anna: as the investigation intensifies. robert mueller is said to be using a second grand jury to how select information in the russian probe. report may show the economy is on a steady trajectory. what does this mean for the fed balance sheet? rbs.arnings from analysts will look for guidance. we speak to the cfo. first, we get the numbers from swissread.d ♪

a very warm welcome to "bloomberg daybreak: europe." manus cranny will be joining us in an hour or so. he is off on assignment. breaking news. we getting numbers coming through from allianz. the owner of pimco as well. we have numbers coming through. year net profit of $1.2 billion. these numbers coming in from the world's second-largest insurer. insurers have been squeezed by a natural disasters including a tsunami. negative interest rates also

taking a toll on the ability to generate returns on their investments. fees, $19.8 billion. the industry is betting on a new trend. tailor-made policies. also looking for more detail from swiss re regarding the buyback. $1 billion. in buybacks. also looking forward to the combined ratio. looking for some numbers coming through from allianz. we will bring you those as we get them. the owner of pimco. we get the headline numbers from them a fee -- a little while ago. pattern to holding the asian markets. is not goingfic anywhere in a hurry. we have had some movement in the

risk assets. as a result of the news around the second grand jury being appointed by the u.s. special counsel in the russian probe. treasury has gotten a boost from that. thepretty steady regarding jobs report that we will get a little later today. 109?t keep above spoke to an fx strategist earlier in tokyo. u.s. futures are pretty flat. we have the pound for you. looked pretty flat. interesting comments from the bank of england. in the u.k. ino these early hours about u.k. wage growth picking up in the coming years. the vote yesterday was 5-2.

that is a quick look at where we are in the market. it is jobs day in the u.s. in the us, special counsel robert mueller is using a federal grand jury in washington to help collect information as he builds probes -- as as he he probes russia's meddling in the u.s. elections. has yet again lashed out at the russian investigation speaking at a rally in west virginia. he denied any collusion with russia. know that there were no russians in our campaign , there never were. we did not win because of russia. we won because of you. juliette: former bank of japan

said theber has central bank should start a policy normalization process. he was a dissenting voice during his time at the boj. if the boj continues, i think it will lead to a limit around the middle of next year because privatet right that a financial institution will gpminish the holding of the j completely. juliette: china's stock and bond market are placed to rally. that is the view of the shanghai investment management whose hedge fund has

returned almost three times the benchmark. >> as far as the market impact is concerned, the most violent place is over. i am sure you know that the chinese financial institutions will continue to be under pressure from the regulators. juliette: in dubai, a blaze has engulfed one of the world tallest residential -- one of residentialtallest buildings. it is the second time in two and a half years that the more than 1100 foot tall tower has been ravaged by fire. if you thought the trump administration tough on trade policies only involved chinese steel, think again. they are also investigating

whether spain is dumping its market.n the u.s. the move has prompted intervention by the european commission in support of its producers and drawn criticism from the continent's maine for rming lobby.n fa global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. you can find more stories on bloomberg's top . anna: thank you, juliette saly. the latest information you need to be aware of. further details coming in from swiss re. we will keep an eye on these comments as they come through. while u.s. markets were roiled yesterday, investors will be focused on jobs. things.d impact >> plus 180,000 jobs.

that is the consensus forecast for july when the jobs report comes out on friday implying stability. why is that? the six months and 12 month moving averages is right -- are right around two. justg might have increased a bit. closer to 200,000 in july. the topline number. average earnings will be a big interest again. the question -- will people make more money with unemployment falling? forecast says the gear on your great could fall to 2-4 percent from 2-5 .5%. labor and lists have been looking for support but that has not materialized and it is not expected to do so in july. consensus also expects the average work week to stay the

same. a number it has hovered that in the last year and a half. consensus thinks the jobless rate will fall back to its previous cyclical low of 4.3% from 44% but bi things that andd fall to four point 2% the julian rise that we saw was an aberration. economists are looking into whether the neutral level has lowered. because wage pressure has not placed that number at 42%. 4 -- 4.2%. by thee are now joined european equity strategist at j.p. morgan private bank. great to have you with us this morning. we look ahead to the jobs report later today. it seems the market has managed to pause after the stumble on

news that the second grand jury has been convened by robert mueller. the market seems to have put that to the side. >> that will be the focus today. looking at the headline number. the focus for the market will be where the unemployment rate is and what that means for the fed and also what is happening with wage growth. that is the key determinant in to taste -- in today's report. could be seen as another dovish sign and raise concern. to watch thate closely, more than the headline number which could be impacted by some seasonal factors. in july, the auto sector closing down. some factories. had a weakness in auto sales. might not be the headlines

you are looking for. 180,000 is the consensus. what is the range of estimates? we have all of that on the bloomberg. rateng at the unemployment , are you expecting it to hold steady? --are you more focused on u6 those who are unemployed but through no choice of their own? >> i think that is one explanation on why we do not see the wage growth that we should see at this point in the cycle when you have an unemployment rate that low. the number today is expected i think i the market to come slightly down in terms of unemployment. whether it goes down or not, i do not think that is the key. will we see the curves coming into play?

the fed seems to think they are still very much alive. there are questions around that because where we are in the cycle, wage growth should be more than 3%, where it is. the way that the unemployment rate is impacted by the factors, the fact that we have people leaving the workforce and being replaced by younger people who have the same wage as when you are at the end of your career. people are working more part-time, etc.. all of that has an impact on the wage growth. it is difficult to see how the fed could be more hawkish than it has been recently. this i have pulled up chart that has everyone thinking about where the fed will go. this is a really long view.

the dollar and the u.s. trade currency in particular going back to the 1970's. we do not remember. the dollar bear market is the conclusion you get from this chart. and that is the context. the period of weakness in the election.the trump what are your expectations around the u.s. currency? seemsthe shorter term, it the move we have seen is that it is quite strong. we have to differentiate between the shorter term in the longer term. there isrm, potentially pressure on the dollar as your chart shows. when you enter a period of weakness, it tends to last. in the short term, arguably a lot of optimism has been placed into europe both on the economic recovery side as well as how the ecb could address that and how it may be looking forward to

hiking at some point. at the same time, there is not the trumpanymore on administration side, frankly. shorter term, there could be some correction forced with the euro coming in a little bit lower. anna: in terms of the sectors that you are focused on in terms of european stocks. some quite taken by commentary on the bloomberg around the technology sector where investors may love tech may benow, but they thrown by all of the big investments in r&d looking for the next big thing whether it be artificial intelligence, self driving or whatever. a lot of that is costing money. >> that is a key question. the technology sector is a sector that is a focus of hours. broadly speaking. we also like the automation

theme. how much will be needed to fuel -- how much capex will be needed to fuel that technology? boost productivity and make it good for the long-term? you could have questions around profitability, but longer-term, that means economic growth potentially. if it does change the inflation dynamics. thank you very much. , we will tap into his knowledge of european stocks later. a quick look at what you should be watching ahead. withwandan president vies an opposition leader in today's election. nonfarm also the u.s. payroll. and after the u.s. closes, we have information from warren

buffett and berkshire hathaway. we are on brexit and the u.k. economy. this is bloomberg. ♪

anna: welcome back everybody. "bloomberg daybreak: europe" this friday morning. seng trade is pretty flat. it is job stay in the u.s. 180,000 is the consensus figure. will the focus be on the wage story. let us get a bloomberg business flash, here is juliette saly. juliette: toyota and mazda are nearing a deal to jointly build a u.s. factory. the capacityl have to produce 300,000 field of corollas and mazda crossovers

per year. the facility will create 4000 jobs and be operational by 2021. an official announcement is expected later today. shares in southeast asia's largest bank has fallen in singapore trading after dbs posted second-quarter profit that ms. to estimates on a narrow lending margin. the income included one-time items. the legendary cost-cutting deal in thethe food giant punishing grocery industry. second-quarter profit accounted for $.98 per share beating estimates. despite a decline in sales during the. . -- during the period.

god is closing down his hedge fund after large losses. after oillation comes prices wrongfooted traders from goldman sachs to bps insider trading unit. fund lost to 30% through june. let us check now on how we are seeing asian markets faring in late trade. the embassy pacific index is on track for another -- the msci pacific index is on track. ulster sharemarket coming under some pressure up by 0.2%. there is a caution ahead of the jobs report. in terms of stocks we are watching, we just talked about mazda and toyota. mazda shares doing incredibly

well in late tokyo trade. hong kong holdings are going the other way. this was affected by a weaker pound in the first half. is thedevelopment corp best performer in the region. a philippines geothermal company. we had the rba lowering its 2.5% -- tocast from 2-5 percent from 3.5%. is at once the 5%. a 2% differential. when you take in account the

strong dollar and the inflation forecast, it looks like a lot of the work has already been done in terms of the tightening of the aussie economy. we see a differential of only 1% when you take in account the very strong aussie dollar. back to europe now, mark carney says brexit is casting the biggest shadow over the uk's economic outlook. speaking out, the governor sounded a cautious note. u.k. economy is beginning the process of adjusting to a new and uncertain economic relationship with a european union. monetary policy cannot prevent -- but it can influence how the income is distributed. can support u.k. households and businesses as they are just to such profound change.

anna: in an exclusive interview, manager says mark carney will not move on rates until the u.k. leaves the eu. >> interest rates will not go up ofil we see the conclusion the brexit negotiations. he is unwilling with the other five that voted with him to take the risk of starting to put interest rates up. why put them up when there is so much uncertainty. europeanian is the strategist with j.p. morgan is still with us. i just wanted to point out, ben from the bank of england doing an interview pointing out details about the interest rate. another voice from the bank of england making it look like there is a conversation about where rates go rather than an

assumption. a challenging situation for the bank of england where it has an economy that might slow down. cracks of to see some hearing. at the same time, you have inflation where it should be and where the bank of england wants it to be. you are in this weird situation where you want to make sure that you do not get into a situation with too much inflation but you do not want to slow the economy too much. i think it is a very normal debate to have given all of the things happening in the u.k. economy. the question is -- will they act on it or not? that is what will keep the market busy trying to figure it out. anna: yesterday, some of the response from prominent figures on the brexit side of the debate.

disappointedhaps that the bank of england had reduced its forecast for growth. at the same time, perhaps taking hard from the fact that the bank of england is assuming a smooth transition to a post-brexit world. if things look anything other than smooth, those forecasts could come down further. >> that is a big assumption. i hope things will be smooth but it is a big question mark. in the worldank where the visibility is quite low. and the way they estimate when iscomes to wage growth indicative of them being unsure of what the dynamic is going to be going into the brexit and after brexit. in our view, the most likely scenario is they will reduce the stimulus they started right after brexit. but in terms of coming into rate

hike cycle, that is unlikely. anna: julian, thank you. he will stay with us. down with leveraging. one of china's top hedge fund manager discusses that next. this is bloomberg. ♪

anna: welcome back everybody. this is "bloomberg daybreak: europe." the dollar against the yen trading at 110. will it stay above 109. we are waiting for a few numbers to break this morning. let us get an update on where the markets are right now. flat. we are pretty investors in asia are looking at data.o the payroll perhaps shrugging off the news out of washington. there is a bit of a mixed

theure and we look at different indices. south korea rebounding after losses yesterday. australia and japan lower. seen dollar hit a seven-week low. the dollar holding its losses thatyesterday from washington news this chart is holdng how the dollar may 109 if the payroll numbers disappoint. but if it is better than expected, the dollar is poised to rebound according to a lot of technical signals including the relative strength index we have looked at before. speaking of that, i have a care. if the dollar is one currency that might be looking oversold by some measures, the euro by other measures is looking overboard. -- is looking over bought. even though the target is at the

120 level. the euro has shown a lot of strength recently. six-monthshow you the risk reversal charge. euro-dollar come six-month risk reversal. euro.sitioning on the bullish positioning on euro at its highest since 2009. anna: an interesting look at the currency markets. let us get back into the earnings story. we have numbers from austria's largest bank. second-quarter net income start ahead of the 339 million forecast. income, 180 9 billion. numbers were beaten on that measure as well. getting a corner sense of the first quarter. depositsness, taking

and lending to customers, it has been struggling. the ceo has always been quite outspoken about not liking the negative interest rate. we will ask about austria and the ecb and the check -- and the h change yesterday. questions fromse the ceo, for his first interview of the day. in about 10 minutes. a new edition of daybreak is available. let us have a look at some of the stories that have made it into today's edition. mueller, the probe intensifies. he is using a federal grand jury, a second one, in washington to help collect information. that is according to three people familiar with the investigation. the president has labeled the

fabrications.tal the next-door is about saudi arabia. the country's oil minister met privately with some of the world's top hedge funds last month. finally, daybreak focuses on --ael where the police has have confirmed that the prime minister is being investigated. denies all ofyahu wrongdoing and says the probes are a political witch hunt. top hedge fund managers says the most violent phase of china's deleveraging campaign is over. speaking to bloomberg, let us hear from the investment president and bike he had to say onut beijing's new crackdown companies making overseas acquisitions. and how that has been ineffective. >> we think we have entered a

more and morethat investors start to pay attention to the corporate fundamentals. do you see more of an upside? more positive for the market at the current juncture than we were six months ago. we expect the current conditions will not be sustainable. we should expect interest rates to decline and that should help the overall current conditions. that will be good for the equity market. presentingctors are the best opportunity at the moment? >> consumer discretionary's. we also like manufacturing

companies. technology. also pay a lot of potentialto the reforms. those companies could really reforms ifm these they were to take place. >> there has been a lot of conversation about the deleveraging campaign. how have you seen that feeding into the markets? riskingctive is it at d -- derisking? >> as far as market impact, the most violent phase is over. i'm sure that chinese financial institutions will continue to be under pressure from the regulators to deleverage.

what we areu assess seeing in terms of the regulatory crackdown on the large conglomerates? how should we read what is going on there? are startingayers to pay attention to financial risk. and starting to pay attention to the concerns expressed by many chinese observers that china has deaduch leverage and the isrising and -- and the debt rising and is unsustainable. there are some weak institutions. to take direct action. they ask you to cut down by selling assets.

bluntk this is somewhat and not market friendly but it is also effective. ,hinese financial systems chinese markets in the last few years are characterized by financial innovation. hindsight.efited in others, we have gone too far, too quick. looking ahead, in the next few years, we can see a much environmentgulatory on the financial market. that was the investment management president speaking to bloomberg's tom mackenzie in shanghai. the euro. ammunition toive traders bearish on the common currency. does the euro have more to run?

let us be too julienne with j.p. morgan who is still with us. let us talk about european assets. starting with the euro and looking at this chart. is it time for a break with what we have seen in the euro? has the rally we have seen recently, done for now? >> it does not feel that the euro is overvalued at this level. short-term, the move has been dramatic. some consolidation around those levels would not surprise us too much. the key question is where the euro goes from here. further strength is not impossible because of the strength of the economy. the other question then becomes what does that mean for european equities. our view is that there will be a headwind in the short term. it is an drifting to see

how this will play into europe and corporate profits? where does the pain level kick in? some say 120. but some say that is a psychological level. you have german exporters talking about the strength of the currency. >> what matters is the pace on how we get there. at this level, there has already started to be a headwind. todo not feel this is enough derail the story in europe. it was undervalued before and we are going back to a more normal level. for european equities, what matters is, for the first time in six years, we will see earnings growth. we have not seen that. maybe the stronger euro will take away some of the shine of that recovery but we do not think it will completely derail that. anna: for those that have not

jumped into european equities, now is a good time. pes is u.k. versus eurozone spread. this is the euro helping european companies to open up the gap against the u.k. it always depends on which currency you are starting with as to whether you will make money. do you think there is further to run? >> yes. looking at equity markets. should you invest now that you market making record after record. one market that has pulled back is your. market that is still attractively valued is a eurozone in particular. onare slightly more cautious the u.k. as a whole. we believe the concerns around a stronger euro are probably

overdone. anna: which ones do you favor? the ones with foreign exposure to bring back the profits? >> that was the trade-off last year. we are more focused on increasing opportunities. looking at companies or sectors where the consensus is becoming to bearish. we have seen what happened in the wake of the brexit vote and that was basically nothing when it comes to the u.k. economy. but consensus has moved down. is, --like housebuilder things like housebuilders -- we think there are still good opportunities. on the-12 months consumer side. what about where the ecb goes next. what is your best case for when we get a real start to tape

think proper from the european central bank and what it looks like? >> we cannot forget that tapering has already started. definitely, we will see more of that. they have been clear in the communication that that is the next step for them. is it september or october? i don't think that matters. we are moving clearly towards normalization. is how long itn might be. we believe the ecb will really take its time. the stronger europe may at some point have an impact. do not want to refer to the currency but if the stronger starts to impact inflation, the ecb will have a reason staro try to settle things down. and going from there, we believe

that it will support recovery. slowly, the ecb moves one of your colleagues has talked about yields and how they are no longer compensating. purchases have had an impact on the broader corporate debt space. this is the high-yield spread. the spread of the high-yield is coming down versus investment grade. some of your colleagues are suggesting that you're not being rewarded for the risks you are taking. >> when you look at the asset class, i would say clearly not. spreads are tight. risk is being priced in. our of which to be very specific with what we like in this space. still opportunities in the asset classes but it is on a case-by-case basis. anna: julian, thank you very

much. jpian has joined us from morgan. if you are a bloomberg customer coming you can watch the show using the tv function. you will follow along with all of the charts and the functions and you can join the conversation by clicking on the bottom "ask the guest a question." of the bank and ceo will join us for his first interview other day. we will cut about european banking and rate cycles. this is bloomberg. ♪

anna: welcome back everybody. "bloomberg daybreak: europe." let us get a bloomberg business flash with juliette saly. juliette: toyota and mazda are buildg a deal to jointly

a u.s. factory. the plant will have the capacity to reduce 300,000 toyota corolla cars and mazda crossovers per year. the facility will create 4000 jobs and be operational by 2021. shares in southeast asia's largest bank have fallen in singapore trading. it posted second-quarter profit that missed estimates. cross times legendary cost-cutting efforts. excluding some items, second-quarter profit amounted to $.98 per share beating estimates. despite another decline in sales. that is your bloomberg business

flash. anna: thank you very much. is still with us here on set. we want to talk about what you do and do not like in europe. we are digesting a lot of results this week from financial services operations in europe. how do you feel about the banking sector in europe? it has been one of our preferred sector this year. starting in february. we still very much like it. -- thented to the ecb comfort we have is expectations and they have moved this year but we are still very cautious in our opinion. the market is pricing in roughly 50 basis points in the next three years. that would bring the ecb.

have the rate side and the expectations there. very gradual. and on the economic side. long growth. better capital ratio. anna: fantastic. let us put some of those thoughts to our next guest. pleasure this morning of speaking to erste group -- joining us live from vienna is the ceo of erste group. great to have you with us. looking at your numbers. i am drawn to the net interest income line. what are your expectations or outlook given you still have a low rate environment in the eurozone? >> we had an event which was rather important to us yesterday.

the national bank increased the rate by 20 basis points. that is good for us because we are deposit rich in the czech republic. that will be positive for as. very stronghave growth, lowosit rates do her to us because we still have a very large -- do still have ase we very large government portfolio. it is getting better. if rates stay the same or if the euro will go up a few basis chance we see a strong that we can go back into a growth pattern. anna: it can go back into a

growth pattern. a little more on the czech republic story. in center bank increasing more than a decade. they are concerned about a bubble in the housing market in the czech republic. are you? >> we are not really worried about that but what is, of course, a logical consequence of low interest rates, in combination with the fact that where you the region hardly have any kind of capital market product. not invest in shares or investment funds because we have very little available in our region. it is logical that there is a andht into real estate therefore prices go up. i would not call it a bubble. we have seen bubbles before and they look different. it is blowing up a little bit

but it is not a bubble. anna: can i ask you how you are doing generally in central and eastern europe? previously, you mentioned how brexit could be a good thing because people might be tempted to travel back to that part of europe and how that might boost your business. are you seeing any evidence of that? whether thenow yet poles arethe flooding back to their home country or if they come from the u.k. or elsewhere. but the fact is we are strongly improving unemployment rates. in the czech republic, we have come to full employment if not over employment. that has a positive effect on real wages. ont has a positive effect household income.

that is, in my view, the main reasons why we see lending growing substantially faster then in the rest of europe. turnarounddefinite in the labor market in our region. difficult tory find employees for the moment. anna: something that the central bank referred to in their economy. very different from some of the other economies that we talk about often. can i ask you about poland? said to of assets are be for sale. are you tempted to get into that market? >> we are betting on george. believedeveloped what i the most attractive digital platform in our region and one

of the most attractive platforms in europe. i have very little interest in buying brick and mortar. we can reach our clients through digital channel -- digital channels. banking is a lot about getting simpler and buying another bank does not make you simpler. that would have to be a really, really good occasion. thinkhow quickly do you the ecb should unwind its qa e program? it's qu >> in my view, they should stop it immediately but they will wind it down until the middle of next year. that is what everyone assumes. faster and will move actually hope they will go for a

rate increase, sooner rather than later. andreas.nk you, ,e will get numbers from rbs the giant here in the u.k.. that is up next. this is bloomberg. ♪

manus: the investigation intensifies. robert mueller is said to be using a second grand jury to collect information in the russia probe. anna: the u.s. jobs report may show the economy is on a steady trajectory. what does that mean for the fed alan sheet unwind? unwind?ed balance sheet manus: -- >> we are announcing we are in advanced discussions with the dutch national bank for setting up european headquarters in amsterdam. logical market for us. we have a bank there, it has the

right licenses for us. ♪ manus: welcome to "bloomberg daybreak: europe." i'm manus cranny. anna: and i'm anna edwards. manus is back. we have news breaking from allianz, the german financial giant, the owner of pimco. we have headlines coming through today. inflow, $52 billion in the second quarter. about some of these numbers already. the q2 revenue number looks lower than announced, at $13 billion. well, interesting as ¥1.75 trillion in that the

four-year net income levels. getting some details on the first quarter performance of the company and some forecasts for the year ahead coming in from toyota. to what extent are they trying to share those are indeed -- those r&d? the two companies are nearing a deal to buy stakes in one another and build a u.s. factory. manus: let's give you the top lines on second quarter adjusting operating profit. ago. up from a year it is a turnaround story. they are operating at a buffer .f capital at over 14.8% in the margin is at 2.81%. this is what the cfo had to say about the numbers at rbs. of very good set

of results. we are encouraged by the progress we are making. it is our best six-month results since 2014. income up, costs down. but we know that we still have to settle. we inspire -- we aspire to get that settled this year. that could push us to our bottom line. how much of a possibility is it that you get the deal? clouds a bit of a black hanging over the numbers for 2018, isn't it >> we would love to get a result, but we have no updates today. like no more looks substantial provision. are we done with ppi? can you ensure the investors that we are done? >> i have made that statement a number of times.

time we weret that doing that. we were trying to be cautious. we think we are continuing to be cautiously positioned. but i am not going to sit here and say we are done with ppi. reporter: the one story with every breath -- banker i sit down with this brexit. an update on your brexit contingency plan? >> you will see in today's announcement that we are announcing that we are in advanced discussions with the dutch national bank about setting up a small european headquarters in amsterdam. very, very logical market for us. we have a bank there, we have the right licenses. it is the right decision for us, but it is sensible at this point. reporter: how many people are we looking at potentially? relatively small markets operation. i do not think it is a large number of people that we are in discussions with. we are in discussions with the dutch regulator and our own

people. reporter: i speak with various bank heads, and i wonder your opinion in terms of being potentially outside that scalable ecosystem that appeals -- that appears to be happening in frankfurt. any concerns there? >> not at all. the french national bank is very familiar with it. we have a long history going back, so we are very, very comfortable setting up business in amsterdam. reporter: let's talk about the story of growth. second consecutive quarter of attributable profits to shareholders. where does the growth story come from when we talk about 2018? >> when you look at today's numbers, continued very good us.th for we are growing about three times faster than market growth rates. we will continue to prioritize in this environment secured lending over unsecured lending. sme's, we are seeing good

investment in banking. at the top end, we continue to be more cautious. commercial real estate, another area where we continue to because this. reporter: i was looking at with the bank of england recently said. spiral of complacency with car loans, credit cards, mortgage lending as risks. is that a fair warning shot to you, the banker? >> not at all. today's trends continue to be very benign. we spent a lot of time looking for canaries in the numbers. we cannot see those signs today. but we will continue to be extremely cautious in looking for any signs of weakness in the credit markets. provisions are historically low. do you think it is unnatural that we stay at those levels of provisioning? >> no, we have told the market we are guiding -- guarding for

strong provisions. we are looking at the current level of provision is being unsustainable, so almost inevitably, i think credit conditions will deteriorate over time. reporter: your customers -- listening to mark carney as he was saying the darkest cloud hanging over the u.k. is brexit. is that what you are really hearing from the borrowing side, from the community of business? >> i think it is mixed across the customer base. some are doing very well in this environment, others are being more cautious. we know,ncertainty, as causes people to delay investment plans. i would agree with the bank of thatnd comments yesterday uncertainty is bad for markets come about for investments. your overall outlook, it is almost like we are at an inflection point. are you optimistic, as you said you sat down and looked at the business, the british economy. there may be tough times ahead, but we are set for that? >> we try to position the

business appropriately for what we see is tougher times ahead. bank oflooked at those england forecasts yesterday, we are forecasting low growth continued reasonably high employment figures. we are not looking at a material lowet down to persistently growth economies. we think we are well-positioned for that. reporter: delighted to see there is no prospect of the moment for a rate hike or disappointed? >> for us, we got a lot of our funding on demand or in current account ending. he would and if it more than most banks from arising environment, so we would welcome higher interest rates at some point. we positioned the bank for what it is today. you can see in our interest margin, the continued pressure today that comes as a result from this rate environment. reporter: and there will be no abatement on that until you see a change in rates? >> we are not planning for any

significant improvement for some time. ce -- the cfo the speaking. to bring you another headline, blackstone and cbc dubai pay . we had previously been talking about 590 pence per share. offers for other players, well-paid. a safe delivers -- paysafe delivers a variety of services. we will watch that one at the start of trade. crossing 2.8 7 billion pounds. manus: we just heard that the cfos over at rbs. let's bring in our reporter. that was a good set of numbers. you have got operating profit of

1.7 billion pounds, up from 1.0 game -- 1.0 4 billion pounds. it does look like a decent set of numbers, and i think important lee, we have gotten through much of the headwinds. the important question is what is the doj settlement? manus: he suggested they might do that this year. that it is a question of who will be in there. jonathan: there is the risk because of that, but also the range of estimates is still huge. is sortedews is it out, revenues, i will be interested to see what they have done. they have done well there, good -- done well on costs. it is not helped by the fact that the rates have gone nowhere for a long time. what i think when we look at the stories in europe, you couldn't put a number on the agent.

long timeeems like a ago when we were talking about frank goodwin and the deal, but they are making notes of that with the dutch regulator. --und the head quarter around the headquarter in amsterdam. in terms of the u.k. story, there is brexit, but the consumer environment. the bank of england flagged it. it is very clear to you, manus, that it was expected to go up in the future, but right now, looking for signs in weakness in the consumer market. it is benign at the moment. the competition is so fierce. the markets is a horrible place to be. consumer credit, you have the credit cards, pcp, small for them, bigger for lloyd's, competition is not going away. as people are growing ingressive in this environment, you

question why, and in you know it is because there is a bad debt around the owner. i will be interested in what they do. these are all problems that are not going away. manus: that was the line -- we chatted about this. economy is brittle, but it was a warning shot from the bank of england. anna: eyeroll. manus: what lenders are in the spiral of complacency. it is a cliche, but what did you make of this? jonathan: what i think was interesting as there were very clear winners and losers. there are still problems. at the french, which should be at a sweet spot. anna: it is not forming on the trading side. jonathan: trading, but also asset management. they have got 25% retail market

share value from their parent companies, and they plan to use it. they are reasonably positive on the top side. they want to own financials, and it is a little bit easier to see where you want to learn that. manus: thank you for being with us. jonathan tyce is our banks analyst. anna: now let's get a bloomberg first word news update. juliette: anna, thank you. using aueller is federal grand jury in washington to help collect information. that is regards to russian youring in the 2016 selection. according to people familiar, the grand jury is in alexandria, virginia that is already involved in the inquiry. in while, donald trump has lashed out at a rally, he denied any collusion with moscow and says it is a total fabrication. >> most people know there were

no russians in our campaign. there never were. we did not win because of russia, we wind because of you -- we won because of you. the dissenting voice during his time at the boj made comments during an exclusive interview with bloomberg. the boj continues to partners it is the limit around the middle. that privateely financial institutions will holding.iminish the dubai, a place has

engulfed one of the world's tallest residential towers. storyities say the 86 building was successfully evacuated with no injuries reported, and the flames were brought under control. it is the second time in 2.5 years that the tower has been ravaged by fire. if you thought the trump administration's tough on trade policies only involved china and canadian lumber, think again. the commerce department is investigating whether spain is dumping is always. -- it's ol ives. the move has prompted intervention by the european commission in support of its producers, and drawn criticism from the continent's main lobby. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . of a muted session to

round out the trading week here in asia, but worth noting the asia-pacific index was up for a fourth consecutive week i 0.1%. off bykei closing lower, 0.4%. a bit of trepidation ahead of the u.s. jobs report in the ongoing russian probe. hong kong stocks are still holding the two-year highs. australia's market way down by cba today. a quarter of 1%. some mixed movement coming through on the csi 300. rally coming back up. not reversing all of the losses we had from that slump from samsung. said to betoyota are close to building a joint u.s. factory. we just had toyota numbers coming through after the bell. holdings falling in hong kong. two is one of li ka-shing's

companies. companyippines energy is doing very well today, almost up by 17%. we saw a lower gdp forecast from 2.5% 3.5%. you see some of the work to tighten the economy is doing -- is being done by the strong aussie dollar. ave the neutral rate with want interest rates at 3.5%. the official rate at 1.5%. taking into account the inflation rate, it bloomberg shows instead of a 2% differential, it is only a 1% differential. anna, manus. manus: thank you very much. anna: she has talked about the

rba. it is the second day. it in strategy and -- australian insight. manus: positive day for to yoda. they raise their profit from first quarter on the numbers. we will discuss everything toyota. that is next. ♪

♪ anna: welcome back. 8:21 in paris or berlin. get a quick check on the markets. this is where we are expected to open. a -- upper around 0.2%. the u.s. features are pretty mute. -- u.s. futures are pretty mute. the pounds, we put that in there because there are comments coming through from the bank of england. he was talking about how rates

may have to go up faster than market expectations currently, but also mentioned it will be very gradual. he was talking on u.k. radio. manus: let's face it, it did take a spanking yesterday. as christian forbes let the bank of england, it was trading at 131.89. let's go to juliette. juliette: shares in southeast has fallenest bank in singapore trading. that is after it posted a profit that beat estimates and a drop in trading income. net income including a percent from a year earlier to 830 million u.s. dollars. the food giant was able to cope with the punishing grocery industry in the last quarter.

the second quarter profit amounted to $.98 a share, beating estimates. the stronger earnings came after another decline in sales during the period. the oil traders sometimes known closedets as god has down his hedge fund after big losses in the first half of the year. according to people with knowledge of the monitor -- of -- a separate person with knowledge of the matter fund lost almost 30%. that is your bloomberg business flash. anna, manus. manus: toyota and mazda are nearing a deal to share stakes in one another, and build the u.s. factory. anna: it comes as toyota reports a first quarter operating profit that beat estimates.

very good to have you here with us, michael. let's talk about how toyota has performed. in terms of how toyota has been affected by suv's in the u.s., they have done quite well compared to the u.s. market. michael: they have benefited from new products. it is very important for them. they should continue to benefit from new products such as camry later this year. manus: the other mentioned is the cash type. billion innearly $53 cash on their balance sheet. we have a graphic, let's pull it up in terms of dividend pay off. relative to the ferrari, honda, they are just not paying out. of the global carmakers have significant cash balances. this is to make investments in the future.

they might need that money for something. how has the reporting season been going for you? it has been sidetracked in europe by some of the scandals hitting the sector and the investigations that are ongoing, but how has it been in general terms? michael: in general terms, it has been good for automakers. a good contrast was yesterday. the had just set up results. one billion euros of cash flow. the stock was barely a. then you had tesla, which burns $1 billion in cash, it is losing money, and it was up. make sense, this idea that you share r&d costs? wanting to share r&d costs with the manufacturer? this is something carmakers will have to do increasingly as they look to all these new

technologies. michael: it has been a huge increase in our indeed for elected -- for electric and that is what toyota and mazda are doing. seven: 20 6 a.m. in london. we are counting down to the jobs number in the u.s.. the estimates are for 180,000 jobs. the question is will this be on trend? how hard is it to fill the jobs and pay the money? it is all about the wages. anna: and we need to have progress on all three fronts to secure the rate tightening cycle, with what is needed to normalize the fed cycle. there are more americans entering the job markets. manus: the earnings is at --, which is the confessed

consensus estimate. anna: you want to stay with did -- stay with bloomberg for that. the open is next. this is bloomberg. ♪ ♪

matt: --nejra: friday --guy: friday morning, good morning. matt is over in berlin. what are we watching? the probe into russian influence influences as robert mueller appoints a grand jury. what does this signal about where this investigation is going? jobs.jobs, how many have been created in trump's for six months in