Boris johnson becomes Prime Minister today. He has to build a cabinet and tackle brexit by the halloween deadline. Deutsche bank trading slump deepens. The cfo spoke to bloomberg this morning about the impact of low rates. We are very aware that outlook deteriorated in june. It does represent a revenue pressure for us and all of the banks if rates go down further. Anna daimler sets its sights on recovery, operating profit will improves significant leak in the second half as rival peugeot downgrades across the world. Going to talk more about the Banking Industry, german asset manager dws had a 4. 2 billion euros in inflows in the quarter. Spot forbig bright Deutsche Bank, the Parent Company. The influx is beating average analyst estimates, this quarter 2. 9 billion euros. Bank,e news for deutsche it owns almost 80 of the asset manager. Thats bring in claire peel, cfo, dws group. This time last year it was a different story. The Asset Management business has turned around, more than 700 billion euros in assets under management. What is going right . Pleased toare very announce today secondquarter results. We have strong results we are billion and, 719 growing yearend. 6. 7 billion of net inflows to the first half. That is with cost efficiency that we are looking to achieve across the year. What is going well for us, we have a diversified Portfolio Asset classes, passive and this marketin environment we respond to our client needs. Strong inflows in passive particularly. Matt is that because investors are spooked from the volatility we saw at the end of last year . Do you expect that volatility to come back . Volatility, we saw at the end of 2018, and we have seen markets recover in the first half of the year. Our clients are looking for diversity in managing their portfolios. Of growingtrend passive assets, and we have diversified portfolios each year across the globe that can accommodate the requirements of our clients. This year we have seen 10 billion of inflows across passiveactive asset class. A much higher margin for our clients. 5 billion of inflows in the first half of the year. Matt what do you think about the possibility of growing to over a trillion euros under Asset Management . That is what you need to be a top 10 global player. Can you do that organically . We are a newly listed asset manager, listed last year, we are focused on growing profits, ensuring sustainable cost reduction, and achieving targets we set for ourselves in the medium term. Being listed means we can look at inorganic opportunities as they arise, subject to the portfolio we already carry, adding to our Distribution Capabilities and asset classes. But not disrupting the investment capabilities we provide to our clients today. Matt you have to get there somehow if the guy who runs your Parent Company wants you to. How long will it take to get over a trillion . Our assetshave seen under management growth 719 billion in the Second Quarter, up from 662 billion. We are pleased with the growth over that short period of time. And continuing to focus on asset class growth, we can grow organically and focus on leveraging our strategic partnership, our distribution partners, and product launches and Innovative Solutions for our clients. Organically, as opportunities arise, if they complement our portfolio, we will look at them. Being company read to the portfolio we have today. To theg complementary portfolio we have. Matt would you be willing to join a partnership if the price is right . We are once again, focused on our organic strategy and have clear targets we are focused on. The Management Team is focused on that slow growth with a target of 3. 5 average over the medium term and focused on sustainable cost reduction. And growing profits. We give our attention to growing our platform around the globe across our global footprint to achieve our midterm objective. Matt claire peel, cfo, dws group, thank you for joining us. Tonext, we will talk akzonobels ceo, there operating income beat estimates. We will speak with the chemical thierry f. J. , claire peel vanlancker. This is bloomberg. Anna welcome back to the European Market open. 20 minutes until cash equity trading begins this morning. U. K. Politics, i am live at downing street because we are waiting for Boris Johnson to arrive later. For thewhat is to come u. K. Political scene, i am joined by the u. K. Health secretary matt hancock. Lets start with your personal ambitions. What conversations do you wish to have . New primerly, the minister if he asks me to serve i will, but i have not had any commitment. Boris johnson won the overwhelming mandate of the conservative party to be the next Prime Minister, and he will put together a cabinet he thinks can drive forward this agenda, delivering brexit and putting energy into the domestic agenda on health, education, social 20,000olice he wants more police on the streets. A cabinet that reflects modern britain and can drive the agenda. If he asked me to be part of it, i will. Anna would you have any misgivings on the potential for a no deal brexit . He says do or die by october 31. The you be prepared to sign up for his view on that . Matt i have always thought it is best for britain to deliver by agreeing to deal with the European Union. I wish we had done that by march 29. We have to do that by october 31. At the same time you have to prepare for leaving without a deal, i did that over the last year as Health Secretary making sure the Health Services are prepared. It is not my preference or Boris Johnsons preference. Our preference is a good deal with the eu and leave, then we can get this country moving forward. One thing you will see today is the determination to not just do brexit over the next few months, but really get motoring on the domestic agenda too. Anna do you think it will be toortant for his cabinet reflect parts of the conservative party . That is something theresa may did, and that did not work out well for her. What will the balance of brexiteers be in this cabinet . Cabinet should expect a that reflects modern britain. Balancehave to have a across the conservative party. One thing boris has been good at during the campaign is attracting support from across the conservative party, and from people who voted both ways in the referendum who believe like i do that we live in a democracy, and you have to respect the results of votes. We need to deliver on the vote that was three years ago. You will see the cabinet that reflects modern britain, and the energy to get on and drive the domestic agenda as well as delivering on brexit. ,nna on the domestic agenda something that moves investor expectations, talk of a sugar tax and green paper overnight in that regard. Position on boriss a sugar tax will be a rethink for the government . On that specific policy we have been clear about following the evidence. I commissioned a review from the chief medical officer. The broader agenda of making health care fit for the future and money behind it that is necessary, which you can only get with a strong economy, the agenda of making sure we tackle the big Health Problems like obesity. This is an agenda that unites the country and is very important. Whether it is that agenda or education, where boris has been clear to level up funding that is uneven across the country, or tacklemore police to crime, there is a positive domestic agenda we want to drive forward at the same time as delivering on brexit. Us, thank you for joining u. K. Health secretary and conservative mp matt hancock. Akzonobel is reporting profit that beat analyst estimates. 305ings were up 36 at million euros, it is europes biggest paint maker, and it reiterated plans of cost savings by 2020. Joining us from amsterdam is ceo, thierry f. J. Vanlancker. Let me ask you about the beat after the mess. The miss. Do you see growth on the revenue side . Thierry good morning. On one side you have cost savings, we are disciplined on executing our announced plans, in line with a company that wants to be the leader in its market. Margin management, you may be 2017 wee beginning of have seen about 900 million euro inflation, that is a lot for a 10 billion euro company. That was the mandate to offset it. We are proud of the work we did. Growth has been for the whole industry somewhat of a struggle, driven by microeconomic effects. Side,growth on the margin that has been your goal. Return, do you see that continuing Going Forward . Thierry we have a seasonal ,usiness, paint is seasonal people do more painting in the spring and summer, less so when it is freezing. We are looking at the Margin Expansion for a quarter that has yet to expand, we have to deliver 50 on average in 2020. If you look at the numbers now, we see the management of these different streams to deliver on 15 , so the journey continues. Anna good morning. Some analysts remain skeptical looking at the research. They do not see a way you can deliver this 450 basis point margin uplift. It is unlikely in the timeframe given the plans you have. What do you say in reply . Thierry i would be more impressed if that person what our plans are. We are not just making up these plans. The Second Quarter is a great proof of that. We have a real project management, when to start delivering etc. Recordlook at our track over the last 18 months, we feel hasortable that the Company Personal rewards associated with delivering that number. We have the plans in place. The Second Quarter demonstrates the willingness of the team, that hides a lot of work in sales, internally, and our functional people to deliver that. We feel comfortable. Lets see in 2020 who is right and who is wrong. Gauntlet is thrown down. What part does m a play . Some analysts look at your leverage goals and gas that m a is not part of the plan. We Just Announced an m a deal with the French Company that is specialized in aerospace , and already strong toospace business, we want keep our lead position there. On the bigger m a we want to be careful that it does not distract us from our 15 by 20. 2020,ge would go up in that has speculation how we will do that. We can returnr, money back to the shareholders. It depends on what is most advantageous for the company to read m a became an of session in our industry, we want to counterbalance with product innovation. We have done a lot with the startups and open innovation, new Business Models. It is not only the width of the company but the depth. You previously pointed out that the u. S. China trade war ,as hurt the industry broadly and your clients are talking about it as well. Do you need that to be fixed before it hurts your 15 by 20 target . I think the Second Quarter results prove there is so much selfhelp that we do not need those to be resolved. They are a headwind. Need this to say, if there was more clarity on when or if brexit will happen, there would be more clarity on a u. S. China trade conflict. We can operate in these scenarios. We crave clarity. Consumer confidence will be impacted without clarity. Argentina, brazil, the turkish lira, big countries and a big impact. I am encouraged about delivering on our plan despite the headwinds. Imagine what the upside would be if some of these things were clearer. Matt thierry f. J. Vanlancker, ceo, akzonobel joining us after the Company Released its earnings. We are minutes away from the opening of stock trading. Theill go around the northhe newsroom. This is bloomberg. We are working as quickly as possible to execute on this has sensitively as possible as it affects the lives of our colleagues and friends. We have notified 900 Staff Associated principally with equity, sales, and trading business who are either leaving or left or leaving in the nearterm. Moltkeames von discussing the timeframe for Deutsche Bank. What can we expect from Deutsche Bank and terms of the share price reaction . We are seeing the shares down this morning. This was preannounced and they were expecting a poor trading performance, it will be worse than expected. The calls on the stock are negative this morning. Anna what is the story on daimler . It has been a roller coaster for the auto sector. Yes, the stock is under pressure today. We are saying the company come out with earnings, repeating what they said a couple of days ago, a profit warning. The focus is on how they will get out of this. They want to weed out underperforming units, and cars that are not selling well. The stock is down a bit this morning. Matt we are also getting news from aston martin from the last 30 minutes, cutting its 2019 wholesale views. Watch the carmakers. This is bloomberg. 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 a minuteanna to go until the start of cash Equities Trading in london and across europe. Anna reordering is standing by in the studio in london with the details. Good morning. Lets kick it off with what happened overnight in asia. 8 as robertearly 0. Lighthizer gets ready to make his move to china for the highlevel talks. Nearly100 futures down 0. 4 as big tex stocks slumped yesterday as u. S. Justice Department Opening up a probe into the Technology Sector in the u. S. Boris johnson getting those keys to number 10. The big question is, what his government will look like, who he will surround himself with. The futures are looking ahead of the open today. Definitely in the right. And 100 futures down, dax flat. Arly we are getting the first opening of the European Market open this wednesday morning. Ftse 100 is flat, pretty much flat, yeah. Still waiting for the other majors to open. We had a lot of big corporate scum out today, especially the auto sector. We had a lot of numbers flow out today. That may impact things like the dax or euro stoxx 50, which is opening flat. Euro stoxx 50 has actually gone negative as well. We have the ecb tomorrow. We have the fed as well coming up, the imf cutting its forecast for Global Growth yet again. They still have some optimism in asia, given the fact for the trade. Netherlands aes up nearly 0. 2 as well. Lets take a look at what is going on in these individual needs. It will be an interesting day given we have had so many earnings. Breadth is tohe the upside, 294 stocks to the upside. Itv is higher this morning, up some 5 . They had some slowing of ad revenue, but announced that love island, i know a lot of people in the newsroom love that show, 2 series starting next year. Onpmakers will be moving trade optimism as well as Texas Instruments in the u. S. Yesterday reporting stronger than predicted results. Peugot with results. All of these moving higher. Anna thank you very much. We are live in westminster, because today is the day that we see a handover of power from Prime Minister theresa may to soon to be Prime Minister. Theresa may soon to be Prime MinisterBoris Johnson. This afternoon, theresa may will head to Buckingham Palace to see the queen. When she has left buckingham heade, Boris Johnson will there to see the queen. We are focused on who is going to be chancellor. Many names are being thrown around. Someone with a bright round in finance and previously with a background in finance and previously worked at Deutsche Bank been considered. Focused on they u. K. Politics and who becomes chancellor. For now, back to the earnings picture and the market story. The Deutsche Bank story this morning is one of trying to get things done as quickly as possible. I spoke with the cfo at Deutsche Banks headquarters. You can see those behind me as well. At least one of the twin towers right over there. He told me he is trying to get things done as quickly as possible in terms of their restructuring. They want to fire 18,000 people, reduce their Balance Sheet by 1 5. The have taken charge of 3. 4 billion euros which resulted in a loss. Overall, the entire project is inspected to cost 7. 4 billion. They are trying to frontload it as much as possible, he told me. Was, we sawthing trade revenue fall 30 . 3 . It wants to close that equities business. They have already informed 900 people that their jobs will be going. We will continue to follow Deutsche Bank and watch the shares this morning, down another 3 . They rally to 3 yesterday. After the rally yesterday, we see them pretty much erase that today. Covestro reported secondquarter revenue that came in slightly below estimates this morning. Importantly, however, it confirmed its fullyear forecast, contrasting rival Chemical Company which cut guidance earlier this month. Joining us from the companys headquarters is thomas toepfer, the cfo of covestro. What is behind your confidence in your forecast . Thomas very good morning. Thank you for having me. I think you said it in your introduction. The key thing is in q2, we were able to deliver on all of targets we have communicated. It was certainly a quarter characterized by high Competitive Pressure and by key uncertainties. Against this background, we were able to deliver growth. We were growing by 1. 1 . Secondly, we have delivered an million, absolutely in line with what we have communicated with the market. We can fully confirm the for your guidance for 2019 fullyear guidance for 2019. Anna how concerned are you about lower prices . In particular, lower prices being generated by intense chinese competition. How do you tackle that . Mean, 2018hink i was a year characterized by exceptionally high prices. We have always communicated that they would come down eventually. I think that has not happened since q4 of 2018. Currently, we are in on environment where prices are probably below the mid of the normal cycle. We feel we are in good shape that for the second half of the year, we can continue around the pricing level that we currently see. That is also the basis for our assumption that we can confirm the guidance. Pleaser member, we are the absolute please remember, we are the absolute cost leader in our industry. From you do still suffer the same economic headwinds as everyone else. Which is the biggest risk . Which is the biggest concern for you in terms of all of the geopolitical issues out there, from europe to the u. S. And china . The Geopolitical Uncertainty is certainly also waiting waiting on our industry weighing on our industry. May be the Automotive Industry is certainly suffering. We see negative growth rates in the Automotive Industry in our clients across the world. Automotive is 20 of our client base, but we have other industries that we serve where we see good growth rates, namely the construction industry, medical industry, but also the Wooden Furniture industry. We serve the need for material helping with insulation and helping to reduce the consumption of energy. Here, we were able to grow, and theyll for therefore outsell the negative growth rates we see in the Automotive Industry. Anna so that is interesting, in terms of the structure of your clients. On the subject of pricing, specifically on mdi, which i understand is something that goes into phones for insulation, are you particularly concerned about pricing there . If prices get lower, what can you do to tackle that . There is always a certain fluctuation in pricing. I think that is the nature of the industry. The fact is, the Industry Needs plat per year plant per year. More Important Message is we see growth rates run 5 Going Forward, especially in the u. S. , where the insulation of buildings is the key thing in order to save energy. Mdi is a number one material to do that. I think the secular Growth Drivers we have planned a new world scape planned. Our biggest investment was 1. 5 billion. We are convinced it is a good market because the sector Growth Drivers are absolutely intact. Matt we are all suffering from this unbelievable well, unseasonable heat, even in summer. We should not really be having 40 plus degree days in berlin on a regular basis. Do you feel the effects of Climate Change on covestro . For example, the rhine river is far too hot to use for a lot of things you would normally do with it, right . Matt yes. The rhine river presented an issue, especially in q4 of 2018 where we have seen historical low water levels. It. Can never exclude a week of high temperatures in germany does not present an immediate issue. I think currently, our production is running smooth and absolutely as planned. Of course, Climate Change in the long term presents an issue that we will have to deal with. Matt thanks very much. Thomas toepfer there, cfo of covestro, joining us from germany, where it is also extremely hot. We will bring you the stocks on the move so far this morning, including aston martin, which is plunging in london after cutting its 2019 sales guidance. This is bloomberg. Anna welcome back to Bloomberg Markets european open. We are needing to check on whats going on in these markets. We have your movers this morning. Good morning. I want to start with aston martin. It is absolutely plunging this morning, down 20 . This is the super luxury carmaker. This is as they cut their Sales Forecast by 14 . They are blaming the environment , joining a course of carmakers talking about this weakening outlook in the car sector. Itv up 7 this morning. Ad salesfell 5 fell 5 . Seems like love island is helping boost itv and its shares. Next year, moving to two ceres two series. Deutsche bank down. They are going through this sweeping mass Restructuring Plan basically in their history. Matt i have not had a chance to watch love island. I will give it a shot on netflix if it comes to it. Thanks very much for that. European Central Bank Policymakers have plenty of reasons to postpone the stimulus decision to september. Andfeds decision next week pending euro area Economic Data could justify a gradual approach by the ecb. Traders are currently pricing a 30 chance of a 10 basis point cut in the deposit rate. Joining us now is valentin marinov, head of g10 fx research and strategy at Credit Agricole. What do you expect from the ecb meeting in frankfurt tomorrow . Valentin we certainly do not expect a cut tomorrow. We think that president draghi will prepare the ground for more easing to come in september in the shape and form of a 10 basis point rate cut, plus an extension of the Central Banks qe program. I guess tomorrows meeting will be important, if nine star mental, and getting the market big if not instrumental in guiding the markets expectation of whats to come in september. Expectations of a rate cut have been on the rise. With think that is such a step at that we think this is such a step at this stage that is premature. The ecb has been cutting rates in response to unwarranted tightening in the euro zone conditions, be it in the form of stronger euro or higher real rates. None of those seem to be presenting any significant risk at the moment. We think that the ecb, for the lack of a better word, will be sitting on its head for the time being. Anna sitting on its head for the time being. So qe, when it comes, what will it look like . What kind of qe would we see take place from the ecb if the backdrop is not all that bad, as you suggest . Valentin i guess the backdrop can always change. It seems the euro zone data has not been improving as much. If anything, Mario Draghis message has been that more accommodation may be warranted if indeed the data does not improve. That is still the case. It is more a matter of time. In terms of qe, we expect the the the bank to central bank will be more willing to buy more government bonds, corporate bonds. They may be facing an important decision facing the issuance limits. That issue may be debated tomorrow. I believe tomorrows press conference may provide important indications to how far the debate has come. From that point of view, i think if indeed mario draghi to indicate that the limits were discussed in any shape or form, that will be seen as a fairly clear signal that a qe2 may be indeed on the way. Matt do you think a weakening euro would please the ecb . What level would they like to see the euro trade against the dollar against the pound . Valentin the official message has always been that the bank never targets the euro. And if anything, the impact matt of course come of course. Valentin changes in the euro have been having a diminishing impact on eurozone inflation. I believe the euro will play a role down the road, especially if the fed were delivered on its dovish were to deliver on its Doug Schreiber and cut rates, on its dovish rhetoric, and cut rates. Guess a rate cut may indeed come in handy, especially if the ecb is forced to match the feds easing kupfer cut down the road cut for cut down the road. Anna let me ask you about your perspective on the dollar. We have heard a number of new signs. The imf guiding lower on the Global Growth story. Positive risk on sentiment possibly coming through. Concern may be a u. S. Deficit. How do you add all that up to a dollar strategy . Valentin all of these risks are to the longerterm Downside Risks for the currency. At the moment, key driver is the demand for dollar carry trades with investors start leaking to certainly keen to find those carry trades fund those carry trades. Advantages rate remains unrivaled. Oris not much hope for any reason to expect the dollar to depreciate significantly. That may change down the road. We think the dollar will suffer at the hands of the more dovish fed, which we expect to deliver more cuts, potentially a cut next week and more cuts down the road as they tried to fight the u. S. Growth slowdown that we expect in the second half of the year, especially in early 2020. Lower rates in the u. S. Will ultimately reduce the rate advantage of the dollar and should lead to at least some unwinding of those dollar carry trades funded in euros. That is ultimately good for going to provide some support for eurodollar. These are themes and price dynamic that may indeed kind of a set in later on, maybe 36 months out. At the moment, it is all about the dollars rate advantage. The dollar is still the unrivaled king of the g10 fx. Anna ok, the unrivaled king of the g10 fx. Valentin marinov stays with us, head of g10 fx research and strategy at Credit Agricole. I am alive at downing street. When we come back, we will talk about the end of theresa may, the start of the Boris Johnson era. Boris johnson will picks top team ahead of taking over as the uks Prime Minister this afternoon. We will discuss what that means for investors. This uber. This is bloomberg. Anna welcome back to Bloomberg Markets european open. A mixed start to the trading day this morning. 22 minutes into the trading day. Lets talk u. K. Politics. Street. Ber 10 downing Boris Johnson will formally take office as Prime Minister this afternoon. The former foreign secretary faces the job of bringing his Party Together as he appoints ministers to his top team. He has restated his pledge to leave the European Union on october 31 and says there will not be an early general election. Fxentin marinov, head of g10 research and strategy at Credit Agricole is still with us. Leaving aside the possibility of a new election been called, what is the key timeframe you are looking at for u. K. Assets, for sterling . I suppose the 31st of october. I was also told the start of september could be crucial because a vote of noconfidence might need to happen in that kind of window. Valentin that is indeed the case. I guess any delay beyond Early September could put any will create some timing issues between a potential snap election that could come on the back of the noconfidence vote that you were referring to. With that in mind, i think the biggest risk for the pound, also taking into consideration the timeline, is not the risk of no deal brexit. There is sufficient majority in the house to block any move by the johnson cabin in that direction. It is the risk of an accidental no deal brexit, especially if a noconfidence vote comes to close to the article 50 october deadline, which could put the ball back in the court of the eu, where they have to decide whether to grant the u. K. An extension of article 50, provided the extension is being requested, so a snap election could be accommodated. With that in mind, the risk of an accidental no deal brexit is still very much there. Judging from the price action, the pound has indeed dropped. The stock markets have moved. Markets have built some sizable shorts once again. A look at the options markets, risk reversals, the state of emergency or indeed the feeling of kind of a despair at times is no longer there. From that point, you would argue that from that point of view some negatives are still to be priced in in the pound. Matt there was a time when the risk of elections and a corbyn government was a bigger concern for the pound, at least it looked like, in terms of pricing, then a noto brexit. O deal think than a n brexit. Thomas for us, valentin for us, it will create Political Uncertainty in the u. K. The risk of an accidental no deal brexit may be underestimated. Most investors are assuming that the eu will grant an extension, but what is also important to know is that any snap election will open the way to more Political Uncertainty, especially on the resurgence of antiestablishment parties in the u. K. From that point of view, it may be a much more difficult decision to make the moment. It ishat point of view, safe to assume that in the next 36 months, Political Uncertainty in the u. K. Likely to remain quite elevated. Anna ok valentin the ultimate outcome of the elections are means very difficult to predict. Anna what percentage do you attach to the chance of a noto brexit right now no deal brexit right now . Valentin 40 60 . Chanceeve there is a 60 of brexit but a considerable risk of a no deal brexit in the coming months. Oft valentin marinov, head g10 fx research and strategy at Credit Agricole stays with us. Did not vote for pedro. Spains acting prime mr. Failed in his attempt to form a new government. If he fails again, spaniards could go to the polls for the fourth time in four years. We will never get tired of the napoleon dynamite references. This is bloomberg. Matt 30 minutes into the trading day, here are your top headlines. The dude in a number 10. Boris johnson becomes Prime Minister. First, he has to build a cabinet and then tackle brings it. Brexit. Deutsche banks trading slump deepens. Ceo James Ronald Kirk spoke to bloomberg about the impact of low rates. We are aware that the outlook deteriorated during june. Frankly, it does represent revenue pressure for us and all of the banks if rates from here go down. Aston martin shares fall by 20 as the luxury carmaker cuts its sales outlooks for the full year. Welcome to Bloomberg Markets. I am matt miller in frankfurt in front of a Deutsche Bank alongside anna edwards in front of 10 downing street. Are across these top stories. , butat 10 downing street just a quick word on something happening closer to you. Manufacturing numbers coming in and we were talking about weakness in the eurozone growth and germany. The pmi is 43. 1, the estimate was for 45. 2. So that is well below the estimate. It leaves the july composites belowaving forecasts and below estimates on both numbers. We will watch for reaction in the euro. But get back to the u. K. Politics story because that is why i am here, to talk about what is going on here today. We see theresa may go to make her last Prime Minister questions appearance around lunchtime. And then she visits the queen and Boris Johnson will visit and the queen will ask them to form a new government. Then he will return to number 10 downing street and make a speech for the first time as Prime Minister. He will then start security briefings and set about giving us more details. That is where a lot of the focus will be. We will be looking for more women in the cabinet and ethnic minorities to be making a strong appearance. In terms of chancellor, names are being thrown around. So we will keep an eye on who the key appointments are and business reactions. Lets get bloomberg first word news updates. Senior u. S. Trade officials are flying to china on monday. The firstrk highlevel facetoface talks since negotiations broke down in may. Lighthizer and his team will be in shanghai through wednesday. Is not expected to yield a major breakthrough. Big tex is facing an antitrust probe from the u. S. Justice department. Investigating whether dominant Technology Companies are thwarting competition. It will look at concerns that consumers and businesses have expressed about search and online retail. Is considering how to respond to turkeys decision to buy a Russian MissileDefense System according to senators who met with the president yesterday. Last week, trump said he was not looking at economic sanctions. Gainst turkey right now the eu has almost doubled the amount of u. S. Goods it would hit with retaliatory tariffs. That is if President Trump imposes duties on eu cars and auto parts. Hit 35 billion euros worth of goods up from the earlier figure of 20 billion. U. S. Say they will reject demands to limit auto shipments on National Security grounds for china has accused the u. S. Of undermining global stability. They have released the first white paper since present xi jinping launched an overhaul of the military. His language represents a departure from the previous report. That one had focused on efforts to improve military cooperation with the u. S. President trump is suing to block democrats from obtaining his tax records, his latest attempt to keep the information out of the public view. This comes three weeks after the house ways and Means Committee sued to get his tax records. 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 and matt . Matt thanks very much. Yields areyear bund touching a new record low of 43 basis points after pmi data that missed estimates. You can see a bit of a bounceback here but we had a dip. We have a new low for german bunds at 43 basis points from about. Points, about. Spains Prime Minister has failed in his first attempt to form a new government. Sanchez failed to find Common Ground with key political partners. A Leftwing Party of stained and left the leader short of the required majority. If sanchez cannot repair relations with that leader, the clock will start ticking towards a new election in november. That would be the fourth in four years. Joining us is the chief economist at tresses and someone who participated in the last elections. What do you think about this failure and how damaging to spains economy would it be if we had to see new elections yet again . This was predicted. The first round was expected to be a failure. It was very difficult that the extreme left party put them us demos would approve of the presidency without an agreement of how many ministers they would get. On the other side, even with the support of the extreme left , the socialist party would not have enough of a majority to reach a government. The next question is how many other parties are going to be supporting this new project of government . The likelihood of new elections, i would say it is quite limited. It is less likely than what many people believe. Ultimately, we have to understand that the parties are already in coalition in numerous local governments and regional governments. Ecb is thethe ecbs negative yield policy enabling this lack of government . Because they make it easier for spains economy to grow. Absolutely. You just hit a key point. Economies, then injection of liquidity and the extremely artificially low yields that we see on sovereign bonds are making governments very complacent about the situation. There is absolutely no economic debate, for example in parliament. Everything being talked about is more about things that i would call ideological issues. Everybody seems to be forgetting about structural reforms. Everybody seems to be forgetting the rising imbalances, deficit spending. But we seebt, industrial production, the pmis my electricity consumption,mis, electricity consumption all of this data is not showing positive signals. So having artificially low yields is sort of enabling government and politicians to ignore the economic realities. Anna talking about the economic reality, looking at german data, the pmi data is weak. In contrast to what you are saying, does that not build the case for more stimulative action . Maybe a little bit more debt given how low bund yields are. , butl you would say that there is absolutely no evidence the German Economy is spending less than what it needs. That it is investing less than what it needs without there is any type of Government Spending problem. Is the, what i think risk is that if germany follows the path of friends and france and decides to increase the imbalances, what it would do is not improve manufacturing and services, but actually make it less dynamic. The problem in the eurozone is much more complicated than just ecb stimulus or Government Spending. I think it is just a question of the entire economic area that is completely has completely abandoned structural reforms, at economic area that is ignoring the challenges of demographics and has completely abandoned the race in technology. Productivity grows, Government Spending, all of these things continue to be a burden on the economy. Anna and if government is not doing enough or the right things , in your view, what about the ecb . Are you expecting any movement this week or next or in september . I think the ecb is stuck between a rock and a hard place. Side, but knows that the eurozone problem is not a problem of liquidity or the rate. As you know, area rates are negative. Governments are financing themselves of the lowest rates after. With the challenges it faces is financing itself at 1. 5 on the 10 year bond. And the 50 year bond it issued received massive demand. So it is not a question of how cheaply governments are financing themselves or how high because therehat is almost 1. 8 trillion euros of excess liquidity. But the ecb knows that a lot of those figures dont come from secondary market demand. There is actually very little signals out there that investors would be buying eurozone bonds of these yields if the ecb was not supporting. Think it will continue to increase its stimulus. I think we will see a rate cut and probably a qe that will involve not just bonds but also equities. Sort of mirroring the structure of the japan market. You haveave to ask, advised the spanish conservatives at the highest levels on finance and economics. What would you do if you were a lot of schulz olaf schulz. And you had to deal with the Deutsche Bank problem and the fragmentation. What would you do to make sure your Banking Industry was a strong and helped your future economy in such a difficult position . Example, what spain did in the crisis with the Financial Sector reform was a very important step. Which was improve transparency, and at the same time, avoid the idea that merging weak banks is going to help those banks get stronger. Two weeks banks that make a stronger bank, they make a weaker bank. Not ae learned that it is good idea to try and disguise the issues of one bank by putting it together with another. The other element is that what Deutsche Bank is doing is the correct strategy. It is improving costs and reducing transparency. It will start separating part of the businesses. So what they need to do is make sure there is enough transparency so that no one starts believing there is some hidden data out there that would show the banks are in a worse situation than what they are. I think that transparency here is what is going to help those banks improve and increase rates. Anna thank you, a very good place to leave the conversation. Thank you much chief economist at tressis. Lets get to the top stock stories of today. Annmarie lots of moves this morning, given that massive earnings dont. Dump. Is up nearly 7 , beating the highest analyst estimates. Up nearly 4 . A profit beat and a wider sales margin. The ceo spoke to the program earlier, this is really needed as he is trying to convince skeptical analysts he can reach 2020 targets. Rio tinto is down nearly 3. 5 . Shops this at two morning. It is down some 4 . One of its biggest mines got the green light to come back on the market and you are seeing a lot more iron ore come back to the market. Matt i will pick it up, thanks for that. Bring you our interview with the Deutsche Banks ceo after the lender revealed a deeper than expected slump in trading. That is the business it is restructuring. And move costs and restructuring forward into the corner. That resulted in a loss and now the shares are down 4. 5 . This is bloomberg. Matt lets get more on the earnings of miss from germanys biggest lender. Deutsche bank has reported a 3. 2 billion euro net loss. That is more than previously guided. The ceo spoke to me this morning. We are working on the restructuring as quickly as we can. With that comes the accounting recognition of the steps we have taken. This quarter, we are recognizing 3. 4 billion of costs. Those are by and large noncast charges noncost charges. Portion of thed accounting impact already behind us in the Second Quarter. In the balance of the year, we are working out severance and restructuring charges. , there will be some real estate charges and some incremental dta charges. We are expecting another 2 billion of these related charges over the coming quarters. Matt what percentage of the job cuts to you think you can get done this year . Clearly, that is a huge portion of the costs. , gradual is a steady process, affecting all areas of the firm and geographies. Were working as quickly as possible trying to execute as sensitively as possible given that it is affecting the lives of our colleagues and friends. We are acting as quickly as we can. We have notified Staff Associated with the equity and trading business that are leaving or have left. The capital release unit is well underway in terms of execution on the deleveraging steps, organizing itself under new management and moving to reduce the headcount associated with the businesses. Soria are well advanced for two and a half weeks in, but it is a process we now need to focus on. Headcount orhave a target you want to hit . We have some external targets, absolutely. This is something we intend to achieve and want to go as deep into the high 80s as possible, and we dont want to give a specific target at this stage. One thing you may see going on and we have talked about is internalization. We are continuing to internalize , particularly technology jobs. That type of activity will continue. So it is a bit of an avid and flow, hence the resistance to be pinned down to a targeted number. Matt you mentioned the equity and sales business. The fixed income was down only 4 . Compare not so unfavorably to your peers on the street. Why did you do better than expected . James i agree. Our fixed franchise performed quite well. You 4 is down about 11 if exclude the trade game which a number of our peers had. Within that, rates performed reasonably solidly. Our credit franchise was up year on year. So we were quite encouraged, frankly, with the performance in many of our businesses. Say equities is down significantly. That reflects both of the restructuring we executed last , some of as you expect the uncertainty that played out clientshe quarter as and employees were anticipating some element of restructuring. Ceo Deutsche Banks speaking to me this morning about trying to get the restructuring done quickly. Up next, nasdaq futures are pointing lower after the u. S. Department of justice announces a fresh antitrust probe. But chipmakers gain on a profit beat from Texas Instruments. More on tech next. This is bloomberg. Anna welcome back to the european open. 55 minutes into your trading day, lets talk about tech stocks. The u. S. Department of justice is poised to open a broad antitrust review, putting alphabet, amazon, apple, and facebook into the spotlight. They are looking at whether the companies are so big they are stifling competition. For more, we are joined by bloomberg editor. How big of a threat is this probe . When you look at the language used in the Justice Department statement, you have to come away with the idea that this is a massive threat. They use some very broad language that seems to be aimed at the very Business Model these businesses are based on. They give away products to consumers in exchange for using that data to gain mass. Were talking billions of customers giving them a lot of market power. That has basically been an agreement that that model was acceptable, but this raises the question about whether it is. This is potentially very threatening. The timing also comes in a clinical season so there is the additional threat this becomes a political issue president ial candidates start batting around. So this is a broadbased threat they will have to scramble to address. Matt absolutely. Dave mccombs covering tech for us from tokyo. That is it for the european open. Stay with bloomberg television, we will have more on Deutsche Bank up next. I am headed over to radio talk more about Boris Johnsons incoming government with a shot of westminster. This is bloomberg. Francine Boris Johnson becomes Prime Minister. On the agenda forming a cabinet and negotiating exit brexit. China and the u. S. Restart in person talks. And Deutsche Bank posts a bigger than expected net loss for the quarter and a slump in trading revenue. We are aware the outlook has deteriorated during june. Frankly, it represents revenue pressure for us and all of the banks