manus: good morning from the city of london. i am anna edwards. manus: this is "bloomberg daybreak: europe" and these are today's pop stores -- top stories. ni says hent rouha will open up to the nation if trump is sincere. turkish assets causes concern over diplomatic spats in washington. , will pboc move to offshore the yuan as more shots are fired in the trade war?

anna: good morning everybody this is bloomberg to break europe, 6:00 in the morning here in london. numbers, second quarter is in line with -- 747 million euros is the number given us -- given to us. is that in line or a little below? 1.9% below. we'll see if that is true or not. are confirmed2024 by the companies. business, the korean business, not changing their forecast. we cultivate r.o.e. bounds --

rebounds. the company confirmed its goals, it would be a little surprising if between then and now we see a big change. we have not seen a big change. itociate 3.2 billion euros, would happen to be 3.3 alien. -- billion. look to the banking headlines to take us through. manus: it's kick it off with commerzbank. be slipped but good news, second quarter is 272 million euros. costs -- a great on they have a grip on costs. costs full is your will be $7.1 billion. 23%. the issue is pretax profit is

doing a little bit better. 300 and 9 billion euros. operationally, it is great, in terms of the net income, it is a beat. capital however, to your one capital, 13%. that ties back to the whole dividends and buybacks which has been a demon in banking this quarter. it is a higher underlying revenue in 2018. but the equity market and commodity business from commerzbank. the strategy just called the before and the target there is cost saving of maybe 200 million euros by 2020. to the germans -- from the germans to the italians. 1.0 2 billion, it is red headline by the way, the market

has 30.96. commerzbank, 12.1%, revenue, that is just them xp for jean-pierre. the market has been 4.92. they beat on the revenue and buffers of capital just a little bit. one, in hisour comfortable beat on the net income. of course, when you think about this, the target here is to deliver 4.7 billion euros of income by 2019. that is the target jump your -- jean-pierre has set for himself. the challenge for them is substantial but nicely done the income. we will have a few

conversations. anna, line them up for us. anna: picking up on what you just said about the banking sector, the cfo of commerce by will be joining us exclusive be here at bloomberg. dateirst interview of the is with the current ceo of aberdeen. that will be taken place right here on "bloomberg daybreak: europe" at the top of the next hour. a lot to come. that's the market in context for you. the msci asia-pacific drift a little bit in the early hours. in particular, chinese markets are bouncing back by more than 1.4%. eight.waiting for the fx they have been having to splurge those fx reserves. we will talk about that during the program. yesterday lands are worth keeping an eye on.

this as a result of the rba interest rates. this was broadly expected. the prospect of hikes still remains and will be deferred pretty distant, 2019 or 2020. the u.s. dollar falling suit against the turkish lira. that makes a big difference. . saw it almost in freefall in yesterday's station -- we saw it almost freefall and yesterday's session. manus: when is the bargain a bargain? when it is at the bottom of the pocket? have a look at the chinese market. -- what we have done here is put together the equity market, relative to the bond yield. you begin to understand what i am talking about because the

equities market relative value to bonds is at a two-year low. you need to be convinced that the pboc has a handle on the yuan, that tariffs will be settled between the united states and china, and the pboc will do enough to give a little bit of support to the chinese market. but what you're looking at here is a relative value. 3.43, the sovereign bonds of delivered the percent of 5%. it is the lowest in nearly 3.5 years on the chinese market. it is a beautiful spread. you can see the reviews. that kind of level, it'll kind you cantle top there, see the spread is getting to a point where technicians might look a little bit deeper into it. what is a bargain -- when is a

bargain really a bargain? we have more news with juliette saly. >> in the u.s. the trump administration has restored some sanctions on iran and reaffirmed plans on penalties on oil sales. they target the auto industry and ban imports of persian carpets and pistachios to the u.s.. washington talk to while such sections are in place. >> negotiations and sanctions at the same time is meaningless. front ofe stands in his rival or m&a and pushes a knife against their arm and six talks, the response is that they should put the knife in their pocket and use logic. >> they are paring some of their

losses after sinking to a new low. the currency in the country's diplomatic spat with the u.s.. -- it fell 6.7%. the u.s. justice department had a lot to say about why at&t should not be allowed to buy time warner. but the judge ultimately cleared the billion dollar deal. until transcripts allowed the merger to go through, showing that during private conversations between district judge richard leon and justice department lawyers, the judge shut down arguments that he decided or punitive or unhelpful. rapidlynited states, spreading in northern california

blazes have become the states largest fire in history. 27 andted on july encompassed an area the size of los angeles. it is the second straight year that california has restored it -- reported the states largest wildfire. global news, 24 hours a day, and on 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 . looking pretty positive. yet the nikkei high. as anna was alluding to it as the rally of seeing chinese and hong kong markets particularly large cap stocks by 1%. the earnings season has been quite positive for chinese equities. having a look at the asx 200 down by about --no surprise.

but stick a look at some of the stocks we are watching in detail in the asian session. tokyo, has jumped the most since november. now that this report could flow about a third of its company worth around $30 billion in an ipo that would be the world's largest ever ipo. also seeing some upside coming through in chinese development sucks today on the back of very strong earnings listed in hong kong. thatownside is a company leases in australia pulling down by 45%, the most on record, target was cut. quite a big fault but it is small. manus: thank you. commerzbank, they delivered their numbers. in the lusty minutes, read headlines.- red

you tomd morning to stephenson investment director , at fil investment management ltd. the americans have it. the europeans would love to have it. where do you stand on the banks as we look at this market? are you a u.s. man or are you a little bit more toward the euro? >> valuation is the key here. if you look over at the u.s. on equity. it is more impressive. you pay a price for that. just -- and.s. and just one in europe. the european banks have been fairly beaten up in recent years. the value is there for them. they threatss of to the bank of the banking

sector, the low interest rate environment, is that the big picture? seen in theave results season as they have been clawing back provisions. that is great but it is a fine measure. what we need to look at is the interest differential. with interest rates remaining hurry tois not in any change that before and a summer. it will be difficult for banks to make that difference on the interest rates. -- to grow their loan books they have to grow their loan books on both sides, as fast as they need to to deliver that earning. watched and is interview with jeff last week --

jesse lessig. -- jesse last week. nearu think we are coming to the beginning of the end of , are we running free and the banking sector? are we there yet? >> the beginning of the end or the end of the beginning. it has been a long haul. 10 years. clearly, we are beginning to get to the end of that. it has dragged on. litigation is not out of the way it. the big challenge for the banks is generating growth. you clear out the litigation, all the bad loans, then you have to get back into growth mode. anna: what about the sector, the banking sector?

you mentioned whether they were cheaper not. bank specifically, this is about value stocks versus growth stocks. value stocks have lacked behind growth. with the challenge that you see in the sector, that being part of the growth part of the is morei suppose, focused going to fall on value or is it too early to say that? >> we may be on the cusp of a rotation from growth into value. we have noticed the tech sector. anna: you need the banks of that was going to be the case. you need the banks to do well. >> the banks have started to do well. really,ed more growth, for the sectors to look attractive and a growth world. anna: more growth than value. thank you every much, tom stephenson, investment director at fil investment management ltd.

he stays on the program. for next was of interview. manus: coming up, trade tensions continue. we bring you the very latest from the former u.s. secretary of the treasury, larry summers. what he had to say about the cost of a trade war to america. this is bloomberg. ♪

anna: welcome back. this is the rocket lifting off -- launching off of cape canaveral and florida. to get32 minutes later, to that point, it is communication satellite in the state, manufacturers in the united states but in -- they're gearing this event telecom

services satellite air will be in indonesia or india. improving communications, no doubt. it takes 32 minutes to get there. we have covered these spacex launches a few times. first stages should be able to launch in 10 minutes. it is really an upgrade on the previous ones they were using. as you say, let's just listen and to mission control at cape canaveral in florida as we see this spacex falcon nine heading off into space. as you said, anna, to be of the atlantic ocean, what a wonderful name. communication -- satellite. that will be delivered into orbit. anna: one minute nine seconds

into the the speed of sound. you can hear the voices of the control team coming through to us. we will continue to watch these pictures. we will bring you the stage one landing, that takes place around eight minutes after the takeoff. we know there are not many. this gets a bit business flash -- to the business flash. japanese say initial public offerings, bloomberg has learned speaking to advisors that around $30 billion of the business and the you. the company shares in almost a month, a representative for the bank the client to comment -- --r softbank atlanta, declined to comment. sources, to bloomberg

discussing the repurchase of 25% to 30% stake in avalon. set -- soit could over $2 billion. sellover $2 billion -- over $2 billion. that it is forging ties with bank to offer services by the messenger chat application. it is something that could produce user involvement to grow facebook's main platform. you have tried for years to make messenger a natural communication system -- destination with the aim to replace e-mail. it has faced widespread criticism of it security of data. that is your bluebird business flash. -- bloomberg business flash.

it will be going into august. we go to the trade conversation. larry summers is a trade war poorer.y make america summers is on the advisory board of the "bloomberg view" economy forum. to be held in beijing. he explains his views of trade and the potential growth facing your economies. -- new economies. >> consumers will pay more for the products they buy. our producers will be less competitive because it will be paying more for inputs. i do not think china is the same here. globalization, i think china is a developing -- developing in terms of its average income. a country with average standards of living like those in the

1930'sstates, during the . it's context is very different. there will be competition from more places, but in london, the principal risk has been the self-inflicted wound of brexit. they will have to make a variety of strategic decisions, but they should be --e to minting a major maintain a major role in financial services for years to come. manus: that was the former treasury, larry summers. we have the reserve numbers for the month. stephenson is the investment director at fidelity investment management ltd.

do you see a little bit of discomfort maybe even criticism for xi jinping in his handling of the trade discussion? with china link first? >> china is walking a bit of a tight rope. . it imports a lot less from the u.s. than it exports to the u.s.. you have to find a different weapon of choice if you like . that weapon is the currency. -- 7%, the 789% decline a percent, seven -- 9% decline, is acai years ago, it does not -- as we sawo far years ago, it does not want to go too far. that is what they are concerned about. anna: this shows the fall.

you have the fall and the yuan -- in the yuan. receive active reserves -- we saw the active reserves. no evidence so far. you go back three years and the chinese burned through a trillion dollars in a couple of years supporting the currency. they are not doing it for the moment but the reserve figures will be interesting to see. you want a very managed control depreciation. whether they can do that is a new point. manus: what you want and what you get are completely different .hings in china's currency we talked about the differential between a market -- a bargain and is it really a bargain? relative to bonds, this spread

here is -- does not offer value. the spread of equity versus bonds is 3.43%. would you be brave over bonds in china? whatever the comparison that you make whether it is with bonds or other equity markets around the world, i think the chinese market does look quite interesting at the moment. that chinese stocks are as low as it has been for three years. there are increasingly opportunities within the chinese market. much, tomnk you so stephenson investment director , at fidelity investment management ltd. let's turn back here to cape canaveral where we have just had left off. they had indeed lifted off. we just lost a little bit of

video connection there. spacex falcon nine has lifted off. we will talk about iran and rouhani's response to trump's next. -- to trump next. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. anna: welcome back to bloomberg

"bloomberg daybreak: europe." we just saw the takeoff of cape canaveral take off of spacex stop and then. we will keep you across the launch and updated. let's update you what is going on in markets. >> good morning, we are seeing a little bit of cautious risk guard in asian markets. the msci up for sense of a percent -- 4/10 of a percent. we were seeing those losses in the shanghai yesterday following

what we were seeing with the yuan continuing to weaken even though it said it the course for the pboc. highere are seeing leading gains in strength in japan and korea as well. a little bit of weakness coming through in australia. the overall effect is quite similar. we are a little high on the msc index.a-pacific the lira is very much in focus. that lira seeing another fresh record low. cyclee blown past that the 10 year yield has been spiking as well under 20%. today we are seeing a touch of strengths come through in the turkish lira. we have seen gains of 1% earlier, if you look at the longer-term chart it is not making much difference to the .rajectory

i love a technical chart. actually come up the euro has five days of the client and hit a 13 month low. 56 at the moment and an interesting technical pattern here, the neckline is very much in focus with this head and shoulders. what this is actually showing is in the medium-term we have dropped 11187. that is a green line you are seeing. back to you. manus: everybody loves that. the very latest on the market. let's get you to world news. juliette sally is standing by in our singapore city of. -- studio. saudi arabian airlines

will halter --with any current tickets exempt from restrictions or cancellation charges. the kingdom is recalling its .mbassador the judge who ultimately cleared the $85 billion deal did not always want to hear it with time warner and at&t. during private sideline conversations between district judge richard leon and justice department lawyers they shut down arguments that he decided were repetitive or unhelpful. sayhe u.s. authorities blazes tour through northern california and have become the states largest wildfire in

history. it is known as the mendocino complex. it ignited like tony seven. it is the second straight year the california has reported the states largest wildfire. global news, 24 hours a day, and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ manus: thank you very much. let's get you set up for the day ahead. this is what you should be watching. the real position of u.s. sanctions on iran comes into effect today. argentina's central bank is due to denounce monetary policy decision. marketfter the u.s. closes this weekend as we get earnings from disney and a couple of big corporate in the media in the united states reporting this week. we will do that a little bit more in depth tomorrow. fresh sanctions are on iran kicking in preventing the

government from trading gold or selling or requiring several industrial method -- metals. they will impose tougher penalties on oil sales. iran is open to talks of the united states is sincere but insists that such dialogue will be pointless while his nation is being hit with sanctions. >> negotiations and sanctions at the same time is meaningless. if someone stands in front of his rival or enemy and pushes a knife against their arm and seeks talks, he should put the knife in his pocket and come to the negotiating table with logic. anna: we are joined by -- due to offsetni the impact on these imposed sanctions from the united states? limited inhe is very

what he can do. before these sanctions kick in for the past six month people could be anticipating donald trumps withdrawal -- donald trump's withdrawal. it has crashed through several record lows after the past six months. records, even in trying to combat that and try to mitigate the government has not been successful and in fact, policy has even backfired. it has made the situation even worse. right now, they are trying to introduce new policy to try to fix not only some of the , theems that have come out previous attempt that have to

improve the climate to accept that they can. trying really hard to reassure the public as much as they can. address, putting on the face of defiance. manus: we seem to be having one of those moments. skype, of course to keep the communication open. she has been online to us. any -- ifo pick up on you want to pick up on any comments goto to be go or i would twitter stream and you will get live streaming from her. let's talk a little bit more about iran.

tom stevenson is the investment director at fidelity investment management ltd. you might have an opinion on iran but if we look at this policy by the united states of stop theamerica first, running of the six month high of america. lack ofou look at this cohesion of america with the rest of their partners in regards to iran? does it raise the attention of geopolitical risks? what are the consequences of the global investment director? coherence, of cohesion between the u.s. and its partners in disregard to iran is really important. sanctions work best when they are coordinated. they work best when they are specific and when they can be reversed, if and when the target response.

what we are seeing here is america on its own. the other five parties to the nuclear deal have said that they will stick with it. that leads america isolated. that reduces the power of the sanctions. just piling on the sanctions with no clear route out of them. it means that we could be stuck in the situation for a very long time. it is not a good situation. it is hard to see where it ends. anna: we are looking for that offramp. something that changes the negative -- narrative and takes us off the current trajectory. in terms of the impacted european companies, not just european but also american perhaps, boeing for example, airbus, carmakers, where do you see this having the biggest impact? industrial goods and large consumer products. of sanctions round

is clearly targeted at be aerospace -- aerospace industry and the automotive industry. we have confirmed that in november we will have the oil sentence which of course is more significant. in the meantime, boeing affected, airbus clearly affected, because it is part supplies from the u.s.. that is affected. persia accounts for about one third of the iranian car market. the iranian car market is the 12th largest in the world, quite significant. persia controls about one third of that market so they are badly affected. the got intoply, .ran post the 2015 i think companies are looking at

the situation and realizing that the american market is so important to them that they have no choice but to comply. they're confirming that they will comply with sanctions in a conversation earlier with the management there. they're calling on european oil companyaustrian to protect european businesses. tom, you for joining us investment director at fidelity investment management ltd. we will continue our conversation on bloomberg radio in the morning. manus: let's talk about the turkish lira. annihilation is what comes to mind. they think to a record low. it was a wipeout yesterday. currencyto support the

. word -- the word annihilation yesterday. that really was something. capital control is on the way. would you agree that that is where we are headed? >> that is one of the choices. the point about capital control is that historically, turkey has been reluctant. it is very dependent on flows to finance its deficit. that would be a very hard pill to swallow. money would be a move by the central bank. as we have said repeatedly, and the discussion, it will have to be something very big from the central bank. it does look now that the central bank will move and defy erdogan.

it will have to do something that sends a clear signal to the market. the policymakers are here and they defend the currency and will not let this continue. that is a very open question. anna: again, good to see you, just in. -- justin. is it all about a substantial increase on interest rates and going up against the president? the two choices, anna. we saw yesterday the move to try to free up a little bit of capital at the banks. that was a minor measure. the market has taken that to signal, almost worse -- making it worse. that will clearly not be enough. it has been taken and therefore the market turns negative again. manus: a lot of times we cover implosions in the -- one

currencies going to freefall, there are limits to various funds and institutions have set. a risk mandates that is set their in the market. that is what is causing this cascade as well as the lira depreciates and the on market implodes. banks are forced out of the market. i will not use the word versus because that is unfair. >> we're going to that forces them -- through the process now. how much exposure they want to turkey and how willing they are to continue to refinance turkish banks. i think across the turkish economy there is about $100 billion of debt coming over the next year or so. that is a big number for an economy of a hundred $58 billion. -- $858 billion. manus: there could be more pain.

thank you for putting the turkish market in context for us. is big?at anna: what is big? what is trending across the bloomberg universe? twitter, they are being -- eachhirts cost up to $1700 and feature mash-up's of friends including flames and bananas. they have been worn by celebrities. manus: i just want to disclaim from that. paul manafort, former right-hand man, rick gates, the metaphor tax and bank fraud trial that he worked to help his bus concealed millions of dollars.

two -- tied to offshore. our most read stories on the terminal over the past the hours in third place, the gulf between north korea and u.s. secretary of state but pompeo seems to be widening. in second place, china wants to impose restrictions on the -- you can find out more details on the bloomberg. manus? manus: i will be asking what the budget is. chinese foreign exchange reserves are what is coming up. we will talk about what are the and thefor this pboc

decline in the yuan. have they done enough? is there a line in the sand for the pboc? this is bloomberg. ♪

hi manus: we're watching spacex

launch. live pictures of the pictures from -- of the takeoff from cape canaveral. we are in the final seconds it of the edging part here. these liveng pictures off the spacex launch. website atpacex spacex.com where you can follow this. as go over to juliette saly. coming at ank

higher price than expected. germany's second-largest registered at -- the pace of winning these customers slowed and its core capital levels dropped surprisingly. the bank also warned that operating costs would be slightly higher than originally planned. commerzbank cfo stefan engels joins us for a next -- exclusive interview in the daytime. as the italian bonds hit a halt, it hits revenue and capitals. the net income is set to 1.2 billion euros. the bank also said it is set to reach target cutting branches and stock ahead of schedule. the legendary piano maker controlled by u.s. hedge fund

billionaire john holton -- steinway has interest from china's poly groups. it is the early stages of considering and all pacific company. this isn't may also merge with the business according to the people were asked to not be identify because deliberations are private. that is your bloomberg business flash. anna: juliette saly in singapore, thank you. suggest rating would the central bank continues to refrain from selling foreign. currency to curb a decline in the yuan join us now. is douglasus now seeon, what you expect to the central bank after spending its dollar pile if you like to support the chinese currency somehow? suggestingers are there continue to -- continuing

to flow into china which is different from what we saw in 2015. it is very different from 2015. concerned of the initial high velocity suggesting actually that things are ok in the chinese have not had to step in to support at these levels. manus: very good morning to you. we spent the day at ruminating whether it will hit seven, you what -- you will maintain that maybe we are more fascinated by the machinations of the you want than the pboc. why? >> with the pboc are working on is this argument, it we get -- a weaker r&b it bleeds into becoming uncontrollable. at the moment, in general, the r&b is going -- remaining

controlled. it is something we are looking at very closely but also treasury holdings going forward. wea: controlled weakness -- would be in favor of. there is a balance between the united states and china. the is limited decisions on what china can do in terms of retaliating against the united states. how far can china go? trump has been complaining about the imbalance here. does it mean that they have the use of the policy in their or are they going to use other weapons? >> they will potentially use other weapons. the rizzoli so much they can do on the currency -- there is only so much they can do with the currency. that is a big risk for the regional growth. when we look at u.s. interests,

despite adjustments, last month we saw a record trade bounds that grew between china and the u.s.. the initial stages of this are doing the opposite almost. i think china also has the ability to look at other areas in terms of not just fbi but he was in persons in china that have been best for the last five years. for more than people suggest. china has the ability to argue ly assets in china and certain have a history of looking at -- and notgetting buying. things of thethe fundsit is focused on flowing on the yuan. we are seeing it below u.s. rates for the first time in nine

years. index the question about global boj,al bank moves, fed, the rba is unchanged this morning, do you think the pboc keeps rates unchanged and does not match the fed? >> it is a fascinating chart. that is something we are looking -- watching very closely for the last beers -- for the last few years. the chinese tenure in the u.s. yeare -- the chinese 10 in the u.s. 10 year, we have convergence between those yields between china and the u.s. in the last months. one of two things on the back of that, we may begin to start to see outflows because of holding chinese assets becoming less valuable to people. or we may see the demand for more in china.

manus: we have to leave it there. douglas morton, head of the asia research team at northern trust securities llp. more to come on bloomberg. ♪ phones have made our lives effortless.

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manus: good morning, this is "bloomberg daybreak: europe.". anna: these are today's top stories. manus: sanctions pressure. the u.s. imposes new restrictions on iran. president rouhani says the nation is open to negotiation if trump is sincere. the freefall in turkish assets pauses after concerns over a diplomatic spat with washington drives the lira to record low. chinese fx reserve data is due. the pboc moved to shore up the yuan as more shots are fired in the trade war.

welcome to "daybreak europe." breaking news from softbank. softbank's ascent to lead a $3 billion round of funding .longside alibaba be heading said to the investor pile in this set of talks. this involves the vision fund plans to lend three to $5 billion to a food delivery giants which is owned by alibaba. this is according to people familiar with the matter. his son had built this $100 million fund to spread the wings of softbank.

this is a much-needed capital e, which isr ele.m burning enormous amounts of cash. we are going to see some breaking news. a few lines here, let's get to intercontinental. revenues in line with estimates. $900 million for the first half revenue. that is in line with estimates. was to anhead of this extent they are going to run up against competition in china. others in china, big u.s. hilton,es, the likes of marriott, perhaps they are going to run into headwinds. that could be something that weighs on competitors. we are waiting to see what intercontinental says about its performance in china.

we going to be speaking to the management later. let's switch to the drug sector. interesting we are getting headlines about a new cfo over at glaxosmithkline. if you have been wondering where hsbc's cfo was going to be going , every time we have results out of hsbc, he talks to us. he's going to be going to glaxo. he joins gs k from hsbc. headlines suggest the end of december would be the time he will leave hsbc. perhaps that timing is of interest. also german data. yesterday german industrial production, factory numbers were week. how does the industrial output number stack up? falls 0.9%. the estimate was for a fall of 0.5%. expected, butthan

not the size of the disappointment we saw yesterday in the data. the exports unchanged part of the story. imports rising 1.2% month on month. a little bit of a disappointment on the industrial output size. euro to show you what we are seeing their. shorts spiked up on the euro against the dollar. manus: futures are indicating a little bit stronger. we have some breaking data coming through. there lower to go on that? is that bolstering the london market? standard life aberdeen has released their numbers. let's get you numbers out of the way. inflows of 38 billion pounds. the big shocker for standard life aberdeen was the outflow. the terminating of lloyds taking away a big block of funds managed by standard life

aberdeen. that was the shocker. they really are trying to stymie that. inflows, 38 billion pounds. interesting you are seeing gross inflows, a lot of people have been warning this could be a risk you see further outflows. under management for continued operation, 610.1 billion pounds. the ambition was clear. when you put standard life and aberdeen together, the ambition was to be part of a trillion dollar club. aberdeen standard life aberdeen says the market conditions or main challenging. let's not prevaricate too much. stocks are higher. s&p 500 is at a six-month high. china, is it getting cheaper, is it not? a big wash of bonds coming to the market in the u.s.. the o.a.t.'s in france down by

nine pits. s. pip anna: first interview of the day, martin gilbert, cofounder of standard life aberdeen. a pleasure to have you on the program as always. gross inflows of 38 billion pounds. tell us the overall picture in terms of those inflows. >> it has been encouraging. that is up from the second half of last year, which was the first six months following the merger. the very encouraging thing is about 80% of those flows are in what we would call our non-blockbuster or the assets that have driven the success of both companies in the past. diversified.ll

said, conditions are tough for the industry. we certainly feel we are in one of the best positions with one of the strongest balance sheets in the world to whether what is going to be a tough period ahead. manus: a very good morning to you. when you put this company together, i remember we had the conversation, you were quick to speak to us. it was the trillion dollar club you want to get to. is that off the table? is your ambition no longer a trillion dollars in terms of assets under management? what is the realistic ambition for martin gilbert and the team at standard life aberdeen? >> i never thought we would get to a billion pounds. to be a 600 something billion, way beyond our expectations. we would clearly like to be bigger. i think the key point i was trying to make was, scale

matters in this business now. the industry has sort of -- is sort of moving towards the big and the boutique. and legacyndard life aberdeen made a decision that we wanted to get ahead of the industry trend here. we combined before everyone else and we are one of the first groups to see costs down i think . i look at competitors, costs are up. our costs are down. we are addressing the industry issues before other companies are. as obviously we would like to have a trillion dollars under management. anna: you say scale matters. talent also matters. up,stors have been building even in your backyard, setting up an office in edinburgh to house people they have been taking from your business.

do you feel threatened by competition? >> quite the reverse. we want edinburgh to be a financial center. a term, fake news, that was a great example of fake news. these were people that had left our businesses as a result of the merger. we are actually delighted they have got jobs in edinburgh. it keeps edinburgh as a financial sector. it is fake news to put out an announcement that these people left us to join another company. but needs must i suppose in the industry. we are delighted they have jobs in edinburgh, that edinburgh continues as a financial sector. hads: i know you have millions of dollars, but when you are channeling it into the

media message, it is a shocker. we have seen fidelity move. would you be introducing fees? ?ould you be interested is that the way you should go with standard life aberdeen? >> you have really had upon one of the big issues of the industry, which is declining fees. clearly we would rather not go to 0%. obviously the funds that hoping toave a 0% are make money on stock lending. you could argue stock lending fees belong to the client. it is not a truly 0%. what it does show, you are absolutely right, if this industry is under enormous pressure at the moment. seeh is why i think we will further consolidation in the decline in address mergers.

anna: to clarify what we are seeing on inflows and outflows, we have growth inflows at 38 million pounds. but net outflows at 16.6 billion. is that correct? number, that the is an improvement on the second half of last year. we are seeing a continuing improvement in flows. as i said earlier, the encouraging thing is the gross flows coming in are going into 80% of them are going into what we would have termed the non-blockbuster products, for want of a better word. we are seeing an improving situation. what we are seeing again in the industry is this move from active to passive.

it is not a great time to be an active fund manager in the manus just said. these are being compressed by the passive fund managers. the industry is in a tough place. manus: that's one side of your life. we would be remiss if we did not squeeze in sky. you are an advisor on that board. think the independent committee of the board representing the 61% of theeholders that are not in fox can't have done a great job. we are in 92% premium. we will have to wait to see what happens now that the disney-fox deal has gone through.

really iny fox is disney's hands now. anna: thank you very much for your time. oftin gilbert, co-ceo standard life aberdeen. if you are a bloomberg customer and you want to watch tv, but not just the regular screen, you want to get the added extras, use the tv function. you will be to follow along with charts and message us to roughly. -- directly. manus: i leave the hard questions for you. later today we have more earnings coverage. frank appel joins us. commerzbank, the cfo joins us for an exclusive interview at 10:30 a.m. u.k. time. it's on bloomberg. ♪

anna: this is "bloomberg daybreak: europe." we are 43 minutes or so away from the start of the european equity trading day. the euro stoxx 50 futures will be higher at the start of the session. a bit of a rebound taking place in chinese stocks. there is an we are waiting for the fx results from the pboc. the world's worst performing flowsmarket, focus on the . they are not seeing the outflows they saw a couple years ago. downr-lira strengthening, 6.3%.

capital controls will be the bitterest of pills to swallow for the central bank and mr. erdogan. let's get your first word news. in the u.s., the trump administration has restored sanctions on iran and reaffirmed plans to impose tougher penalties on the country's oil sales. the measures restrict purchases of dollar banknotes by tehran, and ban imports of persian cashews and pistachios to the united states. iran's president said he is open to talks with the president, but not while sanctions are in place. >> if somebody stands in front of his rival and pushes a knife in his arm and seeks talks, he should put the knife away and

use logic. juliette: the turkish lira and the countries bonds tumbled over concerns about a diplomatic spat with the united states. and fell as much as 6.3% while the rate on 10 year bonds fell just below 20%. president erdogan has promised to respond in kind after the u.s. imposed sanctions over the detention of an american pastor. 's final right-hand man has broken his silence and offered inside testimony about how wealthy the ukrainian businessmen used shell companies to pay his boss millions of dollars for political consulting work. rick gates appeared at manafort's tax fraud trial, where he told jurors he worked to help his boss conceal millions of dollars in income, hide offshore accounts, and lied to banks that loaned money.

the u.s. justice department had a lot to say about why at&t should not be allowed to buy time warner. dealudge who cleared the did not want to hear it. trialtranscripts of being that allowed the merger to go through show private sidebar conversations between a district judge and justice department lawyers, the judge shut down arguments he decided work repetitive or unhelpful. spacex launched an indonesian satellite into orbit. another milestone in its bid to use reclaimed rockets on its 15th mission of the year. the company re-flu a booster for months -- booster in mission in months. reuse.s spacex's first a version of its rocket that was built to be launched as many as 10 times with limited refurbishment between uses. 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. bloomberg. anna: juliette saly in singapore. the trump administration is ramping up efforts to defend tariffs on chinese products, portraying the chinese economy is weak. this comes as chinese foreign-exchange reserves are due later today. the central bank continue to refrain from selling currency to curb at the klein in the yuan. -- curb a decline in the you .ant -- yuan are you expecting the pboc will spend vast amounts to support the currency, or not yet? >> know, partly because there are multiple interest mints -- instruments and policies they

can use and not rely on outright intervention. the key is to understand their goal. is therel to our minds going to manage and control the volatility of the currency rather than try and impose an artificial level. that is why is less of a strain on the actual reserves. they are not going to try to set a line in the stand. -- sand.nt ltd. -- sand. manus: the reverberations in the commodity markets, they are felt in the emerging markets, from the fed in from trade wars. one year low on commodities. emerging markets also under pressure. are you at any juncture seeing a value light in those distressed markets? valuation, of definitely yes. they reset quite significantly

and reflected a lot of these risks. valuation alone is not sufficient. there needs to be clear capitalists for that's reverse. headlinestential for and more conflict ahead, which would really prevent that recovery from happening anytime soon. i do not think it is time to wade in at this stage. that is where your shopping list should be focused. some you also say you like copper, mining stocks have been increasingly attractive. what is the rationale? tradere concerned tensions might disrupt those global trade flows. >> the reset we have seen and the metals prices have gone ayond fundamentals and even stressed scenario for those fundamentals.

the outlook is for deficits to persist and it is because of what the miners themselves are doing. we have seen it in earnings season. it confirmed capital discipline. they are not spending the way they were. that is going to be controlling level of supply. markets will focus more on demand and the risks demand. we point to the supply-side is being a great backstop. of these headlines start to lift, you will see the fundamentals support higher prices. manus: which brings me to the earnings season. we have popped this into the gtv library. we are looking at a staggering outperformance. the number of companies being earnings is an 82%. energy is one of the laggards. a peace about getting

deal in trade. is that when you see share buybacks? the resurfacing of tax incentives? is there another three to five years left in does equity market as jamie dimon says? >> we are certainly on the ground that midcycle can't. -- camp. we think the length of problematic inflation consistent with the cycle. ae higher without commensurate rise in inflation beyond target levels. we think there are several ways to go. the financial conditions backdrop is also very conducive to that. anna: financial conditions are conducive. what does that mean for the dollar? the dollar has been popular. will it remain so?

>> really on the back of expecting strong growth out of the u.s. because of the fiscal push from the tax reform, but going forward, outside the u.s. has really stabilized, likely to improve going forward. that really squeezes the growth differential. bythe same time, we think spring of next year if the fed is going to be increasingly talking about potentially pausing. that also limits the rate differential. --h of these argue for manus: ok, let's see what the cpi and the ppi gives us in terms of data this week for building on the dollar story. a portfolio manager at pine bridge investment. that's it for this session. we are back together again on the radio. just a reminder we have ceos aplenty. we have financial in zurich

insurance along with thyssenkrupp. anna: that is it for daybreak europe. the european open is up next. ♪ two, down and back up.

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guy: good morning, welcome to "bloomberg markets: european open." i'm alongside matt miller in frankfurt. cash trade is 30 minutes away. matt: indeed. decentarkets have shown gains. a little bit of mixed trade. we will see how we open in europe. >> germany's second