| Welcome to your morning markets update, delivered every weekday before the European open. Good morning. China vowed to retaliate against the U.S.'s latest trade war actions, although the country's stocks gained overnight. The Australian dollar and Turkish lira are the focus of currency markets and Tesla Inc.'s woes continue. Here's what's moving markets. Hitting Back China vowed to respond to recent "bullying" by the U.S., with the Chinese ambassador to the European Union saying his government "will not sit idly by" as the White House ups the ante in the escalating trade dispute. There are no details yet on what countermeasures China may take in response to the U.S. action against Huawei Technologies Co., with a Foreign Ministry spokesman telling journalists to "wait and see." Unsurprisingly, anti-U.S. sentiment among the general Chinese population is worsening, with a song about the trade war going viral and people being encouraged to eat more tilapia -- a farmed fish that's now subject to higher U.S. tariffs. China Stocks Gain Despite the tough rhetoric from Beijing, Chinese shares traded higher overnight, while stocks dipped in Tokyo and fluctuated in Hong Kong. In foreign exchange markets, the Aussie dollar erased the gain that followed the weekend election results as its central bank chief said he'll consider cutting interest rates at next month's meeting, while Turkey made a fresh attempt to defend the lira. Oil rose for a second day on signs OPEC and its allies will extend production cuts beyond June. Worth keeping an eye on Iran, too, amid reports it has accelerated the rate at which it's enriching low-grade uranium. Tesla's Torment One of the biggest cult stocks has fewer true believers. Tesla Inc. shares plunged below $200 Monday for the first time in more than two years before paring the loss, after a well-followed analyst voiced "major concerns" around the electric car-maker's growth trajectory and underlying demand for its Model 3 vehicle. The company that's faced persistent production and logistics issues, as well as recent fires in China, may need to raise another $1 billion to $2 billion of capital if it's unable to earn profit in the second half of the year, Wedbush's Dan Ives said. There's not much read-across for European stocks, but the stock is a bellwether of general risk appetite. Carney's Testimony Postponed Bank of England boss Mark Carney and and his rate-setting colleagues had been due to speak to Parliament's Treasury Committee later on their most recent economic forecasts and suggestion this month of possible faster hikes if Brexit turns out alright in the end. However, that event has now been postponed, with a new date yet to be announced. Traders of the ever-volatile pound didn't give too much weight to that more hawkish tone, although sterling against the dollar ended a six-day losing streak on Monday. U.K. inflation data will be keenly eyed tomorrow. Coming Up... The OECD publishes its latest Economic Outlook, having trimmed its global growth estimate in March and saying the world economy is suffering more than expected from trade tensions and political uncertainty. Elsewhere, most of the earnings action comes from the U.K. mid-caps with airport retailer WH Smith Plc and Peppa Pig producer Entertainment One Ltd. due to update. Meanwhile in Spain, the new parliament convenes, with five Catalan separatists released from prison for the day among those taking their seats for the first time. What We've Been Reading This is what's caught our eye over the weekend. And finally, here's what Mark Cudmore is interested in this morning Following a decade-long bull market for U.S. stocks, is it finally time to turn structurally bearish? After being enthusiastically positive on U.S. equities for all of 2019, I turned negative via this column on April 30. At the time, that was intended as just a call for a multi-week tactical correction, but the evidence is building that a longer-team peak may be in place. The game has changed, thanks to a significantly more dangerous shift in the U.S-China trade war. It's no longer just about bilateral tariffs being a drag on global growth: The targeting of Huawei is fomenting a bigger divide between the countries that is filtering down to the consumer. Given that almost 20% of the world's population lives in China, with an extraordinarily large, tech-savvy, consumption-focused middle class, this is very bad news for the earnings of U.S. multinationals and its key tech sector. As highlighted in that piece from three weeks ago, U.S. stocks looked expensive even before trade tensions escalated. The outlook is now deteriorating by the week. Here's a 10-year chart of a forward-looking blended estimated price-to-book ratio for the S&P 500:  Mark Cudmore is a Bloomberg macro strategist and the Managing Editor of the Markets Live blog. Bloomberg Terminal users can follow him there at MLIV <GO> CORRECTION: The "And finally" section of the May 20 newsletter erroneously included an old comment. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more. | 
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