anna: good morning from bloomberg's european headquartersanna:. this is "bloomberg daybreak: europe." more trade pain. the u.s. commerce secretary threats hit chinese assets. the u.n. is set for its longest weekly losing streak in a quarter of a century. may's drive to win over eu leaders as mark carney adds further rate hikes despite brexit risk. apple becomes the first u.s. company to breach the 13 digit mark. shares rose 9% over two days. will amazon be next?

good morning everybody. 6:00 here in london. we have some breaking news for you. we've got a host of companies reporting earnings this morning. let's start with allianz. this is the german insurance business. second quarter upward profits, 3 billion euros against an estimate of 2.8 9 billion. they are concerning their outlook -- to meet their operating profits target, delving into the numbers a little bit, looking for any news more broadly, or specifically on pimco. that to you.o get operating profit, 3 billion euros against an estimate of 2.89.

we get intome line, the statement a little bit, miss forestimates -- a estimates. they have stuck with their guidance. what inflows and outflows to be seen? -- do we see? that was one of the big questions. we do not see m&a just yet. a relatively new ceo at this business. we talked him june about the potential for them to do some m&a. anything from rsa in the u.k. to u.s. insurance businesses, such as hartford. we are going to be talking to the cfo. that will be from 7:00 a.m. u.k. time. banking sector, second quarter net profit 1.4 billion head of estimates.

above estimates for that particular part of the business. we heard from a moody, which they own. majority-owned by credit agricole. they rebounded from outflows. beating estimates. the investment bank is certainly one of the elements here. investment banking profits, 578 million euros against an estimate of 389. that was part of the stretch. let's talk about swiss re. numbers from the swiss reinsurance business. exploring the potential for an ipo of reassure in 2019. 6.3%. up first half, net income, $1.01 billion. that was below the estimate of 1.1 7 billion. interesting to see what has caused that.

there was a lot of talk about whether the rise in -- whether that was going to drive increased demand for product. and also increased the ability to price product more strongly. .hat is part of the story softbank was interested in taking a stake. they stepped away. that also part of the story. the cfo will be joining the bloomberg team, 8:30 a.m. u.k. time. the stock about broader markets. particularly china. it is not all told by the msci asia-pacific. that looks resistant. pretty mixed of this morning. a lackluster week. here is the msci asia-pacific zero -- up 0.2%. china holding its head above water in this morning's session, but that's not the case for the chinese currency, which continues to slide, heading for its eight weekly drop.

run since longest 1894. remarkable.mething it is just benign neglect by the currency by the pboc, or something more active going on there. s&p futures looking flat. --s data from the u.s. do due. we're going to get numbers out of rbs and u.k. banks this week. the rbs executive director, we will bring you that interview at the start of the 7:00 our. get a first word news update for you. juliette: u.s. commerce secretary wilbur ross has are going ahead and less china changes its economic system. give ministry should will create

-- where it is harder for the continuerepublic to bad practices than it would be to reform. aging has pledged to -- tourist -- beijing has pledged to respond in kind. >> the u.s. is trying to put china on -- pressure on china. we do not think that approach will work. china is ready to talk to anyone who is ready to talk to us. but this kind of dialogue has to take place on a basis of mutual respect and equality. in the u.s., a bipartisan group of senators has introduced legislation to impose sanctions on russia. the plan includes penalties affecting russian sovereign debt and energy projects. republican senator lindsey senators goal is to impose sanctions against vladimir putin russia until he

ceases meddling in the u.s. electoral process, stops cyberattacks, and removes russia from the ukraine. some bob boy and election officials say the president won -- zimbabwean election officials say the president won the election. several were killed in postelection process -- protests. two decades of misrule. 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 . what a volatile week it has been for asian markets. the regional index on top for its most weekly loss since march. , but still a lot of weakness in beast chinese markets. and i was mentioning that fall

on the ground the one, heading for its longest weekly -- that fall in of the yuan. its longest weekly loss in years. apple had that $1 trillion mark in the u.s.. at stocks inlook detail, particularly the tech players. realtek in taipei is rising the most since 1997. it has had a double upgrade from morgan stanley from underweight. a lot of focus on the tech space in asia. very strong numbers. we are awaiting toyota earnings. goldman sachs increasing its start -- price target for the stock. heineken at $3.1 billion in china's largest beer maker, this is as they try to move into china for a lot of these premium brand beers.

anna: thanks very much. an update on the asian equity session. let's talk about an asian company, a japanese company that has reported operating profits beating estimates. causetariff changes pricing confusion. bloomberg tokyo deputy bureau chief joins us now. great to have you. what is behind the earnings beat? some of these numbers did look strong compared to estimates. >> they do look good. as is the case with toyota, i think it is finding more, doing more with less. it all comes down to cost cuts. they had a cut in expenses by $60 billion. just over $500 million.

that more than offset a marketing greece they had done as well. -- marketing increase they had done as well. good.l, i am doing pretty i'm confident compared to their rivals. how do they compare to rivals? i noticed the performance in china better than european carmakers that reported in the chinese market. >> the performance in china was good. the performance overall versus rivals was quite good. there assumption is right in the middle of what they are reporting. and theydone better were not sounding as many alarm bells as their rivals were. course, there's a lot of the year left to go to see. anna: thank you very much.

bloomberg tokyo deputy bureau chief joining us with the latest on toyota. very focused on the trade conversation globally. u.s. commerce secretary wilbur pain unless more china changes its economic system. meanwhile, investors are expecting solid employment figures from the u.s. later today. a lot of talk about with regard to the u.s.. us. great to have you with i am drawn to these comments by wilbur ross. he says they will increase the pressure on china so that china changes the way it works. is that going to happen? or are we going to see an ever falling yuan? >> after the trump juncker meeting, it was inevitable the

focus of american trade policy would now concentrate on china. >> that's a positive for the global economy. >> it means that he does off. -- heat is off. the negotiations, and it would appear progress is being made on a nafta negotiations. the whole focus is going to be on the relationship between the u.s. and china. mnuchin androm wilbur ross about china needs to change its economic models, what does that mean in english? it is very clear. , and they haveus raised this at wto level, is they do not like to areas. the first is intellectual property rights. the american claim that american companies operating in china do

not have the correct protection for their intellectual property rights. frankly, the americans have some grounds for criticism there. i would be fairly optimistic progress will be made on the ip area. , where thearea americans make complaints to the wto, is the operation of state subsidies for companies in china. and to what extent those state subsidized or state backed companies have unfair trade advantages. the whole thrust of what wilbur ross was getting at yesterday, i don't think he said he clearly, but that was the comments behind. >> so those are the criticisms that have level that china, that's for they want to see change. the chinese response has been to say, we will not be bullied. byhave seen them retaliate neglecting the currency.

yuan.s to do with the , the yenhe yuan broadly strengthening. is where we are on the fx wars story. is that what we are seeing in china? really is saying what's interesting now is where the asian equities are going to follow china down this road. >> one observation is that when 6.25hinese yuan reached against u.s. dollar, the minister of finance was very concerned. what they are now seeing is actually a healthy correction. healthy depreciation. it is not just their concern about the trade conflicts. their concern that the chinese economy is -- what we saw at the end of june was injections of

liquidity. significant injections by the people's bank of china. you have seen that in the fact that tenure chinese government bond yields are trading at a reasonably low 3.5%. january we had 4%. in turn hasicy resulted in depreciation, and a welcome depreciation. >> thank you very much. the u.s. national economic council rector larry kudlow will be joining the bloomberg team in 2:30 u.k. time. a fascinating time to get his insight. withg up, our interview the royal bank of scotland cfo. that at 7:00 a.m. u.k. time. ♪

anna: this is "bloomberg daybreak: europe." a blue sky over singapore. msci asia-pacific underwater by 0.2%, ending the worst week in asian trading since march. trade tensions part of the story. let's get a business flash. theette: apple has become first u.s. based company with a market value of $1 trillion. other tech giants are not far behind with amazon, alphabet, and microsoft with more than $800 billion each. the milestone was reached for decades after apple was cofounded with steve jobs in a silicon valley garage and revolutionize the world of computing and mobile communication. in oil company briefly crossed the $1 trillion mark, but collapsed.

heineken buying a stake in china's largest beer maker that will allow it to expand in a market dominated by local brands . the dutch brewer making it global push into emerging inkets will take a 40% stake china research beer holdings. china, the world's largest beer market, is seeing fierce competition as drinkers with rising incomes seat switch to premiums and foreign bruise -- brews. an international dealmaker and advisor to the vatican is leading blackstone. he told bloomberg he is ready for new challenges after 12 years at the you -- new york-based company. students key misinterpretation as an investment banker with -- made his reputation as an investment banker with morgan stanley. mark will not rule out

raising interest rates before he leaves the bank of england next june. heat knowledge is brexit could change everything. the bank of england raises benchmark rates for the first time since the crisis. bloomberg asked the governor whether it would be risky to reverse course. >> not as the situation fundamentally changes. right decision for the economy given the track it is on. obviously there is a wide range of brexit outcomes possible. we all hope by the end of the year we will be much better informed on which path the u.k. and the eu are taking. outcomes,ty of those they would be consistent with rates at their current level if not higher. there could be circumstances where it would make sense to adjust policy.

i think we will all know what those circumstances are. the mpc at that point will take them into account. it does not automatically follow . certainly a set of circumstances like what happened post-referendum, where the balance of what happened to the future supply of the economy demand, which was more of a business hit than a consumer hit , and the exchange rate, the culmination of those things made sense for us to extend the horizon over which we brought inflation back to target. fast-forward to today, i would say this, it does look like the right call. have inflation coming back to target, record employment growth, real wages starting to grow. there are circumstances where the balance of those three factors would be too

inflationary for the tolerances of the mpc. we can stretch the horizon, but up to a limit. we have to make those judgments at that time. anna: that was the bank of england governor speaking with bloomberg. let's continue the conversation about the u.k.. theresa may is meeting emmanuel macron today. the unusual meeting is said to be part of a diplomatic drive to win european leaders over to may's brexit vision. british leader has 11 weeks until the accord is meant to be signed. a few lines just crossing the bloomberg. i u.k. cabinet minister sees no alternative to brexit deal. the uk'secretary says future is still take -- is to stay economically close to the eu.

let's do brexit and also bank of england. was there evidence enough for you for the interest rate rise? >> the interest rate rise was fully discounted in the markets. that's why you saw very little reaction in the gilt market and why you did not see a bounce in sterling. -- 1.2g testing 1:30 eight against u.s. dollar. they reaction was totally logical. what's the rationale for the bank of england? certain indicators, if we look at the manufacturing pmi, the service sector pmi, they have recovered. secondly, we are seeing some upward pressure. rising to a half percent. -- 2.5%. unemployment is at a low level. .here is a brexit factor

investment spending is subdued. there is uncertainty as to what policy is on the eventual outcome. ont has a negative impact company corporate psychology. putting all that together, we are in an environment where inflation probably stays around 2.5%. growth is recovering, but modestly. have still got very negative real interest rates. that does justify the rise in base rates. where do we go from here? don't expect another major rise in base rates over the next two to three months. they talk a lot about the speed limit and the changes in productivity as part of the justification. you mentioned sterling. this is the forecast for sterling. many people have been bringing down their expectations. part of it is very much to do

with brexit. the bank of england works on the assumption brexit will be smooth. the answer is nobody knows. and i think this is evolving as we see with the british government is doing at the moment with this campaign to meet lots of eu prime minister's. we have made meeting with the austrian prime minister, the meeting with emmanuel macron. there is this campaign to sell the revised package to you leaders. it is reasonably clear. there was quite a good note on bloomberg earlier about this, which is that the divorce deal world -- will be agreed in september or october. european citizens rights will be agreed. but what is the future relationship between the u.k. and the eu? they will agree to delay that. that is a good way of getting

around a problem. you can say it is the status quo. discuss this in 2020. anna: thank you. this is bloomberg. ♪ two, down and back up.

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remember, we are seeing copper. it is down asear forecast. >> we are not immune to geopolitical situations. for us as they focus on the work we are doing -- for us to stay focused on the work we are doing is important. 2014, merely in consolidating, mostly a clean up. .his completely different

it is about growing the company further and improving by 200 basis points, which i think is a massive promise to the markets and our shareholders. >> to adapt to new trade --icies, to me manufacturing new manufacturing. i'm really thankful that those parties are looking for a solution. >> has not been much impact on the health care and pharmaceutical industry. in terms of our position over time, we are for fear he -- for free trade in lower tariffs. there are differences between localization requirements, lower standards, and pricing between the u.s. and foreign market. there are problems in our industry.

up by a factor of two compared to the same quarter last year. 30% down, linked to a difficult refining environment. a difficult trading environment as well. was our interviews with business leaders over the last week talking about the greatest threats to their businesses over the next six months. let's check in on the bond market. a bit of a lackluster session in asia. lackluster, broadly mixed in asia. japan slightly down. the topics under more pressure. 0.7%.na, down some bright spots in india and south korea. and in the worst week for

equities in asia since march due to trade tensions this week. adding some more pressure. wilbur ross signaling more ahead and less china changes its economic system. losses. is extending ftse futures pointing to a higher start in london. i want to dig deeper into this chart when you look at what's valueon, the percentage of what's happening with china equities versus the united states. up 7.5%ed states is while china for the year is down 18%. equity rout in china has shrunk markets -- the nation's market capitalization. it is the smallest versus the globe since 2015. comparing the two, you can see how this year china has been affected with this increasing trade rhetoric, it does not look like august will be a rough

month for equities there. it is job data day in the united states. i'm looking at the iron workforce. it is up since april last year. that is when donald trump announced investigation that led to the implication of import tariffs. it is an upswing. donald trump tweeted yesterday that pennsylvania should love him for bringing steel back. when you look at the last few years, since the 90's, steel and iron jobs are down 64%. anna: i saw the uptick we circled their. important to get the big picture. let's get a bloomberg first word news update. u.s. commerce secretary wilbur ross has signaled more pain ahead unless china changes its economic system. he. news the administration will create a situation where it is

harder for the people's republic to continue what he calls bad practices, then it would be to reform. reform --s pledged to respond in kind. the u.s. is trying to put pressure on china, but we do not think such an approach will work. china is ready to talk to anyone who is ready to talk to us, including the u.s.. but this kind of dialogue has to take place on the basis of mutual respect and equality. theresa may meets emmanuel macron today as part of a diplomatic drive to win european leaders over to her brexit vision. with just 11 weeks until a divorce accord is set to be signed, may need to chart a path to the deal. mark carney discussed brexit with bloomberg after raising interest rates for only the second time since the 2008 financial crisis. >> the important thing is this

is the right decision for the economy given the track it is on. obviously, there is a wide range of brexit outcomes that are possible. we all hope by the end of the year we will all be much better informed on which path the u.k. and the eu are taking. 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. this is bloomberg. anna: we just past the midpoint of second-quarter results season in europe. despite the trade related selloff we saw this week, the earnings season has been positive. half of companies reporting surprises on the upside. joining us now, the senior european equities strategist for bloomberg intelligence. very good morning to you. -- at the ea function on

the bloomberg shows me we have seen a bit of a surprise in europe. sales to the upside, earnings to the upside. if we look at all securities they have reported so far, over half. what is your assessment? >> has been a good reporting period. ago,scussed a week or so the set up was constructed. by our accounts as we look at the msci europe similar index and try to clean up the numbers, we get 55% positive surprise versus 40% miss. that is on a basis of being more than a percent or two outside of consensus. certainly, it leads to the positive. from the standpoint of growth, earnings were expected to grow about 8% for q2. by our numbers, they are 10% for europe. it has been positive. anna: which of the sectors that

are flying, and where are the lacquers? -- lags? >> you have ended up with energy , you heard some quotes from ceos, it is a robust business. profits are high given oil and natural gas. but relative to expectation, european integrated, the big guys, have disappointed quite notably. they have underperformed since midyear. the momentum has gone after driven a year earlier. what has replaced it is staples. food, beverage, household products have done relatively well from a performance perspective. earnings are coming in. -- coming in ok. anna: i was wondering if the

u.s. was different. the earnings season on ea shows we have seen disappointment in oil and gas as well. it depends where you look in the sector. what are your thoughts so far? it has been positive? year, we were going to see a trend acceleration in earnings, notably in the united states. are coming out on the second quarter around 10% the european earnings, whereas the expectation was just over 8%. that's the positive. i would argue that's one of the reasons we have not had a major equity market correction despite all the negative news on trade conflict and the fed raising interest rates. the ecb being very clear about the end of quantitative easing. the positive earnings numbers i think have supported equity markets. specifically on energy, the first point is if you go back to

years on earnings in the energy sector, we are coming from a very low base. that is why the percentage improvement is so good. where do we go from here on energy? in oil prices hold around these levels, i think it is absolutely right to comment in europe and the united states that the momentum in the energy sector probably loses pace. are we going to get outperformance by the energy sector over the next six months, 12 months? clearly we are not. the interesting question is, what happens in areas where we have seen very strong growth? in the states and europe? that is the i.t. sector and the health care sector. in the i.t. sector we are going to see this clear divergence between market performance -- clearly what we have seen over the last month.

this breakdown in components of the i.t. sector is going to be a theme. anna: we will talk more about apple's technology. of the earnings season, we heard from some ceos in that clip earlier about fears for the second half. note comes up, but it has been as big a theme in this earnings season as you might fear if you watched bloomberg headlines every day. yet. answer is not the first impact has been tariffs on steel and aluminum. one company say the costs of aluminum cans has gone up. if you are a consumer of metals, you're cost base has gone up. that's where it is starting to impact. in terms of the trade conflict between the u.s. and china, the negative impact over the next

three to six months could be in the consumer sector. with those tariffs, wilbur ross is threatening 25% on $200 billion of chinese exports, those are mainly consumer goods. anna: it is interesting the apple team dismissed this as a consumer tax, and that tells you where the pain is going to fall. how important is this going to be when you consider european stocks? comments, the same this is a bit of aggression -- of a breath of fresh air. .he market had paused we have had better than expected earnings. we are constructed as we go into 2019 expecting to see better growth relative to what we are going to see especially as we get into the second half of this year where we have tough comparisons, the energy thing from last year, for example.

9%, 10% earnings growth next year should be a good thing. valuation has pulled back to reasonable levels. we think it's going to be a different tenor of the market. anna: thank you very much. tim craighead, senior european equity strategist bloomberg intelligence. , if you are a bloomberg user and you want to use any of the charts we have been showing, gtv is the place to go on your bloomberg. program, on the apple's road to $1 trillion. foundecades after the i -- iphone maker was founded, it becomes the first u.s. company to join the four, club. and what keeps european bank ceos up at night? ♪

anna: good morning, this is "bloomberg daybreak: europe." very early in the morning if you are in new york. s&p futures flat this morning. waiting for the job report stateside. 85% of companies on the s&p who have reported so far have beaten. some of the big things we are trading around, as well as trade. let's get a bloomberg business flash. theette: apple has become first u.s. based company with a market value of $1 trillion. other tech giants are not far behind with amazon, else about, phabet, and microsoft more than $800 billion each.

founded for decades ago in a silicon valley garage. an oil company briefly crossed but oil prices7, collapsed in the financial crisis. booming demand in china and the 4 sportity of the rav utility vehicle. operating profit rose to $6.1 billion. that is even as questions hang over the world's largest car market after terrorist changes f changes caused pricing confusion. a slumping income from an insurance investing portfolio. profits fell from a year earlier and missed analyst estimates. net investment income declined to $3.1 billion in extended trade.

that is your bloomberg business flash. anna: apple became the first company -- the first u.s. company to hit $1 trillion. a-shares rally in new york yesterday. other tech giants are not far behind. there was a chinese energy company that kutch that mark very briefly. -- touch to that mark very briefly. said that has never been said about this company? the first to make it across this threshold? >> in many ways it is a symbolic threshold. that does not take away from the fact apple is one of the great corporate american icons of our time. it revolutionized the world of computing, smartphones and music , all the way from the ipod to the current generation

it has transformed the way in which people around the world consume everything from music to games. >> tell me where this goes from here. i was reading some negative opinion pieces that point out how margins are under pressure because of higher r&d spend. then i read the positive piece of the talk about how apple should be worth more than it currently is. what is the logic? the second part of the question first. apple is noticeably cheaper. in terms of valuation metrics faang peers you mentioned. a lot of people are worried it gets itsct that revenue from hardware. that is an intensely competitive

market. there is no guarantee apple can maintain the growth that has managed so far. you couple that with the fear that innovation is installing. since the iphone has not been a category defining product, something as revolutionary as the iphone or the ipod, and the worry is that someone else is going to come up with the next to go to consumer gadget and dethrone apple. there are many factors at play. one thing's for sure. apple has matured as a company. it is still managing positive growth for a company its size. anna: quite a phenomenal achievement. thank you very much. your thoughts, then, on apple? do you celebrate $1 trillion company? the one trillion mark is

obviously symbolic. the important point is their results has been extremely robust. have held onto margins. cash flows are strong. liquidity is high. there is really nothing negative that one can say in the results that have been announced. it is not surprising that what was a reasonably cheap valuation of apple, i would not say apple has become expensive. it has become less cheap. this evaluation can be maintained. i do not see any catalyst which is going to reverse apple. plus, the other powerhouses of the consumer tech industry, amazon, google, etc., less so on the consumer side. those are the current leaders for the foreseeable future in global tech. anna: interesting how we are having to distinguish tech from tech. if one needs reminding him many zeros there are in a trillion.

but you do need to distinguish. the revenue models are different. >> one scene where one can be critical of investors is they have not distinguished between the very strong robust earnings techcash flow backed companies such as apple, such as google and amazon, and the others, where they are very vulnerable to the client base either not growing or falling away, and where there is potential revenue margins. over the next six months, one year, there is going to be major divergence. no longer can you just follow this acronym affect. let's pause the conversation on technology because i want to get your thoughts on the banking sector. a numberu to hear from of ceos bloomberg has been hearing from. >> i think the fundamentals are quite good.

it is just that day after day the market environment is volatile. .nd filled with uncertainties how do you price trade wars? how do you price brexit? how do you price events in italy over the budget? you try to price them, but actually, it is difficult to forecast. >> the biggest downside risk for the major central banks beginning to move out of quantitative easing and accommodative monetary policy they have had since the financial crisis. >> there are elements which could trigger correction. at the performance of the market, 20% or more. at the end of the day, 10% correction can happen anytime.

we can solve the volatility of the world market. market.ices from the , with the voices we heard him just yesterday about how barclays is now running free. free of the previous impediments. is that a business you like? >> i think barclays is a great success story, finally. on the investment banking side. i think there are two components. the first component is a lot of the legacy issues with the fines that have been imposed by the department of justice and others on the banking sector. those hopefully are now behind us. recently, we have not added up

the fines imposed on the financial services industry, but we are talking well in excess of $250 billion. those legal legacy issues are behind us. second component is bad debt write-offs and restructuring costs. what we have seen since -- we are coming up to the 10 year anniversary of lehman going bust. what we saw was major restructuring costs, major write-downs of bad debts, cost-cutting across the board, and a total restructuring of the financial services industry. at the risk of making a bold statement, that is behind us. with regard to barclays, they have made it significant that on investment banking. that that is now proving successful. anna: good to hear from you up next, wearker, will sit with the banking scene

and the lehman debacle. all of that relevant to this. we will be hearing from the cfo of royal bank of scotland. ♪

>> good morning from london. i am nejra cehic. anna: i am anna edwards. "bloomberg daybreak: europe," and today's top stories. nejra: the commerce secretaries tariff threats hit chinese assets. the u.s. separates longest weekly loss in quarter of a century. in heray meet macron drive to win over eu leaders. this is mark carney hints at further rate hikes in the face of brexit risks. nejra: we will bring our interview with the cfo at the royal bank of scotland.

anna: good morning. this is "bloomberg daybreak: europe." futures look green, but we have rbs numbers to go through. let's go to those. nejra: these numbers are coming out from rbs right now. the end of june ratio coming in at 16.1%, it will come up in the interview we hear in a moment. it is retaining its outlook guidance in 2017 annual result. second quarter coming in at 96 million pounds versus 68 million pounds a year ago. second-quarter operating profit coming in at 613 million pounds. the key thing investors were looking at was to do with the dividend. i asked the cfo about that. we declared today to

determine our first dividend. i think it is a great sign of progress the bank has made over the last couple of years. to pay as, intending two pence per share dividend to the doj finally agreement. -- final agreement. that $4.9 billion settlement with the boj allowing them to resume dividends for the first time in a decade. we will dig more into that in the interview. the lines coming through on bloomberg. second-quarter pretax operating profit for rbs coming in at 613 million pounds versus 1.2 4 billion pounds a year ago. news,other earnings numbers coming through from iag international airlines group. second-quarter adjusted operating profit comes in the low estimates. the revenue number looks a shade like, as well.

keep an eye on that when at the start of trading. we have a brief links at the futures. we are waiting for the jobs report out of the united states later today. this is what we see right now. the session in asia has been weak, but europe and asia don't necessarily move in the same direction. the weakness in asian equities generally is part of a different dynamic with the trade conversation. let's have a look at the bond markets. bond investors are waiting for the jobs data later in the united states. we have the u.s. 10 year yielding 2.9841 at the moment. report,it for the jobs 193,000 is the number of jobs we expect to see created in the past month. let's get a first word news update with juliette saly. juliette: u.s. commerce secretary william -- wilbur ross

signaled more pain ahead unless china changes its economic system. the administration will create a situation where it is harder for the people's republic to continue "bad practices" than it would be to reform. beijing has repeatedly pledged to respond in kind while the foreign minister said tariffs also hurt american companies. puthe u.s. is trying to pressure on china, but we don't think such an approach will work. china is ready to talk to anyone who is ready to talk to us, including the u.s. has tos kind of dialogue take place on the basis of mutual respect and equality. theresa may meets french president emmanuel macron today as part of a diplomatic drive to win european leaders over to her brexit vision. with 11 weeks until a divorce is signed, she needs to chart a path to a deal. the bank of england governor

discussed brexit with bloomberg after raising interest rates for only the second time since the 2008 financial crisis. is thatmportant thing this is the right decision for the economy given the track that it is on. brexits a wide range of outcomes possible. end of the by the year, we will all be better informed on which path the u.k. and eu are taking. zimbabwean election officials say -- won the election with 50.8% of votes, but the opposition mdc is -- inng vote rigging and postelection protests. the violence may underline efforts to reunify the nation and rebuild an economy battered by almost two decades of misrule under mugabe. 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 . a mixed year in asia. seeing weakness in chinese markets and as was mentioned, the yuan continuing to fall, its longest weekly losing streak since it started in 1994. have seen it fall almost 7% against the u.s. dollar in eight weeks. the nikkei, closing out fairly class. to record highs. australia, fairly flat but an overall volatile week for asian equities. the biggest losing streak since march. the yield to came through with earnings today, better than what the market was looking for but we are seeing selling, down by almost 1% on the close. afters on the tech space apple became the first $1 trillion company in the u.s. and apple providers doing well. it a doublehad upgrade from over -- to

overweight from underweight by morgan stanley. -- from market cap in january. we have a great piece on the bloomberg saying analysts are not willing to cut their buy recommendations on this stock. all 51 analysts tracked have a buy rating on tencent. nejra: let's get back to the rbs numbers from the top of the hour. a quick recap. the big news for investors today is the fact they are declaring a dividend, reinstating it for the first time in a decade, declaring an interim dividend of two pence a share. remember a little earlier this year, rbs came to the $4.9 billion settlement with the doj with a big stumbling block to get over before reinstating the dividend. i asked about that in my interview with rbs' cfo.

i asked him about share buybacks and he couldn't commit to anything particular there. that is the next step and asking if they can return capital to shareholders. their capital, looking strong. 16.1% for the second quarter, beating the company compiled estimate. anna: in terms of the guidance on that ratio, in excess of the 13% target, near and medium-term. laying out the plan to return dividend the big headline for investors and changes the game in the ability to drive private sector interest to the business and the government able to step away. returnarty there and when we are able to bring the rest of the interview. let's talk about other big market teams dominating the asia sessions. china lost its ranking as the number two stock market after a thursday slump. chinese equities were worse -- worth less than japan's as president trump ratchets up

pressure for china to surrender in his trade fight. the u.s. still has the world's largest stock market at over $31 trillion. for more on this, paul johnson joins us on set. good morning to you. takeaways from the japanese stock market, overtaking china. is this all in dollars? this isn't just to do with chinese currency, is it? paul: part of it is the currency element. sois more china retreating, a double whammy for china. the currency is weakening and the stock market is falling, so that is taking down the market cap when you translated. -- translate it. it would be too much to say this is a shift in power between the two or anything like that, but it tells you japan is still reasonably stable despite what we have seen in their own bond market this week.

china is on the ropes and -- perpetuate this global game of chicken with the u.s. nejra: the u.s. weakening for a eighth rate -- we can row. -- until we get a real sign of the pboc intervening heavily? paul: that is basically it. says noe central bank more, the market speculators will keep on pushing and edging it weaker. what is striking is the yuan is weakening again, the dollar but also against the broader market that the central bank uses to measure currency strength. goingis passive weakening on. the currency is in play. he said one of the

questions was whether the asian economies follow suit. he said we are in an fx fall -- war carried do you see other parts of the asian region being drawn into the fx or? paul: a big risk. of the worldest has been ok despite what is going on in china. we are nervous, but not crashing. in -- seaps to seek into markets more generally, we could have a lively august, i guess. nejra: let's talk about the dollar. we talked about the yuan weakening against the dollar and we are looking at the jobs number. we are seeing strength in the bloomberg dollar index ahead of that. paul: it has been a busy day -- week for central banks around the world. the boe was taken to be dovish despite raising interest rates. the boj, also taken to be

dovish. terms, iny market spite of the push higher in fed,s, look ahead to the we will carry on raising rates. the market is pretty confident on that, so we will look for the wage growth numbers confirmation but there will be little derailment if that is what is what counts. anna: bloomberg economics has something over 200,000. thank you, paul. us with thejoining latest on the markets. if you are a bloomberg customer and want to watch the program, you can do that on tv . it gives you all the charts and functions we use. you can interact with a chart and the program by sending us a message during our show. nejra: next, we hear from two giants in financial services. allianz ceo joins us and we another ceo.

this is bloomberg. ♪

remember, we are seeing coffer and so on and so forth. today, it is clear the economy is slowing down as suspected. we are not immune to geopolitical situations, so for us to stay focused on the work we are doing is important and that is exactly what we are doing. out in 2014 was merely a consolidating restructuring. is different.0 it is about growing the company further and improving over the current -- which is a massive

promise to the markets and our shareholders. >> to adopt new trade policies, to adopt new manufacturing footprint is hugely costly, so i would really be very happy if trade and tariffs could be -- remain on the same level and i am thankful that those negotiating parties are really looking for a solution. >> so far, there hasn't been much impact on the pharmaceutical industry, but in terms of our position over times, we are for free trade and lower tariffs. that said, there are differences between market access, regulatory standards, localization requirements and pricing between the u.s. and foreign markets. there are problems in trade in our industry. >> look at integrated gas, of compared to the same quarter last year. our business up compared to the same quarter business.

-- last year. it is linked to a difficult refining environment and trading environment, as well. nejra: from the second quarter business -- business challenges, let's get today's business flash with juliette saly. has become the first u.s. based company with a market value of $1 trillion. other tech giants are not far behind with amazon, health of that, and microsoft worth more than $800 billion each. the milestone was reached four decades after apple was cofounded by steve jobs in a silicon valley garage and later revolutionized the world's computing and mobile communications. century china crossed the market in late 2007, but slumped as oil prices collapsed in the financial crisis. a $3.1n is buying billion stake in china's largest beer maker that will allow it to expand in a lager market

dominated by global brands. 40%dutch brewer will take a stake in the chinese holdings, maker of china's best-selling brand. beer, the world's largest market is facing competition as drinkers with rising incomes look to switch to premium and foreign bruise. -- brews. an international dealmaker and fixtures at davos, human rights advocate is leaving blackstone. he told bloomberg he is ready for new challenges after 12 years at the company, including three as vice-chairman. he made his reputation as an investment banker at organs -- morgan stanley and later hsbc. earningsond quarter hit a slump in income from the investment portfolio. profit in the period fell and missed animate -- estimates as

hedge funds performance weakened. income declined 12% to $3.1 billion and shares fell in extended trading. that is your bloomberg business flash. anna: thank you, juliette saly in singapore. allianz reported second-quarter profit that beat estimates. the firm will be kept on track to meet its targets. the market is waiting to hear about acquisitions the company might make. let's go to munich with the cfo of allianz, here to discuss the company's results. us. to have you with in 2017, we saw a lot of natural disasters. lots of people talked about how that would increase your pricing power and drive demand for your products. has that happened in 2018? has that been the response? >> i would say so. not establish such a

link but if you look at growth for six months, it has been adjusted for fx about 6%. in the second quarter, the growth rate we had was 7%. we see strong growth in property line and our combined ratio has improved by 20 basis points and this, despite having higher losses in 2018 compared to 2017. in general, the moon -- momentum we see on the property side is positive. it is more the outcome of the actions put in place at allianz as opposed to coming from the market environment, but we are pleased with the performance of our property-casualty operations and they have supported our 3 billion in operating profit for the quarter of 1.9 billion for the quarter, so the fundamental

business is very strong. expecting toianz be affected by the heatwave across europe in terms of claims? at this point in time, we don't expect this is going to be an issue for our loss ratio. from this point of view, we are not concerned about this development at this point. anna: can i ask about the performance of asset management? profits have increased. there have been outflows from inco, but it is slightly cloudy. what is the big picture around out kos and income -- outflows and inflows at pimco? giulio: we had about 8 billion largeflows, driven by the mandate. if you adjust for the large mandate, the outflows at pimco were more or less at zero level.

what is important when you look at the six months, inflows at were about 11 billion euros. in general, we had a strong inflow. the revenue we are generating out of the inflows are positive, so that is an important kpi to look at. also, we saw positive inflows in june and july. when you look at operating performance of pinko -- pimco, it is very strong with 20% adjusted for fx compared to the level of last year. momentum ina slower the second quarter, but now, we see inflows getting back to positive and underlying performance of our pimco franchises very strong. nejra: that is asset management. i want to ask about

acquisitions. are you making to look any in the near future? i generally do not make comments about acquisitions. i can tell you what we did. there was an announcement a couple of weeks ago that we are repair servicef provider and this is a good fit to our operations, especially operations in southern europe and is also a good fit to our strategy where we believe in the future, we need to combine assurance with services. this is a transition we will complete in the second half of the year and we will look to other transitions this way, but will not make any comments about what we might be doing in the future. the only thing i can say is we committed to

efficient capital deployment. as you saw, we did a buy back in july and at the same time, a small acquisition. both options are available to us. nejra: you have been disciplined on capital and i understand you don't want to tell us what you want to do in the future, but in terms of gaps in the business, businesses as diverse as zurich have been mentioned as potential targets. as to where the gaps are in allianz that may need to be filled? giulio: you know, on the m&a side, we are especially looking at property-casualty. that is our main area of focus, priority number one. we may be looking at acquisition from aanagement and geographical point of view, we have a gap in the united states,

but we think it is challenging to close this gap because of the valuation you have out there. , my response to your question is we have a strong franchise. we don't need m&a to provide value to stakeholders. we can provide a lot of value just buy organic growth but goodly, if we have opportunities, we will look at that soto. nejra: thank you so much. giulio terzariol, the cfo of allianz. we will bring our interview with rbs' cfo later. .nna: return to the dividends managers sort out issues with fines in the united states. we will wait for more details on that. that is it for "bloomberg daybreak: europe."

"the european open" is next. european futures continue to point higher, can -- in spite of the lackluster session in asia. nejra: this is bloomberg. ♪

guy: good morning. welcome to "bloomberg markets: the european open." we are live from london. i am guy johnson alongside matt miller in berlin. matt: not a lot happening in asset prices, with the exception of asian markets. a mixed trade, but big arrows. the cash trade is less than 30 minutes away. guy: china's currency heads for eight weeks of decline, its longest