>> good morning from bloomberg's european headquarters in the city of london. >> and i am yousef gamal el-din. dailyc slashes its fixed-rate. out of about surges as much percent following a monster quarter shaking off the $5 billion fine from here. and ubs are earning -- switzerland's largest bank suffers outflows in its wealth business. atwill hear from the ceo 6:45 a.m. u.k. time.

>> welcome to daybreak europe. breaking news -- the earnings season. i have numbers coming through from lindt. 1.6 7 million francs. the estimate was 1.66. this is saying billion but i assume that is wrong. net income coming in at 86 million swiss ranks. at 117.1 million swiss francs. the estimate was 118. the ever so slight miss. we are looking more on the full-year guidance. we are looking for that. we are also looking on how the u.s. is doing.

that is something that investors will be focused on. u.s. developments are in focus. and we will look to see if there are any comments on the impact of the hot weather on chocolate consumption. >> get some more lines heading the bloomberg in the midst of earnings season. the supplier of aluminum and aluminum products. we will get you through those figures. at 2.7 billion norwegian krone. a slight miss on that front. and on the underlying profit -- a slight beach. 1.78 billion norwegian krone. costs aree down and higher. this is a company that has that has seen quite a bit of downsizing. the options market was applying a 4.7% move following the results. you compare that to an average of 2.9% in the last two years.

we will break down some of the themes of the latest batch of figures with the ceo himself. he will join us for his first interview of the day. that is at 9:30 a.m. u.k. time. numbers from syngenta. this company taken over by chemchina. at 7.2 $5coming in billion. first half ebit coming in at 1.7 billion dollars. syngenta free cash flow for $178 million. radar us get to the risk before you come through with more breaking news. take a look at what is happening in the markets. teens in asian equities after we saw the u.s. gains from -- at 0.2%. shares outperforming and that is a big theme in the markets. with china coming out and

talking about some stimulus for the economy and the weaker fixed income playing in to yuan weakness. offshore yuan. we are past the 6.8 mark. we will talk a lot about the yuan in the show. the 10 year treasury yield. global yields rising yesterday off the back of the boj speculation. we sell 10 year treasury yield were -- rise some six basis points. keeping an eye on the curve. the biggest two day steepening since february. theou are talking about yuan. quite a few chinese asset it's on thelass move including stocks. that raises a whole new talking

point of conversation around where to the sox go from here because they have seen a lot of downside pressure. we put a chart together. it lays out what is happening with the stocks and the sovereign bonds. analysts surmise there is plenty of room to decline. they are also saying that the trends are reversing for each asset class. want to see a stronger domestic economy. >> let me show you how the u.s. equity session might shape up. looks like we could extend yesterday's gains. s&p 500, the dow jones, the nasdaq futures all pointing higher. it is a huge day for earnings. we talk to the ceo of ubs. the second quarter net income beating and we will bring you

two exclusive interviews. get the bloomberg first word news with juliette saly in singapore. hello. u.s. president donald trump would agree to an interview with special counsel robert mueller's investigators to questionsted about whether his presidential campaign colluded with russia in this 2016 election. the president's legal team is concerned that robert mueller and his staff might believe witnesses that contradicted the account of the president. including james comey. that could lead to the president vulnerable to a perjury charge. five potential witnesses against paul manafort including accountants and bankers have been identified. at the same time, a judge gave the former trump campaign officer's lawyers. among those granted immunity for their testimony include an

accounting firm used by paul manafort. the u.k. is anticipating a 50 fold increase in interventions on takeover of british companies and assets. ministers are outlining proposals. the departments of for business, energy, and industrial strategy expect to examine about 100 deals this year and will take a remedy in about half of those. greece, wildfires have raced through holiday resorts. 24 people have been killed and more than 100 injured including 11 people in a serious condition. deadlieste nation's wildfire season in decades. they are asking for help from the european union to control the wildfires. 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 . of course, we have been watching the yuan and the spike in yields happening in asian bonds. you do have strong momentum coming through on equities. it really is a hong kong and chinese markets giving the boost on the back of the announcement of further infrastructure spending from china. thebased eanes across region. chinese stocks are at their highest level in a month. we did have that yuan fix. weking at some of the stocks are watching. movement in industrial stocks in chinese shares listed in hong kong is where you are seeing most of the momentum. china's railway group is up about 10%. looking positive. we are still seeing weakness in the vaccine stocks in china. this is the company that reached thereached -- breached

vaccine industry. you are seeing it down by the daily limit once again. in austria, we are looking at the implications of trade war's. in terms of exports to china, they are looking good. >> thank you. let us get back to our top stories. china has unveiled a package of policies to boost the economy. see -- thethe bbo pboc slashed the daily reference rates. stimulate the economy have sent the currency to a one year low. joining us now is pater chatwell head of rates strategy at mizuho international. they are saying though it is a bit of a tweet. not a big shift. do you agree? that thisould agree

is incremental policy change. it comes at a good time because this is when the chinese economy has been confronted with the tariffs from the u.s. so it is helpful to boost and support demand and confidence at this point. nolso think that just by longer looking to intervene into the currency at this point, and just allowing the national -- the natural market forces to have their influence on the currency will also end up being supportive for the economy. >> i want to show you a chart, peter. it is on the gcb library. it is on the premium. the comfortable range. when you look at yield differentials, what does this tell you about whether we will see and a in the weakness of the yuan? peter: what this is suggesting

is that there is perhaps not as much yield premium as the pboc might have wanted in the past. one of the reasons for this is yields have been low in the rest of the world and also now the renminbi is establishing itself. imf's members and commonlyng more adopted as an international currency. just a start but it means the bonds will be indecent demand. >> could you see another response from the chinese? let us assume that the u.s. raises the stakes a little bit more or quite a little bit more as the anticipation is. if this is the reaction to the initial batch of moves from the u.s., then they would still need some sort of buffer to react and adjust to another set of tariffs . peter: well, i think what this

is showing is that they are allowing market forces to have their influence on the economy. if we just extrapolate the reason to move, i think this shows that the market can adjust. the market can weaken the currency, supporting the economy. and than the government does have room to move on the fiscal side to help ease and support the economy. i think what we see is an evolution of incremental policy adjustments. and the lack of desire and less a depreciation of currency accelerating in pace. >> in terms of the incremental policy adjustments, at what point do they start to concern you and you think -- hang on a moment, this may be storing up problems down the road? too much there is weakness of the currency, there would be domestic outflows. it is really about watching the currency flows. if there is a sign that the

outflows start to pick up again, there would be some concern that the policy has moved too far. for the time being, i would say that this looks like sensible, measured policy making and something that equity markets should be cheering as a have been doing. it is not like the timing is a coincidence. a talk about external realities and arguably the tariffs and the international economic rushers are part of that. equity, is this a turning point as well for chinese bonds? would not say so. i mean this is another bit of the policy easing. you have been looking at the lack of a yield premium on chinese government bonds so i think this just suggests that we will be remaining in this regime where the premium is still

relatively low. i do not see any real possibility of there being a structural change her. i think it is just steady and continued implementation of current policies. >> pater chatwell will stay with us. withter chatwell will stay us. we talked to the ceo of ubs and we will bring you two exclusive interviews with the ceo of peugeot and the ceo of syngenta. this is bloomberg. ♪

nejra: 6:17 a.m. in london. -- the msci-pacific asia-pacific index is outperforming after we saw gains in the us at led by financials. feedback --itial

the top and estimates for a potential listing. bloomberg has learned that institutionally there were as little as $12 billion. representatives for volvo declined to comment. analysts are raising new questions about the future of tesla after it asked suppliers to give back some cash. elon musk insist the new model three will pull his money loser into the black but others say this could be a sign that something has gone wrong. tesla has spent billions trying to ramp up production and the second-quarter numbers could be disappointing. goldman sachs has on was the number of women on its senior governing body. david sullivan begins to shake up the leadership team. the strategy chief joined the management committee along with another woman that leads the investment banking division. sheila patel come ahead of the

international asset management business and lauren stein are also on the board. ubs has posted second-quarter net income of 1.28 billion swiss francs. the biggest report in switzerland also reported net new money outflow of 1.2 billion francs. you our interview with the ceo, sergio ermotti. that is your bloomberg business flash. let us talk about alphabet. shares jumped in u.s. late trading after the company posted strong second-quarter numbers. local is still raking in marketing dollars helping the company move past costly regulatory troubles in europe. emily: alpha that revenue revenue25% -- also that -- also bet alphabet -- also

lphabet revenue soaring 25%. $5 billion ined europe. accrue that fine over the course of the next quarter. ceo talkingn to the about how they are approaching this ruling as of now. >> we will always take a constructive approach. we will appeal the decision from the commission. we are also looking forward to finding a solution that above all preserves the enormous benefits of android users. there is more work to be done and i think it will become more clear as we go along. but i am confident that we can find a way to make sure android is available at scale to users everywhere. emily: the big question will be

will handset makers start charging google to preinstall apps on handsets like samsung handsets were example. that remains to be seen. i did speak to the ceo from stronglyand she attributed the growth to mobile. she also says they contribute that they continue to invest in growth. capex continues to grow this quarter. her view is that it will continue to grow. she says they continue to support growth of across the business. they are looking for additional compute capacity even the outlook for growth. i also asked her about the new regulations about privacy and how google handles our data. interestingly, from the outside it appears that it has boosted google's bottom line because smaller companies have had more pr compliant. gd

she says it is still too early but she emphasized that privacy is of utmost importance to google and they are working on additional tools to improve transparency. let us stick with the u.s. and turned to the treasury curve. yesterday, the 10 year treasury yields rose from six basis points. we have also seen some curve steepening. analysts say the yield curve flattening will continue the cousin of the possible impact of a trade war. from mizuholl international is still with us. let me show you a simple charge. the most steepening since friday since february. we are at about roundabout 32 handles. a touch of flattening. was this a little bit of a breather before the flattening resumes? depends on what

timeframe you're considering but we have had the view since q4 of last year that the second half of this year would be when the curve changes dynamics. and moves away from the ullepening into a b steepening. that is why we have this expectation. we do not think the fed will be able to deliver in hikes after september of this year because we have a clash between rate hikes and the reduction of the balance sheet. only one will win out. we think the reduction of the balance sheet will continue while the rate hikes go on pause. we are seeing a lot of factors combining to suggest that our base case is still likely to play out. we see it steepening up to 32 basis points. we think it ends the year at 35.

curveteepening along the is where we see a lot of steepening potential. a long end of the curve starts to get really excited and underperformed as demand from theion funds die down and long end of the curve factors in the inflationary dynamics that the tariffs are likely to cause. data point that could yield movement is u.s. gdp forecast. having grown the fastest since 2014 giving the dollar traction. what will drive what you're? -- what will drive what here? we will beuld say moving away from yields driving the dollar. the dollar is going to be driven more on the trade tariffs. we are in the regime where the more tariffs the u.s.

implements, the less likely it will be to trade with external parties. it will have less demand to sell the dollar to purchase foreign currency. that is one of the reasons why the dollar has been able to rally. on the interest rate differential, i would expect the peaked asyields have we continue to price a less hawkish fed going forward. the fed funds strip is telling the story of two stories. cuts is a possibility of further along the line and that is particularly interesting. we also subscribed to that. intothat starts to feed front and bond yields, the rate differentials will be tightening against other major currencies. nejra: what about if you look at the 10 year? yesterday, it rose some six

basis points. we are edging back to the 3%. for example, the 10 year yield differentials with g7, will that tighten up as well? is what weas peaked would say. our expectation, just as long as we have expected the curve to reflect, we have never been in the camp that expected the 10 year yield would end the year above 3%. we think it ends the year at 270. that implies it is tighter jgb.ive to bunds and the thes about as being passed expectations of peak hiking from the fed and looking forward to the effects of the stimulus wearing off and that being priced into the curve. we appreciate your time this morning. good to see you. a preview of what

is coming up next. a huge week for earnings. we will speak to the cfo of santander. plenty more to come. this is bloomberg. ♪

is 9:30 a.m. in dubai . you're looking at a live shot of downtown tokyo. is currently up 0.5%. we have some breaking lines. nejra: we have some numbers coming through here from persia. revenue comes out at 13.6 billion euros bang in line with the estimate. at 750rring costs million euros. the first top profit has surged

on higher car sales and cost cuts is the take away here and the cfo saying the situation in china is stabilizing. we will hear a lot more in the next hour when we see -- when we speak exclusively to the cfo. let us check in on the markets. at theus take a look equity trading session in asia. as you can see behind me, it is pretty much a sea of green. looking at japan. up 0.5%. losses a reverse of the we saw yesterday on the back of the reports that the boj might change its qe program. the yen today is little changed. looking at china, extending three days of gains. percent. hong kong is also up one play 4%. really strong session out of china. lastly, i move on to my next chart -- looking at the yuan.

today, we saw the chinese currency fall the most in a year. as you know, this has prompted the trump administration to suggest china is manipulating its currency, weakening it. when you look at my chart, the blue line looks at the dollar and the yuan but also the yellow one is a comparison to 24 other currencies. not you see is the yuan is down just against the dollar but down against pretty much everything. from china, i want to look at japan. yesterday, it was a crazy day for government bond yields. the 10 year -- you can see it jumped the most since february. this is on the speculation that the bank of japan might fine tune its quantitative easing policy. the bank of japan likes to keep this in control so all eyes will be on governor kuroda next week.

over to juliette saly in singapore. china has unveiled a package of policies to boost domestic demand as trade tensions that into worsen the economic slowdown. the measures announced after a council in beijing including a tax cut and fostering research spending and special fonts for infrastructure investment. they are intended to form a more flexible response to external uncertainties. u.s. president donald trump would agree to an interview with special counsel robert mueller's investigators if the questions were limited to whether his presidential campaign colluded with russia in the 20 election and that is according to his lawyer rudy giuliani. the president's legal team is concerned that robert mueller staff might believe witnesses such as james comey. that could lead the president --

that could leave the president vulnerable to a perjury charge. five potential witnesses against all manafort including accountants and bankers have been identified. -- hisge also gave him lawyer's more time to review documents handed over to them in recent weeks. among those granted immunity anlude people from accounting firm used by paul manafort and others who appeared to have worked for the federal savings bank injured out of which provided him with millions of dollars in mortgage loans. the u.k. is anticipating a 50 interventionsin on takeovers of british companies. ministers are outlining proposals that wind the scope in which they can intervene in deals over international security. the departments for industrial strategy expects to examine 100 deals this week and to undertake some sort of remedy and about

half of those. 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. this is bloomberg. nejra: thank you so much. juliette saly for us in singapore. sticking with the u.k., the bank of england is it -- is planning to raise rates for the second time in a decade. qe -- peter chatwell, head of great strategy -- head of rate strategy at mizuho international is still with us. should we get that rate hike in august? peter: we expect the hike will be delivered. but i would not be voting for a hike. nejra: why not? uncertaintyconomic the country has to deal with is so great and the level of obviouslyeverage --

it is high. i don't believe we will be in a position to bounce back from the ofe hike path that the bank england is illustrating. i can understand how they have a arrived at their forecast but i don't inc. they are taking into account the political uncertainty. yousef: what exactly is priced in to some of these u.k. asset classes? the beautiful thing about the bond curve for example is that what is priced in in terms of the slope is pretty much a symmetric -- asymmetric. we would expect that the two-year gilt year can go up toward 1%. while we would expect the 10 year yield would be falling.

two year yield will be dictated by the policy from the bank of england but the 10 year will be dictated by the brexit uncertainty and demand for what is called the risk free assets. those -- as they start to underperform with the brexit uncertainty, they will be in strong demand. we think it will come down to 10 basis points. nejra: peter chatwell is such a pro he saw my chart before i brought it up. peter, you think this will continue. peter: 10 basis points for march. it there any relation because we were talking about the relation between the earlier? the other disobeying the law's. ws. tole is likely to go down

120 before then recovering for a longer-term recovery. outcome120 is a likely purely from the political uncertainty. we believe the bank of england is not really going to be able to influence the fx market. the fx will be trading on uncertainty and the withdrawal of real money investors from the u.k. as an asset class. yousef: peter, there is a bloomberg column that came out a few minutes ago from therese raphael. she said no deal brexit is crazy but it might just happen. you think back to when it was considered a laughable negotiating tactic. where are you on how this will all play out? peter: i think the likely delivery from the government -- they have a mandate to deliver. brexit, in other

words a soft brexit. that is all the house of commons has the copy -- has the capability to deliver. if they try to deliver something else, i would expect a second referendum to pop up. i think that would be more likely to suggest a soft brexit outcome materializes. if we try to push for anything harder than that, that is when the fx market will start to be disappointed with what is trying to be delivered. on the other hand, if we push for something that is too soft, the likely of the eu pushing back on that becomes great. nejra: given what you said about u.k. rates and taking into account your view on european rates, where do you see eurosterling going? peter: i expected to be strengthening against sterling.

i think the study path of the euro continues to outperform sterling and that will likely remain intact. nejra: and will rates go higher? peter: ten-year bund is around the current value, 40 basis points. we believe it could rise to 50 basis points. not a big move. but we believe the lows have been reached and it is upside from here and same for the currency. nejra: thank you so much, peter chatwell, great to have you with us. yousef: remember that bloomberg uses can interact with the gbt go.using db you can catch up on the key analysis and see -- and save charts for future reference. we are just getting warmed up.

we will be bringing you our interview with the ubs ceo, sergio -- sergio ermotti. manus cranny will be live from zurich with that conversation. this is bloomberg. ♪

>> futures are rising ever so slightly this morning. the treasury market will be in focus. on a sidewalk in ubsch just outside the headquarters. the numbers for ubs, a rise of 9% in the profit, 1.3 billion swiss francs, that is a very comfortable beach. where did that come from -- that is a very comfortable beat. where did that come from? -- two magic fx

words in this community. 1.2 billiony saw swiss francs. we sat down for a conversation with sergio ermotti on the markets and more. sergio: we have seen a strong performance on our investment bank. , they look at management all contributed to a strong quarter and the fact that for the first six months of the year, we generated almost 3 billion of capital which is a at that. you look it allowed us to buy back 550 million shares this quarter. allowing us to put aside for our

capital requirements. manus: will you continue with share buybacks in the back half? target?till on sergio: our clients are asking for capital commitments. can we apply that capital in different ways? we play a role and we will assess the situation during the year. looks like everything is going splendidly at the investment bank looking at the rate and fx business. how strong a quarter was that an can the momentum continue -- and can the momentum continue? q2 17 was quite challenging. in the second quarter of this ofr, we had the effect

gaining market share because of our rolling out of our electronic execution engines. i am very pleased with the performance of our businesses. manus: was there any consequential market share because of the investment bank? sergio: the competitive landscape is quite full and diverse and i don't think it is one or two players that make the big difference in a slowdown. is there a sense of deleveraging from the clients? sergio: if you look in general, especially when we are looking at u.s. clients as a proxy to answer your question, it is quite interesting because they are still quite constructive about the future. of how they see the

economy, the outlook. if you look at their asset location especially on stocks, to the thirdasure therer of 2017 two today, is an increase of cash ban us of cash to about 5%. they are not only moving their portfolios, they are committed to maintaining their positions which is good for transactions. money is a debit item. will want will not -- to understand from you if it is a one off anomaly. you have set some targets on that. look, first of all i have to look that we will add to our 2%-4% target of the year.

we will not relapse. this quarter had some seasonality effect. tax outflows from the u.s. were expected. we had one off outflows from corporate. that is an interesting business but is low-margin. we had almost no effect on leverage or lending so clients are very cautious. -- we also had a very good but we also had very good momentum. we are up three for old compared to last year. outside of the u.s. we had over 6 billion in net new money. overall, i am positive about our developments. i am quite confident that the rest of the year will be ok. manus: we caught up with larry fink on his results. he said if we go to a fully

, what is your war call on the consequence of an explosion of the trade wars? sergio: if you look at the performance of the market -- 10%-15% correction is in the cards. manus: can a trade war trigger that? to be ait does not need war but a constant escalation. is the need for the markets to correct and i think it is in the cards. -- weieve that extensions played the tensions will eventually be resolved but things could get worse before they get better. page two of your release talks about a gradual increase of interest rates in america. how critically important is it

that the fed stays the course for interest income for your bank? sergio: for every bank it is important. ratesstill see all of the hikes coming this year. and the real dilemma is to see how much -- is to see the margin pressure and if it is still there. component on pnl is going to go the wrong way for us. but we will still be able to keep at least around 60% of the benefits of the rate increase in the future. have seen a shakedown in the shanghai composite. but there has been a shake in emerging markets and china. what is the consequence to your business? or has there been a consequence

in a decline in the appetite? sergio: the negative developments on a year on year -- we mentioned this before. clients being more prudent in how they invest but also in asia, we had a slowdown in client activity. it was somehow compensated by the msci inclusion of chinese stocks. we had good momentum in the a b in terms of the silla trading the inflows. in general, i would say the environment has been on the proven side in q2. manus: there will be a real boost to the earnings season for the investment banks. the wealth management side -- no doubt about it. net new money. a growth of 5%. the market might be disconcerted by the net new money.

businessok at the fx and the equities business on the investment bank side, they are doing very nicely. a little bit of bull and bear. very much getting on with the job of trying to take this bank through and further grow it. fascinating insights there. a very interesting camera station -- a very interesting conversation. let us get some more perspective on those results with filippo maria alloatti. thank you for coming on the program. second quarter profit beating estimates. net new money expected to be negative. what exactly would you say struck a chord with you from the conversation and the results that you saw? filippo maria: good morning. the most important thing is that is in thement bank

second quarter and it is taking shape the idea that the rate of the investment bank which has long been a weakness of ubs, which is very positive. on wealth management, a little we will take him at his word. that the wealth management aspect of ubs is growing. for me, the glass is half empty. ejra: if we look at ubs' equity performance, it has underperformed some of its competitors like barclays and credit suisse.

equity from the perspective. how compelling is it ubs from its peers? it is moreia: defensive. it has been quite strong for a couple of years. there could be a correction. people appreciate the defensiveness and if clients do not trade, it is not great for the managing of the bank. ubs.e they still go to ubsef: we have heard from and also from julius baer in the last 24 hours. as the bank results continue to trickle in. is there a common thread you would point to? filippo maria: one big question clients see as

the potential for escalation? they need to understand what to do with their money. we could see some clients be more conservative as opposed to taking out more loans and growing their capital. theme. a common briefly, deutsche bank results tomorrow. will there be some sustainable profitability? filippo maria: it is too early to say. it is a relief that we have not had a profit warning from deutsche bank. this time around, they could not meet the cost target. the figures have been elusive for them. for profitability, it is complicated. we need to wait a few more quarters. nejra: thank you so much to

filippo maria alloatti. if you have a bloomberg terminal, you can follow all of the commentary and analysis on the second quarter earnings of ubs. this is bloomberg. ♪

>> good morning from dubai. live from bloomberg's european headquarters, these are today's top stories. one.f: sinking you -- yuan. china's currency falls. stocks and bonds rates climb. google parent rises following a monster quarter, shaking off europe's $5 billion fine on the company. , switzerland's largest bank reports income well above estimate. from sergio ermotti

throughout the day. let's get you straight into what's happening in markets when it comes to the futures picture, because we are getting the positive seed from the asian equity section. a couple of things to look out for. european banks, wealth managers , a very strongts third-quarter guidance. nejra: financials outperformed in the u.s. as well, pushing the s&p 500 higher. we see those gains in the asia-pacific index. materials are outperforming and

chinese equities as well. efforts from chinese authorities to support the economy, impacting bond yields and the ui and -- yuan, blowing past that 6.8 level. i've got the 10 year treasury up because we saw yields rise. steady in this session along with the 10 year u.s. yield, which trades at 2.95%. we did see that rise six basis points in yesterday's session. that march toward 3% on the u.s. 10 year. let's see how that is feeding into german and french bond futures. relatively steady picture for a lot of these key metrics. bund futures just barely called lower by a few whiskers. let's get back to the earnings picture. one group says its first-half

profits surged on higher car sales and cost cuts. automaker also boosted its profit margin against higher run materials and currencies. for an closearis of interview with the ceo of exclusive-- an interview with the ceo of group psa. >> the ceo of group psa. thank you for being on bloomberg tv exclusively this morning. -- have managed already >> we are seeing this successful turnaround as we consider the operating margin and more than 900 million euros of free cash flow. we can say the very first positive signs of this turnaround are visible. i would like to praise the leadership of -- we have been

doing a great job implementing. we can say each employee is contributing. i am very happy to see the results. sort,n you acquired look everyone said psa group is becoming more dependent on europe. given thegood thing geopolitical uncertainties we see everywhere? >> what we can see is the changing in the world is chaotic , it is making us very humble. what was true may not be true today. for the time being, we want to be recognizing that we are performing well in europe and europe is a place where we have -- we understand our customers, where we can make great products, and create value. that is why we are such a big player. that does not change our strategic plan where we want to

become a global carmaker with cutting edge efficiency. that means we will continue to develop in other parts of the world, china, latin america, eurasia, and india. this is what we are doing now. or the time being, it is great to be a european carmaker and make good value creation. -- in the long term are interested to be fragmented in our business model. our interest is to make sure we profitable everywhere in the world. this is why we intend to come back to north america, one of the places where we are not so much present. >> the u.s. president donald trump perhaps will impose 25% tariffs on european car imports. what is your time frame in terms

of coming back to the u.s.? >> i think it changes the way we perceive in the way will do it, but i think globally if we step back from this very short period of time, if we look at it from a broader perspective, it is better that we keep open trade in the world. it will create more wealth and than the wine more lose situations. including the u.s. citizens in the u.s. country to have open trade, i think that is the long-term. we recognize the current situation and we will adapt accordingly. >> will you go to canada instead? >> it is part of north america. >> you said you would put more investment to canada rather than the u.s. because of this new tariffs? so far we look at it as a whole. both markets are important for us.

again, let us be pragmatic. let's see how things are going to unfurl. we will see based on what will be decided beyond the announcements and all things we can learn in the media. happensee what actually and we will adapt. so far our plan is, go back to north america within a 10 year time window. >> you are also president of the aca. do you think the eu is right to retaliate? choice.ve no other >> escalation? >> yes, and what we learn from business and there are many wise people in the u.s. administration, i think it is better to look for win-win situations. on the long run, i think this is better for all of us.

let us see if we can avoid retaliation. let us see if we can bring common sense and try to cool things down and try to recognize that if we work together, we will find a better way for creating wealth for humanity. of au still own 46% carmaker. ,hat is going to be the impact which is very present in the u.s.? it is a stronger automotive parts supplier and they are doing very well. they announced results last week . they are progressing significantly in the ranking of the different parts suppliers. we believe they are doing a very good job. as you know, in our industry, everything is about competition. the point is, is it going to impact this industry or not? within a certain framework, we

trust that it will be competitive and will between a better job than some other competitors. overall, is it a good thing? this is the question to be answered. >> last year you sold 415,000 cars in iran. the u.s. decided to reject the french waiver on iran. what will be the impact of sanctions? >> we have made a very clear-cut decision. it is black or white. we have made the decision to wind down. letut the number of calls -- cars sold last year has to have a financial impact. >> financially speaking it is marginal. it impacts less than 1% of our turnover. it is not at all financial. it is an opportunity for the future. we have made a decision because

in terms of compliance, it is not gray. we have made a decision to be compliant. our people are coming back to europe, which is the current situation. we believe in the long-term, this the best way to protect the company. >> in china, unit sales were up nearly 7%. the pewgoing to see out brandug him across china? >> we are seeing some life. how wetrying to learn peugeot.ve pew show --

10% target.from the is that achievable? >> when we reach that point, we will see. . it is growing challenge also an opportunity. we have been delivering those results for 2011, 2018 h one despite the fact we are not operating so well in china. china remains a big opportunity. near not forget we were 400,000 sales last year, so it is not marginal. it is still growing opportunity for the future. >> think you very much. , all this group psa very interesting subjects in this geopolitical uncertainty weighing on carmakers. thank you very much for

that. let's get some breaking lines from audi. they are said to be hiring the bmw purchasing chief as the new ceo. a quick recap. back in june we had vw saying that audi ceo had been taken into german custody over the diesel probe. we understand there was an interim ceo. latest news, there is a new ceo, the former purchasing chief. we also understand there is some -- well, there could be a delay because of contractual clauses. it's is going to be important in terms of providing clarity. a fresh page and a fresh start after the diesel scandal over the last few months. absolutely.: earnings news does not stop there. coming up we have exclusive interviews with the ceo of anglo american.

we will be speaking with the ceo of shell. ♪

nejra: it is just about 7:16 in london. we are 45 minutes away from the equity market open. we could see equities rebound from losses we saw on the stoxx 600 yesterday. euro stocks pointing higher, the same for u.s. futures. we saw u.s. stocks close higher yesterday led by financials. we are also seeing risk on in the asian session. china leading those gains with policy. the 10 year yield, study after gaining six basis points yesterday. let's get the bloomberg business flash. ubs has posted second-quarter net income of 1.2 8 billion swiss francs, beating analyst estimates.

switzerland biggest bank reported net new money outflow and global wealth management at 1.2 billion francs, citing seasonal u.s. tax related outflows. >> a very good signal of good momentum for financial advisor compared to last year. outside the u.s. we had almost -- in net new money. we do not look at net new money on a quarter to quarter basis. i am confident the rest of the year is going to be ok. juliette: google is still raking in money from advertisers, propelling the search giant to another big quarter. out of that recorded -- alphabet numbers that beat analyst estimates in the second quarter. there on course for a record.

goldman sachs almost doubled the number of women on its senior governing body as the incoming ceo begins setting up a leadership team. sheila patel, head of the international asset management business, along with chief administrative officer lorin stein. the latest high-profile hedge fund manager has quit the industry. he announced he plans to convert business into a family office. he spoke exclusively to loomberg. >> this decision, the toughest part was the need to resize my staff. i have a team of 35 terrific partners and associates. i have done a great job. -- and they have done a great job.

>> if you were on camera i would be watching you tear up right now. >> i'm going to go from 35 people to 15. juliette: analysts are raising questions about the future of tesla after it asked to suppliers to give back cash. elon musk insists the new model three will pull his money loser into the black, but the appeal could be assigned something has gone wrong. tesla has spent billions trying to ramp up production. its second-quarter numbers may be disappointing. nejra: thank you so much. this is what you should be watching today. strike pilots go on ahead of walkouts by cabin staff on wednesday and thursday. we spoke to the cfo on this show yesterday. he said they managed the strikes well so far. an interest rate decision out of turkey. we will talk about that with our guest onset.

and the u.k. brexit secretary appears before parliamentary select committee later. yousef: let's focus on turkey. speculation is building the willsh policymaker group look past president erdogan's call for lower rates and raise borrowing costs for the fourth time since april. inflation has soared, the lira has fallen. the government has resisted tighter policy. that has eased. is the director of emerging-market strategy at societe generale. in istanbul for the elections, i do not think anybody would have foreseen the economic scene that would come together. today a pivotal moment for the credibility of a central bank that has been going from scandal to scandal. >> it is true. this is the first meeting we are having after the june 24 general

elections where we had the presidential and parliamentary elections. this is a litmus test of the regime. we will see whether the central bank can retain its prudent stance has implemented over the past couple months with respect to normalizing the policy corridor and increasing effective funding rates by 500 basis points. we have seen a real drop in real policy rates with recent inflation figures. that is set to rise. it is quite important for the central bank to maintain its prudent course. we are calling for a 100 basis point hike, in line with market consensus. before the turkish lira jumped against the dollar, it is studying up today. studying -- steadying up today. the options market is the most bearish on the lira across all.

i looked at one month, i looked at three months. most bearish among all em currencies. does this tell you even if we do get that expected hike, any gains are going to be short-lived? are given that analysts also pricing in 100 basis points to 120 five basis points worth of hikes, there is not going to be a huge market reaction if the central bank does deliver. there can be a backlash if they under delivers significantly. nejra: how much would we weaken? sorry, go. howef: not just in terms of central bank is going to react possible weakening of the lira, but also in terms of how they're going to respond to the external realities outside of turkish borders. it's a tough world in terms of monetary policy. rising interest rates, oil prices, it complicates the whole thing. >> the environment is still very fraught.

we've got a gradual decline in growth momentum. we have high external funding pressures on turkey. the prospect of more trade wars. all of these are weighing on investors sentiment and having an impact on financing. is quite important for the central bank to keep that in mind as well as try to offset some of the deterioration we are seeing domestically around growth momentum. nejra: what tactical opportunities would you be taken right now in being em space generally? >> medium-term is still bearish given the fraught environment. tactical opportunity can arise, for example in south africa, we have fx hedged position on long for government bonds. also in russia we are long. given some of the levels we are seeing in the euro currency

side, pon looks interesting to us. one asset management company is cutting their positions. dollar strength and america's protectionist trade policy risks some of these economies. is it time to get out of p.m. to reduce those positions? p.m. -- em to reduce dispositions? >> for us it is difficult to imagine on the currency side that currencies will underperform. complexly need very situations for that to happen. , spot might depreciate

over the medium-term horizon. there still might be positive carry versus the forward. the medium term is negative in terms of how much capital inflows em a might see. that forces investors to be much theydiscerning about where place. some pockets in india might present opportunities. nejra: what is the crux of your bearish view? especially on emf x-ray now. >> -- em ask right now. we have really been undermined by chinese deceleration and by the policy divergence between the u.s. and the rest of gm. those situations can still continue and on top of that we have got the trade war that

still rile markets from time to time. yousef: what is the contrarian play in e.m.? >> for us, the compounding fiscal pressures the country is under and the fading of the euphoria in the past couple months, so for us, playing that -- being long seg be with an fx can be a goode way to capitalize on positive fixed impact -- fixed income. nejra: the director of emerging-market strategy at societe generale. great to have you with us on set. yousef: it has been a jampacked show. u.s. equity futures a little bit higher. showsequity session

strength across the board with chinese a stocks leading gains off the back of the stimulus measures. a lot to consider for the remainder of the trading day. more ahead.

matt: welcome to "bloomberg markets the european open." we are live from our european headquarters. guy johnson is out this week. cash trade is less than 30 minutes away. trading revenue surges at ubs. the swiss bank suffers an outflow of money from its global wealth management business. we will hear from sergio ermotti. asia in the green. stocks rise