recession. growth sinks and employment in the euro area falls for the first time since 2013. china industrial output rises while retail sales fall short in the country continues to defend itself against virus accusations. and hard-hit states like new york and new jersey prepared to reopen part of their economies. we speak to julie sweet, onenture ceo come businesslike after covid. welcome to "bloomberg daybreak: friday, may this 15. i'm alix steel. congratulations on one more week of work from home. retail sales at 8:30. first quarter revenue down slightly, more than 50%, that is a big number. they say it is not possible to provide a full year outlook for 2021. this is their fourth quarter, by the way. fourth quarter revenue down by 35% year on year, and adjusted

earnings from continuing operations was just $0.10. terrible numbers from certain sectors. --iously, retail search obviously, retail front and center. market, kind of a mixed bag. terrible data, yet equities tried to stage a rally earlier. now futures flipping into more negative territory. definitely the euro-dollar and dollar-yen are two to watch today. the yen was significantly higher that's butt all dies all eyes really on retail data later. let's get some more market moving news from our new york and brussels teams. we want to start in the u.s., where we are expecting more of that dire economic data. many nonessential stores are closed. we also get industrial production. michael mckee, international

policy and economics correspondent, joins us now. michael: i will give you guidance for the year, dismal. it is only a question of how bad they are going to be. retail shrank by 8.7% in march, when things were just getting started. in april, americans spent all of the time at home, not going to stores that weren't open anyway. insensus is for a 12% drop retail sales. that is possible. jp morgan chase institute says average weekly household credit card spending fell 40% last month from the prior year. the control group, you leave out food, cars, gas, building materials, that is down 5%. that would be the part that goes into gdp, or in this case, doesn't go into gdp. if anything gains, look for food at home. it is not the only data out today. industrial production is out. empire manufacturing forecast to from -72.8.60

63.8%.y utilization, that would be the lowest, a new low. michigan sentiment, 68%. that would be the worst since 2011. not going to get much sympathy here from the chinese. they have reopened their economy and industrial production is up. factories started back up again. nobody is buying anything they are making. retail sales down 3.3%. that may be sort of a picture of what it is going to be like here when we reopen. alix: such a good point. let's get to what is happening in europe as well. germany gdp out. the economy shrank 2.2% in the first quarter, the most in more

than a decade. maria tadeo has more for us. maria: exactly. this looks like a bad number. anything that happens in germany does have big implications for the european economy. it is a 2.2% contraction, but if we look at the details, germany actually looks much better than any of the rest of the european countries. ,f you compare it to spain italy, or even the french economy, they are all declining in the region of 4% to 6%. so the idea here is that germany has better testing capacity because it had more ability to produce some of the equipment needed to contain the virus, and was able to keep the economy going more than its peers. the concern here is that the fallout is not going to be contained and will continue to do damage to the european economy. we are doing this in a very gradual way, and european governments are concerned about doing this too quickly.

they worry that we will see round two of the outbreak. so germany looks a little bit better than everyone else, but we will probably see a lot more damage. ministers our meeting today, but they don't have a lot to work with because european leaders cannot agree on the basis for it. alix: that's pretty grim. yes, the market somewhat looking through all of that data today. thank you very much. here in the u.s., talk about onpen the federal government how to reopen things bars. steps from the cdc encouraging handwashing, social distancing, and how to check for symptoms of coronavirus cases. the trump administration held back an earlier version of the guidance that it felt was too prescriptive. meanwhile, five of new york state's 10 regions can open today.

apparently the jersey shore is going to open by boreal day with restrictions -- by memorial day with restrictions. we will see how that works out. coming up, more of your market was inrade and and i today's -- and analysis in today's first take. this is bloomberg. ♪ ♪

alix: time now for bloomberg first take. joining me from our in house team of wall street veterans and insiders, michael mckee, bloomberg international

economics and policy correspondent, and damian sassower, bloomberg intelligence chief emerging-market credit strategist. we heard mike outline what we are going to get in terms of data out of the u.s. i am curious, today and next week, what is the number one thing you're focused on? damian: oh, god. data, the china to video we saw overnight was really telling. i am going to be focused on what is going on domestically because chinas.tale of two it has taken six to eight weeks for production to approach pre-pandemic levels, but services and sales are completely off-line. outside of retail sales, there's that that much to shake a stick at -- there's not that much to shake a stick at. we need to see china shake out a little better than its peers to get a little more confidence. we have china's national people's congress next week, where they may drop the gdp

target. that is my focus, most likely. alix: just to get into the numbers real quick, how much are we trusting these numbers? if this is what is coming out do a -- coming out, do we have real read on how bad it actually us? michael: yes and no. this is the best picture we have. these are what they call the advance numbers. they only capture data through roughly the first half of the month, and then you get the revisions to the prior month. we can see big revisions. i suspect what we are going to see is a big revision down to march because it only got worse as that month went along. since this month, everything was closed from the beginning of april, we will probably get a better read on how bad things were. but does it really matter? everybody knew how bad it was. i suspect this is all priced into the markets. it is just a question of interest in how bad the numbers are. alix: totally, as now we are losing steam over in europe, but the dax still up by 0.7% despite

the recession there. you brought up the npc, the national people's congress. what does the pboc do ahead of that to create some kind of stability or whatever? damian: i think what it comes down to for china is, with the market has been waiting for is stimulus, and some color to the extent that they will be injecting stimulus into they are economy. i think that is why you see china yields rising here, while the rest of the world sees negative yields and yields falling. u.s. treasury yields are down to the lowest levels on record today. for me, that is kind of in focus. i have to just take a step back and say china's debt to gdp is going to rise above 3%. 2005,en't seen that since so it is at a dangerous stage of the recovery. that is really going to catch everybody's attention, and we are going to see how quickly they can turn the eggs around. my guess is they are going to it

announce a lot of stimulus package at the end of the week, so let's see what sort of aggressive policy stimulus we have in store. alix: and let's get to some news on just this exact point. according to state tv, china says they will strive to achieve full year economic develop goals , strengthen the emblem edition policy -- theic implementation of macroeconomic policy. but what china has been good at historically is creating stimulus that helps things like manufacturing, so they can export stuff like copper, refined copper products, for example. but this isn't necessarily that kind of stimulus. i wonder how they manage that. michael: it is going to be an interesting question to see what they do. this is coming out of a politburo meeting, and they want to beat their economic goals. we don't know exactly what they are going to be. we also don't know whether they are going to set a target as of ausually have, or kind loosely defined goal for

growth this year. one thing to have always been focused on is creating jobs, making sure that the vast population, especially that migrated from rural areas into the cities, were employed so they could keep down any kind of social issues. at this point they are having trouble getting people back to work, from all of the reporting there. so it isn't clear exactly how they stimulate. in wuhan, the reporting is a lot of people can go out to dinner, but nobody is doing that. people are just not spending. that is what people are worried about in the united states. that you will see factories open and start making stuff, backed up orders, but people won't go out and spend money. we see pictures from florida and places like that of twentysomethings who have never been particularly well in this whole virus crisis going out to bars, but in general, the

average person going out to dinner in a crowded restaurant, it will probably take a while. alix: our economic recovery is now based on 21-year-olds. awesome. to that point, how does china and stimulate -- china then stimulate? we know their debt to gdp is going to rise. we are expecting central bank rate cuts. that is certainly not going to help someone go buy a shirt. damian: infrastructure investment, maybe even tax cuts, and probably a removal of policy hurdles which will allow government and local finance institutions to basically fund new projects. i think that is probably the most likely thing we are going to hear out of them, but shifting to the u.s., those claims numbers yesterday, as bad as they were, we are seeing claims flat lying. the crazy unemployment numbers and how that extends abroad, even to china, it is about capacity utilization. we are going to get some color

on that today with the ip data in the u.s. 64% is what we are expecting here. it is going to take a lot longer economy. we are not going to be sitting at restaurants for very long. are: but even the take outs interestingly restricted. you have to preorder, the menus are set in a different way. mike, you already dug into retail sales and we know it is more backward looking, but we do have a stimulus bill to be voted on in the house, but it is not going to pass the senate. $3 trillion. what is your take on where that ends up in if the money comes fast enough to people? michael: i think this is a question of the data being really bad, and that will influence what happens in washington. republicans don't want to move very fast on this. they suddenly got deficit religion. but when we go through this month and when you see the next unemployment report and it is 25% or something like that, that

will put pressure on them to act. also, all of these states, their fiscal years start in usually july, so they are going to be threatening to lay off policemen and firemen, people like that. that is going to put a lot of pressure on republican senators as well. i imagine mitch mcconnell is going to ignore the democratic governor of kentucky, but is going to get a lot of republican mayors calling him up and saying, we need any. so i -- we need money. so i think they will reach a deal at some point. it may not be as fast as people want, but we are talking about a couple of months from now, running out of money. they do need to get this done, but i don't think they will put it off forever. alix: it's a fair point. so is bad data good news from that perspective? by the way, the fed balance sheet is almost at $700 billion

-- is almost at $7 billion. michael: for the first time, they showed us what they bought in the secondary market, the eds. -- theught 305 million etf's. they bought $305 million the first day. alix: and again, $7 trillion balance sheet. that is a really big number, and moving higher really quickly. damian, the fed balance sheet is no bigger than any out there. how does that affect your world -- is now bigger than any other out there. how does that affect your world? damian: we are also seeing interesting data from the banks, basically looking at their value risk breaches over the last quarter, and they were a lot. obviously, march volatility goes without saying --s you times trading losses

goes without saying. saw trading losses. it tells me that that didn't really find flaws in the banks' models, so the key point for me regards liquidity in the front. we saw a piece yesterday saying that funding conditions are normalizing globally, which is a good thing. it all kind of sticks to the actions the fed is taking and how they are working. alix: i know you are going to bring up the piece from credit suisse. i have it in my notes. he mentioned the gravitational pull of the zero lower bound can drive the libor-ois spread tighter. as you continue to see money into prime money market funds and central banks access those

yieldsp lines, negative is my point, which is despite what central bankers are saying, we're still seeing may 2021, pricing and negative yields. i understand it is hedging. the markets aren't very liquid. but we keep hammering this point home. michael: part of it is that the media keeps hammering this point home. most people in the markets -- alix: oh, my fault. [laughter] michael: well, we like the controversy. most people are not expecting the fed to go negative, i think. we are seeing it in one particular market right now. the fed has been so adamant. the problem is the fed has given into the market so many times over the last couple of years that the market says we should go negative come up they will. but in this case, but i think they will really push back because i can't imagine what would happen to the money markets if they went negative. suddenly, money market funds cannot make money, so why are they going to lend it out?

companies going to finance their payrolls and daily activities? that would be a real problem. and in an election year, do you want to tell people they will lose money on what little they have left? it would be really tough to see a negative rate. alix: really just have to see negative rates. help me wrap it up. as we go into the weekend, we have seen oil rally for three straight weeks. we are talking about rotation at some point, tech versus financials, etc. equity futures unable to get a bid this morning. how much risk you be taking on right now? damian: i think yesterday's turn in the equity market is really quite telling. it really threw all of the bearish technicals out the door. we have euro treasury yields now at an all-time low. speaking up to negative yields, but the fact that the bloomberg arclays global index now has

worth of 1%, so if you are a bond investor, that is what you can expect. and then you basically have all of these heavyweights talking about if equity is the most overvalued. put very little stock in what funds are saying. certainly, valuations are relative. but with yields the slow, it is kind of understanding why people are just going to continue to pile into equities because it is really the only game in town. but that drives 12 month because this is the tug-of-war investors are dealing with. it is certainly going to extend into next week. alix: no kidding. bloomberg's mike mckee, fx a lot, and damian sassower. thanks for running out the friday with me. any charts we use throughout the two hours, go right to gtv on your terminal. browse the features, check it out. gtv . this is bloomberg.

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ritika: this is "bloomberg daybreak." taiwan semiconductor will spend $12 billion to build a chip factory in arizona. it is a move designed to assuage u.s. concerns about supply chain security. it is the world's largest and most advanced maker of chips for other companies such as apple. it plays a crucial role in the production of devices from smartphones to internet service. its low-costc and unit carried an average of just 458 passengers per day. that is a 99.6% drop from last year. skeleton operating a passenger flight from hong kong to just 14 cities. the english premier league will

complete its season that was suspended in march. the government sent little -- the government signaled that soccer clubs must make televised matches more widely available. alix: next so much. some breaking news -- thanks so much. some breaking news, fiat is said to be in talks for a $6.8 italyn credit line led by -- line backed by italy. also looking at stimulus to help its economy. one thing we are watching today is when states start to get ready to reopen, we want to look at the economic toll on american cities. overall, they are going to lose about $360 billion in revenue. michigan hawaii, and will also be hammered.

philly expects budget deficits to be five times what it was in the last recession. that is definitely front and center when it comes to politics in the next round of stimulus packages. coming up, and equity market that btig says is neither a bull nor a bear. seesn emanuel on what he for the recovery. this is bloomberg. ♪ staying connected your way is easier than ever.

you're just a tap away from personalized support on xfinity.com. get faster internet speeds with a click. order xfi pods to your home in a snap. or change your xfinity services with just a touch. all in one place. you're only seconds away from all of that on xfinity.com.

faster than a call. easy as a tap. now that's simple, easy, awesome. alix: welcome to "bloomberg daybreak: americas." i'm alix steel.

the commerce department saying they will plan to protect u.s. national security by restricting huawei's ability to use u.s. technology and software to design and manufacture it semiconductor abroad. they are basically cutting off any of huawei's efforts to change or get around u.s. export controls. that is weighing on the markets, but the backdrop of the words between president trump and china over the virus, and the threat of either sanctions or something else in terms of trade , no phase two trade deal or a pullback of the phase one trade deal weighing on the equity market. the safe in germany, haven bid continuing. the yen come of the dollar the out performers the g10 space -- the yen, the dollar the outperf ormers in the g10 space. let's get more julian emanuel, btig chief equity and

derivatives strategist. what do you think of the emerging u.s./china trade, virus headlines? julian: it is obviously a challenge, and if you thick about it, given what has happened to the economy and given our expectation, i think the market is realizing expectations that the reopening is going to be slower than perhaps first thought. the v-shaped recovery is not on anyone's minds anymore. it is logical with an election coming up november 3 that you are going to have to focus people on the relationship with china, but it just really shows you that they are going -- that you are going to have to islands between -- you are going to have to balance between what the effect is on the market and with the effect is on the sick college he of the american people. it is a difficult situation --

on the psychology of the american people. it is a difficult situation. alix: it is hard to digest it. how does that play into any valuation when you have a bizarre overhang that no one knows how to price, and you cannot price company's cash flows because they do not know what they are able to sell and when? julian: from our perspective, what has been really important is thinking about why we are where we are. off the bottom, you've got this incredible stimulus from the fed and the federal government. what it did was unlock the ability of the capital markets to refinance corporate america. so what is important now is looking at the companies that are haves and have-nots, not necessarily in terms of their business at the moment, but in terms of their liquidity position. over the last couple of months, there are a lot of companies that have refinanced such that there is no issue into the

second half 2021, which, if we don't get recovery, which we don't think is going to be the case, then you get solvency issues somewhere. but the financing is very important. alix: yes, very important. and there's been a lot of talk of how the equity market is not reflecting the underlying economic fundamentals yet. this week, as we saw what is truly continuing to outperform, , continuing to get .aken out what do you think? julian: there is an element to that, but over the last couple of days, we think there is a subtle change going on in the market. i think that chairman powell's talk a couple of days ago and his insistence that there won't be negative interest rates on his watch, something we have hardly endorsed -- if you saw

yesterday in the markets, it turned the tide in terms of financials. what we found is over the long stretch of time, not only when you make the transition from bear market to new bull markets, the stocks and sectors that were lagging on the way down start to lead. but in general, if financials are going to outperform, one day does not a trend make, but if they are going to outperformance, that generally comes with a better market backdrop. alix: so what did you make of the banks outperforming yesterday, considering we are still talking about negative rates? what do you make of that? was a: we think it really psychological sort of line in the sand that the chairman put into the markets by insisting that we are not going to go the way of europe, we are not going to go the way of japan in terms of negative rates, and you see what has happened to their banking systems compared to

ours. and more sea change, importantly, i think investors started refocusing the idea that the disappointment on financial earnings this earnings season is a function of banker conservatism in setting aside loan-loss reserves larger than expected, not so much the fact that they are projecting a more dire economic situation or business situation. if you think about it, these set-aside,n-losses they couldn't actually do that in 2008 because they were too worried about their own house burning down, as it were. alix: but we knew those things. we look at their quarter, know, especially when it comes to jp morgan, that they were being conservative. what made yesterday so different? julian: well, again, you could know, but sometimes

the market doesn't actually react until it is ready to react. obviously, there was talk out there of certain combinations among banks and brokers, and that is the kind of thing we tend to see at bottoms. essentially, when you have new trends start, there's an element of short covering, but we would compare this psychology change to the psychology change we saw several weeks ago when oil prices printed negative, printed negative. basically, you had been underweight energy for a year or two. the sentiment against financials was horrible. that is a contrarian type position that, and our view, is going to kickstart a week view of the space. them financials, you like for a while. what other sectors can play

catch up in terms of valuations to those big tech names? julian: well, again, we think energy is a theme. i would say that most people are actually, from being shocked at the energy weakness a month ago in oil prices, i think people are almost oppositely shocked that oil prices continue to rally as strongly as they do, and obviously the expectation is once the economy in the world normalizes, you're going to get ofl prices well north $30. the other sector that we think is worth a very secular rethink his health care. particularly coming into the election year, health care had been an oppositional type thing. drug prices are too high, gouging, so on and so forth. but what has happened over the last several months, we think health care is turning into a

strategic sector that was cheap on both in absolute and relative basis coming into this crisis, and we think health care has the wind at its back for a long time to come. alix: julian, always fun catching up with you. appreciate it. some breaking news for you. guess what? it's brexit, because that is not over yet either. u.k. negotiator david frost says they have made very limited progress when it comes to a next round of talks. they say there are still significant issues between the two. guess what? the cable rate is down on the lows of theto its session. we want to give you an update on headlines outside the business world. here's ritika gupta with first word news. ritika: china is denying it tried to cover up the details of the coronavirus outbreak. beijing said today it didn't know until january 19 how

infectious the new disease was. china says it released to that information the next day. the chinese face growing blame for delay in sounding the alarm about the virus. that allowed people to spread it unwillingly for some time. house speaker nancy pelosi going ahead today with a vote on a $3 trillion democratic only virus relief bill. the bill has no chance of getting signed into law, but generates public support. that could force senate republicans into negotiations for another round of stimulus. germany has entered a historic recession with its guests slump in more than a decade. the german economy shrank 2.2% in the first quarter. less than two weeks of official lockdown in that period hit capital spending and investment. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm ritika gupta. this is bloomberg. alix: thanks so much. coming up, the work from home pivot and how it will change the demand for i.t. needs and how business is structure themselves. we will speak to the ceo of one of the biggest i.t. companies in the world area julie suite of accenture is coming up next. -- in the world. et of accenture is coming up next. this is bloomberg. ♪ ♪

alix: let's get your take on what is going on in the c-suite exec it of spot. the work from home set up is changing the man for i.t.

support -- changing demand for i.t. support. sweet is ceo julie behind that effort. julie joins me now. it is great to get your perspective because when it comes to i.t., you guys are behind all of it. what are your clients doing? how much interaction are you having, etc.? twoe: i would put it into camps. work from home has done two things. for one, for all companies, it has increased the threat landscape from a security perspective, so we are helping companies rethink how they are managing security because they've got a broader landscape with people at home. the second piece that remote working has created is it has exposed a lot of issues with systems resilience, so companies have very successfully transferred, but a lot of it has been done with patches to make it work.

so we are working with a lot of companies now who hadn't built really robust digital uprastructures ensuring resilience. many who had those robust infrastructures are doubling down, trying to think about how they widened the gap. alix: so how are your clients holding up -- your client bookings holding up, compared to activity six weeks ago, versus three months ago? julie: i would look at the big areas of focus right now. on the i.t. side, it is really these collaboration tools. for example, we put the entire nhs health system, 1.2 million employees, on teams within a week. we took an aerospace company within weeks and put 100,000 people onto g suite. so it is all about the collaboration tools. then there is security. if you look at all of the sites

that went up to help with are 50% morey likely to have hackers simply because they weren't done by design. and companies are recognizing that they have to move to the cloud in order to have the data in the new world, where they don't have all the old models about customer demand and sentiment that have gone out the window. so we are seeing a lot of interest in moving quickly to the cloud. alix: is this across industries, or are there some industries that are just that and down the hatch, not spending it all -- atten down the hatch, not spending at all? julie: you've got travel and hospitality on one side, retail and grocery, but they seem particularly around cloud, we

are having those discussions with all industries. it is just about the pace, for three reasons. first, there is lower cost, and it reduces your carbon footprint, which is important today. the second is that all innovation is happening in the they see a retailer who already moved to the cloud when they had to look at their supply chain. they were able to do so it's more quickly than those who had not. the third reason is as they move forward, all of the innovation they are can manage spending on, and everone is cutting costs at the moment. alix: are you anticipating spend, and for how long? before the crisis, you had a decline in sales. how are they different for you now? julie: what we are seeing is a

focused bend. i am not really talking about our financials. i am talking about the buying of our clients. we just got together a group of cios, for example. many of them are saying certain things are stopping, but there is an acceleration on digital transformation. precrisis, we did research that says the top 10% have done and aregy adoption performing twice as well as the bottom 20%. what the crisis has exposed is that that gap has now widened. take a retailer who has already done 100 stores and curbside pickup. they have done all that investment. in 48 hours, we went from 100 stores to 1400 stores. contrast that with retailers either not online or online, but haven't invested a lot in digital marketing and campaigns.

they spent the first few weeks shoring up those e-commerce channels. what you are seeing across the board is what i would call acceleration of digital come up with a clear focus on how they recover revenue now, and quickly switching to how they reduce cost in order to continue to invest in digital channels. alix: that is a great point. i wonder where that leaves the ad space in the media space -- space and the media space. julie: we have accenture much focusedvery on customer experience, as well as enabling omni-channel experiences. what we are seeing is as cut down, it is about how you make that experience

different. but what is really interesting is what is happening with the industrial segment. havetrial companies who selling,tionship based when they went home, their cios .nabled them to work remotely so we are taking all of our experience in retail and helping now industrial companies rapidly pivot to how do you sell online, how do you digitize. alix: you can really see that on a regional basis, like grocery stores, for example. give me some insight into what accenture is doing. typically, if i am not misunderstanding, you usually hire about 100,000 workers, along with some of your peers. what is hiring going to look like this year for you? julie: i think it is too early to predict exactly, but as we talked about on our list earnings call, one of the levers we have is that we slow down

hiring depending on demand. so we are one of the best companies in the world in managing hiring and managing supply. for example, insecurity, which is a very hot skill right now, we are continuing to hire. one of the things people count on the forgiving is that there is nobody better able to manage the supply and the demand. alix: are there any areas of your business that you either have to furlough worth think about cutting back in any kind of way? we haven'tlie: announced any furloughs. one of the things that is so important now is that the environment continues to be not predictable. what we are really focused on is helping our clients outmaneuver uncertainty. that remains very focused on what our clients need right now, and how do we accelerate their growth, andding

also addressing our cost constraints. alix: can you give me some insight into hiring in the accenture world after this is over? how are you thinking about it? julie: it is interesting. in the 1990's, we already moved in 51 countries to working come because there were so many people working at client sites, we had already reduced our office space. one of the things we are really counseling clients on is to get the right balance. many companies are looking at that, and while remote work is absolutely necessary now, it is to ensure that we can still engage. caution companies to not get too excited about, well, we can cut down our real estate significantly and have

people work from home because over time, and we are one of the best in the business at doing this, you really need to maintain that connection. we have not had a headquarters for over three decades. for us, it was seamless. we had a virtual leadership team. but we are good at making sure that both remote working, that it works, but also that you keep the human connection. perspective.great i appreciate the candor. thank you so much, julie sweet of accenture. coming up, we took a look at the fed swap lines with central banks. this is bloomberg. ♪

alix: breaking news here, cable dropping like a stone, extending the drop to $1.21. e.u. chief negotiator michel barnier says they haven't made ,ny progress on a brexit deal

so that is overshadowing everything is well. time now for trader's take. joining me as damian sassower of bloomberg intelligence. what are you looking at? damian: we mentioned it earlier, the increase in the fed balance sheet. most of that has to do with two things. number one, the asset purchases. the second are these central bank swap lines, which now total $446 billion. most of that is with the bank of japan, the ecb, etc. but we added four central banks from emerging markets to the swap lines, and the take-up has been pretty good. the one central bank, bank of brazil, has really avoided the fed swap facility, opting to drop down reserves -- to draw down reserves. brazil has ample currency reserves, so this makes sense, but with the local debt market down nearly 30% on the year and the currency market getting

crushed, how much longer can it avoid the inevitable? these are the things we are watching in a world where funding pressures appear to be dissipating, so that is a good thing. alix: something i would've never thought you would say six weeks ago. and also, brazil cases are heating up for coronavirus, so we will see how that plays out. think you so much, damian sassower of bloomberg intelligence. coming up on the program, kim forrest, bokeh capital partners founder and cio, joins us. this is bloomberg. ♪ staying connected your way is easier than ever.

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on this: americas" friday, may 15. i'm alix steel. let's take it from the top. chinas.f two fixed asset investment is less bad. meanwhile, retail sales still hit hard. michael: the problem they have is nobody is buying anything they are making. retail sales down 3.3%. that may be sort of a picture of what it is going to be like here when we reopen. alix: china also pushes back on accusations it purposely withheld information about the will had outbreak. outbreak.-- the wuhan officials say they did not know until january 19 how infectious the virus was. the german economy shrinks 2.2 percent in the first quarter, while the economy ministry says that growth probably bottomed out, and a recovery is now underway.

meanwhile, euro area employment falls the most since 2013. >> the fallout is not going to be contained. it is going to continue to do damage to the european economy, but it is only just opening up right now. we are doing it in a gradual way. alix: germany, more than 250 billion euros, and italy, 55 billion. eu financial ministers are discussing relaunching the entire region's economy. >> i know that everyone is actress to get back to work, see stores open, to get back outside, but we've got to be really careful here. alix:alix: some u.s. states hit hard by the virus start to reopen. central new york and new jersey move toward it, while businesses offer curbside pickup starting --day and the state offering , as dostate needs help all the states, and this is going to go on for a long time.

we better get used to dealing with it, making some adjustments. alix: former ceo of google eric schmidt talks about the importance of helping states. the cdc offers guidelines on how states should reopen. meanwhile, democrats putting their latest $3 trillion stimulus offer on the table, , ash provides for states nancy pelosi pushes for the bill today. right around the lows of the session for the s&p. a couple of things happening. earlier, there was a report that signaled the u.s. is moving to block shipments of semis to china's huawei technologies, so reigniting that issue. we learned that the u.s. is extending the temporary general lessons for the company for 90 days, but this highlights the ongoing tensions between the u.s. and china, made worse now by the virus. we just got news from u.k. and e.u. brexit negotiators david

frost and michel barnier, both saying really negative things , saying theydeals are very far apart on issues. the haven bid continuing across the markets. let's get to the trade here. joining me is kim forrest, bokeh capital partners founder and cio. i am going to ask you the question no one knows the answer to. how do you price and a potential next level battle between these two countries? i don't know that anyone knows how we are going to do it, but we have to start figuring that out. i think taking a good guesstimate, there is going to be some friction between these ,wo countries, but ultimately we really do have a global supply chain still, and we are just going to have to learn to get a long. it really is that simple. the chinese seem to have the

upper hand in a lot of areas. currency just to pay for the things that they need to get paid for around the world. so it is really hard. but take a guess. for example, this morning's ef corp., maker of things like more face and -- like north face and vans, they say their revenues were cut in half. i think that is a good place to start. have aboutou like half the revenues. take it from there. alix: if you begin there, but companies do you like based on that? kim: there are a whole i still like, ones with really strong balance sheets with not a lot of debt. i would first of all the quick calculation.

show you but net cash is. start there. what kind of cash do they have? then you can look at the borrowing terms to see, if they do have debt, when is that d -- when is that due? you really have to roll your sleeves up and start doing some homework. there are trends in the larger world that i still think are going to be upheld. the technology seems like a pretty safe ways to stay. that is ironic, right? it is usually the roller coaster of wall street. but with people working from home and office is changing, there is going to be technology that has to be bought. so look for that corporate oriented tech. i think that is an odd safe haven in times like these. alix: you are not alone in that because if you look at the dispersion in terms of valuation

multiples, many people seem to agree with you when it shows the tech versus everything else. does that valuation premium sustain? how does that work out? kim: i think what you really should do is lengthen your timeline. if you are going to buy today, instead of saying what am i going to do next year, have a three to five-year timeline instead of a one year timeline, and then stretch out that valuation a bit if you are initiating a position. i am pretty sure that the world is going to look very different five years from now. ,ecause i am an optimist because i come from equities, i think it will be a better world than today. alix: can you give me some tech names you still like that have some exposure to businesses that will still be there in a while, that can also sustain this debt to gdp? kim: the big one in the room has really held up really well is microsoft.

again that and over teams is proving to be a lifesaver for a lot of companies , being able to unite their staff that are now at home. that just makes the company more valuable. they are also in the early days of rolling out what i consider real cloud computing, and that would be on their azure platform. a lot of companies have built their internal programs or applications that they run their businesses on on microsoft.net, so it is an easy transition, as opposed to rewriting this stuff for aws. so there is that. the you go way down to basement of semiconductors. i still think next year, we are going to have more semiconductors in the world and this year. so companies like intel and micron are probably pretty good bets that the revenues will hold up and you won't have to cut those in half. alix: even though we still have

supply chains/u.s.-china trade war issues? kim: yeah, especially companies like intel that have plants all around the world. so diversification is basically what you are also talking about. kim: yep, but good balance sheets, too. alix: let's diversify. so if you like some of these names on those perspectives, what about undervalued names? no one seems to be debating if jp morgan is going to be around in five years. so what do you do with banks? kim: i think you look for banks with the biggest fee structure as opposed to those who make money off of lending because the spreads for net interest are so narrow, no one is really making banks but a lot of the have turned a lot of their business to fee-based businesses. ort is kind of an easier

risk-averse way to play the banks. alix: and when you take a look at that, and we hear all the talk about negative rates even though there is pushback from negative rates, you saw the market pricing that information 2021, does that factor into your thinking at all? still thinkut i that because the banks have learned about the volatility of interest rates and not to bank on that business -- kind of a funny term there -- not to depend on their borrowing business to drive their revenue that i think a lot of banks have turned to fee-based business, and that is just that. alix: first of all, we love puns, so nice job. kim: oh, thank you. sometimes it just comes out. [laughter] alix: love it. which banks actually fit that model then?

kim: i think jp morgan to an extent, but certainly bny mellon , which is now pretty much a custodian. they are charging people fees assets. another pittsburgh bet which has really transferred fees and reduced their retail footprint is pnc. those are areas i would look at. alix: and last question for you, what have you been selling? kim: nothing right now, actually. we are pretty well-positioned. i would haveines, gotten out of them. anything travel related looks like that is going to be a huge going forward. i don't think i have the patience for that, even though i am a three to five-year kind of person. alix: fairpoint, and honest. always good to catch up with

you. kim forrest of bokeh capital, always a pleasure. coming up, the health of the fitness industry as states begin to ease lockdown rules. we will speak to the group executive chairman and managing partner of equinox. this is bloomberg. ♪

ritika: this is "bloomberg daybreak." the trump administration is taking steps that could ramp up tensions with china. it moved to block topments of semiconductors huawei technologies. has denied u.s. claims that china can use its equipment for spying. and while, taiwan semiconductor will spend $12 billion to build

a chip factory in arizona. it is a move designed to assuage u.s. concerns about supply chain security. it is the world's largest and most advanced maker of chips for other companies such as apple. it plays a crucial role in the design of products from wireless.s to new york city has not met the seven health-related benchmarks to start lifting restrictions. that is your bloomberg business flash. thanks so much. it is time for our new series, what comes next, where we speak to investors and top industry voices on how the pandemic will forever change the way we do things. today we are focusing on the world of fitness. gyms were among the first businesses to close during the pandemic, and some like gold's gym are filing for bankruptcy,

while others have pivoted to online classes. oneness is harvey spevak, equinox holdings chairman and managing partner. thanks for joining me. quickly of the land. where are you opening -- quick lay of the land. where are you opening? where are you still closed? harvey: we are still closed throughout the united states, canada, and the u.k.. we are closely evaluating the situation in texas, and that will probably be the first market we open, but no final decisions have been made as i speak today. alix: how do you make the decisions? backy: we created a while a task force of an internal team working closely with our own medical experts, that emile adjusts, infectious disease experts -- experts, epidemiologists, infectious

disease experts to create a plan for reopening. we have widely been recognized for the safety and cleanliness standards we have always embraced, but we wanted to take those to another level. we have been working with our own medical experts to do that, and that is the new equinox standard we recently introduced to our member community. as part of evaluating when and where to open, we are seeking the guidance of local governments. these are local decisions, but even with that guidance, we will evaluate whether it is put into opening to protect the safety and well-being of our community. each market will vary based on the specific situation. into craftingo what gyms can look like and what kind of facilities you need, how much does that all cost? harvey: well, obviously it comes with a significant cost.

some of it is around staff. some of it is around supplies and different protocols that we will be executing. but we are prepared to spend that money because that is the commitment we have made to our members. equinox is recognized as a leader, and we believe it is important to protect our community, and we are going to do what it takes to protect the community of employees and members. i think we have already done things that most have not, including how we protect our employees, and we will continue to do so to make sure we create the safest environment possible for when it is time for remember to come back. alix: talk about your employees. you have furloughed them, not let them go. correct? harvey: that is incorrect. the majority of our employees continue to be compensated by the company. we furloughed, unfortunately, a group of our employees that we felt would be financially better

off because of government initiatives if they were furloughed and collected unemployment and additional money the government provided for them, but the majority of our employees continue to be compensated by the company, which is clearly unique not just to the fitness industry, but i would say all of the hard-hit industries that have effectively zero revenue. that includes hospitality, retail, and the like. alix: how do you think of it if you want up reopening some of your clubs, and then if demand is uncertain, how money people come back which way and when, how do you reevaluate when it comes to a second round of layoffs or furloughs? harvey: we continue to evaluate it. when you don't have revenue and you have the unknowns, it is an ongoing process. evaluate.ntinue to hopefully, we will be able to

open some of our markets in the immediate future, but there are uncertainties there, and we will have to continue to evaluate what kind of spending we can incur until we are open and generating revenue. at the same time, are you also able to pay your rent in full across the country? harvey: we made the simple decision of saying we were going to pay our employees and prioritize the well-being of our employees, but that resulted in us having to make some difficult decisions. i am very proud we have been able to take care of those employees, and i can't tell you how many emails, text and because i have received from employees that, because of what we have done for them, they were able to continue taking care of their loved ones, parents or others, because they did noah how they were going to pay their -- they did not know how they were going to pay their own rent and put food on the table.

we needed to start suspending paying our landlords, and that is public information, but we have great relationships with to bendlords, and we want alone around -- we want to be around for the long-term. so they are working with us, and i am confident that we will all come to a resolution that works for everybody at the right time. alix: just two more questions for you. how long can you sustain this? what is your cash burn like? and how long can you sustain this level of working with operations until you have to make another round of decisions? harvey: we have limited revenue since we closed our clubs in march, and we paused all membership dues. we made the decisions not to charge our members even a modest fee, but we are plummeted a

strong plan -- we implement it a conserve.n to over time, we will emerge stronger and continue to have the success that we've had. one of the things coming out of this pandemic is that people recognize living a healthy lifestyle is very important to their immune system. so there is great demand, and you see it exploding virtually right now and fitness. ultimately, we are uniquely qualified to do that. we are currently doing some of that through our virtual offerings, whether it be a first of its kind digital platform by , but we see a world where online/off-line come together, and we are excited about delivering that to our community in the years to come. alix: i appreciate it.

thank you very much. i would love to catch up with you to see how that is going. harvey spevak of equinox, thank you. we will have more with the planet fitness ceo today at 10:30 a.m. eastern here in new york. coming up on the program, the eu breakup is back, and it is not good. chief negotiators say there is very little progress on a brexit deal. we will break that down. this is bloomberg. ♪

alix: the pound is reeling now after u.k.'s top exit negotiator says -- top brexit negotiator says there has been very little progress on a deal with the eu. we want to go now to maria tadeo. maria: the negotiations have totally changed. we knew that negotiations had

been continuing, even though i must say, this being done in a very different context and a very challenging prospect because travel restrictions mean that all of these negotiations are not being done in person. these teams are not actually meeting in person, and that removed some of the momentum. what you're seeing is that the tone has become much more pessimistic, and both sides are saying there has been no progress made, and the sticking points are pretty much everything, from fisheries to the role of the european court of justice. nothing has really changed. the problem we are running up ininst, the tight deadline june, the u.k. will have to whether they want to extend the negotiation period before the end of the year, or just essentially not have a comprehensive trade deal with

the eu. that would 100% radel markets. this story -- 100% rattle markets. this story went off the radar because of the coronavirus. alix: coming up on the program, april retail sales fall 12% as the latest read on the consumer. we will talk to lara rhame of fs investments. this is bloomberg. ♪

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the headline that moved the markets was the report that said the u.s. is moving towards blocking global chipmakers from supplying huawei. all of that reigniting trade tensions between the u.s. and china. if a switch of the board, the u.k. and the eu. eu chief brexit negotiator, says he is not optimistic about exit talks. we now have retail sales the month of april, and they are really bad. the advanced sales on a month i month basis is down 16.4%. the estimate was for down 12%. if you back out things like auto and gas, what you know is going to be bad because we weren't buying any of those things, it thanill down 16.2%, more double what economists had predicted.

wening me is bloombergs -- are actually reacting to bad .ews s&p futures of 32 points. these are bad. the control number, which takes out a lot of things that are counting elsewhere down 15.3%. there is a contraction already into the gdp numbers. there's almost no good news at all. motor vehicles down 11.6%. 18.5%.re stores down food and beverage stores and non-store retailers are the only ones that gain on the month. food and beverage up 12.7%. nonstore retailers, what you

bought you bought on the internet, up 13.8%. you look at things like gasoline down 13.3%. prices fell. clothing and accessories down 37.5%. 51.1% last month, so i suppose that is leveling out. you cannot see anything good out of this. it is what we expected. people just stop shopping. this is what you get. the number for empire manufacturing was little bit interesting in that there were a small proportion of companies responding to that survey that said business got a little bit better in may. this is the most contemporaneous numbers we have. maybe there are some signs the worst was in april and things are starting to bottom out. we will need more numbers to confirm that. michael: the empire -- alix:

empire manufacturing employment and shipping moving higher. one more thing on the retail sales. we know they will be bad. no good news in the report. now what we look for? michael: there is not much to look for in terms retail sales for right now. i guess what we are trying to see is when we going to june, when we get there, everything but unemployment, witchel be cumulative and get worse. we start to see a little bit of improvement. for now all the numbers will be bad. there is an index put out by the federal reserve started at the new york fed and others are using it called the weekly index , which combine some of the high-frequency data we get on a weekly basis. it has been going down on a regular basis. if that starts to level off, it might also show us we are at a bottom. i would not look for a month or so of any signs that things could get better. alix: stay with me. lara rhame of fs investments

joins me as well. your thoughts to these terrible numbers? lara: i think might hit it on the head. hard to sort through this rubble and find anything positive. ,e have known going into this we all had a spectrum in our minds of where the data could fall, would be bad, would be catastrophically bad, and at in theurn it has hit worst outlier negative spectrum of that news. there is no doubt that the second quarter we will look at a massive decline in gdp. what has been fascinating to me is markets. markets that have clearly prepared for this negative data, but the market seem to be floating past it with the expectation we will rebound quickly or disregarding the

near-term and feeling like it will not have a long-term negative impact. that is the focus of so many questions i have been getting. alix: what you tell your clients? lara: markets are not the economy. thatan layer onto that is theang plus sector high tax, high-growth companies has continued it's so sore -- has continued to soar where the median equity is down 12% which reflects much more pervasive economic uncertainty. thatare so down, the idea this will be a v-shaped snapback is not realistic when you have drastic massive unemployment. it will be slower, it will be -- it is a small

sector of companies pulling the s&p higher and "the markets," which is a much broader area that is showing continued --ertainty alix: you are fading in and out for us, so we are losing you on your phone. what we try to reestablish that connection with you and see we can get more solid. i will go back to mike. you've been digging through some of the stuff, what do we notice? michael: nothing you would expect that did not go much lower expect building materials and garden supply dealers. they are up 4.4%. some of the states said you could open building material and garden supply centers. upstate new york, florida, some of the other said garden was permitted. maybe what we are seeing is a rebound in the sense that they

collapsed last month, and so any kind of gain at all is good news. other than that, there is nothing that suggests there is any kind of a bottom yet. as the headline number worse than forecast. you have to figure this is what we thought it would be. a very bad month. wrap it in wanted to some china-u.s. trade tensions with you as well. we had the huawei headlines earlier. markets reacting to that. strong words from president trump. i wonder how that one's up playing into the data at some point in the supply chain, how you restock, etc.? michael: it will take time. we do not know exactly how the supply chain issue will affect us yet because we do not have any demand for the supplies. with factories closed their not needing the intermediate parts. once we reopen, and that is starting to happen, we will see

how difficult it is for people to get parts, especially the parts that go into things that go into things that go into things down the chain. that could be an issue. also trade could be an issue. the u.s. and china not doing as much trade. they are starting to buy some of the things they said they would buy. it will take months before we see how that does play out. it'll be interesting to see whether china retaliates for the announcement that we are going to block them from buying semi conductors from other countries that use u.s. technology to get made. company close to the chinese leadership says they may impose sanctions on u.s. companies and may cancel boeing airport orders. it will be interesting to see whether that does play out in the chinese escalate this. alix: lara, we have you back.

we played this trait game before coming i wonder whether you talk about the uncertainty in the economy versus the optimism in the market and you overlay that with increasing trade tensions between the u.s. and china, what does it do to your models? is adding to this echo chamber of uncertainty of volatility. it has been fascinating. china trying to relaunch its own economy into the void of u.s. demand speaks to the fact that it is a struggle to get the economy back on track after being knocked down by the pandemic. u.s. has more organically driven domestic demand, but it is interesting we had trade war escalation during times when the economy was good. that is when we are experiencing below 17, 18, 19.

normally trade tensions and protectionism get worse when the economy is challenged. we have examples in the u.s. for that has played out to a devastating degree. it is a careful game that needs to be played with an eye on long-term goals, not just short-term frustrations. alix: i wonder when you take a look at what led her we are looking at for the recovery -- att letter we are looking for recovery, when you land supply chains and protectionism conversations, does it change the letter? v to w to something else? lara: i think that is right because there is no doubt this will have long-term implications for u.s. supply chains, u.s. manufacturing, globalization as a concept. we had already seen it on a decline. to follow even

more. that has long-term solutions for productivity. -- long-term implications for productivity. these are long-run considerations that in the near term uncertainty will be the overriding factor i worry makes it hard for companies to rehire employees as rapidly as they have been shedding them. alix: that is a great point. thanks very much. thanks for bearing with us. andael mckee of bloomberg lara rhame of fx investments. we also want to talk about another way consumers are spending. -- an onlinerecast restaurant reservation networks warning one of four restaurants will go out of business due to the quarantine. data is showing there signs people will eat out in states where it is allowed. florida reported traffic was down 83% from a year ago.

the state begin a phase reopening last week. florida is followed by indiana and tennessee. staggered data about restaurants. let's do an update on what is making headlines outside the business world. here is ritika gupta. ritika: nancy pelosi is going ahead with a vote on a $3 trillion democratic relief bill. the measure has no chance of getting signed into law, but pelosi counts on part of its generating public support such as aid to state and more payment individuals. that could force senate republicans into negotiations for another round of stimulus. china is denying you try to cover up details of the coronavirus outbreak beijing said it did not know until january 19 how infectious the new disease was. china says it released the information the next day. china faces growing blame for a delay in sounding the alarm about the virus. that allowed it to spread unwittingly.

entering a historic recession with its biggest slump in more than a decade. the german economy shrank 2.2% in the first quarter. spending and construction help stabilize the economy somewhat. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. alix: thanks so much. recapping the retail sales. they are bad. my bum bath -- month on month down 16.4%. estimated forn the month of april. the news may get dicey next week. we will see some of the biggest names like walmart and target will release their earnings. we will break through the winners and losers and how to understand the numbers with paula rosenblum, rsr research founder.

bloomberg users, go to gtv . check out any charts we use. this is bloomberg. ♪

alix: time for bottom line. we look at companies and sectors worth watching. today our focus is on retail after the disastrous retail sales numbers for april. joining us is paula rosenblum, rsr researchers cofounder and managing partner. great to chat with you. we get the retail or next next week. first question. when does jcpenney go bankrupt? paula: that is coming shortly.

they have already paid retention bonuses to their top four executives. they will clearly declare. it is worth noting most of the bankruptcies we have seen so far are not rising. the surprising ones will come later. alix: what kind of companies or what names do you have on your radar for those that will not make it? paula: any kind of company that has its stores in the body of a mall are in trouble. sector,about the luxury particularly the lower end of luxury. consumers will be trading down of thew until all economic and physical uncertainty is behind us. alix: does the higher end of luxury, are we able to have that withstand the virus? paula: i think so. the poor market for that group tends to be baby boomers and generation x and as long as there portfolios are solid they

will continue to spend money. it will be the younger generations that worry me a lot. that is millennials and generation z. i think this is a life-changing event for them, i do. alix: no doubt. when you go through retail earnings next week, i guess the question becomes what companies are you most interested in hearing from and what is the key data? they will all be bad. have you look at them? paula: i looked two different ways. is walmart and target and cosco and rest of grocery, and do in home improvement, i think we will see good top lines out of those chains. surprisingly good. i think any company that sells groceries is going to be struggling more on the earning madebecause they have not the technology investments required to shift to this dramatic erect to consumer --

this dramatic direct to consumer model. alix: i am glad you brought that up. not only does the money have to be spent pivoting quicker, but their physical store presence has to be changed, whether it is plexiglas or more staffer cleaning. are we looking at structurally lower margins for the survivors and retail? paula: for now, absolutely. grocery has typically been a laggard technologically. they were the last to find themselves in the director consumer game. the challenge is going to beat how do we find a way to make money. it does not go away. it is never going away. to morees this lead consolidation in the space? what are we talking about in nine months? lot about the a structural fundamental value of malls. until we get out the other side

of the pandemic part of this issue, i worry about their ability to generate the kind of sales they need to generate. obviously there will have to be serious constraints around foot traffic and as you mentioned structural changes, and it is not so easy to make money in that environment. it is challenging. i worry about the structure of levers thatother can still be pulled considering some have already done so much cost cutting and restructuring anyway? to some of those companies have any more levers? paula: the levers i would love to see them pull is to buy less inventory at a time so they can get a sense of how demand is changing and slow everything down a little bit. long ashard to do as they are sourcing half a world away. how this all inner plays with the trade war i'm not completely sure, but if i ruled the world i

would love to see retailers bringing in smaller quantities of different kinds of goods until they get a sense of what the trend is. alix: is it smaller retailers or special retailers that will be able to do something like that? paula: we would like to see the largest retailers do it, to be honest. ,maller retailers certainly can assuming the manufacturers are willing to sell it to them that way. it is the large retailers who looked to be bringing in whole containers of products from halfway across the world that has to start shifting their thought process around sourcing. the other piece they have to that they'res going to be hotspots that continue to pop up so they will need flexibility so they can continue to make money as well and continue to bring in products. it is a complicated period of we are in. we are already talking

about the risk of supply chain and protectionism before the virus hit it brings up the structural bought cash it brings up the structural issue. is there retail you like the best? paula: i like the way walmart has been working throughout the entire pandemic. i liked a lot of what they were doing before hand. i think walmart and target are well-positioned positioned for the long-term. i do. there's a lot of people liking it. alix: great to catch up with you. paula: my pleasure, you have a great day. alix: paula rosenblum, rsr researchers managing partner. coming up, bitcoin versus the nasdaq. which one has the upper hand? we will break that down and technically speaking. this is bloomberg. ♪

alix: time for technically speaking.

mike mcglone joining me now. the nasdaq big tech has typically been holding up. now we are getting the huawei headline striking at the heart of it. you still see a bull market in the nasdaq? see: i do, but i potentially a better bull market in bitcoin with the upper hand. what you see in the first chart is the price of bitcoin divided by the nasdaq composite. they've been at the same level for three years. the big difference is bitcoin volatility has dropped substantially, yet nasdaq volatility has decreased. you see 260 day volatility on bitcoin divided by the same level and nasdaq. if history is a guide, bitcoin has the upper hand in this case. alix: talking about upperhand, oil looking at a three-week rally. do we hit a top? mike: that is where we potentially are. the old lows in oil which have been a bear market.

the spike we put in the bottom -- does that mean we are starting a new bull market? around 38 was a low from 2016 and 2009. it is unlikely will have much upside above 30 in wti crude. alix: thanks for joining me. mike mcglone of blueprint intelligence. that does it for me. open" withn "the jonathan ferro, mohamed el-erian on a day we wary are -- on a day where we are risk off. tensions between the u.s. and china continue to percolate in the market. this is bloomberg. ♪

♪ jonathan: from new york city for

audience worldwide, good morning. on this friday morning, let's get straight to the price action. it has been a rough week with the s&p 500 on course for one of the biggest losses going back to march. 30 minutes away from the opening bell. equity futures at session lows and down 27 points. back ofost 1% of the pretty brutal retail sales data. in the bond market, treasury yields find lower two basis points to 0.6% and in foreign-exchange the dollar gets a little bit stronger against the pound. weaker against the euro. a bounce in euro-dollar. positive .2%. that is the price action. let's begin with the big issue. a triple threat. the data is ugly, the fiscal effort is stalling, and the relationship between the world's two largest economies is breaking down. president trump: we are not happy about china. the ink was not dry on a great trade