Deutsche bank in the crosshairs, u. S. Investigators with the malaysia scandal investment fund. The tale of two listings. Budweiser asia offering is set to price later today. Less than half an hour until the start of European Equity trading. Ftse futures look like this, positive, as if we will get more out of the minutes or Powell Comments we heard yesterday. Storyle catchup, the before that session is a positive one. Lets see where we are on the asian session. A strong session, fully pricing in everything we heard from paolo overnight. The expectations for july have an cemented. The jobs report on friday did not change the fed thinking on what should be done with insurance cuts against the slowdown globally. Higher. Arkets going this is the fx picture. The japanese yen on the rise. The dollar retreating. Lets put up the other side and show the fixed income side. There are bigger questions about what happens to sovereign trade if we look to reinflate the u. S. Economy. In terms of the commodity markets, looking for weakness in the dollar as one of the drivers, the gold price got a boost despite the risk off atmosphere everywhere else. Oil prices are in focus after renewed tensions in the strait of hormuz. Lets hear from fed chairman Jerome Powell in washington dc. The overall economy is performing well, but what we see , what we call crosscurrents come up 3. 7 is a low unappointed rate, but to call something hot you need to see some heat. We see reports of Labor Companies having qualified labor, nonetheless we do not see wages responding. I do not see that as a current issue. The uncertainties around Global Growth in trade continue to weigh on the outlook. Inflation continues to be muted. The law gives me a four year term, and i intend to serve it. Anna thats pick up the market conversation with mark and singapore. I thought Jerome Powell was channeling your dovishness. The market, 25 basis points happens in july, then more thereafter. How is the fed testimony changed your review if at all . I think he was surprisingly dovish, more dovish than anyone anticipated. Impressively, he surpassed the wildest expectations. It is important to emphasize why, he communicated he is worried about the economy. He communicated well. I have been impressed by paolo. Some i have been impressed by powell. I think he is warning there are signs the Economic Outlook is deteriorating rapidly. That is slightly worrying for the by everything trade. Buy everything trade. He has lowered yields everywhere. Reached their own conclusions, and it seems like the fed is worried, i am worried, but not many Market Participants are worried yet. Anna not worried enough to stop buying. What does this mean for the dollar . The simple answer is the dollar weakens. We did see some people pointing there is a big Interest Rate differential between the fed and elsewhere. Do not expect the dollar to fall to quickly. Too quickly. Mark my view has not changed from last night. Or dollar peaked out a month two ago, and the next move will be lower. Easy affair,e an it will be a jacket move up and down. The bigger move will be to weakness. The yields on the dollar are attractive, but it is the direction of change that is moving faster than other countries, because they have nowhere lower to go. Over the next year, the dollar will see weakness, but not in a straight line. Anna what about banks talking Interest Rate differentials . What will they be doing . I know the question you are asking is, what will the pboc do if the fed cuts rates as month. We saw the pboc echoing the fed. Does that apply on the way down . Think all Central Banks have to follow the lead to some extent. The Central Banks need to turn dovish. In november, every bank was projecting more hikes. Now, almost all are projecting easing. Some got ahead of the fed. The pboc will try to track the feds actions. Cut benchmark rates. They are directing to other measures and being more targeted. They do not have a problem with liquidity, but getting it to the people who need it. Those small and medium institutions, whether banks or nonbank financials. In china, yes they will follow the fed with easing. China has serious worries at the moment. Think about the central bank abilities, there seem to be so many factors working against them as they try to put inflation back into the system. That was part of the conversation yesterday with Jerome Powell. What do we make of the tools they have available to them . I think they do not have the tool, they should be targeting inflation. 2 is ridiculous and arbitrary that was chosen for an economic model that was derived a hundred years ago, and it works for that period when we had quickly growing populations. Demographics have changed, and we have the rise of automation, the amazon effect. Demographics have changed again. A 2 target is ridiculous. Central banks targeting it is the wrong policy for assets, people, for real growth. As long as they keep trying to do that, they will distort the system and struggled to achieve it. We are pumping in liquidity, but it will not generate inflation because we have structural issues that means we will not sustainably get those targets ever probably. Anna thank you very much, mark cudmore. Give us your thoughts on the fed and what it means to other Central Banks, what will the pboc do if the fed cuts rates this month . Lets get a first word news update debra mao in hong kong. Debra that u. K. Has confirmed an incident with iran in the strait of hormuz. They tried to impede passage of a tanker. The royal navy was forced to intervene, this comes amid heightened tensions in the persian gulf. Irans News Agency Says the revolutionary guard denied a competition. Hedge funds have seen their best first half of a year in a decade. The average Multistrategy Fund has been about 6 in the first six months. Is fitted out, the Flagship Fund has gained 13. 6 over the period. The fixed income fund returned 10 from blackrock obsidian. The u. S. Is about getting frances plans on tech giants. Will have ahizer year to examine if the plan will hurt u. S. Technology firms. The 301 investigation is the same tool trump used to impose tariffs on china. There is no end in sight with the spat between japan and south korea in years. Neither has climbed down from the trade conflict. It escalated last week when tokyo moved to curb materials vital to south koreas tech sector. They are planning to meet tomorrow. Opposition, the European Commission president. She has yet to win over socialist members to get a majority in the assembly. This roadblock highlights the risk that parliament might veto the slate of nominations. Global news, 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna debra mao for us in hong kong. Coming up, the savings turnaround plan, Deutsche Bank confronts more problems. It faces investigations from the u. S. Justice department. More on that next. Remember, Bloomberg Radio is live on your mobile device or dab Digital Radio in the london area. Anna welcome back to the european open. 7 43 in london. 17 minutes until the start of equities trading. We are expecting the bounce given to equity markets globally by Jerome Powell. By 0. 2 andg higher 0. 4 here in europe. It Deutsche Bank is facing an investigation from the u. S. Justice department as part of a probe of the malaysian investment fund. Federal authorities are preparing to charge Jeffrey Epstein with running a sex trafficking ring of underage girls. Joining us from frank hurt. Rankfurt it does not seem a day we do not talk about Deutsche Bank, part of the restructure, and now these nasty headlines. Wise Deutsche Bank in the crosshairs . Why is Deutsche Bank in the crosshairs . You do not want to be in this limelight. EmployeeGoldman Sachs went to work for Deutsche Bank, and he was involved in the matter. Not beenbank has accused of wrongdoing at this stage. Some of the findings of also say they were one, and they see a limited role here. Publicitythe kind of the ceo wants at this stage. He said he put the bulk of the legal issues behind it. He has used the word stabilized, and so this reminder of the history is the last thing he wants at the moment. Anna what about these other new revelations surrounding epstein . What was the lenders connection with epstein . Is one of the most interesting things. We do not know a lot about how epsteins finance, we know about his spending and visible assets like houses and cars, but we do not know about what is behind it. Right, nothing with theh operating bank, but it is an unwelcome reminder of the clients Deutsche Bank has had. They came over flack with how they treated donald trump before he was president. It is a high profile case. People are focused on this, and to have your name associated with him is not a good thing for Deutsche Bank. The u. S. Is there most important market after germany. Not the headlines they were hoping for this week. Anna this comes days after the cutting,nd, the cost the job losses, the restructuring announced on monday. What is the word in frank for on how that has gone down what is the word in frankfurt on how that has gone down . The Immediate Reaction has not been positive. Indeed. Investors are not inspired. , it isey were hoping for a letdown after the fact. They hope for him to pull a rabbit out of a hat. There is not a lot he could do beyond this to wow markets. Anna thank you for the update. The latest on the negative headlines for Deutsche Bank. Lets get a Bloomberg Business flash from debra mao in hong kong. Ryanair is morning and extend the grounding of the boeing 737 max might hit its growth lands. The ceo is set to meet with the jet manufacturer in the next two weeks, and he will push for a specific date to return the plane to service. Boeing is indicating it should fly again by the end of some number. By the end of september. If it gets delayed beyond september, we may have to slow down our growth rate. A more news about the biggest ipo of the year, Budweiser Brewing will price its hong kong offering at the low end of the market range. It is offering 1. 6 billion shares between 40 and 47 hong kong dollars. With a 1flirting trillion valuation once again after posting a seven day winning streak. Yesterdays close saw its market 99 billion, a gain of less than 1 would push it above the 10 figure mark. That is your Bloomberg Business flash. Anna thank you, debra mao in hong kong. Minutes away from the start of trade. Channeling more of howls dovishness channeling more of powells dovishness. This is bloomberg. Anna welcome back to Bloomberg Markets european open. To go to the start of European Equity trading. Lets find the stocks we are watching. Swis covering in connection with the opioid crisis. Sides to this. O they have agreed to pay 1. 4 billion fine. A record high today because it removes and overhang for the stock. The company at the center of that product also raised its guidance today. They called up between 25 and 30 . Anna thank you for the update. We are anticipating a big ipo in the asian markets around the beer sector. But closer to home for you, the suspension of the ipo plan. Absolutely. We reported yesterday the company was considering pulling the ipo and delaying it. Shares declined yesterday and are expected to decline further today. The reason was because of cautiousness and weaker demand from u. K. Investors. Theipo now may not be off table, but would be after the summer. We will see if others follow in the days to come. Anna that is the interesting thing to watch, whether this is part of a broader move. Lets talk about norwegian with change of the top. Stepping down, he has been there for 17 years. The turnaround plan is starting to take hold. Now is the time that he is stepping down. Have secondquarter earnings miss expectations. Shares are lower by about 2 . Anna thank you to the team for joining us. First go is the function on the bloomberg. Buy the mobile app you want to get up to date with the stories we are watching. We need to keep an eye on the real estate stocks in the u. K. Because they are out with a positive report on the state of the u. K. Housing market. That could lift some house builders. We are expected to open more strongly. Next. En is this is bloomberg. Anna a minute to go to the start of cash equities trading. Welcome to the European Market open. From thehe handover asian session, a strong one, up 0. 8 on msci Asian Pacific index, reflecting the dovishness from Jerome Powell. The jobs report did not change his thinking. Rate cuts are on their way. The euro was stronger, but it is a dollar weakness story. The dollar has weakened as a result, the euro made gains as does the yen. We see weakness and yields. The buy everything story seems to be back. Youre watching developments in the straits of war moses the strait of hormuz between the u. K. And iran. 0. 2 and 0. 4 on this european sector. ,uropean equity markets opening the extent of the dovish messaging coming through from the fed ringing in the ears of investors globally. Powell will appear again in washington today. There could be further news, more headlines will be printed. Euro stocks in positive territory. A continuation of the positivity, the positive reaction from powell. Higher in Global Equities has gone from the u. S. , asia, and is here in europe. The japanese yen benefits from the weakness in the dollar. The pound also gains as does the swiss franc. The euro a little stronger. Thisollar index down morning. Lets see how things are moving from a sector perspective. Generally the picture is green. We have a sea of green across equity markets. We have green around financials, health care, telecom. We do not have large areas of red. In terms of stock specifics, lets dive into those. To the upside, the biggest gainer ashmore. There will be a 1. 4 billion doj. To the a big overhang for the stock. A period of uncertainty comes to an end. The stock is higher by 1. 4 . On the downside, we had a few exdividends in the mix today. Smith is down by one point 1. 5 . Lender is downn by 1. 5 . We will let other stocks open up, and bring you the movers shortly. European markets are opening higher. Asian stocks climbed higher. Joining us now is viktor hjort, global head credit strategy, bnp paribas. Good to speak to you this morning. Lets get your initial reaction to the fed, we heard a surprising level of dovishness. Were you surprised . Viktor not really. I dont think he has necessarily promised two rate cuts in july, but for the credit market and possibly the equity market, it is the direction of travel. ,he fed is ahead of the curve they are acting to prevent a from becoming a recession. It is important they are recognizing the underlying economy. One in the the manufacturing pmi has been tracking down with the rest of the world lately. Industrial production is impacted by the tray conflict. Earnings expectations are quite weak. T is right for them to act they are acting early, and that is the message. Anna this is the insurance cap we spoke about. I have a chart showing how the market has cemented its expectations for a rate cut. It seems more solid after we saw Jerome Powell speak. A lot of red makes it alarming. What message would it give if we see a 50 basis point cut . Would that be a sign of too much panic . Viktor no, i do not think so. They are starting and easing thanign with lower rates historically. They have be mindful there is less opportunity to catch up if they find themselves behind the curve and the economy continues to do. Continues to deteriorate. I doing the 50 basis points, do not think it will look negative at all or the market will see that as anything other than a preemptive aggressive move. Anna the fed seems to be trying to stoke inflation. , butve buy everything there seems to be debate about what it means for the bond market. If they are successful at bringing inflation through, what do you rate their chances for producing more inflation . Viktor they are up against so many headwinds. They believe in what they are doing. This is digressing a little bit, but i watched philip lane at the ecb do up presentation in helsinki. He was showing slides and where the economy would be if they had not done the easing over the last few years. He is saying if we did not do qe then Economic Growth would be lower than it has been currently. They believe what they are doing makes sense. They are shifting the targets a little bit in talking about symmetric inflation target around 2 , meaning that you have been spending the last decade below, shouldnt you be running mostly above . That is a more structural dovish message coming through. This, aongst all of lowinflation environment, it has increasingly negative yielding markets. Is it making life more difficult for investors to find places to go that are safe enough that have yields . Theis this changing investment community, the way we see negative yielding assets in places we have not expected to see them . Viktor i think it makes life extremely difficult. More than 50 of sovereign bonds are trading with negative yields. In the European Market, the credit market, about a fifth are trading with negative yields. That isy in a world lackluster, you want yield but you want to be as defensive as possible. What is happening now is how you assess whether something is sufficiently defensive enough. That is changing. It means you have to go further , but rightsk curve now there is an interesting dichotomy in the market that i focus mostly on, the credit market where there has been a huge rally on everything defensive. The entire market rally has been about discounting what the Central Banks are doing. Priced in to less cyclically sensitive riskier parts of the credit curve, like low rated high yield, cyclical credit and so forth. Credit markets are saying it is about Central Banks. We do not believe in growth. Theare very consistent with market environment now. If there are upside to prices, it will be because growth turns better over the next few months. Anna a positive place to leave it. Viktor hjort, global head credit strategy, bnp paribas stays with us on the program. Up next, the stocks to watch. This is bloomberg. Of course i would not do that. I cannot hear you. [laughter] my answer would be no. What i have intended to say on the subject, and what i have said is the law clearly gives me a four year term, and i intend to serve it. Anna that was fed chairman jay powell answering a question on whether he would leave his post. F President Trump asked him to powell cemented market bets for a rate cut. If the fed starts using, how long can the credit cycle be extended . Viktor hjort, global head credit strategy, bnp paribas is still with us. It is an interesting question. What does this do to the credit cycle . That showsart spreads of u. S. Corporate high , high yields specifically. How long do we extend the credit cycle for . Policies makesve the cycle run longer and with less downside. The fed was this proactive in 1995, it did not trigger a credit rally, but it extended the cycle for another two years. Ways, the difficulty has ton to get corporates invest and borrow. There is a lot of uncertainty with the backdrop of the global tray conflict. What global trade conflict. You have been seeing deleveraging in the u. S. And to some extent in europe. That is positive and helps extend the cycle, but it is a problem for Central Banks. Anna Goldman Sachs said do not worry about leverage levels at because Interest Rates are so low, profits are better than they were. In thosee anything metrics to worry about . Viktor i think the main point is that the overall leverage trend is trending lower, and. Hat means safer Balance Sheets and over time, less bond issuance. It removes a supply overhang from the market. Problem if becomes a growth starts to slow materially, and that is why it is important the fed is ahead of the curve and proactive. Anna it is clearly something that worries Jerome Powell. He said leverage requires monitoring. Why does he think it needs to be monitored . Viktor because it is trending lower from very high levels. You are right, if you look now, thee u. S. Economy Financial Sector is safer than it was. If you look at the one place where leverage has increased substantially, it is in the financial corporate sector where leverage is substantially above where it was. Anna maybe that is the area people worry about more. What about overall Global Growth picture . What does it do for your outlook with the fed cutting Interest Rates . They are faced with a global slowdown read how concerned are you . Is dovish,think it the economy is weak but not in a recession. Central banks are easing monetary conditions fast enough to be ahead of the curve. That is a benign environment for theorate bonds which has investors it needs at the moment, and parts of the market is safe. It is a sufficiently bullish backdrop for credit, and obviously that is predicated on is nota that growth slowing too fast. We think that risk is relatively low. Anna with the fed cutting just rates, and you make the point earlier that they plan to cut rates below where they normally would have started. What does that tell us about how andrest rate environment, what assumptions we need to make about how high Interest Rates can spike . Viktor that is an interesting point because it is absolutely true the fed is cutting rates from a much lower point than they have done historically. Not just in an absolute sense. Normally what happens is the fed hikes Interest Rates up until it is on par with phenomenal rate of growth of the gdp. , yourappens then liability starts to grow and it becomes difficult for borrowers to deleverage. That is when the default cycles move higher, and when credit bear markets start. This time around the fed is possibly cutting more than 200 basis points below previous points. That is being ahead of the curve. Maybe they discovered in a more leveraged economy, you cannot change rates as high as you have done historically. It is a good thing they are aware of those constraints. Anna because of what that might do to the corporates involved. Thank you for your thoughts, viktor hjort, global head credit strategy, bnp paribas. He stays with us on the program. A few lines from china. Commercehe ministry of speaking in china. Both trade teams are trumpmenting the xi consensus. He does not answer a question on trade talk meetings. China, he says, has been consistent in its core concerns that need to be met. , among the hopes that the u. S. Moves huawei. Dani a good day for u. K. Home developers, we are seeing a few that today after a report buyers have returned to the u. K. Market for the First Time Since 2016. Here are signs that amid the brexit uncertainty, the Housing Market is starting to stabilize, and there is more confidence. Dnb, norways largest bank having problems in its earnings report. Its all losses in trading and Investment Banking areas. Analysts concerned because the Interest Rate environment is more favorable for norway than others. Shares falling by 2. 5 . 26 . Ior, big gains, up the company raising its outlook for the full year after its first half beat expectations. Jeffries out with a note saying the results are encouraging, and it should provide a shortterm boost. Anna thank you for the update, dani burger. Theext, mario draghi, will this is bloomberg. I have no doubt they will try again. Is going through a valuation. When it is back in service, it will be the most inspected aircraft of any aircraft flying in the sky. I have no doubt the regulators will give it when they are satisfied the issues have been addressed. Ceo williewas the the 737ying he is sure max 8 fly again. The ecb is likely to mirror the fed and may show a dovish tilt in its account at the june meeting. Investors will gauge how strong the push was. For how great the chance of a rate cut is in september. Still with us, viktor hjort, global head credit strategy, bnp paribas. Fed, what dout the you expect from the ecb from here . Do they wait to september to do any kind of easing . Viktor no, we think they will signal clearly in the july inting that we will get september a rate cut, 10 basis points, then another rate cut later in the autumn. Then they will end up doing quantitative easing again before the year is over. Be throughoutll the second half of the year. Anna what is it you like investing in . Ie a sharp that shows have a chart that shows cocoa. Cocos. You say you like them because you are buying into a healing process. What do you like about them . Viktor we think the backdrop is sluggish but dovish, then a stronghere will be search for yield. What you get in cocos is highyield and underlying defensive. Anna banks are defensive . Viktor banks are defensive. If you look at the last 10 years in europe, you have a corporate sector that has leveraged up, but a corporate sector that has the leveraged. Deleveraged. Everything the ecb has been up to, it is mitigated to the downside. Giving the Financial System time to heal, that is what you are buying into it you are buying cocos today. Defensiveou like the properties of the Banking Sector . Banks do not necessarily do well when Interest Rates are being cut. Story, if youbt disregard the probability is not quite that great, the debt is still safe. Viktor i think that is right. There is a playbook for how to invest on Central Banks and quantitative easing. It starts were you front run the central bank, and the second stage is where you buy everything they are not buying. Cocos fit in that category. There is a third stage down the line, when growth comes back, that is when you buy bank stocks. Financial credit should outperform financial equity, and cocos are a good example of that. Anna one thing the ecb would be , andg is Government DebtItalian Government bonds are something you like. Viktor yes, italy is a deleveraging story at the corporate level, which is a nice additional yield exposure. The italian banks are quietly cleaning themselves up. Maintain aanaged to stable capital ratio even when the Italian Economy has been weak. Now they have been given a gift from the ecb that allows italian in carry trades and shore up their earnings base. Theyre earning space. Government bonds are something banks on a lot of, and generally improve Credit Conditions in the system. They have landed themselves in a sweet spot now. What would be bullish is if they take this opportunity to derisk themselves, come to the market, extend your profiles of debt, raise capital buffers. Now is a golden opportunity to do that. Anna thank you very much, viktor hjort, global head credit strategy, bnp paribas. Coming up, this funding round is on the. The upcoming hong kong ipo. That is next. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Anna here are your headlands. Headlines. Jerome powell suggests a cut is all but certain of this month. Reese suspends its offshore unit. Deutsche bank in the crosshairs. Investigators probe the lenders involvement with malaysias and malaysias scandal. Welcome to Bloomberg Markets. I am anna edwards in london. Lets get uptodate with what is on the move. Upside, so wethe insee a positive upside bias the wake of those surprisingly dovish comments. From Jerome Powell at the fed yesterday. We have got Gary Shandling gerreshiem, profits coming in better than expected. 4. 48 . Up Barrett Development of 3. 4 . Keep an eye on the u. K. Housebuilder because we saw that positive take on u. K. Housing, suggesting buyers are coming back to the market. Up, yesbenckiser is they have had to settle, but this does move and overhang on overhang price an on the share price. This is also the story of the specialty farmer business profits are soaring. Dm the put buffets out this put profitsmv also out of this morning. The stock is little bit weaker in todays session. Lets get a first word news update. The Federal Reserve is getting ready to cut Interest Rates for the first time in a decade. It sees a cooling Global Economy and weak manufacturing around the world. Speaking to congress about to congress,eaking Jerome Powell says the strong jobs report did not change that view. The uncertainties continue to weigh on the outlook. Addition, inflation continues to be muted and those things are in theace place place. In a place i n place. Intervention with iran comes amidst heightened tensions in the gulf. They are saying the revolutionary guard denied a con foundation confrontation. 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. Anna . Anna thank you. Unit of this firm is guiding investors that it could push its ipo to the lower end of the range. Budweiser brewing is offering one point 6 billion shares. 9. 8uld raise as much as million and top over uber uber as this years biggest ipo. What do we know about the deal so far . Like you mentioned, they are guiding investors that a deal may price towards the lower end. That would make it a deal of roughly billions of dollars. As you mentioned, we have seen tot swiss three has decided suspend an ipo this week. So the market is questioning whether there is enough appetite or liquidity in the market for a deal that is double the size. The pricing would not come until later today. Anna is there any sense of resale interest . A lot of the growth in the beer market in a recent years has come through the asian markets. This is an opportunity for asia. Interest in the Retail Community . That is definitely right. The market they have carved out is really the sweet spot for beer growth. India is a really highgrowth region. Bea is really the place to and that is why they are aiming for a rather high value. Investors,to retail they definitely have shown some interest. We have seen retail coverage of this dear covered by at least three times. For a deal this size, it is not bad coverage. But like i mentioned, we are seeing that because of how much Growth Potential there is going to be. It is also rather aggressive on pricing. Expensiverhaps more in pe terms or even ev compared to its peers, globally and regionally. It could definitely have some impact on whether investors are putting their money in. Anna thank you for the update. Crystal with the latest on that beer offering. Coming up, we talk about the movers this morning, including in this company which is agreed to pay millions into the investigation of an opioid treatment. Money,ve not paid this but it is being seen as a positive by the market because it removes this overhang. The stock is currently up by 2. 7 or so. More on that in a moment. This is bloomberg. If you are going to Say Something that strong as ambassador about the president , you have got to make sure it is persontoperson with your boss, rather than going through the cables and a channels. Virtually nothing is secret the space. And channels. Virtually nothing is secret these days. That was a former u. S. Ambassador talking about the former u. K. Ambassador resigned over leaked comments over the trump administration. Joining us is the undersecretary frome Commonwealth Office 20102015, now a managing partner at flint global. Great to have you with us. Just picking up on those theents, does this change way diplomats globally are going to operate . Anna it is a bit of a problem. Simon the problem is not what he wrote. What helem is to write thinks, and he was not rooted but the president , he was commenting on the organization of the white house. That aside, your question is a good one. If people think they are reporting will be leaked, they will be inhibited in reporting. That is a dangerous thing because it means people may not be getting the right advice they need. Assessment, how poor are transatlantic relations, specifically relations between the white house and the u. K. Government . Simon the basic relationship is strong. Institutionally, it is strong Intelligence Services and diplomats Work Together very well. , itat the political level is a tense at the moment and unreliable with President Trump in office. And now we are having political change in the u. K. I hope we can repair the damage and move forward. Anna if Boris Johnson and does lead the conservative party, his relationship with President Trump would help the u. K. . Actually, you have got to be able to stand up for your own interests. And Boris Johnson will be weak in the relationship with donald trump, unwilling to cross and more challenging, thats not a good thing for us or the United States. They need reliable, firm allies. Anna what is the best way to stand up in the situation . How do you take issue with allies . Is it best done publicly for behind closed doors . Simon diplomacy is best done behind closed doors thats why its diplomacy. Trump does it on twitter. Style andhas his own it dont think it is a good one. He insulted kim derek and is not aay, that normal way of conducting diplomacy. Back to anan get it adult conversation and we can Work Together on the interest we share, which are many. Given he felt the need to resign over this, it suggests the u. S. Has the power to Block Investors it does not like. This a new Development Block ambassadors it does not like. Is this a new development . Simon i spoke to someone who said was it was the first time he could recall Something Like that. I dont think he will be able to block the appointment of the investor. But what tim decided was that his position given the leak and the lack of support, was untenable. He therefore took his own decision and i think he reacted in an admirable way to do damage limitation on the situation not of his making. Anna should Boris Johnson be involved in naming the next ambassador . Simon the Prime Minister always is. End, who is the investor is a decision the Prime Minister will make. The key thing is that there needs to be a process. It cannot just be whoever Boris Johnson wants. Anna there seems to be tension building in the straits of for thes of hormuz between u. K. And the iranians. U. K. Ranians said the said they have tried to impede the progress of some vessels. Is this going to be an area to explore the relationship between the u. S. And u. K. . Simon we have a lot of common interests in the gulf in terms of keeping open the passage of oil and we cooperate closely on that. This incident is a difficult one. It is a bit odd they should pick that we havegiven been supporting them in maintaining the nuclear agreement. So we have a difference in the United States with the United States on that agreement, but a shared interest on the free flow of oil. Anna the iranian enrichment agreements think that is salvageable . The u. S. Step away from it many months ago stepped away from it many months ago. They have maintained it, the iranians are now saying they will not reflect respect to the positions. I want to know what the alternative is in u. S. Policy, because i have not seen it. If it is just pressure, im not sure that is a viable alternative. , joining usfraser here on set in london. Has intervenedy to stop iran from blocking a commercial oil tanker. The u. K. Government says it bps carrier was attempting to pass when three iranian vessels tried to stop it. We get more details from terra tehran. We have had a denial and some ,ushback against these claims saying they have not tried to interfere. We had the Iranian Foreign minister come out, saying that this is just another claim by the United States and the u. K. To detract from their weaknesses , whether that is in areas of Foreign Policy or other things, he did not elaborate. Thatey are not concerned they did this, they are denying that they tried to come in any way, interfere with the vessel tried to interfere with the vessel. Happening at a time when we have the french president top diplomatics , speaking to highlevel National Security officials here on the jcpoa and the future of the nuclear deal. The u. S. Action to withdraw from the deal, iran could scale back compliance. So the context is a lot of diplomatic to and from. And fro. We had an important meeting yesterday at the iea indiana which the u. S. Called in vienna which the u. S. Called to publicly criticize irans actions. Again, the United States saw a lot of pushback from the chinese, russians, and europeans. So the wider context is also very complicated. They are trying to salvage something from the nuclear deal and avoid any further publications. Anna thank you, bloombergs reporter on the ground in tehran. Lets get some top stock stories. Dani we are looking here to start with, shares moving lower about 4 . The swiss Construction Company receiving a fair amount of downgrade. Thathe saying it is not they are that bearish on the company, but they have had such a massive runup in shares. The other hand, downgrading from a hold to a sell. Resenius,city us f the white house is planning some changes to the kidney treatment guidelines, encouraging patients to seek dialysis treatments. They said they have been working at this on the athome treatment, so shares are on track to the biggest gain since january. ,inally, Reckitt Benckiser another medical company. They have settled one of their tooid treatment cases for up 1. 4 billion. So this is helping to clear some of that regulatory pressure they have been feeling. Shares higher by nearly 3 . Anna thanks so much. Up next, a french plan to Tax Technology giants is under scrutiny. We look at what that could mean. This is bloomberg. Boeing will be back flying by the end of september. Right, weat date is have missed a number of dates already. Are workingcting with boeing and would like to see the plane back by the end of september or as soon as possible. Beyondets delayed much september, we may have to slow down our growth rate for summer 2020. Anna that was ryan ayres ceo, talking to bloomberg about the potential impact of the boeing 737 max 8 rounding. It is these best sparked for hedge funds in a decade. Managers capitalized on the everything rally, fueled by dovish Central Banks. 2018,lows a difficult peng shuai to buy short bouts of byatility punctuated short bouts of volatility. Dani what a change from last year. These guys saw some big gains. Ackman, as much as 25 . But i want to talk about the multistrategies. They are not just going long. Citadel, andnd gains in the first half beating all of its rivals. They have a marketneutral fund with a bit of a quantum flavor. Quant flavor. Well,smith is also doing their best start since 2020. 2018. Ce but not everyone is doing well. What they saw, far behind their peers. Some disappointment because they had the best Hedge Fund Start ever. It was also the heir apparent. Another want to point out, loan kind, the jupiter fund is going to shut after 20 years. They specialize in long short equity managers, but the issue here is compression hitting the industry. Managers really need a good reason for why they are charging what they are. Want to that in mind, i show you the Hedge Fund Performance relative to the s p 500. In white is the hedge fund, returning 5. 6 . So yes, the best in a decade, but compare that to the s p 500 with more than 19 . So yes, hedge funds are doing well, they are still charging higher fees, so they definitely need a reason. Telling us that, yes, they are good, but is it good enough . Anna tells you everything you need to know. Dani burger there on the hedge fund industry. French plan to Tax Technology giants is coming under scrutiny from washington. Robert lighthizer will look into whether the measures would hurt u. S. Companies. The socalled 301 investigation is the same tool President Trump d to impose chinese goods to impose tariffs on chinese goods. Joining us is alex webb. Is france the first country to do this . No, which makes it interesting that the u. S. Decided to respond. The u. K. Announced similar measures in autumn. Those measures wont kick in if2020, and if it there is a national agreement, they wont introduce them. Start measures go to the of this year and is a tax on revenue. Anna this is a big debate in technology. Taxing revenues in the place they are generated seems to have come a popular talking point. But i guess it needs some coordination. What is the context . We have a huge a study going on at the oecd where they anticipate presenting findings just in time for the g20. The hope is that they are adopted on a multilateral basis. But there is opposition from countries like the u. S. And germany. They dont want countries to be taxed where the interaction is, they wanted to be taxed where they are domiciled. Google is in the u. S. , germany , and theyies like bmw want them paying the tax bill in their own market. One of the reasons friends of the u. K. Are getting ahead of this is to set the agenda and force the hand of the g20. Anna something that might need subordination. Web, you very much, alex joining us on that tax story. Thats it for the european open. Stay with bloomberg television. The European Equity market is up by. 3 , reveling in the dovishness of Jerome Powell. This is bloomberg. A sure thing. Jay powell signals a cut is coming as concerns. Rising tensions. He british navy intervenes Deutsche Bank in the crosshairs. U. S. Investigators probe and involvement with malaysia. Welcome to bloomberg surveillance. Good morning. Good afternoon if you are watching in asia. I am francine lacqua. These are your markets. A cheer across the market for