the government releases and white paper on the trade war,: u.s. greedy, and warning students of the risk of studying abroad. and tariffs are a beautiful word. president trump doubling down on tariffs, leaving investors trying to figure out the next move, all this while he lands in the u.k. for his official state visit. and, 10-year yields. calls for 1.75%. bonds continued their rally. we will talk to that chief economist over at barclays on best for hisls calls for a three rate cut this year. >> and the real story is china. . you mentioned fedex, but also, there's only 200,000 chinese students here. >> yes, i did not know this, they are the largest total of foreign students in the u.s.. it is almost like in any oakley thing, if you can do this, i will one up you. >> so many ways to get up this.

aspect, the financial those students bring a lot of cash to the country. the on the that, it is a really will good way of recruiting emissaries going forward in a next generation will know the united states and understand the system. >> and then we also have other headlines with australia. anyway, in the market, it is a risk-off feel. features are off by about 1%. to move lowerd along with these low yields, down another three basis points. record low yields in germany, -21 basis points. crude is on its own, there is a supply issue in norway because of labor strikes. labor strikes, that sounds familiar, doesn't it? they are ok, there you go. is the morning brief. president trump meeting in the u.k. with queen elizabeth today. tomorrow, fed chair jay powell gives opening remarks for the

fed conference in chicago. in the u.s. releases durable goods numbers for the month of april. wednesday, we get market, services and composite pmi's. thursday, the ecb's latest rate decision, and president trump will be in normandy to commemorate the 75th anniversary of d-day. and finally, friday is jobs day. and theresa may will be stepping down as conservative party leader, as part of the transition going on in the u.k. leadership. we are joined by gina martin adams and martin schenker. let us start with the. china white paper that came out of the weekend. the chinese government saying -- it is foreseeable that the latest tariff hikes are far from resolving issues and will only make things worse on all sides. the chinese government reject the idea of threats of a turned rejects the idea that a trade war will ever resolve any issues. and trump responded that he

has china right where they want them. this does not seem to be moving in the right direction. we can talk about the end of the month g20 meeting between president xi jinping and trump and what that will accomplish, and it may not accomplish much except solidifying the position you alix: it feels like we were talking about exposure to china. now we have to factor in companies exposure to mexico. how do you model all that in? gina: it is nearly impossible to read i think the biggest impact is deceleration in investment. seeing easily -- already issues with sentiment for investment. a slowdown in growth, from the mid-single digits numbers we had last year. the longer this goes on, the more restrained investment becomes. businesses like certainty, they like to be a what to plan. business investment is the swing

factor in growth. if you kick showing restraint in business investment, if you keep depressing the prospect in the future for investment, the greater of a chance that you will the contraction in economic growth, and that is really problematic for the earnings streams going forward. you have to have earnings growth to drive prices higher. david: we are starting to see the markets turn, and yet president form went on a tweet storm over the weekend. .e loves tariffs martin: and we did a story on friday talking about how trump has decided to weaponize tariffs, not just as an economic tool but as a foreign-policy tool to achieve something none economic in the context of mexico. and when that happens, the unpredictability just ratchet the point just made, investment is slowing down, businesses don't know what to do

, and to a certain extent, trump wants to see businesses invest in the u.s.. that is actually his ultimate goal. alix: so it is easy to make big a about all this when it comes to earnings, but if you put it in perspective, the s&p hasn't really fallen that much. alix: which begs the question of how much it has actually arrived into a president who is sticking tariffs. gina: and the bigger issue in my mind is all the intellectual property discussion. as marty just mentioned, this is a weaponization of tariffs, it is not actually trade that is a problem, it is the fact that we are utilizing it to attack other issues. the biggest issue clearly was intellectual, property and innovation, and who will be the leader in innovation in this ongoing battle. it is really a tech war not just a trade war, and that is creating major downside. and the potential is that the longer it lasts, the longer the restraints on investment, the

longer it becomes from a medic. the margaret -- the longer it ecomes th from the -- the longer becomes problematic. the question for the market becomes, how long does this last. we have the month of june, there is a big meeting at the end of june that the market will probably hang out there and say, this is the carrot, can we get some kind of resolution by the end of june? but it is a huge? now. this has expanded well beyond trade. it is more about innovation, now it is about immigration with mexico, and the market is really struggling to price out earnings. david: one thing the market is pricing is bond yields. making done remarkably in the last week. now we have jp morgan out with the projection going forward, a continuous slide down to 1.75 on

the 10-year yields. they are really a anticipating draw. marty: and donald trump is banging on the table for the market to cut rates, well, the market has done it for them and now the fed has to catch-up. the reason for that is the key thing, is it because of an economic slowdown, or is it just a search for a safe place to park your money regardless of the low yield? also raises the question, if yields are already low and the fed cuts, what will be the upside? do we need fiscal stimulus to move any kind of needle than? marty: let's read, good luck getting that through congress. david: rise, the democrats are really eager to work with the president now. [laughter] arty is pretty empty:. gina: the real key now is whether or not the curve inverts. rates can reset lower and lower.

two and the 10, and the three-month tenure. the one that gets closer to recession is usually the two-year and the 10 year treasury curve if this. rates lower,ing of it is probably more likely that it is reflecting a tolerance shift, a risk-off shift, not necessarily the we are headed toward recession. however, with an inversion in the curve in the 10 year rally,, it is much more important. it becomes likely that you tip over into a contractionary phase. two/10 is actually steeper, 23 basis points today. see theer, you can charts we feature on gtv . coming up, more on president trump's tariffs and rising recession risk. much of bank -- deutsche bank's chief economist joins

us. this is bloomberg. ♪ ♪

♪ alix: china wrapping up its response to the u.s. tariff hikes. on thursday, the president released a white paper saying that it is foreseeable that the latest tariffs, far from resolving issues will only make things worse for all sides. the chinese government rejects the idea that continuous tariff hikes can ever help resolve trade and economic issues. joining us now is deutsche bank securities chief economist. good to see you. china, india, mexico, and there wasn't random australia potential over the weekend. what does this mean for the gdp forecast? >> the situation looks really fragile. you have the unemployment rate in the lowest level in 50 years,

consumer confidence at the highest level in 15 years, so i recommend that we take a deep breath, take a walk in central park and figure out, has the data been slowing? a lot of the fed talk is showing that the data has not been slow in quite yet. so it is a little premature in our view, to get really overly worried. trade might be worse, but it is not showing in data quite yet. david: what we are watching is the president arriving at buckingham palace, just arriving, where he will greet the queen. in the meantime, back to china. can you show us where we are with tariffs and where we are about to go, we have added so many tariffs prevent we have so much more tariffs on chinese goods than the have an hours. at the moment the gold is where we started out, then have the second round of tariffs, the third round, and now we are the next round?

>> the chart shows clearly, the chinese retaliation was relatively modest compared to what you saw in the blue and the white. the big issue in the forecast is the yellow for the u.s.. between theerence yellow and the rest of the u.s. is that the yellow is all consumer goods. this means if the yellow goes through, if we get to the final batch of tariffs, that means everything you buy in department 20%.s could go up 10% or consumer goods will go up in the could have significant dynamics. david: chinese reaction on tariffs is modest perhaps because it must be. but there are other things that they could do besides tariffs. true. a fake one or two, they could've added 50% or 200% on that chart. they wanted -- they could have done it even with tariffs. there reallyight,

is broadening out to so many other things. now we are also debating away, mexico, fedex, other things that gets quite complicated to figure out from a gdp perspective and from an earnings perspective. david: so if you are a head of a company and have the supply chain in china, and you say, then we go to mexico, closer to the u.s.. and we just got the u.s.m.c.a.. now this goes down. what do you do? what does the company do? >> and remember, in mexico, it was all about autos. 2% of gdp is what imports from mexico are. another statistic that is important is that two thirds of trade with mexico is intracompany trade, that means about two thirds of all imports really are u.s. companies producing very cheaply in mexico. really hardt has a

time figuring out how to quantify the risk. so far the incoming data is still decent. the incoming dinner on friday on consumption was decent. but the data today, we are still watching the it has been quite solid compared to other news recently. david: we continue to us the president and the first lady arrive in buckingham palace on the back lawn where they have a picnic every year with a grin. the president will be a lighting. with the first lady shortly. coming up, first of all, you said we haven't really seen it in the underlying data. why? is it a lack? the president tweeted out this morning, it is better than we think it is. the chinese subsidize exports so we will not have to pay a lot more. and other companies are moving from china into the united states. maybe it will not affect us as much as people think, according to the president?

>> quantifying this is very difficult. the most important thing, last year, we give huge tax cuts to corporate. gdp was added. now we have the trade war basis of a lower number than that. but now it is escalating to areas where the situation feels fragile and we are getting word undefinable effects. are watchingat we now is prince charles and camilla parker bowles coming out to greet president trump and the light.lady as they a >> i am flying to london today, hopefully it will not destroy my traffic tomorrow. [laughter] alix: help me understand what is the biggest threat going forward. will it be mexico, india, what is it, really? i think the trade war could have

a big issue. trade.ntracompany beth continues to be a big risk for mexico over all. david: and here's president trump and the first lady coming off the helicopter and being greeted by prince charles and camilla the hats. david: looks very british, doesn't she? quite appropriate. as i understand they will have tea with the queen. we would love to hear that conversation, wouldn't you? alix: i really would love to hear the conversation. maybe it is about the "nasty" granddaughter in law, meghan markle? ?e said that david: he said he did not say that. it was in a rupert murdoch paper. [laughter] david: prince charles and the president of the united states now walking into the buckingham

palace where they will have tea. there has been a lot the has come out because of the various tariffs imposed particularly on mexico that has caused a lot of people around the world to change their views on the future. one of them is barclays, it has joined other banks in forecasting rate cut in 2019. now we have barclays u.s. chief economist. and we still have torsten slok here with us as well. welcome. you changed your view on friday. explain to us why. . >> we are now calling for three rate cuts this year, 75 basis points in total for three reasons,. as you mentioned, there is an front.ion in the trade we have had a breakdown of talks between the u.s. and china, and now, potential jeter fishes on imports from mexico. it is a major. escalation,. the second is that it is coming at a time when a lot of the incoming data suggests softer

business spending then we had a anticipated. the durables data as well as that infiltrate data points to much leaker underlying growth in business spending. -- much weaker. we don't think the fed will be pushing to inflation targeting and actively seeking to make up for lost ground there, but inflation is about 80 or 90 basis points below the current funds rate. i wonder if the fed's willingness to be patient on that front will be tested. maybe it is that monetary policy , that it is a little tighter than some on the committee expect. these are the main reasons we changed our view. >> how do you square all that with the bloomberg consensus, the labor market, it is very strong. 3.6 percent unemployment rate. high.er confidence is

do you think the business issue is enough to make the fed change their tone? michael: i think what we're arguing is that if we expect growth to slow down about 2%, thatow it goes below and gets us to the critical level. our view on this overtime has been in the consumer has been in a good place, in the labor markets are strong. i would argue that is probably why we are looking for growth to slow below potential, and not calling for something more dramatic. i grant we could be. , itg on this, and if we are is probably because we underestimated the durability of consumer spending. towards we are looking the weaker business spending numbers as rationale. ,lix: is there a risk of that you have this call and all of a sudden out of the blue there is a trade deal? that there has to be a flip-flop for the fed? michael: yes, i do.

if we are wrong, it is probably a combination of, we are over reacting this is just a threat that could be pulled back quickly. torsten mentioned, the consumer remains on solid footing. i would argue that chair powell at present doesn't seem the keys ready-to-eat. -- ready-to-ease. it just feels like if we escalate in this direction and the administration has generally followed through on its trade threats overtime, then growth will slow down more than the fed wants. alix: i like that you brought up jay powell. from thekari minneapolis fed was here on friday, and even the dust had come to know if we are quite ready yet. .ere's what he had to say >>. >> if it looks like the u.s. economy were slowing down, if job growth were slowing down, if the trade fights were causing businesses to retrench, that

could put the u.s. fundamentals of the real economy on a trajectory. so either of those could because for changing the path of monetary policy. i am not quite there yet. i take comfort from the fact that the job market continues to be strong. alix: so, when? michael, when do you see the turn? michael: we are thinking sometime in september is when the cut would take place, i think june is too soon. the majority of the data would tell the fed right now that patience is still prudent. we are looking more -- you would need several months more of data, so probably in the june-july time. david: some people think it is worse than we think. we had the chief economist of this bank talking to us in the we can and he said if china retaliates, he think there could be a recession. he said in part -- the u.s. has a lower buffer, bond china and

the u.s. will probably be getting something like .2% in 2020 in that scenario, and china would lose about 1.5 percentage points. do you think that was overly pessimistic? >> i think what we are wrestling with, is how do you can't to five -- how do you quantify the risk? how can you not think this is terrible. we keep 20 to the data and say, where is this thing falling over the cliff? ? we are just not seeing it? the data is just not showing it. we do worry about the unquantifiable risks, but i think the fed is taking a prudent approach of saying, surely the data we will change our mind. why is the bond market so negative? in 50 years? that is not an economy about to

go into recession. alix: michael, if we get some fed cup the market is ready pricing in fed cuts. if we get them, does it do anything to the economy? michael: i think you could argue that maybe you don't get too much bang for the buck. the markets certainly price them in. i think we need to look at more than the cost of the capital. the dollar is strong. , so we could get relief on the currency front. i am arguing that business. ending is weak. but we look like we are getting signs of an industrial recession and the trade front as well. so. we could get some relief there. alix: thank you so much, michael michael, chief u.s. economist at barclays. j.p. morgan downgraded the yield forecast for the 10 year, they 1.75% at the end of the year. the question, how low can yields actually go?

theten: even with incoming data being bad, when does it start to turn south? the rest of the road is also unfortunately not doing very well, europe and china, and that also speaks, they are a lot of show that the 10 year rate is good at least. that suggest that if the data is not turning, certainly, yields could plunge further. david: talk about what the market is telling us. who the equity markets, they have turned down but not as dramatically as yields. is the equity market behind the bond market? or is the bond market overreacting? torsten: how do you quantify this risk, it is going on on so many fronts that you just really can't figure out what it means for gdp and for the bond market, what does it mean for earnings, the stock market? we just on have anything in or toolbox that can quantify what is going on, and that makes it anyone's guess.

in the fact that we are spending so much time talking about howtical second guesses for politicians will react in the u.s., china, mexico, and now, india, it gets incredibly complicated. not surprising that some markets are saying that this is a bigger deal elected to other markets. alix: how do you know, what part is safety that we are seeing in yields and what part is a commentary on growth? how do you model that? torsten: that is about 11 trillion in negative yielding debt in the world corresponds to about 20% of all global bonds, sovereign and corporate outstanding. the fact that that number keeps that itg up, that means doesn't really matter so much what happens in the u.s., it is really the global hunt for yields that is helping to support u.s. assets. and u.s. equities have gotten support also because of the lack of attractive investment opportunities around the world. alix: what about ceos say that

money is cheap, i will borrow more, why is that not the conversation we're having now? torsten: what is a little unusual is because less corporate to donate cash, they have plenty of cash already. where you are not seeing any significant need for cash and financing. so in that sense, many corporate friendly feel relatively good about it. and again, why is it that the unemployment rate is low? if we were really doing poorly, we wouldn't have unemployment at the lowest levels in five decades. david: again, this is buckingham palace garden where the president landed on the helicopter with the first lady a short while ago. prince charles came out to greet them, as they walked in, we saw queen elizabeth come and greet them at the door. now, we see the royal guard presenting to them. they will have a ceremony here, and then go in for lunch.

alix: do you think president trump says, hey, i really like nigel farage? david: by the way, he likes borris johnson. i am not sure if you will take it up with a clean. alix: you have to wonder whether it will come up somewhere. i do see it playing out in some conversation. david: but they do the pageantry awfully well over there. alix: they do, they really do. torsten, we have theresa may leaving her post as head of the party on friday. brexit, your case? if you are a portfolio manager in europe, first of all, how do you assess the risk? in the u.s., likewise. this continues to be difficult for investors to deal with how to quantify and assess what it means for gdp, does it mean anything at all? the short answer is unfortunately we don't have good tools and ways of assessing that risk either.

alix: the further question is not just u.k. politics, but -- i think that is a ivanka trump. ared.: and j and i think i just saw john bolton, national security adviser. alix: and angela merkel. alix:, you have the head of the spd, what does that mean, that she have elections? what you make of that over the weekend? torsten: the political guessing from investors is just how do you quantify the risk. the fact that we have become political experts in all these politics, it is just not anything that you learn in your mba courses for your phd in economics, it is just very complicated to do. david: and at this point, we have an ecb decision coming

later this week. 's are anything the ecb can do to help this decision? torsten: it is difficult for them as well. the data have been worse in the euro area, but across the board, i think the good news is that inflation is either plunging or accelerating. i think all central banks around the world need to continue to stay on hold and watch the impacts of the tariff situation. but the trade war situation is the one who worry most about simply because of the global economy is so intertwined. the global supply chain. what does this mean for the immediate connection in the supply chain but also for planning in terms of future capex. and in barclays they are saying, business planning could have risk, and if companies continue to hold back a bit -- alix: is say that the ecb, having this rate

below the deposit rate, goods were movement in the economy. how do you respond to that? torsten: if you read what that ecb is saying, it sounds like a broad range of things are being discussed. it doesn't sound that they have come to a consensus at this point. david: thank you so much, torsten slok, for being with us today. president trump, as we have been watching, just arrived at buckingham palace. our colleague, annmarie hordern, is live outside. anne-marie, what do you know? annmarie: good morning. we know the president trump on the lawnrine 1 of buckingham palace just behind me, he will be greeted by the queen. we saw prince charles as well arrive. we saw him coming through a motorcade just behind me. so now, he will be entering the building.

you really see this grand staircase, and that is where the staterooms are. you supposed to have a private lunch with the queen. we don't know what is on the menu. we know that the queen likes to eat healthy, gene fishes and meet. and then the president will go over -- the queen next eat fishes andan meats. so this is going to be a big day. the pomp and circumstance part of the trip, only the third president in the u.s. to get a state visit. then tomorrow, it is about as nice. we have heard donald trump weigh in to u.s. politics, speaking nicely about boris johnson and nigel farage. he had unpleasant words to say about the london mayor, calling him a nasty percent. so if he has been getting -- u.k. in the u.s.

politics, and it is quite embarrassing for theresa may, with the two set to meet tomorrow. the u.s. wants allies to stop using equipment from huawei, and they will also discuss russia, china and the trade war. alix: thank you so much, hordern.'s annmarie there, we see queen elizabeth and president trump working off of octomom palace. david: followed by the. david: first lady -- walking all of buckingham palace. david: followed by the first lady. reviewing the troops. alix: you have to wonder how she views the global disruption that we have seen from president trump and all the other elections around the world. how do someone who has been in power for so long view something like that?

david: and traditionally, the queen does not like disruption. to the president there. , you can see prince charles holding hands with camillap♪ alix: nice gesture, star-spangled banner for president trump. david: yes. ♪ playing] gled banner ♪ david: there you have, the star-spangled banner played for a former colony. alix: exactly.

david: but bygones be bygones. [laughter] alix: i know that they will have lunch soon, but i wonder how much more pomp and circumstance we will see here as well. but it is a lovely gesture. david: they have a beautiful day for us. david:. look at that. . david: who we do not see is prince philip. he has retired from public appearances. and a sense iss .tanding in -- prince charles [laughter] alix: as he directs. ♪ david: they had a list, here are all the u.s. songs. ♪

david: there you go. , navy. away ♪ david: how many of these do you think race charles has done? as he has waited to be king? alix: one million. [laughter] ♪ alix: he could probably do it in his sleep at this point. ♪

alix: you have been watching prince charles and president trump walking through the , and melania trump as well as queen elizabeth and camilla parker bowles there as well watching on as we hear the songs of the u.s. play over a new u.k.. queen elizabeth and president trump will have in for tea and an nice lunch after this. on the market. we are still looking at this risk-tone, equities down 6/10 of 1%. technology down .8%. in other asset classes, it is a risk-off move. we are still seeing money flow into the bond market.

german ten-year bund holding steady at -21 basis point. the two tens and the five 30's are steeper. into negativemove territory. for how long wells occur invert before people start to get worried? we have a disruption in were norway due to labor strikes oil.ls affecting david: and today, u.s. businesses are trying to come to terms with the new tariff war with president trump reassessing their plans in a light of new tariffs on mexico. one of those companies with big expansion plans for china and throughout the pacific region, we welcome the president and ceo here. are any, welcome back. >> thank you for having me here. david: as we are watching queen elizabeth, let us talk about the euro. and you. -- you have a new home rental

initiative. how is that going. >> we started last year. >>. we had 2000 units when we launched and a big part of that is in europe. obviously, you saw the footage of president trump visiting the u.k., there is nothing like the pageantry which is rolled out for something like this. it tells you a bit about how attractive europe is as a destination. american travelers were heading into high season and that business will be strong this year. is home rental business perceived by some as a direct charge into airbnb territory. is that fair? are you taking on airbnb? ignoringare not them. we have seen the business evolve in the last decade or so and a chekov it has been about the cheaper stay, the extra bedroom or the studio apartment. the has not been the focus of our business.

the focus of our business is to deliver something so that people can feel like the experience they are getting is not risky. they have services standing by a key rental,, housecleaning. so you can say that it is a top. and of that market, not just in terms of luxury brands but also in terms of square footage. brand and have your band also you have a loyalty program. does it give you a leg up in your business? arne: absolutely. the loyalty program, which envelopes all of our 30 brands, including homes and villas, will be the connection. you can redeem points, stay in homes and villas. alix: i want to read to you what you said about china bark on march 1. he said china and u.s. and to

have stepped to the brink on the trade war. i think we remain pretty optimistic that china will be a positive market for us and continue to present exciting growth opportunities. two months later, what with that sentence the? a reminder not to climb up the pole of prediction. [laughter] alix: march 1, it was a different world. arne: it was a different sensibility. particularly today, we are much more effort has with where the relationship is going. business conditions on the ground in china reflect the chinese economy, it is diverse, it is big. so we see markets like beijing and shanghai which are stronger than others. one thing we forget is that americans typically, our business in china is really about the chinese economy. the majority of our guests in hotels in china are chinese, even in markets like shanghai. so the question becomes not what is happening with trade narrowly but instead, what is the impact

of trade conversations on the way the chinese gdp is growing? then one of the reasons for a bit of optimism still even in the midst of all of this, is out the chinese are transitioning to more of a consumer economy. they know it is important for political reasons. it tends to be a driver of demand in our space. quite optimistic about china in the long-term. david: what we're watching here welcomeompletion of the ceremony. when the ceremony is over, they will go in and have lunch, a light lunch and with queen elizabeth there on president trump's right, and the first lady to the queen's right, and prince charles to the left. coming back to china, you say that it is more the chinese economy. we just heard that china might be looking into fedex.

and there is a list of unreliable entities have. are you concerned, do you see any evidence that china might take action against your interest in china? you could become an innocent? bystander to be injured in this trade war. arne: we have not seen that yet, and of course, we don't know the direction things are going. we do know that of the 360 open hotels we have in china 100% of them are owned by chinese real estate partners. we manage that business for chinese real estate investors. so our economics are not simple american economics. company,re an american we are in management fees, but the bulk of the profits goes to chinese investors. how that plays out politically, we will have to see. alix: the you allocate capital areerently in china a few less macro but then the macro eventually goes to the micro? how do you allocate? arne: again, because our

partners are chinese real estate investors, the bulk of the macro is coming from them. they are making decisions about local demand, sometimes hotels that are married to residential or commercial developments, that make the whole thing work. they understand those markets but then we do. and also how to the old -- they also understand how to build hotels in those markets. david: at the same time, you have made ambitious plans for china, getting a lot of hotels based i am sure in part on projections of growth in the chinese economy, six percent. if we have people say that the united states follows through on the tariffs, and there is chinese which ideation, we could take some off that growth rate. does that changes the calculus for marriott? arne: in the near-term, the question will be, how does that impact what chinese real estate investors decide to do? i think one reason i don't worry overly about this long-term is

you see chinese domestic trouble and chinese outbound travel growing in a year. that is a shift to the consumer economy. alix: everyone seems to think the government will step in in some way, whether it is that the boc or the government stimulating. have you seen that on the ground? do you feel lucky will have the ago?effect they a year arne: this gets above my level of expertise. the chinese government cares about the growth of the economy and its impact on the life of chinese citizens all around the country so they are trying to opportunities. obviously, in the midst of these things, they have a great globalization trend underway where they continue to move tens of millions if not hundreds of millions of people to the city's and away from the countryside. and the have to make sure they continue to create economic opportunities. and a half leverage to do that, which they have shown over

decades. that they will use and use fairly sensibly. arne: thank you so much for being here. david: and thank you for your patience as we deal with the pageantry. arne: thank you for fittingly and. david: the queen can make way for you. arne a sorenson, really great to see you. we have been watching. the formal ceremonies of the queen welcoming president trump and the first lady to the palace. you can see the president flanked by queen elizabeth to , and they just played the star-spangled banner for the president. alix: we have always been watching the secretary of foreign affairs from mexico speaking about the u.s.-mexico issues. mexico and the u.s. need to deal with the root of migration, she said, and they do see a good chance of cooperation with the u.s. and obviously, they made the point that the u.s.-planned tariffs will cause problems. mexico does not have the levers

that china has to offset any kind of trade war. that would be a different type of situation. especially with companies diversifying their supply chains to mexico from china. david:. david: i think mexico has been very measured in their response to what president trump is proposing. alix: they don't have anything they can do. david: their response is they are doing a lot already. they have prevented thousands from which in the u.s. and they continue to work on more. and they are willing to negotiate. but as you say, they have a lot example,ose, like for -- than china. alix: and we are dealing with the problem of the inflow of refugees, not just mexicans going to the u.s.. david: right, they have a problem on their southern border with the central american countries, all these people pouring across it is a big. harden on the mexican economy. alix: so we will continue to track those headlines as well from the mexico foreign affairs secretary.

first up, deutsche bank and unicredit begin brexit swap moves. banks are beginning to quietly shifted their trade from london to frankfurt as they prepare for brexit. and, this company is seeking to raise another $100 billion for its fund. people familiar with the matter say investors are making limited to know contribution. and blackstone spending $19 billion on e-commerce. they will buy assets from singapore logistics company glp. david: joining us now is bloomberg car asset reporter sarah ponczek. is this the beginning of the end for london? sarah: it is an initial move. we have been seeing this go on. last year, the european commission extended the amount of time that the lch, part of the london stock exchange can continue to act as a service for these continental european banks.

the extension, though, and in april even though we get no resolution. so a lot of these banks like unicredit are stepping up to the table and saying, we need to use this as an exercise to make sure that if we do get in no-deal brexit, that they are able to do this in a very organized form, so we are seeing the beginning of it. that brings up the question, if we get a no-deal brexit, what happens to london as a financial center? alix: so deutsche bank hit a record low. j.p. morgan said guys, stop "tinkering with restructuring." i love that. [laughter] saying,hey are probably what are you in the swaps business at all? [laughter] sarah: jp morgan is saying that they have to be more decisive. but they also said they have taken on the most difficult job in european banking. when you look at the european

system, that is saying a lot right now. figure out which costs you want to cut, which assets you want to reduce, and we have seen it deutsche bank really struggling. really rough this morning. j.p. morgan sees the bright side. they say that the ceo could be up for the challenge, but they need to get it together. david: let's go to softbank. they want to raise another $100 billion. it seems like they did not have -- 100 million dollars. sarah: notably, the saudi arabia public investment fund gave $45 billion to the first fund. so raising $100 billion, $45 billion, that is a lot, it's about half. this time around, a lot of the big sovereign wealth funds that contribute to the first time are saying that it will be more difficult so it. back the question, what does softbank do? where do they go for the cash? if you will not get a large investment of $445

billion, you may have to go to many different places to get smaller investments. and it looks like people may not be willing to invest those large sums of money for another unicorn-type fund. this is the successor to that flag ship vision fund. alix: i want to blame oil, but i can't. it is stronger than where it was. [laughter] the other story is blackstone, making an almost $19 billion investment into logistic u.s. assets from a singaporean company. i thought it was really interesting. the largest global pe deal for real estate in the world. sarah: and it really shows you how big of a deal online shopping is right now. when the largest private equity real estate deal is going towards warehouses, that is just showing you that all men shopping is here to stay and companies need to double down on warehouses. bloomberg intelligence calls it the last mile warehouse because

when it comes to these retailers, they have to focus on how they are going to get these goods over the last mile to the shoppers in a very fast way. so this shows you that softbank is a doubling down on online shopping. it is here to stay. .n $18.7 billion deal we will probably see things like this continue. david: if that is right, then you can look all around the world look for that last mile. alix: and of course, blackstone is making that big bet. you also heard from amazon. they say that for the mom-and-pop retailers, then it went to store that in their warehouses because it will cost money. sarah: i believe amazon is one of the biggest users of glp's warehouses. david: ok, many thanks to sarah ponczek. coming up, the u.s. justice

department is said to be getting ready to investigate this company's market dominance. this is bloomberg. ♪

david: here is what we are watching. the justice department is set to open a probe into google. this is what their stock has done. alphabet stock has done rather well after the s.e.c. had said he looked at it and it don't on. anything on the the other hand, the european commission has three find imposed on the company. but if you compare that to their revenues, not that much. alix: i was going to say, the forward everyone hates this time is different. you have the e.u.. , is not necessarily the amount of money they are being charged, it is just the fact that they are doing it. and you also have a politician, senator warren, talking about wanting to break up big tech. it is a different world than in 2010 when this was done the first time.

david: and. david: it will be a big issue coming up in the election. have talked to people in the administration who say that they have not been aggressive on this issue enough. it always has to do with google's strong dominant position in search and using it to favor other products, whether it is an advertising or in product they sell, that is always the issue. alix: yes, we will be definitely talking about that. coming up, china is ramping up its was once to president trump's tariff threat -- ramping up its response to president trump's tariff threat, of a risk-off mood continues in the market rather orderly today. this is bloomberg. ♪

♪ alix: china demands respect.

leatherman released a white paper on the trade trade war, calling the u.s. greedy. while warning foreign students on the risk of studying abroad. and the u.s. news countries of all over 20 figure move, all this as the u.s. president length in china for a three-day state visit. and, investors need to place a more defense according to this analyst. david: welcome to bloomberg daybreak. i am david westin alongside alex steele. there is a news conference, the have several members of the covenant who have gone to washington to try to make peace with president trump. alix: and to her left is the foreign affairs minister. they are saying, we're getting a lot of refugees into mexico as well. we have done our best.

. david: she is saying, if not for our efforts, there would be arriving.re if we think it is bad now, without us doing what we're doing to keep them out, it would be much worse. alix: and it has been quantified as well, that a 5% u.s. tariff rise, it could cost mexico a lot . and there are many suppliers who work with them. then, there is china, petitioner coming out with laws that might prevent u.s. students from studying abroad, which is what 31% of yo students who come to the u.s. from china. david: which benefit us in all different ways. the administration has been concerned, and i am sure there is some espionage going on with some of those students. quite possible that they are taking some information back with them. alix: what we have learned is that there will be some tit-for-tat in some capacity regarding the trade war. we are well off the lows of the

session. s&p futures down on the. six points. the dow has struggled the last few days as yields continued to grind their way lower as well. but 10-year yields, 2.12 is where we sit, just don't one basis points. crude is on a different story, up almost 2%. they have a worker strike in norway that could imperil oil production. and we are still a little risk off, just not as bad. david: crude is up? that is different. alix: yeah. david: time now for the morning brief. president trump has been saying. that she is in the u.k. right days ofe started meetings, first with queen elizabeth right now, and tomorrow, with theresa may. tomorrow, fed chair follow will give remarks in a fed conference in chicago. and the u.s. will be receiving. april. goods numbers for wednesday, markets, services and composite pmi. thursday, the latest rate decision from the ecb, and

president trump going to normandy to commemorate the 75th anniversary of d-day. friday, u.s. jobs day and theresa may stepping down as conservative party leader. a big week ahead. alix: i am already tired. [laughter] some investors are weighing the impact of a chinese probe into the quote "wrongful deliveries." here is bloomberg's taylor riggs. taylor: china said they were investigating this company after reports that they had accidentally or reportedly diverted that could just to the u.s. that were containing huawei products shipped to japan. from has been cut to 136 161. we don't have the revenue breakout specifically from china, but we know from their last annual report that it is their second largest annual shipping facility, in china. and in january, they added in you hub in shanghai, so

this is giving some analysts a bit of cause. come into my terminal on gtv . we had talked about concerns over the slowing global economy. the north american air cargo volume in the u.s. has been tracking gdp, but most recently with the fight over the trade war breakout in the purple rectangle, it is starting to slow just a bit. this is all adding to concerns. david: thank you so much, riggs.rg's taylor the chipotle chief financial officer issued in email statement basically saying that if the tariffs continue, they could hurt chipotle and they would have to modestly increase their prices. that is coming out of chipotle. i suspect, not the last of these hear.e will news of possible chinese actions on fedex came against the backdrop of a chinese white paper on the trade dispute which is made out of the overall attitude toward negotiations with the united states.

saying in part, it is foreseeable that the tariff hikes far from resolving issues will only cause more problems on both sides. saying that. continuous tariff hikes cannot help resolve trade issues. redcoming now the author of " flags: why china is in jeopardy." george, thank you for being with us. i understand you had a lecture in shanghai but you decided he was not the right time. why is that? george: sorry, could you say that once more? david: it was reported you were to give a lecture in shanghai but you said it was not the right time for that. why is that? i have just been for a weekend in the mainland and everything was fine with the exception of one particular episode where there had been an official inquiry into an event that was supposed to give -- an

event organized i foreign correspondents. the organizers decided that it was altogether better to consummate rather than expose the venue -- better to cancel it rather than expose the venue to problems. it is kind of indicative of a strongdefense of -- a ahead ofangst in china the anniversary of the tournament square protests -- anniversary of the tiana nmen square protests. david: the white paper from the chinese government seems to say that they are not backing down over the tariffs. george: as i am sure everybody knows, during the last week or two, the has been inconsiderable rhetoric on both

sides of the trade war. and i think there is definitely a nervousness. i spoke to a number of companies and ceos and cfos, who clearly going tot this is plant roots for quite some time. surveysfor example from that a big proportion of american companies and foreign companies are moving parts of their supply chains out to ,ountries outside of china perhaps to northern asia and in some cases, to mexico. but there is a kind of amongstess certainly people about where this trade war is going, with implications might the. where the economy

is kind of doing ok, but not quite, it is pretty concerning. alix: we saw fedex get wrapped crosshairs. which companies or industries do you think will be more vulnerable going forward? george: i am quite anxious about all of this. as i'm sure many people are. because it is not about steel or soybean, or energy products. the trade issues could be sorted out with a little bit of goodwill. this is really all about technology and about targeting companies. i know that you mentioned fedex in your opening package, a tech company. but there are a lot of companies that have been drawn into this dispute. i think we have to think about this much more like -- we have to learn about global finance in 2007, 2008. the connectivity.

multiply the consequences of disrupting this industry, i think there will be much greater than people think. and markets are discounting. . which is why we have hope that the g20 summit at the end of this month, that both president trump and president xi jinping can find it within themselves to shake hands and say, let's talk. because if they allowed this to go to the extremes, as implied by the entity list, the "unreliable entities" list which china published, the implications are not great at all. alix: george magnus of oxford, thank you so much for that perspective. what it means for the equity markets? you have risk skewed to the downside, according to our next guest's early 2019 outlook. saying the potential for tariffs to mexico make it likely that s&p will fall below 2650 the summer. what do you do? >> in the short-term, we have

been telling people to buy stocks. whether we are looking at mexico, china, this is the one sector in the market that does not seem to be caught up in the trade war. so we think it makes sense to add defensive positioning right now. alix: volatility has not been elevated, it has been orderly. that?o you make of >> we watched the see sbc did a very closely, and it got us board back in april that it was getting close to last january levels. this has been a very orderly unwind. in addition to assessing the risks, i think investors are trying not to overreact, trying to say, what is the probability that these things actually go through. so they are gradually taking down risk, but they are not panicking. david: what does this say about small caps? often when there are trade

issues, you are better off in small caps. lori: the problem with small caps is they are chief at this point. if we wake up to a couple of tweaks and that trade threats go away.that goes also, the damage to the economy hurting small caps are the margin pressures. we hear from companies that these tariff issues are manageable in the short-term but not longer-term. that is really a big cap. thesis. these smaller incremental costs are difficult for the small companies to manage. alix: lori, you will be sticking with us. coming up, putting pressure on tech giants. again this is bloomberg.

alix: as google faces down the tom forte, davidson senior research analyst wrote a paper called "the death of amazon," talking about how antitrust legislation posed the biggest risk for stocks. tom joins us today over the phone. and still with us is our guest, lori. tom, when you have the google and the d.o.j. case pending, walk us through your worry with regulation and big tex. tom: basically, when you think about it challenges for technology and you look at stocks in general, and how , when youh stocks look at microsoft, one of the factors is antitrust as well as competition and successive risk. if you look at amazon and you look at google, i would argue

, antitrusttory risk concerns could undo those stocks as much as competition, or in the case of amazon, succession risk. so i think it is something that needs to be monitored rather closely. david: it is a great parallel to microsoft, because clearly, the justice department slow them down. they went through a very long trial, which we are very far away from with google. how much do they lose with that? tom: if you look at microsoft stocks, antitrust negatively their blueem, from to put their browser with their software, separating that had a big impact on that. so i think if you look at antitrust and regulation, and think about google, what would happen if google if they had to change their search results and perhaps move their proprietary

whatnt off the first page, sort of impact might that have on amazon relative to google, which is a big concern? david: not all tech is greeted equal. in the case of microsoft and it is not as clear how that would work with amazon, which is where you are talking money.ossible dead is there a antitrust possibility to attack amazon? tom: absolutely. when you think about it amazon antitrust, you think, how can amazon be suspect to antitrust if all they do is make things cheaper to the consumer? aazon recently lifted policy that required third-party sellers to offer products on amazon at the lowest price, meeting they could not offer the products that other platforms at lower prices. i think they did that because they realized they were vulnerable to antitrust. so if you think antitrust can

not be a concern for amazon, it could. alix: lori i cannot imagine that you like tech if you upgraded upgrading utilities. lori: we thought in our bones it was a long time to chase tax. one of our big concerns has been the longtime regulatory backdrop where we feel like, people talk about secular growth drivers, we feel like you are seeing the exact opposite from a regulatory perspective. especially when you look at the democratic candidates that are starting to talk about their policy positions. they are arguing specifically about breaking up some of these companies. ink about the republicans, they have also been making some noise, that they are not totally happy with a lot of these giants either. so there is risk on both sides aisle.political david: we also have something like a commission in the sea which has also been pretty aggressive.

how big of a threat is that to google or amazon down the road? lori: i think generally you have to look at the regulatory backdrop around the world. last fall, we had geopolitical experts went through country by country around the world and described it as the balance of power is really trend for governments. these companies have too much power they have retained. governments recognize that and they want to take it back. that tells you that there is a longer-term issue here that will take longer to resolve. alix: is there one company or a few that are better positioned to handle this than others? tom: if you look at the tech sector, there are companies that don't face the same risks that amazon faces. exercise, -- maybe not of bigger size. i think the big concern is when you look at a facebook and a amazon, an apple,

how much influence do they have in the lives of consumers not only in the u.s. but on a global basis? to the extent that you look for smaller size companies they, are less likely to have the same risk that google, facebook, amazon have in that regard. david: that was really fascinating, tom. thank you so much for joining us. tom forte and. lori calvasina stay with us. coming up, boeing faces certification probes for the 737 max and his order to replace wing parts that are cracking. not good when your parts are cracking. live from new york, this is bloomberg. ♪

♪ david: time now for the bottom line we look at three companies to be watching. this company making a huge $10 billion bid for a chipmaker, psy

cipress. and if that is not enough, samsung has all their senior management to get her saying, what will we do at this? we have a problem. david: and blackstone also had a big deal. $18.7 billion to buy a u.s. the just company of singapore's glp, basically a play on e-commerce. if you needed it, you will need to store it. in with amazon and walmart needing one day delivery, you need logistics. david: i hear it is the future, online shopping. maybe i jumped the shark. alix: i am an averse indicator. david: another company we are watching is boeing. brooke sutherland, bloomberg opinion columnist, joins us now. i thought i knew all the problems they had, but i was wrong. [laughter] we had the software problem, and now, another problem.

brooke: yes, the wings, they are prone to cracking. the is an older variants of 737. these types of things really do happen all the time, but there was increased scrutiny on anything to do with boeing, any types of problems they might have with any of their planes. this is in some ways healthy that we are doing a deep dive on all their models, all of their potential sector issues, and putting it all in the open. i think the question is what does boeing learn from this? to really follow through on this commitment? a meeting theys had in korea which sounds that it was pretty rough brooke: which is what you should expect that this point. they had these brand-new planes, they can't use them, the airlines, it is a significant hit their profits, hundreds of millions of dollars to some of these carriers. so if this goes to the end of the year, with some airlines are

saying they are prepared for this point, it could be catastrophic. but the number of airlines were talking about, the passenger trust, whether or not their customers will feel talked about getting on these planes, that is something we think boeing is underestimating. consumer company so they don't really interact directly with the consumer, so we don't know if they are fully prepared for what the backlash will look like. in the airlines are saying, this problems.s you have to step up here. alix: and in theory, you should have the regulatory bodies give the trust. if the fda says it is ok, then it is ok. but that is not the case here. brooke: absolutely. foreign regulators are saying, we are not so confident in the certification process in place in the u.s.. you also have the national transportation safety board saying that they are doing a deep dive review of the process

certification, and they might make recommendations to change the criteria for getting planes approved. david: what does this say more broadly about aviation? what jumps to mind is what it means for the whole regulatory backdrop. in the trump administration, the impulse is deregulation led companies regulate themselves. we have an important election coming up. . and i anticipate that see that reregulation angle start to come up. i feel like this is just going to add to the policy risk that we are facing in the market. alix: what is the read through to the industrial companies? if they have to make big shift or if customer say, we don't want t your planes anymore, what happens to them? brooke: it has big ramifications for other revenue and profit goals in the short-term, but

what i am word about is the shift in power dynamic from voting to the suppliers. in the past three years it has been boeing doing whatever it wants in terms of integrating their supply chain. now i wonder whether suppliers take back some of the power. whether or not boeing should ultimately have that control over the aerospace market, when you have questions about whether the f.a.a. was rigorous enough in their reviews. is that a good thing for anybody? alix: thank you. lori calvasina will be sticking with us. policy.p, approaches to the look at the broader impact of geopolitical discord on the bankdities space with the of america merrill lynch global heads of commodity research. this is bloomberg. ♪ rch. this is bloomberg. ♪

viviana: china is tweaking president trump's campaign slogan, saying the trade war has not made america great again. beijing says it is willing to work with the u.s. to end the dispute. it has blamed the trump

administration for the collapse in talks and china says it will not be pressured into making concessions. donald trump's chief economic advisor will be leaving soon. the chairman of the white house council of economic advisors has been a vigorous backer of the president signature tax cut, but his influence in the white house was seen as limited. kevin hazzard's post was downgraded from a cabinet level position. the transportation board is conducting a far-reaching review theow going -- investigation could lead to recommendations that would have significant implications in the way aircraft are certified. global news -- 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 am viviana hurtado. this is bloomberg. are athe u.s. and iran odds over each other's approach to achieving policy objectives.

here's what secretary of state pompeo said in the response from iran's foreign minister. >> we are prepared to engage in conversation with no preconditions. we are ready to set down. talking is the continuation of the process of pressure. he is imposing pressure. this may work in real estate market. it does not work in dealing with iran. alix: joining us is francisco blanche, bank of america head of global commodities resource. and still with us is lori calvasina. francisco: the administration has been clear about the objectives. they do not like the jcpoa. they want a different deal. iran feels like they've been holding up their end of the bargain. you have does go different views of the world coming together in

a meaningful clash. that is the story. i do not think it is resolvable because iran does not want to negotiate a deal and the u.s. wants to redo the deal. i do not think how -- i do not know how we unlock this situation. david: to the markets in oil price in the fact that we will have these sanctions? what is the market assuming about the sanctions? francisco: the market is assuming they will stay through the end of trump's first term. if he gets a second term, my guess is the iranians are waiting for trump to be ousted in the next election and then maybe they get back into the jcpoa, which is the reason they have not breached any of the limits established in the treaty. that is my sense. game buthas been the they have also up their

intentions by utilizing proxies for certain attacks against the emirates. it is a difficult situation to resolve. there is an impression in iran there is a regime change push on the u.s. side, which the government here has said no. there is the both sides argument. alix: the result in the oil market has been staggering. if you come inside the bloomberg, this is wti. on the cusp of a bear market for the year. a crazy couple of weeks. a couple of other reasons for that. you have saudi arabia able to make up for iran. chinese refining margins have fallen off a cliff. how do you explain the bearishness? francisco: you have to go back and look at disruptions. we are experiencing the largest 1990's,ons since nearly

since the first u.s.-iraq war. we have not had this kind disruption in 30 years, including venezuela and iraq. we have aer hand, picture that is falling apart. it is falling apart because we cannot agree on trade, which is the other side of the equation. we are entering the third in the last 10 years. we have had expansion for 10 years but we've had three industrial downturns. in 2012, 2016, and in 2019. that is what is pushing the oil market over, the weakness there, and issues that could happen from trade. let's say china decides they do not want to pursue a trade deal with the u.s. and they will start buying iranian oil and ignoring u.s. sanctions. that is a pretty bearish outcome for the oil market. david: what does this mean for the energy market? lori: we downgraded the energy

sector last week, we did it with a heavy heart. there's a lot of stuff we like about the sector. very shareholder friendly, very disciplined, but we cannot step in front of these demand concerns. i do not think investors give the energy sector enough credit. that is what you are seeing right now. alix: that is the demand picture. then we have supply from the u.s. continuing to grind higher. we will get more pipelines in the back half of the year so even more oil than the u.s. -- even more oil out of the u.s.. has the market started to factor in francisco: question mark -- factor in -- francisco: supply has been falling quickly but then again so has demand. we have been working with the assumption there would be a u.s.-china trade deal. that was our house view. noun the three weeks, things have changed and it does not

look like we will get a trade deal immediately. the news for the last couple days on mexico makes it even the china dealh because china can say hold on, do i want to get a trade deal done and then after i get that extra tariffs for some other issue that is unrelated to trade? i believe that is why the markets are selling off. you're seeing oil and industrial metals having a pretty terrible turned down. we are at the inflection point cyclically. if we keep them going down, we will try down our service in industry, not just the main -- our services industry, not just manufacturing. if we get these issues moved --n, we could see a cyclical in which case we do not have supply to meet the demand. david: we have seen some things we have not seen before. often markets overreact when it is something new.

are there places in the energy sphere you think are overreacting? lori: on our industry level work, the oil and gas look more interesting than equipment and services. profile evaluation there. the earnings expectations have held up better. what i see as once the energy sector is out of favor, everything tends to go down. prices toeed oil stabilize or go higher to think about your value call on energy? i think you do. investors have been rattled by the decline in commodity price which causes them to question whether that shareholder friendliness can continue. we also need to see the geopolitical backdrop stabilize. energy is a macro oriented sector. it is an easy one for people to trade. what has been surprising as we have looked through some of the trade war issues is that energy keeps popping up as being at risk. our analysts were very focal the

demand picture will be impacted by the situation in china. say energy is one of the sectors that chatters about mexico. it is very easy for investors to pull the trigger. if this uncertainty continues, what changes might there be in supply relationships. you mentioned china buying oil from iran. when you talk about supply change with respect to china and manufacturing, where there are other places around the world that will say i have to find another way to get my oil? francisco: if you believe the trade war is not just about trade and what is going on in the 5g space with huawei is resulting in two different blocks. david: we have some evidence it is not just about trade. francisco: the issues the spaghetti on the wall kind of tariff approach, or is this more targeted approach on china and china's allies?

if we have that kind of circling around china, we'll have what which isalking about, the source of supply starting to split apart. iran and china moving one way and the u.s. and its allies moving other way. i think that is more specific to the 5g sector, but it is a risk week and up having a split war. alix: what do you do? look inside the bloomberg at wti and brent. francisco: i put my goal tied on. that is my statement. [laughter] alix: is at gold? easy to buybeen brent when the spread kept going up. francisco: i think if the world economy turns around and the cycle picks up from here, we will have a big run in oil prices.

end of the year, we have 2020, which will lead on consumption for oil. it is an easy by if these late tensions are react and we see a cohesive policy from the white house saying we have sealed all of the deals and are going forward. i think we will need that for the economy in 2020. we cannot keep going down this path where we are taking done global manufacturing and global services. not turn out well for the u.s. economy either unless these issues get resolved. david: i'm curious about 2020. does lower oil prices helped some of the pressure in 2020? francisco: of course it does. if we have a recession by the end of the year, we will not have to worry about i am oh 2020. 2020.o

david: that is one way to fix it. francisco: not the best way. francisco blanche and lori calvasina, thank you both for being with us. we speak with the business roundtable smart regulation doug peterson. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." ,oming up in the next hour andrew sheets, morgan stanley chief cross asset strategist. here is your bloomberg business

flash. a goldman sachs unit has agreed to buy capital vision services. according to the wall street journal, the deal is valued at $2.7 billion. capital vision manages optometry practices. the trade war between the u.s. and china has hurt air cargo traffic worldwide and that was before china targeted fedex. this after the u.s. ramped up pressure on huawei. global cargo demands fell 4.7% in april, that equaled of february drop that was the worst in three years. trade experts warn declining shipments indicate a slowdown in global. but -- ofes of quirky cortiva begin trading in new york. dow dupont spitting out the aggro science. the company was created when dow chemical and umag -- dow chemical and dupont emerged and

decided to split into three companies. david: we now are going to turn -- let's talk about corteva. agricultural not doing well the moment. alix: one of the last spinoffs from down dupont. a really bad time for farmers to do this. look at john deere and what they are saying about former incomes. not great. david: a bad time to do anything agriculture. any we have president lopez in mexico giving his weekly news conference in their headlines saying we would like to talk about this, we can agree with one another. the united states governors on the u.s. border states really support the usmca which was supposedly going to get ratified but now does not look so easy. alix: president trump is using the stick, this is definitely the character. to eachntinue talking

other, we give all of the support to migrants returning home. cannotch to me like they economically withstand the terror pressure. tariff pressure. david: he has his own political constituency in mexico. he cannot appear weak. company with.s. supply chains in mexico will be saying the same type of thing. at least yes the support from u.s. companies. david: stub the auto industry, gm and ford. now it is time for followed lead, deep dive in the stories making headlines in moving markets. today we looking at the need for regulatory reform in the united states, something the trump administration has been addressing, but the business roundtable says needs more work. we welcome doug peterson, s&p global ceo. welcome. you are the chairman of this committee and you've done an extensive study.

tell us what you found. doug: the business roundtable supports regulation. we want to be sure our products are safe, and the markets are fair and transparent. framework of federal regulation and were defined overlap or duplication or different regulatory agencies that do not work together? david: regulation is armand because of the boeing 737. maybe we have not had enough regulation. doug: you want to make sure regulation will support the needs of our economy and consumers and different organizations. we want to make sure that when you look at organizations -- what we found in the report is there is multiple jurisdictions, multiple regulations, sometimes multiple agencies and all the way to the state and local level. one example where the administration has come out with the approach is called the fast act about infrastructure. the fast act found a way to get

the different agencies to support speeding up of approval of infrastructure. now infrastructure is coming in almost two years faster and billions of dollars have been saved. alix: i was speaking about that, in terms of building up occidental says that was instrumental in building up pipelines. what about regulation that does not exist? we talked about big tech. what you do with that? doug: that is one of the areas that the business roundtable is looking at. think about privacy. you have the gdpr in europe which forced all kinds of companies to come up with an approach to privacy and in the united states california's coming out with its own law. three 150 different state laws are to coordinate that right up front. not only does it have implications in the u.s. and competitiveness for the tech sector, but how we act globally? your recommendations

about the approach of the federal level which involves increased communications. cannot be done by the administration itself or does there need to be congressional action? congress likes to overlapping regulations because different current -- different committees have different jurisdictions. doug: generally speaking it will be better if it is a convert -- a combination of the administration and congress working together. there are areas like financial services, transportation, and food safety. ,lix: when you talk about tech and getting out ahead of everything so it is not bifurcated, is their stomach in the tech community to be like, yes, we would like that regulation? doug: they are working together. we see tim cook taking the lead on this, working with the business roundtable and other organizations. i think the tech sector will realize it is to their benefit to get ahead of this. david: how much of the overlap

is because we do not have a regular process by which we go back and review regulations to see whether it still applies? that is something that comes up when you think about all the change in business models. meat. one is meatless who will regulate that? this is a way to get the fda and the usda ahead of that. alix: how do you do that? i hearken back to plant-based milk. right now it is becoming how do you quantify if that is melt? doug: and how do you label it? alix: how do you get ahead of something like that before it hits? doug: this is why the business roundtable has this report. this is not easy. this is the sort of thing that comes last after people up on a different business models and how they will work. that is why the business roundtable wants to address this. david: this is the sort of thing

donald trump has said he would like to do. you have a receptive ear to your report? doug: there has been a lot of receptivity in the trump administration, and a lot of that has been the tax. usda and fda are working together and there are many other cases where read regulator has been put in place. this is something business roundtable wants to advocate. david: very helpful. thank you much to doug peterson for being with us. alix: coming out, is ubs's latest weapon in its fight for cash from wealthy cry it -- wealthy clients -- deposit data. this is bloomberg. ♪

alix: here is what i am watching. ubs offering a 2.35 annual percentage yield through september for clients willing to bring in new assets. joining us is shelley, bloomberg

investment banking reporter. lot.ey: 2.35 is quite a it is only through the end of september, so let's not get too excited. you have to have $10,000 at minimum to put into this account. goldman sachs has 2.25 as their rate and there is no minimum, but there is somewhat of a cap and the reason u.s. -- ubs is doing this is because they -- as volatility rises we are seeing client sentiment moved over and this is ubs's way of getting ahead of that. they are also competing for a small pool of wealthy clients or is this your doing it anyway? sonali: ubs banks is one of two billionaires around the world. in the u.s. they are a lot smaller.

compared to goldman and morgan stanley and all of the rest, which are hundreds of billions. this is their way of saying hey, usa, we are here to be significant in banking and not just wealth management. they do that because they want $10,000 or because they will do other things? sonali: it is definitely we will do the other things with you would you do that with us. david: it is promotional. sonali: ubs is a lot like morgan stanley. morgan stanley is not shy about saying they want assets hidden away. is waynt -- this is ubs of doing that. alix: is it going to work? sonali: 10,000 is not a small amount. there is no limit on the upside. ?ow much will come in there is a ways to go in terms of them attracting significant

money in the u.s., especially when every one else's attracting that as well. alix: thank you ray much for joining us on that. 2.35%, we did get excited. david: i think it is interesting. you have a portfolio and sometimes you have cash and sometimes not. alix: the money higher than the 10 year, actually. that wraps it up for bloomberg daybreak. , morganp, andrew sheets stanley head of process and strategy will be joining jonathan ferro. it feels like we may a bottomed in the equity market, futures down by four points despite money still going into the bond market. this is bloomberg. ♪

at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. there is reward. ♪ ♪ beyond work and life... who else could he be? there is the moment. beyond technology... there is human ingenuity. ♪ ♪

every day, comcast business is helping businesses go beyond the expected, to do the extraordinary. take your business beyond. jonathan: from the city of london for audience worldwide, the countdown to the open starts right now. ♪

coming up, the president touching down in the u.k. as his trade policy feeds growth anxiety. anda digging his heels blaming the u.s. administration's demands for collapsing talks and strategist on wall street market to market with 2019 breakup forecast piling up. good morning. growing a little bit higher off the lows. down just three points on the s&p 500. treasury yields giving up the bid. by single basis point at 2.12 on the 10 year. in the fx market, a stronger europe. euro-dollar 1.1195. let's begin with the big issue, markets nervous about a growing trade dispute. >> it is about a trade war. >> trade tensions. >> rhetoric with china is not only back but escalating. >>