anna: good morning, i'm nejra cehic. manus: i'm manus cranny, live from dubai. this is bloomberg daybreak: europe. nejra: your move, china. as the threat of a trade war hangs over market, the world awaits the asian superpower's response. we are live ahead of president xi's address. manus: the german bank deutsche bank cuts john cryan out after less than three years in charge. one lifelong employee will be the new man to steer the troubled bank. nejra: debt the luge. the congressional budget office may increase the forecast for the u.s. budget deficit. how will investors respond? ♪

nejra: welcome to the program. let's recap some highlights that broke a few minutes ago. novartis to buy of excess for billion, $218 per share in cash. we are also hearing from avexis that the transaction is expected to be completed in mid-2018. let's take a look at how markets are responding to this trade skirmish that keeps moving on. we are awaiting a response from china after more developments from the u.s. on writ friday. the msci pacific index shrugging this off, with gains of .8%.

chinese markets reopened this session and it is the hang seng that is very much outperforming. we are also seeing u.s. futures edge higher. let's look at the dollar -- in terms of the dollar index what we are seeing is a little bit of consolidation after the weakness on friday. dollar-yen has been stalling a little bit, 107 on the nose is where we are trading ahead of haruhiko kuroda giving a news conference as he starts a new term. finally, i have a 10 year treasury yields, up two basis points in the session, 2.97% is where we started. yields have been interesting higher in the past few days -- we went above the 50 day moving average on friday, blackrock sees 3.25% by year end but we are back below 2.8% and we have to talk about net shorts at a 13

month high. manus: we have to talk about deutsche bank. it has just gone 7:02 in germany. he is a life or, since 1989 he has an in charge. a revision of the internal process, new leadership won't accept missing targets anymore. this is the core part of the differentiation between the chairman and to the outgoing john cryan. new leadership will not accept missing targets anymore. the bank says it needs to see improvements, and here's the kicker -- are you goldman sachs? we spoke to francine lacqua -- jpmorgan says stop using capital in the united states, saying

missing cost revenue targets is damaging for the bank. we will analyze how corporate investment banking works in a difficult environment. all things for all people does not work -- is this the man that can emulate tidjane thiam, sergio ermotti, and outperform john cryan? those are the key issues. we have matt miller on the ground later. trade. you have novartis, deutsche bank. let me talk about that. this is the chart we have put together, dtv is where you can get it. china says we do 3 billion, then it says 50 billion. they can get away with 3 billion, but if you mix and match you actually physically run out of product to put tariffs on. so where do you go?

china says it will fight back. we are on the ground for that. for trumpet is about the art of the deal, his tweet is what moved markets into risk on fervor this morning. nejra: he absolutely dead. an important chart. if china can't use tariffs in the same way, what other measures might it take? the selloff on friday, the 200 day moving average still in play. it looks like we could open higher later today on the s&p 500, the dow jones, and the nasdaq. you were just talking about deutsche bank -- we will bring you analysis on the senior shakeup, with interviews with two shareholders with a senior portfolio manager and hans christoph. those conversations will happen later this morning. but for now let's get the first word news with juliette saly.

explosions have been reported in a military base in syria a day after president trump warned of a big price to pay over reports of chemical attacks outside damascus. rescue workers and activists say dozens of men, women, and children were killed over the weekend and the chemical assault. while the u.s. has called for an immediate international risk on, moscow is warning against any military strikes. bank's advisory board has named a new ceo to replace john cryan and in a wide overhaul of senior management. a deutsche lifer who currently heads the banks private and commercial arms will take over immediately. as part of the re-organization, garth ritchie is promoted to saul head of the unit and will become deputy ceo. seen three top leadership

appointments in six years amid pressure from investors to improve profitability. victor auburn has scored a crushing election victory to clinch a fourth term as prime minister of hungary. his party is on track to repeat the two thirds majority it won in the previous two elections. the european commission vice president says the eu should not participate in a trade spat between the u.s. and china, or he says the bloc could leverage its role as the largest market uphold the rules of international trade. it spoke to bloomberg engine of you. >> it's not so much about taking sides, it's about respecting internationally agreed-upon and trade disputes, solve them within wto. the head of saudi

arabia's stock index says it is almost ready for the aramco ipo/ good to goey will be on the listing whether it is this year our next. >> the market is ready. this saudi exchange is making necessary changes by entertaining the second half. juliette: a new survey suggests tons want to hold the final brexit vote. 44% say the public should have the final say on whether to accept a deal or remain in the eu. 36% say there should not be another vote. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries.

you can find more stories on the bloomberg at top . a lot of selling on wall street on friday but investors in asia had more time to digest all those moves, and we had the tweets from president trump singh testing more risk on. the trade war spat could be dissipating or at least come to an agreement. the nikkei up in late trading, chinese stocks resuming trade for the first time since wednesday, and we are seeing buying across most indices. and australia's market in late trade is also looking quite good, supported by the material sector. alumina is where we are focusing most of our attention today, you saw the russian company fall in hong kong according to the hong kong exchanges but a couple other players we are seeing, in sydney and malaysia, looking

good in late trade. that is on a takeover offer from a company offering a 59% bid. manus: thank you very much. risk on, risk off. president shooting pain will be speak -- president xi jingping will be speaking on tuesday, expected to address the threat publicly for the first time. tom mackenzie is on the ground in beijing for us. good to see you. what do they think china's response is likely to be? i just laid out the physicality of it -- $3 billion they can manage, 100 billion begins to get difficult -- the reaction? >> certainly it is a challenge

for president xi, and he will have to walk the tightrope in his speech. we are expecting him to push back. certainly you will be under pressure from his own team to push back against these tariffs. he is unlikely, though, to name check president trump, or even the u.s. he will want to reiterate that china has the right to protect its own industries and to retaliate. on the other side he also wants to welcome new investors and make it clear that china is a market that's open to foreign investment. he doesn't want to see these trade tensions exacerbate because he has a lot of domestic issues he wants to tackle. what we have been hearing is that there will be quite possibly some significant announcements around opening up some of the sectors so that is something we will be focusing on. there's something of a credibility gap because for many the reality on the ground in

china doesn't match the rhetoric from policymakers. nejra: how is all this playing out in china's markets? they are replaying after the holiday, if you look at the equity markets and what's happening, markets are shrugging this off? saying, theywas appear to be taking this in stride. the hang seng index is up nearly 2%, though some of it is down to strong earnings and companies like tencent doing well. in terms of the shanghai composite, they have had a choppy day but are getting games. the bond syrian in china are doing very well, the yields are expected to soften, and then of course we have the fixing for the yuan, slightly stronger, and

the fx reserves up for the month of march by about $8 billion usd. whether or not these trade tensions see the fx reserves start to advance is something we will be watching but so far markets are taking this in stride. matt: let's see where we go. it is in part the tweaks this morning that has given some sucker to the market. tom mackenzie. let's bring in our guest host this morning, the asset strategist. good morning. when i looked at the tweaks this is wherei think that the market hundred , saying we will be buddies forever, china will do the right thing, they will equalize the situation. it's all about the art of the deal, isn't it?

china will take down its trade barriers because it is the right thing to do. 1987.rt of the deal," >> good morning. about it has always been negotiating and negotiation tactics from trump, but if you go back in time, even with north korea, left, and now the trade war, you keep hearing a harsh rhetoric, and then the actual delivery is much softer. investors are getting a little bit tired having to constantly try to price what will happen in a full-blown trade war. that is why you see a lot of worry in the market. but let's not worry too much, trump has said in the past that it is very much his tactic and in the end he is pragmatic and i think that will dominate. nejra: you reduced your emerging market exposure.

is that the way you are finding to express any eventual concern about a possible trade war in your allocations? >> absolutely. if you think about what it means and if you step back a little the global economic picture remains positive and strong. economicslowdown in momentum but we very much believe that the environment will be conducive for risk assets. within risk assets we expect some preferences and recently we did that down a little bit with emerging markets partly because of the trade war risk but also because of the risk that you could have a stronger u.s. dollar going forward which could eventually weigh on emerging markets stocks. manus: you mentioned the dollar, we have a chart up on the screen. gtv, this is fx volatility. i'm amazed -- if anything it is

quite subdued. it is quite a positional change in terms of dollar-yen. ultimately, do you need to see an explosion in volatility rather than just equities before you would make any more dramatic changes? >> i think it wouldn't be necessarily driven by volatility and how weamentals see the risk of having a recession going forward. when you gather a very high risk, that is when you get potentially large bear markets. until then, you are getting more relativity, and we called for it from last year. but that doesn't change the picture which is volatility for risk assets. shot, manus had a great which shows china may be limited in terms of responding to the latest moves on tariffs.

what other steps are you anticipating? one thing that has come up is whether china could reduce its treasury holdings but i know the conversation is more nuanced. a lot of people talk about the holdings that china had in the u.s. target and it was holding more agencies than treasuries, so doesn't move around the treasury market, those questions would have had more impact in the corporate on space -- how do you see that playing out in terms of china and the u.s. market? >> the u.s. has leverage in his negotiation. they just put out a huge fiscal ismulus and what that means by stimulating their own economy that really benefits china. and say weo see xi are helping our country, indirectly. i don't see china retaliating by

selling treasuries, that would be an extreme measure and it wouldn't benefit. so they have replied harshly on the tariffs but there's only so much they can do before they run out of things they can put tariffs on. they have other measures, or are a lot of u.s. companies doing business in china could be affected, so we have to see what they would say, but if they did move away from just talking about tariffs, that would be escalation and would be bad for sentiment. manus: that for sentiment, a consequence for inflation. have a look at this. this is another chart on the fiscal situation. the congressional budget office will release an updated view in terms of just how tough that is. now look at the bond market, i have a triptych. $64 billion worth of paper coming into the market,

and i also have cpi. 3%?we talking yields above i think people earlier this year were very worried around this fiscal stimulus and what it meant for inflation in healed and you have this selloff on the back of that, then fast forward months and people seem to be more worried about a google trade war and a slowdown in economic growth. i think neither will happen in the short term. what i know for sure, if you look at the 10 year treasury yield, it is still really high because of the technicals, the huge issuance that takes place on the back of this u.s. deficit. it could even percent about 3% when you look at the amount of debt that needs to the

observed by the market at a time where the fed is gradually removing from quantitative easing and other central banks are planning to do the same. that means we could get higher yields in the u.s. from here. strategist,-asset you stay with us. coronaity at the boj as enters his second term as central bank governor. the indicators for inflation or turning positive. will it hit 2%? manus: indeed, the whole world is looking for the magical number. this is a man the world is focused on, the shakeup at deutsche bank, a new ceo. but will it mean more moves at deutsche bank >> we are live with the very latest. this is bloomberg. ♪

tous: haruhiko kuroda is set

give new findings today. he is set to mark the occasion, with faster wage growth and a positive output gap. 2% target seem a bit distant. this is the story we've talked about for as long as i've worked at bloomberg. the distant low lands end high lands, let alone in the underperformance -- will they make it to 2% and if so would you buy japanese equities? >> i don't think they will make it this year. but that's not really the key issue. i think the trend is what matters to investors and what matters to us. you have seen really good retail , and there an pickup in wage inflation which

is quite new for japan. the overall picture for japanese markets is quite positive. ,hat's a market we own and like it is very cheap on valuations. it is very much loved by international investors and we think in this environment where you have tension in emerging markets and some disappointment in the u.s. on the tech sector, japan is a good market to be positioned on. nejra: investors are not loving japanese markets. will japanese investors not love treasury? take a look at this. part of this is down to dollar weakness. what do you see them doing from here and how might that impact the global investment portfolio? >> again was quite strong this year on the back of her nude volatility, it is typically a safe haven for investors.

i think the chart you are showing is very much a reflection of hedging, so there are a lot of flows into european bonds despite the low nominal yields. when you translate that it makes sense. that i think is very much a reflection of what makes sense to them and seeking yields out of their domestic markets. manus: you stay with us. we have more value to extract from you from the deutsche bank's tory to europe. we are live with the rest of the team. groundller is on the with the new ceo. cryan, heacing john will integrate, he will review corporate institutional banking, he is a man on a mission. the new gadfly piece is

fascinating. the ambitions of the man who joined deutsche bank in 1989. he is the ceo. these are the shareholders that we talked to on the deutsche bank story. ♪ retail.

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>> it is 6:30. strugglingyen is ahead of the news conference as he starts his new term. we saw some dollar weakness after the jobs report and let's of then on the rest markets. trade tensionsng

dominate the news and the higher and we see that across-the-board. morning and of this the market is waiting on what the president does in response to the escalating trade rhetoric. many are trying to see the balance he is going to strike and showing the world that he is willing to open the market and .his is certainly one to watch let's move on to the commodities that have been front and center u.s.his is something the depends on and it is important for the united states. we have these trade tensions and

that.rket is working with there will be robust sanctions on companies and billionaires and these are the biggest producers of aluminum. andave seen this skyrocket this at then to bank of japan and you can see the diversions between the andal and the potential this is the highest we have seen in a decade with signs that hiroki kuroda is making progress, but i do not think they will ever hit the target. >> good to see you.

has named a new on.to replace john cry the ceo has spent his entire career at the investment bank and let's get to matt miller. the tcu. spats ande of those the savings mission looks more deutsche and less angst. >> absolutely. to be honest, this mission the savingslike mission now from different people. and theright about this

board was unhappy about the yeares that were paid last for the poor performance. what will he do and will they do a better job and will this open into the business? wonder what changes we see .ith garth ritchie interesting as part of the overall. leave had been looking to the deputy one of

you, along with carl and would assume he wants to build he is going to come against the saving like you have never seen. it is a european focused bank. >> thank you so much. us, the ceo. great to have you with us. recommended selling shale -- shares. >> we said to buy.

did we say sell? and we had ay technical recommendation after that financial meltdown and we realize that the bank was headed towards a restructure. this and we think that this will be in the sector. >> a good morning to you. accelerate the performance? isy said that deutsche bank reckless and that this is not goldman sachs. do you agree or disagree? this, it isok into

not a buy. in the last year, these were somehow unguided and everybody was against this. simply was just not the we believe that they with the new ceo there the advantage and is the risk management and he knows where the issues are. he grew up and never worked in we need new power

that, but ild be think that the days are cap -- live. that wereere some considered as an approach. do you think that deutsche bank is not going to be able to compete as much and will it really matter? should they focus more on germany? andhey have to restructure been trying toas be a big player and they went into every mess that you could imagine and i don't see a single argument, but i think they this andntinue to keep

and they strong market did not make money in this itket, so they reconstitute and that is what the bank has to hand, ion the other supervisorys a lorde with hard-core investment bankers and he is kind of trying ping-pong and will be doing something to make people happy, but i do not think he is in control of the bank any longer and he should step away. that thee saying shareholders should call for him

to be dispensed with? >> this represents the shareholders, right? i don't think that they have this isted well and strengthening the supervisory board and that means that the bank will be kind of a vacuum somebody from outside has to clean it up because somebody from inside is to close to these people and important decisions have to be done by people who come in with a strong vision and execute it. much.nk you so you more analysis from deutsche bank throughout

the day. >> those are the names and you read it out. after 9:00, we will speak to hans. multi-assets is the strategist and you heard the conversations there. let me take you to a chart of who is winning with the bondholders versus the shareholders and this is a good view to you. a retrenchmente from the investment banking activity and this shot is good because they have been struggling on the equity side,

usps and we made the code of the bond structure it towhere we would want the. are is mainly because they quite punitive and they have been a strong story. is very at this and it cheap in europe. is with this treading cheap banks have the european on the equity side that could havee attractive and you european curve and

banks are more sensitive to this. normalizationis and that should benefit banks. there is as much money you could and it ise bond side time to make equities. isthey say that the problem the mishandling and the consolidations. is deutsche more vulnerable? you look at credit suisse and the transformational stories and you don't get a sense of the new world order in deutsche bank being revolutionary.

bythis could be a target other banks, but it is a long we probably have that bank ist, but deutsche not alone. we mentioned that valuation of the old sector and deutsche bank has struggled more than others, but this european sector trailed behind and you look at this and there are the and banks from a few years ago and this would have been an amazing call to make. >> a thing that you said was the risk for markets being a sharper

slowdown in growth and we had comments from the ecb about all of the trade wrists adding , willre and that softness its balance back? had slowdowns and we are not going to get that in i think it is robust people always talk about the the story is not changed and they are experiencing a strong recovery and ity remain positive

thisbly has the impact on momentumwn economic and i think that we will get a better picture going forward. relative to the u.k., they talk about that data. hedge.xpensive to intou think that is a move the u.k.? u.k. better.e there is a clear rationale and we are cognizant that we will get that and that is what and we arethis cycle

and you defensive play are having a strong valuation for the market. there is a lot of uncertainty and that is in the price. stronglements are very and in favor of the u.k. market. >> what do you expect? how will that play this year? i don't think they will move the merchandise until next year that we will see that hike twice this year and and the ecbord more will face this dilemma that they

will have to manage the policy be and there will always more caution for when they decide to hike and that could be ugly. >> could be ugly. trade tell you that these creates a risk. interact with all of this. it was born and it grew and it is now a young adult. you never thought you adhere me compare the function to the adult. >> we use that all the time.

>> the deutsche bank supervisory put out an overhaul of senior management. who heads the private and commercial arms will take over immediately. as part of the reorganization, garth ritchie will become a deputy ceo. leadership three top appointments. $8.7 billion to expand the gene their feet. 80% represents a premium of and the transaction has been unanimously approved by the boards of both companies.

that is your is this flash. >> thank you. ands talk about trade globalization. talked aboutmp has china as a great economic power unfair andsituation said that the u.s. was badly represented. should the terror threats the scene as a way of fixing this imbalance? joining us to discuss this is richard, who is the author of the great convergence and this is a book about the impact of globalization. thank you for joining us on the program.

aboutare a lot of talk whether we are approaching the trade or or whether we are in it. sidesstop at both implementing tariffs? we have tariffs? come in ade conflicts couple of types. these are conducted by clear rules and stay within the confines. the noises we have heard in the last month sounds more like national interests and pride and this can lead to the trade war spinning out of control. i guess the vested interest

would keep this on the rails and this would get settled, but the the of terminology and militaristic terms are what you don't usually hear. a good morning to you and welcome. is there any merit in this with validity and what trump is trying to do? the administration has an issue with how the policy is getting conducted and the last it ledey had the beef,

and ieries of discussions think that there is room to sit to discuss the intellectualow the properties are done. the approach that is being taken has the opposite result. term of 301ard the measures being used. how will they respond to this. law and itthe trade allows trade policy measures, including on intellectual property rights. wto andthese are in the

china has complained against these tariffs. know if that's what you are referring to, but they are talking about this with a plan on the wto. >> thank you for being with us this morning. wars, let'st trade talk about the airbase hit by a missile attack this morning ther trump warned about and let'senying this bring in our government editor right now. it is good to see you. they are trying to

understand this and it has been the day. are we any closer? was quick to say they were behind the missile strikes and we have not had any further information on that side it wasmay suggest that not the united states. againave agreed to talk within 48 hours and we have heard that there were as many as 14 dead and it is interesting because the military base that thehit was operated by iranians.

we have known them to strike unilaterally and they never take credit. it could be the u.s. and it could be israel. >> do we expect more? what are the risks? thatump was very clear this was not acceptable. clear this time they had a debate and the risks are very crowded and and killed 200 mercenaries a lot can go wrong with so many actors in a confined space. >> thank you for coming with us.

this is everything you need to know on the political front. up next, we'll talk about will go live to beijing. is this a moment where he fights back with rhetoric or reality.

this wi-fi is fast. i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's.

manus: good morning from dubai. i am manus cranny and this is "bloomberg daybreak: europe." fromd i'm nejra cehic london. these are today's top stories. manus: your move. china and the threat of a trade war hangs over the market. the world awaits the asian superpowers response. we are live at the forum ahead of the president's address. >> dumped by deutsche's, the german bank cutting john cryan. -- christianling sewing will be the new head of the bank. manus: the conventional budget office is expected to increase forecast for the deficit.

how the response is. ♪ manus: a warm welcome to the show. it is 10:00 a.m. here in dubai, 7:00 a.m. in london. breaking data for february for germany. exports contract by 3.2%. the market had an expansion estimate of 4/10 of 1%. dying.rts, by 1.3% that estimate was for a growth of a half of 1%. that is the trade data. in terms of the markets, no doubt about it. there is one tweet that encapsulates everything from donald trump. take it back to "the art of the deal." he says that china will be buddies.

a big week for the markets. you will get the fed minutes, the cpi. you are basically saying there is a wonderful line, tech is going to come back as a story this week. larry summers compares mr. trump's attack on amazon to italy under mussolini. stocks -- and there is a daily's coming. $64 billion worth of debt coming to the markets. $64 billion. short end paper? rick writer of black rock says it's about deficits and we will hear more about the size of the official sources this week.

a lot to play for in the bond market this week. we already on the cusp. the cpi will be the scene setter. good morning. in thewhat's happening bond markets fits in with the general risk appetite we are seeing. whents are waiting for xi it comes to the trade story. in the meantime, there is appetite risk. chinese markets have reopened. we have seen gains. it is really hong kong that has been outperforming in the asian session. equities are bid. we look at dollar-yen, the dollar has been struggling a little bit. handle.the 107 right now, a little bit of dollar strength and yen weakness when it comes to that trade. you were just talking about treasuries. 10 year yield back up to 2.8%. we saw it drop six basis points following the jobs report on friday.

we did see the 10 year yield go above the 50 day moving average on friday before the drop later in the session. as you say, this is one of the key things in the market, the direction for the 10 year yields, particularly as the data shows treasuries at a 13 month high. you are talking about deutsche bank as well. we got headlines here. 5.6% at thek rising trade gate. we could see the shares rise when the european equity markets open in just under one hour. investors could respond positively to that change. we will bring you analysis on that ceo shakeup. interviews with to shareholders. those conversations will happen later this morning. for now, let's have a conversation with juliette saly was first word news. explosions have been

reported at a military base in syria a day after president trump warned of a big price to pay over reports of a chemical attack outside damascus. rescue workers and activists say dozens of men, women, and children were killed over the weekend in a chemical assault. the u.s. has called for immediate response, moscow has called against military strides. bank's supervisory board has named a new ceo to amid a john cryan overhaul of senior management. christian sewing currently heads arm,rivate and commercial but will take over immediately. as part of the reorganization, ceo.e is becoming a deputy europe's largest investment bank

has seen three top leadership appointments in six years amid pressure from and pressures -- investors to improve profitability. victory toelection clinch a full term as prime minister of hungry. an anti-immigrant campaign triumphing, on track to repeat the two thirds majority3. viceuropean commission's president for jobs has said the eu believes in a rules-based settlerder and can help the trade spats between the u.s. and china. he spoke to bloomberg. thef you don't support framework, even though it might sometimes be slow, then we have unilateralism that is replacing multilateralism. as the eu tries to settle down the current situation. reporter: japanese prime

minister shinzo abe has apologized for a second scandal a a month, this time over failure to report the discovery of missing records about the deponent did -- deployment of troops in iraq. he said the problem is extremely regrettable. opposition lawmakers say the failure to inform the defense minister about the documents throw doubt on the control over the military. stockad of saudi arabia's index says it's almost ready for the aramco ipo. bloomberg was told that it will be good to go on the listing, whether this year or next. >> the saudi market is ready. whether it will come this year or later, that is a decision by the government. the saudi stock exchange is making all necessary changes to be ready this year, by actually the beginning of the second half. regardless of when the decision that will be made.

reporter: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. find more stories on the bloomberg. checking in on the markets here in asia, it is pretty green when you look at the world map function. japan and australia closing out the session. the nikkei up by half of 1%. it really has been hong kong leading the gains in the region. a big rise coming through in health care players. hong kong stocks headed to their month.y in almost a investors are piling into a lot of stocks that have been beaten down over these tit-for-tat trade concerns. the cfitrade though, trade 300 of large stocks. in china arepretty flat china resuming trade for the first time since wednesday. in terms of the stocks we have been watching, a lot of focus on the aluminum stocks after we saw aluminum on the -- aluminum futures and shanghai also higher.

up by 6% in sydney. wh group is a park provider. rebounding today up by 3.6%. noble group says singapore is unchanged in late trade, but the toder is moving headquarters london. it will still keep its registered office in bermuda. manus: thank you. deutsche bank's supervisory board has named a new ceo to replace john cryan as part of a sweeping overview -- overhaul. christian sewing has spent his entire career at europe's largest investment bank. shares are up 5.6%. let's get to matt miller in frankfurt. brilliant line. it would be reckless if deutsche

bank seeks to compete in the u.s.. the change, why now? they have had losses for three years in a row. that's one of the main reasons. if you dig a little bit deeper into this feud that started between john cryan and paul of laettner and the board, you can see that the bonuses john cryan paid to investors did not go down well across germany. this has been the biggest story in finance for the last couple of weeks, and it comes to a head today with the replacement of john cryan by an insider, andstian suing, who comes has to continue the job of shrinking this bank. out, they can't

kid themselves anymore. they will not compete with goldman sachs on the investment banking fund. they have to be on their bread and butter, a german savings bank. nejra: i want to ask as well about the other changes with garth ritchie taking over the investment bank. we have headlines just coming through. richie commenting in a memo saying that there will be no near-term changes to cid management. what is the outlook for the investment bank, and particular it in the u.s.? -- particularly in the u.s.? reporter: that is an interesting comment since this was a huge change in the cib management. he will take over as the sole leader and also be a co-deputy -ceo. it's also interesting in the context of the statement we had moments ago, saying

that they have to reassess their world. the the entire community is expecting them to move out of the u.s., to pull back a little bit. garth ritchie's appointment as co-deputy ceo and head of the investment bank is interesting, as is the ceo search when they were looking at these big, international names and ended up choosing a local guy in germany who has worked at the bank since he was a teenager. manus: by the way, cib revenue from trading stocks and bonds, single biggest source of income, over 32% in 2015. that is what irked investors. they've got a new ceo man and boy, but paul at laettner, the chairman, saying that he's the problem, it has been mishandled. to sum it up, it has been quite a farce, and that the chairman

could be the person perhaps that is next to go. reporter: that is certainly true. ueller wantser -- m to see axel takeover. he wanted him to take over as ceo or chairman. there was something about a management shakeup three times in the last six years. i think he's wanted in a lot of different places, and he already has a job. notpaul achleitner has served the job well as chairman, at least judging by the share price. we are looking at all-time lows. nejra: thank you. matt miller for us in frankfurt. we will bring you more analysis on deutsche bank throughout the day. matt miller will be speaking to speich at 8:30 a.m. u.k. time.

toer 9:00, we will speak hans christoph hirt. ahmed --s, solomon salman ahmed. at the top,hanges we will see more deutsche, less bank. are we going to have fewer take global investment banks in europe to compete with u.s. banks? >> i think i agree with that. it started after the global financial crisis. i think deutsche missed the boat on becoming -- there was a window of opportunity into the financial crisis. i think the fact that they have an eroded capital base means they cannot compete with u.s. players. there is an identity crisis going on, and probably less bank, more deutsche. manus: let's see where these discussions go on trade.

where do you think this goes to? that tweet trump sent out over that we are saying going to get on just fine, xi jinping, be buddies, and china will do the right thing. to match the u.s. with $100 billion, but they don't import enough physically to match that. where does it go next? >> i think the whole situation right now is more bark and flexible bite, in the sense that the rhetoric is quite strong at the moment. we should remember that china was on the cusp of opening up the economy. acceleratedave anyway as xi jinping consolidated power. i think right now, china has a lot more to lose if this gets

worse, because, as you imported, they can only around 150 billion from the u.s. and vice versa. i think it's a lot for them to are, and i think both sides keeping their bite quite flexible. when theysaying should go ahead. those treats show -- tweets show that there's a lot of rhetoric and pulling back of the rhetoric. nejra: we got to the main things we are talking about throughout the show, deutsche bank, and also trade tensions. i want to take you back to a chart here showing the bond holder versus shareholder returns at deutsche bank. bondholders have been winning. when you look at european banks more broadly, would you say it is better to invest from a corporate want perspective or equity perspective?

>> i think it depends on the size. think you should close your eyes and by the bonds if it is systematically important. we have seen that in the performance of the structure. if you are thinking that some of the banks will make money, probably not. deutsche has a big discount on book value. the discount for equity holders is therefore a good reason. unless they sort out the strategy, you will not get the growth from the equity holder. manus: in terms of the underperformance under john cryan, it has been very, very obvious. you're just completely wrong if you think you are going to be able to take on the americans, you are not goldman sachs, it is almost an abuse of capital if you remain there. this is deutsche bank lagging. would you agree with that as a bold strategy option to right

the ship and rewrite the stock? learn.ink deutsche can into a core- focus strength area, there's no reason why you can't be profitable. i think they should accept the u.s. has become a competitive market, ahead of the game. they can pay time the way you can't because of various reasons. the time has come to focus on what your identity is. a similar to what lawyers have been doing in the u.k. to focus on core strengths. the u.s. is not their strength. ahmed, chief investment strategist, staying with us. a lot more to talk about, including trade tensions and impact on the market. let's get the bloomberg business flash with juliette saly. bank'sr: deutsche supervisory board has named a new ceo to replace john cryan and need a wide overhaul of senior management.

sewing, currently heading deep private and commercial arms, will take over immediately. reorganization, garth ritchie is promoted to soul head of the securities unit and will become a deputy ceo. europe's largest investment bank has seen three top leadership appointments in six years amid pressure from investors to improve profitability. the struggling commodity trader noble group is moving its headquarters to london from hong kong as it pursues a controversial restructuring of more than $3 billion. the group says it took effect over the weekend and is registered still in bermuda. noble has seen the value collapsed since little-known iceberg research began to question its business and accounting. the deputy chairman of our clays says tit-for-tat trade threats between the china and the u.s. are potentially damaging for the

global economy. but speaking exclusively to bloomberg tv, he praised the authoritarian leadership of president xi jinping and says china is wonderful for u.k. business. china has become a beacon of stability in a very troubled and the fact that xi jinping is prepared to give such strong guidance within the context of the economy is great for competitors such as mine. reporter: that is your bloomberg business flash. manus: thank you very much. one of our lead corporate stories this morning, the ceo has been barely there two months and announced a blockbuster deal. geneagreed to buy a u.s. therapy company. $8.7 billion deal for novartis. this is making the mark. >> absolutely.

this is the new ceo making a fairly big splash. of course for them, it's not that much money. what you have to remember as well, they have a lot of money assets toey just sold blackstone. they have that money to play with. they will use those funds to reallocate into promising new cancer research or experimental research. that's what we are seeing now. it is working in areas of jean therapy, cutting-edge therapy with the promise of helping to care eventually incurable diseases. if it works, it will be a blockbuster, if not, they look for the next target. nejra: what does this mean for net?ider pharma >> we are seeing this movement

into the gene therapy space. dabbling in been this for a wild. i think we will see more. it is an area where you are basically using technology to alter dna of a patient, and an might be able to cure incurable disease. there are so many experimental companies out there. the company being bought now has the first drug coming to the market, still experimental. there's a lot of opportunity, but also a lot of downside risk. if things don't work out, you have to write off the investment. but to pull the company's out, very large. more companies are moving into the field and novartis is making a first and bold effort here. manus: $9 billion deal in context, and the scale of the global economy. thank you very much for summing up the deal.

we have had quite a bit of an and a activity as of late. are you going to come out with the late cycle activity management, i think i have seen more? good deal for novartis. a good shakeup in pharma. >> i think overall the environment has been conducive m and a. a -- profitability of the corporate sector would be quite strong. some of this cash is being deployed in m&a. although this novartis deal seems to be a tale end -- tail e nd bet on what may work.

a mainstream automobile buying a self driving car kind of thing. i think this in a lower environment, we are seeing that. now saying that, we have to be careful. nejra: you pointed to volatility. it has been a turbulent start to the year to say the least. as you look ahead, what is the biggest risk? an escalation of this trade spat? is it the fed, or du still see inflation is a risk for markets? >> interestingly, i see all three of them as a key risk. i think the trades that is taking a lot of focus -- spat is taking a lot of focus. i think the markets are reacting to this rhetoric because there was no scope for mistakes in the evaluations. 2017 was a great year, volatility was repressed. the extension nature of the markets means any negativity, although it is not real in that sense, will have an effect.

i think the real risk for me is inflation. if inflation comes through and the banks are behind the curve, that could end the cycle. larry summers had a great one-liner, trump's attack on amazon is like mussolini. is the right over in tech? >> tech is becoming a bottom-up story. i think the regulatory shift will be company specific. if i were to be worried, i would be more worried about facebook because they are more based on user data, and that can shift very quickly more than amazon. nejra: how much is a risk that central banks get behind the curve? we heard from raphael bostic say that it would be ok to let the economy run a little bit hot. >> right now, inflation globally is not strong enough to get about.

the central banks behind the curve i think it will also depend on financial conditions. if inflation comes in and equity markets are selling off, they may air on the side of caution, but i think what happens to equity markets, especially in the u.s., would be a keep portion of that. nejra: thank you to salman ahmed joining us on the program. let's get a quick check on the markets. we have seen in the asian session that equities have been shrugging off any next step from china in this trade spat. euros stocks 50's futures trading higher. we could see them in the green at the open. the 10 year bond yields are unchanged, even though we have not seen the 10 year treasury yield higher. looks like the u.s. could open higher as well after the lowest -- losses after the jobs report friday. manus: yes, two big stocks to watch. has a new ceo.

the european market open is up next. they carry that story forward on deutsche bank's with the investors. this is bloomberg. ♪ welcome to the xfinity store.

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♪ guy: welcome to bloomberg markets. i'm guy johnson in our london headquarters alongside matt miller. why is he in frankfurt? he is watching deutsche bank for us. castrate is less than 30 minutes away. -- cash trade is less than 30 minutes away. ♪ bank, less deutsche than three years in the job, john cryan is replaced by this man, christian savings. he will lead the investment bank this morning. 5% higher.