i am david westin. welcome back to "balance of power." we have our trade expert, sarah mcgregor, from washington. let us start with mexico. tariffs forf 5% imports into the united states. has. this ever been done before? sarah: president trump is using an emergency power that he can invoke during peacetime when there is a perceived threat to the economy or to national security. so far, this law, we are told it has been used for sanctions, like doing the iranian hostagetaking crisis. but it is the first time it is being used to directly hit tariffs. >> you say that in the fastest has best in the past, it has been used to block actions like it sanctions. for thethe next move

president? sarah: and think keeping things the fact the column is that mexico has not responded with inflammatory statements. the mexican president said he would send foreign leaders here to negotiate with the trump administration, who is asking for mexico to respond to this migration coming from central america, address u.s. border security with them. and think mexico has shown that perhaps it is willing to play ball. but tariffs don't take effect until june 10 so they have some time now to find a solution. david: what about on capitol hill? sarah: lawmakers are not happy. the statement came out late last night, and right away, we saw a flurry of statements and comments from lawmakers. they basically saw the u.s.m.c.a. as a slamdunk it was really to get, the democrats on board. i think everyone thought that might be possible. but now, this throws that into question. david: early this morning, we heard china is putting together

what they say is "on unreliable ." what is that , and what are the consequences? sarah: it sounds like the u.s. ,lacklist used to ban huawei banned american suppliers from giving one away their part. so it could be a response to that. a lot of companies have said they may have to restrict exports to companies like huawei and he might put them in china.sshairs of david: president trump said he would put the tariffs and mexico on june 10 do we have attempted will from china on wednesday will know who is on this unreliable entities list and what the consequences are? sarah: we don't. this was a very sweeping order that china sent through. they don't have a lot of details. they said that companies that block contracts or impede the progress of their own companies, a really broad stroke.

i think a lot of companies are nervous about what this could lead to. companies like apple saw their shares drop today. david: give us a sense of the planning in the white house. it is speculated that if the markets reacted enough, the president might respond. to have a sense of how the president, what he thinks of the market? we had peter navarro, he is a trade hawk in the white house, he was on the news today saying that investors should remain calm this is a tactic we are using to get mexico to the table so they can stop sitting idly by and letting the migrant flow coming. i think the trump administration sees this as a good time for stock markets, something that will help stop the problem for immigration. i think the problem for companies and lawmakers is the fact that trump is using tariffs as immigration policy. it has moved beyond the realm of trade and into immigration. david: sarah mcgregor, thank

you. emma chandra is here to tell us how the markets are reacting as peter navarro thought they should, is a good news,? >> we are looking at a loss of close to 1% for the dow jones and s&p 500. the s&p 500 was off by 1.4% earlier in the session, we are off the lows, and coming back from the highs as well. also wanted to mention the bond rally, that is continuing today. we are looking at yield below 2.2. 500 andook at the s&p how it has performed over the month of may, we should be of a to show you a chart here. this made is shipping up to be the second worst since the 1960's during the kennedy administration, looking particularly poor at the moment. i should mention, the dow jones

industrial average is headed weekly loss, the longest losing streak since 2011. big movers today, retail. the s&p 500 retail index has been one of the big losers this month, down 6.4%. only two of the stocks in that index are in the green for the month of may, that is target and autozone. we had weak earnings in the last few weeks. gap falling yesterday close to 11%, it was close to 17% at the open today. ofery we read in terms earnings. also, old navy had been driving growth, but it is not good news for cap. costco is also down today, surprising given that they beat estimates forecasts. sell aid they hope to $100,000 ring in the quarter,

down.ill a couple of good earnings stories for you today, we have a home where brand, williams-sonoma, rising close to 13%. happy.rs are clearly big lots is also doing better than expected on that are earnings. also, the auto sector, given that we are talking about tariffs, gm, ford, fiat chrysler all falling today. they are very exports to mexico. in imports from mexico, auto makes up about 60% of that. exposede most automaker, about 28 percent of its north american production is done in mexico. down 15% sois also far this month, the worst since 2009. david: thank you so much, emma

chandra. she just told us how the markets are overall reacting. let us find out how they should be reacting. we will talk about that with our next guest. this is bloomberg. ♪ ♪

♪ "islands ofis power" on bloomberg television. i am david westin. returned to bloombergs mark crumpton for the first word news. >> the mexican president says his country will not respond to president trump's threat of tariffs with desperation but instead will push for dialogue. has been taking steps to slow even immigration and he wants to have a good relationship with the united states. he has pushed for a longer-term immigration fix focused on

raising living standards and increasing opportunities so fewer people choose to leave the country. the united. nations says iran is complying with the terms of the landmark nuclear deal reached in 2015 with world powers. but the international atomic ofncy says iran's stockpiles enriched uranium and heavy water are growing. it is the roster report system run announced it increased low production.nium trump will leave on sunday for the u.k.. his visit largely consists of. royal engagements on monday including a state banquet at buckingham palace. he will then meet with outgoing prime minister theresa may and also with the front runner to succeed theresa may, former foreign secretary boris johnson north korea kim jong-un reportedly took heart measures after the failed summit with president trump. according to a south korean newspaper, the north executed its top nuclear onboard to the

u.s. and four other former military officials. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪ david? .avid: thanks very much, mark financial markets got a double hours,in the first 18 when president trump first announced traffic shoes on mexico in retaliation to illegal immigration, and then china this morning announced it would compile a list of "unreliable entities" in retaliation for the sanctions on huawei. we welcome director of economic policy, thank you so much for joining us. let us start with the mexican situation. we just heard a report about the effect on u.s. auto stocks. i put up a chart that illustrates something that is important to bear in mind, a lot of imports from mexico have to

do with the auto industry. >> absolutely, and as a cross the border sometimes 5, 6, 7, 15 times. i don't know how many times they are hoping to oppose these tariffs, but it could be 5%.nsively much more than david: and we have another chart here from deutsche bank. a lot of that is within the same company. . transfers.-company for example, general motors will make parts in one place and shipped them to another and then they will come back again. >> that is exactly right, even beyond that, they have utilized for the last 30 years, this highly developed process for manufacturing. which means if a compilation has a plant in tennessee does not have more than a three-day supply of whatever good they are getting from mexico. they have to pay these tariffs, several times, as they cross back-and-forth, and they don't

have stockpiles to avoid this when it hits in 10 days. the logjam at the border will be substantially immediately. david: and they start on in june 10, but he has an automatic escalation to 25%, so it could really be a lot of money. what are mexico's practical options to eliminate these tariffs? henrietta: i think the president is being smart in not trying to retaliate, not rising to president trump's bait. my read of the president's executive order, which i understand was pretty much directly transcribed from him and a few other senior officials , none of whom are with the str or the other economic white house teams the white house has, that the president was talking about the border between mexico's southern border, and having that be the main problem. so if you are looking at guatemala and belize and mexico, wondering whether and low may be

best served by saying he would take steps at the southern border to see whether they can stem immigration there. caravansately these trying to make their way into the united states, if they can understand that flow. i think the best option would be to say something about doing some level of increased interrogation or erecting further borders at the southern mexican border. david: what does this mean for the u.s.m.c.a.? we thought we had things worked out with mexico and canada, both about to take courses of ratification? henrietta: i am sorry, it is over. he just let that on fire. talking with members of the senior economic council, it seems clear to me that they are going through the motions. they are engaging with the administration. they would like to work with are --lighthities

zer. speaking with him, i know they have been working in honest to get an corral the members they have on board to get the u.s.m.c.a.. because there are things they like about it, it has increased wages, increased environmental oversight, but you can't have that conversation while you are detaining children at the border, or threatening to slap tariffs on billions of dollars of goods that will be paid for by consumers time and time again. david: effortlessly to china at the moment. we had the announcement, this morning that they would put together this list of "unreliable entities,' apparenty in retaliation to while in -- unreliable entities, apparently in relation to huawei. what question does this raising your mind about the u.s. sticking to its deals? henrietta: that is exactly the right point. we have heard this from resident months,ng for several

this fear that even if they did acquiesce and sign a piece of paper with a trump administration, there is no scenario in which president trump doesn't bring china in a month.e light in an 18 that has been our ongoing thesis, that investors need to consider the alternative, what is the alternative if president trump and president xi which a deal? trump has to justify that his deal with china is the best and it is perfect. and he has 25 democratic presidential candidates who wants to make him over the coals for not being stringent enough. china sees that and understand that they cannot get a yes on any component because president trump all turnaround and do something like he did to mexico, despite reaching the so marc, despite congress enacting tougher labor reforms -- despite reaching the u.s.m.c.a. and reachin enacting tougher labor . i think china is acting

rationally in understanding the president trump cannot get to a yes and if he does, he will ask for more in the coming 18 months. david: he seems to conclude that tariffs are not bad for the american economy. what are they doing to the chinese economy? we heard pmi numbers last night that were pretty bad, and their export numbers were worse. henrietta: i was actually on the phone with senior folks in the manufacturing sector on the lobbyists side, they advised to really focus on the pmi numbers. i don't think investors are appropriately watching the dow and assuming that a 2% correction will steer this administration in another direction. but disastrous pmi numbers in both china and the u.s. could have a serious impact on our underlying economy. one of the senior staffers i have been speaking with pointed out that you can't get 2.5% gdp growth in the united states rising,a global ship

it has to lift the whole globe, not just one nation so. pmi numbers will be an important number to be monitoring. it seems to be the only. economic restraint valve that president trump response to. david: very helpful, henrietta. the red still ahead, we talk about how the president can take the action he has against mexican imports and the ramifications for all u.s. trade negotiations with everyone with the president of the international foreign trade council. that is coming up next. this is bloomberg. ♪

david: you are watching "balance of power." i am david westin president trump esther and to impose 5% tariffs on goods in an effort to curtail people crossing from the united states into mexico illegally. he is proceeding under the emergency economic hours act which allows presidents to declare an emergency went he

finds it to be an important national security, foreign policy or economic threat. we welcome the former deputy andctor general of the wto, president of the international foreign trade council. thank you so much for being on bloomberg. you can put up with the statute, in which it says the president may regulate foreign trade. is it clear that the president has this authority, even though it has never been used this way before? >> it has definitely never been used this way. it is a law that has only been used really against rogue states and terrorist behavior. this is the first time we have used it against a good trading partner, not only a good trading partner, our biggest trading partner and closest neighbor. congress wrote these laws in a way that gave broad authority, assuming that presidents would have the judgment and discretion to use them in the right way. can there be a legal challenge to it? the process by which he did it is very shaky, the law requires

that he consult with congress before taking these actions. it is not that clear that he can actually use tariffs as a measure. there is a number of things listed in the statute about pivoting transactions, but i am not sure that we can overturn this legally. congress, i think, will view this as a huge over reach for the president, one that is very, very destabilizing a dangerous. david: congress has become fair to say, increasingly concerned. we can show, these international emergencies have been declared more and more often through the years. it is growing, not diminishing. the most recent one going back to the iran situation, where we seize assets, for example. but it seems to be used more and more frequently these days. rufus: no doubt about it. this is part of a bigger problem, which is that the president loves to use tariffs for all kinds of reasons that

you have the national security concern about the steel industry, imposed tariffs on the whole world. word about chinese investment laws, use tariffs. adoption tariffs. basically telling the rest of the world, don't bother doing trade deals with the united states. we. spent a year and half negotiating a deal with mexico but essentially, the president has thrown out in a witness for permission -- with this reclamation. david:. david:. david:. congress might actually take action on this. we heard senator chuck grassley came out right away to say among other things quote "trade policy and border security are separate issues. this is a misuse of presidential authority. following through on this would seriously jeopardize passage of the u.s.m.c.a., which is what you just said." congress is increasingly concerned

. what is the likelihood that mitch mcconnell would get on board, and of that senate republicans could curtail the president's authority? rufus: so far, they have not done that, and we have watched as the president's actions have progressively taken more and more of the trade power away from congress. the constitution clearly gives congress the authority to do these kinds of things, and presidents are supposed to, even if negotiating a trade deal, they have to submit them to congress forehand. certainly, on raising tariffs, the president needs congressional action. but he has used these authorities have given to him so far, the republican senate, has not challenged him, and i have not seen much from the democratic-controlled house either. it is really unclear whether the congress will recognize the long-term implication as to what is happening here. david: i mentioned that you had a senior position at the wto. you also had a senior position at the trade office. you used to negotiate these

deals. tell us where we go from here, if you are robert lighthizer, how do you go to the next negotiation? the lead with mexico, china, with europe, how do you go, given this ground? rufus: i think if you can't tell your trading partners that you are willing to deals to cut tariffs and create reciprocal trade without the risk that the president will then turn around and completely appreciate those agreements, i don't think you have credibility at the bargaining table. i don't think other countries will be willing to put painful, politically difficult concessions on the table. i can't imagine japan and europe seeing what is happening here with our closest neighbor -- we have had a free-trade agreement with mexico for 25 years and we are overturning that -- i can imagine they will look at that and say, let's get in bed with the trump administration and do a really progressive trade deal. david: rufus, thank you so much for being with us. we really appreciate you being

here. for deputy directly -- former deputy general of the wto. ♪ live from new york, this is bloomberg. s is bloomberg. the latest innovation from xfinity

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like never before store. the xfinity store is here. and it's simple, easy, awesome. david: this is "balance of power" on bloomberg television. i'm david westin. for bloomberg first word news, we go to mark crumpton mark: the pentagon says it is really report it as a navy to move

abortion the uss john mccain out of you before president trump's recent trip to japan. patrick shanahan told reporters in singapore today he is waiting to get all the facts before passing judgment. he president told reporters "was not a big fan of senator mccain's but that he was not involved in the matter." a st. louis judge is weighing whether to grant the only abortion clinic in mississippi to remain open. planned parenthood is asking for a restraining order that would prevent its license from expiring at midnight tonight. the missouri health department sites patient safety and legal violations. planned parenthood says missouri is weaponizing the license process. president trump and turkey's to form a study group on the russian missile defense system. turkey wants to buy the system and the u.s. is opposed. bloomberg has learned president

erdogan wants to jointly examine any risks this missile system may pose to american-made f-35 fighters. angela merkel took aim at president trump's policies at a speech at harvard graduation without ever mentioning him by name. chancellor merkel checked off a list of policy issues where she has clashed with president trump from trade to immigration to climate change. she told graduates they should tear down the walls of ignorance and reject isolationism and protectionism. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. david. david: president trump's tariff against mexico is hitting the market today. the president has enjoyed economic success. consumer sentiment and wait growth our up under the trump administration while

unemployment is at the lowest since neil armstrong first stepped on the moon. how will this influence the election? joined by the former spokeswoman of the california republican party, and the current ceo of all in together. lauren, let me start with you. many people think in a 20 election, the economy will help determine who is elected. right now it is looking pretty good. the president thinks tariffs, if anything, are helping. is he wrong? >> there have certainly been net winners and net losers in the economic boom. rural america, noncollege american -- educated americans, the economic boom has passed them by. stagnant wage growth, continuing issues, opioid problems, stagnant job growth. those are the people that are potentially hit by tariffs, especially when you look at the

mexican tariffs in the auto industry, which is the heart of big parts of america that are struggling, even post the last recession. the big issue is we don't know. we have enjoyed economic success over the last couple of years but throwing this uncertainty, of this unending trade war into the mix, it is hard to predict how this will affect average americans. state at the heart of the in the upper midwest, ohio, michigan, pretty important to get elected president. if the auto industry comes under the stress that we are seeing today, they start laying people off, that could have ramifications in 2020. president trump is measuring the potential cost of these tariffs to these people to the cost of illegal immigration overall. according to a recent study, the cost of illegal immigration to

all americans is $116 billion per year. that is more than the tariffs we are discussing today levied against mexico. that is at the high end of the 25% tariffs by october 1. when you are seeing here is one many people underestimate donald trump. they made fun of him when he claimed on the campaign trail that he would build a wall and helps on the immigration crisis and that he would send the bill to mexico. bill we saw a down payment sent to mexico on this. david: but who is paying the bill? >> we are. david: general motors is paying it, ford is paying it. tariffs are going back and forth on auto parts going across the border. he can impose a tax. he is taxing americans. >> there are several sectors in the economy that are doing quite well. $92 billionomes up last month. quarter over quarter, consecutive quarters, jobs.

record unemployment for women, record on a plumbing for minorities under this president. and record spending. -- record unemployment for minorities under this president. americans are sitting on a trillion dollars in savings in cash. reflected by the way by the gallup poll which shows him sitting at a pretty 46%. they said if the american economy continues to perform, he will break through that 50%. david: that is interesting. in fairness, doesn't president trump have a point? we have to do something about that southern border. we cannot just keep letting people come in. >> we don't have an ambassador to mexico right now. our ambassador resigned in november. anher departure, she wrote extensive op-ed in the new york times about what the administration could be doing to stem the tide of the southern border. there are many things that we have not chosen to implement.

assignment attorneys could have been -- a silent attorneys could have been in mexico determining what was legitimate and not. attorneys could have been in mexico determining what was legitimate and not. the fact is, this is unfortunately a political stunt. there was no strategy here around serious engagement with mexico. we have not had an ambassador there working on the issue. we have not worked proactively with the mexican government. if we are serious about stemming dealide, we also have to with the countries of origin, which are not mexico. 200 political appointees not approved by the democrats. some of this logjam is because of the democrats. the average time a migrant takes to pass through the country of mexico is 21 days. i would be willing to bet this bill sent to mexico will shorten

that a bit and turn some folks around. david: putting aside political stunt, but what i don't understand is the president said he wants the usmca to the congress. virtually on the day that canada and mexico is taking it up, mike pence is in canada, and he imposes the mexican tariffs. doesn't that kill usmca as a practical matter? is there any chance getting it through congress now? >> it will be tough. david: why does that make sense, how does it add up? >> this is the first shot across the bow from president trump. i believe that he will use these tariffs in the negotiations for usmca. i respect senator grassley greatly but i disagree with his comments, that you cannot use economic policy on how many -- humanitarian crises or immigration crises. we do it every day. we leverage u.s. economic

policy with usaid, iran sanctions. that was a silly statement. if you look at the approval rating of congress, about 10%. donald trump is almost 50%. i would take his side almost any day. >> this is all about politics and winning points, and soon starts to be about the health of the nation. create ongoingto economic prosperity for all americans, that all americans can benefit from, which is what the president ran on, and is the goal for all of us, you have to using politics, tariffs is really achieving that goal. most would say no. david: let's turn to national security and north korea. we had news overnight that the six top negotiators with kim jong-un were executed for sb not. the president of the united states -- executed for espionage.

the president of the united states is in japan and says, i trust kim jong-un. that is an odd word to use. >> president trump is in a tough position where he has to publicly state that he trusts, but he is like reagan, he will verify. that is what you have with this nuclear deal, monitoring this situation in north korea. he knew that this was a long road. there is a reason why it's been decades and decades of failure of policy. a very precarious situation, as you can see by the deaths of those five. and that is those that we know of. probably more. we know thato president trump is doing with the democrats? do you support? david: progressives? say, i do operate a lot with foreign policy folks. have had awe stalemate over north korea for so long is for this very reason.

it's incredibly difficult to trust somebody who is a bloodthirsty dictator willing to execute people in his own family or his own means. it is very distressing to those of us who believe deeply in the values of democracy and amec and way of life to see our president praising someone who is such a brutal dictator, for whatever reason. the reason we have not made progress with north korea over all these years is because it's been an impossible set of choices. if the choice is between making a deal and totally compromising our values, allowing a brutal despot to have more power in the region, previous presidents have said it is not worth it. with many things with this president, a lot of behavior that does not have a lot of considered strategy. we will see the effects over the long-term but it is certainly distressing. there is no one in the national security apparatus in this administration or the other administrations that think the

north koreans are trustworthy. david: and the situation gets more dangerous with time. lauren, thank you both for being here. coming up, president trump vows to impose 5% tariffs across the board on mexican goods. we discuss what that means with peter rodriguez from the rice university jones school of graduate business. that is next. this is bloomberg. ♪

you are watching "balance of power." i'm david westin. american businesses continue to wrestle with the issue of tariffs and trade.

we welcome now peter rodriguez, dean of rice university's jones business school, coming to us from houston, texas. good to have you here. peter: great to be back. thanks for having me. david: let's start with china. we have a chart that shows what pmiens with the chinese overnight, which were down in manufacturing, really down in export numbers. how vulnerable does that make the chinese economy and therefore put pressure on xi to resolve things? peter: exactly what we would ever get it. anufacturing is pulling back bit, but the forward-looking sides of the export drive is more. that will ramp up pressure on president xi even although i don't know how vulnerable they would be. -- president xi. although i don't know how

vulnerable they would be. i would mention that we are coming up on the 30th anniversary of tiananmen square. the chinese will want lots of stability, lots of good news. they will try not to blink and is very crucial period. that was bad news, and i think it will get worse. david: reports that they may take action on rare earth, where they have a dominant position in. western or american businessman trying to do business in china, what do you do? peter: this is part of the problem. with enough uncertainty, people are unsure about how to draw up a contract. what we're seeing today, bringing china and mexico together, global supply chains being disrupted. with the tariffs imposed earlier this month, you can imagine readjusting supply chains around the world. now with mexico, it gets more complicated. where do you go? same thing with rare earth. rare earth can be found

elsewhere, although the chinese dominate the market. it will complicate supply chains. it is not the imminent threat of cutting off the availability or rising prices for cell phones or lithium batteries, but it could become that. trade negotiations are like fishhooks. ite you get past the barb, is hard to extricate. that is where we are heading. prices, morehigher difficult processes going forward. sources ofof the uncertainty is exactly who is in charge in washington. the president ultimately is but there seems to be disagreement among his advisers. even as we are speaking, "the wall street journal" has a report out that robert lighthizer opposed mexican tariffs. to what extent is the president's team on the same page as him? peter: it is hard to say. i would say that lighthizer and others were not for the music and tariffs.

usmca looked like it was going to get done. lighthizer and others were not for the mexican tariffs. to try to ensure the u.s. does not use this sort of exceptional economic power. and beyond that, if you are lighthizer, you have to worry that this really deteriorates your negotiating power. the rest of the world can look at this action with mexico and all the wayyou went to establish a 25-year free trade agreement with the u.s., they may still use this type of policy to get out of other agreements, and act in an ordinary way, against a trading partner. that has to be concerning and will make negotiating harder in the short run. concerning for ustr and other entities in government. it is not clear to me they are on the same page. certainly not the timing of usmca trying to complete its path through congress and the

mexican tariffs being announced yesterday indicate there is a lot of same page activity. it also means there's a lot of uncertainty as to what happens next. this means mexico will likely respond. the chinese will continue to respond. this is the sort of vicious cycle you worry about with trade. makes it really hard to get out of these situations. the chinahave situation and the mexico situation coming up more or less on the same day. easy to put them together, but there are some differences, with its respect to its affect on the united states, and the effect to those countries. fedpoke to the minneapolis president earlier today, and this is the point that he made when comparing the two. >> a tip for todd, america versus china should accrue toward america. we are so integrated with mexico. data got into a tariff

with mexico, that could be much more costly to the american economy and have a direct effect on business confidence, which would cause them to retrench, and that could lead to an economic slowdown. david: we are seeing markets react to this possibility right now, particularly in the auto sector, where so much of that trade is going back and forth often within the same company. what is the possible downside for u.s. companies from mexico that we don't have as much with china? peter: his point is correct. there is such a deep integration --oss the u.s. mexico border u.s.-mexico border, and the canadian border for that fact. it is not a holy mexican whollyed -- mexican-produced good coming across the border. that cross-border trade is important. we have seen slowdowns because

the tightening of security. that is more concerning for the long run. the north american economies are highly integrated. you can think of mexico as almost another group of states economically. we are so integrated in that way it is a deep concern. over time, i think he is also right, because we import so much more from china that they import from us, these types of pains lay in our favor, but it will be at the cost of higher prices. sources of two prices going on, chinese prices for our imports going up, and mexican imports going up. we don't know the extent of mexican retaliation, if there is some soon. but i would agree, auto manufacturers will see this. you already saw some japanese manufacturers take hits and a market yesterday, and will again today. that is more concerning for the long haul. that could threaten jobs on both sides of the border.

this is a consequence of that. we are so much more integrated with mexico. that is probably the bigger problem at the moment. david: peter, thank you for your time. right now, stocks are down 1% across the board. we have been reporting on this all day long. i suspect we will be all day. live from new york, this is bloomberg. ♪

david: this is "balance of power" on bloomberg television. i'm david westin. u.s. stocks are on track for their worst month of the year as trade tensions with china and mexico continue to rise. here to take us through it all is emma chandra. looking at the major indexes, all off by 1%. off the lows of the session. earlier, but we

are still away from the highs. every sector in the s&p 500 bar real estate in the red today. transport having a rough time, down 1.2%. freight markets a little more exposed to the tariff risks, now that president trump is threatening these tariffs to mexico as well. s&p 500 down about 6.5% this month. transportations are doing worse. we have a chart that shows you how the s&p 500 has fallen below its 200-day moving average. that technical level, 200-day moving average. a lot of technical analyst will will be watching, predicting that we go down further couple percent from here. david: it has not been a good day. emma: or week or month. david: is this a larger set of problems or is this simply

within the range of the normal? emma: there is a sense that there is a range, the bull market has been running for some time. when we are seeing here is a sense of uncertainty, especially around trade and tariffs. at the beginning of the month, we started with an escalation in the trade war between u.s. and china, now between u.s. and mexico. an analyst talking about the risk factor of mexico, a lot of people thought that had gone away. usmca, not ratified by congress, but has been negotiated. also looking at the company that would be affected by this. automakers, transporters affected. kansas city southern down the most since december. mexico generates about 48% of their revenue. some companies really exposed that way. david: auto parts you would

expect given what is going on with the u.s. and mexico. are there any save par verse year? ?- safe harbors here exposedu may have those to mexico and those that are exposed to china. we are talking about very large global markets. of course, the usual havens. gold is doing better today. david: and bonds. many thanks to emma chandra. tonight, catch the full interview with the huawei founder and ceo, "huawei: connected and contested." live from new york, this is bloomberg. ♪

jonathan: from new york city, i'm jonathan ferro. yield" startsl right now. coming up, fresh trade tension providing even more fuel for the global bond market rally. 10 year treasury yields breaking down to new lows of the year. bund yields printing a new record. uncertainty leaving high-yield credit element exposed. spreads widen, funds suffer. we begin with a big issue, more fuel for the treasury market rally. >> the bond market rally right now is a risk of