♪ >> good morning from dubai. this is "bloomberg daybreak: europe." i'm manus cranny. >> i am nejra cehic, from bloomberg european headquarters in london. ray dalio says it is time to buy gold, warning of central bank policy. the bank of korea takes action to shore up the economy with the first rate cut since 2015, battling japanese export restrictions. i ran's foreign minister -- iran's foreign minister says europe needs to live by commitments of the 2015 nuclear deal, hoping for the slim chance of a breakthrough with the u.s.. is necessary,what

and the europeans need to take necessary actions. the united states has basically in my view for -- a shot itself in the foot by withdrawing from this agreement. nejra: netflix slumps. a drop in u.s. customers and slowing growth overseas. shares plummet in extended trade. in europe, watching for results from s.a.p. welcome to "daybreak europe," just on 6:00 a.m. in london. numbers from novartis are coming through. second quarter core operating profit, at $3.65 billion. the second quarter core eps,

$1.34. second quarter net sales, $11.76 billion. 2019 guidance has been raised for the new focused medicines, and they named a president of pharmaceuticals. they see d sales up mid to high sigel digits. to give you more detail, the second quarter sales, $858 million, the estimate of $868 million. a little miss on second quarter sales. we're waiting for a few more numbers to come through. 2019 sales guide's race for both for both -- raised units for novartis. manus, what do we see in the broader markets? manus: the question is this. ray dalio has raised a valid point. gold, look at the five-day chart. negative yielding debt, want to protect yourself, by gold -- buy

gold? ray dalio says we are coming to the end of a period, a paradigm shift. what happens? return, which could be through gold in the portfolio. real interest-rate returns will push so low, you may want to consider buying gold. it is a 6000 word piece, and i confess i have not read all 6000 words. what i like that deutsche bank said this morning about gold, it's a way of protecting yourself from a currency war. dalio talked about paradigm shifts, and of an -- end of an --, cannot agree wit cannot disagree with that. and from deutsche bank, we don't know how the 2020 fx currency war could look like. the bloomberg dollar index, what you have here is that the dollar is shifting, but also s&p

futures. deutsche bank shifting views globally, from 50% to 40%. netflix has had a damascene moment, in terms of, is it all really good news in pushing through price rises, you need exclusive content, and oil slipping a little lower. nejra: let me look at the 10 year treasury yield, heading back towards 2%. not getting there yet, but down another basis point, 2.04%. a strategist of jp morgan saying that negative yields globally could even involve u.s. treasuries. multiple yeart a processor the bloomberg dollar index, weaker the second day, g10 currencies strengthening against them, particularly yen and swiss franc. a little risk-off. you mentioned netflix. one of the worst moments for

netflix since 2011. is it just a blip? but look at what it does to nasdaq futures, moving even lower. yesterday, industrials outperformed in the u.s. session. juliette saly in singapore has more. the weak certainly, earnings from the u.s. in terms of netflix has played into the asian sentiment as well. most major markets lower today. we also had disappointing export data, out of japan, contracting a seventh month in a row. nikkei, topix, having their worst sessions in over three months today, a strengthening yen also impacting. australia's jobs report, it looks like somebody just threw dartboard, 500 a jobs created versus estimates of 9000, but unemployment remained 5.2%. watching india closely in the earnings season. yes bank has fallen as much as

20%, before recovering somewhat, after numbers that disappointed and bad loan provisions. talking about the rate cut in south korea, the bond market seemed to get right, even though it surprised many in the market. we saw the bank of korea cutting rates to 1.5%, but they have said they don't have too much more room to maneuver. goldman sachs, we spoke to them earlier on bloomberg television, and they said it is very unlikely that it would be one-and-one form the bank of korea, because normally they move in two steps. a little weakness in the kospi, despite the rate cut, which surprised some, but certainly not the bond market when you look at the charts. nejra: juliette saly in singapore. thank you so much. nordea bank, second quarter operating income missing estimates. by iggest nordic bank

assets, the group says results are not satisfactory and they need to review capital and dividend targets. the president and ceo of nordea bank joins us on the phone from helsinki. kasper, thank you for joining us. should investors prepare for a dividend cut? kasper: i'm not going to comment on that right now. when we look at where we are, in recent years we have de-risk ed the bank, invested heavily in digital and compliance platforms, and concentrated the business into the nordic markets. we really have entered a new phase of customer focus. what has also changed,t he financial environment. you made comments on that earlier in your program. most importantly, we expect to have better clarity on our capital requirements from the banking union. really this, in combination, has

said we need to review our overall business targets, which of course includes also capital policy and dividend policy. we'll comment on that after the third quarter. but in that context, our shareholders, investors have it is thethis, and right time, when we have visibility into the banking union and those requirements we get from there. so that's all i can say at this point. manus: the market is going to want to know a little more than just "i can't comment." when you talk about strengthening the financial results, is that more job cuts? is it a shift in the business? where should we be looking? should we be focused on the dividend as a prospect, or focused on structural change? are clearthink we

what we are doing. we have said we will drive very much the income and business momentum, and we see encouraging signs on that, when we look at the last two quarters. we have had quarter on quarter growth,. we look at our volumes. growing, in all our markets, particularly new mortgages. also, in asset management, in this quarter an annual rate of 5%, which is a positive we haven't had in several years. income,s is driving income momentum, and i think we have good signs of it. and it does take time for that to fully reflect in the results. of course, i have always said costs need to come down, and we

will deliver on our cost target. this is an industry that has two ear-on-year, control costs. and income, less costs, accelerated on both fronts. manus: we'd like to talk more about income in a second. would nordea start buying back its own shares, given they are now so cheap? of,er: again, that's part when we have the new business targets, the new capital policy, that's the time to comment. i think it would be wrong now to speculate, so let's do the work, the back, because we need visibility from our regulators, where we stand, where we are

heading. that's why fall is the right time to discuss this. manus: we are obviously not youg to prise a word from on dividends or buybacks, so let's move to a broader environment. you describe the environment of negative rates as something that suffocated european banking players. i want to know from you, as you go toward the end of your time with nordea, do you thin negative -- think negative rates are a bigger risk to stopping cross-border mergers, or does it push further consolidation more aggressively and quickly? casper: by themselves, i think they should accelerate them. there's a much larger question, thet overall confidence in regulatory environment that is to drive theneeds cross-border mergers.

negative rates actually do hurt banks' business models, and as such in an industry like, in a market like europe where we have overcapacity, consolidation would be very natural, particularly domestic consolidation, but also over time cross-border consolidation. the biggest impediment is the overall environment, and confidence, in the medium to long-term. nejra: casper, in that case, you talked about focusing on driving income momentum. ome's plunged 25% over almost five years. a persistent problem. against that backdrop, how will you improve revenue and net interest income? casper: that number you are talking about also has a lot to do with the de-risking we've done. we've divested quite a few activities, particularly in higher-risk areas or areas

less core for the bank, refocusing into the nordic investors. becoming a smaller bank you could say, but less risky. from that base, we are growing. so the numbers you are talking about is not like for like. having said that, we do see margin pressure, and of course hard to manage that. with the volume growth that we - as thatave - ourinues, particularly on commission lines, we see good signs. so we are doing the right things. manus: casper, doing the right things. we will see what it means for dividends and buybacks. ll, presidentsku and ceo of nordea bank.

s.a.p., a stumble in cloud. growth in cloud revenue up 15%. if you think about the first quarter, cloud revenue grew 26%. this quarter, 15%. that is a red headline in terms of a little bit of a stumble, as it is being referred to. wascloud software revenue $5.2 billion. on the operating level for s.a.p., 1.82 versus 1.84. this is a story about transition to the cloud in terms of what they are investing in, chief executive bill mcdermott, and xhe call tricks -- qualtri acquisition that will be a growth driver according to mcdermott. total sales, boosted by the cloud as i said, and also a number of other factors. investor optimism will eventually pay off, is what they

are saying. that's s.a.p. the man himself will speak to us a little later run. we'll catch up with the chief financial officer, the man behind the numbers from s.a.p. don't miss that interview, at 7:30 a.m. with anna and matt. let's get first word news now. debra mao is with the team. debra: netflix reported a drop in u.s. customers and slower overseas growth, raising fears that streaming giant is losing momentum just as competitors arrive. the result is the biggest hiccup for netflix since 2011, when they planned to split the dvd and streaming businesses, resulting in the loss of 300 thousand customers. president trump wants more details about a cloud computing contract that the panic on will award to amazon or microsoft, which is worth up to $10 billion over a decade. amazon is seen as the favorite. but the president has reportedly

been told of complaints that companies including oracle were frozen out of the bidding. the second-deadliest outbreak of the ebola virus in history has become a global health emergency, according to the world health organization. there are concerns the virus could spread outside the democratic republic of congo. the latest outbreak has already killed more than 1,500 people. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. nejra: debra mao in hong kong. thank you so much. coming up, we speak to e.u. commissioner pierre moscovici. a.m. miss that, 6:30 london time. and, iran says the u.s. shot itself in the foot by withdrawing from the agreement. our interview with the foreign

minister. this is bloomberg. ♪ >> nejra: this is bloomberg

daybreak: europe. nejra cehic in london alongside manus cranny in dubai. the foreign minister of iran said that the u.s. shot up in thefoot by withdrawing from agreement. he spoke with john micklethwait in new york. f.m. zarif: it is a agreement, a multilateral agreement, and no multilateral agreement can be implemented unilaterally. everybody has to chip in. now, the europeans believed this was important in their security. if it is, then reinvest in your security. you don't just get security by praying for it. you must invest. you must do what is necessary. and the europeans need to take necessary action. the united states has basically

in my view shot itself in the foot by withdrawing from this agreement. >> what is the necessary action that europeans need to take? you want us to buy the oil, to buy it on credit? f.m. zarif: it is up to them to decide. they have made a commitment in the deal that iran's economic relations with the rest of the world would be normalized. they made a commitment, after the united states left the deal. they knew the u.s. was leaving, and the u.s. impact on their economy, but they committed themselves to allowing iran to sell oil, repatriate its money, have shipping, have insurance, and we have none of that. so they need to live by their commitment. if they don't, we don't have a quorum, we have a mechanism within the jcpoa, within the nuclear deal. we negotiated this deal with open arms, without trusting each

other. nobody trusted the other side. that's why we have mechanisms within the deal where we reduce our commitments until they comply. once they comply, it can be reversed. but if they go beyond certain limits,t he reversal would be much more difficult, and much more costly. >> if they don't comply, they will continue with enrichment? f.m. zarif: yes. we will continue with the steps. and the steps are legal, in line with the agreement. we aren't building nuclear weapons. if we wanted to build nuclear weapons, we could have built them a long time ago. >> people talk about breakouts -- you believe you could build nuclear weapons tomorrow, or very rapidly? f.m. zarif: very rapidly. had we wanted to build nuclear weapons, we would have done it during the time that we paid the price of building nuclear weapons. during the previous administration in iran, we had all the sanctions, all the pressure. had we wanted to build nuclear weapons, we would have done it

then. >> you think you could build nuclear weapons within a year, or very quickly? f.m. zarif: if we wanted to. but we don't. and the supreme leader has made a commitment, a religious commitment which is not breakable. his religious view is that nuclear weapons are forbidden, haram in islamic terminology. >> so he won't do it. can we talk about president trump? there have been noises recently from his side that he's willing to sit down and talk, and all these things. what would be iran's red line, the issue of missiles? missilest a deal on in general, rather than nuclear? f.m. zarif: first of all, you don't buy a horse twice. we have paid the money. we invested in this deal. >> but this is a different

horse. missiles, not nuclear. f.m. zarif: we also paid for that, in accepting certain limitations, accepting certain sanctions. were notle sanctions lifted by the united states, by the united nations. we changed the language in the resolution, which is very clear, a different language than it was in 1929, the previous resolution. it's clear, what we decide. now, they have misinterpreted what i said yesterday. i was very clear saying the united states has a lot to do before it can talk about our missiles. first, implement the agreement. we didn't have a revolution in the united states. a government of the united states elected by the people had a agreement with iran, which was endorsed by the security council, where the united states

was and is a permanent member. so nothing has changed. so they have to live up to their commitments. then, they need to start looking at where the problem is. the problem in our region is not the $16 billion a year we spend on defense, but for $67 billion a year saudi arabia spends buying weapons from the u.s. and other western countries. the $22 billion emirates spends. the u.s. is spending $50 billion to our region. that has to stop. that is making our region -- zarif, speaking to john micklethwait. the foreign minister of iran, speaking to our editor-in-chief. let's get the markets now. the mliv editor is with us. eddie, the top headline this

morning from ray dalio. fictionalr it's fact, -- he would suggest we are heading to a paradigm shift. some of the lines. awful,eal rates are so you want to buy gold. but a couple cautionary notes, his whole dynamic theory, risk -- his proposition is real rates will be dreadful, and buy gold? eddie: i think he's absolutely right. real rates are the main driver for gold. i've had a look at the numbers, and what drives gold changes over time. but in the last few months, there's a correlation between gold and real rates, at the highest that it has ever been. that tells us people are really worried. nejra: more about that in a moment. eddie, thank you for joining us,

on ray dalio's call on gold. theng up, we speak after swedish telecom group meets estimates with second quarter results. this is bloomberg. ♪

manus: warm welcome to "bloomberg daybreak: europe." i am manus cranny in dubai. inra: i am nejra cehic, london. some breaking news, tsmc second-quarter net income coming andt 66.77 billion there, the estimate was 65.66, so a little bit of a beat on second-quarter income, the red headline on the bloomberg now. sales dropped for the most in eight years, but third-quarter guidance is likely to be strong. we are waiting for the guidance,

the key line. second-quarter operating profit, 76.3 billion, estimated 77.35, so a miss there. manus, you're looking at richemont? manus: i am, indeed. some of the household brands, dunhill,hloe, alfred very much the luxury market. sales increased 12% on actual exchange rate basis, and 9% on comparable exchange basis. double-digit growth in japan and asia-pacific, notably mainland china. reflecting the burberry story, high single digit growth in the americas, double-digit in japan and asia-pacific, notably in china. when it comes to the americas, high single-digit growth. this is where it begins to sting. in europe, the middle east and strong decreases among

comparatives. a slight growth in specialist watchmakers, which reminds me, i have to pick up a couple of watches i dropped off for repair. not a cartier. [laughter] still with us is our mliv editor, eddie vander wild. we crushed a very big story into a very tight space. are markets heading into a paradigm shift, as we see sovereign bonds versus the reach for yield? mliv tv wake up every day and look into the quantum of quicksand? eddie: whether this is a paradigm shift, or an extension of the paradigm we are in, i can't say for sure. veryhe markets are still worried about negative rates,

and it's not just the headline of the trillion number we keep hearing. real terms, there's a lot more debt in negative terms. one of my mliv colleagues calculated the total number, in real terms, at closer to $25 trillion. as the u.s. cuts rates, more and more money's pushed into that. and where i think dalio is right, where people agree with him, is the idea that is more and more debt moves to negative real terms, what we see is assets like gold do really well. it has a reputation for doing well when inflation is higher than you could get from your bog-standard bonds. there's an argument there. and we see people going into

gold by etf's futures, options. nejra: the quicksand reference from manus, that comes from j.p. morgan. percent orhat zero negative yielding on u.s. debt could actually happen. we haven't even hit 1% on the 10-year yield. a reasonablelly possibility in a vanilla recession? they said it could happen over a number of years. eddie: certainly everything is possible. it is not a near-term possibility. we would have to move fully into a recession. but they are right in calling it quicksand. this is what japan, europe have done before. when europe -- when yields drop so low, the banks don't do so well, that doesn't do well for the economy, and it is a potential trip. f articleat's the

in the ".t." talking -- in the "f.t." talking about the japanification of europe. ll,spoke to casper von kosku talking about negative rates and the impact on european banks. how important are the rate cuts to come in europe? is the consideration that rate cuts will perhaps not have the same impact, delivering the transmission mechanism they need to deliver on this time around? like: yes, it feels diminishing returns. offound in the first round quantitative easing, where they had to deliver bigger and bigger packages just to keep it going, eventually going to q.e. infinity. you wonder if this time around it will be the same, if they have to have a real big bang effect before the results they want.

nejra: what is leading at the moment? yields driving stocks lower, or stocks driving yields lower? a bit of a debate about that. eddie: a good question. i don't know. a strategy that i keep hearing, i spoke to someone at soc gen the other day, saw another note yesterday, is the risk barbell strategy. or either position yourself, you position yourself both on the long end of the yield curve and on the really, not even short end, but high-risk, high return equities, and you take both ends of the risk spectrum. because the only way you get yield is if you take on a lot of risk, and the only way you get security is if you go to the really long end, so i think that is the way people tend to be playing this. manus: eddie, hold the thoughts. van dertor eddie

walt. facebook's problems are not just in the u.s. the german finance minister yesterday said swift action was needed to deal with the planned cryptocurrency. our economy and government reporter maria tadeo is live in chantilly with a very special guest. maria: good morning. so much happening here on day two. we talked about libra, about the digital tax, and of course he dollars who -- the americans who argue that the dollar is too strong. i am pleased to be joined by pierre moscovici, economic affairs commissioner for the european union. it has been a contentious g7 because of the tension between the french government and the americans, but one thing they agree on is that libra could be a problem. i would not say that this is a contentious g7. the climate between the partners is fine, not only due to the

weather, but the climate between us. [laughter] i see no such contention. u.s.,, the e.u. and the we are allies and friends. considering each other enemies, like i read once, makes no sense, so we are trying to bridge the gap and find solutions, to create a bridge between us. i'm confident this will be the case. yesterday, we had a discussion on libra. and the unanimous point of view is that this raises major concerns, and it's certainly notw ready to happen. why? out moneyncern ab laundering, encouraging corruption. cybersecurity, protection of data.

this really has to be addressed, to. the third one, also macroeconomic concerns if libra were to succeed. let's not forget, facebook has 2 billion people liking or ttnsulting, and it could be se -- could affect monetary policy, could create weakness in monetary policy, could create competition with other currencies, and this needs to be regulated. maria: that appears to be the issue, an existential threat when it comes to the euro or the dollar? some people would say that's hard to believe. this is a social media platform. pierre: there is a matter of sovereignty there. i'm not saying it is a direct competitor to other big currencies like the euro, the dollar, but it must not, cannot be -- we don't know how it

starts or how it ends. that's why the discussion yesterday was unanimous. everybody expressed concerns. there was not a single minister or institution saying this is nothing, we should go on with that. maybe,re, possibilities but it needs to be firmly regulated. that's why the commission is working on it, how to characterize it, the afinal,ion, and there's not decision but point of view from the g7, that we need to coordinate on that, to be forerned and if necessary collective action, not necessarily versus libra, but on libra. maria: we know there is no collective action on the digital tax. the united states is serious. are we going to get any progress today? pierre: i think so.

the meeting has not ended, but i saw i would say a positive spirit, yesterday. not contentious. there can be some discussions, but the fact to implement or not implement national taxes, it's not because i'm french, but because i am e.u. commissioner. that makes more sense, because any tax on the digital economy is not protectionist, not anti-american. maria: that is what they argue. true.: this is not it's not an anti-usa tax. it captures the economy as a whole, 50 companies in the case of the french tax, which are not american, far from that. other countries, spain, italy,

u.k. plan such taxes, and the french minister, other ministers, if such a tax exists, it will be temporary until we can find an international solution. let's cool down the climate, then we can find an international solution. that's why the e.u. proposed a solution but could not get totally there. that's why we work in the framework where we see, here at the g7. i don't know if there will be a communique. marie: if there isn't,? ? is that a failurep? pierre: there will be one, but the question is what is in it. i will say that we have made good progress. the discussion was good. why? everyone agrees on the fact we need to build a corporate tax system for the 21st century, the digitalo catch

economy and the natural economy. the first one is about right, andof taxing identifying the digital presence. we know how to tax a physical presence, but we don't know how to tax a digital presence. we have proposals, which could be useful for that. the second pillar, about minimum taxation, but it is not that simple. define sucht to taxation, then go to a level of taxation that, i would say, of course we couldn't conclude on clearbut we can give guidance to the g20 oecd, and we're on time to meet targets. of course there are differences of approach, but everybody is trying at least, to go in tyhhe same direction, with i would say

good progress. market has basically priced in that mario draghi has to cut rates. is that a concern, going negative? you see the yields in europe, abnormal in many ways. pierre: there is a tradition in europe, i don't know if it is reflected in the u.s., that the executive branch never comments on what the central bank is doing. we really have a independent central bank here. the ecb chair mario draghi knows do.has done what he has to to save the euro, as he did in 2012, but also to create. yesterday,id monetary policy is one thing, but we also need to reflect on fiscal policy, and it is high time that we build the right policy. what we see today, the slow in and thes everywhere,

need to address various risks o together. trade tension, not between france and the u.s., cut the u.s. and china. maria: do you worry the u.s. administration will try to talk down the dollar? pierre: i am not commenting on monetary policy. the currency is their own domain. but i think we need to think about what happens if there's more than a slowdown. i don't think this is going to happen. our forecasts are i would say moderately optimistic, with a slowdown for this year, but also risk. we need to have that in mind. for example, we need to reform wto. i think this is absolute the necessary. designe imf quotas, and

fiscal policies that are coordinated. some of our economies have a large fiscal gap, and they need to use it to invest more and create growth. some of us still have high levels of debt, and we need to reduce that. maria: probably a reference to germany and a reference to who's but with the imf, going to replace? ? christine lagarde -- he was going to replace christine lagarde? insistseveryone i on competence. meaning you have diplomatic skills, meaning you are able to handle complex, diverse institutions. the americans chair the worl d bank, and the europeans

chair the imf. the tradition has been respected. maria: that is a yes? pierre: that is not a no. there is a procedure that is ongoing since christine lagarde, who has done a very good job, has resigned. we have until september 6 to nominate people, so let's not discuss too early. maria: commissioner, thank you so much nice to see you. manus, day two and we are waiting for the statement, but there is a lot happening here. nejra: thanks so much, maria. great to have you with us. maria tadeo, from chantilly. this is bloomberg/ . ♪

manus: this is "bloomberg daybreak: europe."

i am manus cranny in dubai. inra: i am nejra cehic london. let's get the business flash headlines from debra mao. : netflix reports a drop in u.s. customers and slower overseas growth, raising fears they are losing momentum as competitors look set to pounce. the results of the biggest take up for netflix since 2011, when the company planned to split dvd and streaming businesses, losing 800,000 customers. ibm executives are being tight-lipped about the company's $34 billion acquisition of red hat. investors may have to wait until the annual briefing, on august 2, for insight into how it will help growth in cloud computing. the tech firms are revenue fall over 4%, the fourth consecutive quarter of decline. pg&e's creditors have disclosed how much of the utility they would like to own after it emerges from bankruptcy. almost all of it. the committee of lenders is

prepared to inject $20 billion, for 85% to 95% of the company's common stock, which would effectively wipe out most of the existing equity holders. the owner of ray-ban sunglasses is in talks to take control of competitor grand vision. isk exotic a -- luxotica holding talks, looking to buy a three-quarter stake in a deal that values grand vision at about 7.1 billion euros. fored air is asking boeing details on a proposed new jetline for middle distance routes, as they work to get the workhorse 737 max back in disguise. as bone decides whether to build a midmarket airplane, airbus is plowing ahead with a rival offering. that's your bloomberg business flash. manus: thank you another redline

-- thank you very much. another red headline, third-quarter sales forecast of billion.ion to $9.2 on margin.y beat - it is on the go, and you can see what the editors are saying. largest player in made-to-order chips, and not talking about chips from the chippie on a friday night, but high-grade tech. [laughter] back to somebody who knows a thing or two about high-grade weld.s, eddie van der i want to talk about this. deutsche bank wealth to 40%ent, dropping 50% because they don't trust earnings. where they want to go, they want to go into global investment grade, over junk.

so pretty big calls from some of the houses. ubs says to get ready for the hype to continue. deutsche bank, calming time, taking a little money off the table, so there's a big discussion at the moment. eddie: absolutely. deutsche, they seem to have gotten their calls right this year. i think they turned bearish on the market just in time, and i think, having read that piece this morning, i think that they as marketsil turned were topping out. thequestion here, whether u.s. consumer is holding up, and that will be a big factor going into the second half, deeper into the second half. nejra: absolutely. judging by bank earnings, you could conclude, as well as by the retail data, that the consumer might be holding up. the question, can the u.s. consumer upset the global

manufacturing slowdown? yesterday industrials underperformed, underscored by the railroad operator csx. this chart shows the dow transportation average lacking the broader industrial average. bulls shis make stock udder? eddie: i think it should. i read that piece earlier this morning. it is a worrying sign. it is another sign that there's a disconnect between the real economy and what some of the data on consumer spending and so on, or sentiment data is showing us, particularly on consumers. this is another factor that we have seen, the drop in u.s. stockpiles of oil. not only of oil particularly, but of gasoline. that has been slower than expected. it is all kind of feeding into

this narrative, that people just aren't spending the money. netflix is another one. it feels like people are getting a little nervous, that they are cutting back, even though job growth is fine. i think we are at a tipping point, and whether it turns out dal wass right or -- was right or whether bank of america was right, i don't know. we will have to wait and see. manus: i think everybody has to sell something. that is the whole point. you know what i am shocked about? i am shocked that our analysts were shocked that korea cut rates. take a look. where you shocked? this is pretty much a global phenomenon, isn't it? eddie: everybody's getting in on it. they've -- there are very few central banks that aren't cutting. south africa will do the same thing. nejra: thank you so much for joining us. bloomberg mliv editor, eddie van

der walkt. up in a -- walt. up next, danske bank reporting earnings. how are they contending with negative interest rates? this is bloomberg. ♪

>> good morning. i am their rich heritage -- nej ra. >> this is bloomberg daybreak: asia. daybreak. warning, it is time to buy gold. the bank of korea connection to share of its economy with the 20 16.ate cut since battling japan's export restrictions. the foreign minister tells bloomberg, europe needs to live by its commune minutes --

commitments from the nuclear deal. just don't get security by paying for it. you must invest. europeans need to take the necessary action. basically states has in my view shot itself in the foot by withdrawing from this agreement. >> ups and downs. the earnings outlook for the second time this year. a different story over at s.a.p.. a $10 billion bet on the cloud facing headwinds. the cfo in less than an hour. netflix slumps. higher prices wait in the group as it reports a drop of u.s.

customers and slowing growth overseas. shares plummet. ♪ >> welcome to daybreak europe. we have danske bank breaking. cost money.tions that is the message i take away. shiftre going to have a in the capital requirements. for 16.7%.e was we just caught up -- he was talking about the same issue. -- 5.37.going to

, the ceo has made a couple of lines. danske in talks. less than the market estimated, $5.49 billion. lending continued growth. ofstions around the subject capital. confidence they will be able to adapt to capital changes. the conversation takes place a little later on. around 8:00 a.m. and the next show. low.g high, flying for later inething the year.

the headline. a chief operating officer. no change to cost and revenue guidance. the third quarter factor, 97%. 93 .6%.mate, third quarter passengers, 23.4 million the estimate. in abover coming estimates. performance in line with expectations. pretax in line with consensus. however bond markets looking? parks we saw one of the best days. getting your mojo back. it takes a couple of pieces from

j.p. morgan. saying rates in the unit states could go to 0%. a yieldl it take to get on 10 year paper to zero? it will take a good, plain-vanilla reception. -- recession. breakeven. i would say, not reflecting any kind of boosters. breakevens slipped as well. well, up by 9/10. got their mojo back. the question is, the quicksand of negative rates, where do you want to be. that is the question. >> taking a look at equities. low rates globally.

it.alked about it is what we have seen in the u.s. banking season. saw a decline in the s&p 500. fright atp bulls take the fact the transportation index has been lagging? opening up later, netflix will be in focus. those shares dropping every a surprise drop in u.s. customers. is that a blip or the start of a trend? let's check in on the markets in asia. great to see you in singapore. coming through with numbers that are not that great. slowing into negative sentiment. have a look at the nikkei.

the worst session and three months. concerns about their. decision, not helping of the kospi. weakness coming through in china, india. dropped at one point as much as 20% on higher bad loadings provisions. australian employment numbers. created in june. the unemployment rate remains the same. i want to show you what has been happening. the an hour ago, we saw largest chip player come through with earnings, 1.7% above estimates. profit came in at $2.1 billion in the three months, annette

loss from the prior quarter. it was better than what the market was looking for. it looks like the chipmaker has blown off of those concerns about huawei. three cells in the stock in the bloomberg. third-quartering sales to be higher than 9.1-nine, coming in at $.2 billion. 9.2-9.2 billion. 's we speak with the group cfo in less than an hour. >> volvo, second-quarter earnings beat expectations. the company increase the market forecast for north america. joining us to make sense of it squares -- swiss global

equity. i want to get straight to the heart of the matter. deutsche bank shifting their portfolio to 50 -- from 40%. equity valuations, 15.1 times earnings, below the long-term average. do you still believe there is mileage to go? >> first of all, the performance was we have seen in equity markets have been driven by quality equity. identifyted --we would as companies with high cash flows in investment. some investors may have switched away and moved towards quality in terms of preparing for that lower growth environment.

interesting, cyclical stocks. despite the poor results coming into the second quarter, they have been strong performers. in expectations the second half of this year can show better results than the first part of this year. notably on the basis of a lower base. results are much weaker. arehis new environment we getting used to, where you have support from central banks and you continue to have growth but level, you don't have excesses at any point. we haven't had that since the great financial crisis which leads to the traditional boom and bust cycle. if you look at 2020, there doesn't seem to be much fear of

a recession. risk may not from necessarily be the best strategy to have. looking for quality investments. in companies which can benefit from medium growth going forward. specificg about companies, i want to bring up you have expressed an interest in health care and luxury. given what we have heard, novartis boosting their profit outlook, they are a little bit more concerning. missingarter sales -- estimates. would you want to be holding both of these stocks? if so, why? that is very encouraging. i am very pleased to see the improvement we have been seeing over the last few quarters.

returns on investment, the swiss equity market has mixed. theresee an improvement is very encouraging. they have a good pipeline of new drugs. a couple coming out in the it is notrter pyramid much of a surprise after the results were published. weakness fora specialty watchmakers. that is proving to be difficult to prove around. i found it a little bit disingenuous to say that weakness that was due to the attentions and hong kong, could

have affected the whole of their first quarter. >> i like a deeply suspicious analyst. thefactor, which has been sidelines. the reality is, in the u.s., not only are they preparing for lower interest rates, the margins are reflecting that. you look at u.s. banks in your own home country, we will be julius -- doing julius. you have any proclivity towards ubs?u.s. versus have -- manage swiss equity portfolios. currently, we are not holding any of the swiss banks and our portfolios. we have a couple of names in our

portfolios. probably shows you how we think about looking at the moment. low net margins are a phenomenon that comes with low interest rates. they are not easy for the banks to handle. that is what we have been seeing. we have seen some decent results in the fixed income business. obviously for u.s. banks, they will be able to benefit going forward from the absence potentially a deutsche bank in that space in the next few years. side, it has been a bit of a mixed picture. always great to get your thoughts. you stay with us. we have more to discuss. deborah. trade deal between the u.k.

and the u.s. will not be forged quickly. that is according to boris .ohnson, the favorite would boost things over time. an essay posted on linkedin, the be risksaid it would reducing and enhancing to consider adding gold to your portfolio. the second biggest -- deadliest outbreak of the ebola virus has become a global health emergency. there are concerns the virus could spread outside of the democratic republic of congo. 1500s killed more than people. by more than 2700

journalists and analysts. this is bloomberg. coming up, netflix flunks. overseas plummeting. details to come. this is bloomberg. ♪

7:19 market open. this is daybreak europe. clock at gone?e what have you done with the clock? jose, where is the clock? the topix is off by 2%. jose is the director of the show. to pause for thought?

deutsche bank thinks so. are you really that shocked? is anybody really that shocked korea cut rates. apparently we should be. apparently they really were in shock. monitored a total of 150 rate cuts. 22 times they were shocked. this. the moniker on nejra, bring back the clock. >> i don't like adding up the time in my head. i'm surprised to see gold a little weaker. we have this big discussion about negative rates. in the 10 year yield yesterday. european futures lower. nasdaq futures, underperforming, given what we have heard from netflix.

my netflixhave account left. let's take a closer look at the markets. anne-marie gordon standing by. what have you got left? and then start macro we will dive into netflix. that is the top story. we are seeing equities, downside, the nikkei down 2%. hong kong down half a percentage point. foreign exchange, strength in the yen. the korean won, up 3%. should we be surprised? i think people thought it was coming, just not today. traders saying, players are closing out these long dollar -- i know you are still a subscriber.

stalling user base. it stumbled since the dvd by era -- by mail era. they only signed up 2.8 million subscribers during this time. roughly half of what they were expecting. what does this mean? two things we should keep an eye out in. historically, and the second quarter, that has not always been their best quarter. the second half of the year, analysts say it will be a blockbuster. movies coming out from scorsese. a second season of the crown which i will be watching. thank you very much. still with us. i want to get your thoughts in tech. justcularly what we have heard on netflix.

are you feeling positive or a bit shaky at the moment? area that needs to be addressed. what is correct. -- i'm not surprised there is a lot of noise. i would don't wish to sound overly cynical. i am not particularly surprised politicians can make an easy win by making a lot of noise. no way in which you can address some of the side issues. it is an easy win for a regards netflix,

we see lower areas to entry than on the other companies. somewhat unlimited ability of maintainend content to -- spent on content to maintain their position. as we see new streamers coming into the market at the moment, they are losing some of their key shows as well to those streamers, obviously the company is one that needs a little bit of attention, thought before investment. >> i am going to go slightly off. you have talked about politicians and their ability to interfere in the running of companies. what about cryptocurrencies? to what extent -- we have had all this discussion about libra. nextyou look at that

paradigm shift, if you excuse what ifling from da -- any trades are you prepared to make on that? i am an equity investor as opposed to a currency trader. trainnterested in block -- chain technology. what it can bring to the industrial space. cryptocurrencies for me are more and the speculative field still. >> i am glad you brought up industrials. one thing i was looking at was the industrial performance in the dow jones transportation index. should takeck falls

fright at this trend. do take fright at that? >> a lot of it is a research in terms of valuation. they have performed quite well, since the beginning of the year, despite the fact we know 2000 and 19 is going to be a more difficult year to navigate in terms of lower growth. a strong start to the year. of pause forbit thought. people saying, we don't have the growth, the macro economic drivers to justify the current valuation on some of these companies. the earnings season so far across the board terribly encouraging. that includes transportation results. has played against us.

the cohead of swiss and global equities. regional indicators a little bit lower. that is it for me. i will see you monday.

>> we are live from our european headquarters. i am anna edwards alongside matt miller. >> the markets say there is gold in holding silver. the ratio is starting to break down as silver gets buoyed. european futures point to a negative the cash trade less than 30 minutes away. >>