>> good morning from bloomberg's european headquarters. >> this is "bloomberg daybreak: europe." >> of the greenback slides as steve mnuchin reassures his counterpart of a currency war. the g20 says trade tensions are a threat to global growth. japan's central bank takes action to rain in yields, which rose on speculation it may be changing its policy. ceo,at replaces irreversible conditions following convocations from shoulder surgery --

complications from shoulder surgery. >> breaking lines heading the bloomberg. first-quarter profit after tax fall 20% to a figure here that is very clear. you have quite a few numbers that are clouding the broader line. is making it clear the recent u.k. political events have added to the brexit uncertainty. to reiterate the numbers, 19 million euros. guesstimate was 318.4 million euros. it is a marginal beat on that front. a marginal beat on revenue as well. customers at 36.6 billion for the first quarter with average fares falling 4%.

you are still seeing fiscal year profits in terms of guidance after-tax at 1.3 5 billion euros. we will have this conversation later on in the program. >> i have a couple of breaking another well from company. assets under management coming in at 400 billion swiss francs. where going to hear a lot more from the ceo later when manus first halfnterview. nets coming in at 543 million swiss francs. some of the lines from julius baer. also from phillips. second quarter comparable sales up. it is a very slight miss on that. second-quarter revenue also coming in pretty much in line. 4.3 billion euros. we are looking at a second quarter adjusted ebit a margin

of up 11.2%. phillips continues progress on defibrillator manufacturing. it is reiterating its targets to 2020. second-quarter adjusted ebit a coming in at 82 million euros. .- 482 million euros those earnings pretty much in line. later. talk to the ceo the diagnostics and treatment unit was supposed to be a macron focus. -- in focus. the have not shown the asian equities, pretty boring today. the msci asia-pacific index unchanged. the action has been in the yen. we have seen the yen hit a two week high against the dollar. dollar-yen up by 0.4%. , the 10 year yields jumping as much as six basis points. we trade write about their at

ere moment -- right about th at the moment. reports of changes to monetary policy. often provides unlimited bonds. crude up a little after dropping 2.4% last week. we saw drop in that oil rig count -- cap. meanwhile, hedge funds continue to cut their long. we are still trying to get context in terms of the market moves. we put together our chart. gtv . friday you had a big cut from the authorities in terms of the reference rate. the biggest cut in two years. a reaction across asset classes. as the reaction we got in 2015? this is the chart that puts context of the story. contextsee the broader

was a lot more alarming than it is now. now it is far away from the scale and size of back then. that is something to bear in mind as we look to reaction and trade for the remainder of the day. nejra: after we saw u.s. equities and last week where they started, this is how the picture is looking in terms of futures. struggling for direction with s&p and dow jones futures, we can is coming through on dow jones futures. today we speak to the ceo of philips and the cfo of ryanair in their first interviews of the day. manus cranny will be speaking with the ceo of julius baer later. let's recap some of those numbers. has been a small correction. the first half net income comes in at 244 million francs.

i'm going to catch up with the new ceo taking over. where is the strategy six months into this review? new money comes in at 10 billion swiss francs. they setn the range this bandwidth for pulling in new funds between four to 6% is time last year at the halfway mark. they exceeded that. what guidance can we get in regard to the backa? lack ofextent has the volatility -- but certainly there are vicious moves across the asset classes. to what extent have trade wars, ?x wars, upset assets under management, 400 billion. this stock is down 2.25% against other world managers. -- wealth managers.

i have had a tougher time in terms of reaction. good morning. enjoy yourselves. nejra: enjoy yourself, too. let's get the first word news. juliette: thanks so much. mexico's new president-elect's has called on donald trump to the new nafta talks and aim for a final deal that includes all three countries. should workdes together on trade, migration, insecurity. he added that uncertainty about a new nafta could harm investments. dramatic session for japan's debt market, which saw yields surge on reports of changes to the company's -- the country's ultra-loose policy. governmentn tenure notes soared as much as six basis points, its biggest

increase in two years, pulling the yen higher. the benchmark paired its advance after the japanese government offer to buy. there were no sellers at that level. uk's foreign secretary is heading to berlin to warn that the european union needs to do its part to avoid the commit -- of the chaotic scenario of britain leaving without a deal. britain's lead negotiators of the government must step up planning for the possibility talks collapse. >> a responsible government would have to make sure do have the plan and preparations in place in the event of negotiations not reaching an outcome. juliette: global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . the regional picture is a flat

one. you have markets in india, hong kong, and china trading higher. it is all about japan. the yen stronger, yields on those jgb's spiking. you also have that trump to be about trade that is very much weighing into electronics makers and carmakers. let's have a look at stocks we are watching in detail. the movement in yields has seen japanese banks up by almost 4% in late trade. plus retailing, one of the worst performers. it has the heaviest weighting in the nikkei it is among those with the highest boj ownership. it is up by almost 6%. we are watching chinese vaccine makers on news of a probe into the industry. that has seen chinese that seem makers come under pressure. 7.5% drop from shanghai listed

stocks. yousef: thanks for those insights. let's cross back to our top story. global growth and trade tensions were key themes for the big finance chiefs at the g20 summit. president trump stole the headlines. he took aim at china and eu from an appealing currency. that left steve mnuchin to take down fears over currency war. joining us now from hong kong is bloomberg's international editor. what are the details of the g20 warnings? where does the warning appeared to be aimed? >> it does appear very much aimed at president trump and the u.s.. the warning is that while global growth is still robust, it could be threatened. the statement highlighted particularly heightened trade is geopolitical tension.

specifically mentioning trading tariffs. the march statement did not mention trade at all. this is clearly something that has come about since the tariffs the u.s. started imposing on china, but also more generally. this really does appear very targeted toward the u.s.. it did have the u.s. on the defensive. steven mnuchin really had answering to do. he tried to take down these fears, particularly the currency war fears. still, it was the talk of the g20. nejra: good day to you. meanwhile, president trump has lost -- launched a new attack against iran. what is the significance of this? >> he is warning iran there would be unspecified serious doesquences if iran

continue its nuclear program or make threats against the u.s.. iran has threatened -- rouhani threatened the u.s. in a statement and president trump tweeted back his response. this is very interesting in that the tone and the wording of president trump's tweets are very similar to that wording he used with north korea some time ago, talking about north korea's nuclear program. it does have that ring to it. it is also interesting timing. the u.s. will start re-imposing sanctions against iran. the timing is very interesting. we are in a war of words between iran and the u.s. nejra: bloomberg's senior international editor, live from hong kong. thank you. joining us now is the head of fx commodities and rates at j.p. morgan private bank.

we got the statement from the g20. apparently we are not in a currency war. what seems to be dumb and dating markets is speculation around monetary policy from the boj. when you think about the threat of a currency war, how destabilizing could that be for markets rest of the year? --if we look at how much this year, politics are huge driving force. people have tried to stay away from politics. but the war of words we are seeing from different parties, whether the administration in the u.s. or central bankers, it could play a bigger part. the currency moves friday were indicative of that. with the tweets from the u.s. and the concern around the currency world, we are starting to have a bearing on these big swings in the currency markets. it does become a destabilizing force.

it becomes unpredictable and difficult rest to see how this might involve. at the last four to six weeks in terms of the tensions, itthe has not played out clearly in the safe haven space. we put together a chart. gtv is the code on the bloomberg. hedge funds are looking to short wagers as the price slump deepens in gold. why is this breaking down as a safe space? >> it is quite interesting. people start to get concerned around trade war escalation. what you see is safe haven currencies perform better. gold, yen,ted out, swiss francs, have not reacted that way. ,f you look to volatility volatility remains quite low. the market is not concerned about the applications coming

through. it is looking at the case this could be trade skirmishes rather than escalation. if we see volatility taking up, ing up, you start to see these flows developing. people protect themselves against concerns of what's coming through. we have not seen that. nejra: we will talk more about the yen later. i want to go back to the moves we have seen in the yuan, which sparked these comments from president trump. interesting he talks about the currency war when a lot of the growth pushing the dollar higher has been the trade war he has been pushing for. as we look at this chart, the fed and pboc policy may be on par in terms of tightening. it is interesting. when you look at the yuan, do

you see this as a managed devaluation? >> if you look at the fundamental picture there is an argument you should see a natural depreciation coming through. the growth has slowed down in china. we have seen the current accounts starting to narrow. we have seen natural easing from the pboc as well. the currency should be week on the back of that. what has been interesting is normally when you see these you feel that coming through from the central banks to avoid -- to manage depreciation. in fact, we have not seen that from pboc policy. we have seen them higher. 8%n you consider the depreciation in the you wanted, that accounts for almost an upset of the 25% tariffs and lamented from the u.s.. there is an argument to say, is this a more managed depreciation?

yousef: definitely something to look out for. we want to get into other key views. the head of fx commodities and rates for j.p. morgan private bank. we could see a snapshot of what is coming up. a huge week for earnings. we will bring you an close of interview with the ceo of julius baer and the ceo of philips and the cfo of ryanair. this is bloomberg. ♪

nejra: 6:20 a.m. in london. let's get a bloomberg business flash. labor strife is starting to weigh on ryanair as opposed to the 20% drop in profits. the discount airline board that sporadic walkouts by trade unions along with regional traffic control strikes are

starting to make customers hesitant to book flights. ryanair's joined by cfo for his first interview of the day at 6:30 a.m. u.k. time. sergio marchionne and replaced at fiat chrysler because of deteriorating health is in intensive and care according to italy's news agency. the 66-year-old's unexpected decline comes after complications from shoulder surgery. he has been succeeded as the ceo by the head of the company's jeep and ram division. >> let's get back to one of the companies reporting earnings. phillips just reported ebit down for the second quarter. that met analyst estimates. it also beat its estimated progress ontinuing defibrillator manufacturing. philips to ceo of discuss second-quarter earnings.

i want to get a sense from you, what is happening with the outlook? what are the key risks? are you seeing signs of potential dangers from trade tensions in the headlines? >> let me come to that in a second. quarter, 4% growth for us. , andd a very exciting 9% that bodes well to underpin the future orders to come. we also were able to improve profitability by 100 basis points. we are tracking within guidance. looking forward, we have a slate of exciting innovations that customers are excited about. of course, that reflects the 9% order growth. we have always had the second half of the year will be stronger than the first. nejra: you have recently warned

you might move manufacturing out of the u.k. as the viability is threatened in the case of a hard brexit. what does the government have to do to change her mind? -- change your mind? >> prime minister theresa may has invited many european companies to have a conversation at downing street, which we were able to convey that for industry to stay competitive in the united kingdom, a customs union is really important. that was the message i gave. at this time i continue to hope this will all work out, and therefore the scenario planning which would affect -- which would factor in the united kingdom would not be -- yousef: brexit the key risk of course. i want to circle back to trade tensions.

that could have a cascade effect on the supply chain and force you to raise prices in certain geographic areas. give us a bit of a top line on where you think this is all going to go this year. >> i agree with your introduction. supply chains globally are very complex. if i take an example of an mr scanner, the magnets come out of the united states, the product is assembled a macron europe, the software comes out of asia. if the supply chains are upset, inevitably it risks higher prices for hospitals and for consumers. that is not a good thing. i think for now with the initial list as published, the effect is quite manageable. we are able to absorb it. if this trade rhetoric escalates, i think we need to be very careful about how the world

will evolve. nejra: on that point, are you doing any contingency planning around your supply chains in the case of disruption? is in a good situation where we have a balanced manufacturing footprint. we produce about one third of all manufacturing in the united states, one third in europe, and one third in asia. to redistribute manufacturing depending on measures taken. of course, there is a limitation on that. certainly it addresses the components we use from secondary or even tertiary supplier base that may come from regions affected. yousef: do you have the portfolio at the moment to be able to close the gap with your

rivals? i am thinking of ge. where do you see yourself allocating? made thes has already switch to focus entirely on health technology, whereas some competitors are still more in their identity crisis. of a clearuence choice, we are able to advance our strategy to what the customers really need. matt philips we focus on the entire health continuum and we provide solutions. assess needs of customers for better outcomes and better hospital productivity. and for consumers to take better care of their personal health or support -- to live with a chronic disease. growth, thatt our shows the strategy is working well.

we have seven large hospital deals coming through in the quarter. thank you so much, the ceo of philips, thank you. ♪

yousef: it is 9:30 in the morning in dubai. a live shot of the interior palace. we are seeing quite a bit of pain if you are a bull with some of the currency and bond place. all of this around speculation this meeting was going to be live for the boj. the boj moved to counter speculation considering amending its quantitative easing program. that is what the media reports just. stocks under pressure. >> good morning.

let's take a look at what the asian equity trade looks like. you see a mixed picture. australia is down, japan is down 1.4%. the yen is climbing. the boj in focus. currencies very much in focus. china is up 0.4%. extending two days of gains. we saw gains friday on speculation that chinese authorities had already intervened. you are now seeing a continuation. i want to move on to my next chart. still continuing to look at china and focused specifically on the yuan. we saw over the weekend officials in the u.s. suggest ,hina has weakened its currency suggesting they're going to have to monitor the yuan very closely. , and this is my red box, the big decline when it fell to 6.42.

if you continue to follow my line, that takes us to last week . what you see now is the decline in the yuan touching on the 6.8 to the dollar, now outpaces the devaluation even the u.s. administration some ammunition in their currencies that -- currency spat. seen a flattening of the yield curve. the two-year and the 10 year treasury yield, you notice a continues to narrow until next week. you see an unexpected spike. last week we heard from donald trump saying interest rates should not go up, the dollar is too strong. that resulted in an unexpected widening. back to you. nejra: thanks so much.

now on earnings, ryanair earnings slide. a 20% drop in first-quarter profit. it is warning the walkouts by trade unions are making customers hesitant to book flights. cfoing us now is ryanair neil sorahan to discuss second-quarter earnings. thank you for joining us. we just read out what the concerns are. can you give us a sense of what the forward-looking curve is looking like? >> we are better booked at this time than we were last year. we are seeing lower fares. in light of the weather we have had in the u.k., the heatwave in northern europe, the world cup, and strike action. we are now guiding our average fare of only 1% in the second quarter, below the 4% we have guided. slightly stronger numbers

in the first quarter, which is why we are able to maintain our guidance. your read onis what is happening with oil prices? the previous quarter that was key in your outlook. you cautioned this could lead to a wider shakeout in the industry by the and of the year. what is your strategy at the moment? where do you see crude going? >> we are very well hedged for the current year. we are 9% hedged out of $58 a barrel, well beyond 75 to $80 a barrel. for ourlevels are good industry. it will help lead to consolidation within the sector. as we get to winter, the weaker and hedged carriers are going to see pressure on their space and , whichr cash generation will lead to more consolidations and failures within the sector. we have said for many years we

are moving toward the five large airline strategy. i think ryanair will be one of the key players in that strategy in europe while leading to higher costs for other it airlines is probably good for the sector. nejra: we have got to go back to the strikes. there are more expected this week. i am wondering how long you expect the impact the last, and what it would take for you to change your guidance? made very good progress with unions over the past number of months. but a lot of things in place to make us attractive to pilots and cabin crew. we have the pay increase which has started to come through in the numbers. we have reduced the training costs significantly. we are seeing more pilots and cabin crew coming through. we have invested in a simulator and training within ryanair. we are the most stable employer out there.

a 20 billion market cap company. over 90% of our pilots excepted pay increases at this stage. italye made good moves in , where 45% of our pilots are based. we signed up in germany. that said, it has been slower in smaller markets like ireland and the likes of germany. we anticipate we may see more strike action, but we have managed it well. to put it in context, tomorrow we have a strike in dublin. that is 16 flights impacted out of 290. we have protected the key holiday destinations. --are able to rio, did re-accommodate. there will be more strike action, but ryanair will protect its model. it is kiwi have a highly productive workforce and that we retain the cost advantage over

everyone else. we may have to take on strike action. we have managed the disruption well to date. yousef: this has dragged on longer than you would have liked. the reality is it is having an impact on your balance sheet. what additional contingency planning have you set in motion to offset and buffer that? room andou breathing see how this shakes out? >> the balance sheet is in good shape. we saw a net debt drop in the quarter. we maintain guidance at the levels would put out at the end of may. we are still guiding profit in a range of 1.2 5 billion to 1.3 5 billion. we are not seeing any further impact on our cost base. , fuele put our unit cost

increase of 6%, which includes growth and the next 200 aircrafts next year, which will lead to significant savings. we going to work through this. we have made good traction with unions across europe. smaller unions in ireland and germany are going to be slower, but we are going to get there. nejra: i need to ask you about brexit. how confident are you you will be able to keep your normal routes operating? >> like everybody else, we are very hopeful the transition agreement will be signed and that will buy more time to the back end of 2020. i think this may be a little bit of overconfidence this deal will actually put in place. there is still a chance for heart break in 2019. we would be helpful we would see transition here. we continue to work hard to make

sure we have contingencies in place on the shareholder side in , whethervoting rights it's getting an air operator in the u.k. to protect domestic routes, and talk to airports around europe in the event. hopefulbe helpful 8 -- the transition deal would be signed. yousef: last time we spoke emitted clear you're looking to develop your relationship with boeing and airbus. has there been any particular progress? neil: we are talking to everybody. we always do. taking 210 boeing seven -- boeing aircraft next year. these are significant cost savings for us. an airline we have a 24.9% investment in and would increase over the next few weeks, an airbus operator, we plan for it to grow over the next few years.

very keen to develop a relationship with airbus as well as boeing as we move forward. yousef: appreciate your time this morning. neil sorahan, ryanair cfo. keeping up with their top corporate stories elsewhere, fiat chrysler names a new ceo as a health crisis makes sergio marchionne unable to return to work. the new ceo takes the reins as the company plans its hopes on the branch he has overseen since 2009. marchionne was replaced as convocations from shoulder surgery left him in intensive care. his condition is irreversible. joining us now, singapore's transport editor. how big of a shock is this for fiat chrysler and its shareholders? is a major shock for the

company. a leadership change at this scale, you always want to see in a more planned fashion. the ceo has been running the company for 14 years, executing on his vision, talking to shareholders quarter after quarter. now it seems like all of a sudden he's not going to be around. that said, marchionne was scheduled to potentially step down next year. his term was due to end in april 2019. on some level, shareholders were expecting a change. obviously, the company has been around for a long time. they're going for continuity is trying to minimize the disruption from the unfortunate turn of events here. the new ceo will face

investors for the first time this week. what do we know about him and investors perception of him? >> he seems like the obvious choice. he is marchionne's protege. he is running a large portion of business. he is in charge of the ram and jeep brand's, two thirds of the company's sales in the u.s.. he is a company veteran. he has been running the ram and jeep brands since 2009. he is seen as an obvious pick. our own bloomberg intelligence analysts call him the best possible pick for the role. obviously, he faces a ton of challenges on many fronts from electrification to self driving cars to expanding the jeep and ram empire be on the u.s. -- beyond the u.s..

yousef: live from singapore, the bloomberg transport editor. let's get back to the head of fx, commodities, and rates at j.p. morgan private bank's. you have had a chance to listen to the ceo of philips and the cfo of ryanair. together, where does this go next? what is the next milestone in this mess? >> we are all looking out towards october. when you think about the u.k. parliaments now on the brakes this summer, theresa may made a few concessions and ultimately now we look to the next meeting with the european union to see how does this play out? obviously we are running out of time. this meeting is crucial to understanding mother they will be pushing toward a harder

brexit or no brexit situation. >> would you be looking to take opportunity on pound weakness? >> the way we have been looking at this is ultimately we have seen more sterling into the price. but we have not seen as volatility picking up. we think the volatility is too low for the risks that are out there. when we started the beginning of this year, there was the idea we might get transitions coming through, becoming more and more likely to get this risk. we have been advising clients to buy volatility and position in that respect. yousef: what is the bigger issue that is driving the pound? it is any development on brexit. to what extent are other factors weighing into that? the rising global rates, the backdrop of rising trade

tensions. >> exactly, and if you look at the price action last week, we tested 130 in sterling dollar, a significant milestone with regard to the brexit conversation. ultimately toward the end of the week, we have pushed back toward 131 again. you have different stories coming through. the more we see president and the trade escalation talk coming through and the more we start to see tweets coming out, that impacts the currency. it does start to skew some of the risks at the moment for sterling. and ultimately, how that could play out is as we start to seem more developments, you could start to see that outweighing the dollar side, which obviously we have not been seeing this week. nejra: head of fx, commodities, and rates stays with us.

let's get the bloomberg business flash. juliette: thank you. julius baer stepped up hiring in pushedst half as the ceo growth rates. switzerland's third-largest wealth manager also added $10.1 billion of net new money in the first six months. that is in line with the company's target of growth. private bank'sd ceo will join us for an exclusive interview at 7:00 a.m. u.k. time. amazon's u.k. had has said there could be civil unrest within two weeks if britain leaves the european union with no deal. the london-based times said the warning was given at a meeting hosted by the u.k. secretary. it makes amazon u.k. the first business to issue such a stark assessment.

a company has agreed to buy sentelle in a cash deal. it will pay for the technology from, 4.8% more than the closing price on friday. the total price is $3.57 billion 's debt.cluding syntel moreves them access to customers. tesla has asked suppliers to pay back a portion of its payments in an attempt to buy the electric carmaker to make a profit. that is exciting a memo sent to a supplier last week. the wall street journal says that it was sent by a global supply manager and described the request as essential to tesla's continued operation. yousef: thank you. let's go to technology. later today we are going to be

healing that hearing from alpha that on its second-quarter earnings. predicts intelligence the $5 billion antitrust fine from the eu may lead alphabet to be doubling down on hardware. for more, bloomberg opinion columnist alex. what impact has the new data hadection regulation, gdpr, on locals? >> they have benefited. the investment scramble when gdpr went into effect and a lot of companies were not compliant, google has been working towards -- i huge number of different points across the value chain. it was able to say to customers and advertisers, you know google is going to be compliant. nejra: microsoft cloud sales surged last week when they reported. can we expect the same from

google? >> absolutely. that has been the trend. amazon, microsoft, google all benefiting from include -- increased spending in the cloud space. gdpr is a way of ensuring everything is compliant by giving it to google or amazon. nejra: alex webb, thank you so much. bloomberg opinion columnist. let's shift to asia and what's been happening in the markets. japan's benchmark bond yields climbing to the highest since february on report central-bank will discuss possible changes to its ultra-loose monetary policy. yields pared their it after the boj offered bond purchases at 0.11%. any change would be the first since 2016 and its introduction of yield curve control. fx, commodities, and

rates at j.p. morgan private banks is still with us. looking to the boj, what are you expecting from the policy meeting? >> we still focus on the fact that the bank of japan is committed to yield curve control because inflation is still low. even though actions you saw today on the backs of market aeculation there will be change policy, the bank of japan committed to their yield curve control policy. even if they were to be thinking about change over the course of the next year, it is likely to be gradual. levels, itt these seems like yield curve control will remain intact for now. yousef: if you look at some of the moves across assets, the , this goesummer bond to show how delicate situation the boj finds itself in, trying to manage the communication here.

maybe it is time for a bigger rethink about how to proceed with policy. >> potentially. there is a lot of focus around all central-bank policy at the moment. even with the ecb, there was a lot of focus around normalization coming through their. the ecb slow down the market expectations. the process will be gradual. ultimately there has been big moves in japan. the bank of japan has an inflation mandate. they will be thinking about how the inflation picture is developing. >> i want to take you to this chart of dollar-yen. but we have been talking about since the start of these trade tensions ramping up to these surprising -- the dollar has shown so much strength against the yen. we have seen yen strength in this session, so much so we are looking to snap that uptrend.

do we get yen strength from here? >> we believe we might see yen strength coming through. you talked about the trade tensions happening and we talked about the program. ultimately, the flow that comes through is the repatriation of foreign assets. as i said at the beginning, the equity still being quite low, we have not seen those coming through. the amount of foreign equity investor we have seen from japan means that if we do see volatility picking up, there is a chance we see that repatriation. we are at a critical juncture in 108 level in dollar-yen. yousef: where does japan ranked in terms of favorability to enter into certain traits? i was speaking on bloomberg daybreak middle east about -- they're very keen on japanese

equities and u.s. small-cap stocks. are in the cycle in valuations. >> from a currency perspective we think there is room for the japanese yen to keep going. one of the key points over the past few months, there has been a breakdown in the interest rate differentials. with regards to dollar-yen and u.s. rates. for us, that means it does open up the possibility of more dollar-yen downside. we are subscribing to the idea that the yen could outperform versus the u.s. dollar from here. from a currency perspective, that does make sense. nejra: speaking of flows, i remember a months ago -- a few months ago we were talking about four inflow anchoring the long end of the u.s. treasury curve. we did see a touch of steepening when it came to the 210 on friday. we are at 29 basis point higher than recently.

was the steepening just a pause before further flattening? >> in our view, yes. there was concern about tweets from the u.s. administration. the idea that central bank may not be as independent as we have seen from the federal reserve. we do not think there is anything to worry about. the federal reserve in our mind will stay independent. ultimately we continue to see a flattening of the curve over the course of the next year. we are looking for two year treasury yields to move toward zero. we think flattening is still coming back. this is a slight retrace on the back of market concern. yousef: bloomberg's dollar index is weaker as we speak, reacting to the news flow with tweets of president donald trump. you can choose any currency or interest rates you want. what would it be? at sign what we talked about in

terms of the yen and the u.s. dollar? what would be interesting is the idea of buying gold into your portfolio. we talked about the yen as a safe haven, but gold is one that does what. we like commodities in general. what is interesting about gold is we have not seen that pickup coming through. it provides good diversification. it provides an inflation hedge. it provides protection against geopolitical risk. gold is a good place to have positioning in terms of the risk out there. nejra: if we look at the dollar as well, hedge funds have been boosting their net bullish wager even though we have seen stabilization in the dollar since may. i know you see the dollar weakened against the yen. do you think we are going to see further dollar strength? >> we do. we do think we might see near-term coming through.

over the medium term, we think dollar weakness will be coming through. the ideall hinging on of global growth synchronization coming back. we continue to believe in 2.4% growth in europe. we think about the late cycle dynamics in the u.s., that tends to lead to dollar underperformance. what we are seeing right now is short term suggests the dollar may continue little bit longer, but ultimately, dollar weakness still holds. yousef: really good to see you this morning. thank you for your time. the head of fx, commodities, and rates at j.p. morgan private bank. earnings you should be watching, big earnings this week. also bet inonday the united states -- alphabet in the u.s..

nejra: and the return of switzerland's ubs. we round up the week with twitter and exxon mobil. up next, the ceo exclusive. ♪

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yousef: good morning. this is bloomberg daybreak: europe. live from bloomberg's european headquarters in the city of london. these are today's top stories. the greenback slides as steve mnuchin reassures his counterparts over fears of a currency war but the g20 says this is still a threat to global growth. japan's central bank takes action to rein in yields. sergio marchionne is in an irreversible condition following complications involving the

shoulder surgery. yousef: let us jump straight into how the markets are shaping up specifically european exit -- european equities futures. ftse 100 down. we have a string of earnings from a lot of corporate this week. we heard from phillips and ryanair. individual futures down. called., futures are their lower as well for the s&p 500. the cash market open for european bonds right now but let us take a look at futures. looking at bund futures. looking low. we may see the 10 year yield edge up at the open.

the cash market is moving. future is also moving. we could see some tightening. 2.8 9%.rading at what is interesting is that we are seeing some curve flattening. the biggest moves have been in the jgb market. up some five basis points. it has risen as much as six basis points on speculation that we could see some changes to the boj monetary policy. jgbtill see those 10 year yields higher. juliette will join us in a few minutes with an exclusive interview. in windows aires, the world's top finance chiefs are warning that the trade tensions

are threatening global growth. g 20 finance ministers and central bankers said in a statement at the end of their summit, that global growth remains robust and many emerging market countries are better prepared to face crises. mexico's new president-elect has called on donald trump to renew have a finalnd deal involving all three countries. a should work together on a range of issues including trade, migration, and security. he added that prolonged unsecured -- prolonged uncertainty could harm nafta. it is been a dramatic session debt market. we saw yields surge on media regarding the change in the boj policy. yield on 10 year government

notes saw as much as six basis points in early trade. the biggest increase in almost two years. the benchmark pared its advance after the bank of japan offered to purchase the security at a fixed rate of 6.11% although there were no sellers at that level. the u.k. foreign secretary is heading to berlin today to warn that the european union needs to do its part to avoid the chaotic scenario. this comes one day after britain's new chief brexit negotiator says they may step up. >> any responsible government would have to make sure that you have planning in place in the event of the negotiations do not reach a positive outcome. juliette: donald has lashed out on twitter at the president of iran saying to the iranian president, never ever threaten the united states again or you

will suffer consequences the likes of which few throughout history have suffered before. we are no longer a country that will stand for your demented words of violence and death. be cautious. the iranian president earlier warned the u.s. not to threaten his country's oil exports. >> the americans say they will not allow our run to export even export even a drop of oil. you cannot do such a thing. we will stand up to you. resistance.e of the entire iranian country will resist. president trump, do not play with the tale of the lion. you will regret it. juliette: global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. you can find more stories on the bloomberg at top .

checking in on markets here in asia in late trade. the yields sending the yen higher. the nikkei off by 1.3% and the australian market also under pressure but some goodbyes coming through in india, hong kong, and china. a mixed bag coming through from asian markets. yousef: a mixed bag indeed. let us switch back to earnings. the julius baer group has theted net new money in first half in line with the target of the company. let us head to zurich where manus cranny is joined by the ceo himself. manus: thank you very much. and welcome to blur -- welcome to bloomberg again, bernard hodler. it looks as if it has been a good have to the year. how would you describe these first six months? it was a very good

half-year for julius baer. i am proud to present these numbers. million nethed 480 profit, a record for julius baer in the 128 years of history. very satisfied with that. 10also produced nearly billion of net new money. a very good money -- a very good number. a net ofve added managers to the platform. january,en we spoke in you had that target of new managers for the year. you are at that level. will you upgrade that number? also addedtually, we 13 so the net number is actually 66 but i am very confident that we can reach or exceed the number 80. no plans to completely slow down and you could expect that we could reach or exceed that goal.

manus: where are you finding these bankers? what is the geography leaving you the best yield? bernard: asia, the middle east, and europe. reason they are attracted by our platform is the business model. we do prime banking, wealth management, and it is a model --t people like because they because we do not have to push only our own product. money came in at 5%. you are in the corridor. will you make the higher end of the guidance this year? we will be between 4%-6%. that is my guidance. i said 2017 was an extraordinary year. markets went one way and everything was easier. i am very happy with the 5.1%.

manus: there is a difference present -- there is a different presence when you came into this room. what has been the biggest challenge? bernard: the markets were not so easy. back.lity has come it is also good for julius baer because we have more interactions with our clients. i am very comfortable in my seat. manus: last year, asia yielded perhaps the best inflows ever. how is asia holding up given the china market meltdown we have seen on the equity side of the business? bernard: asia is holding up nicely. the assets we manage there are at about 100 billion. we have seen a bit of deleveraging in asia in some areas mainly in the fixed income areas so clients that were invested in fixed income and

leveraged it with loans are more cautious. and the tone i hear from the clients are -- is a bit more cautious. geopoliticalthe and trade tensions. overall, it is still holding up quite nicely. target was to make asia a big part of the business. do you still stick to the target of 30%? bernard: currently, it is about 25%. it depends on how nicely we grow in other areas but definitely it promisingour most growth areas that we have and we continue to invest in asia. maybe you saw the transaction we had in march. we did a joint venture in thailand with the number one commercial bank there. we see other opportunities, not only in china. there are other interesting markets as well.

defections,rms of we wrote a story about the bahamas and panama. i just worry about retention. are there any pockets that are getting harder to retain? bernard: the answer is no. competitor but we have other competitors as well. what you mentioned, it really has to do with our strategic repositioning. you may remember that in january i also spoke about focusing on the key markets. our key markets in latin are brazil and argentina. we invested inat those markets and do a little less in the other markets. if you had to choose the next year if he -- where are you -- if you had to choose the next

geography, where are you focused? bernard: we are focused on the growth market. asia and latin. i am personally quite sure that months, wext 12-24 will also acquisition opportunities in europe and in switzerland. within switzerland. manus: just acquisitions? bernard: the last two or three years, everyone was doing well and everyone was a buyer and prices were quite high. when the market gets more difficult, which is my expectation, we will see more opportunities because maybe some of the competitors will realize that it is quite tough out there. dennis: 13.7%. question one, will you reward the shareholders? withrd: it has a lot to do the opportunity that we have. with 13.7 and hopefully we

continue at the same pace to generate free cash flow, there is a good possibility that we were returned some of the capital to the shareholders. but if we see good opportunity in m&a, we will use it for that. shareholderhe expect a share buyback in 2018? a share buyback or a return of part of the capital to the shareholder. if there is no large acquisitions. manus: you talk about the market -- a very frank discussion. we caught up with larry fink a wild ago. he said -- we caught up with larry fink a while ago. can you see that kind of a move on the equity market if donald trump goes full monty? we will see volatility in the next six months of but

also in the next two years. right now, we have trade tensions. not a trade war. everyone is positioning. over the weekend, we heard from g20 and that was not very helpful. if it goes to the full monty as you mentioned, it will be bad for the market. that the expect situation will fully escalate like this. manus: you think it will step back? bernard: the discussion will continue for many months. that some of the trade partners of the u.s. will also trust some of the parameters like china and europe but we do not expect that things will go completely out of control. into july.re 20 days those 20 days compressed a great deal of rhetoric and volatility.

has there been any shift from the clients --taking of cash, treasuries, or bonds? bernard: in july or the whole year? manus: in the last two or three months -- and a shift of the dial? bernard: not massively. the clients that were positioned in the fixed income market and leveraged, they corrected their position of it. we have seen more diversity. but by a large, they are still invested and if you see the numbers that we published today and the distribution of the client at what -- of the client assets in equities and cash -- it is very similar. it has not moved massively. manus: britain will thrive even if there is no brexit deal according to david davis and the telegraph the swing. you were quite contrary and

bullish when i met with you last. do you believe that britain will thrive with no brexit? we have invested in the u k and we will continue to do so because we think it is a very interesting market. the fifth largest wealth market in the world. and for our business model, i am quite optimistic and confident that it will be positive. bernard, thank you very much. it has been a treat to calm. bernard hodler, the ceo of julius baer. ok, there you go. that is the first curtain raisers of the ceos. have a good time. don't break anything while anna and i are away. the bloombergget business flash with juliette saly in singapore. ryanair posted a new

percent drop in first quarter profits. it also warned that sporadic walkouts from trade unions are starting to make customers hesitant to book flights. who wasarchionne, replaced at fiat chrysler is reportedly seriously ill and in intensive care according to italy's news agency. the 66-year-old's unexpected decline came from applications following a shoulder surgery. he has been succeeded. amazon's u.k. head has reportedly said that they could be close to civil unrest within two weeks if written lease the european union with note deal. the london-based times said the warning was given at a meeting on friday. u.k. the first

business to issue such a stark assessment to the threat posed by a no deal brexit. that is your bloomberg business flash. yousef: thank you, juliet. let us get back to this part of leaderld because iran's has warned donald trump in no uncertain terms to not threaten his nation. he says the u.s. should be and would be sorry if it really is -- if it reimposed sanctions. >> do you think that iran is that week? what are you thinking? we are people of resistance. the entire nation will resist. president trump, do not play with the tale of the lion, you will regret it. a strongly worded message. ais time around, he got response from president donald trump who said on twitter -- never ever threaten the u.s.

again be cut -- or you will suffer consequences likes of which few in history have ever suffered before. we are no longer a country that will stand for your demented words of violence and death. -- run us through the messaging here between these two. it is rare that we have a tit-for-tat this quickly. reporter: we also heard from mike pompeo over the weekend urging the european union allies to ramp up the pressure and -- in this campaign against iran. we are coming close to august, the 90 day period before the sanctions hit in november and that could be why we are seeing this war of words. it is very heated right now. rouhani also said -- mr. president, be careful what you

are doing with the islamic republic because we have always guaranteed the safe passage of waterways. we also heard earlier this month from the revolutionary guard talking about the fact that they could cut off supplies through the streets of hormuz. that -- the straits of hormuz. that is where we could see some pressure. nejra: how much oil are we talking about? reporter: let us take a look at the chart. this will help on where sanctions were reimposed last time. circles arethe red the u.s. sanctions, the blue are the eu bans and the yellow is where the sanctions were lifted. meeting, thepec production is up to 2.5%. the u.s. is really saying that they want zero waivers.

no broad-based waivers on any of the customers. they are putting pressure on japan and india. we believe the flow to the european union will be far less. you so much. let us turn back to the g20 and the finance ministers' call for a greater dialogue. ministers and central bank governors warned that trade tensions are casting a pall over the global economy. >> we want our companies to have the same access to markets that they have to us. we do not want our companies to have to have joint ventures there. we want the right to protect our ip and technology anywhere in the world. not just china specific. >> in the worst-case scenario, under current measures come are not taking into account most recent announcements.

in the range of .5% gdp on a global basis. at blackrock is with us on set. one thing that has been interesting through these trade tensions -- we have seen it reverberate through fx markets at the s&p 500 has held up fairly well. see in terms of etp flows? wei li: year to date, investors are a lot more cautious in to prior quarters and in the hole of 2017 and there has been greater selections, a to ber degree of wanting careful on where i put my risk budget. trade tension is weighing down on sentiment. in terms of the degree of

greatest selection, we have seen investors looking at equity markets and out of european equities and out of emerging-market equities. the former had been supported by growth outlook as well as strong earnings and momentum. we saw that coming through in the past weeks. -- this has been on the back of reasonably strong dollar. policy comingnted from your. that has been weighing on that. yousef: we had six weeks of losses for metals. we are currently seeing a rebound especially in aluminum. that is such an important indicator on the health of the global economy and expectations for future expansion. what are you seeing in the flow data in terms of the wider commodities base? wei li: we are seeing more

volatility. i would caveat that by saying that not all commodities are made equal. industrial metals are sensitive barometers of expectations for growth. platinumhave gold and -- save havens. investors are going into them regardless of price and movement in order to diversify their portfolio. specifically, aluminum and industrial metals -- we have seen more recently the outflows. the rationale behind that is investors looking at to what extent the exposure has sold off and weighing that alongside -- thisthis really warrant degree of price correction. as we look ahead to this week, we will have quite a few

tech earnings. i want to show you this chart. tech mega caps underperformed. they are down the most since march relative to the s&p 500. does tech continue to be your preferred sector? biggestit is our single investment. we think earnings are just getting started. earnings coming through are just getting started and we expect to see that coming through in the numbers that we will get this week. even though tech has outperformed the broader market, it has not moved significantly. in terms of the actual multiples, it seems to be going sideways. if you think about companies rmbng more cash to spend on , capex expenditure, a lot of them would also focus around

technology, innovation, and that should also support other sectors as well. yousef: in your view, this fear around tariffs and trade tensions, is it disrupting the equity flow too much? is it overblown? wei li: what we have seen so far especially in recent weeks is that no new money is being a large extento anyway. it would appear that investors are just rotating within the different buckets of asset classes rather than taking cash off and putting it into the market. now, there is greater competition for cash. even after adjusting for inflation.

because of this hesitant participation into markets and still strong growth, we think there is room to correct. from -- wei li, from blackrock, thank you very much. yousef: this is bloomberg. ♪

>> good morning and welcome to bloomberg markets, the european open. we are live from our european headquarters in london. the cash trade is less than 30 minutes away. matt: threats to growth. the g20 warns on trade tensions but steve mnuchin reinsurers -- reassures his colleagues. that the u.s. does not want a trade war. the future of fiat. th