guy: welcome all. you're watching "on the move." it is 8:30 over in frankfurt. i am guy johnson. here is what we are watching. a purely the summer is over at august comes to the clone desk comes to a close, markets come back to life. -- market come to a and a disappearing act. euros bankers see $2.5 billion of bonuses vanish. in just a few minutes, we are

going to hear from deutsche bank's ceo john cryan. good less than half an hour away from the european equity market open. that me take you to my bloomberg. -- we are going to see a little bit of negativity reflecting that selloff we saw yesterday in the united states yesterday. not going to be down by much this morning. .1%.to around let's show you what is happening elsewhere around the world. the gmm function. a good place to start your day. what we are seeing here is a little bit of a pickup the new zealand dollar. the end is down. trading north of 103. that has had a positive impact on equity markets in asia and particularly in tokyo. that is a story i hope to continue to watch out for. also that boj decision as well.

in terms of what we are watching elsewhere, quantities reasonably mixed. bond markets reasonably mixed. a little bit of a buying spree in the back end of the japanese bond market, given the news we have seen of late, nothing to write home to. with theavid ingles first word news. david: lots to talk about. -- a 1.8 billion dollar property deal going to people familiar. the investment bank was the original winner of the sale before the transaction fell apart. that led blackstone to prevail with its deal. -- worth around 450 million you -- dollars. did not want to comment at this point. the cape prime minister marked the end of summer -- the uk

prime minister mark the end of summer today. theresa may and ministers have so far it chosen not to flush out public details about what they will be seeking in britain from the eu. they will soon face pressure from international colleagues, investors and executives to define what may means when she says brexit means brexit. donald trump has said he will travel to mexico today for a meeting with the mexican president. the chump and clinton's campaign means -- the trump and clinton resident.eans for the trump is expected to deliver a speech today in arizona. onwhether he is moderating this issue. hillary clinton has been given 30 days provide written answers two to the five questions

stemming from her use of a private e-mail server during her time as u.s. secretary of state. among the questions, the nominee has been asked to explain under -- under old why and how the private e-mail server was created. the list was drawn up by a watch dog group with permission of a federal judge. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. bloomberg. guy? .uy: thank you, david as august draws to a close, so to me the u.s. bond rally. treasuries are heading through .he worst month increasingly more hawkish comments coming out of the federal reserve. while the data have improved, much pessimism has remained. speaking to tom keene, stanley fischer i just this bloom -- fisher addressed this gloom.

>> employment is close to full employment. it is about growth and that problem is about productivity growth. something which is very hard to control by policymakers. it depends enormously on what private individuals are doing in their companies. it is very slow at the moment. guy: stanley fischer talking to tom keene. august, what a difference a year makes. particularly when it comes to volatility. let's return to the uber can chose you -- and show you what happened a year ago. we highlighted it in red. you can see the huge spike in volatility. china largely responsible. that was a year ago. where are we now? the markets are relatively becalmed despite equities pushing higher and bond prices doing the same. what happens when asset

allocator's return in september? are we going to see similar story that we saw earlier this year in january? we saw equities selling off aggressively. volatilenticipating a september? >> it has been very quiet in august. we expect september will be the same. markets are up 2.5% in local currency. it is hard to see markets trading significantly higher but it is also harder to see markets selling off. there seems to be a lot going on at the moment. guy: what would change that for you? we have talked about the fed and we have an ecb meeting for you. central bankers seem to be providing some catalysts. i go back to january, i'm still scratching my head after what caused that, people came back and believed they were wrongly position. mica could that not happen again? yogesh: it could.

a lot of questions about u.s. interest rates. there's a petition we can seat rate cuts and europe and the u.k. -- cuts in europe and the u.k. japan is down by 11% year to date. expected to see a whole range of stimulus be announced. the pension fund has about $52 billion, investing to make up for losses made between april and june. the yen is soft 5% overvalued. to see that weekend. japan could be the wildcard that could stimulate activity in this very quiet market. guy: you talk in terms of ratio. would that be on a top end of a historical basis? we have rates at historical lows , therefore the correlation doesn't really work. talk about the cash location

that many investors have -- cash allocation that many investors have. yogesh: a lot of investors are remaining quiet. u.s. markets are about you to date. respect to what is happening globally. you have a very strong u.s. dollar. you've got a lot of volatility around oil prices which seem to be at the top end of the range. it is hard for investors to get excited when we have seen such a strong rally in the u.s. market at the moment after such a quiet summer. volumes of very muted at the moment. guy: all of that true. let me come back to something you said earlier on which was -- 2.5% up, local currency. somebody is going to have to make more money if they are going to make their expectations for the year. yogesh: if you look at u.s. 10 year at 1.5% pushing higher, 2.5% on local currency. the world is ok.

it is nothing to get excited about. bear in mind that volatility that we saw earlier this year. i would focus more on what is happening in japan and china and rate hike expectations in the u.s. and u.s. elections will drive sentiment going forward. when you talk about valuation ratios, it is earnings that drive share prices -- share price depreciation. is not chair political events -- it is not chair political events. it is earnings. .2, q3 let's see what happens in terms of q4. they are looking for strong revenue numbers going forward. if the u.s. environment is doing as well as we suspect based on the hawkish comments we are from the fed, then u.s. the mystic markets could push higher -- then u.s. domestic markets could push higher. guy: balance sheets have expanded but money is very cheap. why can't equity markets push

higher if we continue see buybacks being driven which is because rates are so low, companies can return that money? see an you need to environment where revenues at a corporate level increase. earnings equal -- we've seen a lot of the earnings numbers being managed through cost control. even see an environment where revenues improved significantly, that should help drive share prices higher in respect -- irrespective of your selections. -- irrespective of u.s. elections. yogesh dewan is going to stay with us. what will be learned ahead of next week's ecb meeting? then it is the market open. we've got earnings. we will break down those figures for you. the bonus disappearing act. 2.5 billion dollars goes up in smoke as banking stocks continue the route.

we are going to hear from john cryan in around 30 minutes time. an interesting story doing the rounds on deutsche this morning. this is bloomberg. ♪

manus: 8:43 in berlin. looks like a lovely day and we are 60 minutes away from the market open up your we are expecting a softer story when equities get going.

let's get you caught up on what you need to know. this is ebf with david ingles. ingles is ebf with david -- this is bloomberg business flash with david ingles. -- he the dam collapsed expects a judge to be asked by the end of this month to charge employees. the company says the ceo won't be getting his bonus following this disaster. he is paid an annual salary of $1 million. minister michael noonan says apple has paid all of the tax due for its activities in the country. this comes after the european owed said that apple ireland back taxes. >> apple has between 5000 and 6000 people employed.

they have substantial economic activity there. -- on the profits generated by the activity in ireland. david: investment bankers at europe's biggest security firms are watching their bonuses melt, according to data compiled by bloomberg. this drop has widened. more than $2.5 billion in value per share -- in value. credit suisse, deutsche bank and ubs. that is your bloomberg business flash. guy: david, great stuff. french cpi breaking. let me show you what is happening here. this is year on year number coming in, in line with expectation. the actual number in terms of the month on month is a little bit of a pickup. in lines with expectations. we are seeing some firming in the inflation expectation.

a -.4.ersus below the liney we would have to get to take get -- to keep the ecb comfortable. -- from the -- in terms of the total number. that is the number the ecb is going to be august on. -- going to be focused on peter we get data coming out as we work our way through this morning. draghi has not said anything for five weeks. we start to get data. it is going to be interesting to see the ecb meeting was takes place on september 8. some suggesting inflation is going to be making a return. are you in that camp? yogesh: it is hard to make that call.

it is hard to see us get anywhere near 2%. this is all supportive of the ecb reducing rates perhaps by the end of the year. manus: more negative rates coming -- guy: more negative rates coming through? yogesh: more probability for rate cuts by the end of year in europe. brexit hasn't helped sentiment. it hasn't helped inflation numbers. inflation in the system at the moment. guy: when it comes to what happened in the eurozone -- what caught my eye? let's see if i can generate a chart. the fact that u.s. banks over the last few days have started to go up. this is not the next dictation. they have been outperforming -- this is not an expectation. they have been outperforming on the next dictation that we are going to see a rate rise.

yogesh: you want a strong banking sector and you wanted to deliver. you don't do what we are doing at the moment which is keeping rates very low. there are lots of ways system really growth. one is through fiscal spending. -- andk lending argument u.s. if we start to see rates go up, that will help support that lending which will help growth. in europe, they are not taking out tax. they are more likely to go down a fiscal or's -- a fiscal stimulus route. this is not going to repair itself over the next three or six or 12 months. they have to recover from the events of exit vote. they will get there eventually. i will go back to earnings. most european companies with significant u.s. -- that will help the environment. in this environment, and tend to agree with you, lower rate

strategy is not ideal for stimulating growth. it is not going to help the banking sector. guy: do not cut rates. what can be done tuesday really growth from a month -- what can be done to stimulate growth from a monetary perspective? we will like some fiscal help but monetary policy can still deliver. we've heard that from the japanese. what else is in the toolkit back of the bank of england down the road -- in the toolkit? the bank of england is try to force into the real economy could it is trying to force -- real economy. what trying to force -- are we going to hear from draghi that could change in the game? yogesh: fiscal spending going forward. let the currency remain quite weak. we are undervalued in relation to the dollar.

111, 112vering around amid a lot of volatility. the euro is undervalued at the moment versus the dollar. there is room for currency to have an impact on earnings and investment. if draghi supports that, that will also help the environment going forward. the euro has been caught in a very tight range. -- in a very tight rein. guy: you can see the euro is marginally up and undervalued on a ppp basis. if you look at it last month, you can see the euro is trapped in a very tight rein. the euro is barely moving. yogesh: that is been a consequent that's consequent of a much lower rate environment. -- consequence of a much lower rate environment. it is going to be difficult for

them to stimulate growth in this environment. behind all of that, you got this profit slowing growth in china which is a major trading partner for europe. oil prices have not helped europe as -- helped europe either. guy: yogesh dewan is going to stay with us. -- we are going to take a closer look at the stock and potential movers in today's trading. ♪

guy: 7:53 in london and we are minutes away from the organ open . john cryan is a spot -- from the market open. john cryan is about to be in focus. there is a markets magazine story suggesting they are having an internal discussion at deutsche about the possibility of a thomas bank merger unsourced and to a certain extent reasonably speculative. the fact that maybe this discussion has taken place tells you how extreme the situation is starting to become. maybe the kind of solutions that john cryan has been looking at -- in the german banking sector. to deputy ceos -- two w ceos coming in. the top line is a bit of a mess. 888 another stock, the boating

business. pretty confident but heading for your numbers. yogi, talk to me about what john cryan is going to do. due to bad to make a good? beds make a good? yogesh: a low-interest rate environment is not good for earnings going forward. the m&a environment has not been as lucrative as they hoped. trading volumes are much lighter. they are still recovering from uncertainty around the brexit. we touched on this earlier could i wonder how the average u.s. investor is thinking about investing in europe at the moment? why would they want to take the risk when they have a domestic economy that is doing reasonably well? to negative snow make a positive . just because if something looks

cheap doesn't mean this is a good time to go invest in the banking system. there's a massive amount of uncertainty in european banks. guy: youngest, think you very much indeed. the market open his next. ♪

guy: david: good morning. you are watching "on the move." we are moments away from the start of european trading. here is your morning brief. summer, apparently is over. the markets are coming back to life. sell we due a september of? ppi numbers out of europe this morning. and a disappearing act. y $2.5's bankers sa billion of bonuses have vanished. we will be hearing from the deutsche bank's ceo, john cryan.

we are 15 seconds away from the market open and we are expecting a mildly negative open. let's run you through what we have got in terms of the market numbers. expecting a mildly negative open. dip a little bit of a coming through. the ftse, unchanged. and a similar story for the cac, and the dax as well. let's show you what is happening with the stoxx 600. this is the imap. as you can see, in terms of where we are seeing underperformance, it looks like pretty much everything is in the red this morning, very few market outperforming. the nordics, bringing up the rear this morning. they are down more than most. let's find out the details with caroline hyde. she will be anchoring "bloomberg

" little bit later. caroline: what is opening right now? u.k. treasuries. basin --hem down three we saw them down three basis points yesterday. the reversal option, they had to pay a price to get the bid to cover overall, guy. therefore, we saw a rally in u .k. 10 year. 0.5634%.ching higher, let's have a look at how we are opening on the stoxx 600 in terms of the industry breakdown. miners has seen the pain and metals are falling. materials are up by 0.5%. energy and oil are playing into this. in the green, the people who have been losing their bonuses, the european bankers, but financials are up .2%, not

really making up for the significant the year. the financials are the performers this morning? will that be led by commerzbank? a fascinating story coming out, according to merger magazine, we could be seeing overall in germany. deutsche bank and commerzbank potentially with a merger. not really telling us where they got their information from, but it is at a very early stage. commerzbank is up 1.5%. still, could it be considered the deutsche bank will be restructuring the business and bolstering profitability by eyeing up commerzbank? this is the french telecom and indeed, conglomerate. they are a building company as well. ar up 1.8% with first half revenue slightly slowing.

nevertheless, they stand by their outlook and have named two entity chief executive to help support the ceo. let's have a little click on the next key player. this is number four. the french phone carrier is increasing first half earnings. guy: let's stay with france. a bid willeculation be launched to replace president francois hollande. we are at the middle of a conference near versailles in france. over to you. by pierre. am joined the business represents 700,000 french companies. departurekel's yesterday, was it bad news are good news for business? >> i would say it is good news.

macronbusiness. he comes from the business. he is a truly international guy. he speaks perfect english. are interesting assets for a political person. we would like this. reporter: are you disappointed with what the government has achieved in the last four years? >> i think it has moved in the right direction, in any case. to decrease the tax burden on the company's by 41 billion euros. things are moving in the right direction. that is important for fronts. but we will have to go further and stronger, and quicker in those directions. i think, we are in the middle of the river. we have to go to the edge. reporter: is that mean you would

like to go to a different edge in 2017, meaning a change of governments, a change of majority? >> i would like to see what the candidates can propose to the business community. first of all, i am sure we have to have people who understand the business. and we have to put in place the business friendly legislation, can have a global objective. that would be a strong growth objective. that means we have to work together, collectively. we have to have the ambition for friends to go to a 3% annual growth gdp. that is so important. so, they are listening to us. we have some people from the left wing, candidates. they all try to understand what

we want and they are pushing hard. the impression is they are listening to us. this is good news. i am rather optimistic. reporter: we are two months after the brexit referendum. can you see the impact of the brexit on the french economy? >> the impact is negative for europe, for the u.k., and for friends. -- and for france. nger.certainly, the french econy will be impacted a little bit. and toe have to go ahead t move forward. like in every crisis, we have to find a way to reach opportunities, such as being more and more attractive for business, for finance, to be sure that we can, you know, find ways of developing more business in france. brexit is not good news.

it is bad news for europe, for brits, and for france. reporter: a lot of businesses are lobbying for paris to get some jobs, from london to paris. is that going to happen? >> we are working on that subject. again, we have to be clever enough, we have to be smart enough. the attractiveness of france, fo , france and for europe, yes we have to get more business into town and be more attractive. i think that reforms that have been put in place are there to show that france is moving. reporter: is angela merkel speaking tonight? >> i hope so. reporter: so, macros is not a minister anymore. here. he speaking >> he is a former

minister of the economy. he knows the business. he is a young guy, smart guy. i think people are waiting for him. now, we have to wait and see if he is going to be a candidate or not, officially. we have to wait for his program. reporter: the want him to be a candidate? >> and could be interesting for the elections. -- it could be interesting for the election. now, we simply need to see his program. there is no program for the time being. so, we have to evaluate his program. reporter: that was pierre gattaz. the head of france's annual business gathering here in versailles. guy: caroline, thank you. a quick check on the banking story. two banks that might be

repositioning, according to ,arkets magazine, deutsche internal conversations about the possibility of a merge with commerzbank. but look at the bounce that you can see in commerzbank this morning, up over 2% at the vaguest of possibilities that we might be some action. interesting stuff. it shows you how geared these stocks are for some positive news. we will talk about that in a few minutes time. up next, we will hear from the deutsche bank ceo, john cryan. he is speaking in frankfurt. we will bring you his comments. plus, a race to a stand up. socialists going to deny the candidate at another shot at the job? the u.k. from minister returns

from her holiday for a cabinet meeting today. below show you a preview of what is likely to be on the agenda. all of that is coming up. this is bloomberg. ♪

guy: you are watching "on the move." we are 12 minutes into the session. .2%..s. close down about

the cac is unchanged. the dax it's up a little bit. 600 ise is flat and the absolutely flat. here's the bloomberg first word ms.. it is saidman sachs, to have lost a $1.8 billion deal, according to people familiar with the matter. the investment bank was the original winner before it fel l apart. to prevailed them with their own deal. goldman sachs will proceed with a purchase of u.k. assets worth $450 million. representatives fromgoldman sach a purchase blackstone refused to comment. the u.k. from minister is gathering cabinet members for talks. theresa may has chosen not

to rush out in front of the public. however, they will soon face fellowe from politicians, investors, and even executives to decline what may really means when she says brexit. and hillary clinton has been given 30 days to provide written answers 220 questions stemming from her -- written answers to 20 questions stemming from her e-mail server. she has been asked to explain under oath my and how the private e-mail system was created and when she decided to use it for official business. the list was drawn up with permission of a federal judge. and the board of south korea's largest shipment container company has filed for court receivership. this comes after lenders rejected a restructuring of the

plant, thing it was insufficient. creditor said the company might still need as much as a $1.2 billion in the wake of losses. 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. let's get back to the banking sector. investment bankers are watching the banking firms. more than $2.5 billion has been wiped out as a result of a change in regulation. ubs are part of this story. this is inevitable, was that the jonathan? as a stocks go down and if you

are paid in stocks, you get less money. >> it is. but this is different. get a bonus. bankers are just getting used to the new way of getting paid. the deferred stock has not come through because it is underwater. the cash component of being a banker has changed beyond measure. bank shares can go up as well as down, though. how is it affecting the banks themselves, though? >> interestingly, credit suisse, have said in the second quarter, because of the stock related compensation, they accrued 30 basis points. that capital has fallen quarter on quarter. so, it is a very strange conundrum.

the point is now, more of these banks have moved to a revenue driven model. in a conference in june, they said, if you hit this revenue, you get this to spread however you want. same.ys has said the using equity sales and trading down -- we have seen equity sales and trading down. guy: who is worse hit? and deutschesse are in a critical position. i would imagine that the ubs bankers gave of a while ago. guy: yogesh, is this a good thing or a bad thing? >> i think it is inevitable and it has to happen. you look at the valuations and their cost space.

what is interesting is the difference between what is going on in europe and what is going on in u.s. in the u.s., they have seemed to make the model work, granted it looks like rates seem to be going up. but they seem to be making better investments. guy: the economy is doing better with the possibility of a steeper yield curve. >> i think the leverage is also quite meaningful as well and the banking system is bigger in the u.s. guy: jonathan, give me your two cents worth. the stocks of commerzbank is popping just on the idea that which a bank is considering -- ist deutsche bank considering the idea of a merger. >> i struggle with that one. i mean, deutsche has enough problems. look where the economy has gone. it is not what it was. commerzbank, again, they have

gone down twice this year on their roe target and things are difficult there. i find it unlikely that these anythingreate other than a potential problem. cryanhen jonatha speaks in frankfurt, how much time do we need to give him to fix this situation? he usually starts off in german and then moves into english. how much time do we give him? >> he did a good job at ubs, though he was in a slightly different position. with deutsche, he wants to be the last man standing in europe with fixed income. that did not mark. the u.s. banks have mopped up

some of the share. it did not happen the way it was supposed to. as long as he keeps delivering on cost, i don't think there is much more we can ask of him, as long as he reigns in pay, and everything he does is credible. unfortunately, the world did get a lot worse after he joined. guy: the u.s. banks are starting to recover on the biggest possibility over the last few days that the fed is going to raise rates. can we make the same connection here in europe? is there a possibility of rates going more negative here in europe? what would be the effect over here? >> the balance sheets in the way banks are funded has change beyond measure. with lloyds, they had a destruction in their mortgage book. if rates go the other way, banks

will try to pass it off on the banking or lending side. think we understand a lot less about the relationship between interest rates and net interest margins these days, the size of the hedge, where the sovereign bonds are, than we did previously. so, i don't think it is as linear as it used to be, almost certainly. they will be a very big difference bank by bank. guy: if we were to see the faintest of glimmers of a european recovery in place, how geared is the sector to that recovery? are u.s. investors pretty much out of europe at the moment? once the data starts to show even a hint of something positive happening, is this the place to be? >> good gdp growth, a weaker euro, all very positive for european banks, who are so beaten up. saw deutsche bank

priced around 1.5. oversold ins so this sector and this space. relying onurope is global growth, particularly in asia and china as well. you can see a positive outcome here if you start to see things take up in the u.s. and china and the spillover into europe, despite interest rates being lower. guy: not a lot is happening. i largely want to yield story to be going on at the moment. is there an asset allocation argument? this stuff may be a value trap. it is incredibly cheap. i don't need dto own it. but do i just on the european banking sector, just a little bit of it, just to anticipate that? >> i think there is an argument supporting buying on the purpose

of valuation. so, you have exposure. most of us already do. interesting for you is the u.s., and u.s. investors. would you rather go with u.s. banks or european banks at the moment. they do not want to risk their c attle on europe at the moment. >> i think the observation you make is the banks are still trying to fathom where revenues go. level, wheret to a you have decent visibility and some share buybacks. if you want to give your tell into the water, you can do it without worrying that your entire foot will be bitten off. be selective and focus on the revenue story. is speaking in frankfurt. let me bring you a few of his comments.

he is continuing in german. let me tell you what he is saying for those who don't speak in german. he says there are too many banks in germany, interestingly enough. the low rate environment is a headache for banks. he is also saying that the first half of 2016 was turbulent for banks. that might be something of an understatement. anything you are digesting and taking out of those comments? >> i think for the retail sector, there are too many banks in germany, of course there are. it is not going away anytime soon. also, that is not that big a part of deutsche bank because of their relationship with the post office. it is not quite as straightforward as that. low rates, yes we have been there for quite a long time. i think the issue from here is

very much, if you do see an improvement, if the environment did change, they have a lot of fixed costs. they have changed their ability to manage the variable side of it. the rate rise in question is interesting, but it will not happen for a long time. guy: german banks are falling behind their international peers and have been for years. there has to be a point where you think, the longer he sewe se the deferral happening, problem becomes greater and greater. as a point, the gap becomes almost -- at some point, the gap becomes almost insurmountable. >> yes. it is shipping in germany. they have a huge problem with shipping. structurally, there are enormous problems in the german banking system and they are not going to go away. how much will that affect

price? deutsche bank is not a german bank. it is still a pan-european semi-global investment bank. i think it is not disingenuous, but i don't think it is fair to look at germany too much. deutsche bank's problems are because of the investment banking. do you do about that? that is his biggest problem. ever be backsche where it wants to be? >> yes, i think it can. i think it needs to reduce its dependence on fixed income. it seems to be the place to go. it is the wholesale bond market in europe as well. eurowill benefit from the weakness going forward. yes, i believe they can sort things out. guy: thank you, guys. our thanks to yogesh dewan and jonathan tyce.

a quick check on the stocks. deutsche is now up 1.17%. commerzbank, up a full 4%. ♪

[speaking in german] guy: it is john cryan, speaking in german. it would be more useful from my perspective to be spoken in english. he is talking about the idea that are too many banks, speaking at the conference in frankfurt. there are too many german banks, he says. he says the bank costs must drop in medically. banks, apparently, need to become less complex. that tech come -- but tech

companies are becoming more complex, but we will go into that. the market remembered, though, it is heavily shored with german banking stocks. ryan chilcote is going to give us the details. ryan: thanks, guy. commerzbank, having its best day in two months, it second day rising. yesterday, the reason you just said it there, manager magazine is a german monthly. it is also online. they have a story on without a source saying deutsche bank is considering a merger with commerzbank. it is very volatile, very subject to investors covering their shorts. next up one up, -- next one up, bhp billiton is declining. it was declining in australia earlier today. still is worth a sense july 6. -- still its worst day since july 6.

the other story coming out of bhp billiton, the ceo will not be getting its bonus. he could have gotten as much as $4 billion. you will just have to make do with his $1.7 million pay salary. ad finally, grafton group, big loser on the day, one of the worst-performing stocks on the stoxx 600, down by 8.5%. it's worst day in only two months. they have plenty of bad news there. it is a 1.3 billion pound company. it trades here in the u.k. and filled building materials. they just said trading in june was very weak. do i smell brexit? they say it is too early to say. guy: shopping is more important than brexit, it seems. let's turn to more european politics. mariano rajoy says the nation is

that one of its most serious crossroads in history as he looks to secure the support of the socialist party. his allies and opponents will respond today ina a vote taking place at the end of the session. joining us now is ben. ben, what can we expect today? ben: well, the socialist leader, pedro sanchez, has kicked off the session this morning. he has launched really, a kind of visceral attack on rajoy. he painted a picture of a corrupt, deceitful leader who has really run the country in the interest of his own, in a row group of -- in his own, narrow group of associate. we will certainly not see an abdication from the socialist today, and probably not on friday. and i guess it also raises

questions about whether there is any possibility for a deal between those two leaders in the next couple months. if not, a third election. guy: a third election at christmas, i guess that is the most likely outcome now? bed: that is a good question. the timetable is pretty strict in spain. and the way rajoy has times this debate means that all other things being equal, the vote would be on december 25. there is a majority in parliament, however, who are opposed to that. the socialists can get together and outvote rajoy. they have made noises about changing the timetable to avoid that christmas vote. it seems difficult to imagine that we could all be following the voting on christmas day, but you know, it has been a year when many strange things have happened in spain. guy: yeah, that might be a step

too far. ben, thank you. let's carry on the conversation now. david now joins us. does raojoy end up with prime minister by the end of the week? >> probably not. socialistsnk the will change their opinion by the end of this week. to see thevery hard gap being closed. and if we go back to another election, will that change anything as well? >> we talk endlessly about western political systems being broken and new political parties emerging and effectively, ending the old monopolies. spain's system is probably the best example of this. guy: do we need to change the electoral system to get a government in spain? >> pretty much, the two party

system does not work anymore. guy: how long can spain carry on without a government? spain's, you look at economy in the last nine months and they are doing fine. there is the significant question as well, can he continue? day, thed of the economy has been moving along quite nicely. guy: let's turn our attention somewhere else. spain, not the only government, of course, with an issue when it comes to the political system. we were just talking about the fragmentation of europe. let's focus on another country. >> i presented this afternoon to the president of the republic my resignation as minister of the economy industry and digital affairs. i thanked him for having trusted me and allowing me to serve my country for two years, dedicated to the rear structure and --

reconstruction of our economy. macron, resigning. it was long suspected that he would. the french political state is getting very crowded. >> it is. and one of the things we have seen over the years is french political history is littered with candidates hoopla popular movements to break down the old monopoly and then are not able to see that through. i think macron has a better chance than most, but perhaps, not for the presidential cycle. that might be a look of late for him and his association with the current -- it might be a little bit late for him and his association with the current government. but in the next five years, why not? guy: but again, fragmentation. the old system is breaking down and new parties are emerging. >> absolutely. the party is in a complete mess.

the republicans have, as they often seem to do, a bit more existential this time. they have two candidates representing. they are going to have a very public fight in the next few months. guy: that the british system work better, though? there is a whittling down process. >> there is an eventually, you come to a decision and it works better from the point of view of getting to an answer. it also works better from the point of view of preventing extremists from getting involved. it is still very unlikely that anybody would lose in the second round. it looks like he will get to the second round. guy: if i had 10 euros to bet, would you put it on him? if he gets through and has the ability to become the candidate,

does he win? moment showl at the him ahead of everybody else. thank you very much indeed. i want to take you back to frankfurt and the conference where john cryan is addressing the audience. a number of significant headlines have been coming out. has suggestedne there is a conversation at the very early stages in some room in frankfurt where a commerzbank and deutsche bank merger could be a possibility. john cryan is saying, we need more bank mergers at a national and international level. he is not singling out the possibility that it could be an only german deal, or the possibility of an international deal as well. only through mergers can banks become profitable in the long

run. i think it does make for an interesting story. the is maybe why the stocks are beginning to move. let's check in and see where deutsche bank and commerzbank are trading this morning. member, they are very depressed. commerzbank is a heavily shorted stock. this move is not in its entirety a positive reflection of the idea that it could become a takeover. it could be simply market positioning. nevertheless, commerce bank is up fo4% and deutsche bank is up 2%. but we are at an early stage in this story. up next, we will talk to the 14 billion euro industry over the tech giant's taxes. this is bloomberg.

guy: john cryan on stage in frankfurt. interestingly enough, on a day when we had a conversation about the article suggesting that deutsche bank is considering a merger with commerzbank, using john cryan pushing the idea that only

through mergers can banks become profitable in the long run. when the more bank mergers, says john cryan, at a national and international level. monitorcome back and this as we work our way through the session. that the moment, both stocks are higher. the big story this time yesterday is what was happening with apple. the company was ordered to pay 30 billion euros, plus interest. ida, the agency responsible in ireland has responded saying, "ireland does not do tax deals and it is simply untrue's and a -- it mischaracterization is simply untrue and it is a ro gross mischaracterization." your country's tax code suggests will percent is the level at

which corporate taxes should be levied. apple was not paying that. explain the difference. >> it is 12.5%. the issue here is we tax activity in ireland. the commission seems to stress we should tax activity that is my happen in island. the commission decision is internally flawed. ireland should collect this opportunity, this tax, they believe. on the other hand, they are due in thethat it is u.s., they're not quite sure. ireland cooperated fully with them. the basis for this is entirely unclear. we are talking about a historic issue. this is the commission retrospectively imposing its view on ireland. they made these role 25 years ago.

that is a really dangerous precedent. if this decision was to stand, it would mean that european countries, not just ireland, could not defend on the tax rules set down by each member state. back to the and a moment. but first, let's dwell on the 12.5% theyou tax at money that is generated nationally. who should collect the rest? this is the question i have been grappling with. you have a list of money that you have been told to collect. you say we should not be collecting it. the question is, who should be collecting it? >> that is a matter the commission set out to answer. that is the question. is there even tax due? if there is tax due, where is it due? at the moment, the commission is saying, ireland should collective. maybe it is due in other european states, or maybe it is due in the u.s. at the most basic level, it

is not early coherent. ireland fully believes in international tax reform. we have been a full participation with the oec. -- with th eoe oecd. we have a very competitive taxation regime and we are unapologetic about the fact that it is competitive. we should not be punished for the fact it is competitive. guy: that is not what this is about. >> it is not clear what this is about. they do not support of collecting this. is it about something other than that? guy: my is the commission getting involved? >> from our perspective, we welcome clarity from the commission. it would mean they are encroaching on a national

president. undoubtedly, the commission is going to damage direct investment, not just into ireland, but into europe. guy: you talk with companies all the time. your job is to talk to them and encourage them. give me a sense of the scale how big a shockwave this is causing. >> at the moment, companies are digesting this and are waiting to see how it plays out. there is a lot to play out because it looks likely that ireland and the country are going to appeal this decision. the cabinet is meeting in dublin this morning to discuss its next move. in all likelihood, both ireland and the commission will appeal. i think companies are taking stock. but i think the outcome of this, the commission decision going unchallenged, or is it prevails, it sets a very dangerous precedent.

this would open the tax rates up to the commission at any time, retrofitting its view on what the taxes should be. i think that is the most worrying thing from yesterday. the commission, salami one hand should be promoting job creation -- the commission, who on the one hand should be promoting job creation, on the other hand, it has undermined our ability to track foreign investment. shanahan. you, martin let's take you back to the deutsche bank story. as we already indicated, john cryan is on stage. some interesting comments actually that might pour a little bit of cold water on the market magazine' story. john cryan, suggesting he is not looking for partners in the german market. he is talking about merger partners.

nevertheless, commerzbank has rallied under the biggest stability that -- under the vaguest possibility that there could be a merger with deutsche bank. just a quick reference on the brexit story as well. remember that john cryan is talking to an audience that would like to see what he is about to say happen, and that is he is suggesting london will be a very different financial sector in 10 years. i could have told you london will be a very different financial sector in 10 years time. he is evolving and moving -- the world evolves and moves on. i think he is implying that the brexit will have some kind of a fact. the brexit will clearly have an affect at some level. we do not know how this will affect the single market, early stages. it is hard to argue with the idea that london will be a different financial sector in 10 years. we will continue to bring you

the highlights. up next, the summer of brexit indecision comes to an end as theresa may gets back to work. what is going to be on the agenda? that is next. this is bloomberg. ♪

guy: 53 minutes pst thast the h. it has been an exciting session already. in just over one hour, we get

cpi data from the eurozone. then, we get mba mortgage application data from the united states. then, we have adp employment change. u.k. time, 3:00 p.m. eurozone spcpi data. staying with what we have learned thus far, the to bank is firmly in focus today. the conversation is taking place in frankfurt. john cryan, suggesting the london financial center will be a very different place in 10 years. i think we can all except that as a fact. the question is, what kind of a change are we anticipating? that is one of the questions that theresa may will be considering today back from her holiday in the swiss alps. she is gathering her covenant

for tal -- gathering her cabiner talks. what are these people going to be talking about? caroline: the cabinet and taught officials are meeting before the g-20. they are going to be under international pressures come the brexit define what the is all about. because we know that brexit means brexit, but nobody knows what brexit means. she has told the officials to come to this meeting, thinking about what we can do to make brexit work for the u.k. we still do not know when there will be a parliamentary vote regarding article 50. the parliament will have a say, theresa may said, but does that mean a vote? we understand that planning is

taking place at various banks for an ends to passporting, or at least a very big change to passporting. some want to maintain this existing access that they have, though some bank lobbyists have given up on that and movin are g more toward a swiss deal. guy: just very briefly, you were talking about the brexit. caroline: i guess in terms of an intellectual conversation, we have not gone much further. we still do not know what the brexit means. the consumer is not bother. the helpful index jumped five point -- the household index jumped five points. guy: think you very much indeed, anna. the conversation is going to continue. let's get to the german

unemployment numbers. so, the unemployment change is a little more aggressive than we thought. we will have more analysis on the deutsche story throughout the morning. "the

francine: the bonus pool dries out. draghi let's the data talk at all eyes on the eurozone inflation numbers. deutsche bank's ceo says central-bank side effects are hurting lenders. does the apple deal signal for the end of an era for business in europe? ♪ francine: welcome to the pulse, live