counteract u.s. tariffs and says the trade war will not ripple trump's response to aggressive stance on huawei. theresa may under pressure as cross party talks go nowhere. oil's geopolitical risk premium. to "bloomberg daybreak." 17, we hadday, may earnings come out a short time ago. because of trade, they are ticking down their forecast for sales from 7% growth to 5%. you have to feel a little sorry for the deeres of the world. they thought they were coming into good times, but now the farmers are just really getting killed. alix: and they are also seeing

higher production costs and r&d. their margin falling 100 basis points in the second quarter. that part is irrespective of what is happening with trade. david:david: not an easy time. alix: we will focus on that. in the markets, $19.5 billion. that is how much fled out of global equity funds this week. we are looking at some fallout here. euro-dollar flat, surprising because core inflation rose. it is a completely risk off morning. david: now it is time for bloomberg first take. we are joined by peggy collins and lisa abramovitz. let's start with that story about china's response to president trump, which was not very encouraging for a variety of different outlets. they say they are going to roll

measures asve necessary, and then people saying the u.s. lacks substantial sincerity and won't get an effective response, and the trade war will not cripple china. it only strengthens us. it. sums china is not softening any. peggy: that's right. china does have different tools in its toolbox then we do in the u.s., so it does seem like they are saying we plan to support our people. don't worry, we've got this. we are not going to let the u.s. bully us around. just like in the u.s., we are trying to say you've been bullying us on trade and we are changing the landscape now. yesterdayonder if particularly it got personal with what respect -- with respect to what they did to huawei in washington. when i was speaking to

people familiar with the discussions, they were saying that president trump may be pursuing a parallel track. the huawei issue is not directly related to trade. china is saying we don't buy it. i am trying to understand why markets are not taking any of this seriously. you are seeing slight declines ahead of the u.s. open, but not a wholesale selloff. still a premium in markets that there will be some sort of trade deal even though it is harder and harder to see how this is going to come together, especially with issues like huawei on the table. peggy: i was thinking about that this morning when i was looking at the deere earnings. they are starting to see some of the effects of the uncertainty in trade talks. farmers are not making take expenditures on things like tractors. it will be interesting to see if the market reacts. it almost felt what the markets didn't care. alix: ask germany with the -11 points in their 10 year.

here is the latest on brexit. jeremy corbyn says it has become clear that while there are some areas where compromise have been possible, we have been unable to bridge important policy gaps. the more crucially, increasing weakness and instability of the government means there cannot be confidence in securing whatever might be agreed between us. -- thele rate stays a cable rate takes a nosedive. theresa may is not just fighting for her life. she may actually be out in the next couple of weeks. lisa: and she created a pass to leave. david: was created for her. [laughter] think it does seem like her tenure is imminently coming to a close. you're seeing different factions break apart and trying to assert control. right now the biggest six-day drop in cable since november. we are tracing almost all of the advances of the year, back at

the lowest level since january. if you want to see the greatest market pain of this, it is the london housing market, which we've seen taken absolute nosedive. people saying we don't know where the banking sector is going to be. this is making it look like a hard brexit is back on the table. david: what we see in fx and the housing market is similar to the china situation. it is not that big an issue anymore. we don't even hear about hard brexit. again.ell, now we will peggy: exactly. because it has dragged on and we've heard some of the rhetoric over and over again, one of the greatest lines in the story on the bloomberg today is that this blows wide the possibilities of actuallyit will look like. alix: it looks like it can't be a binary situation anymore for brexit or trade. in this worlde

without a resolution? david: normally you think you're getting closer to certainty. day said weyn to are also not ruling out a second referendum, so everything is still on the table. alix: and that is true for oil. isgy, do you feel like this a trader's show me story? or is this just in general traders not believing in higher oil prices? peggy: i think the uncertainty is there, but you are also seeing headlines cross about trump saying we don't want military escalation or conflict with iran. he's going into at election next year, so that would be a difficult situation. one of the things i was thinking about this morning, you do see some of the tariff prices moving down to consumers. walmart saying they expected to push some cost on the consumers. if you start to see oil prices

and gas prices rise, that could offset some of the lack of reaction we've seen from consumers so far, in part because there's been low inflation. oild: is it possible triggers are just terribly sophisticated political analysts? [laughter] david: president trump doesn't want to be in a war in the middle east going into an election year, full stop. lisa: i think there is something else at play here. saudi arabia has capacity to ramp up production. russia has capacity to ramp up production. we have the shale producers that are also fulltilt ahead. there is a question of what the bigger risk is for oil, a big swing to the upside or to the downside, given the fact that there have been cuts in opec. the dynamics of the oil market, as alix i'm sure knows vastly better than i, are complicated,

but it shows there are plenty of producers that could offset any losses from iran. we've already seen venezuela go offline pretty much. that has already been factored in. it becomes really tricky. alix: i think that is definitely one part of the story. if you want to dig a little deeper, russia is having contamination issues, not just because of that pipeline. there's questions of how much saudi is going to ramp up now. they might have to wait. from last time in october when trump tanked the markets. they are selling oil to asia right now at a premium. they are not lowering their price to do it. there's some nuances that i feel like are making some tightness, but the market just doesn't really care. david: in the short-term, we are not sure what is going on, but

in the long term, we feel pretty good about it. alix: real pleasure. thank you for joining us on this friday, peggy collins and lisa abramovitz. throughout the next couple of hours, you can check out all of the charts we are using and more. go to gtv on your terminal. coming up on the program, you've got volatile markets leading up to the g20 summit, were presidents trump and xi are expected to meet. we will discuss next how to hedge it. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." is feeling there

impact of the trade cutting its guidance. the dispute between the u.s. and china is threatening to erode the market share. its drive intoup the european food and groceries business. the world's largest on-time reit -- largest online retailer is making an investment in a london-based startup in the meal delivery business. has raisediveroo $1.5 billion. hewlett-packard is an advanced acquire cray, with a market value of $1.2 billion. andould help hp enterprise computer systems against ibm. that is your bloomberg business flash. david: china overnight sent word

it felt no pressure to come ionk to the trade negotiat table with the united states. ubs chief china economist came on our show days ago and warned of what would happen even if they do take action. we welcome now dean curnutt. if this goes on a long time and does affect china growth that materially, what does that mean for markets? thus far in the equity markets we had a tumultuous week, but it's all come out ok. dean: we've got monetary policy, trade and geopolitics, markets, and then you got the economy, so there's a system here. i think right now what we are waiting for is to try to understand the extent to which

the trade uncertainty is leading to potentially greater flaying of economic growth. we started to see some of the stats soften a little bit. i'm concerned about europe, starting to we can again. and then i think the markets, there's a system of hedging and risk-taking. issome point a worry for us that the overhang of uncertainty from the ongoing trade negotiations, which doesn't look like it is going away anytime soon, starts to weather people's ability to take risk. alix: so where you are starting to see it is dollar you on -- is dollar-yuan. how do you deal with that? dean: it is an interesting currency to watch because we all know it is highly managed. to the extent the pboc wants to keep it below seven, i think that they can. we saw a real challenge the last time this happened, when oil was

crashing. that is not happening right now. we saw a big outflows from the currency. that is definitely something we are supposed to watch carefully. we look at the correlation between cnh and the vix. that was a big market narrative when oil was crashing in late 2015. that feedback loop felt very active, so we started to notice that correlation take back up a little bit. there's all of these things that are interacting, and i would say in a not so favorable way. i think what you will ultimately need is for investors to really switch into risk aversion mode. you will have to see corroboration that the global economy is re-softening. we seen an uptick in pmi's earlier in the year. people were buying into this notion that chinese stimulus was working, but maybe not so much.

vix, sittingt the here at about 16, you are really supposed to look more at fixed futures, so june and july. those are at 16.5, 17. that's about fair. . a little bit of risk premium in there. one thing that i think is a compelling hedge is gold. -- gold iser glibly negatively correlated to the s&p. it also moves very adversely to real interest rates, which have been coming down as concerns about the economy increase, and this view the fed is going to do something increases as well. and then gold vol. we spend a lot of time on options, and we look at the price of options on gold that are extremely cheap. it is cheap for a reason. it hasn't really moved that much, gold. it is sort of acting like a

currency, and currency volatility has been muted. like gold vol options. alix: i feel like part of the issue is the dollar has now been labeled as the safe haven instead, whereas with the political risk, you would think it wouldn't be. when do you expect that to change? dean: the dollar has been incredibly muted. if you look at the range bound- yen,of the euro, of the these have been very muted currencies. at the top end of its range, not moving dramatically, but i think it is something we are supposed to watch. the playbook for the dollar strength side of the risk off is to start to thing about em as vulnerable to dollar strength. .here's an etf called the emb

it's an emerging market bond etf. when we saw the dollar rally exceptionally last year, about this time last year, this emb sold off quite a bit. that is another thing. you are trying to watch these asset price relationships. that is on our radar a little bit as well. david: to what extent are markets pricing in the fed? we see more than 125 basis point cut into the markets right now -- we see more than one 25 basis baked into the markets right now. dean: there's a lot of things there. the implied rate cuts in the s&p had been moving together quite a bit, and it makes all the sense in the world. the economy starts to flag. people start to price in rate cuts. the s&p comes down. then powell had this gigantic pivot earlier in the year.

the s&p went up even as rates came down. now that is starting to get tested as well. inflation is coming down globally, but in the u.s. as well. now the question is to what extent has the market backed all of this market expectation from the fed? the next press conference is going to be interesting. powell has tended to move markets during these press conferences. whether you're going to hedge or buy call options because you are bullish, you want to time your hedges to correspond with that press conference in mind. expiration isns the 21st, so it is important to time it. alix: dean, good to speak with you. coming up, it is a costly rivalry brewing in china. the second largest coffee chain goes public in efforts to compete against starbucks. the cfo joins us next. this is bloomberg. ♪

david: china's second largest coffee chain luckin coffee raised 506 to $1 million in its raised $561 million in its u.s. ipo. we welcome luckin's cfo and chief strategy officer. first of all, congratulations on the idea. -- on the ipo. guest: thank you very much. david: you have grown really fast in a short period of time. i talked to kevin johnson, the head of starbucks. he says you are a really good competitor, and the more the merrier. guest: that is a nice thing of him to say. what we are really trying to do and smallhnology locations to save cost on rental

to bring down costs, and i think we've been quite successful there. to get that allows you high quality coffee at a very convenient vocation and at a affordable price. the way we look at the coffee think it is, we mostly the price point and inconvenience we are trying to address with our model. i think the market is big enough for multiple players, and we really focus on driving that consumption to get close to what you see in the surrounding asian countries. david: how long is the room for the both of you? how big is the headroom just to continue to grow the business before you are competing directly and taking things away from each other? look at theyou penetration in china, it is 1.5 that only

make freshly brewed coffee, so there really is room to grow. we want to increase that number to get it much closer to what you see in surrounding countries. i think the way we do that, and when you think about coffee consumption, we are very focused on convenience and quality, people in offices that work hard and just want a quick cup of coffee. that is our key market, and that is the market we see growing relatively quickly. when it comes to starbucks, i think they've done a great job educating the markets. i think coffee consumption has increased, and i think we benefit from that going forward. alix: what happens if there's continued china/u.s. trade war pressure and worries about chinese growth? i think theout: impact of the trade war come up we haven't really seen anything to date. from a cost perspective it doesn't seem to have any implications.

that is not something we are particularly focused on today. we are really focused on executing our model and growing the business going forward. david: are you seeing in the indication that there is some reaction on the part of the chinese consumers about u.s. companies such as starbucks as opposed to your company? tooout: no, we are not focused on that. we haven't really seen it to date. if it is something that develops, maybe that is a positive, but we have not seen that. we are convinced we have a model that will attract a lot of consumers going forward. alix: if there is weakness in the chinese economy, some say growth could be under 6%. why wouldn't that hurt your business? reinout: what we are trying to do is help people save money on daily necessities. we are not just about coffee. juice and lunch,

things people need on a daily basis. we are trying to save cost by the more efficient on waste and labor. the way we can do that is passed some of those cost savings through to our customers. that sort of price point we see at a much more affordable price is what i think will drive consumption and help people actually save money. so particularly in a market that is going to be a bit tougher, we are very well positioned to drive that growth. alix: thank you very much. later today we have an exclusive interview with the ceo of the second largest ipo in the world so far this year. that is at 3:00 p.m., so don't miss that. coming up on this program, oil heading for its biggest weekly gain since mid april with the geopolitical risk priced in. this is bloomberg.

alix: this is "bloomberg daybreak." you made it to friday on a very tough week, and it is looking like a risk off open yet again. s&p futures down by 0.5%.

overall, u.s. equity funds had outflows of $.1 billion according to be of a -- of $8.1 billion according to bofa. downa look at dollar-yen, another 2/10 of 1%. that level we are watching for ae dollar-yuan is going to be seven. take a look at that, -12 basis points, continuing to grind lower in the bond market in germany. david: it was a tough week if you wanted calm, unless he were shorting treasuries. alix: unless you are end the bond market. spanish yields hitting a record low, too. buying very much across the board. david: let's look at what is going on outside the business world. viviana hurtado is here with first word news.

viviana: president trump is looking at the election calendar while he contemplates tensions with iran. the president is wary of drawing the u.s. into a war with the islamic republic. he reportedly believes it could hurt his chances of winning a second term. president trump campaigned on promises to withdraw the u.s. from wars in the middle east. president trump's immigration plan getting a cold reception even within the republican party. it called for new funding for border security measures and implements a new merit system for allocating green cards, but republican senator lindsey graham says the plan won't become law. he urged the president to work with democrats to overhaul asylum laws. in the u.k., labour party leader jeremy corbyn says compromise brexit talks are over. he says negotiations with prime minister theresa may's conservative party have gone as far as they can. may hoped to reach a deal that would ensure passage in

parliament. her deal has been rejected in parliament three times. 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. as she just mentioned, u.k.'s jeremy corbyn says brexit talks have gone as far as they can with the conservative party. meantime, u.k. prime minister theresa may responded a short time ago. pm may: we haven't been able to overcome the fact that there isn't a common position in labour on whether they want to deliver exit or hold a second referendum, which could reverse a -- deliver brexit or hold second referendum, which could reverse it. david: i have to laugh a little bit at the pot calling the kettle black with not having a civil position within the party. reporter: these talks were always going to be difficult because both sides are very divided. if there is any hope at all that

may might squeak her deal through parliament, those hopes are now pretty much killed off by corbyn walking away. really now we are focusing on the leadership race. as of early next month, theresa may has set out the timetable of her departure. over the summer we will have a leadership race in which the candidates will be setting out what kind of brexit they want. really, right now the options have blown wide open. we can't rule out that further down the line when the new leader takes office and realizes the realities of brexit haven't changed, then perhaps you will get a general election down the line. david: it looks like it is inevitable we will have a leadership race now. theresa may will no longer be the prime minister. with a do go forward candidate for the leadership of the conservative party, does anyone have the capability of

bringing this party together behind a unified brexit approach? emma: that is the question. one of the challenges the new leader will face is bringing the party together, but the other is getting a brexit deal delivered in bringing the nation together. that is one of the things people are talking about a lot, that a second referendum might be a solution in one respect, but would divide the nation bitterly. the same could be said for a general election. david: and you have to persuade the rest of the european union to go along with it. well, the european union would be delighted if britain had a second referendum. they do still seem to think it would come out in their favor, although that is a big question mark. david: thank you so much. still with us is dean curnutt of macro risk advisors. we talked earlier about the effects, the cable and the pound sterling. is there any other part of this that one can trade on or invest

in? is soi think that brexit fluid and so complicated, the options are blown wide open. from pricese a cue themselves because we are just not qualified to get inside these negotiations. first thing i would say is the volatility of sterling on a realized basis is really not that high. it is almost as if the market has just gotten tired of the whole thing. if i look at the implied volatility, this is how you measure the option price. you go back to december, a volatile time for global markets, volatility then versus now for the pound is actually half. the vol has come down quite a bit over the last couple of months. , people are people throwing their hands up. it is really difficult to position for it. one thing i would say is versus the brexit vote itself in june 2016, that was a wild period.

ferris -- there was a massive amount of hedging. you just don't see us much of that right now. i think people are exhausted. alix: hedging the risk has not paid off. i want to turn to oil now because prices are headed for the biggest weekly gain since april amid flavoring tensions in the middle east. iran is likely to dominate the conversation as they look at the technical output for their opec deal. i spoke to atlantic council's senior fellow on what would be a major risk to the oil markets. >> i think in order to really bump up prices, we would have to see something like major movements in the middle east. oil markets are recognizing this, and realizing this is making things into a bigger issue than they actually are. alix: richard my lesson -- richard mallinson is with us now.

do you feel like what we've seen is accurately reflected in the oil price? guest: i think we seen a little bit of an uptick, and that has generally been the story for quite a while. whilst we have ground our way higher, given the extent of geopolitical risk, not just the , i don't think we are really seeing that fully reflected in flat price. but i would agree with the commentator you just had on that when it comes to what is going on now, i don't think iran wants to get drawn into a conflict. i don't think president trump wants to take this down that route. i think the markets should be careful about how much risk it prices in specifically on the u.s./iran tensions. alix: it's a good distinction. i want to bring your attention , theo different spreads wti one to three months and the brent one to three months spread. the brent is moving higher today

, meaning prices today are higher than prices tomorrow. do you feel like the flat price is reflecting certain tightness? richard: i think the mismatch i see is if you look at brent, that big tightness and backwardation in the spread is only accentuated with the , which pipeline issues has left europe with a lot of contaminated oil. we've got a whole flurry of outages and factors affecting brent, but also the loss of iranian and venezuelan crude due to u.s. sanctions. if anything, the flat price for brent wasn't look high enough relative to that backwardation. , there'se demand side the refinery numbers softening a little bit. everyone is worried also that opec is going to raise production in saudi arabia will

repeat what they did last year, pushing more barrels into the market. i can understand why flat price is slow to respond alix: -- to respond. alix: what using the rhetoric is going to be like this weekend that the market has to watch out for? richard: i think really they are hold offbe looking to until june. they are monitoring it very closely, so they will do as little as possible to give the market a sign. i think that means june becomes really important because before that, people will be worried that second half of the year supplies are going to surge, but if prices don't increase from here, it's going to be relatively little incentive going into the june meeting to push production much higher. that could catch the market by surprise in terms of how tight it would leave the second half of the year. david: dean curnutt of macro

risk advisors is still with us. we talked about pricing options in terms of the fed news conference. are there events like that in the oil world that you should keep in mind as you price your options and timing? dean: you've got time consideration and the stock price, so it is a when and by how much. with oil, if you look at the entire surface of options, you see not a lot of fear that you could have this up shock. that is the old days of the oil price shock. maybe it is the shale revolution, but you don't see people reaching out for these very fall car -- these very far calls. when a look at it in the context of that period when oil was , the riskn 2015, 2016 asset complex was the high-yield market. credit spreads were soaring as

oil crashed, and oil is a much smaller part of the credit indices at this point. the correlation between crude prices and the credit etf, that is much lower now than it was. it is still positive, but lower now. oil is important, but the market pricing of options is telling me that the risk of this supply oriented shock is not as high as it used to be. mallinson, good to catch up with you. dean curnutt, thank you. david: coming up, we run prove -- we run through everything you in our weekly "business week" feature. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." bloomberglater on "the open," be of a merrill merrill lyncha head of u.s. equity. pinterest plunging in premarket trading. the digital scrapbooking company giving in annual sales forecast that fell short of estimates. confidencethe of investors. ,n its first month of trading stock price has pushed more than 60%. it is the world's second-biggest ipo this year, and it doesn't involve a tech unicorn. manufacturernces

pressed the bottom end of the range. today trading begins on the new york stock exchange. exxon mobil shareholders are being urged to vote to separate the jobs of ceo and chairman. that comes from the influential proxy voting firm institutional shareholder services. on at the voted annual meeting on may 29. david: thanks so much. we turn now to businessweek. let's call it "bloomberg businessweek." alix: we have to brand it. david: this week we are taking a look at the 90-year-old monaco grand prix, the most glamorous of the formula one races, run in may each year. the race is grueling, through the twisting streets of monte carlo along the mediterranean,

and has some of the wealthiest people in the world descending on the stunning tax haven. i've never been. always wanted to go. reporter: never been to monaco? david: i've been to monte carlo, but never to the race. alix: i feel like you would really want to go to this. reporter: our car columnist has gone to this. the whole city is taken by the race and cars can't go anywhere. she had this incredible day and at the end of the day doesn't know how to get home, so she has to hitch a ride on a vespa. [laughter] walk us through some of the big highlights we can expect. obviously there's the racing, but also the luxury yachts and the parties. chris: most people around the

millionve to pay up $31 to have formula one come to town. monte carlo doesn't have to do this because it is the most fabulous place in the world. all of these clubs from around the world have pop-ups there. basically every hotel becomes this chic paradise where celebrities and royalty come and hang out for the weekend. david: if you have to ask how much it costs, you can't afford it. the cover charge for one party i think is $10,000. chris: it took them forever to get back to us. how can monaco do what they do with no taxes? question for a politics. david: a lot of people live there because there are no taxes.

driver,he number one the one this going to win, for mercedes, he lives in monaco. he is probably going to win this coming weekend. david: he's the favorite to win. alix: your next big birthday, we will start planning that. david: check out the latest issue of "bloomberg businessweek," on newsstands now, and on bloomberg television. alix: some breaking news for you, hpe set to buy cray for 1.3 billion. shares have risen about 11% in the past year, so total market value is about $1.2 billion. it is now up over 16% in premarket. david: i haven't heard about cray in years. cray used to be the amazing supercomputer company. even how computers have developed, i'm not sure what i supercomputer is anymore. alix: you wonder where is the synergy opportunity and overhead

costs. david: great name. alix: it is. we will definitely follow that story. david: coming up, former vice president joe biden's bid for the white house. that's what i'm watching. we will speak with the deputy campaign manager. this is bloomberg. ♪

david: vice president joe biden was ahead of the craddick -- ahead of the democratic pack running for president even before he started. we welcome now his communications director kate bedingfield from washington. thank you for being with us. welcome. guest: thanks for having me. david: we had a little preview of what the vice president is going to talk about, and part of it is rebuilding the middle class. how is he going to go about doing that? guest: vice president biden has spent his career working for working people. he believes the future of this

country is about building a strong middle class that is inclusive. we are going to implement policies that give working ,eople a level playing field and that is a motivating reason for him. you will hear from him on education, tax, trade. he has a really inclusive vision for a middle class that gives everybody a chance to get ahead who works hard. david: part of what you just described goes right into the teeth of what donald trump campaigned on in 2016, the middle class, giving people a fair shake, giving them jobs. in fact, he's created a lot of jobs under his administration, as president obama did before him. wages have gone up and he's gone after the trade issue hard. how does vice president biden say he will do a better job on the question of job creation and wages? kate: as you've heard vice president biden campaign these

past few weeks, he's asked voters, are you feeling relief from the trump tax cuts? people are saying no. he believes we did tax code that is fair -- we need a tax code that is fair. it is ridiculous that someone like warren buffett pays lower tax rate than his assistant. create policies that ensure people get a fair shake. that is something you've heard from him his entire career. it is a motivating reason for him to run for president. he feels strongly about it, and believes that this president, for all his talk, hasn't been able to make life better for working people in this country. that is something that vice president biden feels strongly and is committed to. david: one of these things in the news every day is u.s./china trade relations. president trump has gone hard on that. he's delivered a message come particularly -- a message, particularly through the rust

belt, that they have taken our jobs and we are going to get those back. vice president biden has been more of a free trader. kate: he believes in fair trade. you've heard him talk on the campaign trail about his strong belief that when given a level playing field, nobody can out match and out produce the american worker. haselieves that trump sacrificed opportunities to really force china's hand. he's abandon our allies as president. the full would bring negotiating force of our allies to the table to ensure american workers are getting a level playing field, and make sure that labor is at the table in any discussion with china. he feels very strongly that a lot of opportunity has been lost , and as president he will focus on ensuring that he is bringing the full force of our allies to force china's hand. david: fair enough come about as both republicans and democrats have said, this problem has been around for a long time, long

before president trump came in. vice president biden was part of the obama administration. the china situation was not fixed under president obama. what would be different under a biden administration? kate: i think vice president biden has unique stature in this race in that on day one, he can look any world leader in the eye and command respect. he has long relationships with leaders around the world and a fundamental understanding of how to advocate on behalf of working people in these negotiations and discussions. finish.o ahead, please kate: that will be a critical piece of how he approaches any discussion of trade in a biden administration. david: as an old white man, which is what i am, kanaan old white man lead -- ken and -- can

an old white man lead democrat party in this generation? kate: he is someone that spoke out for lgbt marriage equality when pundits are saying that was not a smart thing to do. he has been an inclusive leader and for equality his entire career, and that is the kind of president he will be. david: thank you for being with us. good luck at the campaign rally over the weekend. that is kate bedingfield, vice president biden's deputy campaign manager in charge of communications. this is bloomberg. ♪

♪ alix: global equities feel $19.5

billion worth of pain come out of stocks -- of pain, out of stocks and into bonds. the trade war takes its toll on the world's biggest tractor maker as farmers hold back on big purchases. and china says it will counteract u.s. tariffs as they respond to president trump's aggressive stance on huawei. david: welcome to "bloomberg daybreak" on this friday, may 17. besides all of that, we have brexit back in the news. jeremy corbyn saying we might as anymore, we are not getting anything done. theresa may says it's all your fault because you can't agree on what you want. alix: a second referendum could happen. we are done. talks didn't go anywhere. david: she says the conservative party is going to get this done. alix: and boris johnson are is

right behind her, waiting in the wings, ready to take her place. we are laughing because it is so preposterous how it keeps evolving. we have the fourth try for her brexit plan. if it doesn't work, it is basically assume she is out of office. david: and it is not our government. too painful to laugh at our own government. alix: we are ending the week. happy friday. it is a risk off tone. the dollar becomes a safe haven within the g10, with the exception of the swissie and again. -- and the yen. bond yields keep moving lower. brent on its own with geopolitical risk. david: we had a tumultuous week in geopolitics, with u.s./china trade talks spiraling down and rising tensions in the middle east. but at the end of the week, what is really changing markets? for answers we turn to

bloomberg's taylor riggs. taylor: we are basically back to where we were a week ago. that is changing a little bit with some weakness this morning. i wanted to take a look at the cost of protection, with a 10% move to the downside. it has really fallen in the last few days. theou mentioned sentiment, yen strength had is a good gauge of fear. we are seeing some standard deviation moves like in previous months or years, so yen strength is there, but it is a calm move. in china, you really have to be staying investments. when china devalued their currency, you had a big discount for chinese currency relative to the total. during the december volatility route, a big drop. right now only seeing about a 3%

discount. we are seeing a little bit of calm here as we got a lot of this news. alix: thank you so much, bloomberg's taylor riggs. joining us from chicago is ubs asset management head of intrinsic value equity. we haven't really gone that far. what do you do in a market like that? guest: sometimes it can look like much ado about nothing, but there is actually a lot going on. you need to remain disciplined. you need to remain long-term in your approach. one of the challenges we face is that some of the news that comes out day-to-day has long-term implications, but changes the next day, whether you are talking about brexit or the u.s./china tariff negotiations, these things are far from over and the level of uncertainty will remain heightened in the market for a while. david: the fed is still the fed.

we've got low interest rates that are not going to go up higher. there is some speculation in the marketplace they may go lower. is that the more important factor right now? thomas: it probably is. the discount rate is everything when you look at a long-term valuation approach. they have been low for a long time, and now people are finally starting to accept that and realize they can stay lower for much longer. the fed, if anything, isn't going to be the enemy that people thought in late 2018. now the fed, even if they stay where they are, is accommodative. the fed has pumped about went to see inflation. you could see that. lix: if you take a look at low volatility stocks, we thought that would have seen a big rally. we didn't see that. is the fed why we are not seeing

those kinds of moves? thomas: some of the fear has just been pure outflow. it wasn't from hive a -- from vol.vol to low it was just outflow out of the market. you see with the energy sector, where oil prices have gone up dramatically and energy stock prices haven't, oil companies start by another oil companies. it is an interesting market that provides a lot of opportunity, but i think the flows are still going to be very volatile around short-term news events. alix: fair enough. that flow out of stocks obviously went into bonds. how do you play that? thomas: if you are an equity investor, let's say you have a balanced portfolio. some of the outflows could be a rebalancing. you had a very strong market at the beginning of the year come -- of the year, but more

recently it is out of fear. for -- ares are few fearful, you should be greedy. there's a lot in the middle on the sidelines. david: if you are an equity investor, at what point do you become concerned about some of the geopolitics? they haven't driven the market so far so much. we are now hearing from a lot of analysts that perhaps if this --s on for an extended pei an extended period of time, chinese growth could dip below 6%. thomas: i think what you have to watch is what china does. china has a lot of tools in their toolkit. one of the tools is propaganda. in terms of the news flow, they are being very aggressive right now in their messaging to the populace that we are going to remain strong in this trade war, the u.s. is the bully, and we

are not going to back down. trump has his own version of that as well. another tool china has is there monetary and fiscal stimulus. they have shown historically that they will use that if they need to. that is one of the strengths they have. david: another tool that is talked about is the possibility of selling u.s. treasuries, maybe not even as a way of getting back at the united states. they need the cash for the stimulus they want to bring to the economy. u.s. treasury holdings for china has dipped down now. it is not dramatic, but still down to a level we haven't seen in some years. how much of a danger does that pose? thomas: i am not a bond investor, but if china disposed of ever u.s. treasury they had, i don't think it would impact u.s. treasuries. if china sold and that caused rates to rise, there would be such a flood of money from everywhere else in the world that would bring those rates back down in equilibrium with the rest of the world.

whether or not china invests in u.s. treasuries doesn't change the underlying value. alix: so if we wrap this all together, if the risk is really going to be a place in the bond mentioned, where is the best place to diversify and take on risk right now? to be the contrary an investor? thomas: there are still pockets that are really underpriced. i mentioned energy. financials are almost historically cheap. boundless sheets are as strong as we have a -- balance sheets are as strong as we have ever seen. there's just a general distrust of certain industries right now, and i think that is where you can be opportunistic. david: one of the places where there is at least concern is tech. tech in general can be affected by trade relations, but more specifically, yesterday where the announcements of two

different initiatives in the administration going after chinese telecoms. how is that potentially affecting u.s. tech stocks that could be selling to huawei or would be affected by component supply? thomas: there's a lot of places in the world to go for components, but there's certain aspects you really do have to get from the u.s. that is a negotiating chip that is valuable. the u.s. should probably be very careful how they play that. when you look at what is driving the tech stocks longer-term, you've had tremendous consolidation in the semiconductor industry, within memory. the pricing in the margins should be strong. i think there's still opportunity, and i think people still look at backwards when it comes to the cyclicality of that sector, and i think they will be surprised at the resiliency and the pricing. alix: coming up, oil headed for its biggest weekly gains since early april. we will look at the meeting of

opec and its allies. what is at risk for the oil market? this is bloomberg. ♪

viviana: this is "bloomberg daybreak." hewlett-packard enterprise agreeing to buy u.s. supercomputer maker crate for $1.3 billion -- maker cray for $1.3 billion cash. deere feeling the impact of the trade war. the farm equipment manufacturer reported lower-than-expected earnings and cut guidance. the dispute between the u.s. and china is threatening to erode the market share of american farmers. that could keep them from making

big-ticket purchases at one of deere's tractors. shares of british tour operator thomas cook are essentially worthless, according to citi analysts. it says the company's debt wipes out its value. that is your bloomberg business flash. well, the price target -- david: i've never heard of that. alix: the litany of excuses from the company was huge. it was like last summer it was too hot, so no one wanted to leave the u.k. david: they are down just under 45% the last two days, 90% for the year. they took a hard look at the business. what are they worth? zero.

i guess you might as well just wait. david: when i was in london a while ago, thomas cook was a big deal. holidays booked their through thomas cook. alix: there you go. also in the market, we are taking a look at oil, headed for its biggest weekly gains since april amid tensions flaring in the middle east. we asked if the turmoil in iran is accurately reflected in the oil price. >> when it comes to what is going on now, i don't think iran get involved. i don't think president trump wants to take us down that route. so i think markets should be muchul about how is -- how is priced in. alix: thomas, what is your base case for oil prices? thomas: our base case is low

70's. as we know, oil can go pretty dramatically into a state of disequilibrium that can stay there for a while. alix: so why do you like energy stocks if we are sort of appropriately priced, yet might see volatility? thomas: right now i don't think investors trust the current price. oil stocks are not priced as though oil is in the $65, $70 range. they are priced as an it is in the $50 to $60 range. even as oil prices have gone up, the normal correlation with energy stocks should have gone up with them. they haven't really gone in step. alix: it feels like part of the reason is longer-term prices. , can bring up a terminal here a function that shows the higher oil yield prices aren't even the next year and a half, and then settling at a base. that is not necessarily a

bullish case for oil. is that part of the problem? thomas: that is the problem. people don't believe it is sustainable. if people believe you are sustainable at $65, $70, then these are really cheap. people are pricing in a big drop. one thing i think people are discounting is global demand. i don't think they see that even with new, more efficient energy sources, electrified vehicles, the demand for oil is still pretty consistent and strong over the next few years. alix: how do you play that? is it going to bnp -- going to eop's?s, eop's, that is where you see the occidental, chevron, anadarko stuff going on. on the oil services, i think one

of the reasons those have been held back is we've got a big backlog in the permian from a pipeline issue. to the extent that pipeline comes on, then all of a sudden i think you see a pickup in demand. david: at the same time we are seeing consolidation come along. we saw it in the fight between chevron and occidental or anadarko. does that give potential lift to energy stocks? thomas: i think it should. consolidation is always good for margins. i think other companies will say what else is down there, and where are the opportunities. alix: if that is the case, it feels like the problem with investors is they just don't believe it. that you are not going to get the same kind of asset value you would normally because you will be focused more on free cash flow, and cash will take longer to trickle down to the bottom line, which means less shareholder return. are you looking for those that

can deliver free cash flow faster? thomas: it is so interesting. the market is divided between short-term investors and the long-term. it is almost like this hyperbolic discount rate. to the extent you are looking long-term, you can be patient, and without any clue what stocks are going to do in the next few months, if you are patient, then that is where the opportunity is. run, you still see a lot of pressure on those stocks. alix: what about oil services? they've been the biggest hammered part of the oil world in the last five years. what you do with them? thomas: that's where you have seen a pullback in demand. the multiples for those companies are very low. some of that is cyclical rather than secular. and the permian, you had kind of a pullback to the extent that permian production picks back up when the pipelines are open.

possible we are looking at the wrong part of energy, and should be looking toward some of the renewable companies? thomas: i think you are looking at the future when you take into account the oil price and what drives it. the big challenge there is the price. what are you willing to pay for it? right now there's a bit of a premium built into those. david: thank you so much for being with us. enan of ubsmas dig asset management. he is staying with us. coming up, trade takes its toll on deere. detractor company cuts guidance as farmers shy away from big-ticket purchases. this is bloomberg. ♪

david: time now to look at three

companies worth watching this morning. amazon has taken a big investment in deliveroo, a british company that delivers food, really going after uber eats. out with its ipo, part of the issue was they bump up against the amazons of this world. this illustrates the point. this could potential he pose a problem for uber eats. alix: what is interesting is the big difference between the two eats drivers are not the same as the uber drivers. david: i never knew that. alix: they have a crossover in technology, but you are still exposed to high overturn for drivers. i'm looking at pinterest. not a good quarter for the company. they disappointed after being a public company. annual sales forecasts were cut.

the 2019 revenue on the high-end is going to be 1.08 lien dollars -- $1.08 billion. david: you wonder if there is a theme going across these really big tech unicorns to bring a lot of capital before they go public. lyft did really well for a couple of days. now pinterest. alix: it has been a very difficult week, so there is that. and there is the international business to take a look at as well. it is hard to judge what pinterest and the accommodation -- what pinterest and the combination will do. david: deere had earnings and forecasts that were not to pretty. amid thehis is coming escalation of trade tensions between the u.s. and china. ceo here notco

long ago, raising his guidance. deere doing the opposite, generally seeing a lot more caution in farmers. their machinery is not cheap. it costs thousands of dollars. david: hundreds of thousands. weaker you also see soybean demand out of china because they are battling the swine flu virus. you also have bad weather in the u.s., delayed planting seasons. that is really difficult if you are a farmer to justify that kind of expenditure right now. david: president trump kept promising the farmers, this is going to be great. the farmers were hurting even before the trade problems brooke: -- the trade problems. brooke: there's talk about potential stimulus for farmers,

but if the demand isn't going to be there, that creates an awkward trade-off. alix: fairpoint. also, the floods you mentioned are a big deal. they are planting corn right now. that hasn't locations for prices also. also still with us is tom digenan. how do you decide which industrials you would and wouldn't want to buy? thomas: there are pockets that are really cheap come about -- are really cheap, but it also affects capital allocators. when you are making decisions, that is when you see pullback and demand. uncertainty hits industrials pretty hardly. also, increased automation. some companies are winners there, summer losers. so who has margins that are sustainable? these tariffs are a direct impact on some of these companies. brooke: they were a little weak

this quarter in agricultural equipment. not as great as what analysts were hoping to see their. seehat they were hoping to there. the demand is the bigger issue for me. does this introduce too much uncertainty? does it need cap some of these nascent recovers in markets? alix: thank you both very much. coming up, the trump administration announcing sweeping new restrictions regarding chinese telecom companies. we will take a look at the winners and losers in the age of 5g and the network of things. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. getting a little ugly for the last trading day of the week. s&p futures off .9%. the dax taking it on the chin.

off over 1%. a lot of political risk. in other asset classes, the dramatic moves in the bond market are continuing. a huge move into bonds. u.k. gilt yields are now down six basis points. same thing in germany. -12 basis points is where we sit and dollar-yen getting part of the safe haven flow. the yen having its best weekly winning streak since 2012. if you want a look at where the risk is, you can see where the safety trade is. david: you can see why you don't want to go to the weekend alone. last weekend we went into the weekend thinking a trade deal was around the corner, saturday trump tweets. let's find out what is going on outside the business world with viviana hurtado and first word news. viviana: donald trump looking at the election calendar while he contemplates tensions with iran.

bloomberg is learning the president is wary of drawing the u.s. into a war with the islamic republic. he believes it could hurt his election -- his chances of winning a second term. president trump campaigned on promises of withdrawing the u.s. from wars in the middle east. president trump's immigration plan is getting a cold reception , even in the republican party. it calls for new funding for border security measures. it also implements a numeric system for allocating green cards. republican senator lindsey graham says the plan will not become law. president tothe work with democrats to overhaul asylum laws. over to the u.k., where jeremy corbyn says brexit talks are over. he says negotiations with theresa may's conservative party have gone as far as they can. may hopes to reach a deal that would ensure passage in parliament. lawmakers already rejecting

may's brexit agreement three time. now to the bank of canada where the governor is rejecting calls to relax mortgage changes. bloomberg tv tighter mortgage qualification rules have created better qualified new borrowers with lower levels of debt. the governor says there are no longer price spikes that were seen in vancouver and toronto. 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. david? david: washington yesterday announced sweeping new restrictions targeting chinese telecom companies, and in , which it haswei claimed were based entirely on national security concerns. i talked with wilbur ross yesterday and asked him whether huawei could turn to european companies like nokia or ericsson. >> a number of things they now

by could be replaced with third parties. i am not sure it would be the third parties you mentioned. there would be some potential replacements. that would probably involve reengineering, maybe some redesign. it is not necessarily a seamless or immediate transition. they coulde material probably design around, either with third parties or do some work internally to huawei. huawei has quite a bit of technology itself. david: if huawei can find other ways of doing this, there may be some time and some difficulties, how is it protect our national security interest to cut them out from u.s. suppliers? it is not certain

they will be able to find replacements or if they do, will the replacements be as good as the u.s. is equivalent? will they be as economical? will they have the useful life? i did not mean to sweep with too broad a brush in saying that for many of the items they could find a replacement. whether they could find a replacement for all is another question. that is one you would have to ask huawei. david: that was part of my interview with wilbur ross. we welcome alex webb, tech ,olumnist for bloomberg opinion and john butler, who heads up our telecom coverage in the united states. alex, how difficult would it be for huawei to replace qualcomm or intel with the nokia or an ericsson? they are competitors.

the chipsets are the key components. businessd its own ship and increasingly it is leaning more on that. there are other suppliers in the u.s. that do other parts of the supply chain. scoop on theave a terminal saying one way has been stockpiling desk saying huawei has been stockpiling for a year. earlier we had the trump administration do much the same with zte, which is a smaller chinese telecommunications equipment maker. they cut off access to u.s. suppliers. that is a warning shot across the bow. recognize they have to be able to stand alone to a certain extent. zte is a different case.

zte was cut up for a while and came back in. john: i look at the zte move as a political move. they shot across the bow. huawei is a protection move, or a protected move. there is rising security concerns surrounding the equipment. we are moving on to 5g. one way makes very -- huwei makes very cheap and very good year. at&t and verizon do not use while way because of those carriers but smaller may and i think the u.s. wants to get in front of that for 5g. the door forens nokia, ericsson, and cisco systems to steal that market share. what does it mean for 5g? yesterday was about the demise of that? is that accurate? alex: knocking ericsson, if you

are a u.s. carrier and you want to do any government business in 4g you cannot use while way equipment. -- you cannot use huawei. supplyhas been able to the market in the internet of things. 5g, youve from 4g and will have factories and farms and office buildings running not on cables and not on wi-fi, but on five g networks. that is a huge opportunity for all of these suppliers. huawei, alsoo samsung. huawei coming out of the picture creates a huge opportunities for these guys. david: a further question is what comes next. if we can learn from the trade negotiations, china tends to respond. what can china due to react to what president trump has done? john: i will start by saying

that is the big concern. is an important company to china because of their desire to lead intact. fall way is the look -- huawei is the largest telecom equipment company in the world. it is their shining star. my concern is they've may begin to i apple as a tool to get back to the u.s. apple has fallen outside the blast radius of this trade war. i think the risk is rising for them. think about china. for apple it is 20% of sales. most of that is probably iphone. david: how bad could it get if china wanted to go after is on tech, telecom generally? alex: as john quite rightly says, so much of the growth has historically come from china. it represents a huge piece of

the business. it has been a declining part of that business and that is partially because of the championing of their home brands. equally, there is a symbiosis because there are so many jobs in china which are dependent upon apple. upwards of one million jobs. that is not something they can easily turn and eliminate those positions. apple does have that slight offer. -- that slight buffer. china is depending hugely on 5g. that is not necessarily about earning 5g outside of china, but turbocharging its own growth and capabilities with this new technology. by cutting off the supply to huawei, that endangers that. the likelihood of a strong reaction seems high. david: alex webb and john butler, thank you very much. alix: it is official. the white house releasing a proclamation on auto imports saying the eu auto terex will be

delayed for at least 180 days and they are ordering negotiations with the eu and japan. david: i was worried earlier he might well be doing this. at the same time it is not clear what the point of that 180 days because he has said this is the time you can agree to limit your exports to our country. the eu has said we will not agree to a quota system. it will be curious to see what the negotiate over. alix: isn't it the point of what is real and what is negotiations? is it the timeframe that matters? david: many people think what is going on is they have to do with china and they do not want to deal with two things at a time. we will turn to europe and japan down the road but let's focus on china. that is what people close to the white house a. alix: is that a good thing or a bad day for getting a china deal done? david: the good news it is high on the list, the bad news is it

is not going so well. alix: the white house saying at least a 180 day delay for eu and japanese auto tariffs. david: coming up -- alix: coming up, the market fallout. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." you are taking a live look at the hewlett-packard enterprise greenroom. coming up on "balance of power" republican representative will heard of texas. ♪ this is bloomberg daybreak. i'm viviana hurtado with your

bloomberg's newsflash. drive is ramping up its into the food business. the world's largest retailer is leading a $575 million investment into a london startup that competes in the meal delivery business against uber. exxon mobil shareholders are being urged to vote to separate the jobs of ceo and chairman. that comes from the influential proxy voting firm institutional shareholder services or iss. opposes the exxon board in five of 10 proposals that will be voted on at the annual meeting on may 29. today in london, shares of easyjet are higher. european discount airline says it has taken steps to disrupt the impact of air traffic this summer. absent ao trying to

fair -- offset of fair slump and the uncertainty surrounding brexit. lead. time for follow the a deep dive into stories making headlines and moving markets. today we take a look at emerging markets and how they have ofthered all of the tumult u.s. china trade wars and heighten tensions with iran. we turn to taylor riggs to take us through the world of em. taylor: the quick answer to your question is it has not been pretty. you have equities off 7%. andl currency bond off .9% dollar denominated emerging-market debt off one -- off .5% in the last few weeks alone. i want to look at outflows in terms of the local currency debt. the of the biggest outflows ever after the tweet on may 5 and then we are still seeing $15 million in outflows this week. that is the most since november. a lot of investor outflows out of emerging markets.

once that translates into safe big gainers relative to the dollar and back into emerging-market, chinese and south korean you on some of the -- yuan some of the worst performers. and the chipmakers and huawei. alix: thank you so much. the standoff between china and the u.s. topping emerging-market investors concern. investor mark mobius sees caution and reward in the midst of this trade war. we are interested in brazil because there is lots of reform going on there, and india. those are the countries where he will not be much affected by china and the u.s. china trade disputes. karpur.us now, arjay

let's get right through that. you saw all of the outflows from local debt. where can you go that has risk that is insulated. >> there are a lot of emerging-market economies that are more domestic demand driven and there are places where the election outcome has been quite positive for the reform momentum to continue and take place. two places are brazil and south africa. large economies. ,ore driven by election demand positive outcomes and the momentum continues. the other places any oil exporting nations such as the gulf or russia where the economic framework is sound, or some countries in africa look good. they have to think of oil in the short term as manna from heaven and build up their buffers. the long-term story on oil still

drives oil prices back to 50. david: if we talk about a large economy, it makes you think about india. we are in the final stages of an ongoing election. what are the prospects for further reform their, or could it retrench given where mr. modi stands? >> our expectation is that all modithe -- although the government comes back to power, it would be with a reduced majority, which would make it positive. modimomentum, i think the government did a lot of reforms early in the last election cycle and what we should see is this government looking to benefit from the refund -- from the reform already put in place. new reform momentum is unlikely to be there. alix: where our valuations cheap

enough? >> there are two separate questions. stuff is always korea, always russia. they are cheap for a reason. i am not sure i want to get away from the china trade war. i am bored of this. either do a good deal, or do a bad deal, the market will be happy with both outcomes. stop talking so much and get something done. i think there is this china i think this china trade war is a tempest in a teacup. i do not believe it matters as much to either economy. china exports about $500 billion to the u.s.. the u.s. exports about $400 billion to china. these are very small numbers and -- if nike sells for

$100 or 120 you will still buy. i think the chinese should simply sign a bad deal. david: that is a good suggestion. it does not look like they will take that suggestion. it looks like you have to be board for a while longer. suppose this goes on. what she said is go defensive. is there an offense of play to make? southeast asia, as people redo their supply chains, my there be an upside in emerging markets? --the biggest been officials the biggest beneficiary will be taiwan and then southeast asia. you need the engineers, the educated labor force. taiwan is good at this stuff and we believe in something called modularization. different parts made in different parts of the world and stuck in the u.s.. the u.s. may be a beneficiary. alix: stay over in asia.

if you take a look at china, what do you do? if there is going to be more stimulus and growth ships, -- growth flips, how do you play something like that? >> the em debt indices are actually very diversified. china and asia combined is only 17% or 18% of the index. a lot of the asian names are very low yielding. we can afford to be more aggressive in other parts of the market. having said that, it is not like you have to be completely defensive. trade tensions will ebb and flow. we have seen as it stresses to the downside from the tariffs thating apparent, the idea you get back onto negotiations to sign a deal, even if it is a bad deal, or more policy stimulus from the pboc and possibly even the fed as

financial market conditions tightening could create a risk rally in markets. david: one of the things we're hearing from a number of analysts is that if these trade talks go on, we could see chinese gdp growth dipped below the 6% rate, even with all the stimulus. if that happens, all caps off? -- are all bets are off? >> asian markets do not like chinese nominal growth to go down. i disagree with a few. i think the longer this goes on, the more aggressive the pboc easing will be and you have more fiscal stimulus. you will actually get is your policy which we pretty good. we saw bit of that in the first quarter when you had a massive increase in credit. watch out for that. alix: bad news is good news, remember. guys, thank you very much. it is now official.

the eu and japan get a six-month reprieve on auto import tariffs. remember, interact with the charts we show on gtv . browse the features and check out the charts. this is bloomberg. ♪

alix: i'm watching any news out of the white house. 180 days. the auto tariffs on japan and eu cars. what will we hear from the white house in the next 72 hours? david: like i said, remember a week ago. it was saturday when president said we will have new tariffs. alix: the dax not doing anything on this news. still around the lows of the session. is any kind of reprieve priced in? david: you see this again and

again with president trump. he tweets out something and the markets immediately react and then they say wait a second, that is not so much. that one of the bank say 24 hours after a tweet from trump on oil you get a crazy move and you go back to where you were before. trump versus the algorithms. the next avengers movie. open with the jonathan ferro and you are seeing a huge move continue into the bond market. yields down six basis points in the gilt market. this is bloomberg. ♪

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

president delaying a decision on eu and japan auto tariffs for at least 180 days. not enough to settle nerves as china stiffens it stands. state media signaling a lack of interest in trade talks sending global stock markets on it. 30 minute -- on edge. 500, down1 on the s&p .7%. in the bond market, yields lower by three basis points. 2.37 is your yield on u.s. 10 year. euro-dollar 1.1176. let's begin with china digging in its heels over trade talks. >> it does look to be on a generally escalating trend. >> beijing has become more hawkish. >> recently we have said it is a series of s