In the Global Week Ahead, keep your eye on the trade war ball(s).

According to Scotiabank’s watchful FX team, markets will be gradually informed by developments in U.S.-China trade tensions over the coming weeks.

China-U.S. trade war tensions likely begin to escalate this week.

On Tuesday, the U.S. Trade Representative (USTR) will hold a public hearing addressing its proposed list of tariffs on $50 billion of imports from China. The comment period ends on May 22nd.

Sometime over the first half of June, the USTR may revise its list of tariffs and send recommendations to President Trump who may then decide to enact the tariffs. Mixed into the fray will be the USTR’s next list of tariffs on another $100 billion of Chinese imports and more hearings in a similar process.

Also, Friday will bring the Treasury’s deadline for proposals on restricting Chinese investment specifically

related to intellectual property, which seems liberally interpreted. China’s potential retaliations against any U.S. moves would further inflame tensions.In addition, Reuters in London shared these five world market themes, operating across the Global Week Ahead.

These themes are what traders and investors there are watching most closely there.

(1) Fresh U.S. Retail Sales Numbers Come Out

Economists polled by Reuters see April U.S. retail sales — due this Tuesday, May 15th — growing just 0.4 percent, moderating from March’s 0.6 percent rise.

But excluding the automobile sector, sales are expected to increase 0.5 percent, after 0.2 percent in March.

The recent U.S. tax changes are estimated to have reduced annual personal taxes by $115.5 billion. That means more money in the pockets of consumers, who drive two-thirds of the economy. Now that the personal income tax season has come and gone, and the bulk of taxpayer refunds has found their way into people’s pockets, did consumers spend more?

Economists reckon the data will help shape the debate over how many times the U.S. Federal Reserve will raise interest rates this year. Bond markets currently are betting on at least two more increases. The combination of extra spending and tax cuts frontloaded the positives, and now we wait to see if it translates into robust economic performance. Traders see the Fed on track to raise interest rates in June after U.S. consumer prices rebounded modestly in April.

(2) Oil Prices

Oil prices are at the highest since 2014 and the surge shows no sign of waning. In fact, $80 a barrel is within sight for Brent crude.

The U.S. decision to pull out of the Iran nuclear deal and re-impose sanctions has pushed the Brent 3% higher this week, its biggest of five consecutive weekly rises. It is now up 60% over the past year.

Iranian oil exports should start falling as the new sanctions take hold. Even if other OPEC countries manage to fill that gap, the global oil market is still pretty finely balanced. Brent could reach $90 per barrel in the second quarter next year, Bank of America Merrill Lynch predicts, adding that $100-oil cannot be ruled out.

The question is now how this will impact inflation and central bank policy. Inflationary pressures in the developed world remain muted, but economic textbooks suggest not for long.

(3) European M&A

M&A action has been heating up in Europe, with April recording the highest value of monthly deals in 10 years, according to Thomson Reuters data.

This week, we’ve had a private equity firm agreeing to buy Zoopla-owner ZPG, sending its shares to a record high and lifting other online consumer-focused firms such as Auto Trader and RightMove.

Japan’s Takeda is buying Shire for $62 billion, and U.S. cable giant Comcast is seeking approval for its bid to buy British pay-TV group Sky.

The UK, in particular, is drawing attention from foreign buyers due to the still-depressed levels of the pound and the fact that stocks trade at a discount to their long-run average on a 12-month forward PE basis.

Credit Suisse Wealth Management added UK equities to their most preferred markets, while Bank of America Merrill Lynch say they are rotating from Europe to the UK.

The Euro Stoxx index is close to fully regaining all the ground lost during the February volatility shock, while the UK’s FTSE 100 is flat on the year, after being down as much as 10 percent some weeks back. Deal-making activity could provide the lift into positive territory for both benchmarks.

(4) Italy Has a New Government

After weeks of wrangling, Italy may soon get a new government made up of the far-right League and the anti-establishment 5-Star Movement.

But for markets, which have so far taken Italian political risks in their stride, a League/5-Star tie-up is the worst-case scenario; both groups are hostile to EU budget restrictions and have made electoral pledges that would cost billions of euros to implement.

No wonder the cost of insuring Italian debt against default have crept up, bond yields have hit 7-week highs and shares are set for their biggest weekly fall in seven weeks.

The Italian/German bond yield gap, a key indicator of relative risks, has also widened. But it remains below levels seen before the March 4 election; clearly some investors are still willing to look beyond the politics.

After all, a week is a long time in politics and the two parties are yet to agree on who will be prime minister. And a 5-Star member has even hinted the premier may be an independent figure not affiliated to either group.

(5) Watch What Happens in Malaysia – After a Big Election Win

Malaysian markets re-open next week after investors had two days to chew on a shock election result that saw incumbent prime minister Najib Razak lose to 92-year old Mahathir Mohamad, the end of an uninterrupted six-decade run for the ruling coalition.

Offshore markets are uneasy: the ringgit lost 4 percent on the non-deliverable forwards market and an overseas Malaysian equity fund showed a 6 percent drop. The cost of insuring against default on Malaysian debt rose to more than 90 basis points from 78 before the election.

The fear is that Mahathir, who was in power for 22 years until 2003, including during the late-1990s financial crisis, will fulfill pledges to remove the goods and services tax, scrap toll fees, reinstate fuel subsidies and renegotiate Chinese investment deals.

That would hit budget revenues. Mahathir has also vowed anti-corruption reform, but whether better governance can be achieved remains to be seen. For now, uncertainty takes center stage.

Top Zacks #1 Rank (STRONG BUY) Stocks—

BP PLC (BP Quick QuoteBP - Free Report) : This $151B market cap oil stock has a Zacks long-term VGM score of A. The oil price rise (or fall) story likely plays out here.

Texas Instruments (TXN Quick QuoteTXN - Free Report) : This $106B market cap semiconductor stock is always in the news. Keep an eye on this stock this week, as trade tensions on intellectual property rise between the U.S. an China.

Intuitive Surgical (ISRG Quick QuoteISRG - Free Report) : This $53B Medical Device stock is front-and-center in representing key U.S. intellectual property available in surgery technology these days. The stock is richly priced at $470 a share, as this type of company is where the market is looking for growth.???

Key Global Macro—

It’s a light schedule this week.

In the week ahead, China will report on its retail sales growth on Monday.

The Eurozone reports on GDP growth on Tuesday.

Brazil will address monetary policy on Wednesday. The U.S. will report the latest on housing starts and permits on Wednesday too.

On Monday, the CPI in India comes out. It has been tracking +4.3% y/y.

On Tuesday, India’s exports and import growth data comes out. Exports have been weak at -0.7% y/y and imports look strong at +7.2% y/y.

Peru’s proxy GDP looks good. It looks to rise to +3.6% y/y from +2.9% y/y. In comparison, Chile’s GDP should go to +3.9% from +3.3%.

China’s retail sales should be up +10.1% y/y. Beware: These are always steady numbers!

Eurozone GDP (seasonally adjusted) comes out. It has been +2.5% y/y, which is strong for Europe as a group.

On Wednesday, Brazil monetary policy rate (the SELIC rate) should fall from 6.5% to 6.25%.

Japan’s GDP growth rate comes out. It has been +1.6% y/y, in annualized terms.

Germany’s key consumer inflation rate (the HICP) comes out. It has been +1.4% y/y.

The Eurozone core HICP comes out. It has been +0.7% y/y.

U.S. housing starts (1.35M) and permits (1.37M) should be stronger, now that it is spring.

On Thursday, Malaysia’s GDP growth comes out. It has been +5.9% y/y.

U.S. initial claims should be great again. They were 211K last week.

The Mexican overnight policy rate should be flat at 7.5%.

On Friday, Russia’s GDP growth should rise from +0.9% y/y to +1.3% y/y. Yes, that’s weak folks!

Hong Kong’s unemployment rate, at 2.9%, gets revisited.