bloomberg markets. ♪ mark: here are the top stories we're covering. war,dent trump's trade stocks are lower. fed and monetary stimulus in japan. we will get that with adam posen . and mark carney. with a economy that could be in turmoil. equities, 30 minutes away from the friday session.

stocks getting hammered. falling for a fourth day. stoxx 600 ontrack for the first weekly decline since that's the biggest -- the biggest daily drop since february 6. the lowest level since one year ago on february 9. stoxx 600 briefly rallied by 4%. risingthese currencies against the dollar. all about trade concerns. we will talk to adam posen about it. weekend for the euro, days to go before an election in italy. ftse holding onto gains, one of

few european benchmarks to do so. the least expensive among their expected earnings in 12 italy and germany.

italy and germany. 1.3% is where we are. thursday -- the euro against the dollar has risen to the highest level since april of last year

and nowhere near the levels since ahead of the french vote last april. 90 minutes into the trading day in the

>> down, that maybe what could be ahead of this possible trade war. president trump proposed tariffs, the eu says we will not sit idly while the industry past messes that puts thousands of jobs at risk. the eu will react firmly and defend our interests. should restrictions be imposed on canadian steel and

aluminum, responsive measures. with -- aheaded of the metals industry saying that they and other countries will take retaliatory measures. joined by adam posen up peterson. thank you for joining us. which countries and sectors will be affected. guests today said the path from here to a full out trade war is still a path with a big gap -- a and z.-- and mark: your colleague put up the chart -- >> your colleague put up a chart, the steel tariffs of a limited thing, we knew they

would be overturned. they were overturned. there was no question of the and they wereg unfair tariffs. is the china issue comic book -- important concerns. in the background, a great struggle over cross-border investment. but not a huge cost of the economy. stupid to make everybody who is not china angry over such a tiny part of the u.s. economy. that is what so silly about calling a national security when the costs are felt by the military allies, germany, canada , japan, south korea, mexico. the trade war can and will happen i fear but not just -- mark: play it out, what does a

trade war look like? the background with synchronized economic growth. >> initially, it will not do very much except in financial markets. steel is only a tiny portion of the american economy and it will be a tax on the american consumer. not the end of the world. there will be retaliation. the eu, canada, they know how to retaliate. it will be on specific districts , harley davidson, kentucky bourbon, things that matter to congress. and two dollars from voters. the question -- and donald trump voters. sayingill have a person they cannot be bullied and will have to retaliate. retaliation gets much bigger. if we interfere more broadly in global supply chains, not just making things more expensive but disrupting the flow of

information and energy -- ownership. you can say it is worth it but you have to know what you will give on the other side. rather than just trying to do harm. a study a year and a half ago during the campaign and took seriously what presidential candidate donald trump set about trade and hillary clinton, we set if you applied what he does, what is he is claiming, a 40% tariff, how bad does it get? but the results are equally extraordinary. up to 5 million people out of work in the u.s. and industries like tourism in las vegas and military production in connecticut being affected. even if terrorists are not directly on those industries. i am not saying that will happen. that is the direction of travel. vonnie: china, the world trade organization members, european

union, they are negotiating in defense -- putting out statements that are fiery. they do not want this to escalate into a tit-for-tat or a domino effect. they know their economies will be hurt. what are the chances everybody looks the other way and says, we have moved on from steel being revenue or jobs. chinahink the chances of looking the other way are higher than the eu and canada. in reality, you said it well, china

formative will what -- the number of cases, the

intervention, companies decisions, because it is a legitimate issue, a concern about the technology theft or transfer by companies. is there a better way of dealing with it. also speaking out about the situation, the director general saying that the potential for escalation is real. monitoring the bloomberg. and listening in. back in two minutes. ♪

♪ vonnie: live from new york, i am

vonnie quinn mark: live from london, i am mark barton. the european close in roughly 14 minutes. we have been speaking with mark carney about it though currencies. he does not think bitcoin is good but the future of money. >> three ways to measure a reliable,value, clearly anyone who looks at the screen, volatility is 10 times more volatile been sterling. the most important thing is that working as a medium of exchange, how well do you look at it to like good, not that efficient, it cost 1.5 cents -- pence for cash and 8/10 in the u.k. for a debit card. two pounds to use bitcoin on a transaction that going -- transaction basis.

it is not that good at doing what it is supposed to do. but, it does point the way in many respects to the future of money. there is a glass half empty, we are not worried about it is voicing sterling or the u.s. dollar or conventional currencies. but it throws a challenge, the cryptocurrencies through a challenge to central banks and those who oversee payment systems and markets of how to reorganize those to better serve customers. >> the payment system aspect in your speech, this vision of doingg in the pub simultaneously clearing the price of the drinks using the technology. how do you see that? getting rid of the middleman? >> part of the genius of cryptocurrency is they are distributed and they cut out the central banks and the banks, ideally directly peer-to-peer.

the challenge for payment systems is to move in that direction so we can instantaneously move money from my account to your account to -- pub.ic -- oub, at the bank of england we are reorganizing the core of the system that allows new payment providers to plug-in, they could be using laser technology or other technology -- ledger technology or other technology. will be able to provide those services with similar innovation and banks in the u.s. and other places. this is coming. that is the challenge we have to meet, what these cryptocurrencies are trying to do. not doing it that well. may'sdiscussing theresa speech that took place today in london and he acknowledged its huge important. back with adam posen. there is an irony he -- she made

in her speech about trade, the future and donald trump yesterday talked about tariffs on various industries. index the question -- is there a safety in numbers? the u.k. is trying to go it alone. create individual deals with china, the likes of the u.s.. she gives a speech -- >> it is a proof point that brexit is stupid. i am using that word a lot, should not, brexit is misguided. safety in numbers and you want to be big enough that people have to pay attention to you to get access to your markets. in the u.k., being part of the eu was critical, not only because a part of a bigger entity but people wanted to be in the u.k. as a platform into the eu and did not have to pay standardseet the u.k.

and so on. the other point safety in numbers, going back to the donald trump issue, where theresa may would want to do the right thing is to play by the multilateral rules. if you try to cut your own deals and do everything bilaterally, you cut your self out, which the u.s. is a path to potentially do. i have an article talking about the u.s. under caning -- undercutting is world rules. it could backfire in the u.k. if it backfires in the u.s. vonnie: theresa may laid out five principles that nothing concrete. what happens? does the eu's blueprint get implemented by default? right now, theresa may is saying, there will not be any kind of order on the irish sea or around northern ireland but

no going forward without some kind of border. >> you are right. the principles theresa may said today are as far as they go and more realistic and have more trade options than discussions by our government. there are concrete issues that need to be settled and the northern island border is the foremost. northern not leave ireland in the customs with the rest of the eu, you will create a border where the piece is partially founded on not having a hard border. additionally, there is the issue of free movement of labor. that is nonnegotiable for the eu. if the u.k. want out from that, it is not as not impossible to work around the northern ireland border but means there is relationships the u.k. cannot have with the eu.

these are realities. policy, youf public want to be drafting the meeting and the u.k. used to draft what was at the meetings to a large extent. you have power by doing that. , to theirtheir team credit, are writing stuff down and reasonable steps though you may not love it. until the u.k. write something, we have a problem. vonnie: adam posen, we talked to him about the total reserve an upcoming elections in europe and the bank of japan. this is bloomberg. ♪

♪ vonnie: live from new york, i am vonnie quinn mark: live from london, i am mark barton.

check out european stocks today, falling. assetse for less risky with the ftse down by 1.4%. all the major indexes with declines. board,ut the currency the dollar is falling on the back of the announcement yesterday of donald that he will post tariffs on various industries. the euro up against the dollar. and against the pound in the wake of theresa may's big speech. a flock to haven assets on the bond the board. -- on the bond board.

♪ europeanm bloomberg headquarters in london, i and mark barton. european equities in every industry group on the

stoxx 600. .he biggest drop for a month lowest for one year and the european benchmark. biggest weeklye drop in three and the biggest since february 9. steel and aluminum stocks in focus after president trump said he would impose tariffs on those sectors. basic resources, steel and miners were the big decliners on the european equity space. every industry group declined on this session. in germany, this is the dax index. it is clear that it has raised its gains. that it made after the february slide. sinking to percent on the session and with its biggest two-day drop since june of 2016, reversing the gains since the rebound in february. the export heavy index since the correction have been worried over global trade following the

donald trump announcement yesterday with the dax up 4.3% over the last five trading days. let's talk about the euro in the wake of the italian election this weekend with investors in the currency market are not losing sleep over the upcoming election. the put options on the euro relative to calls, a gauge of how much it costs to hedge against reverse clinical outcome is much lower than in the run-up to the french election which was the first round last april, that was the second round. we do not see the same sort of worry ahead of this weekend's italian election. , this is eurot against sterling in the wake of theresa may's brexit speech earlier. little movement earlier from this morning. deemedech has been pragmatic less idealistic. she said in the source of discussion, not everyone will

get what they want and consequently sterling is falling and the euro is rising today. that is euro-dollar. i wanted euro pound. it does not matter because the euro is rising against the pound , in the 87.90 pence range since september. hard brexit looking more likely. 2.67. that is the latest on european markets. vonnie: let's start with the yen, we will talk to adam posen about the bank of japan but kuroda talked about exiting the qe strategy which has the yen 105.ng at one of 5.61 -- 60. has nothing tox do with it with a spike in the dollar index. 90, nothing to write home about.

vix index is higher but off of the highs of the session. canadian dollar, a proxy for the trade war potentially we see with the canadian dollar weakening, 1.2894. gmm, equity indexes are dropping. italy and germany, you mentioned the european ones, france, but japan selling off assets is the u.k. other currencies on the radar, south african rand, weaker by 7/10 of 1% and we spoke about the yen and canadian dollar earlier. commodities, we were expecting to see aluminum, down one half of 1%. that is gmm on your bloomberg appeared mark: sunday, italians vote in the election and a key vote announced in germany, the social democrats have been voting on whether to enter a

coalition government with angela merkel's christian democrats. let's bring our german government editor in berlin. a book byhor of angela merkel. what is the likely outcome of this vote? >> that is anybody's guess. that hasbeen the -- had germany on center hooks and we talk of the nation -- the talk of the nation four days. it could be heading towards approval. again, the mood in the social democratic party, which really took a hammering in the german election last fall, it is very hard to predict. it is a situation where you want to trust the polls. -- maybe you should not be a

maybe you should not. mark: what happens next? what steps will proceed after such an eventuality? on -- until now, it has been an unusual political limbo situation in germany. down, spd turns it america has run out of options and germany is headed truly into uncharted territory. what will most likely happen, the most talked about scenario at that point is that america will try to be elected -- merkel will be elected by the lower house as chancellor of a minority government, something germany has never had since world war ii, and this would be a prelude to another election in be fall where the hope would

that this would somehow be sorted out. although people suggest the result would be roughly the same. -- the polls suggest the result would be roughly the same. mark: you have a busy weekend. get more on the german vote and what is happening in italy with adam posen of the peterson institute of -- and former boe policymaker. some suggesting the german vote is a bigger risk. >> i think it is. the italian political system for worse is set up to be deadlocked and they are accustomed to having governments that do not function. i am not making a joke, they are adapted to it. germany was set up to have this three party system with one party swinging between the cdu and spd.

having viable right-wing and left-wing parties in the electoral cents throws everything into a mess. we have to pray for angela merkel getting the std support -- spd support for a grand coalition. vonnie: what is next for underlying structural reform in larger countries, what are you hoping for and what are you watching? engaged withtty european commission in a lot of leadership in europe and my colleagues were among the leaders of a franco german effort to set an agenda which could be a macro and, merkel agenda, it includes getting deposit insurance and balance between france and southern european calls for solidarity with german and northern european calls for discipline. and setting up a european monetary fund. it is not transformative, but it

is good and incremental. my colleague and i along with have talked about lessons from the u.s. for european integration and lessons from u.s. mistakes. resubmitting,ep just like we had three tries before we got a federal reserve, you have to keep at it. decade,es not work this not like it will never work. there is a lot that can happen any most important thing is deposit insurance getting in place to go with the single supervisory mechanism in the banking system. national reforms, i think there is less momentum, in part because they have done a lot. even italy, part of what happened to renzi was they put in a labor market reform and that made him unpopular. other countries have put in austerity appeared the real reform is will a more fragmented german government actually lead

to more spending and public investment, which would be win-win for germany and the rest of europe. that is the reform i am watching foremost. vonnie: do the political winds change at some point? maybe swinging back to a more europeore free system in , or does it carry on down the road like in britain and the u.s.? and some countries in europe that have not fully joined the union. , the should start their developments in politics and eastern european members of the eu is worrying. with hungary, poland, the czech republic, there are a lot of the central european countries that are reverting back to prewar fascist or pseudo-fascists behaviors. a statesmanlike way, he took to task his countrymen from poland for their

behavior recently on holocaust denial. there is real threats. in addition to the topping out of the right-wing parties, extreme right-wing parties in france and germany and elsewhere. the other point that has to be reckoned with is, we have seen a decline long-term of support for moderate left parties, called social democrats in various forms. that takes the form in britain you have a labour party that is going much further left and take the form in germany, part of the problem and getting the decision that the voters and membership of the social democrats has gone way down. it takes the form in italy that the

automakers, for example, that have to worry about it. in the last hour is when a lot of the action has been in recent days. you deserve to get home.

taylor there, mark. mark: great job. , premiums spiking on the prospect of higher import costs. more on that next. this is bloomberg. ♪

>> time for our global battle. we take a look at some of the most compelling end telling charts of the day and what they mean for investors. you can access these on the bloomberg i running the function future at the bottom of your screen. kicking things off today -- it's unusual. vonnie quinn, what's going on? vonnie: i kept it very simple today, one line chart, betting on tariffs. aluminum premiums spiking on

the prospect of higher import costs. you see the markets reacting very much in the last month or so. .t had been rising you heard adam talking about this earlier on with people who had done the math on what would happen if there were to be 40% import tariffs on places like china. so, we have seen that. it has become particularly pronounced as president called for the 10% tariff to be signed into implementation next week. anyway, you can see that chart on the bloomberg. mark: funny knows i like my topical charts. knows i like my

topical charts. no pressure on kaylee. what have you got? kaylee: we all know volatility is back, but this is not the vex, this is a one-day percentage move on the s&p 500. were only eight trading days were things moved up or down 1%. this year, 15 already. depending on what happens today, if we close 1% lower or change 1% higher, we will have doubled in just two months from january 2 to march 2 to that number of 1%. rapidly.appening very the s&p has move like this before. everyone says this is normal. this is 36% of all the trading sessions this year that have had this 1% move. that is the most frequency of big days any time since world war ii. this is actually a little bit

unprecedented. it might be showing the investor jitters a little bit. mark: it would be unprecedented if i didn't give you a victory because it is your first time. wonderful job. >> just for presentation alone, she deserves it. >> very smooth. it was like she had done it a million times. nie knows to be topical. she knows how to get me. well done, both of you. we will be talking about steel and aluminum tariffs. and of course, that's something to look forward to. it has been quite a week, hasn't it? four days of stock declines for markets, thety

worst threat for a while, the lowest level in over a year. the talonsinly put on the pigeons yesterday, didn't he? >> he absolutely did. we will see if this continues until next week. toward close. we want to see how the commerce gop arey and the reacting. they have very different viewpoints on the proposed tariffs. ♪ . mom you called?

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it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. vonnie: noon in new york and in hong kong -- >> welcomed the bloomberg markets. vonnie: shares tumble -- ♪

vonnie: the president says trade war's are good and u.s. stocks going to a tailspin with the s&p 500 for a fourth straight decline. the longest love since the republican tax-cut -- slump since the republican tax-cut. an important interview with wilbur ross on the presidents promised to put a claim 5% tariff on steel and 10% on aluminum next week. -- 25% tariff on steel and 10% on aluminum next week. reportsnonprofits new suggesting workers are getting the short end of the stick. from the corporate tax windfall. we are halfway through the trading day.