automobile import into the u.s., saying that they would basically delay tariffs for that time. as long as willing to restrict their imports into the u.s. securityr a national argument, and that the imports,

expanded imports into the u.s. limit domestic and you fractures and cause them not to invest in innovative technologies. that is the argument they are making there. so they gives six more months for the eu and japan do that they are very much against the tariffs. haveis: absolutely right i down here extending to pretend. that is as part of the energy to thank you very much. our international editor. let get more, juliette l.a. is in singapore and it really is giving with one hand and taking away with the other. it is interesting. we have not seen the japanese sawmakers follow what you with the likes of bmw. most of them actually weaker. the yanis back and play because of the uncertainty. japanese stocks are lower.

you're seeing a reprieve coming through in hong kong and china market asx 200 also had a good day. you touched on the week kicking off, is going to mean central bank action from the rba we have the aussie dollar and you lower. it is risk off in the asian session. with yesterday's .51% gain it as you would expect them as they are under proof -- under pressure. selling and the hong kong session leading declines in ct listed in hong kong under pressure to the 10 of over 4% in late trade create another interesting story, coming through from the indonesian government about action to boost the infrastructure in indonesia. that is seeing a lot of property developers and construction stocks rise, up i am most 18%. seeing a bit of weakness in the huawei suppliers. nejra: juliette solly in singapore, thank you. should assets need recession

warnings now? you can join the debate, reach out to us and the mliv team, and lifeless tv on bloomberg. jeremy stretched joining us, head of fx strategy on cibc. let's kick off the trade discussion. some of conflicting sex -- signals overnight, the news on huawei signaling them pessimism in the market. giving a lift to a number of markets and risk assets in yesterday's session. how are you positioned on trade in terms of where you want to take risk and where you want to not take risk customer jeremy: you are right, there are a number of mixed messages in terms of the trade front as we sit here this morning. that is the problem that investors are trying to wrestle with is to determine whether they should be becoming more pessimistic on the outlook for trade or if we are experiencing difficulties. that will not have a material impact in terms of trade dynamics over the next two to 12

months. we take the view in the context of what we have seen in terms of auto tariffs. that has to be relatively unambiguously good news for the auto producers in europe and japan. in context of china, we are not taking the view that this is turning into a material aggressive trade war which will have an amplification of the recession risks through the course of the rest of this year. we are cautiously optimistic in terms of assets and asset values as we go into the second half of the year. manus: good morning, good to see you. you would concur with some of -- others, this magical line in the sand that would be defended by the pboc if that's especially to prevent the rerun on valuations that happened in 2015. jeremy: absolutely. that is a significant psychological level. for the chinese authorities, if they were to allow that level to

give way, it would have a negative and full angela effect in terms of the chinese population, the momentum in their own domestic economy. it would need additional flight. the authorities will be looking to make sure the level is not tested fairly vigorously. if we do see a move in the second half of the year to see slightly that are economic conditions domestically in china and on the u.s. dollar side, i suspect we will see a cheapening bias toward the u.s. as we see a deceleration in mac activity. a debate about the fed ongoing political risk in the u.s., i think that seven threshold should be out of reach and the chinese authorities fear the breach of that level, i don't think it will come to pass. nejra: some news and the aussie, if you remain constructive on risk in the second half, what is your positioning on the aussie

question market has no major support if you look at the retracement for the flash crash loan. jeremy: indeed. the market has been a little bit further concerned by the backwash of the unappointed rate -- wage -- unemployment wage and the amplification of the possibility of rate cuts coming as early as next month. there is, still the jury is out. not turn vicious in terms of the monetary easing story in australia. we have the upcoming election. we are seeing a transitioning government. we are seeing fiscal expansion coming down the track. that would alleviate the pressure on the monetary side and overly that with risk conditions and the overall growth trajectory in the second half of the year, and that provides value down these levels. there is a lot of negativity baked in. manus: can we pick up on some of the data points, we have got the surprise index for china and the library.he

the white chart at the top is china. vertical drop. there is touchy data in the u.s. in terms of retail sales. this philosophy, the drop off in the china economic data, do you think the pboc would become even more aggressive as the year goes on? more cheerful orange to contend with what might challenge the seven level that we referred to earlier. jeremy: you're right. there has not deterioration in some of the data points and you could argue that was coming off the artificially elevated levels we have seen toward the end of the previous data set series. i think there is further impetus or pressure about more additional stimulus coming through in terms of alleviation of those downtrends in the data. i think in the context of the add the retail sales voice, you should not lose

sight of the fact that the i need data was disappointing in the u.s. and if you look at the gdp now from the atlanta fed, that has moderated significantly. it is not just a case we should be concerned of what is happening in china but also the moderation queue to the levels in the u.s. as well. it is difficult to stand in the way of being long yen overall. there is obvious justification in terms of the risk off to anticipate the yen them at making further gains. the euroyen has been trading down around fairly significant levels over the last few sessions. that does have some shorter-term vulnerabilities. over time through the course of the second half of the year, we have seen a stabilization in that context. if you're looking at the yen, for now, it is a predication of being long yen in the process.

manus: thanks, stay with us, a lot more to do ahead of fx -- the head of ethic strategy. let's get the first word headlines. china has cut its holdings of u.s. treasuries to the lowest level since 2017. that was a slight reduction of around $10 billion, but that was enough for it to hit the two-year low. the world that can largest economy owns more u.s. government debt than any other foreign nation. cutting the holdings is viewed by some as a nuclear option in the trade war. the u.s. has ordered its nonemergency staff to leave iraq . this is due to increasing tensions in the middle east that american officials are blaming on iran. fears or arising that the region may be heading toward another conflict. the united arab emirates minister for foreign affairs

says they need to avoid is going the situation. >> we need to address iran's , clearly, but at the same time, not to be beaten into a crisis. it is very, very important. debra: berkshire hathaway has avealed its new amazon total, hundred $60 million at the end of the march. the size of the holding gets more clarity. warren buffett disclosed them earlier. the company also ramped up bets on jpmorgan and red hat. it cut its stakes in southwest airlines and wells fargo. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. debra mao in hong kong, thank you so much. gender equality is not just an ethical issue, it is also good business. is here.r -- summit

what have you been looking at? >> data on working desk companies that are working to make sure they are gender equal. we have a number of companies weresantander, adidas, who at the equality summit. these are companies that are devoted to gender parity and beth -- best actresses. it is outperforming and 13% year to date. while it is an ethical issue, it is also big -- good business. one of the topics we have been discussing all your when it comes to a quality has been the gender pay gap. this is the second year in a row that the uk's requiring companies to report 10,000 -- report. 10,000 companies reported. not a lot of proper tests have been made. some of the bunnies paying women more -- companies paying women more here. a number are still falling

behind where men are being paid more than women and that , and anglobc american. also on the ftse 100 companies, the number of women leading has dropped to five this year. i spoke to one of them last week and asked her why that number is shrinking. take a listen. allison: there is not a quick fix. it will take time to bring people through businesses to develop them and we are seeing improvements are you we look through management layers, a lot of focus and effort that we have to focus on. and the lowerrove levels of the organization, we've got some better performances. but we do need to [indiscernible] through the business. >> we will be focusing on the topic all day. this is the line we have, gina andr, from mastercard,

nicole a mendelson of facebook. all these numbers -- names are coming up as we dig deeper into the topic. days: it will be a cracking in the halls of bloomberg. nestle hitting the tape right now. they are selling the skin care health group. this is the breaking news we have across the bloomberg area they will provide an update on the proceeds. if you are a shareholder, you're looking at proceeds of this. it is the skincare side of the business. this is something that had been muted in yesterday's papers. we have confirmation on that deal to come through. t toxclusive talks with eq sell that size of the business. restructuring nestle. bring back the milky way. coming up on the show. in one week, electing the new

european parliament. we will break down the numbers. that is next. this is bloomberg. ♪ rg. ♪

>> look at what the divisiveness of exit has them to the u.k. the u.k. looks like game of thrones on steroids. >> the main message is i want to have [indiscernible] people feel not that this is my europe and i want to change this. >> are they tax havens? ask a tax haven is a place where everyone pays their taxes. >> big companies do not pay taxes so we should keep asking alexa, amazon, when are you going to pay taxes? moreybe also slightly hard-nosed. >> then-president thinks it is in his interest to have a weekend divided europe. that is dangerous. matt: that is some of the

candidates to replace jean-claude juncker. they were taking part in a debate in brussels. nejra: let's get more on europe create one week until voting starts in 28 countries including the u.k. to elect the next european parliament. a key concern is the rise of populism and the threat of political fragmentation. how likely is a nationalist breakthrough? you look at the numbers. >> european parliament elections are less than a month away. in the past, they have been pretty dull. this time, the stakes could not be higher. the vote is the ultimate test for establishment forces against a wave of populism. until now, the parliament has been dominated by the grand coalition. composed of the central right european people's party and the centerleft socialists. but according to the polls, the groups will not be able to command a majority. that is the first time that has happened since parliament took

on its current form in 1979. the centerleft could lose its position as the second-biggest group and the populist might the the big winners. if the populist put their differences aside and join forces, a second-biggest group in the european parliament. that may not matter. if you include the liberals, pro-european forces will still hold a majority. while populist might be about to make historic gains, that does not mean it will translate into actual power. manus: breaking down the numbers. our guest is jeremy stretch. nationalist breakthrough, how would that upset volatility cart for the euro if at all? think the european elections are going to be interesting. we are at a rarely seminal moment in terms of the european

project grade we have the transition in terms of the leadership of the european commission and the ecb. there are key decisions which are coming and if we are going seaee, if we were to see a change in the makeup of the european parliament, that could destabilize that. populists were an evidential force in the 2014 election. they may well make further gains, but are they going to be change thee to dynamics in terms of the european political direction and is that efficient to change the this vision functions of things like a european central bank? if they are not, the volatility ornot materially influenced the evaluation is not materially influenced but it is unnecessary noise. nejra: yesterday the euro was stable. the yield at -13 basis points. or the evaluation is not materially influenced but itthe bund sprea5

and we saw the two-year yields spike in italy with concerns again about the deficit reaching the eu limit trade if the -- is the bund spreads frost -- flashing warning signs when it comes to the euro? jeremy: we need to take those comments we get from those italian politicians in the context of what they are intended. they are pre-election comments and any key political battle. market participants take these influencing the market when they are aimed at the domestic population to a urge vote. i think we need to be reflective in terms of the reality. just automatically seeing there is another budget challenge from italy to the eurozone, i think also needs to be kept in some degree of context. alwaysjeremy stretch, providing the context for us, staying for the hour. money managers are out with

their latest holdings and lives when the first quarter and -- third quarter. the oracle of omaha has made some notable news. we dive into the details next in -- next. this is bloomberg. ♪

nejra: let's get a look at the world map create equity markets in asia trying to decide what to take away from the latest trade headlines. desperation sign of dealing, if seen a real reaction in the on market to concerns run global growth. yields hitting a february 2018 month. manus: you're right, the bones are below the lowest level in two-year paper, under 230. can you get below 2%? macro man has a call not suggesting all roads lead to bonds.

nejra: absolutely. i'm referring to the two-year treasury yield, the 10 year yield hitting a march low. if you look overall story, the yields hitting a fresh record low after that implement data. nice piece out a from socgen. we will talk about this with goldman sachs and the stocks side. i love this index. it is the dow global titans index. that continues this year. that is one of those questions to put to the equity guest. we are slightly more fx focus. the team is standing by. good to see you this morning. what are you keeping an eye on in terms of the u.s.-trade asked, how does it play out for markets? >> good morning. mainland china and hong kong equities are pushing a bit higher but look at the terminal,

look at what is going on across the rest of asia. down and theospi nikkei down as well as other countries. this has to do with weak data. can that heightened worries about the trade war westmark president trump taking the step two curb huawei access to the u.s. market. that is a move that can aggravate aging. in foreign exchange, the turkish lira's lower. also the aussie is under pressure. not of their right now. and commodities, i am looking at rent crude, $72.10 a barrel. higher.ushing debbie ti is also higher. that brings me to my next chart. i want to look at what is going on with of uti. the spread versus the brand spread. brent is pushing higher. wti is softer. the short term market is tight. opec cuts are still happening. we have sanctions on venezuela and iran.

more tensions in the middle east may ask the late -- escalate. we are seeing wti spreads are softer and that is because trade, we have a trade war that could slow global growth as many as -- are saying already. on top of that, new shale, that is what many people are looking forward to in the second half of the year. nara: equity markets pretty much flat, not reacting to trade headlines. but former stocks seemed to be dragging down the overall index. talk us through the dynamics. reporter: you're right. good morning. trade wars across the world are the trade deficit in india have had an impact today. very flat. election results are due next week. the firm horizon index has gotten battered. had an impact today. very flat. it is a top loser.

bloomberg earlier this week, some u.s. states allege that 20 pennies colluded inflated -- and inflated prices. the nifty form index has only gone down. this is a five day performance, not 5.5%. today 1.5%. it is not a heavy weight on the index but while the index is flat, it is evident that stocks are [inaudible] while the markets are flat, i would watch out for this index very closely. manus: thank you very much. from mumbai. breaking news, everybody. generali having been battered and bruised. in terms of the net income, 744 million euros, the market had canceled in 677. first quarter net income quite as significant eight and the

adjusted net income comes in at 616. netting higher than the market had anticipated. the stock is up 16%. they sold some of their belgian assets. int is something to play out that story. let's get the first word news. debra mao is standing by in hong kong area debra: -- in hong kong. debra: donald trump has ratcheted up his battle with china for dominance of ig technology. he has cited in order to curb always access to the u.s. market. it put the tech giant on a blacklist that could forbid it from doing business with american companies. the risk aggravating aging as the president seeks to reach a deal with china. theresa may will be the best meet with colleagues who want to oust her. she is meeting rank-and-file members of her party and their

question is, when will she let? she has tried to buy herself more time by promising to bring her brexit deal back in june but some are calling on her to step aside as soon as possible. berkshire hathaway has revealed its new amazon bet total, $860 million at the end of march. the size of the holding gets more clarity to the wager that warren buffett disclosed earlier this month. according to 13 is filings, the company ramped up bets on jpmorgan and red hat and cut stakes in southwest airlines and wells fargo. the leaders of france and new zealand have and with a world they get online platforms to curb hate speech. facebook, twitter and alphabet have met you develop rules stuff violent -- rise of extremism on social media. this comes after the mosque shooting in new zealand. hadurus -- a terrorist posted online and live-streamed

his rampage. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. debra mao in hong kong, thank you. let's focus on the rush for treasuries. before u.s. traders could grab a copy yesterday, yields were humbly across the sovereign market. demand kick in after chinese figures disappointed. tensions ripple through euro area assets and to add to the gloom, the part data hit from the u.s. in terms of retail sales and factory production. yields on the u.s. two-year spiraled to the lowest since 2018. the 10 year yield dropped to 1.5 month low. germany stretches still with us. let's look at the pricing. the two-year yield, below the fund rate since 2008. reflecting concerns about global growth rate have we gone too far in the pricing for a fed rate cut?

jeremy: i would say probably yes. did seethe fact that we some disappointing retail data, there is a case to be made that we will see consumption demand holding up that are then perhaps some of the market might have anticipated through the middle part of the year. that, itntext of probably does imply the market is getting ahead of itself in terms of pricing to cut create it is the classic case. it is either too ambitious in terms of that hikes or rate hikes and also swings too far in the opposite direction when the momentum slows down. that is what we have seen the pendulum see -- swinging to far from being too aggressive to being to dovish. it is more likely to be the case the fed will continue to monitor the downside risks through the course of this year. it is more likely the fed will be holding rate, holding policy this year and it will be the late first quarter, likely the second quarter next year when we see the fed easing policy. manus: interesting to see how

the dollar, i would say remains stoic in the face of a cascading lower yield. beryone says my haven would better with a bit of dollar or a bit of yen. are you surprised about the stoicism of the dollar? jeremy: that has been one of the surprises we have seen. we would have anticipated and expected it cheap and in of the dollar by this stage. it has held far better. in a sense, it has been a reflection not just of the fed dynamics, but also the dynamics in terms of global activities. we have seen level economic activity revised down. the implication is there is a dovish bias were other central banks. the relative yield differentials , other markets have invited some stability. the question is, how long will that support mechanism hold as we go to the second half of the year westmark if we are seeing the fiscal position start to

deteriorate and markets become more concerned about the fiscal imbalances, political risk, and the pressure from the white house on the federal reserve area that pressure is not going to end anytime soon. i think that starts to add to the debate about whether the dollar can and should be trading at such levels through the second half of the year. we think probably not. we would anticipate a slightly cheaper dollar across the board. what you are saying about the market what you are saying t the market having gone too far in pricing the fed rate cut, we have seen steepening where we are flooding a little bit. given we said, would you expect the curve to reflect on the two's tends and elsewhere? jeremy: that would be true in terms of the two-year. it is likely to see a degree of reversal. when we had that extreme flattening of the curve earlier, there was a lot of debate as to what that implies and what that

is digesting the recession risks were, requiring more to be priced at. we're not a recession with in the next 12 to 18 months. as we go into 2021, 2022, the market will become more concerned about the risk event easing in u.s. macro data. really extending. we are going to see the recent trend and where it stands. the last guest said it will be down to the fed to cut rates. manus: if you look at the january fed andre, we are at 2%. it will take the fed to cut rates. saving the yield curve and receiving it. would you agree with that westmark jeremy: i am not sure we would require a fed action. we need to see how the data plays out. we are in an environment where there is an and reese degree of pessimism -- increased degree of

pessimism regarding the global actor off and we are seeing this in the reflection of trade tensions, but we should not lucite that we are seeing a slower momentum lovely in the current environment. we're not talking about a dead stop. we need to keep that into context. it was 20 for hours ago that we were looking at first quarter gdp figures in germany which suggested there was every acceleration in german activities at start of year. we need to keep a little bit of context, the gains in terms of the broader backdrop and we tend to get logged down in my new most recentt the data point is an we need to take a step back and look at the broader picture. manus: sometimes we do become slightly myopic when we get one days moves. stay with us. are never myopic. we are investigative and we dig a little bit deeper. never myopic on this show. let's talk when people who are, money managers. their latest holdings and moves for the first quarter could

relief -- reveal something. the latest trends among the hedge funds after a dramatic three months. who better to reveal all then dani burger? we finally have numbers to head to berkshire hathaway's amazon bet. -- number,come a $866 million as of the end of march. if it is usually -- buffett is a value investor. finally jumping into mega cap tech. not everyone was so optimistic. hedge funds in aggregate led all stocks including microsoft last quarter. google was as much as we billion exiting. indexme major gains the topped its best quarter in the first quarter since twice 16. we did he some funds like tiger

global management, they more than doubled their facebook stake and have amassed 1.5 billion dollars and holdings. another interesting trend we saw was chinese stocks. some managers disclosed new bets on the sector including more capital, spiking capital, appaloosa management. one way that of it was placed was through moore capital. this is the exchequer's harvest etf. we can see that that take place in real time. i have the call options in blue. you can see they skyrocket. the ratio of what to call is the low -- the lowest on record. this could all be more capital. or some other investors could have seen this trade taking place and it rushed into options. an interesting that is turmoil between the u.s. and china as trade tensions kick up. manus: a great round up. you can grab those five big takeaways that dani wrapped up.

coming up my tensions are rising. the u.s. orders nonemergency staff to leave iraq. we are bringing you are interview with the uae minister of state for foreign affairs. that is next. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." i am manus cranny in dubai. nejra: i am nejra cehic in london. let's get the bloomberg business flash. ubisoft missed its own sales forecast as they faced tough competition. grossed 25%. sales from the estimate of 700 elliott. traditional video games have taken a hit them that popularity of mobile games like fortnight. they hope to tap into a younger audience by teaming up with

china's tencent. nissan is reportedly planning to add the renault chief executive to its board. that would bring the alliance partners closer together. bloomberg has learned he could be nominated as a director joining the chairman on the board. a merger of the automakers have been rebuffed by nissan. the owners of the ritz crossed and -- ritz-carlton new york have received interest from to buyers, south korea's sovereign wealth fund jointly owns the hotel. they are seeking $600 million. the ritz-carlton is one of the priciest hotels in manhattan. that is your bloomberg is this flash -- is this flash. manus: thank you. the middle east is keeping investors literally on edge. the u.s. has ordered government staff to leave iraq. lamia ran for increased tensions.

-- blaming iran for increased tensions. take a listen to my interview with the uae's minister of state for foreign affairs. .> we are concerned we are concerned, but the keyword is reasonable. so clearly, i think we have to calm right now, and we have to deescalate. followss i, everybody all these of elements. this is a region we live in and it is important for us that we manage this crisis and this is not the first crisis that we have seen in this region. there is -- a this is a turbulent region. we need to work very hard at managing our region. manus: you used the word crisis and you use the word [indiscernible] what is the risk of having an to war? is it a high risk?

with ourk with wisdom, recognition that we need to clearly,ran's behavior but at the same time, not to be baited into a crisis. it is very important. as i said, the region has seen of difficulties because of the iranian behavior and it is essential that we and do with are able to this. clearly, the onus is very much on iran. the current sanctions on iran are formidable. and they are effective. manus: you think this sanctions -- the sanctions are biting harder than they had thought? >> clearly, they are biting than they thought. you can see it within the debate in a rant. if you follow that mastic debate. they have taught -- there is a

fact that countries in the region have concerns about iran's behavior and for iran to l.a. these concerns, it has to look inward about what it has been doing and address it. manus: you have launched an investigation along with the u.s. and french. the phraseology is where you -- that we are using, is it iran and is responsible for attacks? >> again, as i said earlier in the briefing, the investigation, we are being supported by various countries. countriesnd other wanting to join. the investigation will take a couple of days for us to know exactly what happened. and it will have also the credibility of the various countries that are launching it. i don't want to go ahead of the curve on this one.

and on the investigation. ministerat was the uae for state foreign affairs -- state for foreign affairs. that is the uae's rhetoric over what has been a heightened time of geopolitics here in the region. as apricing iran risk chill risk, are we pricing this event at all in the market, or is it in the back of our heads? those, it is one of existential risks that market participants are aware of but it is not something that is necessarily front and center in ofms of the full processes this juncture. markets often have a rather the primaryof what risk factor is. we talk about that earlier in terms of trade and trade risks. it is a risk but not something that is front and center. when you look at things like the

oil price, you can argue it is materiallyng that is impacting thinking as yet. third day of gains on wti, you have pointed some of your research to struggling to holding the moving day average, her -- global tensions having something to do with it. how are you positioning around currencies? jeremy: there is this debate as to whether the trade tensions or moderation in terms of global activity which is the better way to look at it, is going to imply there is not going to be that optic of demand. thinking about the supply dynamics, someone mentioned earlier there is this issue about that shale oil coming on stream. it will be the case that oil is at a substantial rally even if we are backing off the recent highs. are we going to move higher? i think probably not. you will see a significant oil based impetus in terms of quantity currencies. -- in terms of the

majors, you will not see an oil price down that is favorable. you look at the other eventualities, that might be the case if the data proves to be better in the second and third quarters and you see a repricing of what is in the bank of canada rate strip, and in the case of norway, where if you are reasonably optimistic in europe and we are, you will see ongoing debate about the bank. it provides impetus in terms of the trajectory. most? who wins the that is a heck of a menu. if there is some kind of a deal in the next couple of months with china, where will be the biggest spring back factor, is on theie, is it perhaps yuan, where is the biggest relief trade on a deal? your me: you are right.

it is an important question. it sometimes seems distant when you are seeing these negative headlines. in the context of what we have seen, when you look at australia and the aussie dollar, the aussie has been hit relatively hard not just because of trade tensions but the rba is overpriced in terms of cuts and if you price in a more constructive china backdrop, the aussie has -- [indiscernible] rebound. we are remaining bullish. that will be an ongoing case for the currency to rebound. we were talking earlier about whether that pressure will be defended. i don't see a material risk of that being broken. we can see a fairly significant structural correction in dollar see nh through the second half of the year, if we are right and trade tensions dissipate and we see that cheapening up the u.s. dollar. there is a potential for a significant snap back. nejra: jeremy stretch, great to

have you with us. he will continue the conversation on bloomberg radio at 7:30 a.m. u.k. town. coming up, an exclusive interview with nicola mendelson, facebook's vice president. summit. quality this is bloomberg. ♪ mberg. ♪

♪ ♪ europeanloomberg headquarters in city, i am nejra cehic. manus: i am manus cranny live in dubai. these are today's top stories. president trump escalates ensions with china by threatening to curb huaweu's access -- huawei's access to u.s. markets. flight to safety. asush to sovereign debt china cuts u.s. bond holdings to

the lowest level since 2017. and, skin in the game. itsle enters talks to sell skincare business for over $10 billion as the world's largest food group continues to revamp. ♪ good morning, and welcome to daybreak europe, just after 7:00 a.m. in london. numbers coming through from burberry. full-year revenue at 2.7 2 billion pounds, bang-in-line with expectations. full-year comparable sales missing estimates slightly, gaining 2%. the estimate was for a gain of 2.07%. burberry is confirming guidance for the full year, full-year adjusted operating profit coming in at 438 million pounds,

estimated 433.2. clarify, full-year adjusted operating profit miss, full-year comparable sales missing slightly, full-year revenue bang in line, confirming guidance for 20 and talking about a share buyback of 150 million pounds. that is burberry. manus? manus: picking up on share buybacks, which seems to be one of the big things of q1. sony will buy 4.8% of their stock back for 200 billion yen, about 5% of their stock in issuance at the moment, 4.8% if you want to be absolutely precise. how are those futures opening behind you? a little flash of red as you are breaking the burberry numbers? nejra: a flash of red is what i would say. we are more to the downside on dax, more so than cac 40.

ftse futures pretty much flat. european equities closed flat yesterday, carmakers leading the gains, no surprise as we learned that president trump will delay a decision on auto tariffs for six months. gain for theday s&p 500 in a month. concerns around global growth reflected in the bond market, which he will talk about in a second. in futures as well, we have seen weakness in u.s. and european futures. manus: the bond market, you have that flash of red. showedse, yesterday you this at 6:00 a.m. bunds, incredibly important, up another 16 pips. lowest yields on the bund since 2016, seeing a rush, all roads leading as it were to the bond markets. how low can you go on the 10-year paper?

can you break the 2% level? two-year paper at the lowest since 2018. without inflation, and the breakevens don't indicate that there is, disappointing retail sales data in america,, you are seeing a rush into treasuries as well. commerzbank says they will retest the spread over germany because of angst in regard to the fiscal situation. nestle, some cracking brands in their stable, getting ready to all the skincare business to private equity firm, eqt, based in here, my region. the move is part of the growth push by the largest food producer in the world. our consumer reporter joins us from zurich. doreen, good to see you. $10.2 billion, what does the market make of that price tag? doreen: it is a pretty good price for nestle, considering

the previous estimates floating around were a little lower than that. in positionnestle to do another 20 billion franc share buyback program, when the current one expires this year. not expect major acquisitions this year, considering the starbucks rollout that just started. seewe're likely to acquisitions in the-growth categories, such as coffee, water, baby food, pet care. corinne, great to have you with us. ise us through why nestle selling skin health, and what that could tell us about what else we might see in m&a? corinne: so, ever since the new ceo came in, he has been trimming the portfolio, weeding

out underperformers and laggards, and acquiring in high-growth areas. health unit has been a weak spot for nestle, facing a lot of competition from generic alternatives. they have also been cutting hundreds of jobs, and analysts including activist investor dan forayave been saying the into dermatology has been non-core, and should be sold. in terms of further m&a, we still have the lunchmeats business that nestle is expected and plenty of other areas where analysts are keen to see sales, like u.s.

frozen food, ice cream, and chocolate in europe. nejra: great to have you with us. european consumer reporter corinne gretier in zurich. more breaking news, on thomas cook. two red headlines. it sees challenging summer trading impacting full-year ebit, and it has had multiple bids for its airline. the two red headlines to break from thomas cook. marketseck in with the in asia. juliette saly, good to see you. juliet: a little mixed in asian markets. upside in china, but the stronger yen weighed on the nikkei, down 0.6% on the close. some weakness in the indonesian market, and watching india with the polls expected to come through. i want to show you the currency

board, where most of the action has been today. australian unemployment going up to 5.2% in april, showing the aussie dollar hitting a fresh four month low, one of the worst-performing g10 currencies, tied with the kiwi today. you have also seen yields in australia falling. watching closely what's happening with offshore yuan, a little weaker against the greenback after some studying -- steadying. interestingly we are seeing the yuan weakening against all other peers for a record 12 session in a row. manus? manus: juliette saly, on the money as ever in our singapore studio. let's bring in our guest host, r, managinguelle director for asset allocation at goldman sachs.

thank you for giving us your time. we were supposed to go with trade. but burberry is doing a share buyback and sony is doing a share buyback. i want to take that theme and put it to you. how important is that, when you look at these markets, at the end of this first quarter? these are the big headlines that are driving the news this morning. good morning. christian: morning. i think they are very important flowsdays, because the have not been that high, and have lagged on performance. it is systematic investors. as a result of that, it is quite consistent with what we have seen so far. if you don't have a strong growth narrative, it is difficult for investors to get excited about equity, and corporate skin buffer because the bond market is still at very low levels, so it is very easy to buyback right now. nejra: you talked about if you don't have a strong growth narrative. an economic gauge from the oecd, the composite leading indicator.

you are familiar, i am sure. lowest level since 2009, so growth momentum easing. at goldman sachs, do you expect this momentum to the downside to continue, and to impact institutional investors still wanting to stay away from equities, as you are talking about? christian: we have had some early signs that global growth will stabilize. china growth is starting to stabilize, still not managing to get the escape velocity to really alleviate all concerns. you have had a major alleviation of financial conditions since the beginning of the year, and that should feed into growth. a a lot of of stimulus in places like china, of course. we think growth will stabilize, but the problem is of course you have a lot of external things now. the trade conflict was mentioned, and that has the potential to weigh on growth and sentiment. one thing we found recently in our research, sentiment has

become much more important in driving markets. the trade conflict was mentioned,the actual macro volae narrative hasn't changed much in recent months. you are trading on a combination of support from monetary policy and the hope of growth to stabilize and pick up in functional trade and functional stimulus. manus: we are almost at that point on a daily basis, where we are trading sentiment. you talk about your risk accurate -- appetite indicator being back at neutral. ,he support mechanism there global macro policy from central banks. what does it take to shifty from neutral to a more aggressive re-engagement? christian: you know what? we looked at that recently. push risk appetites to really bullish levels, you need a growth narrative of accelerating, synchronized global growth and anchored inflation. the inflation we have, but the growth is missing.

you need to have a certain longevity to such trends to really attract investors. but the good news, you mentioned the neutral, but with the decline on monday you have a pretty sharp gap down again, so marginally negative. not negative enough to say that markets are overshooting on the negative side now, but we are getting to a point, watching very closely, to buy a dip even if there is not material fundamental improvement. nejra: talk a little about how to do that. you remain neutral equity over three months. your asset allocation is modestly pro risk. talku're neutral equities, me through some of the trades? christian: over the 12 month horizon, as i said, we have the view that growth will stabilize, which should be supportive enough to be modestly pro risk in allocations, and should be supportive of a modest overweight in equities. we can't be easily excited about the cycle from here. there's a lot of headwinds

with regard to growth and cyclical headwinds, quite late cycle. so our view would be that in order to purchase made from any rebounded in current levels,, you need to be quite nimble, which is why we like the idea of buying upside calls at this juncture, especially if you see signs of growth stabilizing. you still have a lot of uncertainty. it is not very good to be bearish right now. you can see that trade headlines can easily push the market to strong daily returns. ,e have very high vol on vol one of the features we wrote about. volatility in markets is moving very fast, and options are very useful for that, if you have the ability to kind of preempt positioning. manus: just on that volatility, we have gone from slumber to full on high-impact trading at the gym as it were on equity vol. fx vol has been a little less

aggressive. if you see significant spikes in vol, would you be more inclined to write options on that and sell the spikes? christian: i think that we have machinery that tells us what type of volatility regime you should be in, and that's currently exactly at the edge between a high-vol and low-vol regime, exactly at the middle. so more than last year, when we had a lot of volatility spikes, you are a bit in uncertain territory. last year we were saying you should sell the volatility spike, but at this juncture because the growth picture is weakening, you have to be careful, because it feels there is a certain narrative that can also drive more volatility from here. our base case house view is that we won't get a recession, which is the most common driver of a high-vol regime. we don't expect that. we expect global growth to pick up. and one thing that is still incredibly supportive is

monetary policy. with monetary policy being incredibly dovish, you are still in a friendly backdrop, that should mean you should sell vol spikes. nejra: we will talk more coming up. director of portfolio strategy at goldman sachs, staying with us. gender equality isn't just an ethical issue, but also good business. at the bloomberg equality summit, and marie has been digging into the numbers. marie: this chart shows why it is so important, the bloomberg gender equality index versus the ms all country world index, and you can see it's outperforming, up 13% year-to-date. including names like l'oreal, whose chairander, will join us today. these companies are focused on best in class practices for gender equality, as well as

disclosing a lot of data and what it means to put more female leaders at the executive level of their companies. one thing we talked about a lot over the last year, when it comes to diversity in businesses and gender, is the pay gap. this is the second year in a row that u.k. companies had to disclose data on gender pay gaps, and not a lot has changed. only a handful of companies, reckitt benckiser, a tesco unit and g4s, are paying more than men. the companies are mostly paying men more than women. one of the big problems, lesser presentation of women at the higher levels of companies, which have higher salaries. and at the highest level,

dropped to five. and i spoke to one, allison cooper of imperial brands, and asked her why that number is shrinking. >> there is not a quick fix to this. it will take time to bring people through businesses, to develop them through businesses, and we are seeing improvements as we work through management layers. it takes a lot effort, but we have a significant focus on diversity and inclusion to try to improve, particularly at lower levels of the organization. we have got some better performances, but we need to move that up through the business. >> allison cooper of imperial bands -- brands, speaking to me last week, one of the few ftse 100 women ceo's. today we will discuss this all throughout bloomberg. you can see the amazing lineup of guests. treasurygan, the u.k. select committee chair, and more . manus: annmarie, thank you very much. sounds like a great day at

bloomberg. annmarie hordern, tracking the equality agenda. coming up, from nestle discussing a $10 billion sale to soni, a busym day for corporate earnings. we get all the details. this is bloomberg. ♪

♪ ♪ 38ra: 7:21 in london, minutes from the equity market open in europe. this is bloomberg daybreak: europe. i am nejra cehic in london. manus: i am manus cranny in dubai. nestle is putting their skincare business up on the block for $10 billion, and a consortium led by none other than the abu dhabi investment authority. so this is all about reaching

for growth. this is all about mark schneider, putting his brand across the businesses. selling the dermatological brands, and undoing some of the former chairman's business. nejra: buybacks are a theme, too, sony announcing a plan to buy back as much as $1.8 billion of stock. and from burberry a share buyback of 150 million pounds. manus: you have done the burberry stuff there. let's focus in on the pressure treasuries, shall we? a bit of a shift, pretty big moves across the market. nejra: indeed. before u.d. indeed. befos -- before u.s. traders could even get a coffee, haven demand kicked in. italy tensions rippled through euro area assets, and then subpar data on retail sales and

perfect reproduction. u.s. two year yields spiraled to their lowest since 2018, and the benchmark yield dropped to a 1.5 month low. convexity hedging, let's not forget, had a little to do with that. christian mueller-glissman of goldman sachs is still with us. in terms of asset allocation, looking at fixed income, you are underweight bonds. must be a little painful with what we see in yields at the moment, so how exactly are you putting on that trade? christian: it feels like the bond market is very reactive de-risk, and treasuries have -- very reactive to risk, and treasuries are more likely to move down. but compared to history, the bond market isn't moving like it has in response to risk-off. the global financial market, equities fell 50% and bonds rose 25%. last year, treasuries rally 3%

to 4% during the decline in the market. nothe ratio is a third, or a fourth. so you have to ask yourself, how much protection risk-off are you getting relative to how much he could cost you if there is a resolution or an inflation shock? maybe the market is a little complacent with regard to how much the fed will cut, because they already are pricing in more than two cuts in the next two years, and we think that's quite unlikely unless you get something really sinister happening. you have to consider the inflation impact from the tariffs as well, not just the growth impact. if you have a curve in the u.s. in particular that is so flat, you can also be in cash. you might have seen in our allocation, we are in cash, and that is also something that can protect you. in the u.s., short duration longest credit, you can easily achieve -- longer-risk credit, you can easily achieve 3%, and

it doesn't have the same risk that bonds might. manus: interesting that you make that point. the flood of money coming into very short dated two-year paper. can we pick up on the inflation you just mentioned? you said we could get a shock, and you are right that may be the market is over-stretching. just as a hook to talk about inflation risk in the u.s., you have been long inflation risk, but have a look at the breakeven. is this where one of the risks could hide in the u.s. story? christian: if you look at the drivers of risk appetite and stabilization, monetary policy being really dovish has been critical to stabilize markets. so if you now introduce inflation risk into the equation, the dovish fed narrative could become less strong. that is a key risk. there's a variety of things that drive inflation.

the most important driver is actually the oil price, and you spoke about that earlier. that has the potential to push up breakevens further. having said that, the fed doesn't care much about the oil price related effect on inflation. they mainly care about core inflation, and with regard to core inflation the tariffs are a big risk. if you look at the last round of tariffs, the 25% on the next $300 billion, they have the potential to be much more inflationary than the previous few rounds, because they include a lot of consumer goods. the impact of it, you actually look at is not that large. manus: unfortunately, time has run against us. we could literally pursue this gusto,ation with more but we will draw a line under it. come back and see us soon. ofistian mueller-glissman

goldman sachs. thomas cook flying high, with multiple bids for their business, and burberry, all about the buybacks. the story continues on digital radio and right here on bloomberg. ♪

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anna: good morning. we are live from our european headquarters in the city of london. cash trade is less than 30 minutes away. correction warning. president trump escalates trade tensions by moving to restrict huawei's access to the market. fail,otiations