nejra: fomc voter james bullard says monetary policy is already accommodative and the fed cannot respond on a day-to-day basis. the spread hits its flattest since 2007. weakens again at the pboc fixes closer to it dollar. central bank officials assured it will not fall significantly. health ofn on the u.s. businesses as a dutch retailer reports second-quarter

results. and what is the strategic plan at commerzbank? we are joined by stephen engle's later this morning. ♪ manus: it is germany, it is commerzbank, they delivered just shy of what the market expected. 3 billion euros in term of revenue, the market penciled in 2.14. of course, deutsche bank and commerzbank, the deal floundered. who will come in and swoop in? that is the question in the market. full-year net income targets are significantly more ambitious, this is a re-rating of expectations on this guidance.

significantly more ambitious net income comes in at 1.27 alien for the second -- billion for the second. guiding higher underlying revenue for the previous year. we will have a conversation with commerzbank a little later on. nejra, you have got unicredit. nejra: yes. second quarter income the red headline, coming in a little bit soft on the second quarter. it sees full-year revenue at 18.7 billion euros. 19.07, sote was again, coming in a little light in terms of its outlook for full-year revenue. second-quarter net income, that is the main headline we're looking at. in terms of unicredit, it is one of the favorite picks amongst analysts.

they highlighted they are not immune to the pressure, but they pointed out they have upside through strengthening the balance sheet. they question some management in terms of the potential plan to cut thousands of jobs. at the moment, read headlines second-quarter net income at 1.85 softer than 2.2. manus: if you are looking for a ,ank with tier one capital, abm a ratio of 18%. profits, 693, a comfortable beat on the estimates. , theting profit comes in stock is down 19% on the year. according to our colleagues, this is about cost cuts offsetting the challenges which are developing the income for this bank. anb amro, there is no end in sight to the revenue, but they

have delivered better than estimated. they are making for an additional 140 million euros of provision on redemption programs , so bear that in mind. we will dig into exactly what that means, but certainly a beat on the estimates. the man with the answers is the cfo, clifford abrahams, what does he think of the next move? don't miss the interview, 7 a.m. london time. nejra, it is all about markets. what do you reckon? what is the s&p telling you? nejra: looking unsteady today. trade concerns linger. u.s. equities made up of some of the grounds from the losses on monday, futures weaker right now. bidcan see the safe havens and i know you look at treasuries and a second.

falling again as it has fallen into a bear market on the lingering trade concerns. manus: it is a race to the bottom. if you want to understand who really shot the gun, it was the kiwi's. not ardently -- not only are they good at rugby, they are good at outrunning the central banks. the kiwi drops to a 2016 year low and guide lower. my question is was it shock or pragmatism? they are also pushing inflation targets later into the long ramp. look at the aussie as well, absolutely battered on the back of this dovish buyout. they say everyone is easing, there is no exchange rate channel. looking at the hayden, gold is bid and shining brightly. we are at the highest level since 2013. long positions have tripled.

bank of america says this is the product to have your money in. relative to equity options, that can be the hedge of the day. have a look at the bond market, we will speak to the big bondman himself. he slashes tenure targets. bullard has disappointed the markets again. three, bullard offers one more and done, is that going to disappoint the markets? it certainly has, the bond market is telling you something is anxious in the world. richard stallman is never isious -- rishard salman never anxious. awe?s it shock and all -- have a look at what is going on, the hang seng is lower. we are at 11 straight day of losses.

of losses this string is equaling the longest we have ever had since 1974. the nikkei and the yen remaining strong, putting pressure on investors. looking at the nifty, just down a fraction. , the worst-performing major index in this part of the world on a year-to-date basis. about 8% down at the moment. ,hat is the current position let's look at the ramifications of that 50 basis point move coming out of wellington. the reserve bank of new zealand, we saw bond yields and the currency plummet. 60.63 on the kiwi dollar, also putting pressure on the aussie dollar. there we have it. philip lowe under pressure to do something about it.

we have the governors of the bank suggesting the door is open for further action. the fix today on the sea and why , just a tad below -- the cny just a tad below. but we have moved up a quarter of 1%, trading on 7.03. indian yields, there is a rate decision expected. a 25 point cut expected out of the reserve bank later on. june,t the beginning of we looking at yields on the 10 year at 7.4% so that bond rally does continue at pace. does it continue further? a lot will depend on what the r.b.i. has to say. that is just a snapshot, back to you. much. thank you very rishaad salamat, putting context around the market.

james bullard said monetary policy is already accommodative, speaking at the national economist club. he said the central bank cannot respond to the day-to-day trade conflicts. >> the nature of a tit-for-tat trade war is that there are threats and counter threats occurring all the time. some might be implemented, some might not. but the nature is that you have tit-for-tat on all the time. it is not reasonable for monetary policy to respond to all of these threats. nejra: benchmark 10 year outperforms maturities, shrinking the yield spread to just under 12 basis points. that is the tightest since june 2007. hsbc has taken the hatchet to bone forecasts. analysts -- bond forecasts.

analysts have taken them out to low levels. for treasury yields, the new forecast is 1.5%. now -80 basis points for end of 2019 and 2020. joining us is the head of fixed income research at hsbc. great to have you with us. talk us through the change in the treasury call. >> it took a couple of weeks to do it. we did not just come up with it one morning and decide to change the number it should have been done a few weeks ago. i feel like i am chasing the market, which is the last thing i want to do. for us, it is quite unusual to have a forecast that is above the current rate. forecast was getting out of date and the market had started to move, so some of it was catching up.

the other thing is that we are trying to work back from where we think neutral is. central bankers are trying to guide to some semblance of neutrality. over the long-term, it is around 2% nominal policy. that, a need to be loose now -- they need to be loose now. that means they go lower to get to that neutral rate in the future. fedss consistent with the policy guidance and the incoming information on inflation. manus: a very good day to you. interesting the rbn has moved their view on where the neutral rate is. i want to get your view on this. said, i remember you said you feel you are chasing the markets, so look at this quote. rates, notr we cut

because it was probable it would be necessary, because of the fallout from an event. if it happened, it would be quite scalable." this is the argument, the market is pushing the fed apropos 1995. is it a fair push? steven: i think he also said like if you think you understood what i said, you could not have been listening. longese quotes are quite n't they?luted, are i said i felt like i was catching up. central bankom perspective might be affected if they go hard and fast. if the policymakers are slow and follow the markets, they may not get any impact. so that 50 basis points has caught many people out, because

what was the consensus prior to the move? that is a big cut, that will wake the market up. it seems new zealand and australia are, once again, leading the fixed income rally. just about every fixed income portfolio manager are now has a bit of long australian or kiwi in their portfolio. it is what you are supposed to do. it tend to lead the global rate cycle. it is the time difference and where they sit in terms of geography. but that is an interesting choice. it puts them back at the front of the pellet gun -- pelton. -- peloton. ago, rbs was at the front, then australia and the .oj everyone is taking turns nejra: what could happen first?

that we see rates get to negative or qe? steven: if they are trying to boost inflation expectations bearing in mind there is this discussion about inflation targeting and are trying to boost inflation, to make that really credible, they might need to go a little bit harder and faster on the easing. i realize mr. bullard was saying one more and done, but they will be well served by saying that are in thing -- that, aren't they? they are not going to say, my goodness, let's go to zero. nejra: but they could? steven: there is a chance they will cut more than the market is implying. that is why we have got bond forecasts were they are -- where they are. manus: do you think the rhetoric

could exert more pressure on the fed? new zealand was the first of the developed market central banks to be independent. we're talking about the late 80's. in many ways, they were ahead of the game. it is inflation target that matters. yes, i think everyone will respect what they are doing. they are taken very seriously. to cut by such a large amount are not made lightly. there would have been a lot of analysis behind it. and just as we don't change forecasts on a whim, they have to be thinking ahead. so yes, i think it matters. manus: stephen, hold those thoughts -- steven,, hold those thoughts. but get your first word news in hong kong. -- let's get your first word

news in hong kong. >> disney has opened the most anticipated attraction in company history and attendance fell. the media giant missed on the top and bottom lines as profits at the domestic resort slumped in the quarter. there were also hit by spending on his new streaming service and the costly flop of marvel movie dark phoenix. westminster and brussels continues, both sides blaming the other for the breakdown. eu is not engaging in talks for a new agreement. the prime minister has made it clear he will not sign a deal that includes the irish backstop, but that is a redline for the block -- bloc. hacks into financial systems the funnel billions to its nuclear program, according to a you and report. it says pyongyang's -- u.n report.

it says pyongyang has announced millions by stealing. the regime reportedly has 30 overseas agents handling transactions. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra? nejra: thank you so much. coming up, earnings galore. we have got a full lineup of executives starting with the ceo of abn amro. manus: that will be a fascinating conversation. in later today, we have got the ceo of standard life aberdeen, the ceo of consonant tell, and commerzbank. this is bloomberg. ♪

nejra: this is bloomberg

daybreak: europe. let's get a quick check on the markets. the one is still lower than the new zealand dollar. my favorite phrase of the day have raising our guest host, he makes much better sense. it is about the leadership shown by the rbn. i'm not quite sure what that last product is because we have scrolled on. nejra: let's take a look at the 10 year yield. we are lower, flattening on the 2/10 -- two ten's. brent in a bear market. manus: let's turn to our bloomberg scoop. have learned pboc senior

officials are reassuring foreign companies the currency won't continue to weaken significantly. that is after the yuan fell below the dollar. larry kudlow says the u.s. will take a cut, and look at the steps china has taken to reverse the decline. he added that trade talks in washington are still on. we are planning for the chinese to come here next month. if there is a good deal or good progress, we may reconsider some things. he has said that if there is no good deal and no progress, he may also reconsider the other side. manus: our guest host this morning is steven major. we are dealing with tweets of the rhetoric from kudlow to mnuchin and from himself -- and trump himself.

to this tweet, we may be in the most dangerous 2009 withmoment since the current developments. would you agree would you agree? --would you agree? steven: there has been a few of those quotes. i would not watch to overplay it. is very difficult to compare the two. seems to me this is more like a slow-motion crunch. has been building up for months. what happened in 2008 is a sudden stop. a shocking event happened over a weekend. what we are seeing here is a slow grind. each morning, we come in and look at more yields. it seems that is the market playing it out in real-time.

iton't see what purpose serves to make calls like this. frankly, we will not know until afterwards. it strikes me that the reason we have lower bond yields today is because the markets are pricing in a more realistic possibility of something like that happening. from 3.ave been falling 28 in october last year to half of that level today. that tells you the market has, over eight months, been slowly building in a realistic expectation. nejra: in your latest outlook in which you have downgraded forecasts, the 10 year, the bund yield, i did not see trade war in their. -- in there. if it was put to one side altogether, would you still be keeping these forecasts? steven: thank you for that.

did you do a proper word search? the reality is the forecast is based on the structural view. anduding the debt overhang exploring below zero negative rates, which is happening in other parts of the world. but that is all in response to the trade dispute, which is been at least 18 months since the first signs of this were happening. so economic data and expectations on economic data, soft data like surveys, have been factoring this in for 18 months. so the incoming information has this already in the price. in that regard, i don't really think we have to treat it as something separate. it's not like we will wake up one morning and this dispute will have suddenly gone away. that is just wishful thinking. manus: it probably is. every day, we come in and try to

assess where we are. maybe the chinese will re-graph the higher ground. i want to bring you back to the inflation targeting argument. thatur notes, you say various treasuries have proven useful. i am looking at the annual break even and the five-year, they have one trend. what is your analysis telling you on that? steven: it was earlier this year that the system review has been announced. their have subsequently been conferences and there are more coming. we think there will be a formal announcement later this year. it is working behind the scenes. will it be some kind of catch up or inflation averaging? to me, it is just words. the fact is that the fed has undershot its inflation target nine out of 10 times.

hsbc: steven major from stays with us. up next, this dutch holder reiterates its outlook. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." i'm on tour in abu dhabi. nejra: and i'm in london. let's stick with the fixed income conversation. hsbc has lowered forecast two -80 basis points. steven major is still with us. talk us through this, this is another aggressive cut. steven: it sounds like a big number, people have trouble with negative rates. and no doubt, you have plenty of people on the show who don't get it. not think they are wrong, it's just that the point of bonds is about total return.

you can't have a negative coupon. but you can have a negative yields. bond and currency markets exist with negative yields. there are $40.5 trillion in bonds below zero. it is all about negative -- a relative. if you have bought a 30 year bond, you would have made 25% this year, maybe slightly more. austria, you are talking 60 or 70% total return. who says bonds on fun? -- aren't fun? this is incredible performance, and people are saying that is not right. while it is just life below zero, we're just having to address -- i just. -- adjust.

it is the market deleveraging. so -80 to me is not an aggressive forecast when the blonde is already below -50. it is -55, this morning to my probably even lower -- this morning, probably even lower. the policy rate could be -60 soon. manus: and that policy rate, and this is the conversation i've had with bankers about the risk of stepping into this world, you mention austria, i'm looking back at the austrian offering. 21.17, i will be six feet under, stephen. -- steven. do we see more of this? do i play, do i bate peripheral european trades -- bait

peripheral european trades? is it all a relative plays? that is correct, everything is relative. curve, up tothe the 30 year or longer to get that yield. or you go down the credit spread. you could go from germany to spain and italy, or greece. people needed some yield. as we say, it is not wrong. it strikes me that negative rates could still be in place in several years ahead. what will the policy rate be in five years time? central banks will want us to think they will have cut and gone back above zero within that five years. no way. they are going to cut and stay low. look at the japan experience, this is informing our focused. -- forecast. look at since the bubble burst,

it is very similar. it isday, people tell me different, but every day, it gets more similar to what we are seeing here. central banks are requiring that they have to cut in response to inflation. in -- nejra: you have observed that, at the longer end, it is still quite steep. people are saying to put the steepeners on. what should people be doing instead? steven: the opposite. the u.s. curve is quite steep. let's imagine five years forward , the treasury rate is about 42.5, so that is actually high. that is above what i would say is fair value.

u.s. curve has been steepening at a time when the german curve has been flattening. just think that through. why did the curve steepen? i guess in dramatic loosening and rate cuts subsequently have all helped. that, to me, is the 10 year plus. thank you so much for being with us. stevenmajor from -- major from hsbc. second-quarter net income coming in at 993 million. they said preliminary second-quarter was about one billion euros. if we look at operating results, we're looking at 1.5's -- 1.5 7 billion. it still sees 2019 net higher.

the second quarter pnc reinsurance combined ratio at 87% versus 102%. so quite a few things to get through their. and we will -- there. and we will be speaking to the cfo. manus: let's get a little bit of retail now. they have reiterated second-quarter outlooks that met forecasts. second-quarter adjusted profit came in. the group says there is no significant impact from the strike and the u.s. operations stop & shop. that is the unit which has been an issue looming in recent weeks. the group has been focusing on expanding its u.s. online business to match the success of the dutch online operation. isning us now on the phone

delhaize. ahold i want to get to your guidance about margin, you talk about slightly lower margins for the rest of the year. of impression are you expecting and where does that come from? >> we already mentioned guidance at the beginning of the year. we would have on par margins compared to 2018. because of the strike at stop & shop in the u.s., our biggest brand, we adjusted that slightly downward was slightly lower than 2018 margins. the strike impacted the second quarter, both in sales and in profits. we feel that after this haved-quarter we will

notes and of into effect of the year. sales in the u.s. corrected for the strike at 18% growth. we are very confident that we will do more than 20% in the u.s.. and in europe, we are growing, especially in the dutch market, very strongly with more than 35% rough growth. for total growth for this quarter, we grew close to 30%. i am very happy with the e-commerce and online development. content with the other brands in the u.s. which did very well in the second quarter, apart from the strike. shop, we had a reasonable strike order. nejra: good to speak to you this morning. it is clear that you seats no significant impact of the strike the second half.

-- for the second half. can you give us the outlook for those two biggest markets? frans: we gave an outlook for the profitability of slightly lower than last year. that is the guidance for our underlying operating profit. if youin the u.s. that look at the sales numbers for the second quarter corrected for , andr, which is positive we still have 2.3% sales in the u.s.. that we have a very strong numbers last year in the second half. hurricane florence and these kind of things. we don't see 2.3% extrapolated for the full year, though we see it higher than the present

number in the second quarter. you have been in the job the year, some are saying will he do a big deal? but i take you further forward, looking at beyond meet. -- meat. how innovative do you need to be as a retailer in terms of meeting mine and the millennial needs? do you need to do something new,al like by new -- buy parts toally different add to the business? what is your big vision? frans: i think we do a lot of things on health, in general, if you look at our navigation systems to make sure customers can make better choices in nutrition, that is a big thing we do. eyond meat andb

vegetarian products in the u.s. and belgian markets, we have very high shares in organic meat , but also in plant-based meet - - meat. we are the most innovative player in that market. already a lote for many years, been an innovative player. in the u.s., we have a 30% share. innovative also in new reformulation of heavier -- healthier products and these types of things. nejra: thank you for joining us, frans muller, ceo of ahold delhaize. policy is currency staying at the forefront of the

trade war. the people's bank of china said that the daily reference rakes are just marginally stronger than the seven a dollar -- rates are just marginally stronger than seven a dollar. beijing has vowed to keep the exchange rate steady. officials most dovish at the federal reserve is not quite dovish enough for the bond market. james bullard is only forecasting one more rate cuts this year and agrees with jerome powell that july's cut was a midcycle adjustment. the comments sense of the treasury spread to just 12 basis points, it's flattest close since december. the kiwi dollar is plunging after the reserve bank of new zealand cut its benchmark rate much deeper than expected. most had expected a 25 point reduction. they say without stimulus, it will be difficult to revive inflation.

and the aussie dollar is sliding on speculation the central bank will take the lead and cut by more than expected. it has hit lowest levels since 2009. there are now pricing in a 70% chance just change of the cut by 25 basis points. global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you. coming up, this german media group has confirmed its targets for 2019. fall in q218% adjusted earnings. what is the future for the group? we've got the ceo. he joins nejra and myself next, this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." nejra: i'm nejra cehic. german media group prosiebensat.1 has confirmed targets as it reports and 18% fall in second-quarter adjusted units. this is as the feature of the business has been recognized as expensive, so what is the future of the group? to discuss the numbers, the ceo of prosiebensat.1 joins us on the show. great to have you, thank you for joining us. can you tell us when these investments will start to pay off? max: thank you for having me. are making good progress on the transformation agenda. we are returning towards organic growth. compares to about -4% if we

look at our european peers. we're close to 50% of revenue non-advertising, that portion is growing 12%. we are growing double-digit's in and.al entertainment our studio business we just launched as a streaming platform. those are things we are focused on in our transformation agenda. we're making adjustments in the business and they are exactly as planned is communicated. that will turn into bottom-line growth as we look at yields starting in 2020. manus: that is when the numbers begin to deliver. you mentioned the new streaming platform, i want to get a sense of what kind of floss you have in terms of the numbers.

we are six weeks in, but we see a pretty good launch. we have 3.8 million users in the first month. unique, it is the only place where you can get access to tv across 55 channels with two touches of a finger. is quite a magical thing. i have publicly stated we want to get to 10 million users within the first two years. we are certainly working hard to get to that number faster than that. nejra: you talked about it being unique, but your rival has a similar streaming service. wouldn't it make sense to join those two products? look, we have worked very hard with the public broadcasters. it is the equivalent of the bbc infrastructure in germany, have actually joined.

i have an open invitation to my colleagues and friends to join us, but that is up to them, not me. manus: you just have to sweeten the invitation to make a lunch more enticing. you talked about selling non-core assets, what do you want to get rid of most? max: fundamentally, we are happy with what we have. we have a very clear and well structured entertainment business. we have global content and a digital video player business. a leading digital e-commerce portfolio this year. within all about, there are some marginal efforts and we are always looking at how we can turn those into cash. manus: ok, come back and tell us

what you sold and how you will put it to work. max, we wish you well. oft was max conze, ceo prosiebensat.1. the standoff with in the u.k. and european union is deepening, that is for sure. nejra: yeah. the minister in charge of planning for a no deal has blamed the eu for failing to engage on a new agreement. as the impasse hardens, boris johnson is boosting public spending, fueling speculation he is preparing for a general election. political uncertainty in britain has helped send gilt yields tumbling to record lows. before the u.k. voted to leave the hsbc says the presence of expectations is holding nominal yields up. with us.jor is still

we don't know where we will get to buy halloween, but there is .hiff of hard brexit if that were the case, how aggressive does the bank of england have to be in terms of cutting rates? steven: if things are really bad , then they go back towards the zero bound. there may even be some form of qe. the fact that yields are lower today than they were three years is when we had the vote telling you all you need to know. the market is clearly pricing in quite a high probability of the harder form of brexit. i wonder whether this matters as well. aen though the u.k. is only few percent of global gdp, it is

only adding to uncertainty in developed market bonds. historians will look back and point at the china u.s. dispute, they will point at brexit, and they will look at the reversal of the fence rate hikes. they look at the negative rates in europe. it is difficult to know exactly what the real story is. linked.hey are there is a common thread. how is the market factoring in a possible fiscal response? both in the u.k., but say in germany? ,teven: we have looked to this and let's not underestimate the interdependence between monetary and fiscal policy that exist anyway. and let's not forget that some have already had the loosening, that is why we are in such a mess. where there is fiscal space, it

is not being used, most obviously germany. they have space and negative yields have a it seems to me everything is lined up, but you have a government that does not want to do it. it seems there is space in the u.k. as well, not much, but some. it is not some kind of magic potion when are people going to start realizing that economic growth comes through hard work and activity? not from pushing buttons and pulling levers. we seem to think there is a quick fix. quick fixes could be maybe what the political headlines are at the moment, one could argue, with bojo nymex -- bojo-nomics. let's talk about the lower bonds. you are chatting with namebrand myself, saying that we could get zero it would be difficult to

get below zero in terms of rates in the u.k. and the nine states of america. why -- the united states of america, why? steven: there are some places where it is more difficult because of the current account deficits heard -- deficits. if you go cashless, which is a fact in many parts of the world, just thinking about countries like sweden, most of the nordic countries have already gone cashless. it becomes much easier to run a negative rate. u.k. has to deal with the presence of cash. that will be less of a problem in a few years time. at the moment, the effective lower ground is around zero them other parts, it is way below. nejra: you were saying earlier how bond markets were fun, what are your top trades? steven: they are a lot of fun

and there has been a lot of total returns. i like flattening, so 10-year plus in court bonds led by the u.s., still more to do in europe. u.s.,rt bonds led by the still more to do in europe. manus: so even three cuts did not receive in the curve -- could not re-steepen the curve? steven: it looks as though they are heading towards the lower bound. hsbc: steven major, from has just changed its calls. coming up, earnings below are, re,have a full lineup -- galo we have a full lineup of ceos. manus: indeed. four conversations.

the ceo of standard life aberdeen, the cfos of ,ontinental and commerzbank which has shifted guidance for the rest of the year. this is bloomberg. ♪

manus: good morning from abu dhabi. i am manus cranny with nejra cehic in london. this is "bloomberg daybreak: europe." says monetary policy is accommodative and cannot respond on a day-to-day basis. hits at theead lowest level since 2007. some reassurance, the yuan weakens again. the pboc is closer to the dollar, but in a bloomberg scope , officials reassure companies the currency will not fall

significantly. , a fourth straight quarter of falling revenue. for profit outlooks are ambitious. we will be joined with stephen engle later this morning. nejra: welcome to "bloomberg daybreak: europe." concerns around trade tensions, let's get to glencore numbers. 5.94.the estimate was glencore.miss for first-half net debt stands at

16.31 billion. these are some of the headlines from glencore. the first half adjusted ebit softer than market expectations. manus: when it comes to a return on equity, it looks like they .atted it out of the park 20% return on equity, operating profit of $1 billion. , they do likeit the billion number in this company. general deliver their numbers in a few moments. first-half profit after tax, $874 million. german industrial production, good, bad, or indifferent?

nejra: it is worse than expected . yesterday we got factory orders, but industrial production year on year dropped, the exploitation was a drop of 3.1%. 1.5%. a decline of joining us for the furniture onset withel wilson us here in london. thank you for joining us. manus broke some headlines. i am looking at one that says you are prepared for a full range of brexit outcomes. talk me through what you mean about being full prepared. dr. wilson: we know about brexit in 2015 and have had time to prepare. life insurance payments, the same. for the pastdoers

few years and it is incredibly successful for us. these results are a vindication of our strategy which is about leaning in. it has been a terrific time for us. manus: good to see you. rhetoric coming from this administration under boris johnson, schools, roads, buildings, is this music to your investment years? -- investment ears? is a good news if this comes to bear and what this administration delivers? arguedwe have always that we have invested in britain for many years. if you look at our direct investments, 22 billion pounds, a huge amount investing in the u.k. believing our

schools and hospitals and roads and rail system all need upgrading. we can self determine our success by investing more in housing, roads, transportation, health facilities. the people of britain have a better life. nejra: can we talk about the central bank and how much negative yield is out there. we sit on $15 trillion at the moment. talk about how you are working around this issue? nigel: by investing in the real economy. we invest in real assets creating real jobs which results in real wage increases. we have a huge infrastructure deficit in the u.k. and have been building into it year after year. when interest rates are so low, it is bad if all we do is invest in assets. it is a tragedy not just for the

u.k. economy but the global economy. we should be investing in real assets in creating real jobs. mantrathat has been your for as long as you have discussed results with us. our last guest said the world returno realize that the in a negative yielding world is not something -- when you look ,t the austrian 100 year bond is that fundamentally against everything you believe in? investing realve assets and driving real economic growth. there is so much to do. if you think in the first six months of this year, we set three records in the u.k., the largest pension transfer deal at 4.6 billion pounds, and there are bigger ones to do. deal, $50 billion.

if you invest in the real economy, you get a better outcome then negative non-yielding bonds. it is 101 economics and finance. nejra: this residential commercial deal and oxford, does it make you nervous in terms of the hit it could take to the property market? nigel: not in the slightest. we have had nothing but doom and gloom. we need to build more. who thinks we do not have a housing deficit? nobody. the workhorses of the modern university, that is what has been lacking for 30 years. not only can we do that in oxford but in many other cities across the u.k. we could do with a few new student housing in northern ireland.

i want to talk about cable. 121.58 is where we are. people talk about how this currency could drop to 110. is that a market bubble, or will the currency take that strain on a hard brexit? nigel: i think we are all that we saw a lot of things happen, we saw a weakening of sterling which we expected to happen in the u.k. it is something we prepared for. all these scenarios, we have had many years. the bank of england regulators have done a very good job of preparing financial institutions in britain to be prepared brexit. caps off mark carney who have

done a really good job. nejra: can i talk about life expectancy? what you have been doing for the past you years, releasing more due to thereserves facts that gains in life expectancy are slowing. how long will that trend go on for? nigel: we did not set anything in the first half. we released three different years over the last 10. it is sad, people not living as long or as healthy as we expected people to do. that is for different socioeconomic reasons. we have done with that money is invested in the u.k. economy to build a better society and better infrastructure. we hope it will have the effect of people living longer. manus: i hope to be one of those. dr. nigel d. wilson, ceo, legal & general group keeping it real.

nejra probably likes to see me drift off. i am in abu dhabi. my life expectancy is fine at the moment. let's talk banking. the is well placed for second part of the year. the second quarter, the bank but warnedet share, that lower interest rates are having an impact on margins. shock. let's get to clifford abrahams, vice chairman / cfo, abn amro bank. great to have you with us. i want to understand with the revenue boost comes from. our analysts said there is no end in sight to your revenue pain. tell me you can see a glimpse of light on the revenue story at abn. clifford: good morning.

our results look good this quarter, and our revenue is good . despite low rates, our net interest income was up quarter on quarter, year on year. nii underlying pretty stable, but overtime quarter on quarter you will see the effect of low rates impacting apposite margins. that is why we have called that out this morning. nejra: great to speak to you. this is a situation before we get more potential rate cuts from the ecb. if those come, what would you need to offset the effect? clifford: we are working hard already to offset the effects of low rates. where we can we are passing those on to our clients. some of our big clients already pay negative rates and we pass those on. they are working hard to offer

services to which clients pay fees, and lastly we are keeping costs well-controlled. you can see the cost income ratio pretty good this quarter, 56%. we are operating within the range we have indicated for next year. we do see that range as a challenge given the low interest rate environment. catering dokind of ?ou need to see from the ecb have you had discussions with them, and what have you suggested if so? we have read the reports as you have. i will beking, speculating like you on what the outcome may or may not be. the picture, low rate will drive down deposit margins. it is possible we get some

benefits through tiering, but that is unlikely to offset the impact on us. we would welcome rates moving higher, but we need to be patient, we do not expect that in the short term. when he to operate the business to succeed in the environment. to operate the business to succeed in the environment. nejra: are you 100% money laundering proof? clifford: we have announced today more money to be spent in this area. it is important we comply with the rules. seriouslyr role very and have over a thousand people devoted to this work right now. we expect that to increase in the short to medium term as we upgrade and strengthen the system that is so important to us and our clients. one of the things we

touched on in the last quarter and that the markets focused on was the preparedness for brexit. this hardcussing brexit. how much of an impact on the world what a hard brexit have? for the european perspective, are we underpriced and underpricing the potential risk to your business of a hard brexit? i work in the netherlands, and i follow brexit closely. in my view the direct impact of a hard brexit will be quite ,ocalized in the u.k., ireland some parts of the netherlands. my view is it is more of a sentiment issue. we have seen big events on the trade level between the u.s. and china, and that is not good for

the global economy. i think it drives the sentiment indicator, and a hard brexit will be part of that. i have seen the probabilities of a hard brexit moving up, nearly 50%. it may be one of those events that is fully discounted when it happens. nejra: the search for a new ceo continues. ceo leaves in april when his term ends. growthld pursue new broad, or focus more of the domestic market? we are happy with our strategy. we are winning in our local market, and focused on profitable growth outside the netherlands. i have no special insight on the ceo, and i look forward to a new

appointment in due course. it is up to the board to manage that process. nejra: great to speak to you, thank you so much. clifford abrahams, vice chairman / cfo, abn amro bank. we have breaking news, read headline. the r.b.i. india's reserve cutting its rate by an unprecedented 35 basis points. of central banks, we have the india central bank cutting its rate to 5.4% from 5.75%. indian bonds are gaining, that is a surprise, that 35 basis point rate cut. only one economist forecast the r.b.i. to cut my 35 basis points, and all members of the board voted to cut that policy rate. is it a rosy picture

all around? we have clifford abrahams --we have dr. christoph jurecka next. this is bloomberg. ♪

manus: we are getting set up for this european trade under 40 minutes from the start of cash trading in the equity markets. it is "bloomberg daybreak: europe." i am manus cranny in abu dhabi. inra: i am nejra cehic london. net income came in that 993 11.8 billion, euros for the quarter. joining us is dr. christoph jurecka, cfo, muenchener rueckversicherungs. what makes you confident in

confirming your 2019-2020 target? christoph: thank you for having me. 1.6 billion earned in the first half of the year, we look to meet our 2.5 billion target for the year. this quarter has been the best years, so we are happy with the results. can you tell us about what is going on with the reserves in the business? numbers, by the way. christoph: reserves are always a topic for insurance. they have been absolutely stable on a conservative level. despite this, we were able to twoase some reserves into

duty transactions we looked to finalize. ,ome parts of our core business it was necessary to release some of it. did a great job bringing that business onto our book. nejra: we are informed that munich re was on the hook for the boeing debacle. you talked about how you would pay out for that. can you give us a sense of the numbers and if it will have an impact? arestoph: for boeing, we reserved and feel comfortable. we are aware there are discussions continuing and potentially there might be toferent liability coverage go on in the future.

we carefully follow those discussions. check if our position needs to be adapted. -- it is, our reserve something we are fine with. manus: there are regulations around the timing when you can take more reserves. can i ask you in terms of investment, you are releasing money from the reserve back to the shareholders, what is the depth of negative yield bonds mean to you? christoph: that is a highly relevant question. industry,rden for the and investment yields we currently achieve we have used

compared to 10 years ago. this quarter we were able to achieve 2.2 percentage points as investment yields, but this has come down. at the same time we have to understand the more long-term effect. for the next five to 10 years this will have an impact. in the short-term we will compensate the lower yield the amount we have been taking in the past. it is highly critical to have low interest rates in europe now and other geographies. this is something i would like to criticize very much. you arenderstood planning ahead with the low interest rate environment and negative yields. we could get more rate cuts from the ecb and that would increase the challenge.

what planning ahead are you doing that for an increase in natural disasters? christoph: we have been as a about climaten change and the impact on the environment, and our claims experience. we have been highlighting the negative effect from time it change. our underwriting guideline policies, we try to make sure it is a stable one and we do not proportionally underwrite natural catastrophe risk, and we have good diversification. the company feels relaxed and able to cope with that given the high amount of capital we are holding. from a more global perspective, climate change is an issue.

the whole global population has to work together to tackle that. manus: thank you so much, the message loud and clear with the impact of negative yield. that is dr. christoph jurecka, cfo, muenchener rueckversicherungs. thank you for joining us this morning. ratesb.i. as you said cut 35 basis points, that was a unanimous decision. all six members voted for that. if you think about the new , they ledntral bank the pack. the indians are coming behind. it is setting up shock and awe from central banks. nejra: one of the more dovish members on the fomc talking

about getting one more rate cut this year. we have seen flattening on the 2-10 curve. the european open is next. they will pick up on all those themes. this is bloomberg. ♪ hey! i'm bill slowsky jr.,

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markets: european open." we are live from the european headquarters. alongside mattds miller in frankfurt. matt: the markets they go for gold. a growing haven demand. european equity futures are pointing higher. cas trade is less than -- cash trade is less than 30 minutes away. anna: no need for dryr.