nejra: good morning from bloomberg's european headquarters. this is bloomberg daybreak: europe. these are today's top stories. stocks in asia climb on trade optimism. robert lighthizer will head to china monday for talks. the imf downgrades global growth prospects. boris johnson becomes britain's prime minister today. his first job, building a government that will bring the tory government together. we are live from downing street. earnings amid the avalanche of companies recording. details of a turnaround plan will be the focus. ♪

nejra: welcome to daybreak europe. it has just gone 6:00 in london. an absolute earnings long -- on spot. the second quarter adjusted operating income comes in at 225 million euros. the estimate was 289 million euros. on the second quarter, adjusted operating income, that looks to be a miss. 225 versus the estimate of 289. the second-quarter adjusted operating income there at 305. the estimate at 289. that's a correction coming through there. that second-quarter adjusted operating income is a beat. the initial number look like a mess. -- miss. second-quarter revenue.

2.4 5 billion euros. the estimate was 2.47. a slight miss on the revenue. to their ceo. don't miss that interview at 7:30 a.m. london time. deutsche bank, we are getting numbers from that. the big focus for investors is going to be the execution of the turnaround plan. if i could get to the headline numbers right now. second-quarter trading revenue at 1.6 9 billion euros. the estimate was 1.7 9 billion. givent a huge a prize what we have seen across other banks in europe and the u.s.. second-quarter fix sales in trading revenue. 1.3 2 billion. a slight be on fixed trails. 369 millions in at euros. the second quarter, missing estimates.

13.4%. the estimate was 13.5. slight miss. asset management revenue. asset on second quarter management revenue. with deutsche bank, the firm basically, we heard that it's going to be equity sales and trading business. no dividend for this year amid the overhaul. the radical overhaul was announced earlier this month. also talking about the second quarter loss. cutting the workforce by 1/5 to adjust a slide in profitability. that was big news. the deutsche bank cfo. cats that interview at 7:00 london time. lots to talk about in terms of the turnaround plan. trading butut the then the asset management revenue coming in at a beat. that takes me onto dws.

just getting those numbers appear as well. it's an earnings onslaught this morning. if we take a look at dws second-quarter adjusted, 185 million euros. the estimate was 181. that's a big -- beat. it had 6.7 billion euros of net new assets in the first half. the broader context is that the firm has accelerated expense cuts. it has been exploring mergers. dws group has said it wants to play an active role in the consolidation of the asset management industry with pressure on fees and the challenging market force. scale. to with no acquisitions on the card, the ceo has been focusing on cost cuts as the mainly for. -- main lever. taking a look at what else we have. it doesn't stop. speaking to the cfo

of dws. don't miss that interview either. moving on to daimler. 42.7 billion euros. improvement of cash flow in the second half. total unit sales declining by 1% to 822,000 units. the second-quarter loss comes in at 1.2 billion euro. a lot of earnings to get through. we are deep in earnings season in the u.s.. let's take a look at the broader market. we had coca-cola in yesterday's session. united technologies. snap as well. s&p futures flat right now. the index when above 3000 yesterday. what gave equities of left -- a lift was this report that we could have face-to-face trade talks by the u.s. and china on monday. in terms of the tech earnings, semiconductor stocks trading

near a record high. numbers from texas instruments as well. what is giving nasdaq futures more of a hit seems to be this report out that there's going to be a broad-based antitrust probe into tech stocks in the u.s.. that is hitting nasdaq futures little bit. the 10 year yield takes lower. switch of the board and take a look at fx. the imf cutting its global growth outlook. it did upgrade the u.s.. we saw dollar strength off of the back of that. crude also on the front foot. stockpiles feeding into this. optimism given the news we've had on the potential for further trade talks. wti trading at 56.95. a new prime minister and the. orest johnson. how is he going to deliver brexit? the markets in asia. juliette saly in singapore has more. good to see you.

has it looking -- house it looking? >> asian stocks higher for a second session amid the trade talk optimism. a lot of money going into chinese stocks today. holding onto gains coming out of the lunch break. the nikkei looking pretty good. australia is asx 200 is headed towards all-time highs. --t level since news that november 2007. fall.uing to we heard from ubs today. he things iron ore could drop below $100 in the fourth quarter as valley moves to boost output. i want to show you what's been happening with the all he does or -- aussie dollar. bill evans coming through. he's known us -- as the doyenne. you could see a rate cut from the r.b.i. as early as october to point -- 0.75%.

look at how the aussie dollar has really tried to break out of this resistance. it has failed four times. we are continuing to see weakness in this aussie doar. you could see a catalyst when we hear from the rba governor philip lowe on thursday. bulls watching to see if we could break out of that resistance level. more weakness coming through on the back of the rba rate cut today. nejra: thank you. set to. and china are resume face-to-face trade talks for the first time since may. sources tell us that robert lighthizer will fly to shanghai on monday. negotiations are scheduled to run through wednesday and are expected to review issues dividing the two sides. the imf has cut its global close outlook again. it says the world economy will expand 3.2% this year.

joining us now for the hour is our guest host. head of equity strategy at standard chartered private bank. us.t to have you with let's start with the outlook for trade. yesterday, we saw the s&p 500 get a lift on this news. we close above 3000. you have a preference for u.s. equities. is that because you think they will be more shielded than other global equities? >> in general, when you look at lewis -- u.s. equities, they are more trait -- less trade oriented than your area. if we are correct in our view that there is not a trade deal between the u.s. and china, you want to be in markets that are less exposed to trade. the u.s. stands out as one of those markets. nejra: what if we get more positive developments on trade? easing cycle short and that could put some pressure on u.s. equities. >> i think that the fed is looking at 6-9 months.

even if we are wrong and we were to get a trade deal in the short-term, the damage has been done with regard to growth. inflection point when it comes to global growth or global contraction in our mind. the fed is taking an insurance policy on growth by trimming this month. nejra: the imf cutting its outlook for global growth, he did upgraded slightly for the u.s.. the outlook is quite dam. you have a preference for equities over other asset classes. what's the reason for that? >> it reflects the view that we are in a low inflation world. interest rates in the u.s. down towards 2%. when we look at the alternatives out there, equities standout. nextovery of earnings into year. we had knowledge the concerns about the second-quarter inflow.

double-digit earnings growth coming through next year. that highlights the attractiveness of equities as an asset class, compared to bonds. nejra: you're not expecting an earnings recession. as a phrase i've heard over and over again. >> correct. consensus is about 1% growth. it's very tight. in our minds, the market is a discounting mechanism. it is looking ahead into next year. given where the s&p is, clearly it's taking a glass half-full view in terms of the outlook for earnings. nejra: given that you don't expect a full resolution to these trade talks anytime soon, at one point to these trade tensions actually start to hit company profits? if you are not concerned about an earnings recession, perhaps you think the companies can whether those challenges. >> the absence of a trade deal is already impacting corporate earnings growth. just not in the u.s..

europe, wetowards are seeing those trade sensitive stocks already being impacted by the slowdown in trade that we are seeing in china. the drag that is having on export growth in europe. the impact on consumption as well in china which is impacting some of the auto companies. it is materializing. it's just not materializing in the u.s.. it is materializing in trade sensitive markets like europe and singapore. nejra: i'm guessing your equity trade.ions reflect i wonder how brexit fits into all this. that was something that was mentioned about the imf as well. you have a new prime minister in the u.k., boris johnson. how does brexit and the risk of a no deal sit into your global asset allocation and equities? -- in equities? >> the risks are significant for the pay. -- the u.k.. it's relatively modest.

we have a neutral allocation towards the u.k.. ultimately, we believe that there won't be -- the u.k. won't crash out of the euro area. admittedly, the odds of a no deal exit have increased. we are looking at 40%. that's up from 25% before. we retain our view that there will be a deal ultimately. hence, the damage to the euro area will be contained in our mind. nejra: great to have you. our guest is with us. let's go to bloomberg first word news now. boris johnson will formally take office as u.k. prime minister today. he will be invited to form a government by the queen after theresa may resigns. many mps fear johnson will be forced to colin early election

to break the parliamentary deadlock. we've learned he's assured colleagues that is in his intention. president trump is considering how to respond to turkey's decision to buy a russian missile defense system. that's according to senators who met with the president yesterday. trump said he wasn't looking at economic sanctions last week. now the u.s. has suspended the country's ability to buy and build f-35 fighter jets. the eu has almost doubled the amount of u.s. goods it would .it with retaliatory tariffs that's if president trump imposes duties on eu cars and auto cars -- auto parts. the eu says it will reject u.s. demand to limit auto shipments on national security grounds. china has accused the u.s. of undermining global civility. the country has released its the militaryince

in 2015. it represents a departure from the previous report that have focused on efforts to improve military cooperation with the u.s.. tosident trump is suing block congressional democrats from obtaining his tax records. keepthe latest attempt to his personal financial information out of public view. this comes three weeks after the house ways and means committee sued to get trumps tax records for the past six years. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. coming up, deutsche bank reports a net loss of 3.2 billion euros on higher restructuring costs. that's a wider loss than expected. second-quarter trading revenue missing as well. it's a little bit of a boost as

dws posts a second quarter of inflows. we speak to the banks cfo about the rebound. cats that interview at 7:00 london time. tune in to bloomberg radio, live on your mobile device. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. let's get a check on the markets. green on the screen in asia. heard that the u.s. and china will have face-to-face talks on monday, according to bloomberg reporting. of thesie dollar is one underperformers in terms of g10 currencies. falling after westpac said the central bank may cut rates as soon as october. in terms of the dollar, you seen strength over the past couple days. part of that was down to that debt ceiling deal. the imf cutting its growth outlook but updating the u.s. slightly.

nasdaq futures taking a hit. u.s. antitrust foot -- pro-feeding into that. wti on the front foot. the trade tension is something to do with that. cable is steady after three days of losses. a new prime minister in the u.k. in the form of boris johnson. let's get the bloomberg business flash. tradingche bank's revenue has missed estimates. they are reporting a second-quarter net loss of over 3 billion euros. the bank previously announced plans to cut 18,000 jobs and shrink the balance sheet by exiting equity trading. they announced its 2019 revenue coming lower than last year. agreed to pay $5 billion for wireless assets in a deal with t-mobile and sprint. the satellite-tv provider is paying about 1.5 billion for prepaid mobilege for

the justice department to approve the merger. starwood capital and apollo global management are reportedly buying an aircraft finance unit owned by general electric. a could fetch around $4 billion. as you would accelerate the .ismantling of ge's we work is looking to go public in september. it's expected to be the second-biggest ipo of the year. the company is targeting a share sale of $3.5 billion. largest backerir in values the business at $47 billion. that your bloomberg business flash. nejra: thank you so much. turning to tech. the u.s. department -- justice department is investigating

technology firms. the antitrust probe will look at concerns expressed by consumers, businesses, and entrepreneurs about social media and online retail. shares of facebook, amazon, and alphabet also on the news. futures taking ahead overnight as well. clyde mcdonald is still with us. how concerned are you about antitrust probes like this, in terms of how it might impact the business models of these big tech companies? >> the real issue facing the u.s. technology companies is much more related to the use of personal data. in terms of the antitrust, the ultimate penalty will be the reversal of facebook's takeover of whatsapp or instagram. that's highly unlikely. rather, a severe penalty is a potential outcome. the real issue is whether or not

u.s. authorities go after these companies in terms of their use of personal data. personal data is their raw material. at the moment, that is free. if there are changes to that, if the u.s. takes a more aggressive attitude as the europeans have, that could be in existential threat. nejra: does that make you want to stay away from tech altogether? it is about picking onetwo. we pare back our exposure to u.s. technology. we have taken social media companies out of our conviction list. we still have exposure to tech. names such as amazon, microsoft that give us nice exposure to the cloud specifically. more in the corporate market, those are the types of names we like. nejra: what about chip stocks? they have been a big concern. if you look at the philadelphia semiconductor index, that's near

a record high. texas instruments lifting spirits overnight. the ams numbers yesterday. we also had tsmc out of asia. are you feeling -- how are you feeling about chip stocks? >> you mentioned a number of earnings releases that were quite positive. .ne we honed on was asml it's a chip manufacturing stock. it makes the machines that produce the chips. they started to guide positively. you are seeing an increase in the orders that make the chips, they must be confident on the supply and demand balance looking forward. that justifies a more you towards the -- view towards the chip companies themselves such as my crime. -- micron. nejra: this fits with our discussion earlier in terms of trade. tout u. and china. in terms of the japan korea

spat, i'm sure you've got great insight on this. do you see that posing a lot of risk to tech companies globally? riskdon't see it as a real , globally. i see it as a risk to japan. the logic that we see there is that, if you look at the past when you had china which started to clamp down supplofearth matew was japan starting to diversify and look for other sources. when it comes to this supply of specialty chemicals from the japanese to the koreans, korea is likely to diversify. we don't see it as a structural threat in terms of the korean companies. we see it as a localized spat, more to do with politics than economics. nejra: when you choose the company think? >> industry group by industry group.

it's a global sector. we hone in on the likes of asml which manufactures machines. we don't have any of the social media companies. that industry group. nejra: what about software? >> that's the area that we are most constructive towards. you look at microsoft's recent results, fairly positive. next up we will have amazon which is out this week. we will be focused on amazon web services and the growth we are getting there. our guest is with us. lots more to discuss including, deliver brexit, unite the country, and defeat jeremy corbyn. the new prime minister leadership.is we will discuss u.k. pol next. tune in to bloomberg radio live on your mobile device. this is bloomberg. ♪

>> the problem is not that we failed to make the case for a free-trade agreement of the kind spelled out in the house. we haven't even tried. we should junk forth with the backstop. do not rule out no deal. after three years and two missed deadlines, we must leave the eu. man to unleash on that project. it is vital that we get ready to come out. with the agreement, if we must. any further delay will end up eroding trust in the politics.

we have a good opportunity -- come up with a much better deal. we need to get brexit done. we will get brexit done on october 31. we will take advantage of all the opportunities in a new spirit of can do. the campaign is over and the work begins. incoming prime minister boris johnson comments over the last year. he's expected to meet the queen to get her consent to run the country. more numbers for you. this time on persia. first half are curving -- recurring operating income coming in. t.at's a clear bea 38.3-half revenues, billion euros. oft's a beat on the estimate 38.1. persian seeing a decrease in the

europe automotive market. it says that it has seen a full year sharper automotive market decline in china at 7%. is cfo saying the company working on the question of capacity in china. it has been improving its profit margin in the midst of a europe slowdown. that's the take away here. warning signals on china. this is after we did get numbers from daimler seeing a recovery on profit and cash flow. china is an important story here. earlier this week, we saw china strengthen its hold on daimler with a beijing automotive move. market inmotive europe, symbiotic relationship. the bloomberg first word news with debra mao. senior u.s. trade officials

are flying to china on monday. it will mark the first high-level face-to-face toxins negotiations broke down in may. robert lighthizer and his team will be in shanghai through wednesday. the meeting is expected to yield a major breakthrough. big tech is facing an antitrust probe from the u.s. justice department. it's investigating whether top companiest technology are thwarting competition. it will look at concerns that consumers have expressed about search and online retail. trump is considering how to respond to turkey's decision to buy a russian missile defense system. that's according to senators who met with the president. week, trump said he wasn't looking at an economic sanction against turkey right now. suspended the country's ability to buy f-35 fighter jets. the eu has almost doubled the

amount of u.s. goods it would hit with retaliatory tariffs. that's if president trump carses duties on you -- eu and auto parts. the eu says it will reject u.s. demands to limit auto shipments on national security council. grounds. china has accused the u.s. of globaling -- undermining security. this language represents a departure from the previous report that had focused on efforts to improve military cooperation with the u.s.. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. let's check in on the markets around the world. .oining us

great to see you. and didn't -- indian equities down for a fifth day. that's the longest losing streak in two months. we are seeing optimism. what's going on? it seems to be a more india centric issue at this point. it's a very crucial sentimental hurdle on the downside. most of the technical triggers now suggesting that the downside bursts or rallies are going to be according. the banking sector has been the major cause of concern. that has been dragging the index low in a big way. concerning the disappointing, treat that most of the bigger

heavyweights have been putting out in terms of a slowdown in the upcoming quarters as well. this is not going down well. now tradingority below the 200 day moving average. there is still some more room left for them to correct further. that could be a bigger pain point or sore spot for the index going forward. nejra: thank you. lots to grapple with for investors. you have trade and global growth narrative, we are in full swing of earnings season. we look ahead to the ecb tomorrow as well. what he looking at in the global markets? >> there's a lot to digest if you are a player in these markets. imf has cut global growth forecasts again. across major indices, we are seeing them take a late higher. australia is up. the csi is up. hong kong is higher. all this comes down to trade. this is what the market is focusing on. robert lighthizer getting ready

to go over to china for the sinceface-to-face talk may. west bank banking economists have moved up the call for the central bank to cut rates to october from november. adding, it's going to ease again in february. that's why we have seen the australian dollar tumbled. inr down again. nearly 4% this morning. is getting aazil green light to restart some of that capacity. it's a really big player. iron ore trading at $108 per ton. people were saying, we are going to hit 120 and beyond. i'm looking at where to go if you are nervous in terms of havens. this is off of a goldman sachs call. people looking for protection against risk off shocks should find the yen a cheaper option than gold. gold is that traditional haven. gold is becoming more expensive now.

you can see this in the blue line that shows it's more expensive. higher ands to the risk reversals. if you are looking for any sort of protection, might want to use the yen. nejra: i always need protection. thank you so much. great to have you both. let's turn to the u.k.. boris johnson meeting queen elizabeth later today to become the u.k. prime minister. he needs to build a government that will bring the conservative party together and deliver brexit. resigningainders are instead of serving in the new cabinet. is bloomberg's and edwards. great to have you with us. what do we know about the team that johnson will build? >> we will wait to find out more today. we know little bit. the team is saying that they

want to unify the country and conservative party. theresa may was trying to do that and it was no elusive task. we wait to see how representative of the party and thisry how -- country cabinet will be. a mandateeel he has to shape a brexit candidate. he looks set to promote loyal brexiteers to the front table. liz troff is someone who has been chief secretary to the treasury. could she become the new chancellor? these are the names they will be talking about as we go through the day. we might learn about who is in those positions later on. some outlets are reporting that patel to get to the home office. we will see if that comes to pass. he has made a big deal about how he wants to deliver brexit by the 31st of october. he will need a team that believes in the same mission.

where does that leave tories and other parts of the conservative party? the former justice secretary who resigned is taking with him those in the conservative party who don't feel comfortable with a no go brexit. with parliament, they do not feel company with a no deal present. nejra: in the u.k. media, the acronym dude was being used in terms of what boris wants to do in terms of delivering brexit. how is business reacting to the news of the new prime minister and what he's aiming to do? we got some classic boris dude.day including use of we got classic boris. that has been locked up by the u.k. media. business has yet to be convinced

by the steadfastness which she seems to be adopting the 31st of october deadline. that's a do or die deadline for him. the cbi and british chambers of commerce have reservations about that. the deliver certainty in the sense that it eight -- that a date is firmly on the cards. that makes those who represent the business community nervous. they know they have bridges to build with business. remember that colorful language he used previously to describe how much he didn't care about what business thought? we know that he hasn't always been on the same page as busy -- big business in the u.k.. he knows he has bridges to build. one of the key appointments he wholready made, the cfo will be advising the boris team. there are these early signs that maybe he is reaching out to the parts of the party and business

community that might be nervous at his appointment. nejra: for those sitting at their screens, ready to trade, what is the choreography for today? >> the choreography is that theresa may is still in office. she will be prime minister until midday today. she will go to the palace and leave her post as prime minister. boris johnson is invited to the palace and the queen will ask them to form a new government. he will return to downing street he will go into number 10 for the first time. he will get a security briefing and nuclear codes. all of those parts of day one for a new premise to. he will set about the task of announcing some of his other appointments to the cabinet. bloomberg's and edwards,

live from downing street all morning. thank you so much. clyde mcdonald is still with us. cable, option at implied volatility, is well below the december highs. does this mean markets are complacent? or will we eventually get a deal? >> markets are of the view that we will get a deal. the next couple days will be crucial. in terms of the choreography of , theon announcing his choreography of how we get to october 31 is really important. it's not too far away. what we need to see is immediately some olive branches going out. we need to see johnson go first to brussels, potentially dublin as well, and try to reach out and look for some form of compromise. that is what the market is expecting. that is what we are looking for.

if we don't see that, if he goes to washington first, we see volatility spike and sterling we can further. nejra: if the market and yourself are working on the premise that we have to extend beyond october 31, boris has said he will deliver brexit by that date. the fact that he's also said at other points, we've had many conflicting messages, the backstop is dead. that's not something the eu was going to easily agree to. do you expect the negotiation to just rumble on, perhaps into the end of the year? ultimately, we do think there will be an extension. i don't think negotiations will rumble on. johnson needs to be able to deliver a clear signal that there -- they will be out by october 31. maybe there will be a transition time. maybe there will be further negotiation. i think that he will ultimately try to present to the country

that he has been able to deliver something by october 31. the probability is very close. the probability to replace the backstop, reach a complete agreement in such a short timetable when parliament will go into recess in, is very limited. nejra: you have a target on cable for 135. in what timeframe do you expect that? talk to me about how that might change? believe that awe deal will take place. u.k. will not crash out of europe. that supporting sterling towards 135. if we start to see signals in that direction, ultimately, that is somewhat negative for the u.k. equity market. we have seen the ftse 100 do reasonably well in the environment of a weakening pound , despite the uncertainty domestically and signs of weaker growth. you see that situation where there's an inference -- inverse

correlation. that did see a shift to a more cautious view towards the ftse 100 even though we might become more positive towards the u.k. economy. the ftse 100 is the props -- proxy on external growth trends. nejra: coming up, we speak to the cfo of dws group. don't miss that interview at 7:30 p.m. london time. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. let's get the bloomberg business flash with debra mao in hong kong. profitler says operating will significantly improve during the second half of the year. that's after cutting its outlook earlier this month.

it sees annual revenue slightly higher than year ago. vehicle sales will be about the same at the 2018. dish has reportedly agreed to pay $5 billion for wireless assets in a deal with t-mobile and sprint. is satellite-tv provider paying about 1.5 billion for prepaid mobile businesses and the rest first spectrum. this sets the stage for the justice department to approve the merger of the mobilephone carriers. we work is reportedly looking to go public in september. it will be the second biggest ipo of the year. the company is targeting a share sale of $3.5 billion. softbank is their largest backer and values the business at $47 billion. snapchat's growth has accelerated. the number of users having estimates.

it says an average of 203 million users logged in daily in the second quarter. that's ahead of analyst estimates of just under 192 million. that's your bloomberg business flash. nejra: thank you so much. european banks face a tough start to the earnings season. years of negative rates squeezed lender margins and now the ecb is poised for another cut. ubs on cost cuts. but to bank has posted a bigger net loss than expected and is warning on the risk of rates going lower. clyde mcdonald is still with us. we saw the story on wall street respected -- reflected in deutsche bank's numbers. deutsche bank preparing to exit the equities business. the bigger net loss than expected as it looked to more charges in the quarter as well. if you look at european banks, is there anything to be positive

about with this backdrop of ,ower rates on the cards slumping trading revenue, and the focus being on cost cuts and the struggle to boost her panic revenue? -- organic revenue? >> the backdrop is challenging at the moment. we look towards those banks which have significant exposure outside of europe. bmp in that bracket as well. ultimately, cutting costs is not an earnings growth strategy. you really need to see companies -- banks in europe adjust their focus. that's crimped by ecb actions. it's difficult for them to grow their way out of this challenging environment that they face. that's why they are focusing on costs. what's the prospects for the turnaround plan at deutsche bank actually working? >> deutsche bank is a special case.

obviously they are looking to dramatically transform their business. i'm looking at the likes of ubs. cutting one billion euros in costs in europe as a way to try to boost earnings. that is the example i talked about in terms of banks that are looking to reduce their cost as a way to get eps growth up. deutsche bank is looking to transform their business. it's not about trimming. nejra: will the transformation work? i'm asking the same question. because it is such a huge revamp , with everything you've said in terms of focusing on costs not being enough, the challenge remains. even though they are cutting the workforce, exiting the equities business, there will be no dividends this year. will that be enough to list the -- with the stock -- lift the stock? doesn't lie with

management. it lies with mario draghi, the ecb and their stance going forward. will they deteriorate interest rates for deposits by european banks with the central bank? will they furthering gauge quantitative easing? these are the levers that will impact european banks in our mind going forward. that is where the potential for success, whether it's deutsche bank or ubs, that's where the relative outperformance is compared to u.s. banks. nejra: what are your expectations for what the ecb does in terms of cuts to the deposit rate? also the resumption of qe and how that might manifest and provided transmission mechanism. >> draghi is likely to push through a cut in the deposit rate, maybe 10 basis points. we will probably not get it this week.

they will clearly signal that. in terms of further qe, he will leave that in the inbox of lagarde in terms of issuing the new head of the ecb going forward. they do engage in further stimulus. you are not seeing the growth drivers out there, given the uncertainties with regard to trade. that has negative implications for european banks. i go back to what i said earlier. the levers lie in terms of tearing interest rates and further qe. those would act as a drag on the potential recovery of european banks relative to u.s. banks in our mind. nejra: you've taken me to my next question. we are one mind. the u.s. was a challenge. the fed and possibility of rate cuts and low weights already. if you look at u.s. versus europe, european banks are cheap. is that a reason to be buying them? would you be too worried about the backdrop? >> if you are looking for cheap

stocks, we have an arms length full of them. i wouldn't look towards all you asian's as an indicator or catalyst for revival in euro area banks. the question is, you have potential for rate cuts in euro area. potential for cuts in the u.s.. why would we like u.s. banks in this context relative to europe? both face headwinds. area,fference is, in your lower interest rates coming. . in the u.s., you have an insurance rate cut by the fed. into 2020, resume hiking. that's what leads us more towards u.s. banks. nejra: you said there's a lot of cheap stocks. value stocks have an traded this low in half a century. where you find value? >> it's in some of the auto names within europe. we need a revival in china to unlock that value. nejra: wonderful to have you

with us. coming up, two great interviews. and we willcy be speak to deutsche bank's cfo. this is bloomberg. ♪ hey! i'm bill slowsky jr.,

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european headquarters in london. i am nejra cehic. this is "bloomberg daybreak: europe. the deutsche bank drama continues. trading revenue slumps. the cfo warns of lower pressure from lower rate. >> we are aware that outlook during june, frankly it does represent a revenue pressure for us and all of the banks, if rates from here go down further. becomesoris johnson britain's prime minister today. we are live from downing street.

across u.k., the broadcaster announces there will be two series a year. we get the latest earnings. welcome to "bloomberg daybreak: europe." straight to deutsche bank, they lost 3.2 billion euros in the second quarter. trading revenue dropped 12% in the second quarter. it underperformed its biggest u.s. rivals. the cfo spoke to bloomberg. >> we are very aware that outlook deteriorated during june. it does represent a revenue pressure for us and all of the banks if rates from here go down

further. we are most exposed to euro and one of the things we are waiting to see is how the central banks go about easing if easing takes place. in europe, we are hoping and expecting some amount of depositeering taking place. if it gets moved down, the banking sector shielded from the negative rate environment, it is something that is a significant risk to us. it is something we are managing rev or can, whether around the balance sheet management, optimization steps to offset or implement pricing changes in our business, we need to react to the environment we see coming. >> have you adapted your models down? >> we have. we have been working to look at how we are edging -- hedging the

balance sheet. we started that process late last year with an initial view it might be lower for longer world. we would have liked to do more, but it will be managed dynamically. we will manage the businesses in ways that offsets the drag from negative rates. nejra: that was the deutsche .ank cfo james von moltke we look forward to the opening in under an hour. ricky numbers from softbank, they -- breaking numbers from softbank. a will buy back shares. moving to the futures and general market. we have had three days of gains. the s&p 500 talked 3000. it closed above it, and that seemed on optimism around the

fact that bloomberg is reporting the u.s. and china will have one-to-face trade talks monday. a mixed picture in terms of futures, flat. bonds.ook at the 10 year yield higher yesterday. we are steady today, not much movement. let's get to another top corporate story. itv. to discuss the numbers, dame is with usia mccall, now. to run through the numbers, total advertising in a range of +1% in the third quarter. you had better than expected total advertising revenue. total revenue down 5%.

you did see it down 6%. a little bit of an improvement. let me ask about the risks around brexit, and how that is impacting revenue. is it stabilizing? carolyn: i think it has been a challenge for three years. the advertising market for broadcasters went down in 2016 and has not come back. it has been down every year since 2016. and the prolonged uncertainty has been a factor in the ad revenue performance. cup year we had the world which was an amazingly huge event. that was positive for advertising. think it is better than expected, and we had a good late surge in june. our online performance was very

strong in june. it evens out. business like certainty? i think certainty would give us stability in ad revenue market, which would be welcome. nejra: i am glad you brought up "love island." brexit, you are saying you will deliver 20 million pounds of cost savings over the full year. is that to mitigate the impacts you are seeing on advertising revenue from brexit, and something you might have to increase as the year goes on? carolyn: we have already talked about increasing the costs for the programs. we are in the middle of a digital transformation, transforming our business internally digitally and externally digitally. whether that is launching brit-b

, that advertising deals is all about digital transformation. that will allow us to look for cost efficiencies and productivity savings. we increased our cost savings, partly given the economic environment, and we are investing in the business to offset the considerable investment we are making. essentialsome investment we had to make in tech and data. we are doing well and well on track. we are also investing in brit-box. we are trying to control what we can control on cost, which is the right thing to do. we are being disciplined about that. nejra: how long before brit-box makes a positive cash flow? carolyn: as soon as we can.

we have not shared our business plan with the market, we want to launch and then communicate some of the detail behind that as we go. we know what the breakeven point is. we believe we can do that and return value to shareholders. i would say brit-box is not a one or two year return, you have to look at it as a five-year plan. it is something you want to build, and you do not want to take decisions by quarter. you want to take it from the long-term where you are creating value over five years plus. critics would say you may be late to the table. you have the competition of netflix and amazon, but the looming launch of apple tv and disney. how will you deal with that? carolyn: this is a

distinctive service, a brand that will stand for original content in britain. we have access to the bbc and itv libraries which will be curated and reformed. also, we will commission original content. we are very aware there are people with deep pockets in this market, in the streaming market, but the fact is, viewers are enjoying streaming services. are takingolds multiple subscriptions. 5 million homes already take multiple subscriptions, and that is increasing by the day. i think the feedback from viewers is positive. nejra: it is on "love island." it is the most watched show ever on itv2, and now you are moving to two series a year in 2020.

is this as good as it gets? carolyn: i do not think so. only talking about "love island" is not the range of what we do. if you think about "manhunt" was a massive drummer with 9 million viewers this year. newhave the top four dramas. people do not think about us doing that. they were amazing dramas. we do big sporting events, we have the rugby world cup. we do horseracing brilliantly. we do amazing factual entertainment. we have a range of programs. "i am a celebrity" is the biggest show we did that hit 10 million viewers. you cannot get those audiences anywhere else. why we really have a

belief as we transform itv, we remain an enduring cornerstone in britain. we have our global production division that does a range of other things. it is not all about "love island," but this summer that has been the thing. nejra: what does boris as prime minister for the u.k. mean for business? carolyn: we need to look at his track record when he was mayor of london, i think he was pro-business. he invested in infrastructure. very optimistic about britain, and i think we need optimism and energy and a future facing initiative. , ceo: carolyn julia mccall itv. germany's biggest bank reports a net loss for the quarter.

we will have an interview with the cfo next. this is bloomberg. ♪

a.m. in london, 45 minutes away from cash equity trading in europe. i am nejra cehic. $3.2che bank has reported billion net loss, more than previously guided. james: we are working to execute on the restructuring as quickly as we can, and then the accounting recognition of the steps we have taken. billionecognizing 3.4 of costs associated with the transformation. those are by and large non-cash charges. impairing. we are

we get a good portion of the accounting impact behind us in the second quarter. in the balance of the year we are working to take restructuring charges in the second half as we execute on the restructuring there will be real estate charges and incremental charges. we are expecting another 2 billion of related charges over the coming several quarters. what percentage of job cuts can you get done this year? that is a huge portion of costs. james: it is a steady gradual process affecting all areas of the firm in all geographies. we are working as quickly as possible, but trying to execute affecting theis lives of our colleagues and friends. we are acting as quickly as we can. we have notified 900 staff with the equity sales and trading

business who are leaving or have left, or leaving in the near-term. the capital release unit is well underway in terms of execution on the deleveraging steps, organizing itself under a new management team and moving to reduce the headcount associated with the businesses that were exiting or reducing. we are well advanced four two -- for two and half weeks in. matt: do you have a headcount idea? james: we have internal targets. externally it was below 90,000. that is something we intend to achieve and go as deep into the high 80's as possible, but we do not want to give a specific target at this stage. on thing you may see going was internalization, we are continuing to internalize

technology jobs. that type of activity will continue. it is an ebb and flow, and reluctance to be pinned down on a target number. matt: you mentioned equity sales and trading business that was down 32%. fixed income down 4%. those numbers, as big as they are, compare not so unfavorably to your peers on the street. why did you do better than expected? james: our franchise performed well in the environment and relative to peers. 11%, ands down about our credit franchise was up year on year. we were encouraged with the performance in many of our rates businesses and fixed income

currency businesses. equities is down significantly, that reflects the restructuring we executed last year and as you would expect, the uncertainty that played out during the quarter as the clients and employees were anticipating some element of restructuring to come. nejra: that was deutsche bank speaking ton moltke matt miller. now debra mao with the business flash in hong kong. hasa: texas instruments predicted stronger-than-expected profit forecast, third-quarter to $3.95ill be 3.65 billion. at demand for chips may be an end. it can't is concerned that the u.s.-china trade dispute will hurt the overall economy. the second biggest ipo of the

year, the company is targeting a share sale of $3.5 billion. softbank values the business that $47 billion. acceleratedwth has with the number of users topping estimates after it rolled out an updated version of its android mobile app. --230rage of 200 330 million users. daimler says operating profit and free cash flow will significantly improve in the second half of the year after cutting its outlook earlier this month. they've received annual revenue higher than a year ago. vehicle sales will be about the same as in 2018. nejra: the earnings futures coming fast. ,et me get to aston martin taking immediate actions to improve even since the.

-- to improve efficiency. challenging external environment may have worsened. islesale correction disappointing. more news flow coming along. the bigger picture of trade between the u.s. and china is set to resume. they will resume trade talks for the first time since may. robert lighthizer and senior officials will fly to shanghai on monday. negotiations will run through wednesday. , senior partner / cio, sarasin & partners is with us. at's kick off what you call powerful tale in equity markets. we have some progress on trade. do you stay positive on equities globally? guy: yes, i think we are seeing

typical trouble where you take a big issue, bring in robert lighthizer. it looks like a long battle, and november 2020 is coming up, and this stop at the edge of the cliff is enough to trigger a cautionary easing by central banks, but not enough to damage the economy. it is rocket fuel for equity markets. nejra: is it rocket fuel for all equity markets, or will some outperform others, like the u.s.? have not had smart leadership from the u.s. which is a first. you have modest leadership from tech. what you will get is two phases, the yield plays but in this reporting season, the cyclicals

reported less bad news than expected. daimler, etc. there is a little bit of an upshift that could trigger an interesting rotation into value industrial. we get a big leadership shift, these markets could continue to rally. nejra: the outlook for semiconductors and chip stocks seem to look better for the second half. if we look at value more broadly, do you see banks in europe or the u.s. as a good value proposition? trading was a little better, but it is a scream of agony with negative interest rates. we are just learning of the pain inflicted on the banks. i think people will look more closely at the message for negative rates to take this

blood leaking out of the european banking system and try to mitigate that. any news that would change that would trigger a huge reversal. the other opportunity is in the u.k. if boris's momentum does continue. have interesting thoughts in terms of high global .quities exposure talk about how the developments ,round brexit might change that and how you fit the u.k. into the global portfolio? guy: boris has political wiggle room but not much economic wiggle room. 1.1%, you deficit at could turn qe back on again, he has economic flexibility. if his roadmap is clear to go to europe to get a deal, then take

on jeremy corbyn, it is a bullish trajectory with pitfalls on either side. european investors will scratch leak money into the least loved assets, everything british. nejra: managing the flow of funds into sterling is interesting. also, coca-cola, you sold your holdings in coca-cola. it hit a record high yesterday. second largest endowments manager, we look tough at externalities. that also fits into a broader theme around esg, is that part of the portfolio performing well while it is hard to find yield? guy: these great trends, decarbonization, the alignment

of fund managers is happening at astonishing speed. issue, aoming a huge key part of management reporting. alignment with paris are going to be linked if you see your price rates and momentum accelerates. nejra: guy monson, senior partner / cio, sarasin & partners. thank you so much. we have more news from deutsche bank. follow, they are confident they will stabilize revenues. more than 900 employees were given notice in the last two weeks.

we will speak to -- this is bloomberg. ♪

anna: good morning and welcome to "bloomberg markets: european open." i am anna edwards outside downing street alongside matt miller in frankfurt. matt: the markets say let's get back on track, stocks gain in asia after a bloomberg report that the u.s. and china will restart trade talks on monday in shanghai. european majors -- european futures are mixed. away.rading is 30 minutes anna: the