China warns of "necessary response" to Huawei blacklisting, Trump's battle with Congress heats up, and Tesla bears circle. Striking backChinese officials continue to warn that the country will retaliate to the U.S. blacklisting of Huawei Technologies Co., while also refusing to be drawn on what form that response might take. Chipmakers came under pressure in the wake of the ban, which the Commerce Department yesterday eased slightly by granting a 90-day reprieve for certain U.S. companies and customers using the manufacturer's equipment. In China, suppliers to Huawei rallied as investors bet it will become increasingly reliant on domestic sources of equipment. Trump vs CongressPresident Donald Trump's long-running battle with Democrats in Congress is coming close to boiling point again. The White House has asserted immunity in directing former Counsel Don McGahn not to appear before the House today. Democrats won a judgment yesterday which said lawmakers have power to demand the president's financial records, a decision Trump said he would appeal. The standoff may make Democrats feel they have little option other than to begin impeachment proceedings, a move House Speaker Nancy Pelosi remains cautious about. Tesla bearsTesla Inc.'s shares have dropped in nine of the last 10 trading days and dipped below $200 in yesterday's session. There are many catalysts for the move, but one of the most important ones cited by analysts is lack of demand for the company's mass-market Model 3 sedan. According to data from S3 Analytics, mark-to-market profit for short sellers of the company has already exceeded $1 billion in May, with the electric carmaker remaining one of the most popular short positions among U.S. stocks. Morgan Stanley this morning cut their "bear case" price target from $97 to just $10 a share. Markets mixedOvernight the MSCI Asia Pacific Index slipped 0.3% while Japan's Topix index closed 0.3% lower as technology shares dragged the gauge down. In Europe, the Stoxx 600 Index was 0.5% higher by 5:50 a.m. Eastern Time as technology stocks recovered some of yesterday's losses. S&P futures pointed to a similar rebound at the open, the 10-year Treasury yield was at 2.416% and gold was down. Coming up…U.S. existing home sales data for April is published at 10 a.m. Fed watchers have Chicago Fed President Charles Evans and Boston Fed President Eric Rosengren to look forward to later. In earnings, it's all about retailers today with Home Depot Inc., Kohl's Corp., JC Penney Co. Inc., Nordstrom Inc., Urban Outfitters Inc. and TJX Cos Inc. due to report. What we've been readingThis is what's caught our eye over the last 24 hours. Want the lowdown on European markets? Get the European edition of Five Things in your inbox before the open, every day. And finally, here's what Joe's interested in this morningMorgan Stanley analyst Adam Jonas is out with a note on Tesla this morning, and what's striking is that his firm's bear case for the stock is now just $10. One interesting thing about the note is its warning that the tumble in the share price this year is itself becoming a risk. "Tesla may now find itself in a cycle where a lower share price may itself contribute to a potential deterioration of employee morale as well as potentially increased counterparty risk with both customers and business partners (suppliers, governments)… potentially further impacting fundamentals," Jonas writes. We often like to think of the stock market is merely being some kind of mirror to the real world, but obviously it can have a big impact on it as well. Consider all the angst about Uber's flopped IPO, and what it means for VC investment, employee morale, and so on. There's also an important lesson here for trade-war damage assessment. It's normal to see analysts attempt to model potential shocks to the stock market by counting up the share of corporate sales to and purchases from China, apply some penalty, and then make an adjustment to fundamentals, before translating those fundamentals to the market itself. But this might be the entirely backwards way to think about things. Instead it might make more sense to think about what a major shock to the U.S.-China trading relationship might do to investor confidence, and then try to figure out how heightened volatility in financial markets will translate into real economic weakness. The latter approach probably lacks the precision of the former (because the steps are less mathy) but it may be a more accurate reflection of how causation runs in the real world.  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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