U. S. President donald trump delivers a speech heavy on pomp and pageantry while light on political messaging. Together, we are part of one of the greatest stories ever told. The story of america. Nejra good morning and welcome to bloomberg daybreak europe. 6 00 in london and we are waiting for the u. S. Jobs report. Ahead of that, weve seen the 10 year yield it. To bond markets open after the celebrations. We got to 194 and our study at 1. 95. Futures come up. 1 on u. S. Equity futures. Week, we hit records on the s p 500, nasdaq, and dow. The dollar has been treading water the past few days. Euro, it is continuing the uptrend since the beginning of june and all the action has been in the european bond markets. The tenure bund yield dropping briefly below the ecbs deposit rate beyond 40. The action in btps has surprised the market in terms of the powerful rally. Weve also seen greeces 10year hit record lows. Gold, there we are above 1400 an ounce. That is a point of discussion and payrolls could give direction to gold. Crude headed for a weekly loss as concerns around Global Growth and demand overshadowed what we got from opec this week. Lets check on the markets in asia with Juliette Saly in singapore. Happy friday. Juliette happy friday. Not so happy for markets. Denuded session because we didnt have the leading from wall street. We are awaiting the u. S. Jobs report. Fairly flat on the nikkei. We are seeing weakness in chinese stocks, though most analysts come through with forecast saying thirdquarter numbers should be good in china. And outlier is australia, rising and holding and november 2007 highs. We are watching the indian market. Pretty flat ahead of the budget speech coming down, but we have seen this in sex and nifty and asian stocks having a pretty good week. The fifth weekly gain. All eyes on samsung today. Lets look at what happened with secondquarter numbers because they came through, excluding a oneoff gain. The june profit more than halved. Globally. Lowdown koreas Largest Company reporting a 56 fall in operating income to around 5. 6 billion, but when you take out the oneoff gain, which we havent been given a lot of info about, that could be attributed to 800 million. You can see the profit for the second quarter, down from about half where it was last year. Nejra Juliette Saly in singapore. Butd rate cut is all certain this month but that could change when the u. S. Jobs report hits today, or could it . David strays from consensus, the report could send analysts to adjust their july fomc outlook. It is to how crucial markets, here is dani burger. Dani the jobs report is going to be one of the most important data points considered by the fed as the mull Interest Rate cuts. His misses are adopting a more defensive posture. There are a lot of moving parts, but i will break it down in three broad scenarios of what we might be able to see. We could get a blockbuster report where gains top 200,000, employment drops, wages exceed forecasts. Of americanario, and says the fed would probably hold if they can push back market expectations. Or we could get payrolls that come near the consensus of 160,000. At that level, unemployment holds around the current level and wages fall in line. This is where we get the Market Pricing of a 25 basis point and where it becomes reality. Islysts saying the hurdle too high to forgo easing. Hiring fallsugly in below 100,000. Unemployment rates rise, wages trail estimates and in that scenario, the fed cut could look more like a 50 basis point cut because it means cracks are visible in the labor market and a slowdown is actually happening. Analysts have told bloomberg bond markets more or less are pricing this in, but with equities at euphoric levels, this scenario could be the start of a correction. Nejra great work. Thank you, bloombergs dani burger. Joining us is our guest host on the show, alan higgins. Scenario . More likely that we get a blockbuster number and a hold for july or a week number and a 50 basis point cut in july . Alan it is slightly where a slightly differ is blockbuster on 200,000 on nonfarm payroll, it has to be 400,000. It has to be huge. The fedis just will take as data. There is so much expectation built into a rate cut. It would have to be really amazing data and we get weekly data. Stables indication of a employment market. On the downside, that is more likely but again, i would skew it. You have to be very weak. Go cautious and doesnt want to panic markets, so we probably have to see an uptick in the Unemployment Rate close to zero, maybe negative dofarm payroll to make them 50. I would be very surprised to see them to 50. I think we will get a couple of 25 and that is it. 25s, beyond a couple of could we see the rate go down to zero in this cycle from the fed . Alan that is a big question. As many people know, the yield curve is inverted so what does that mean . It means very low probability the yield curve is wrong and nothing is going to happen. Most likely the fed will ease and ease for two reasons. Your scenario, going to zero, recession. The new york fed probability derives from the yield curve, 30 on the high side. Or back when i was last a bond manager in 1995, i remember the classic midcycle rate cut. Rates are is right, coming down but it is a midcycle rate cut. By us would be toward that. Why . Talks about ite being a long cycle, it has been a weak economic cycle. It would be strange for the u. S. In good shapeer to slide into a recession but it is a risk. It is midcycle and bonds do pretty well, equities were euphoric in 1995, i can remember that and beyond or you were looking are looking at a darker scenario. Nejra from what you are saying, you think it is right for bond managers to keep piling into treasuries at the moment, but what trade should be the doing below the surface on the curve . Is it all about the steepening . Alan we put a curve steepener on in our private portfolios. That is basically going long twoyear relatives it relative to the tenure. Rather than just tenure rather than ten year. Going to your scenario on zero, the more pessimistic scenario for friday, it will be a good hedge to the portfolios. We like it because on a scenario where the fed eases, the classic go back to 1995, midcycle, the economy does better. 10year starts to selloff. Big budget deficits coming down the road in the u. S. Yield curve steepener we think is the way to go. Back by thed come long and so steepeners we have put in the portfolios. Nejra generally you say to stay invested in equities but at this level, would you want to be buying u. S. Equities with valuations where they are . With all three benchmarks hitting a record this week, especially into an earnings season that isnt expected to look at stellar . Alan i have two messages, but i will try to be as clear as i can. Plan,ke fouryour pension something Warren Buffett talks about. Longerterm investing, you want to be in equities definitively. Right now, we are with you. Weve come a long way. Correction, 6 , 7 about a month ago and there is ground for disappointment. Maybe a 25 basis easing for the fed would be disappointing. For the bond market and equities. Have sympathy for being cautious right now but that is different from your important pension for being inequities. Nejra i know you keep wanting me to look at my pension. That is a discussion for another day. This look at the headline level for equities. Would you be looking at value versus growth, bond proxies, what would you be looking at below the headline level of buying or selling index . Tough question because basically, growth and quality has outperformed virtually and continues to outperform. Weve benefited from that. Weve had a tilt. We are looking to buy more value names. We are a customer of the Investment Management industry but by some direct stocks ourselves. We are tilting more towards value. Why . Without removing the quality bias we have completely, the markets could be unpredictable in this rate cut and we are already seeing switching from fed ecb, we are seeing the prospect of qe from the ecb. Classic value, italian banks starting to perform strongly. It shows how unpredictable it can be. Nejra value, but keeping quality. Froms from alan higgins bruegel stays with us. Debra thousands of spectators packed the mall to watch the fourth of july speech. President trump praised the u. S. Military and American People but put himself front and center of the Independence Day celebration. The event included tanks, flyovers by jets and culminating in an extended fireworks display. We celebrate our history, people, and the heroes who proudly defend our flag. The brave men and women of the United States military. Together, we are part of one of the greatest stories ever told. The story of america. Debra china is sticking to its demand the u. S. Lift all tariffs as a condition for any trade deal. Some you officials u. S. Officials have said they will stay even after a deal to enforce it. The president agreed last month to restart talks. No plans for facetoface negotiations have been announced. British special forces seized a supertanker off to gibraltar carrying iranian oil to syria in violation of sanctions. Iran declared illegal, summoning the british and basinger to explain the action. Madrid is considering a plane complaint over the seizure in waters spain considers its own. Earthquake in 20 years has rattled southern california. Buildings in los angeles shook after the 6. 4 magnitude quake hit around 170 miles from l. A. Multiple injuries and two house fires were reported in a town or the epicenter. Los Angeles International airport, saying operations were running as normal. Greece heads to the polls this sunday. The Prime Minister is struggling to defend four years of austerity and economic upheaval. Voters are liking the message that austerity has failed and the country needs a pro business culture. Last nights boston pops fireworks spectacular is one of the largest and oldest public fourth of july events. It gave out 6000 u. S. Flags with 10,000 fireworks launched from three barges. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more. Han 120 countries this is bloomberg. Nejra debra mao in hong kong, thank you. It is jobs day. We speak to larry kudlow. Miss that conversation after 2 30 p. M. London time. When traveling to work, tune in to Bloomberg Radio or dab digital in the london area. This is bloomberg. Nejra what he fireworks spectacular for fourth of july. Of course, markets getting back to action today in the u. S. Earlier this week we saw celebrations in the u. S. Equity markets. Indexes hitting records, the 10 year yield is down another basis point ahead of the jobs were hurt and 94. On thetures slightly back foot. Question, as the more yields go negative, which assets look more attractive . Ib tv on your bloomberg. Lets get the business with debra mao in hong kong. Board osrams management accepted a 3 billion euro takeover bid from baina dn rlyle, offeringca 35 euros a share, 25 more than the stocks close on tuesday. Deutsche banks cuts may go deeper than just u. S. Equities and rates. The german lenders board is set to decide on a sweeping overhaul this weekend. They are eyeing around 20,000 job cuts and may shutter the u. S. Equity unit entirely. They will start informing staff of cuts monday. Grannies in Running Shoes delivering ramen noodles. It might sound ridiculous, but the chief executive says the elderly are actually signing up for the to be uber eats careers. He says seniors in search of exercise are doing the deliveries on foot. That is your Bloomberg Business flash. Nejra thank you so much. Lets talk trade and china continues to stress the u. S. Must remove all tariffs on chinese goods as a condition for newsing a trade deal after the two nations were to restart talks over the phone. One institution affected is standard chartered. It makes the biggest percentage of its revenue from china. We asked the ceo how he is dealing with the concerns. I think the period of unbridled globalization which we could argue was part of what characterize the early part of the last decade was very good for Global Growth, good for a global bank like standard chartered. Good for a subset of the population and left another subset of the population behind, particularly the middle class in developed countries. To go back to the political will for unbridled globalization seems to have passed. My small population in my country is more important to me than a Large Population in other countries. What does that mean for banks . Growth, supply chains, they have moved. Do they come back or are they changed . Bill it is always fascinating to pick up soundbites about china becoming the force for good and globalization having taken a mantle from the u. S. , but that appears to be the case. We are trying to be a globalizedr on a global scale and on a super regional scale. Look at it, the china ecosystem extends from ghana and nigeria through taiwan and japan and maybe some Pacific Islands and south to australia. The china globalization ecosystem is very big. It is a big proportion of the World Economy and of world growth. That is our ecosystem. We are operating in the china sphere. For Check Standard chartered is to be a constructive bridge within the sphere. As supply chains reconfigure from china manufacturing to vietnam or korea or india or thailand, we want to make sure we are facilitating the flow. There will still be a lot of trade between the china sphere and the rest of the world. Advised tod be well maintain a middle position in that tussle rather than side with one side or the other, and we are obviously a european bank. We want to focus on how to promote trade within the big china sphere but across that sphere, which is what we do today. Nejra that was bill winters speaking to bloombergs Francine Lacqua for an upcoming episode of leaders with lacqua. Alan higgins from coutts his still with us. Please got speculation around more stimulus globally to do with trade tensions. Look at what it has done to european bond markets. Weve seen the bund yield drop below the ecb deposit yesterday. 39 but italy, astounding what has happened. Youve liked the twoyear yield before. Do you still like the btp twoyear yield now that we have gone negative . Alan we bought them when they were free and they rolled down one year on and it felt uncomfortable when we were buying them. I think that is the way to get involved in italy. I wish we were more brave and bought fives and tens and 30s. Nejra is it too late to be brave on italy now . Alan yeah, you probably have to wait. The time to buy italy is when there is a political crisis or market issue. There is still likely to be one. Politics are still a difficult situation with solving he] lead,i taking a further so the idea of a parallel currency, that seems to have gone away for now. Why we got the frontend and owned them even though this is slight negative yielding, the negative yield will hedge back into sterling and become something even at zero like over 1 . It is not that great, but it was 4 . It is the fact that the reference rate is. 4 and that is dragging yields down. Or leavel not default the euro in a couple of years. 10 year is the place to be, obviously. Nejra when we have asked people whethere this is an irrational rally, the answer is no because we will get more stimulus from the ecb and more so with Christine Lagarde at the helm. What do you expect in terms of more qe . Do you expect credit buying, changes around the terms . Alan yes. Rate cuts have not stimulated the economy. We know it has been painful for banks, so if there are rate cuts, they will be modest. U. S. Ntrast with expectations, zero expectations are modest with respect to rate cuts. Tltros givingor the banks money. Question is, it is an issue with the banks. You see that in violation. They bought corporate bonds, why not natural that . Debt . Ock on effects the knock on effects, it makes Bank Financing easier. We are looking for senior financials to be included in the next round but it could be creative. Nejra briefly, would you want to be buying Deutsche Bank bonds right now . Alan Deutsche Bank bonds that is a more risky situation. Deutsche bank bonds are in a better place than the equity. Bonds, we sold out of our last piece of Deutsche Bank bonds, actually. We didnt have cocos. Twos, but weier are out now. Nejra alan higgins from coutts is with us. Osram accepts a buyout offer from bain and carlisle. We speak to the cfo next. This is bloomberg. Wanna take your xfi to the next level . Now you can with xfi advantage. Giving you enhanced performance and protection. When devices are connected to your homes wifi, theyre protected. Helping keep outsiders from getting inside. And if someone tries, well let you know. So you can stream, surf and game all you want, with confidence you can get coverage where you need it most. Thats xfi advantage. Make your xfi even better. Upgrade today. Call, click or visit a store. Nejra this is bloomberg daybreak europe. I am nejra cehic in london. Osrams board accepted a 3. 4 billion dollars buyout euro buyout from bain and carlyle. The brief and contentious period as a standalone company. Joining me on the phone is osram s cfo. Before we got the news of the offer and the acceptance of the board, bloomberg was reporting osram was looking for an oscar offer of 36 euros a share. You got 35. Are you satisfied with the officer . Good morning offer . Thank you for having me on the show. We find it attractive for shareholders to get a 23 premium compared to three months rolling and a value of essentially 3. 4 billion euros. We will remain self sustaining. A lot of Business Continuity for business partners. It is attractive to employees. A lot of labor provisions will stay in effect intact. Pensions are safeguarded for our people and it is an attractive with transformation. Yes, we support the author. Offer. Nejra talk to me about how osram will benefit because it has been a bit of a tough time for you. Youve had six profit warnings in just over a year. How will this change things for osram on that front . We had three profit warnings over the last 15 months because of the Business Environment changing dramatically. If you look at the downturn in the Automotive Industry and in a Oil Companies and in china, 23 of the companys business. These are major downward trends so far this year. Bain and carlyle bring with them a lot of six experience in transforming portfolios. To have the knowledge of our industries. We have a lot of access to the expertise and they support us financially with investments in terms of rnd and mergers and acquisitions. It will help us build the portfolio around our strategy. Nejra what kind of portfolio transformation might we see . One of your challenges is your exposure to the auto and smartphone markets. Automotive market is undergoing fundamental change at this point in time. We see a lot of Growth Opportunities there in the future, especially if you look at autonomous vehicles. Still see fairly deep penetration in lighting, interior and exterior in those cars. We see that continuing. Has potentialll from an aftermarket perspective. We can strengthen our portfolio beyond what we have today. Nejra well and Management Structure be affected at all and if so, how . Ingo bain and carlyle consortium supports management and the Business Models that we have. Committed to are margin improvement and growth strategies. Support oure, they current setup and will help drive the business forward. Nejra what response tell me more about the response you have had from shareholders to this offer and the acceptance of it . Is just out,er officially supported by us last night so we dont have much feedback. Overall, i think we will have good support. It is a 23 premium. It values the company on the base of the 2020 consensus. At multiples, we would be in the doubledigit range, so from that perspective, it is attractive for our shareholders. This news has just broken about bain and carlyle taking over osram, but how long do you expect this situation with bain and carlyle at the helm to continue . Two years, five years, longer . First, the process will take us until early september, which is the end of the will seee rate and we how we continue to develop the company, how much we will build and what other things we will do with the company but it is something you should ask bain and carlyle. s cfo, great to have you with us on the show. Lets check on the markets around the world. In london is annmarie hordern. You are looking at Global Markets and also the problem child Deutsche Bank. Annmarie lets start macro. As theseeing trading holiday closed u. S. Markets. We do see more markets tending to the green. Australia is up more than. 7 . In the past half hour, weve seen a drive into the china csr, nearly. 5 . In foreign exchange, it is all in the red and this is weakness on the emerging market currencies. You can see the rupee, hong kong dollar under pressure and in commodities, iron ore has the second day of pullback. Aroundarly 3 , hovering 111 dollars a ton. There was expectation the run to 120 was too excessive. Bank,oblem child deutsche this comes after a bloomberg report that possibly more bad news is on the way. Job cuts across the u. S. Might go far beyond equities and rates trading. The price and book ratio carry it is not just lagging the stoxx 600 bank index. You can see just how bad Deutsche Bank is doing. All weekend, we will monitor what kind of job cuts we see. Been out inberg has front with this reporting. We have yet to hear about restructuring from christian sewing. Lets get a first word news with debra mao in hong kong. Debra thousands of spectators packed the mall to watch president trumps fourth of july speech. He praised the u. S. Military and American People but put himself front and center of the Independence Day celebration. The event included tanks, flyovers by jets, and culminating in an extended fireworks display. President trump we celebrate our history, people, and the heroes who proudly defend our flag. The brave men and women of the United States military. Together, we are part of one of the greatest stories ever told. The story of america. Debra British Special forces seized a supertanker off gibraltar carrying iranian oil to syria in violation of european and u. S. Sanctions. Iran declared it illegal, summoning the British Ambassador to explain the action. Madrid is considering a complaint over the seizure in waters spain considers its own. Delivering brexit is key to keeping the u. K. Together according to boris johnson. A frontrunner to replace theresa may as Prime Minister. He told a Campaign Event he would prioritize the union of the u. K. Over leaving the eu. He added failing to deliver on a divorce could split the nation apart. The strongest earthquake in 20 years has rattled southern california. Buildings in los angeles shook after the 6. 4 magnitude quake hit around 170 miles from l. A. Multiple injuries and two house fires were reported in a town or near the epicenter. Los Angeles International airport, saying operations were running as normal. Last nights boston pops fireworks spectacular, one of the largest and oldest public fourth of july events. It gave out 6000 u. S. Flags with 10,000 fireworks launched from three barges. Global news 24 hours a day, onair and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra debra mao in hong kong. Thank you. Indias new finance minister is delivering her first budget as the countrys growth declines. Inflation is below target and unemployment reaching a 45 year high. The focus is on how she will reinvigorate the economy. We have lines coming through the need toing invest heavily in infrastructure and job creation, many Structural Reforms are needed to expand the economy but she expects indias economy to be at 3 billion in the current year. For more, in mumbai, our correspondent joins us. Great to have you with us. What is everyone watching for in the budget because sitharaman has difficult choices to make, doesnt she . Absolutely. The most important thing will be to revive investment, revive consumption and that should take growth higher. Right now, investment and consumption are laggards. Avidof the reason is consumption has been hit by a shadow banking crisis and the government is not spending enough. And privateernment sector rates have been lowered to boost, but the government needs to do its part by easing the fiscal levers providing more cash into the middle class. That is likely to happen. Also, some investment for the infrastructure sector. That is what markets are looking for. Nejra what Market Reaction are we expecting . Well, what the markets are expecting is they will allow the government to ease on the fiscal deficit numbers. It has a target of 3. 4 but if it eases, most fiscal levers will exceed that. They will allow that to happen because inflation outlook is plus the Federal Reserve is likely to cut Interest Rates. So even though the fiscal expansionary budget is expected, bond markets are likely to allow a bit of leverage. Happyock markets might be if there is a little bit more spending. Nejra just following everything and numberedlog, clients can do this, as well. It is a blog following everything at the moment. Given her has projection of where the Indian Economy will be. Tell me more webby you expect her to announce a roadmap toward more Structural Reforms to attract direct Foreign Investment. The opportunity has never been better before. Government was complaining it didnt have the upper house of parliaments. That will change this year or is much neededh for carrying out reforms. In india, you cant hire or fire workers in the Manufacturing Sector very easily. Land forcant acquire warehouse is a rhodes very easily. Cap will also probably have to change. If india is serious about attracting more into the country and that will be important, because amended indias domestic is not good enough for investment. It needs foreign capital for growth, which is crucial for more employment. Nejra as you were speaking, weve heard that india is to propose initiatives for local and Foreign Investments and will propose steps to kickstart investment in india. Economynag, our Senior Correspondent in mumbai. Alan higgins from coutts co is still with us. Ive got a ratio of nifty priced earnings versus the index and it is near record highs. Indian stocks, somewhere you would want to put your money . Alan it is not where we are within em equity. The country weve singled out has been russia. More deep value. India, weve always been an extensive market. Expensive market. Nejra not rightfully expensive, given the outlook. Alan that is fair, it has been justified given the longterm growth outlook. Encouraging to hear about Structural Reforms. It has always been a closed economy in terms of Foreign Investment and has struggled to do business. That is what is needed there. Our bias has just been toward the more cheaper markets and we wanted a market that had more of a correlation with oil. Russiaair with russia has done well even when oil has been weak. Nejra russia a preference for you. Looking at the e. M. Broadly, if eps,ook at the best emerging markets are leaving behind developed nations. When your allocation globally is e. M. , an area you may like to be overweight versus the u. S. Or europe . Alan no, and that reflects i hear what you are saying on earnings and that reflects what is happening in the u. S. The u. S. Is dominant in terms of weighting. Earnings expectations are declining after the sugar rush of last year. It is more relative perspective. For us, what are we looking for to be more optimistic on equities and where will we go . Rate cuts coming. Is it midcycle or recession . Confirmation looks more midcycle and then we will see improving in manufacturing and europe would be an interesting place. Germany, very cyclical, maybe japan. For us, em equity, there are still plenty of risks. We tend to play em more fixed income. Developed equities focus and within fixed income, both e. M. Local debt and e. M. Debt in dollars. Nejra im sure youve benefited because em debt has done supremely well recently. Any areas you prefer within emerging markets . Is it russia with the equity story or Something Else . Alan again, our approach is blended. We do have direct bonds, direct dollar bonds with russian names. Weve even bought 100 year debt in mexico. Dollars, but we tend to be a customer of the Investment Management industry. You can single out a few names but really, we are taking the generic return to the asset class. Nejra alan higgins cio at coutts co, thank you for your thoughts. Next, greece heads to the polls. Countrys Prime Minister is struggling to defend four years of austerity and economic upheaval. We speak to the chief economist about what a possible change in power means for the country. This is bloomberg. Nejra dancing along. I wish i had been part of the celebrations. Boston pops, what a display. It was all for july 4. Markets, reopening in the u. S. Today. We saw the indexes hit records comic records. Maybe no big bets made ahead of the key jobs report. The 10 year yield down another. Dollar has been trading treading water all week. 6 after aollapsing probe is urged into the rally. Some have questioned the rally recently and whether it is disconnected from fundamentals. Lets get a business flash with debra mao in hong kong. Samsungs quarterly profit has more than halve after Global Industry slowdown and demand has been hit. Koreas Largest Company has reported operating income at about five point 6 billion, beating expectations but only after a oneoff gain. Deutsche banks cuts may go deeper than u. S. Equities and rates. The german lenders board is set to decide on the sweeping overhaul at a meeting this weekend. The bank is eyeing around 20,000 job cuts and may shutter the u. S. Equity unit entirely. Deutsche will reportedly start informing staff of cuts monday. Imagine, grannies in Running Shoes delivering ramen noodles. That is uber plan for expansion in japan. It might sound ridiculous, but stick with me. The chief executive said the elderly are actually signing up to be uber eats curriers. He says seniors in search of exercise are doing the deliveries on foot. That is your Bloomberg Business flash. Nejra debra mao in hong kong. Thank you so much. A lot has changed since the greek Prime Minister resigned in 2011. The party swept to power on a wave of antiauthority sentiment and a crippling debt crisis. A renegade finance minister heads to the polls monday. Leading the polls is a centerright new democracy party, a pillar of greeces political system and led by the son of a former Prime Minister. Promised reforms to jolt the economy after years of recession. It has pledged to reduce greases annual primary surplus and proceed with tax cuts alongside this there could be reductions that are controversial property tax. For investors, the bounce back. 40 tohave fallen from cut 14 to touching 3 monday. Investor enthusiasm is reflected in the stock market. The Athens Stock Exchange index is the worlds best performer this year. Joining me from athens is the chief economist at thank you for joining. Weve seen greeces 10 year yield in the selection hitting a record low. Do you expect yields to drop further based on the results . Is two factors leading to this. The expectation of the election result, but there is also a broader european trend we are seeing across bond yields all over the euro area. Expectations Christine Lagardes election will lead to improved markets. Yieldsyou think bond could continue on the trend. Kind of reforms are you expecting if new democracy comes to power . Has beene program centered around prioritizing investment. Greece is entering a phase of no longer relying on financing from creditors. Market financing will become more. Foreign direct investment in infrastructure prospect, prioritization, the kind of policies they will put in the program but also as you mentioned, renegotiating the primary surpluses is something that will be important. It is something with Party Support but close cooperation with creditors. Nejra you were saying earlier the rally we have seen in greek bonds and other european bonds is partly down to the expectation of more qe from the ecb. We have Christine Lagarde coming in. Do you expect with her at the head of the ecb, if we get a new bonds could round, be included . Danae it is an interesting question. Isther new qe is needed something there are legal issues around and we have the German Constitutional Court case this month. It is something grace should be included if it is repeated. Could you did say that we see a continuation of a crop lower in bond yields across europe. One of the things in focus in yesterdays session is the 10year bund yield wrapping below the deposit rate, 40. We close that 39. With where the bund yield is at, does that increase pressure on germany to loosen the fiscal pursestrings . Danae definitely. That is one of the factors that increases this pressure. Christine lagarde in her role at the imf has been actively encouraging germany through her rhetoric to increase spending in those countries that have the germany is aand primary candidate in the euro area. Another factor is germany is flirting with recession this year. The economy has not been doing very well. It has much need for Infrastructure Investment and as the euro enters its third decade now with Christine Lagarde potentially at the helm, it is something that will need to reduce the imbalance. Nejra Danae Kyriakopoulou chief economist at omfif. Great to have you on the show. Coming up, head of the greek elections, we speak to the former finance minister of greece. Dont miss the conversation after 10 00 a. M. London time. Bloomberg users can interact with charts using gtd go. Gtv go. Save them for your own use. This is bloomberg. Good morning from bloombergs European Headquarters in london. This is bloomberg daybreak europe and these are todays top stories. 160,000 reasons to hold fire. The fourth of july celebrations over and markets need a catalyst. What better than a payrolls report . What could the numbers mean for fed rate cut expectations . Deutsche banks big Restructuring Plan could stretch far beyond its equities and rates divisions. In korea, samsungs problems worsen, as quarterly profits almost halved when we demand. Indias finance minister announces a huge planet to become a 3 trillion economy last year. Donald trump delivers a fourth of july speech heavy on pomp and pageantry, while light on political messaging. Together, we are part of one of the greatest stories ever told, the story of america. Good morning, everyone. Welcome to bloomberg daybreak europe. We have some data breaking on the bloomberg, which is factory orders for germany for the month of may. Month per month, down 2 . The estimate was a drop of 0. 2 . That is a lot worse than expected. Downon year dim 8. 6 8. 6 . German factory orders coming in worse than expected. What would that do to the bond yield . That will go below the ecbs negative deposit rate of 40. Lot. Uro not moving a lets take a look at european futures. Yesterday, we actually closed flat on the stoxx 600. In terms of markets, most of the impetus might come from the jobs data coming from the u. S. Later. Looks like we are set up for another day of not any big moves. We have had four days of gains and then flat. We have seen u. S. Equities, in terms of s p 500, nasdaq, and bt hit records touchdown dow hit records. Looking pretty flat when it comes to the btp and bond futures. Yields comesaw btp up a little bit, meaning maybe we found a very brief bottom in those btp yields. That btp bond spread hitting the lowest since may of 2018. Juliette saly has all the details from singapore. Good to see you. Juliette we have seen more of an uptick in asian markets in the last hour or so. More buying coming through in chinese equities. It has been a pretty muted session, as you would expect with nothing from wall street and as we await the u. S. Jobs report. Australia certainly an outlier. It is getting very close to alltime highs. It has closed at its strongest level since november of 2007. Subdued movement in india. We have seen a nice tick up in some of the Indian Airline stocks, because the finance minister mentioned aircraft financing. Ontracky and semtech for the biggest gain since may 6. We saw its secondquarter profit fall by more than half. 5. 6 billion, this was a 56 fall in operating profit . That is a little bit for samsung. That is in the better than estimated and that is a little bit better than estimated. The global slowdown we have seen really impacting a lot of these chip players. When you look at secondquarter numbers, it is pretty much half of what we saw it in november of 2018. We have seeing samsung shares we have seen samsung shares outperform the kospi. Nejra thank you so much. Juliette saly in singapore, great to have you with us. A fed rate cut is all but certain this month but that could all change rapidly when the u. S. Jobs report hits today. The report could send analysts scurrying to adjust their output. Fining us is thu lan nguyen, strategist atx commerzbank. What do you think is more likely for the markets, a weak jobs number, leading to a 50 basis number,t, or a strong leading to a hold from the fed . It is morethink likely we see a strong jobs report and a hold of the fed in july. Really, the odds are very tight here. Also, in my view, it is not really matter the timing of the rate cuts does not really matter the timing of the rate cuts. Cutsverall extent of rate and the entire rate cutting cycle this time around. Nejra that is interesting. In that case, do you expect a rate cutting cycle . How far could it go . Could we go back down to zero on the fed funds rate . Thu lan yes. Actually, we do expect some sort of rate cutting cycle. In total, three rate cuts in the next couple of quarters, but we think they are going to happen sequentially. The fed is not going to cut by 50 basis points immediately. I would not exclude it if the fed feels like it has to frontload rate cuts, because it is fearing the economic deterioration due to the trade tensions we have seen recently. I think we will see more rate cuts and not just on the one just only one. Nejra what does this all mean for the dollar . We have had four days with a dollars hardly moving where the dollar is hardly moving. What is driving that . Thu lan if you look at eurodollar, we see a relatively weak dollar as well as a relatively weak euro. Both of these currencies are way down by rate cuts waeighed down by rate cut speculation weighed down by rate cut speculation. The dollar has been weakening against the aussie. This is where the movement is going on. I think the dollar will remain weak because of the rate cut speculation ongoing speculations ongoing. Nejra how much weaker could we see the dollar fall . For example, if we were to look at the dollar index. Where could we get to on dxy, for example . Thu lan well, the dollar has akened quite a bit in the last one or two months. I still see more room for dollar weakness, but at this point it will be rather limited. Maybe something around 5 definitely we could be seeing , but probably not much more than that. A would be the maximum over oneyear horizon that i would be seeing at the moment. Nejra 10 max decline for the dollar over a oneyear horizon is what you say. I have asked some people if they see further weakness. They tell me if you look at the front end, two year rate spreads, the u. S. Is still attractive versus other countries and that points to dollar strength. What would you say to that . Only look atou nominal yields, that may be true, but you should be looking at a hedge trade actually. If you account for the currency risk, actually u. S. Treasurys are not that attractive anymore. Actually, japanese and european bonds are more attractive on the edge basis. On a hedge basis. Nejra do you think Jerome Powell will take the opportunity when he speaks next week to push back in any way on these rate cut bets from the fed . Thu lan i think it is difficult to say. Obviously, it depends on the Economic Data and the economic developments. The labor Market Report may be crucial, particularly in terms of the timing of a rate cut. If the labor markets report disappoints, the chances are quite high that the fed will already at at its next meeting. I would say Jerome Powell would prepare the market for that, rather than push back. It really depends on the shortterm data, i think. Nejra yesterday, we were talking about the potential risk of currency wars after more comments from president trump. Is this a conversation you are having with clients that they are concerned about at all . That we could see intervention by the u. S. Into the dollar like we saw in 2011 . Thu lan yes, most certainly. Obviously, the reasons are the increasing attacks of the u. S. President on the fed and his complaint that the dollar has been too strong. That is one of the main reasons why the u. S. Trade deficit is still widening. I think this risk is becoming apparent. I think it also is becoming one of the greater risks for dollar the. We view. We are already quite bearish on the dollar. If you factor in the political pressure we see on the fed, these rate cuts we are expecting from the fed are much more negative burden on the dollar than they usually are. The fed is in a dilemma. It wants to cut Interest Rates because of the fundamentals situation, the economy weakening, etc. , but at the same time, he has political pressure to face. Usually, probably the central bank would refrain from cutting Interest Rates in order not to create the impression that it is acting because of political pressure. ,s i said, it is a dilemma because the fundamental situation is deteriorating. Nejra thank you so much. Thu lan nguyen from commerzbank will stay with us. We have a lot more to discuss. Indian bonds are gaining, therefore yields falling as the budget speech is continuing. Taking a look at indian yields. The 10 year yield is down one basis point. Not huge moves, but we are nonetheless seeing a little bit of a reaction. You can follow all of the reaction on the budget on tliv. The focus seems to be on reviving investment, the focus on attracting Foreign Direct Investment into india. We will keep an i on that through the show. Lets get the bloomberg first word news with debra mao in hong kong. Thousands of spectators packed them all to watch president trumps fourth of july speech. He praised the u. S. Military and American People, but also put himself front and center of the Independence Day celebration. The event included tanks, flyover jets, and culminated in an extended fireworks display. President trump we celebrate our history, our people, and the heroes that probably defend our flag, the brave men and women of the United States military. One ofr, we are part of th the greatest stories ever told, the story of america. Debra china is sticking to its demand that the u. S. List all tariffs as a condition for any traded deal. Some u. S. Officials have insisted they will state even after a deal as a means to enforce it. President trump and president xi agreed last month to restart talks. No agreements for facetoface negotiations have been announced. Delivering brexit is key to keeping the u. K. Together, according to boris johnson, the frontrunner to replace theresa may as Prime Minister. He said he would prioritize the union of the u. K. Over leaving the eu, batted that failing to deliver on the divorce could split the nation apart. The strongest earthquake in 20 years has rattled southern california. Buildings in los angeles shut after the 6. 4 magnitude earthquake hit around 170 miles from los angeles. Housele injuries and two fires were reported in the town your the epicenter. Los Angeles International airport says operations were running as normal. Last nights boston pops fireworks spectacular is one of the largest and oldest public fourth of july events. It gave out 6000 u. S. Flags with 10,000 fireworks launched from three barges. Global news 24 hours a day, onair and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra debra mao in hong kong, thank you. H2o Asset Management says it stopped a week long slide during six key funds during which six key funds plunged by more than 8 billion euros. It was the first day of growth since morningstar suspended its rating of h2os allegro find. What are the numbers behind this controversial business . It held 1. 4 billion euros of bonds linked to and his companies. H2o has owned until recently deep value positions of up to Nine Companies linked to when indhorst. Told clients it had successfully sold the majority of its windhorst linked bonds. Turmoil, the ceo announced he had bought a 37 stake in the german soccer club. Deutsche banks job cuts across the u. S. Could go far beyond the major targets. We bring you the latest i had of the banks Supervisory Board meeting this weekend. This is bloomberg. 7 18 a. M. In london. 40 minutes from the equity market open in europe. This is bloomberg daybreak europe. I am nejra cehic in london. European futures are flat. Still some action in the bond market. The 10 year treasury yield down of crucialnt ahead jobs data. That is something the market is watching. Also watching the 10 year bond yield. Yesterday, we went below the ecbs negative deposit rate, 40. Will we push through 40 again in todays session . The 10year btp yield back up again, but we are down 40 basis points now, 1. 64. Were actually ever so slightly positive on that now at the moment. Futures in the u. S. Flat. 500 hitdaq, and s p records this week. A real tumble in singapore iron ore. Commodity markets sinking, with the top China Steel Group urging a probe after the rally. Downside risks of demand and Global Growth have outweighed the extension of opec plus cuts. Lets get the Bloomberg Business flash with debra mao in hong kong. Osrams supervisory and Management Board accepted a takeover bid from bain capital and carlisle. Bain and carlisle are offering 35 euros per share. Samsungs quarterly profit has more than halved after a Global Industry slowdown and trade tensions hit demand for its chips and highend smartphones. Koreas Largest Company reported operating income at about 5. 6 billion. It beat profit expectations, but only after a oneoff gain. China is sticking to its demand the u. S. Lift all tariffs as a condition for any trade deal. Some u. S. Officials have insisted they will stay even after a deal as a means to enforce it. We spoke to standard chartereds chief executive about the ongoing dispute. There will still be a lot of trade between the chinas fear and the rest of the world china sphere and the rest of the world. Europe would be wise to maintain a middle position in that tussle. We are obviously a european bank. What we really want to focus on is how we can promote trade within that china sphere, but also how we can promote trade across that sphere. Debra catch the full interview next month. That is your Bloomberg Business flash. Nejra debra mao in hong kong, thank you. Deutsche banks cuts may go deeper than just u. S. Equities and rates. The german lenders board is set to decide on the sweeping overhaul at a meeting this weekend. They are looking at around 20,000 job cuts and may shudder the u. S. Equities unit entirely. Joining me now from rome is bloombergs European Finance editor. Great to have you with us. Thank you for joining. Do you get the sense that Deutsche Bank will keep any operations in the u. S. At all . Talk to us about their intentions with the u. S. Presence going forward. Sure. The ceoknow now is that has said he wants to have a u. S. Presence mainly in terms of what it provides as far as access to Capital Markets in the u. S. For european clients. We have no for quite a while that Deutsche Bank seems to be getting out of equities and interestrate trading in pretty much most of the countries outside of europe. Its presence in the u. S. Would be entirely dependent, or mostly dependent on what it can do for its european clients. We are finding out now that besides the equities and interestrate trading, it is going to be probably a much broader sweeping cuts across the u. S. Operations. Nejra when are we going to learn the details of the overhaul . Are we likely to get all of this on monday . What we know is that the board is supposed to be meeting sunday. Whether we get a statement from them immediately after is a question. Our understanding is that they are still actually ironing out these details. They may not be prepared to make an immediate statement. We will be talking to people and listening. Space onay watch the sunday if youre interested in finding out what the details of the plans are. When we hear a comprehensive package and make sense of it when we actually hear a comprehensive package and make sense of it is the question. Nejra thank you so much. Some breaking news on iag. It is not interested in norwegian. The position on that is unchanged. This after it reported plans for a new Norwegian Air bid within two weeks. That is the update from ing. German fact iag. German factory orders slumping in may. , ecb officials indicated they are willing to cut Interest Rates further and possibly even restart asset purchases if the regions economy fails to improve. Jpmorgan has turned instructive on shortterm italian bonds. We are talking about the fiveyear. Thu lan nguyen from commerzbank is still with us. Commerzbank has been out in front in terms of the expectations for ecb rate cuts. You have been calling for july and now you are calling for 20 basis points in july. Why . Thu lan because of the economic situation. The data that we have seen , primarilybviously from germany, has been rather weak. The Manufacturing Sector is still in recession and has not really recovered. Also, i think what is w orrying for the ecb are the following longterm falling longterm inflation expectations. I think that is a big concern among the ecb members. Therefore, i think they will act rather sooner than later and also are going to try to surprise the market on the dovish side to have an impact. Nejra yes. With that in mind, very briefly, and with the 10 year bond yield pushing on 40, can the euro statesupported estate stay supported . Thu lan in the very short term, i would not expect the euro to regain or recover. We are expecting rather the ecb to surprise on the dovish side. Against this backdrop, it is quite likely that euro will weaken further. You are not probably see it as much in eurodollar, but rather in other crosses. The dollar at the moment is also rather weak because of the rate cut speculation going on there. Nejra thank you so much for joining us. Thu lan nguyen, great to have you with us. Coming up, we speak with larry kudlow. Dont miss that conversation after 2 30 p. M. London time. This is bloomberg. Anna good morning. Welcome to Bloomberg Markets european open. I am anna edwards in the city of london. The market to say hold fire. Slowean futures a signal a start to the trading day as the u. S. Reopens after Independence Day celebrations. The cash trade is less than 30 minutes away. Anna sweeping cuts. Job losses at Deutsche Bank may go deeper than just equities and rates staff. The Restructuring Plan will be finalized this weekend