."y: welcome to "on the move it is 7:30 in london. i am guy johnson. i'm alongside caroline hyde over in berlin, which is where theresa may is going today. may meets merkel. europe's two most powerful leaders size one another up. can they see i to i on brexit that is the big question? timko poaches ceo many roman after three years on the job. he's going to california to rid

a beat for sap. the software maker tops analyst estimates. we speak to ceo bill mcdermott. we are less than a half an hour until the european open. let's have a check on how futures are performing. it looks like a day of green, a day of gains. click on the futures button on weei. the ftse 100, slightly underperforming. this could be related to the minors, bhp billiton showing less production than expected. the minors.r we are getting some big beats when it comes to the earnings season. goldman sachs, microsoft among them. the s&p 500 has been in terms of profit. guy:guy: looking forward to carrying on the conversation surrounding the earnings story. we will have more on that with bill mcdermott. -0.3% on unchanged,

the german 10-year. dollar-yen, keep an eye on that one. an interesting survey talking about the fact that we could see a fall of 5%. his will be interesting to see as we work our way forward on that one. let's get you up on what you need to know. here's our first word news with juliette sally. donald has told supporters he is going all the way after formally securing the republican presidential nomination. the tycoon's son made the theuncement in new york as home state of new york pushed him over the line. trump's team has been looking to get the convention back on track after an opening day rocked by questions of whether his wife plagiarized part of her speech. roman as named emanuel its next chief executive. he will replace douglas hodge who presided over the departure ceo.e former

iran is exploring a return to international debt markets for the first time since 2002. economy minister whose ministries at the forefront of securing the country's access to the global financial system spoke to bloomberg. right now, the groundwork for issuing bonds and various iranian debt securities international markets exists, and i'm certain the situation will improve in the future. we have something like $45 billion worth of signed agreements with different countries for financing iranian projects. juliette: the turkish lira is plunging to a close to all-time

low. moody's says it is reviewing the country's investment grade credit rating. turkey central bank lowered its overnight rating by 25 basis points. this is bloomberg. thank you very much, indeed. hot on the heels of her first cabinet meeting, uk prime minister theresa may has a packed day ahead. new chancellor philip hammond and she will get a snapshot of the eu economy. she's in parliament for her first "prime minister's questions" as premier. then may start a two-day trip to europe, attending an event with germany's angela merkel. tomorrow, she meets francois hollande in france. for more, we can go to editor alan crawford. he joins me in berlin.

our reporter emma ross thomas is in london. so is christopher derbyshire. of the a sense pleasantries and the hard bargaining if, any will occur. is this more a meeting of minds? : it will be a fascinating encounter. these are two women leaders who are very pragmatic. they are both daughters of church ministers. generation, same and i think the german chancellor will be very appreciative of the fact that theresa may chose berlin has her first destination. merkel, we time, have to take her public statements at her word, and we hear from what we have heard is she will stick to her line that there will be no detailed discussions before britain

triggers article 50. i don't know what kind of conversation they will actually have. i think they will talk about the weather. caroline: how british. guy: if anglo merkel doesn't want anything detailed, what are we looking for? i think she will probably be trying to establish some kind of working relationship. favors -- lot that that argues in favor of them having a close personal relationship. that will be key through the negotiations ahead. won't dive into nitty-gritty, they are talking about common challenges, terrorism, migration, all the rest. caroline:caroline: brexit is kind of the dominant elephant in the room, which they can't talk about, but what they should talk about. alan talks about the similarities the women share.

how important is that relationship going to be? this is pivotal. this is the relationship that is going to define what the story looks like. emma: absolutely. that is why she is going their first and going herself, not sending boris johnson or david davis. caroline: give us a sense of how much this actually means, a statement of power from germany really. is that what is being assumed by the eu and german onlookers? misses merkel does meet with may 1 out of any leader. alan: there is no doubt that this is a discussion between the eu as a whole and the u.k. nevertheless, this place to both audiences, that she wants to develop these bilateral relationships. merkel, she's the longest-serving leader in europe

. thatcrucial, as emma said, they develop some kind of personal rapport. both theresa may and merkel have said, these are going to be tough negotiations ahead. caroline: let's bring you into the conversation. what will be the market affect? christopher: i think you would see a boost in sterling. what the market is looking for is pragmatism. i think it's looking for common ground, anything to reduce uncertainty, and i think the market is looking for some sign norway are brexit-lite, rather than canada in our arrangements with the eu. that would be a big boost to sterling. caroline: give us a sense if it's right of may to be coming to germany first.

you're talking about other key economies they should be negotiating with, israel, germany. christopher: i think it is, because i think it is our closest ally within the eu. germany holds the keys to the migration and immigration issue, which is what the referendum in brexit was about. if there's an acknowledgment of that in the press conference later today, i think you would see a positive response. crateay is trying to fiscal stability by making it clear that she feels brexit is brexit. we are going to be leaving the eu. she's trying to take that question of whether the u.k. will deliver on that off the table. she's put interesting characters into interesting places within her cabinet, and given the the key profiles in negotiating this story, and yet she is the one who is going to

dictate. she's made clear, it's my way or the highway. how much ofontext, this is going to be done at the most senior level, and how much is going to be done by johnson or davis? emma: iemma: think it's early to tell, but what is clear is there is not unanimity within the cabinet as to what brexit will look like. given she has appointed people who don't necessarily share her view were hammond's view of what , some will look like people suggest it will indeed be may who is the decision maker. there are very differing views as to what brexit will look like. single market access is key for may and hammond, not so much so for others. guy: thank you very much indeed

to our bloomberg team, emma ross thomas in london, alan crawford in berlin, chris derbyshire staying with us. pimco poaches man group's ceo. details coming next. then we speak to sap ceo bill mcdermott. then we are going to be talking about all the equity market action. we are heading towards the market open. it is 19 minutes away. there, busy morning out and we will talk about the market action as we run up to that. this is bloomberg. ♪

guy: we've got some changes at the top. roman is ceo emanuel stepping down to become the new ceo at pimco, replacing douglas hodge who presided over tumultuous time at the firm. we are joined by ryan chilcote. new boss pretty well. he's been based in london. give us the background. group,e has been ceo man the world's largest publicly traded hedge fund, since 2013. you can go on the bloomberg and look at how he has performed versus his peers. during that 10 year, he outperformed his peers, 12% -- 2%.eturn, versus 2% it was a very difficult time for man group, clients pulling out money, trouble with the funds. is he didl feeling

well. pimco putting out a note saying, we think his experience with global markets, investment strategy -- pimco itself is in a process of change, different from the pimco we had a few years ago -- his general experience is going to bode well for his time at pimco. caroline: luke ellis is going to be taking the helm at man group. tell us about the outgoing pimco chief executive. douglas hodges on the way out. what it much mulch was time he had to oversee with the farewell the growth after mohamed el-erian departed in 2014. ryan: it kicked off with the an in januaryel-eri of 2014. then you had gross leaving later that year. gross, when he left, he said part of the reason was in fighting. he said his partners were after his bonus. he also said pimco was doing the wrong thing with its strategy

and verifying away from bonds and burgers and 82 -- i'm looking at my notes -- something like the varied menu you would get at a cheesecake factory restaurant. far as he was concerned, pimco was making a wrong move in diversifying away from what it was good at and viewed everything as for all investors. this was a difficult time. if you look at the company's assets, they declined by 25% since 2013. they were managing about $2 trillion in 2013. that has declined. they are cutting jobs. what we have seen is they are bringing in new leadership to try to manage this period. guy: let me ask you a question. these are smart guys. they have global reach. yet the world is moving money, pushed around by central banks.

why do i need smart guys who can understand what is happening? money keeps going passive. who wants to pay a fixed income manager anymore? the expected returns are not that high. firms have the choice to move away from passive and too active. this is a management decline at pimco. caroline: thank you very much. that was chris derbyshire. you are staying with us. ryan chilcote, great to get your perspective. next, our conversation with sap ceo bill mcdermott, after the company's profits topped estimates this morning. we are going to dig into that number, and then of course, it's the market open. up next, another round. sab miller is said to be facing mounting pressure from investors for higher cash bid from ab inbev. details are up next. this is bloomberg. ♪

caroline: welcome back to "on the move," 10 minutes until your trading day begins. we are talking sab miller. the board will discuss pressure from investors to seek a higher cash takeover offer from ab inbev. this is after managers complain the deal is less attractive following the plunge in the pound. bloomberg reporter thomas buckley joins us to dig into this. why are investors seeking a premium on the ab inbev bid so late in the game?

is it purely about the pound? thomas: i think it absolutely has to do with the pound. we've seen the pound, ever since the referendum vote on the european union, crash to its lowest level since 1985. that sent a number of consumer companies on the ftse very drastically up. rallys missed out on that , owing to the fact that the cash offer remains 44 pounds per share. the value is being talked related by analysts to be 40 pounds per share. guy: shareholders are also getting a better deal. guy:how does that get resolved? thomas: that is absolutely right. what we have seen is that the two largest shareholders are entitled to a partial share alternative.

that is a mix of cash and stock. that has climbed to be at a value of 52 pounds per share. caroline: what about pressure , actuallym investors putting the deal on ice entirely? thomas: it's difficult to imagine a ceremony where it will be blown off course. there's $3 billion ab inbev will pay sab miller. at this stage, i think it's a deal that investors want to see go through. it will be looked at as a good opportunity. risk arbitrage funds are seeking a higher offer. are there other deals?

are there other stories being affected? this is an absolutely massive rna -- m&a story. how much disturbance is the pound causing? thomas: it's an interesting story. thomas:there is a huge amount of uncertainty surrounding brexit. a couple people on the show before hand discussed how much the plunge in the pound has had to revalue into a deal. softbank is still an acquisition that is a 25% premium on its highest stock price. a number of sab investors are thinking, there might be an opportunity. guy: chris, what do you make of this? you've got this arm story sitting here. a lot of people are running the numbers and saying, the pound is down. there are opportunities here. do we need to revisit all the stuff we are looking at? christopher: it has become the

most volatile currency in the world, and massive deals are being derailed. we have heard anecdotally that --ry transaction the works in the works will be stopped dead. it's quite worrying from an economic point of view. caroline: do you feel there could be more m&a flooding in from the pound? is their opportunity as well as other things being stopped dead? thomas: if you look at the commercial property sector, there are opportunities. you got the decline in the pound. foreign investors will be taking a good look at it, but i worry about the volatility of the pound. you can do a lot of planning ahead of article 50 being triggered and see the pound at 1.50.

i do think people are going to be very cautious about the volatility. guy: they must've been caught by surprise as much as everybody else. thomas: absolutely. they are holding a meeting today ahead of the annual general meeting tomorrow. we have heard that all these topics will be discussed. i think there is pressure from investors to seek a higher offer. they have a responsibility to discuss that. guy: think you very much for your reporting, thomas buckley from bloomberg. chris derbyshire is going to stay with us. up next, the conversation with bill mcdermott, this after the company's profits topped estimates. what is happening in the software space? we're about to find out. we'll also get the take from bill on how he sees brexit moving forward and what effect it is having on his business. that conversation is coming up next. we'll also take you up towards the market open. that story is next.

this is bloomberg. ♪

guy: good morning. you are watching "on the move." i'm alongside caroline hyde, in berlin. caroline has your morning brief. mostine: europe's two powerful leaders size one another up. can they see eye to eye on brexit. pimco approacpoaches. and a beat for sap. the software maker tops analyst estimates after a rocky start to the year. we will be speaking to chief executive bill mcdermott. if you are seeing some green on

the screen, that is futures, guy. guy: we are getting the right screens to show you what is going on as we can you down into the european open. let me take you through what happened at the close yesterday. a very volatile start to the day . at the close, we did see a little rally coming through. a positive start for london. paris is jumping as well. we are expecting to see more movement from berlin. now, let's get the details from manus cranny. manus: we have a flash of green, financials up 1/8. moody's turned negative here in the united kingdom. asian stocks of course, they are shifting around. health care come up by .6%. let me show you some other stocks we are watching here on bloomberg this morning.

these three stocks that i am watching. you've got second-quarter operating profit, down by 1.52%. they are saying european growth was between 2% and 4%. a little bit of a trade lower for electrolux. semiis europe's biggest conductor of revenue. the shareausing on buyback. what carolinet hyde has a little bit more detail on. caroline: manus, i will take it from here. let's get more on the sap story as we rev up for the stocks to

open. we are joined now by the company ceo. it is none other than bill mcdermott. bill, welcome to the program. i want to start with politics because you say amazingly, despite the widespread concerns, there are no affects from the brexit vote. is that because there was not enough time to react? are you expecting the third-quarter to feel some pain? interesting, caroline, it's with a double-digit growth in our software sales, our cloud sales, and our operating income. and that is a very pleasing trifecta. sap is positioned like no other in our space. as we look at the real-time information on the pipeline, we actually see a very robust and ever-increasing pipeline for our technology. and what is kind of interesting about the brexit specifically, just like the greek debt crisis are the china growth issue, our

software tends to be very resilient in choppy waters because business executives start thinking a lot about their customers, their channel strategy, their inventory levels, their supply chains, their financials, and the real-time data to make smart decisions. and our architects are right in the center of helping them solve those problems, which is why we tend to be very resilient. guy: just a follow-up, bill, and i appreciate your comments on the resilience. but companies with big exposure to the u.k., have they excited to resist making big investments at this stage? any businesses you are expecting to win, but you have not? walk us through the story surrounding the u.k. specifically. bill: yeah well, specifically, you know, i need to give you an update on sap in the u.k., which

actually grew in the heart of this brexit issue. it actually grew in double digits in the cloud. so, we were quite interested to see how the u.k. would react and how overall, europe would react. europe was actually our fastest-growing region. so, as you know, the whole brexit matter will take some time to evolve, but while it evolves, we are in lots of conversations that are net new conversations with customers on how do they best align strategically in this digital economy to overcome the obstacles that could come their way from such a potential downdraft. and that helps us. i have not seen big, global multinationals at this stage say, i've changed my business strategy because of brexit. as you know, we have see

thissoemme of nationalistic behavior in many parts of the world, which is why i him glad we can diversify our portfolio and irrelevant in all those conversations. caroline: you have been reorienting the business. revenue is up 41% from the previous quarter. can you guide us as to whether we will see this pace of growth going forward in the third quarter and second half of the year? bill: well caroline, as you know, we know have 13 consecutive quarters. when you back out any mma effect of more than 30% growth in the cloud, that is. so, what we have that is very unique, is we have a very unique architecture. we reinvented the business of sap for end to end business,

which now has 3700 customers globally, 500 new in the quarter, 40% of which is brandnew to sap. and this is the platform by all of ouross sell different solutions, whether it is capital management, a crm, a procurement, or even a business network solution, where you are connecting company to company business. so, we are extremely well-positioned in our strategy for the evolution to a cloud world powered by a new architecture that enables companies to connect their customer to their supply chain in realtime to drive growth and drive results. guy: ok, so we have gone from r3 to s4, but i am curious. vendorsot plenty of

that are offering me that kind of business, oracle, microsoft, both offering database solutions to me now. is the value of hana less than it once was? bill: it is actually more ituable now because we took and natively built the application of how businesses the enterprise and outside of the enterprise in real time. it is true that others do have databases. none of them have accomplished that feet. and of them manage the structured information and the unstructured information, like video, voice, or text are all in one database. and none of them connect the entire supply and demand chain in 25 industries across the

world. so, we are unique in what we do. we agree that others do things, but they do not do it with the completeness of vision that sap does. so, i think there is plenty of elbow room for others to do well. we do not need them to do badly for us to do well. we have chosen a different path and we are quite unique in the way we serve our customers. caroline: you have been actually striking deals with so-called competitors, microsoft to get your items into more hands. give us the kind of consolidation you are doing in the tech-sector. we have just seen a monumental deal between softbank, buying up holdings. are you purchasing mma? is it time to consolidate in your space? bill: first of all, because you mentioned microsoft and apple, i would like to a knowledge them

both as great customers of sap. they too believe in our technology because they run it. we are doing innovative things with both companies and we are highly supporteive of their strategy, as they are with ours. the good news about sap is organically, we are growing very fast. we have made major mma moves in the past to strengthen our conversation with customers. right now, we are in a position where we can be very opportunistic on the mma side an look froat mma from opportunistic perspective to complement an already high-performance machine. some companies have to do big things because they are behind. we can do incremental things because we are in the lead. and that is really advantageous to shareholders. guy: last question. there seems to be quite a lot of pressure emanating from berlin

regarding the inability of large german companies to employ some of the migrants that have arrived in the country recently. do you feel pressured to do that? is it possible, or something you are actively working towards? employ -- could you --ase of the the question could you please repeat the question? guy: many migrants are arriving in germany. bill: our objective is to do things with machine learning as an example that really take bias out of the workplace altogether. so, with machine learning, this is one example where the human resource application, you can match millions of resumes with the profile and description of a very specific job in realtime without all of the lost productivity of doing that by hand.

we also have an application with machine learning that weeds out bias. so, i think everybody in the global economy wants fairness. everybody wants to give people opportunity. andfor real-time analytics machine learning, that is how we are approaching the situation. guy: are you going to employ any of these people? bill: absolutely. i mean, if a person has the knowledge, the skills, and the attributes to make a difference at sap, we hire and are open to all people. globalhink we are in a economy where the world needs more love, trust, and hope and we have to hire people based on their knowledge, skills, attributes, and ability to do work. we have various types of work in our company. we consider everybody who is capable and willing a candidate. we kind of think about the will of a person, the domain-expertise of a person,

and the technical knowledge of a person to be the perfect formula for success. guy: bill, on the optimistic note, we believe it. sap ceo chief economist for the german ministry of the economy -- sap ceo bill mcdermott. the former boj official said the investor bank will lose investor trust if it remains bullish. plus, can a lucrative trade deal be made between the u.k. and the u.s. and the road gets longer for vw. we will discuss that story later in the program, too. this is bloomberg. ♪

caroline: welcome back to "on the move." let's check on how the markets are trading 15 minutes into the session. the stoxx 600 is up by .25%. the ftse 100 is up 1%. technology is outperforming on the back of earnings, guy. guy: some stock the want to know. this is the stoxx 600. the miners are down on the iron ore numbers. let's get your bloomberg first word news. reporter: thanks, guy.\

donald trump has told supporters he is going all the way after formally securing the republican presidential nomination. the tycoon made the announcement as his home state of new york pushed him over the line. his team has been looking to get the convention back on track after an opening day rocked by questions of whether his wife plagiarized part of the speech. pimco has named the next chief executive. he will replace douglas hodge, who presided over a tumultuous time, which included the departure of bill gross. ncehas been the ceo si february of 2013 and was previously at goldman sachs. the turkish lira is trading close to an all-time low. the fallout from last week's failed coup. moody's is reviewing their l ending rate. global --

global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. this is bloomberg. guy? guy: it certainly is. darbyshire, still with us on set. are you worried that the brexit story is going to be a little negative? for you a little bit late to that trade? chris: yes, we have held onto this for several years. we felt the earnings' underperformance and the stock market underperformance would revive overtime. had atential impact slight knock on effect in put s us over the edge. so, we have gone for the u.s. caroline: what about the rest of chris?.,

where do you put yourselves when it comes to the eu and the rest of the eurozone, in terms of investment? chris: i think we like the eurozone. that -- the domestic economy is not broken there. you can look at good growth in germany with good consumption everywhere and employment trends are good. it just seems to be that the european large cap is the problem. there is regulatory pressure in sectorsvarious big there. guy: what happens if we see a good statement today? that is the really big worry at the moment, the potential that sterling could rebound. it seems an conceivable. 34 out of 36 bloomberg analysts think it is going to fall, but there are certain scenarios where the brexit risk goes away a bit. any kind of merkel giving ground

on immigration is one of those scenarios, were suddenly, the u.k. and germany would see eye to eye again. guy: just to take this a little bit further, if you look at investments in the u.k. and portfolios in the u.k. at the moment, the have had a huge pop because what has happened with sterling. you are basically saying, this is great for us at the moment, but if sterling goes up, it is all over. chris: that is right, you give it all back. the key decision is sterling, and are you ready to take up some political risk right now to prevent that from happening, that reversal? caroline: would you expect the pound to move on the back of any central bank changes come august? chris: a little bit, but i think factor, is really be factorethe and how brexit will look. we talked about all of the

risks, that we did not talk about the kind of brexit. they could be a light brexit, like norway, which could be beneficial for the pound. or, we could have a more severe brexit, putting us into a canada situation, which i think could extend the period of uncertainty and the pound could become weaker than it is. cio chris darbyshire, the at seven investment management. coming up, is the special relationship strong enough to secure a lucrative trade deal between the u.k. and the united states. we discussed that story, next. this is bloomberg. ♪

caroline: welcome back to "on the move." he dax.on te on the downside, vw will be sinking. we will talk about how the alleged cheating went on longer than expected. the first, we will takdig into more u.s. stories. guy: john kerry has made it clear that there can be no trade deal with britain until the country has left the european union. that is despite the so-called

"special relationship," which foreignand the u.k. secretary boris johnson stress remains strong. of our countries is going to alter or undermine the bonds we have. >> the special relationship between the united states and the united kingdom remains strong and vital as we continue to advance mutual interests and tackle shared challenges. guy: boris johnson, speaking there to wrap that up. let's talk about how the press conference want because it was interesting. let's talk about this with ryan chilcote. kerry is right, the letter of the law dictates you are not allowed to make trade deals together until the u.k. has left the eu. he is absolutely right. that is the letter of the

law. that does not mean you can't start talking. ryan: no, you can start talking and they already are talking. he spoke with the outgoing trade and business secretaries, though i don't know if he spoke with the incoming. the rules prevent member countries in the european union, and the u.k. is obviously still in the eu, from doing individual deals. but the other issue for the u.s. is, they have to understand what kind of relationship the u.k. is going to have with the eu going forward before a separate deal is made. because of the end of the day, .s. does not know if the u.k. will have sovereignty. it may be, the u.k. can't lead those negotiations. what this really is, guy, is, we are having this conversation. trying to push back or dial

down the message from barack obama before the referendum, which is, if the u.k. wants to do a deal with the u.s., then it is going to be at the back of the queue. now, the u.s. is saying, we are prepared to accommodate, but this will be a protracted process. caroline: when i spoke to jack lew at the treasury, he refused to comment on whether the u.k. is still at the back of the queue. the talk to us about the business sentiment. our concerns rising? they need clarity, ryan. i don'ts, but what think that what we heard changes anything. the businesses have gone more pessimistic about the economy after the referendum. what you will want to watch is the pmi data we get on friday. and we do not always get this, this is a one-off.

this could indicate a contraction. this is the first time we have seen that in months and months, where we have had an expansion here in the u.k. caroline: up next, we talk about the road ahead for volkswagen. this is bloomberg. ♪

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the move." 30 minutes into the trading day. we are in the green tentatively. we will be digging into the individual industries. on the down side, it is the miners, guy. and i know you will be digging into one in particular. guy: excuse the pun. you can see the markets are a little bit higher. sap, we spoke with bill mcdermott. that stock is up by 3.22%. manny is going to pimco. and anglo american is down as it cuts is copper input. caroline: we will have to look

at how the ramifications affect that. another key corporate move her that we want to watch is of course, volkswagen. volkswagen is facing fresh allegations from the u.s. state officials. the new claims says the emissions cheating went on for far longer than the company it knowledge and the ceo has been aware of it for a decade. joining me now, chris darbyshire . chris, what do these latest allegations mean? chris: they are coming a little bit late, and that is why the blow to volkswagen. now, they get blindsided by u.s. attorney general, who are levying serious allegations against the company. so, how do they get themselves out of this from here? one of the problems that has opened the door for these kinds of allegations is that volkswagen has not come clean on

how this cheating came about. it is opening the door for these allegations from the attorney general. caroline: this is how the loose lawsuits sort of unfold. what are the tactics that vw has to play? now that they have offered a huge chunk of change to the consumers in the united states in particular, can they start unfolding the rather large details? chris: that will be the hard thing, because what the attorney general are after, and that is a theon result for fixing legal damage. they are actually after retribution. that is a difference ant scenario than volkswagen-based four. the allegations are quite serious. the maryland attorney general was talking about hundreds of billions of dollars in damages.

if that came to pass, volkswagen could not survive that. guy: chris, should volkswagen walk away from the united states? chris: that is a good question. i don't think even if they did walk away that would necessarily resolve these issues. generalshe attorney are going after them. say how significant these cases are, whether they will come to pass at all. producingif they stop or close their factories, that would not get them out of this mess. caroline: vw currently trading down today. chris, always great to get your take on the everlasting problems that we have with volkswagen. guy? guy: let's talk a little bit about the banking sector. the european commission is putting on a brave face when it comes to the lenders, despite fears over the brexit and the bad debt burden.

excerpt is from an interview with bloomberg. >> the banking sector obviously, is in a circumstance that is affected by the brexit, but that goes for a number of banks in europe. the banking sector in europe is slowly but surely picking up in dealing with nonperforming loans. guy: according to business insider, deutsche bank expects the u.k. to lose its past fording rights, which allows banks to sell their services within the eu. they might get an advantage by moving back to the eurozone. the managing director joins us now in the studio. good morning. european banks have been the eye of the storm when it comes to brexit. how much more trouble is there still to come? >> i think, it looks up a moment that it is a slower burn. the panic that some feared

initially has subsided quite quickly. but of course, the deeper economic effects are still ahead of us, both in the u k and the fallout -- guy: what is the bigger risk, the brexit or what is happening in italy? >> well, the brexit is an unknown quantity still to a large extent. so, i think it is a big issue. italy has current challenges, which are live and so for now, italy longer-term could turn out a brexit. guy: let's take this a little bit slowly. deutsche, is there an advantage? do companies have an obligation to look at the options now a walking away from london? otto: i think yes, actually.

strategically, it is important. there is no clarity at this point regarding all the past 40 sporting rights in the eu. it is an obligation of senior management to look at that and look at their options and actually, start moving some of their operations back to other parts of the eu. even if it is just as a strategic hedge at this stage. caroline: i mean, at risk of being obsessed with deutsche bank, considering i am based in germany, we are still watching their debt. if you are looking at my screen, i have the junior debt from deutsche bank trading at 82% of face value. so, there is still a concern there. how much is germany and deutsche bank itself still under duress,

not only from italy to a certain extent, but the rest of the credit story? are we going to see more banks raise capital? think germany is certainly an interesting case to bring up. clearly, most people narrow their focus currently on italy. germany, as you say, deutsche bank certainly has its challenges for the time being. they have a deep restructuring program with some uncertainties over their ability to pay sort of hybrid coupons, which could be a damaging event, if that were to occur. inre are also some banks germany that are under severe pressure, actually. bank clearly,orth has to be sold off by 2018. landis bank are under immense

pressure regarding their shipping portfolio recently. so, certainly immense challenges, as you point out. do these banks have to raise some capital? yes, they do. let them not being stock market listed companies, it is actually very difficult to do for them. of tine: give us a sense his, does germany even have a sense of the stress on its banking sector? are you expecting more flights going out, trains to paris, flights to amsterdam, and the like? otto: it is early days. i am sure frankfurt will be one of the cities and areas that will be trying to attract the sort of more financial services, but i'm sure others will do the same.

it is not clear at this point if it will congregate in one place, or if there will be a bit more distributed infrastructure around europe. too early to tell really. it is unclear. guy: what can the ecb do to h elp the banks? otto: well, i mean. guy: but negative rates in to play? it has done many things, which have made life more difficult. we rely on this channel here in europe, it is 80% of credit distribution. what needs to happen to this sector if the european economy is going to deliver? say, i don't see it as all negative for the banking sector. they are also providing a huge amount of liquidity. so, there is very little risk i would argue at this stage on the funding side for banks. it is more important for some and others, of course, but

overall systemically, that has been an important issue. otherwise, i don't know if the ecb needs to -- sector the banking delivering for europe at the moment? otto: i think so, yes. there is always a bit of a debate, like with italian banks. much onpeople focus too the supply side of the equation, but very little on the demand side. growth, youloan need companies that borrow to expand. if economic growth is low, therefore, loan growth is low. guy: i only ask the question because that is the accusation at the moment. but you make a solid point, that there is a demand issue out there right now. thank you for your time. up next, the turkish currency

nears a record low amidst instability int h the wake of lsast week's failed coup. this is bloomberg. ♪

caroline: 43 minutes into your trading day and this is "on the move." let's get straight to the bloomberg business flash. reporter: a sales forecast trailed analyst estimates. europe's largest semi conductor

quitman makers says their revenue will be 1.7 billion euros, more than the 1.4 billion euros predicted. this is as the company tries to convince clients to update their machinery. unilever once a bigger piece -- wants a bigger piece of the men's grooming business. it is worth $1 billion. it is a direct consumer model, eating into market shares for established razor brands and is on track to post $200 million in sales this year. fueled rise,on go fiel the shares have slumped today. crunch citing a person close to the plans said they decided to cancel the launch in japan over concerns that the app could become

overloaded. growing investor pressure for a high cash bid. that is according to people familiar with the matter. assetaid fund minut -- fund managers have complained that the offer is less attractive following the plunge in sterling. the currency drop means the two currency shareholders are getting a sweeter deal. and that is your bloomberg business flash. guy: the turkishl -- the turkish lira has continued to feel pressure in the wake of friday's failed coup. bloomberg's middle east editor joins us now with the details. i want to ask you first, about what is going to happen today. we have a big meeting today. the world is urging restraint. what are we going to hear? reporter: well, guy, quite a few events to look forward to

today. the turkish president will meet with the national security council. it is the first time he does so since friday. after that, he will sit down with the council of ministers in the capital. "anwhat is expected is, important decision," guy. that is all we have at the moment. but two critical meetings at a critical juncture for the thatry, keeping in mind, turkey has fired or strictly professional accreditation of iran's 60,000 people. of course, markets are on edge. the lira is hovering against record lows against the u.s. dollar. caroline: we have breaking news coming from jpmorgan at the moment. $1.5 billion worth of turkish corporate debt that could be at risk from a downgrade. this is one of the key woes.

more of the top decision-makers in turkey are being ousted. most notably, we are seeing the central bank take action. , what do we see, in terms of the asset classes? reporter: for the moment, they are all under pressure. the turkish lira has stabilized a little bit, compared to the last trading session. it is also important to point out that we are waiting how moody's reacts to the latest developments. that will affect turkey's investment grade. we put up this chart, so you can get some context. last time moody's upgraded turkey and when the upgrade happened, the turkish lira weakened even further. arguably, a counterintuitive development on that front. of course, we will watch the five-year cds's, which have come

under pressure as well. barclays put out a note. they expected investors could $1.32s much as doeson, assuming moody's follow through with that downgrade. guy: how much of this hinges on today's meeting. if we saw an aggressive turkish president today, you could see all kinds of things. do you think we could see a downgrade on the back of what happens today? reporter: the decision-makers we have been speaking with, they have maintained their two tracks. on the economic side, they are trying to reassure investors, saying, we are open for business. on twitter, they have said, banks are resilient. but then you have the political

side, which is really taking a turn for the worse. the numbers are just incredible here, in terms of the sacale of the reprisals. of course, a lot does hinge on what happens today, and what the outcomes of those meetings will be. as you know, the geopolitics in this part of the rubble factor substantially into the rating agency's decision. caroline: he is talking about the scale. 60,000 people are detained, suspended, or stripped of their professional accreditation. quite phenomenal moves coming from turkey. we will wait to see how turkey reacts. now, up next, we are live in cleveland. donald trump is the formally nominated gop candidate. despite the chairs, the convention was off to a rocky start. willie get back -- will it get

back on track? this is bloomberg. ♪

guy: welcome back. you are watching "on the move." we have seen the biggest move in the chinese currency in two weeks. they are very keen to make sure we do not see just a downwards trajectory. this is all versus the dollar, up around .2%. something of a surprise, the dollar is now trading near a five-month high. that is the dollar index.

the bloomberg dollar index, up .2% in advance of the ecb, which kicks off its meeting today. european equities, generally on the frontfoot this morning. well, by weakening as .7%. outline: i will be jetting to frankfurt today to cover all of these things that happened on the end of the two day meeting. but for now, let's get over to the united states. donald trump has told reporters supporters that he is going "all the way." his team has been working to get the convention back on track, following accusations of plagiarism in his wife's speech. trump: together we have achieved historic results with the largest vote total in the history of the republican party.

but we have to go all the way. bloomberg's margaret joins us now. you have been there during the early hours of the convention, margaret. did they manage to get the convention back on track after that rocky start? reporter: it certainly seemed to get things moving on that direction, and that is the best that donald trump and his team could hope for. after the opening day, the controversy over melania trump's speech, and real divisions in effort to stop the nomination, which was finally quashed. andrunning mate mike pence, a couple of heartwarming moments but a couple of his adult children, as we heard them talking of their father's praises. that is a good direction for him

to be moving in. from someve heard of his former rivals, chris christie and ben carson. how is his attempt to unify the party really going? reporter: this is sort of part two of the effort. on one hand, his children are trying to talk about the positive attributes of their father comr, get people to engage in a positive fashion. chris christie understands that though people cannot agree on donald trump, he is now the nominee. and republicans can agree on how much they do not want hillary clinton to take the presidency. take a listen to what chris christie had to say. a former federal prosecutor, i will come the opportunity to hold hillary rodham clinton accountable for her performance and her character.

reporter: in case you can hear what the crowd is saying, they are chanting, "lock her up, lock her up." this is the new rallying cry after night two after they embrace, some reluctantly and some in an excited manner, donald trump as their nominee. guy: margaret, thank you for covering all of this for us. a fascinating story. the politics is going to get interesting at the back end of this year. stay with us. up next, it is "the pulse." jon ferro is going to be on the radio. and i will be a little bit back with tom keene on "surveillance." the chinese currency move this morning, something to watch out for. the european stock market is up by 0.5%. by .25%.down

nearlyas well is down by 7%. what will today bring? this is bloomberg. ♪

manus: taking brexit to berlin. just meet chancellor merkel today. can they hammer out a hammer -- a timeline for brexit talks. a coup, a talk, a purge. tensions push the lira to record anyone -- as erdogan convenes. the tycoon wins the republican nomination. ♪