5 things to start your day

[Bloomberg]( Trade war heats up, markets fall, and OPEC has another problem. Escalation China is vowing to retaliate "[forcefully](" against President Donald Trump’s threatened tariffs on [another $200 billion]( of its goods. Trump ordered the identification of $200 billion in Chinese imports for an additional 10 percent tariff, with another $200 billion after that if Beijing retaliates. Should cooler heads not prevail, it seems inevitable that the escalation will [hit American consumers]( as items such as electronics, clothes and textiles could not be spared. Investors are mapping out tactics for how to play the trade dispute, with the first reaction of many being to [reduce risk exposure](. Drop That reduction in risk exposure can be most easily seen in global equity markets. Overnight, the MSCI Asia Pacific Index fell 1.6 percent, while China’s Shanghai Composite Index [closed 3.8 percent lower]( to end the session below the key 3,000 level for the first time since September 2016. In Europe, the Stoxx 600 Index was 0.7 percent lower at 5:30 a.m. Eastern Time in a broad-based selloff led by materials stocks. S&P 500 futures pointed to losses of more than 1 percent at the open, the 10-year Treasury yield was at 2.869 percent and gold was slightly higher. NOPEC Crude is falling again today, with a barrel of West Texas Intermediate for July delivery [trading at $64.98]( by 5:30 a.m. as traders continued to assess OPEC’s discussions on a [compromise output increase](, as well as rising global trade concerns. While the meeting of oil-producing nations and their allies this weekend will likely be dominated by ironing out the output deal, the cartel is facing a threat from Washington as lawmakers there resurrect the "[No Oil Producing and Exporting Cartels Act](," or NOPEC, which would make members subject to the Sherman antitrust law, last used to break up John Rockefeller’s oil empire. While the chances the bill passes are small, the impact on the oil industry, should it succeed, would be enormous. Brexit vote(s) Prime Minister Theresa May was defeated in the U.K. parliament’s upper house yesterday evening when the Lords backed an amendment to her Brexit bill which would force a “[meaningful vote](” on any final deal agreed with the European Union on the country’s exit from the bloc. The bill now returns to the lower house, where the prime minister will face another vote tomorrow. With [just over nine months left]( until Britain’s exit date, time is running short to agree with the EU the complexities of withdrawal, with that side said to be considering warning that a no-deal [hard Brexit]( is now a real proposition. Off again ZTE Corp. dived 27 percent after American lawmakers went against the president and passed a law to [restore severe penalties]( on the Chinese chipmaker. The move, passed 85-10 in the Senate as part of a wider defense bill, will complicate Trump’s plan to allow ZTE get [back into business](. Trump is due to [meet Republican lawmakers tomorrow]( to persuade them to agree a compromise for the Chinese company. What we've been reading This is what's caught our eye over the last 24 hours. - Summers warns the biggest economies are [not prepared]( for another recession. - U.S. homes are [a lot cheaper]( than they look, Harvard study finds. - Bank of England August rate increase in question as [economy falters](. - Musk says Tesla hit with “[extensive](” sabotage by rogue employee. - The stock pop from a [crypto rebrand]( doesn’t last. - Merkel will [ride out this crisis]( too. - [Space Force](. And finally, here’s what Sam’s interested in this morning There's a lot of doom and gloom about, as the lurch toward a trade war derails risk appetite and the likes of Larry Summers and Paul Tudor Jones recommend [stocking up on canned goods](. Well okay, not quite, but it got me thinking about what will trigger the next crisis. A trade war, hawkish monetary mistake or EM crisis are among the big fears, a survey found last week. Leveraged loan growth [will be explosive](, apparently. That brought to mind an [old prediction]( from Bank of America. Personally, I subscribe to the old Baz Luhrmann lyric -- the real troubles are apt to blindside you at 4 p.m. on some idle Tuesday. After Italian leaders told markets exactly what they want to here, fears of 'mini-BOTs' and the breakup of the euro have evaporated. But don't fall for Mario Draghi's attempts at a reality distortion field -- this is not a "[local episode](," and the populists may have now found Europe's Achilles' heel in the form of the migration debate. After all, who'd have thought just a week ago that Angela Merkel -- guardian of both the EU and euro -- would be fighting for her [political life](? The story has some way to run of course; I'm just observing that it happens to be some idle Tuesday. Sam Potter is Team Leader for Cross Assets EMEA at Bloomberg. 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.]( [FOLLOW US [Facebook Share]]([Twitter Share]( [SEND TO A FRIEND [Share with a friend]]( You received this message because you are subscribed to Bloomberg's Five Things newsletter. [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022 If you believe this has been sent to you in error, please safely [unsubscribe](.