anna: i'm anna edwards alongside matt miller in berlin. matt: it is only code red for china -- for tesla. china shakes off trade. tesla trades at the lowest level since 2016. cash trade is less than 30 minutes away.

anna: unwavering resolve. china will retaliate after the u.s. blacklisted huawei. trouble afoot. nike and adidas lead a chorus of shoemakers urging donald trump to rethink tariffs on products made in china. 173 firms signed an open letter to the president. bp's climate problem. the oil giant under pressure from shareholders to uphold the paris agreement. we are less than a half-hour away from the start of european trading. it could be a risk on day. take a look at a three day trade treasuries. the yield continues to rise higher and higher. investors are less and less concerned about the trade war that freaked everybody out last week. take a look at futures here. after a negative day in european cash trade yesterday and in the

u.s. cash trade as well. we had a rise in asian stocks giving a lift to european futures. dax futures are gaining 6/10 of 1%. ftse futures up 0.4%. what are you seeing on the gmm? nejra: they csi 300 up by 1.4%. the indonesian markets, philippine also doing well. the kospi also. if u.s. companies are not going to be able to supply huawei, where is huawei going to get those parts yeah maybe other parts of china and maybe south korea. close to the very market story. overnight as well. lots of talk from the fed. we will hear from the fed a little bit later on this week. the australian dollar less than 0.5%. the central bank increasingly opens the conversation about rate cuts. the market is increasingly

thinking next month might be the time we see a rate cut from australia. the decline from china into the australian market also interesting longer-term to keep an eye on. let's have a look at the other side of the gmm. movement higher in steel prices. steelng some in the industry to tears, so overwhelming that they find. removing the tariffs on canadian and mexican steel. a story to illustrate these things can move both directions when it comes to trade tensions. let's start the conversation with mark cudmore, our markets live managing editor. good to have you with us. with china talking about unwavering resolve to what they call u.s. bullying, that asks the question, what is china going to do? will they weaponize the yuan? asking,rade war, we are turn into an fx work?

the yuan would be at the epicenter of that. is one of these questions were how you define an fx war is subjective. we are going to see central bank's reacting in terms of their policy toward easing interest rates. china letely to see dollars the ny rise at some point. that will be perceived as them weakening the currency. the other perspective is they are no longer trying to support as much. most of the intervention from the pboc the last couple years has been the exact opposite of what donald trump says. some point, fx is going to play a big part in this game as this trade war evolves, whether you call it an fx war or you say it is the central bank stepping back is a little subjective. matt: you think the targeting of

huawei takes this trade war from tail and risk to real concern for stocks, right? you think u.s. stocks have longer to fall now? mark: absolutely. today is the first day i remember, i reckon in eight years, though i am starting to wonder whether i should be structurally bearish stocks. i have been on this program regularly the past few years. there has always been this long term it is going to go back to the highs and we are in this structural bull market. i am really worried now. this is being underestimated by the markets. they have extended this trade war. the valuations in the u.s. look stretched. the is before the fact earnings are going to be slashed quite a bit by this trade war. s&p would need a full

10%. they may overshoot. i'm not sure there is much people can do to counter this. i think that is a very big stretch. i also go back to occam's razor. assume we not just are going to go from a standoff to the trade war being resolved. u.s. equities have an awful lot of -- the months ahead. anna: there are limitations to what central banks can do to offset the downsides of the trade war. we heard from powell saying it is too soon to say what impact this is going to have. walking a careful line, no doubt. we know they have a balance policy. that gives them flexibility to prolong this cycle if they feel the trade war warrants. -- mark: they are hindered.

the market is expecting a couple of cuts in the next year. that means if they deliver those, it will not provide much support. they will have to cut more aggressively. that might share -- scare the market. 2008 was a very tough time. investors do not have a positive memory of what we aggressive -- associate with an aggressive cutting cycle. the base case here, there is not much that can be done. obviously the world is ok if the trade war is solved. it is not like positions are overly stretched. it is not like liquidity is constrained. the credit cycle is changing and the impact on supply chains is not being factored into prices. assumption,ake the you have some inside lube i don't have the trade war is going to be resolved -- inside i do not have the

trade war is going to be resolved. anna: willie trade war tune into an fx war? reach out to us and the markets live team. ib+tv is the function to use. let's get the first word news now. >> the u.s. commerce department has granted 90 day relief for certain companies using while way equipment. the temporary license covers existing networks and equipment. this comes after the way has blacklisted the company, jeopardizing its supply of american components. while way phone users will be able to use security updates -- huawei phone users will still be able to use security updates. says thephilip lowe jobless rate needs to move below 5% in australian to drive

inflation back to targets as evidence mounts households are reining in spending and slowing the economy. >> we have an easing bias. i want to reassure the inflation target remains central to monetary policy framework. it will take time to get inflation above 2%. we think we will get there. it is just going to take time. waitrkey has told banks to before settling large foreign currency purchases. this is the latest move to defend the lira amid a controversial rerun of local elections in istanbul. president erdogan's party is seeking to keep control of the nation's economic powerhouse after losing it to the opposition. has died at the age of 70. he passed away peacefully after receiving a lung transplant last year.

he won three world drivers titles, driving for aft one's most famous constructors. he also survived o'neill feder fire in 1976. his long rivalry with james hunt was turned into the movie rush. 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. this is bloomberg. matt: thanks. up, bullying and blackmail. china's ambassador to the eu gets tough and warns it may step up retaliation against the u.s.. we will talk trade and what it means for investors next. bloomberg radio is live on your mobile device or on dab digital in the london area. tune in. this is bloomberg. ♪

>> the fact this is an economy that clearly can operate at 3.5% unemployment rate without inflation, that is good. >> the economy is showing continued growth, strong job all in the face of muted inflation pressures.

>> full employment is not directly observable in changes over time. least as lowend at as 4% or perhaps lower. keepep job growth strong, the unemployment rate broadly defined. >> policy has been on point. economic performance would bear that out. we have seen growth continue above the long-term trend. we have not seen very much inflation as well to suggest the economy is overheating. i think we are in a good place. matt: that is a selection of fed speakers discussing unemployment and inflation. let's turn to the topic du jour for markets. china has warned it will retaliate against the united states as president trump blacklisted while way.

--blacklisted while way blacklisted huawei. footweardas, and other giant to produce products in china are urging donald trump to reconsider his tariffs on their shoes. joining us for more on these stories is our senior asia tech reporter in hong kong and are beijing bureau chief. did the u.s. give limited relief for certain u.s. companies that are using huawei equipment? the reprieve covers two different parts. these rural telecom networks that actually do use quite a few huawei components. the big guys do not, but the little guys do. the u.s. government wanted to make sure there was a bit of a buffer zone in order to make

sure those networks are not interrupted. the other side of the coin is phone users that are using while phones.es -- huawei security patches are going to be kept up by google, but new software apps, google search, those things will not be able to be downloaded anew. in terms of the response we have seen, what industry groups -- what are industry groups saying? the shoe industry, the athletics industry not very happy. industry, the shoe shoe companies appealing to not up impose tariffs.

they say they already pay $3 billion a year and then he increases going to be detrimental. chinese companies are also hurting. both sides are paying for these tariffs. shoe companies also show the power china has in this trade war. at the same time, china has recently -- xi jinping made a ,isit to a rare earth mine signaling the strength china has in that area. it remains to be seen how much pain the u.s. is willing to tolerate. matt: one of president trump's goals is to bring production back to the u.s.. what you think of as an american company, nike, produces all of its shoes outside of the u.s.. you would expect them to complain about this. the bigger implications here come from the huawei band. .

how could this foul up, really devastate the global tech supply chain? >> companies have been spending the last few decades creating this wide standing global supply chain across different companies. what companies are having to do now is say, maybe this does not make as much sense. asset --e don't have access to manufacturing capabilities? you are already seeing companies like cisco, google, apple, start to look at these, start to reassess their supply chains from the u.s. side. from the china side, they are saying we need to compare our own -- control our own destiny. u.s. companieson for semiconductors and ai. we need to do this ourselves. you are seeing pressure on companies like huawei to start bringing stuff in town. anna: how do we think china is going to retaliate?

we have heard words like unwavering resolve being used to describe how the chinese plan to retaliate. what is the expectation? open, whateally wide china may or may not do to retaliate. it has said it is a political tactic. we have the foreign ministry at the top of the hour. we might get more color on that front. revealnlikely they will actual measures at that briefing. china has indicated it may turn to nontariff measures to gain the upper hand. we have seen what has happened had theada when it detention with china, they have now jailed two canadians who are still in prison under national security breach charges. it really runs the gamut of what china can do on this front. matt: thanks very much to our

senior asia tech reporter in hong kong and also are beijing bureau chief. if you want more from the bloomberg news team on the trade war, terminal clients will be able to take part in a q&a on our live blog today. that starts at 2:00 a.m. -- 2:00 p.m. london time. let's get the bloomberg business flash now. routsla faced a stock following this month's capital raising. shares have dropped in nine of the last 10 trading days, plunging as much as 20%. tesla has pushed its market capitalization below that of ford. an analyst says tesla faces an uphill climb. >> if profitability does not come in the second half, they will have to raise one to $2 billion more capital. then this starts to take another turn.

>> the justice department is leaning against approving t-mobile's takeover of sprint even after the company's winning of the backing of the chairman of the federal communications commission. proposed concessions do not go far enough for the doj. opposition would mark a rare break with the fcc. that is your bloomberg business flash. anna: thank you. go untiline minutes to the start of the equity trading day. we will take a look at the stocks to watch at the open including bp. protesters blockading the entrance to the company's london headquarters. in aberdeen, climate resolutions are going to be discussed. ♪

anna: six minutes until the start of trade. by rebecca,d today looking at the telecom italia numbers. from our equities team, covering the spanish growth. and details on bp. rebecca, let's start with you. >> it is not often we get news on telecom italia that is not dominated by a shareholder battle between activist elliott

capital management and the largest shareholder, venti. today we can talk about earnings results that were either in-line or beat expectations in certain areas, which shows telecom italia's ceo is on track to meet results. we saw he brought net debt down unexpectedly, which shows cost-cutting measures are taking hold. matt: you are giving us the details on a spanish supermarket. is it dia? sounds like a female god. >> that is right. yesterdayhareholder got the final ok from bondholders to carry on with the rescue plan for spanish grocer. only bankor was the left to accept the plan, including a capital increase.

indeed. we will watch how that one goes. you can give the details of bp in just a moment. market open is up next. ♪

♪ anna: one minutes ago until the start of cash equity trading this morning. this is what we learned ahead of the start of equities trading. the csx 300 and china doing very well -- in china doing very well. if the u.s. is not manufacturing and supplying huawei, then maybe others might be able to do so. is it dollar strength coming through this time around? this is tracking the chinese currency. will weothers might be able to r war spring upn fx from the trade war. you get the sense we are a

little bit more risk on this morning. even where the session in asia was a little bit more mixed, we see strength and chinese equities -- in chinese equities. this risk will we see on rally at the start of the equity trading day in europe? will it be continued into the u.s. session? we will see how long that lingers. ftse futures are a little positive, more positive -- %.rry, the ftse 100 up by 0.2 i mentioned to some of the euro weakness and other strength we have going into these markets. a little bit of yen weakness come in keeping with that risk on a theme -- weakness, in keeping with that risk on game

-- theme. let's have a look at the bloomberg. industrials, health care, consumer discretions. , energy. health care going stronger. . not so for utilities, though. utilities to the downside. that's one area in red that stands out very clearly. energy stocks also positive. made climate change very much on the agenda. what do you see from the individual movers? matt: we can still hear from him. we will have him come on and tell us about that story in a little bit. right now i am looking at a lot of gainers here, almost 500 of the stoxx 600 index are up right now. 102 are down. you see a lot of financial winners, really helping to lift

indexes. that is actually a great sign. if you are long stocks, you do want financials to lead the market. 1%,also see daimler up almost 2% now. we see some big winners in the alsoof daimler, prudential up 1.8%. we see otherwise, not huge gains, but big movers. 2.25% right now. you have some ex dividend stocks on the downside. we had 22 yesterday that weighed on the indexes. stocks on the10 stoxx 600 going ex dividend. -- omv got town this going ex dividend. you don't see huge losers.

we see omv another ex dividend stock. really the ex-dividends on the downside. anna: ex-dividends. i see in the retail space they had numbers earlier on, that down 4%. let's get back to the big picture, european markets opening to the upside, following strength in the asian session, as the trump administration grants relief to some companies using huawei. joining us now is mike bell, global market strategist at jpmorgan asset management. i want to start with tech stocks. the ratiohart showing of semi conductor stocks in the u.s. to the s&p. you see it falling. is this a sector you stay clear of right now because of the

regulations and the threat to the supply chain being too great? mike: i don't think it's just the question of trade when it comes to semis. some concerneds that that inventory is going to be have you be worked -- have to be worked through the second half of the year. you see the slow down in auto sales. i think there are several headwinds affecting the semite sector right now -- semi sector right now. the threat of further trade tensions are not helping. matt: do you expect auto sales to come back? a lot of economists over the last few quarters have said because the production bottlenecks at the end of last year, the industry was it hard, and in the second half they expect maybe a tailwind for the auto industry. of the think that is one

biggest questions facing markets at the moment. ishink that the market pretty optimistic that you are going to get a rebound. when you look at the rally you have seen year to date in equities, it suggests that consensus is of the view that the second half be better and as we go into 2020, you will see this rebounding auto growth, and not only in autos, but exports in places like germany, will see some recovery. given that is baked into expectations, it will need to be delivered for markets to hold onto the gains. anna: we talked about sectors that have very complex, global supply chains. are there opportunities in the short-term to find, well, to seek out businesses that will benefit here? manufacturers in the united

states of a footwear who have been overlooked but the big guys that might come -- by the big guys that might come back to the fre? on a relative basis mike:, definitely -- to the fore? mike: on a relative basis, definitely. that at theconcerns moment the market is still relatively optimistic that this trade disruption is going to go away. and the weakness we are currently seeing in the goal manufacturing will again go away and you will see a lifting global growth at the second half of the year, supported but china chinalus -- by tw stimulus. perhaps the pickup in growth is not as great as people expect.

anna: the question of the day -- matt: the question of the day is , will a trade war turned into an fx war? we have a fantastic chart that shows we are looking at the yaun get back towards a seven and we are seeing a big drop of forward holders of u.s. treasuries. do you think we are seeing the chinese make that move? in answer to the question, will we see a currency war come out of this? i think at the point at which you have not seen for escalation in the trade war, which is where we are now. prior to their being full tariffs on all imports of chinese goods, it's not in the interest to devalue that currency. it risks aggravating the tension between the u.s. and china and

exacerbating the problem. the point at which there is a when you see devaluation would be a full-blown war with tariffs. a bitt point, there is more incentive for them to slightly devalue the currency to offset some of those tariffs. i would not expect a dramatic evaluation in the currency -- devaluation in the currency. i would not expect a dramatic devaluation. you would expect that with the exception of the safe haven currencies like the yen to spill across into other asian markets. that's not necessarily beneficial for china. anna: that's really interesting. they would not necessarily devalue the currency if they felt the easy retaliation in the wake of new tariffs coming from the u.s.. mike bell stays with us. we will bring you the stocks on

the move, including norsk hydro, one of the biggest gainers on the stoxx 600 after a production embargo was lifted at a refinery. this is bloomberg. ♪

♪ matt: welcome back to "bloomberg markets: european open."

we are just about 11 minutes into the trading day, looking at green arrows across the screen. the dax up 0.5%, as is the ftse mib. let's get the top individual stock stories we have prepared for you. for that we bring back sebastian salek. >> let's talk about norsk hydro, which owns the alunorte mine in brazil, the world's biggest alumina mine. it's been -- aluminum mine. the brazilian court allowing that to be ramped back up. you are seeing money can go back into north country. this is positive -- norsk hydro. this is positive. the net debt of telecom italia is falling. investors were expecting it to increase. that's a good showing.

finally, wh smith, they have got a new ceo coming in from october 31. he ran the high street division and will step in and take the place of ceo. anna: thank you very much for that. let's talk european politics. european parliamentary elections take place this week. let's take a closer look at france, which will be voting on saturday. emmanuel macron's party facing a tight race with a nationalist. for more on the issues that are driving voters in france, we have a guest from paris. good morning to you. >> good morning. anna: we focus today on france. macron,le for emmanuel

he has been up against the yellow vests for many months now. what's the likelihood he comes out victorious this time around? of thelearly a rematch presidential elections that we are seeing in france at the moment. this year, a lection's are held over just one round. that's bad for emmanuel macron. the european affairs minister is not necessarily popular. she's considered very out of touch with the french people. you have a young, charismatic 23-year-old candidate of the national rally. has -- is supported a lot by the yellow breasts -- yellow vests. it's possible that the national rally will confer with 24% of voting intentions, according to mccroneest poll and

will come second -- macron will come second. socialists are struggling to just get 5% of the vote. what would the consequences be if that indeed does happen, if the far right party comes first? >> this is like a midterm election for emmanuel macron. if he comes ahead on sunday, this will give him the green light for the next economic including's planning, pension reform and a jobless benefits reform. the problem is if you look at what is on the top of mind of the mind of french voters, it's not the economy anymore like it was in 2014 during the last eu election.

on the top of the minds of the french voters is immigration. that is clearly serving the candidate of -- is trying to put all of his energy in these next few days. today he's giving an interview to all regional newspapers saying i am a european patriot and warning of the danger of the influences of u.s.-china-rush on europe -- russia on europe. matt: thanks very much. mike bell from j.p. morgan asset management is still with us. how do you -- how important do you think these european elections are? clearly they are important for the future of europe, but how important are they for markets in the near-term? mike: not very, to be honest with you. you see amongnity

the various popular parties in europe, it is not like there is a clear, unified, antihero populist agenda -- anti-euro populist agenda. i think the direct market implications over the next few weeks are going to be pretty limited. as you say, for the long-term story along the eurozone, it makes for an interesting headline that you will see an increase in support for the populist parties. it might have some national implications, and terms of what it tells you about the future direction for the actual country level elections. i think this actual round of the voting this week will probably not have a material impact on market. anna: to your point, i have this chart that shows the one year risk reversals treading water ahead of the elections. we get early warning signals in european elections about

earthquakes to come, don't we? we end up with brexit. you don't see any big fault lines ahead in europe? mike: the thing international investors really care about is, is the euro sustainable? the pressure will not be determined by what's going on in the elections. if you look at support for the euro, it's been going up in most of the european countries, even in italy. support for the euro has been rising over recent years. that does not mean there are no risks. the risk does not, from the fact that there is not support for the euro and the italian economy, because there is. the risk comes from the fact that the italian economy is struggling to grow. the service guy is weakening,

the manufactory the service pmi the service pmi is weakening, the manufacturing pmi is starting to come down. there is obviously some interaction, given that were you to get a resurgence of concerns around the italian debt situation, then the current government would not necessarily be the one that you would expect to be putting in the reforms that would be necessary to activate the kind of program that could ameliorate this. matt: we are going to keep you with us. mike bell we have more to talk about with -- we have more to talk about with mike bell. there is a broad field in the race to replace theresa may as prime minister, according to liam fox. we will hear from our interview with the cabinet minister next. this is bloomberg. ♪

♪ matt: welcome back to "bloomberg markets: european open." dayinutes into the trading with gains across european equity indexes, as well as the ftse. the cac barely treading water. elsewhere we see gains. theresa may faces a showdown in the u.k. today. she starts a final push to pass

her brexit deal in the cabinet. the strongest opposition is probably to come from pro-brexit ministers. she also faces a challenge from those looking to succeed her as prime minister. we spoke to international trade secretary liam fox at city week in london about who could be the next tory party leader. liam: the prime minister has made clear at that point she will have a discussion with the committee about the potential for a future timetable. i cannot anticipate that in advance. she has said she will stand down when she gets the first part of the withdrawal agreement through. this obsession about personality rather obscures the issues at stake here. on the duty to deliver contract that parliament made with the british people when it held the referendum. went through every

household that said the government would honor that referendum. parliament now has a duty to do so. in many ways, this is no longer about brexit. it's about democracy. manus: i apologize. i'm going to stay with personalities for a moment if i may. this weekend was dominated by personalities. that if theinced next prime minister was boris johnson, he would guarantee and would deliver upon that contract, i.e., what boris ouldson 100% deliver -- w boris johnson 100% deliver upon a clean brexit, a hard brexit? liam: the key thing is that we the legislative challenge

of getting the second reading of the withdrawal agreement through in the first week of june. it's up to all members of parliament to try and reconcile the duty we have to deliver on the referendum result. all mps will make their own judgment when we come to it leadership conference. i'm sure they will have a wide field to choose from. anna: that was liam fox speaking to bloomberg in london. from j.p. morgan asset management still with us. it could have an impact on u.k. assets, couldn't it? i have a chart that shows the pound falling against the euro -- actually, this shows the euro gained against the pound for an 11th straight day. is their fear of a hard brexit? thee: i think them -- mike: market is looking at the polls thinking, if boris johnson is

nominated by the conservative party, the polling of the conservative party membership shows he's the strong favorite in that scenario to be the next prime minister. he has campaigned quite strongly for a hard brexit. i would push back on that fear. in the latest bout of voting, johnson voted in favor of theresa may's deal. the other thing is, that when you look at the latest votes deal, there were only about 30 mp's in the conservative party that did not support her deal. she cannot get a deal through using just the conservative party. that does not mean a new prime minister would be able to get a known deal through -- a no deal through. there is nowhere near and majority. -- a majority. matt: this is a conversation we

will continue to have during the break. assetell from j.p. morgan management is want to stick with us. later, we will speak to the chief executive of atlas merchant capital, bob diamond. ♪

♪ matt: 30 minutes into the trading day. let's get our top headlines. resolve.g china says it will retaliate after the u.s. blacklisted huawei. european equities gain, as markets shrug off the risk. trouble afoot. lead a chorus of shoemakers urging donald trump to rethink tariffs on the products they make in china. 173 firms signed an open letter to the president. bp's climate problem. the oil giant is under pressure to uphold the paris agreement. we will be at the company's agm

in aberdeen. good morning and welcome to "bloomberg markets: european open." alongside in berlin, -- i am matt miller in berlin, alongside anna edwards. anna: let's have a look at how things are shaping up on the stoxx 600. up.stocks going up the top of the leaderboard on the stoxx 600, norsk hydro. this business has been facing restrictions on its operations in brazil. those have now been removed and the stock is up 5%. 4.5%.p by their numbers pleasing some investors. electric components had numbers out, so that stock up. telecom italia's numbers out. it seems to be the reduction in the debt level from the new

ceo that seemed to please some investors. a number of ex-dividends very obvious in the mix here. is ex dividend. , that particular analyst saying they do not think as highly about one. let's get a bloomberg first word news update from dubai. desley: china could retaliate after the u.s. president blacklisted huawei. that's according to the chinese ambassador to the eu. unwaveringna has resolve to defend its interest and promised to fight american ying after president trump announced restrictions on china's technology company.

tariffs against china could be catastrophic for consumers and the american economy. that's what nike and adidas had to say, urging president to reconsider the levees made on shoes made in china. last week the u.s. trade representative's office released a list of about $300 billion worth of goods that could the higher duties, including all types of footwear. to wait a told banks day before setting large foreign policy purchases -- foreign currency purchases. issident erdogan's policy helping to take control of the nation's powerhouse after losing it during the election. ran has accelerated the rate of enriching low-grade uranium. tensions have increased in recent weeks in response to u.s. sanctions.

donald trump pulled the u.s. out of the iran deal one year ago. three-time formula one world has died at the age of 70. he passed away peacefully after receiving a lung transplant last year. he won three world drivers the f1 mosting famous mclaren and ferrari. he survived a near fatal fire when it crashed at the grand prix in 1976. his long rivalry was turned into a movie. global news 24 hours a day, on-air and on tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna and matt? matt: thanks very much. here is a look at what you should be watching today.

this morning the spanish parliament convenes for the first time since last month's election. five of those taking their seats are catalan separatists who are being released from prison for the day in order to attend. shell holds its agm in the netherlands, followed by bp. climate change will be on the agenda. at 10:00 a.m. today, the oecd releases its economic outlook. see what impact the ongoing trade war has had on the forecast. later this afternoon at 3:00 p.m., we get euro area consumer confidence numbers. keep an eye on any weakness amid a slew of mixed data. turning now to the united states and the federal reserve. the atlanta fed president says

he sees no need to adjust the u.s. monetary policy. he spoke to bloomberg in florida , saying that a hike in interest rates is just as likely as a cut. >> the economy is operating the way that it is operating. it is really operating in a sustained way. the growth is robust. it is something that looks like can go on for quite some time. i think about the cycle, if you want to talk about it, in the context of risk taking. are we starting to see signs that businesses and consumers are taking more risk that they might have otherwise? when you start to see those kinds of risks, that to me is the equivalent of this late cycle. i am really not seeing that. businesses are being pretty prudent. debt consumers are taking on

is happening mainly at the higher credit quality levels among households with higher credit quality. i am not seeing risks to suggest we are at a tipping point where the economy might turn. >> do you think at this point the markets are ahead of themselves in thinking you have to do a rate move either one way or another? they are betting on the moment on rate cuts. >> i>> am not in a position right now where i think a move in one direction or another is more likely. there are a lot of risks out there, which if they come to fruition, might have the economy weakened. if that happens, a rate cut might be appropriate. there are also a lot of sources of uncertainty that the economy stronger,a whole lot which could suggest we might want to do it rate hike. right now there is still uncertainty, so it's hard to say what the next move might likely be. if you ask me how the scales are , i don't feel like for me they are tilted more to the cut them to the hike.- than

matt: that was federal reserve bank of atlanta president. mike bell is still with us. it's understandable that members of the federal reserve would try and make this argument that they could still go either way, but do you believe been? -- believe them? mike: the clear issue is that the market does not. the market thinks the most likely outcome is for a cut. relative to what the market is pricing at the moment, it seems unlikely the fed is more dovish lessmarket expectation and the significant growth shop. i don't think you could see further dovish pricing on race without also worrying about a downturn on growth. you have had the kicker from revaluation coming from dovish repricing. from here, any further expectation of rate cuts being priced into markets would only be coming because people would

be worrying about growth slowing down significantly as well. anna: are people worried about higher where prices -- higher oil prices? i have got this chart, which i was going to suggest to matt for his battle of the charts, but i liked it too much, i decided to keep it to myself. this is breakevens. you see the oil price trending higher since the end of april. breakevens have not really reflected that. do you think we are missing an upper driver of inflation that is going to surface later on this year. mike: no. i think inflation will probably be well contained. of ancern is less inflation pick up. i think there is a chance the fed don't cut. to bek they are unlikely putting rates up significantly because of an inflation pick up.

my concern would be more that that shows you companies do not have much pricing power. as wage growth picks up, the risk is that wages start to squeeze on corporate margins during the second half of the year. you have already seen a slowdown in earnings growth. if that slowdown does not turn into the react celebration the market is baking -- re-acceleration the market is baking in, it suggests that could be a headwind. matt: what do you think about the fed versus other central banks? they all seem to be, for the most part, easing. what does that mean for the strength of the dollar versus major currency pairs, in which we have seen no volatility of late? short-term, it's very hard to call what's going to happen to currencies. you start to factor in the fact

that we are late in the economic cycle and the risks of a downturn at some point in the next few years are building, then within that i think you would say that you would expect the end to strengthen in that scenario. against the dollar, you would expect yen strength. i think you would see your weakness. i'll -- euro weakness. i would expect yen strength and euro weakness against the dollar over the next couple of years. anna: thanks for joining us. global market strategist at jpmorgan asset management. we will bring you some of the stocks on the move this morning, including a swiss software firm, itsn new targets, saying growth has accelerated. details next. this is bloomberg. ♪

♪ matt: welcome back to "bloomberg markets: european open." we are just about 45 minutes into the trading day. i have got gains across european equity indexes, but we see a weakening turkish lira, if you are one of the very few investors left in that trade. the central bank in turkey cutting its literary -- lira

rate. as a result, we see the currency weakening. move, but just thought we would mention it to you. former south african president jacob zuma appears in high court on fraud, corruption, and money laundering charges. racketeering as well today. we are looking at live pictures of that. south african expected to continue until the 24th of may. we will keep you updated on the state of jacob zuma. anna? anna: we are going to talk about charts next, your favorite part of the program. time for battle of the charts. i enjoy judging this segem ment you have been struggling. what chart to use.

i was going to suggest the breakevens chart. i understand you found a better one. matt: i have got one here and they goodness i have hillary -- thank goodness i have hillary putting together charts. this shows inflation. hang on a second, this is not the chart i wanted. i think i have a little bit of a better chart showing that basically the tariffs we are seeing are working, in terms of pulling up the cost of goods on out?se -- can you help me what's the chinese inflation chart that shows the cost of goods rising on the basket of chinese products? anna: i tell you what will do, while you find that, we are going to sort your chart out. sebastian salek joins us. what have you got? >> i thought i would bring you

something that has not been in the show. it is tesla. look at what the share price has done. dropping below a number big player. it's been a dismal month. this follows the $2.4 billion capital raise with analysts calling code red. that's how bad some say the position is for the company. the share price dropping. anna: i think matt has found his chart. matt: i have found it! this is what i have found fascinating. sevenite line here is tariff impacted products. this is a price chart basically normalize from february 28 of 2018. , whererisen dramatically as the blue chart is your typical consumer price index, minus food and energy.

that has stayed stagnant over the last couple of years. it is interesting to see that the tariffs are working. u.s. consumers are ending up footing the bill, at least for now. donald trump says the chinese will pay. maybe he means that in some kind of metaphysical way. anna: maybe he does. good chart. we are going to go with that one. it ties in with the footwear story. footwear manufacturers in the united states understandably complaining about the tariffs. the globalized business models in which they operate are exactly in the crosshairs of the trade tensions, so they are not happy. show consumers will pay. very good chart, sebastian. remember, you can go to gtb go go onr bloomberg -- gtv

your bloomberg. more on the climb agenda. this is bloomberg. -- climate agenda. this is bloomberg. ♪

♪ to "bloombergback markets: european open." just about 51 minutes into the trade day and still seeing some decent gains across europe. indeed, we are seeing the dax and ftse mib.

up a little bit. . they showed big drops. yesterday as well, so this is in a bit of a bounce. wo shareholder resolutions up on climate change today. aareholders will vote on proposal that requires bp to report how it to report how it's strategy is aligned with the goals of the paris climate accord. a second resolution six to make bp include the emissions of its customers when setting targets. joining us from aberdeen is bruce duguid, the head of .tewardship at hermes how do you see the likelihood of these measures passing at the agm? bruce: today we are proposing this resolution which is sinking the company to set out its strategy consistent with the paris goals.

it has already has support from investors, 9.6% of the shareholder base have supported it. the company itself have come forward to support this resolution. it should have a good chance of passing today, but we have to see what the result is after the agm. anna: good morning to you, bruce. the company has said it will include some information in its 2019 annual report. how much further do you want the company to go? bruce: we want the company to demonstrate clearly that its strategy is consistent with the goals of the paris agreement and that it returns to growth. that is something which many investors want to have clarity on. there are two really important components that backed that up. the first is to set up how each new material is consistent with

paris goals, and then to set out the ambitions, the target for metrics for energy transition it's up. that will give -- it's self. that will give much more clarity to investors. the expectations that bp somehow contributes positively to the pairs climate agreement? i mean, -- paris climate agreement? i mean, these are the guys making the stuff that leads to climate change at the end of the day, so how can can they change that? bruce: that's right. the first part of the demonstration is demonstrating that the oil and gas business is operating within the paris agreement. they are not contributing to the projects which are part of the problem above two degrees. the second part of the equation is the ambition for low carbon

energy technologies. in a way, these are the solutions of the future. this has to be, in the long run, the long-term future of the business. bp has interesting options in biofuels, solar, hydrogen, and even carbon capture. these are different areas where we would like to see greater clarity. anna: you have been representing a group of shareholders from the climate action 100 plus group. and their relationships, their discussions with bp, how significant is the role being played by climate action 100 plus and the success they are having at driving change in businesses? how significant is this? bruce: i think this demonstrates the level of concern there is not only in wider society, but amongst investors themselves.

with the consistent paris schools is the best way to preserve and maintain long-term shareholder value. investors,ver 300 many $33 trillion of assets. that means we can be that much more effective. coming forward with this shareholder resolution with such high levels of support already is a demonstration of the potential for collaborative and constructive engagement with companies. you seeing any executive support for this kind of thing? even if they don't support necessarily these resolutions, do they get behind this? bruce: absolutely. the process is one primarily of engagement and discussing at board level and senior executive levell the changes that are required. haveis case, bp, they

embraced this resolution. anna: ok. bruce, thank you very much. good to get your update live from aberdeen. this is bloomberg. ♪

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♪ >> fighting back. china promises retaliation after the u.s. blacklists huawei. strawberry for consumers. -- catastrophic for consumers. there was a series of issues. we will see. ♪ >> good morning, good afternoon, is are you are