5 things to start your day

[Bloomberg]( Pakistan-India tensions take a dramatic turn, Powell (and Cohen) in Congress, and May kicks the Brexit can. Strike back The conflict[ between Asia’s nuclear neighbors]( intensified after Islamabad said it [shot down two Indian aircraft]( in the disputed region of Kashmir today. In a statement, India confirmed losing one jet, and said Pakistan also [lost one](. Much of the airspace in the region is now closed, and there are reports of heavy armor firing across the border. The stock index in Karachi tumbled, and the Indian rupee dropped. Popcorn Investors will keep a close eye on Jerome Powell’s second day of [congressional testimony]( beginning at 10:00 a.m. Eastern Time this morning. His comments yesterday that [growth looked uneven]( left stocks lower at the end of the session. While traders will still be fixated on the Fed Chair, for others the main event is likely to be Michael Cohen, President Donald Trump’s former lawyer and fixer, who [gives public testimony]( to the House Oversight and Reform Committee in which he is expected to accuse the president of wrongdoing. Sponsor Content by PIMCO Late Cycle vs. End Cycle Investing [PIMCO 2019 Asset Allocation Outlook:]( Learn how PIMCO is positioning portfolios in light of our outlook for the global economy and markets.  May capitulates British Prime Minister Theresa May’s Brexit strategy became more realistic as she admitted she could be willing to [allow an extension]( to the March 29 deadline. While that does reduce the risk of her losing a vote later today on her negotiating tactic, analysts see it as more of a [kicking-the-can exercise]( than a major breakthrough. There was some more good news for May as pro-Brexit lawmaker Jacob Rees-Mogg seems to be [easing his opposition]( to the contentious Irish border backstop. The pound, the world’s best performing major currency this year, is holding close to the $1.3300 level this morning. Markets mixed Overnight, the MSCI Asia Pacific Index gained 0.1 percent, giving up much of its early session gains on Pakistan-India tensions. In Japan, the Topix index closed 0.2 percent higher. Europe’s Stoxx 600 Index was 0.6 percent lower at 5:40 a.m. amid a raft of disappointing corporate earnings. S&P 500 futures pointed to [a drop at the open](, the 10-year Treasury yield was at 2.632 percent and gold was down. Summit Trump and North Korea’s Kim Jong Un will have a [private](tete-a-tete before a formal dinner later. It's the second summit where the U.S. tries to persuade the isolated nation to surrender its nuclear arsenal. While expectations are low, experts would see Kim agreeing to a [timeline for denuclearization]( as a successful outcome. In U.S. economic data today, wholesale inventories is due at 8:30 a.m., with December durable goods, factory orders and January pending home sales numbers all at 10:00 a.m. Earnings today include Lowe’s Cos Inc., Best Buy Co. Inc. and HP Inc. What we've been reading This is what's caught our eye over the last 24 hours. - Hours-long [trading malfunction]( halts world’s most popular markets. - The global economy may have [bottomed out already](, Goldman says. - Some bankers are doing even [worse than in 2009](. - LSE leads investors in startup to [automate investment banking](. - It’s [all too quiet]( on the volatility front for some analysts. - Norway’s $1 trillion fund [loaded up on stocks]( at the end of 2018. - Scientists turn carbon dioxide [back into coal](. 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 morning At the start of the year, one of the big risk factors that was on everyone's mind was the slowdown in China, and the question of whether stimulus measures would gain any traction or not. The cooling of trade tensions and a staggering 22 percent year-to-date gain in the CSI 300 index has done a lot to put those worries on the back burner. But the fundamental question of whether Chinese measures to boost its own economy are effective still remains. In a recent note to clients, Srinivas Thiruvadanthai warned that it still appears that credit-fueled stimulus in China is pushing on a string. An economy wracked with overcapacity, there are few compelling places to invest, and so credit expansion likely goes to balance sheet activities rather than anything fundamentally good for the economy. Meanwhile, the household savings rate continues to rise, he notes, which remains a drag on corporate sector profits. Along these lines, if you haven't yet, you should read this [Michael Pettis piece from January]( on the dangers of relying on Chinese GDP data to gauge the economy. It's not that the data is bad (per se) but that GDP data can incorporate activity that isn't positive for the real economy. So, per one of his examples, building a hypothetical "bridge to nowhere" boosts GDP just as much a bridge-to-somewhere, but only the latter represents a meaningful improvement to the economy. Obviously China has the ability to spend more, or to force banks to issue more loans, but the jury is still out on whether this money will actually go to economy-enhancing activity. So far though, investors are feeling good. 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. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022