>> good morning from bloomberg's european headquarters in london. i'm ann aedwards. >> i'm manus cranny. this is "bloomberg daybreak: europe." these are top stories. > u.s. sanctions russia. the nerve scow for agent being used in the u.k.. retaliating against canada. justin trudeau said his government won't change its approach. beijing. chinese equities outperforming the session today despite the ips of that trade war.

good morning, everybody. this is bloomberg day break. it is 6:00 in london. getting some breaking news. let's get to deutsche telekom. the telecom giant out of germany raising its guidance to 23.4 billion euros. that is a positive place to start the program, isn't it? u.s. profit growth is the reason behind that. that's why they are managing to do that. instead of looking at the second quarter numbers, this is the backward looking stuff. it is broadly in line with the estimates. 5.93 billion, a touch ahead of the estimates. it is really the strategy around this business that is of interest. eagerly awaiting the green light

for its deal to merge its t mobile unit with sprint in the united states. they are waiting for the f.c.c. to take a bigger look at that one and waiting for approval in austria and the netherlands. a lot depong on. we start our program on a positive note. >> i have a reafter makings of guidance from thinksen krupp. -- thyssenkrupp. they gave thus notice a couple of weeks ago. lower at the lower end of the previous estimate of 1.8 billions. they have issues around their conglomerate structure. in interprets of the actual number sales, they come in at 11.12. above last year at 10.93. third quarterebit is down nearly 50% from lastier's number.

hat you have here is act vism. pushing for change and maybe a breakup of thyssenkrupp. this is a company that burned through cash, 758 million euros last year. calls are growing louder after hat profit warning they got. to lose your chairman and chief executive officer, this news could be the nail in the coffin. thyssenkrupp will have their say bout activism and the numbers. we'll speak with guido just after 6:30 a.m. u.k. time. that have some -- we have conversation and then lots to talk about the german

pharmaceuticals. merck, second quarter sales look to be ahead of estimates. when we look at the number for the second quarter, it should be shade below the estimate. they sold their over the counter medicines business and that is helping to prop up some of the numbers. they sold that to p & g. they don't just do drugs. they do other things. they do liquid crystal displays for tv's. they have been having a tough time keeping up with rival china. we'll be speaking to their c.f.o. who joins us after 7:30 a.m. manus. the jobs market. what have you got? >> technical knowledge, liquid

crystal display units. one of the world's largest employers out there. profit 1.1 billion. revenue, 6.05. they break down their business and this is where you get a little bit of insight. 18% year to date. in the united states we see record after record in terms of the unemployment rate. e u.s. saying north america, 3%. revenue organically at 4%. strong performance in the permanent market. revenues up 18%. the growth margins are stable at 18.3%. balanced growth and margin trend improving.

we'll have an exclusive interview from zurich in about 20 minute's time. let's see whether the americans are getting the pay rises that go with that guidance. it is all about american foreign policy. for markets as a backdrop. >> that is one of the topics we will pick up. russia and the united states. a lot of foreign policy to talk about. the yen is stronger. that is weighing on japanese stocks. the chinese market getting a boost from -- is it earnings season or the p.t.i. numbers? the stabilize number and the positive t.p.i. data that we got out. we saw the ruble falling. the u.s.a. have made a final determination that russia was responsible for the may 4 nerve

agent attack on the skripal s. the u.k. double agent of course. that has been weighing on the determination there. the new zealand dollar down 1%. weaker growth utlook is the reason for that. your focus on what is going on in u.s. equities. >> absolutely. one market's gain is essentially another market's payload. i'm talking about gold versus equity. gold versus equity. united states s&p. falls to the lowest level since the financial crisis. is the market really saying i want to take more risk? i want equities versus noninterest bearing gold? that's essentially what you have. the proposition here. exiting from those noninterest

bearing commodities like gold. we just caught up with the c.e.o. of one of the biggest jewelry companies. he is talking about gold between 1,200 and 1,300. it will help consumer demand. the hedge fund boosted their bets on gold literally by the most since 2006. o so the market is storing its up for a bearish position. the market gain is causing the gold market pain. has our -- juliette first word news. >> the u.s. said it will sanction russia for a nerve agent attack in the u.k.. washington expects the measures to take effect on the 22nd of this month and could be followed around by more sweeping penalties later this week.

former spy sergei skripal and his daughter fell seriously ill after exposure to a nerve act. the kremlin denies any involvement. criticizing the recent arrest of women activists. just trudeau upheld his stance on human rights. saudi arabia has the backing of the g.c.c. and the backing of the arab league and the organization. saudi arabia is part of an arab league and a large islamic organization and canada must understand that its actions are unacceptable not just to saudi arabia, but to arab nations and the whole islamic world. >> canada will always stand up for our workers and our

companies. we need to make sure that we're protecting canadian interests in any situation. we continue to engage with the government of saudi arabia. the minister of foreign affairs had a long conversation with their foreign minister yesterday and diplomatic talks continue. >> italy is ready to repeat the tough tactics it used to win concessions on migration. the deputy prime minister said the country's anti- establishment coalition wants enough flexibility to introduce a flat tax next year. he said if the e.u. changed the way it was calculated, the government's plans would be implemented without reaching the limit. powered by more than 2700 journalists and analysts. you can find more stories on

bloomberg.com. retaliatory stims in china about the earnings you can see. a strong move coming through this hong kong. look at the c.f.i. rebounding after the selloff yesterday. we can see the kentucky wisconsin -- kiwi yield. stocks rising in shanghai. luminum prices rising. testing, improper tests were conducted by suzuki, yamaha and mazda. suzuki said they deviated outside the range and we are awaiting the new smart phone from samsung in new york. anna? >> thanks very much for the update. joining us now with the latest on the new u.s. sanctions on

russia, this is taking a toll on the ruble. we talked about what the u.s. has determined this may 4 attack. what are these new sanctions and when will they take effect? >> quite a surprise as well given last month's friendly summit in helsinki between trump and putin. these sanctions come under the 1991 law regarding chemical, biological weapons. in the united kingdom, it was only used before by the way between -- against north korea and syria. quite a big deal for the united states to invoke this. set to take place at the end of the month on august 22nd. it will limit exports to russia. the u.s. team is sensitive to national security issues. it could be hundreds of millions of dollars in terms of exports.

this is the first round of sanctions. now if russia does not comply and look into what is going on in terms of chemical weapons, they need access to view on site inspection. we could see a second round of sanctions that would bite even more. it would stop lending on u.s. dollar transactions for big bank flernsd russia and hit oil exports in russia. they don't think russia will comply. what happens next? donald trump could spronal a waiver saying it is no n the u.s. best interest not to continue these sanctions. we do have a midterm election coming up. if he is too soft on russia, it puts him in a sense sieve situation. >> pressure comes to bear on that -- of course you're

jockeying for position here between the turkish lira and the ruble. >> that's right. the ruble is the lowest since november 2016. just as you can see there, that's the u.s. dollar of course spiking against ruble. it was under pressure earlier that day. there are really two big stories regarding russian sanctions yesterday. one was the state department coming out against the skripal case in the use of the chemical weapon. earlier russia newspapers published a draft of congress putting together to bill. these proposals on sanctions, new sovereign debt and blocked dollar transactions on the nation's biggest lenders. the ruble has been under pressure from that bill and the sanctions took it more seeing the lowest since november 2015.

>> thank you very much. great reporting on the sanctions, additional sanctions from the united states on russia. speaking of which, the u.s. is waging a trade war. could president trump act to weaken the dollar? jpmorgan's chief economist said he can't dismiss the idea of more interventionist policy. meanwhile investors scooped up as much as $26 billion at the auction showing swelling u.s. government issues have yet to put pressure on the nation's long-term borrowing costs. joining us now is the chief european economist at standard chartered. great to have you with us this morning. i thought i read all of the various arrows of trade war. here we are. i have a lovely chart in here in terms of weapons of mass destruction. could be the dollar. what do you make of it? jpmorgan morgue talking about he could weaponize the dollar.

last time we saw this was many years ago. what do you make of the latest one? >> it seems quite a long stretch. i think that even if there is a desire to -- we know it is difficult for that to be achieved unilateralry. there have been periods of weakening achieved through card nated efforts through g-7 countries and combined with all central banks acting together. it may well be a response the this recent weakness we saw in the renminbi of course. they are operating from a weaker renminbi. maybe this is the flip side. it is going to be quite tough for the dollar to weaken just on the face of donald trump. of course it could have a temporary effect.

it could well be that if you get some tweaks along those lines that the dollar does react temporarily. but i think that anything sustained or meaningful increase of the dollar would have to come really through fed action, the fed is really signaling that was something they were intent on achieving and that looks unlikely. >> the fed said the inflation story in the united states as well. what are your expectations around inflation in the u.s.? we get data on friday. i read it was supposed to increase. the latest data suggests declining expectations for inflation united states. coming down a little bit. i have a chart that shows that, certainly at the five-year horizon, we break even. what do you anticipate on

inflation? >> don't see inflation being a problem. our forecasts are pretty muted in terms of where we go from here over the next year, couple of years. we would expect to see core p.c.e. inflation which obviously is what the fed is targeting moving up to 2.1%. that is something that policy makers are going to be perfectly comfortable with. we have seen some gyrations in the headline of course to deal with the prices and have seen previous drags on inflation from technology. that is starting to work out of the numbers now. over all in terms of policy make rs, we don't think inflation is going to be problematic. > thank you. she stays with us and we'll get her further thoughts on italy. the firm adecco reported earnings in the last half-hour. let's speak now on the phone from suric to the adecco group's

c.e.o.. great to have you with us. thanks for joining us once again on the program. give us a big picture story then from the state of the global staffing market the second quarter and as you look ahead? >> the global picture is that we have a growth-based revenue growth. we achieved 4% of growth in the second quarter. e good news is that the u.s. is back to gross. 3% gross for the second quarter. that is the best quarter in rms of the second quarter of 2015. we have france with an 8% gross outperforming the market for us. we are very pleased with that. we see also it continuing. italy, eight quarters now of double digit gross. sign is the od

permanent recruitment which is also a good sign of the economy. 18% gross in the second quarter and the third quarter in a row with double digit gross. solid quarters. >> good morning. good morning, sir. welcome to the show. i want to know about wages in the united states of america. every economist wants to know about wages in the united states of america. accelerating faster? what do you see at the front end? >> what we see is a continuation of the gross we had the previous quarters. between 1% and 3 pbt and for the hite collars, around 2% to 4%.

no real change. what you see is that there is still a rather low participation, labor participation rate and you see eople coming in in the labor force and this can explain why wage n't have real bigger nflation than today. >> can i ask you a little bit about brexit? we're months away from the march 2019 deadline and then we await transition possibly if everything is agreed. what are the trends that you're seeing in hiring? are you seeing that some companies are headed to as a result of this? is it part of the conversation? >> for sure. there is a lot of i would say political and clarity in the u.k. due to the u.k. and the

brexit and how the brexit will come out of this negotiation with the e.u. on all sides we have very good figures in the staffing. we have 8% gross in u.k. in the second quarter which means that the activity is continuing. we see also for the second quarters in a row a strong permanent recruitment activity. 18% gross in the permanent recruitment in the u.k. in the second quarter which means that the companies are now back at hiring. during almost 18 months they had waited, hoping to get clarity before hiring again. this clarity is not coming. they had to start to hire. hat's what we see.

>> sorry. i had a few issues there. my apologies. in terms of the big things that we touched on several times here, talking about trade wars and american politics into europe. hat is it that disconcerts the leaders of industry that you're talking to? there is a lot of issues, geopolitical issues going on in the world. when we look at the reality of the figures today and you see that in all figures, this has business ranslated in acceleration or destruction in the business. we will see how it will develop, but with the knowledge of today, we see a continuation of solid

growth. you can also see that the macro figures are staying solid and we will see how it will turn out, but at this stage, there is no real impact in the daily figures. >> tell us a little bit about the temporary hiring. do you see anything interesting there? >> yes. there is a change, especially in e markets where you have the -- of the labor force. for example, the u.s. what we n increasing call temp to personal. -- perm. more and more those candidates and the companies are choosing to hire permanently because they know it is the preferred option for the candidate.

and we see definitely a trend to more permanent recruitment. by the way you see that in all figures. uble digit gross in this field. >> thank you so much for being with anna and myself this morning. that is the adecco c.e.o. alain dehaze. juliette? investors o -- including thomas lee partners. c.c. capital.uded $145 in cash for each share. ryanair faces the worst strike

in its three decade history tomorrow. german and dutch -- join a prothe u.s. forcing it to increase pay and improve working conditions. they will scrap more than 400 flights disrupting travel for about 55,000 people. they announced a 24-hour walkout the same day strikes are in sweden and ireland. elon.e.c. is investigating musk's tweet about a possible buyout of tesla. tesla declined to comment. meme, softbank investing in tesla and taking their company private. sources said the negotiations crumbled when talking about taking disproportionate control.

>> up next, thyssenkrupp's c.e.o. joins us for an exclusive interview. we'll talk about the conglomerate's structure and his future as well. this is bloomberg.

manus: 6:30 in london. 9:30 in dubai. average. moving arch 110.99. bank of japan, the move last week suggests the bank won't permanently maintain low interest rates is thus is likely o pet bet on a stronger yen. nejra cehic, good morning. >> thanks, manus. i have an exciting chart for

you. look at what is happening in the equity session in asia. japan pretty much flat. south korea not doing too much. if we can get the g.m.m. chart up. take my terminal. that's what i want to show. on the left you can see the equities. china outperforming by 2.5%. australia a little bit higher and hong kong higher as well. up by 1%. the new zealand dollar hitting a two-year low after some dovish comments on the bank of new zealand. you can see the five-year new zealand deal down five basis points. moving on to look at the 10-year. it has broken out to the downside of this trading range that it has been in since 2017. some commentary on them that is quite good saying the 10-year yield has dropped below that range and now what we might see

is that the path actually to that record low of 2.14% could be looking fairly clear in the medium term. something to watch in terms of g-10 rates there. taking a look at dollar-yen. we're flat today. we have seen some strength in the yen in reaction to the b.o.j. over the past week or so. so much so the pair has been pushed below its 50-day moving average and the trend line, does that mean we see further dollar losses? anna, manus? anna: let's get to breaking news. breaking news from the insurance sector. we got the numbers. they disappointed just yesterday. looking for a different story from hanover today. ebit numbers coming in different than stmented. the estimate was 394 million. that looks to be a significant beat at that level. the net income line beat also.

they are confirming that 2018 profit guidance of more than 1 billion and they report, p.n.c. combined ratio of 95.7%. that disappointed yesterday at munich re. this looks better from hanover. they are expanding the payout ratio to a range of 35% to 45%. manus? anus: i see you and raise you. adidas ahead of the analyst estimate. second quarter revenue comes in at 5.26 billion. that is again, that is comfortably ahead. they continue to see a strong

financial performance continuing to confirm the full year. this video went viral. of course it was the c.e.o. talking to the boys about the spat with kanye west when amente to the -- came to theesey brand. -- yeezy brand. just waiting for the growth margins to come through. talking about a strong financial performance in the year. they see the second quarter, just the operating one. 11.3%. the gross margin. this is actually an up number. 52.3%. gross margin, 50.7% strong. strong quarter on the back of a successful world cup activation. profitable growth driven by a strategic focus in north america, china.

the lira continues to get demolished. we bring you turkish airline. net earning comes inst in at 141 million lira. the estimate was 1.35 billion. that was an incredible misfor turkish airlines. let's talk about thyssenkrupp. the german manufacturer has reported a loss on its industrial year that drag on its fiscal third quarter earnings. it has been under pressure from investors who have pushed for faster progress for streamlining the conglomerate. let's get straight to our terview with the c.e.o. of thyssenkrupp. what can be described as a profit warning just a couple of weeks ago from you. let's get to the heart of the matter. you're still cash negative. this company should be broken

up. the activists have a fair point? >> that remains to be seen. the question is and this is what we have outlined with our q 3 numbers. we see huge potential in the current portfolio and this is clearly my mandate given by the board to manage the company and the state as it is while they are searching for a new supervisory board and c.e.o.. cash coming out of the businesses currently there that would be minus 800 today. there is a clear indication there is potential which we need to focus and address clearly. anna: good morning to you, guido. you clearly have a mandate to run the business as it is as interim c.e.o. as you say. could a new c.e.o. consider a breakup of thyssenkrupp? one analyst said the profit warning you gave was so bad it

was good. they thought it would be a big catalyst for a big change. could a new c.e.o. deliver that? >> that remains to be seen. it depends on the new people onboard. what we see, we have to address the issues that you have and especially at industrial solutions, we have laid out we see what is necessary to make a turnaround and a profitable business again. this is what we're addressing this the next update on that will be in november. we need to focus on smaller items and revenues and a better cost structure and this is what we definitely addressed. on the other end, you see the businesses are still growing. third quarter clearly shows we had an up take in sales of respectively 9%. manus: it sounds as if you are there to steer the ship until a decision has been made. i get the sense of perhaps you're looking after what bigger

issues are discussed. are you discussing with the board of spinning off the elevator unit? spin off. gnmentance -- >> i'm focused on improving the businesses and clearly show what responsible in there . anna: on intent of what the activists are pushing for. they said we understand speaking to a german newspaper recently focusing on the costs of the sector. that is something you looking at now. how ambitious are you going to be in slimming down the corporate costs of thyssenkrupp? >> i think we have taken a big step compared to last year. we're 100 million down and we want to reduce to significantly below 400 and the number from last year was 535. indeed we're making big progress

and more to come. manus: can i ask you you in terms of -- i get the sense that ou're in this holding pattern. are you definitely not in the running to take on full time c.e.o.? >> i don't want to cribblet to any speculation here. i have a clear mandate and i want to make clear what is the personal knowledge with this company. i know what we can do. this is what we have proposed to for the midterm and something that the team cease as potential in the company and this is what we want to work on. it talks about ownership structures within the group should happen. this is something for a new c.e.o. and it remains to be seen how this discussion goes. manus: the -- anna: the structure might be for the c.e.o.. i saw that your ex-chairman

accused activist investors of using terror tactics to destabilize the company recently. is that how it feels at thyssenkrupp? is that what activists are doing? >> this was a generic the same from our former chairman. i would not like to comment on that one. manus: guido. let's get to something we can get our teeth into. the state of the world. the state of demand. give us your take on the world economy at the moment. trade wars. tit for tat. where are we? tell me how the world looks to you. >> we live in a world of with uncertainty everywhere. trade wars coming or not coming. our business set-up is largely to that extent that we produce and sell basically in the areas where we are selling, so production and sales are in the regions where we're in. you do see somefects with

components. definitely we are well set up to produce in the region where is we sell. we don't like protectionism. we like free trade. that is clear. this is only good for business in the long run and for the countries to develop. trade wars never help anyone. we're not a friend of that but we have to deal with the issues as they are. we're well set up worldwide and we're producing and selling and we have a clear plan forward and i hope these uncertainties will go away. for all parties it can only be good to have a solid and stable environment in which to work otherwise, it will be rejected or postponed. never good for business anywhere. anna: one thing we talked about in the past, guido, we talked about the tariff environment. and steel. are you seeing enough action from european authorities?

are you seeing any evidence of dumping by china into the european market? >> if we take a look back in 2015, we saw the chinese prices for material in europe were going down. ever since, this has come down quite a bit. you take a look at european steel makers. import levels still on the same level coming from china but the price competition has been less. currently the situation with a strong demand in europe is i think for the industry acceptable but it remains to be seen where it goes because the overcapacity in china is still there. they are addressing it in the china but it remains to be seen and we need to closely watch what is going on. anna: thank you very much. kerkhohh, the interim c.e.o. for thyssenkrupp. a little bit of breaking news coming through on pandora. these numbers from the jewelry maker in copenhagen.

we have the? s out just moments ago. the c.e.o. is stepping down on august 31. remember there was a profit warning on this month. a big fall in share price. they expect revenue growth to be below the guided range. i'm not sure if that is another warning on top of the warning that we saw just a few days ago in fact. e are hoping to speak to the c.e.o. a little bit later this morning. italy's deputy prime minister said his country is ready to use tough tactics. he said his anti- establishment coalition wants enough flexibility to introduce a fleater tax without running foul of e.u. budget restrictions. now, kevin -- what

does he really mean? >> well, he means he wants to push the e.u. on these issues. he has said that he wants to fight within e.u. rules but wants the rules to be changed and the two parties in the government have two main projects. one is the flat tax and the other one that you mentioned is the extra help for the poor and he will be pushing for those. as a matter of fact, he said at one point he wanted them immediately. manus: what's the difference and conta's essage message? >> the prime minister had quite a different message. he said these things have to be sbrood introduced progressively. he wants a different budget. it is important for the two parties within the coalition to take things a little bit more even paced and that is what he

told reporters yesterday in rome. finance n -- the minister, clearly the market, a lot of importance to his presence in the government? >> yes, thft tria is what they call the adult in the room. he wants to make sure he has enough money to do the things that are in the government's program. whether or not he has enough clout to push back against these two populist parties remains to be seen. manus: thank you very much. our reporter in italy for western europe. thank you very much. chief european economist at standard chartered. anna said there is only one set of notes printed off. these are they. we talk about fresh elections. e.c.b. emergency support cannot be ruled out.

these are tail risks for now. italian tail risks. how far away are we from a full scale blowup with italy? >> well, it can't be ruled out. we have seen markets come under stress just in the last few days. as this spat over the budget has broken through. this is something we always anticipated. we knew that autumn was going to be a difficult time. we had press departments with the e.u. summits where italy held groups ransom over immigration and there is the budget issue i think is also going to be quite intense. if we look at what the two parties in the coalition promised in the run-up to the election, the costs, five percentage point of g.d.p., that would be a huge blowout on the

budget. now we have got the finance minister taking a more reasonable line on this. but at the same time, if we look at opinion polls, we see quite a bit of support for liga, which suggests that could potentially unbalance the coalition. lots to keep an eye on in italy over the next week and months. anna: interesting of the support level. we have a chart that shows yield that went up once again on the back of our reporting. is there a level of which this starts to hurt? we're at 2.9% or so. 2.91. we got to 3.1% in may. is there a level where you start to be worried or is it the pace of decline that really matters? .> i think it is the pace interest rates, borrowing costs.

they are not going to be problematic. italy has had a period of very low borrowing costs for quite sometime. the over all structure of italian debt although it is high, 130% of g.d.p., the structure is quite manageable. reasonably long maturities at an average cost which is relatively low. it is the extent to which you see a sharp rise in yields. above that, 3%, well north of 3%. that really could start to become self-fulfilling and that is a point of which then mashes start to question what can the e.c.b. do especially in an environment where quantitative easing is being dialed back and e.c.b. purchases of italian bonds are starting to fade. manus: let's be frank. the e.c.b. has a little bit of risk on its balance sheet. ithas a vested interest, and is not cascading out of control.

they are probably one of the biggest creditors of italy. >> that is absolutely true. of course there is a limit to how far the e.c.b. can get involved in this particular debate. it will really very much be a debate between rome and brussels from the european commission side. from the e.u. side of course, they don't want to do anything which is going to push italy out of the block. and there is an awareness of support for the anti-euro, anti- e.u. liga is building. the outcome is going to have to be a little bit of flexibility. the prime minister indicating that these measures, the fiscal measures could take time to be implemented from the e.u. side. maybe there does need to be a little bit of flexibility recognizing that italy's economy at the later stages suggest that it is starting to sell again.

anna: ok. let's talk a little bit about the u.k. i'm looking at a chart at the pound. its decline against the dollar since april. there have been some dollar strengths in there to think about. the weakness of the pound has seemed to have come back with a vengeance sense last weekend. where do you think we go on the pound and what impact that is going to have on the u.k. economy? >> i think a lot depends on how things evolve over the next few weeks. once parliament returns in early september, once we have an informal e.u. summit on the 20th of september and going sfaurd to the october summit, we have quite a few dates coming up in the autumn which will determine the direction of which the brexit negotiations go. of course what markets are worried about is a brexit no deal and the fact that we have

the governor, mark carney as well as liam fox talking -- the trade secretary talking about a no-deal risk. our own view is that the u.k. will be able to steer past threw these negotiations and will be able to come up with a deal that can get through parliament. it may be pretty late in the day and as of when that happens, this will be sterling supported. over the next few weeks, there are going to be risks to the downside. manus: the options market is building up on those risks. ake a look at the chart. tandard chartered. pandora. if you're a buyer of this jewelry, it might be getting cheaper. the c.e.o. is to go. that is the breaking news.

she will step down as of august 13. they expect revenue growth. it is going to be below guidance again. this is a tortured soul of a company. another profit warning piling pressure on this company. the reduction in inventories is challenging the outlook. that is the message they want to eninforce the board with further appointees. this company, if i just go into what it has done this year in terms of return, this stock is own 49% in terms of value. you know, pandora last fired a c.e.o. in 2011. there is a whole variety of institutional investors. one has recently been saying they are very disappointed with pandora. in terms of the actual yearly

performance on this company, you 18 billion kronor has been wiped off the value. what went wrong? we will have the opportunity to put the questions to the pandora c.e.o. anders colding friis. 7:00 a.m. u.k. time that conversation. anna: indeed. what has driven that? the profit warnings we see from the business. let's tell everybody what has been trending across the bloomberg universe and overnight news. the oscars will add a new category for best popular movie. the ceremony will be shortened in an effort to win back tv viewers. will it be enough? manus: it is the announcement of the new u.s. sanctions against

russia for march's nerve act attack in the yeist united kingdom. the ruble is under pressure this morning. anna: most read story over the past hours. in second place. crazy rich asians. a new film about the opulent life of singapore millionaires. and the top story, the mystery surrounding elon musk's plans for tesla. find out more on the bloomberg terminal. manus: let's turn our attention here to saudi arabia. they say they will continue to ratchet up pressure on canada for criticizing the recent arrest of women activists. the foreign minister said the next wave of retaliatory steps could affect investment flows between the countries. >> saudi arabia has the backing of the g.c.c. and the backing of

the arab league and the organization of islamic corporation. these three make up 1/3 of humanity. saudi arabia is part of an arab league and a large islamic organization and canada must understand its actions are unacceptable not just to saudi arabia, but to arab nations and the entire islamic world. manus: let's bring in our managing editor for the middle east with the very latest on this story. we touched on it a couple of times. we're waiting for the index to open very, very shortly. we'll swhee the repercussions are on the market. how did we get from zero to like 100 which is saudi and the g.c.c. going to head-to-head with canada? how did we get here so quickly? >> we have been asking this question to investors around the world. everybody was taken off guard. this is not just a message to canada. it is a message to the wider

western world, don't meddle. we have low tolerance for this. the speed and intensity of the response was surprising. perhaps one factor here is there isn't that much of a strategic partnership on the economy and investment and trade side with saudi arabia and exeand. still it is giving investors something to talk about. manus: i want to know, when you see this. it is a coalescing of power. you're seeing the e.a.u. and egypt call come together. a shift in the past 24-48 hours? >> it depends on where you look. we have not seen a major impact on stocks and debt. let's say you were an investor and looking at the region. that is what saudi arabia needs. long-term investments. anna: thank you. manus: the very latest. anna: thank you very much. oming up on the program,

pandora's c.e.o. joins us after announcing he will be stepping down on august 31. 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.

manus: good morning from dubai. this is bloomberg daybreak: europe. anna: live from bloomberg's european headquarters. these are today's top stories. manus: u.s. sanctions russia. washington punishes moscow for the nerve agent attack in the u.k.. further steps to follow. the ruble sinks to its follow -- its lowest since november 2016. saudi arabia retaliates against canada. justin trudeau says his government will not change its approach. beijing matches washington. outperform thes session despite the tit-for-tat trade war.

anna: good morning, everybody. 7:01 in london. let's get to randgold. this was the largest gold producers in west and central africa. second quarter, $58.4 million. the gold sale, $411.5 million. we are going to be focusing on the ivory coast business a little bit. what kind of gold production they are seeing. updates on the gold production and cost strategy. we have seen a change in the legislative background, the mining code, i should say. we will get an update.

the ceo joins us for his first interview of the day. that is coming up shortly. manus: futures a little bit of a mixed picture. london is a little stronger by 21 tips -- pips. i am surprised to see this kind of robustness. you're going to see quite a significant level of dividends coming through. europe,outflows from $55.8 billion as of july. we are on the longest losing streak flowing out of our european equity market since 2017. nearly reminiscent of the 2011, 2012 debt crisis. this against what you are seeing in terms of earnings. earnings in europe rise by 5.5% versus that stellar run in the united states of america. the dax is up 14 points. we seeing dividends go through.

the zurich may be in play in terms of the numbers. how is your risk radar? anna: let's have a look. up 0.2% on the msci asia-pacific. despite ongoing trade tensions we see the tit-for-tat between the u.s. and china taking place. we have a mixed picture. the stronger yen taking the edge off japanese markets. we saw robustness over in china because of destabilization in the ppi numbers. both of those perhaps in the mix. we are keeping an eye on the ruble. we saw the ruble losing ground. a final determination russia was behind the attack on u.k..ripals in the the new zealand dollar under pressure against the u.s. dollar this morning on the back of a painting guidance from the central bank -- tanking guidance

from the central bank. pushing out the timing of any rate hike from them. a weaker growth outlook for that part of the world. what else? pandora. read headlines aplenty. the ceo of pandora has announced he will be stepping down as of the end of this month. the jewelry maker cut its profit forecast. joining us, for his first interview of the day, the pandora ceo. welcome to the show. many a ceo would have canceled this interview. well done for joining us. have shareholders force you to resign, or is this of your own volitions? >> good morning. happy to join you today. discussions with the board have led to the fact i will be

leaving pandora by the end of this month. if i look at where our share prices moved, i understand clearly that is disappointing. anna: good morning to you. thanks very much for joining us. what do you think has gone wrong at pandora? there was little detail given when we heard a few days ago about the profit warning. little detail about what was joining that -- driving that. what has been the problem? >> we have launched a new strategy in january of this year where we clearly had some assumptions in the development of assortment. big launchg a very of new products during 2018. one of the assumptions was we should see a nice pickup. we have seen progress in a number of the areas, but one of the big things was we also expected to see an increase in

our charm business we have not seen on bracelets, necklaces, and so forth. we have actually seen a positive development. because we have not seen that pickup, we have had to adjust our guidance for 2018. >> obviously you faced a number of challenges in trying to launch new products. previously it was the u.s., which was the big problem. give us insight into how the world is faring this morning. >> if we look at the u.s., we had a very nice progress. we had positive numbers in the u.s. market. we have seen a very positive reception of the new products. if we look at it across pandora, it has been a little bit less positive than expected. that is why we brought down our guidance.

in general, if you look at that, we have seen a slightly weaker development. anna: you say the new launches did not lead to the pickup that had been assumed. that mean the strategy needs to change? i know you're going to be going at the end of the month. in terms of the next ceo, how committed are you to these new launches? committed.ery actually, the board together with management has confirmed the strategy. we believe we are on the right path. you have assumptions around actions, what kind of results they're going to deliver. we were too optimistic in terms of how much the impact would be from charms. the positive thing is we are a good development of bracelets. a good starting point is to have a good development in bracelets.

you have a backlog in your cautious about that. the reduction of inventory is going to be challenging. is it not more that the industry has moved on more quickly than the strategy have implemented at pandora? >> we can see there is a couple things. we believe that the strategic direction we have where we say more retail and also at the same time develop a stronger product portfolio with new platforms is the absolutely right way going forward for pandora. we believe the strategy is developing for the company. do you have any regrets about the strategic decisions you have been making? or has the guidance been too optimistic? look today on the three

and a half years i have been set ine company, we have total a very good and strong strategic direction. that i do not regret. clearly if we look at how this has been seen in the stock course notm of satisfied with the development we have seen there. as you leave, there are going to be questions about the vulnerability with which you leave pandora. honorable to a takeover. how vulnerable is the takeover? -- how vulnerable is the company you are leaving? a i think pandora is fantastic company. i agreed with the board i will continue this month and make sure we make as smooth the transition as possible.

clearly it gives some uncertainty when you have a change in a position like mine. manus: to close this interview, thank you for joining us. it is never an easy question, but if you had to change honestly one of the big strategy decisions you made, where would you put your hand up and say, i actually got that wrong? i actually think we have done the right things. clearly the situation has given me the opportunity to think about that. but i believe we restructure the company, we have developed a robust strategy for the path forward, and i strongly believe in this strategy. so does the board. i do not have a lot of regrets when it comes to the things we have done together at pandora. this is not a one-man show. it is a big organization with a lot of people and we work

together to make the plans and the progress we have done. manus: thank you so much. the ceo of pandora joining us for his last interview on results. go to the terminal, you will see the return on the tenure for chief executive. he does not regret the decisions they made. it has been a mixed session in the asian session. let's talk about the markets more broadly. set for a higher opening. the market holding near a seven-week low. against theates latest trade war escalation. bloomberg teamhe leader for markets live in europe. do you think it is the ruble versus results? which one wins for you?

>> of the ruble is of interest just because of our reason here. that is a story we have been following all along. the question really was, are there going to be more sanctions? well. the oil as setting it up for a little more pain from here. ruble certainly a macron focus after the u.s. made that final determination around russia. what about what is driving china? we have seen a resurgence in the , up nearlyity market 2% in today's session. is this the underlying profit story? what is going on? >> it's a combination of different factors. the profit story has been good recently. that has been a tailwind for chinese shares. we also have the fact that all the trade tensions seem to be feeding into the hard data.

we saw the imports and exports story this week. that is surprisingly better than expected. today we have the producer prices measures also exceeding estimates. the question is, what is the impact of the trade tensions so far? that is not showing up in the hard chinese economic numbers. maybe investors are reconsidering the impact of this trade war is not as bad as the initial thought. talk to us about the chinese economic surprises first of the u.s.. this is one which is hard to assess. -- where you compare the two? >> look at the trend. we have seen the chinese economic surprises taken a little bit of a downturn recently. there are signs that is bottoming out, especially with the surprises we saw this week, you have more reason to think maybe chinese economic data is

taking a turn for the better. in the u.s., that growth story is priced in. we have known for a while the job market is doing well. we have seen better economic numbers. there is a higher bar for investors to be surprised by the u.s. numbers. that's probably the reason we have seen a turn lower in the surprise index for the u.s.. anna: thank you very much for joining us. next, the first interview of the day. later on, we're going to be speaking to the cfo of germany's merck drug company. this is bloomberg.

anna: good morning, everybody.

7:17 in london. let's take a quick check on the markets. this is the picture across the european equity futures higher at the start of trading day. euro stoxx 50 futures not higher by much. i was confused by the green. yields.eye on btp an interesting line from the italian prime minister saying they see a five year time horizon to complete the flat tax. could that be taken as a comforting message? a long time horizon? tension between rome and brussels, perhaps. btp yields are a touch lower. now a 2.9%. manus: the italian question very much in focus. later on in new york, samsung unveils its next galaxy note

smartphone. a presidential debate. after the wall street closing bell we will get earnings for rupert murdoch's news corp.. meetings are going to crack on. another stay of execution. let's get to juliette saly. she will right now are they with the bloomberg first word news -- brighton our day with the first word news. juliette: the u.s. said it will sanction russia for a nerve agent attack in the u.k. washington expects the measures take effect this month and it could be followed by sweeping penalties but -- later this year. a former spy and his daughter fell seriously ill after coming into contact with but british and american authorities say was a powerful russian-made agent.

the kremlin denies involvement. saudi arabia has said it will canada foressure on criticizing the arrest of women activists as justin trudeau upheld his stance on human rights. the kingdom's foreign minister says the next wave of retaliatory steps could affect investment flows between the countries. the uk's prime minister is stepping up preparations in case brexit negotiations break down and the country leaves the european union without a deal. theresa may is planning a top-level meeting of for cabinet next month to discuss readiness for a no deal brexit. a group of senior government toicials is being convened keep the irish border free of customs checks even if there is no agreement. a new york congressman and his son have been indicted for insider trading relating to the shares of an australian

biotechnology firm. christopher collins, representing the 27th district of new york, his son, and the father of cameron collins' fiance were charged by federal prosecutors. they deny wrongdoing. china's inflation held up as commodity prices eased. producer prices rose from a year earlier. consumer prices rose against forecasts of 2%. china confirmed it will match u.s. tariffs on additional $16 billion worth of imports. another ratchet higher between the two nations. -- for trade tensions between the nations. 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. manus: think you very much. randgold resources just reported second-quarter profit.

gold sales came in at $411.4 million. the ceo joins us in the studio. in.ere just chiming how would you describe the quarter? you said a nice word to me which sums it up. >> it is a solid quarter. a quarter that will take us back to our guidance by the end of the year. anna: a solid quarter. good morning to you. tell us the highlights and low lights. i want to focus on the ivory coast. >> all records as we ramp up the underground, we commissioned the automation at the end of last really trending quite a bit above our guidance. everything has worked out really well. anna: so that is a highlight.

>> of that is a highlight. also a deal with a government to support the development of the -- that is another highlight. we really work on partnerships and our social license. it does not protect us from some of the happenings in africa, but it helps. it has been challenging since we bought it during the civil war. -- of our workers are they've never worked before. they work with us as part of the integration back into society. we have been dealing with a small group of people who feel -- they're sort of view of problem-solving is not the normal way. we have had to deal with that. we actually suspended operations on the mine to sit down and

clean it out and start again. that's what we have done. we will have the mind back to normal middle of this month and we will selectively reemployed and get on with it. we have a lot of support from the government and the traditional leadership in the area. manus: what does that do to your production estimates for 2018? obviously with the downgrade on tonga, the market is trying to reestablish where you all -- where you are. just give the market of you on your target. your production estimates for the rest of the year. to 1.35uidance is 1.3 million ounces. we are trending in the middle of that guidance area the reason is offsetting the lower guidance or the lowering of the guidance.

>> how are you coping with changes in congo in terms of the mining code? >> we are still very much involved in the discussion. that new code broke a whole lot of vested rights and state guarantees. i am confident as i have said on many occasions that we will find a solution like we have done in molly. -- mali. manus: we saved the best for last. i caught up with one of the producers in saudi arabia this morning, talking about gold between 1200, $1300. the short rebuilding. where is going to go? >> it is going to go up. it is definitely going to go up. where is it going to go? >> look at the news this morning. it is going to go up.

manus: 1300, 1500, make a call. >> certainly up toward $1300 is not above -- if not above. anna: you got a number. thank you very much to the ceo of randgold resources. take us through a check on btp's. italy will use tough tactics with the eu, but a different message from the prime minister this morning. >> you pointed this out. these are the futures, this is on the yield. we have got a in terms of the overall projection. this morning we are dipping lower. will the italians go head-to-head with the rest of the eu? there is the yield for you this week, dipping in terms of btp futures down 0.25%. it is my friday. i leave you to look at pandora's

selection of online bangles. anna: thank you very much. the european open is up next. ♪

matt: welcome to bloomberg markets. we are live from our european headquarters. shares in asia were mixed this morning. china shares gained big. even with trade sanctions continuing to move forward. the cash trade is less than 30 minutes away. the ruble's poison pill.