Transcripts For BLOOMBERG Bloomberg Best 20170730

Years. We used to focus on cost, now we need to focus more on revenues. David we hear from Deutsche Bank ceo and ceos of other major European Banks reporting this week. Major data out of japan and the u. S. We size up the state of the global economy. I think the economy is now picking up, but if you look around the globe, this is happening elsewhere, so i do not think the bank of japan can take too much credit for that. It paints a picture of an economy overall which is effectively treading water. David it is all straight ahead on bloomberg best. David hello and welcome, im david gura. This is bloomberg best, your weekly review of the weeks most important Business News, analysis, and interviews from Bloomberg Television around the world. Lets start with a day by day look at the top headlines. The week began in st. Petersburg, russia where opec members and other Oil Producers emphasize their commitment to continue cutting imports in put a stoporder to to the Global Supply glut. Were pretty sure that the rebalancing process may be going on at a slower pace than we earlier projected, but it is on course. It is on course, and it is bound to accelerate in the second half because of these numbers. August is going to demonstrate further leadership by the kingdom of saudi arabia. We have already informed our customers of a deep cut in our august allocation, again exceeding 600,000 barrels per day. Also, august is going to experience the maximum demand within the kingdom of saudi arabia. More of the same, it is going to get better. But the saudi put seems to be ramped up just a bit. Yes. It is also the overall projection of strength that the Saudi Energy Minister put on today in the past few hours. I mean, they are still camped out behind me here in the hotel pointing out that, we are going to stick with our lead by example model. When i asked him, are you going to continue over complying, and he said yes, we will continue to do that. That is how we do business, from the very beginning. Also, those who are not pulling their weight in terms of compliance, which was key going into this meeting he said we will go heavier in on them. It will no longer be tolerated as much as it was in the past. Then you have the destocking that the nigerian minister is talking about. They think the second half will pick up and they do not need to refine anything about the agreement. Having said that, they are exploring all tools and options for any future adjustments, which is fascinating to say the least. Jared kushner i did not collude with russia, nor do i know of anyone else in the campaign who did so. I had no improper contacts, and i have not relied on russian funds for my businesses. And i have been fully transparent in providing all requested information. A number of senators, particularly democrats, have said that they do want to see him in public. They said the statement that he made raises more questions than answers. So, i think clearly democrats wont be satisfied until he appears in public. I think at some point, he is probably going to have to, given the number of questions still swirling around about this. Was there anything in the statement specifically that stood out that in your sense, politicians thought seemed vulnerable, that they wanted to understand more about . I mean, one good example would be the statement about how he did not rely on russian money. We are not quite sure what rely on means. Is that something that is being couched carefully, or was it just a word he chose, right . So, that is an example of something that democrats said they would like to ask him more about and find out. The senate being equally divided, the Vice President votes in the affirmative and the motion is agreed to. The gavel has been struck. The Vice President breaking the tie, and the senate has now approved has voted yes to go ahead with motion to proceed. They can now begin debate on the health care bill. Pres. Trump i am very happy with the result. I believe that now we will, over the next week or two, come up with a plan that is going to be really, really wonderful for the American People. I know the president is going to be doing a victory lap on this. It might be a little too soon to celebrate though. It is still a long bumpy road ahead. Anna the senate vote on the amendment to the health care bill, for the skinny repeal. It seemed that the senate lacked the votes on the gop skinny repeal bill. This being brought by the senate gop leader mitch mcconnell. Sen. Mcconnell this is a disappointment. A disappointment, indeed. Our friends over in the house, we thank them as well. I regret that our efforts were simply not enough this time. Tom what will be the response of the white house . Kevin the president tweeting, tom, just after the vote failed in the senate, saying three , three republicans and 48 democrats let the American People down. As i said from the beginning, let obamacare implode and then deal. Watch. Of course, he was talking about senators lisa murkowski, susan collins, and john mccain the latter of whom was a big surprise and the literally audible gasps on the senate floor as senator mccain having returned to the senate and voting against the health care bill. Michael no change in policy, concern about inflation and that hint about the Balance Sheet that jeff was looking for. The committee expects to begin implementing its Balance Sheet Normalization Program relatively soon. The fed is keeping to this narrative of transitory factors holding down inflation so that they can get on with the Balance Sheet normalization. Then the focus shifts to december, as to whether or not inflation has proceeded well along the path to give us another hike. I think the fed therefore will stop raising shortterm Interest Rates, maybe 25 basis points, maybe not, and start disinvesting in 10 year treasuries that they mentioned in the statement, by reducing the Balance Sheet over time. That means, to me, slightly higher 10 year rates. Perhaps to 2. 5 over the balance of the year, but not much. Mark one brave analyst having what he calls the busiest earnings days that he is experienced in over 20 years. James edward jones, arriving at rbc europe today in london. At the same time, the worlds biggest brewer ab inbev reported results. 15 minutes later came nestles results, followed by dan and at 6 30, then diageo, British American tobacco, all before the morning team meeting at 7 15 a. M. James edward jones is still with us. He is on the phone. Its been a crazy day. Woryou are not even done, are you . We have loreal in roughly 26 minutes. There hasnt been a day like it. 706 Million Euros of market cap reporting today. I normally enjoy two or 3 reporting on the same day. You just have to focus on what is important. The problem today is that it has not actually been possible in ways to work out what is important. Something i missed, for example, was the sales in the u. S. , and i had to go back and revisit it at 11 00 this morning. So, it has been hectic. We are watching all of the economic numbers that have come out. Inflation not really budging, still essentially flat there in japan. But we did see retail sales miss on the other end. Household spending, a nice tidy beat there. So, kind of a mixed picture that we have been seeing with economic numbers out of japan. Suzanne at least these numbers do not really change our view that despite the labor market tightening, and upward wage pressures, i think the pickup in inflation is going to be very muted in the near term. I think the economy is now picking up, but if you look at around the globe, this is happening elsewhere. I do not think the bank of japan can take too much credit for that. Inflation is still very weak. In fact, if you look at the service inflation, which is probably the best gauge of domestic price pressures in japan, it actually turned negative last month for the First Time Since the bank of japan launched quantitative and qualitative easing. So, that is a clear sign that the policy is not gaining much traction. Jonathan the gdp number is a miss. A marginal one, it comes in at 2. 6 . The estimate was 2. 7 . This is Second Quarter annualized gdp in the United States coming in at 2. 6 . The estimate was 2. 7 . Michael the pce headline number comes in at just 1 , down from prior quarters. Inflation is just nowhere to be seen. Basically, it is a soft inflation picture. It paints a picture of an economy overall, which is effectively treading water. Maybe a reflationary dividend will be paid courtesy of capitol hill later on in the year which will upset the apple cart. But also, you have to go back to the fomc decision this week and the markets reaction to it. You know, we saw the downgrading of the inflation outlook and the market took that as an aha moment for the third rate hike this year. Dollar was gained, treasuries rose. I think we are getting a reprise of that. David tech earnings on tap. Coming up, we digest the results of alphabet, facebook, samsung , and amazon. And Deutsche Bank bets the wrong way on u. S. Inflation, sending secondquarter revenues south. We hear from the leader of germanys largest Investment Bank. We have said in some areas the revenues do not meet our expectations. That is good and bad. I think the Macro Economic environment in europe is very positive. David this is bloomberg. David this is bloomberg best. I am david gura. Lets continue our global tour of the weeks top stories. With the dive into this weeks tech earnings, starting with alphabet. Alphabet shares dipping in afterhours trading. Googles Parent Company releasing secondquarter earnings, which initially sent shares soaring, then turned south. Revenue for the search giant came in at 26 billion, up 21 . Yearoveryear, but aggregate costs dropped 23 from a year ago. These numbers include the effect of that 2. 7 billion fine from the European Competition commission. I spoke to the cfo about the is soand she told me, it early for our analysis of the decision, this is an ongoing legal matter and they have not decided if they will appeal. I want to show you on the bloomberg, shares were up and then down, cory. Why did that happen . This is more about traffic acquisition cost. Cory i think it is. They have warned that this is going to be a big change in their business. They will be more mobile and more programmatic, it is going to cost more. And this time we saw it. Emily we talked about the adpocalypse this year when they were really criticized for their extremist content shown next to some prominent advertising. A lot of advertisers pulled their campaigns. It seems those advertisers have returned. I did ask about this and she reiterated that revenue across the sites was strong. That benefited in particular for from mobile search and youtube. We continue to take very seriously the issue and we are doing all that we can to protect the ecosystem. We have written a lot about that. Cory a lot of them have made a lot of noise about this, but they also like the traffic, that google is giving them in terms of clicks from their ads. I mean, the google ad is like nothing else in the history of advertising in that you can actually see the results of an ad as it runs. And advertisers like that. Because it is where they are shifting their ad dollars to. Emily facebook turned out faster than expected, Quarterly Sales growth fueled by continued strength in mobile video advertising. The social network now has over 2 billion active monthly users and is steadily driving revenue at a faster pace than other tech giants. Facebook has also been heavily investing in original content and the first shows are expected to come online in august. I just got off the phone with facebook coo Sheryl Sandberg who explained the strategy. Sheryl so we are seeing a lot of content viewing and content engagement shift to mobile and our goal is to be a platform for content providers to find their audience and monetize it. Right now, were doing some early investing in kickstarting the ecosystem to promote more episodic video viewing on facebook. We have a lot of video views on facebook, but not really of that kind and we think that kind is important. So, we are making an investment. Our goal is to become a platform and we hope to have content providers creating the content and finding their audience on facebook. Frankly, for facebook to be producing original content is a major shift for them away from the approach they have always said they wanted to take, which was to be a neutral platform for content created by others. So, typically when they have deviated from that in the past, they have given it up. I will not be surprised if it doesnt work to be honest. Emily cory, what do you think about facebook as the new netflix . Cory the best thing in america seems to be selling content and making content. Because you have everyone from hulu, hbo, netflix, amazon, all of them buying such content. When facebook looks of this, they want to see what works and it is a company that has part of its culture experimentation and trying new ideas. I think this one is just so sexy, they have glommed onto the idea. We will see if they actually try to roll this out in any kind of scale. Samsung at record highs, not surprising given that their profits have beat estimates. We are talking about net income surging 9. 6 billion last quarter. Of course, samsung is such a big part of the south korean economy. It was a Strong Quarter for samsung. Estimates had been quite high, about 9. 6 billion. That was about 10 ahead of the average analyst estimates. So, it was a strong performance. Part of it was driven by the smartphone business, the galaxy s 8, a comeback from the note 7 troubles that they had last year. And also the chips business has been very strong for them. So, samsung is benefiting from not just the smartphone business itself, but also making a lot of the components and selling to them to their rivals, including apple and xiaomi and other strong competitors in this market. You know what, it was a very, very solid set of earnings. We are used to these crazy beats, right . Is that why you dont sound very impressed . Well, it remains a tough market, if you look at the overall smartphone market, it is still very flat. And it is very difficult to differentiate that smart phone by hardware. So, of course, whenever there is a new Product Launch there is this always creates a revenue search. So, we need to remain cautious how samsung can differentiate their product beyond just the hardware. Emily amazon dipping in afterhours trading due to disappointment with its financial guidance, especially its projection of a potential loss in the coming quarter. The companys secondquarter earnings per share, . 40, missed the lowest analyst estimates, showing amazon is trying to set up competition with rival walmart and Cloud Computing challengers, microsoft and alphabet. The headline comes in quite short of expectations and this is not unusual for this company. They tend to fluctuate wildly. And investors have been trained to focus on what jeff bezos wants them to look at. Exactly, what weve seen with the stock whenever there is a strange print in the earnings every quarter, at the earnings level, the stock pulls back and investors pile in. And try to look at that as an opportunity. Because again, the longterm bullish story for the amazon play is growth in Online Retail sales and obviously amazon is the dominant play there. Is content different from these other things, in which, maybe there can be multiple players . Amazon is spending 4. 5 billion on content, only bested by netflix at 6. 5 billion. They will increase their budget 2 billion after hearing amazons footprints behind them. We have never seen a company show up with this sort of artillery in any chosen field. Even in an adjacent category. Whole foods, theyre about to become the fastestgrowing offline retailer within potentially the Largest Consumer market in the world. 75 billion market called grocery. Im sure a lot of people here shop at whole foods, and they would shop there more if it was less expensive, guess what, it is about to become a mercedes for the price of toyota, when amazon lays over its operational excellence. It looks like Revenue Growth though has been slowing down. In the First Quarter, revenue rose 42. 6 . That was down from 47 in the preceding quarter. Or 55 in the Third Quarter before that. This is a deceleration of amazons most profitable unit. Yes, this is a business that is a Large Business growing very quickly and it is very profitable relative to the core business, but it is a competitive business. Microsoft is in the marketplace, with a very compelling product. Facebook and others google in the business on the Cloud Business. So, this is a business that is competitive, it is subject to severe price cutting across the board. What is happening on the cloud space, a lot of the companies are going for a share right now and weve seen that in the pricing. But i think longterm, it is kind of a real estate game here. They are trying to get as much real estate as they can in the Cloud Business because this, again, is another longterm secular story. David youre watching bloomberg best. I am david gura. Just four months into his latest turnaround plans, Deutsche Bank Ceo John Cryan is already dialing back ambitions. What is weighing on germanys largest bank . My colleague matt miller sat down with him in frankfurt. We continue to work on our costs. Yes. You probably saw that the headcount has started net to come down. That is a mixture of the work that we did to restructure in germany, which is now almost complete. But also, we have been internalizing some of our Technology People in particular. The headcount has come down, which will come through as reduced costs in the future. And we continue to modernize the bank. We distinguish between running expenses and investing. We want to keep up the investment, because we do need to move on with the modernization program. Still a bit of a mixed picture, but we have been focusing on costs. Now, we need to focus more on the revenues. Matt you brought renumeration down to some extent in the last couple of years, for example. We have. Matt have you started to turn that around because surely if you want to get the best talent, you have to pay for it. We recognize that we were a bit of an under payer and we need to rectify that. Matt is that one of the reasons fixed income trading revenue, equity trading revenue has not only been down, but also underperformed your peers in the u. S. . John i would argue against that in relation to fixed incomes. We were down about 12 on the trading side. That is in the pack. On equities, we have lost a bit of market share and we are down quite a bit. We think there are some underlying factors there. We need to invest more in electronic trading. I think in cash trading and derivatives is ok. We have seen balances come back, but we have more potential to make revenues from the prime finance. And those balances are back. Once activity levels pick up , we should see an improvement in revenues. Matt how much market share do you expect to take . Even if the whole pie is shrinking, you still want a bigger piece, right . John a little bit, but we do not want the bank ever just chasing after market share. The byword here is always longterm sustainable profitability. Obviously, revenues are important. We need to make sure we are relevant to our clients. So, we need to invest in systems and in people. We have been particularly in our advisory side, but also in equity sales trying to build up the numbers. That also works under the new rules coming next year. Matt where will you build up the numbers . Where is your business . Because of brexit, obviously, everyone is wondering, going to be focused based . John london will obviously be an important venue for us, but we will also try to focus a little bit more on Continental Europe and in particular, germany. We have been investing to strengthen the roots of the bank there. Matt what is the headcount, moving from london to frankfurt . John whether we have an adjustment to where our people are, depends really on what brexit looks like and what the rules are. What we said is from the perspective of contingency planning, we need to ensure that we can do in germany in april 2019, pretty much everything that we can do in london today. We know that means moving, adding at least, some operations people here in germany. I am not sure about moving. But certainly from the perspective of making sure that the competences are the same, we do need to build here in germany. So, there is a positive impact here. We dont know what the impact will be in london. Matt what will your business what would you guess your business will look like in london, postbrexit . John i guess that eurozone clients will gravitate towards doing more business within the eurozone, because going outside the European Union adds a modicum of risk, just as they dont tend to book in our tokyo branch or New York Branch today. It will probably gravitate to europe. We have to respond to the way that clients react. Matt lets talk about your revenue outlook. You said that revenue, i believe Operational Revenue at least, will be smaller this year than last year. Can you quantify that . A little bit more precisely . John if you take the first half as a whole, that will be a little bit indicative of the new footprint of the bank. Now, we have said in some areas the revenues do not meet our expectations. There is good and bad. I think the microeconomic environment in europe is very positive. If you look forward, there are a lot of predictions for growth at the end of the year, up to 3 . And that has way overtaken now the u. S. So, we should be wellpositioned. We think that we are positively exposed and if Interest Rates go up will make a lot more money without any additional costs. And client activity levels generally were low across the sector. Our american peers have reported already, said pretty much the same thing. There is a lot of positive tailwind to that. But the timing of those improvements, it is difficult to gauge. David Deutsche Bank was not the only European Bank in the spotlight this week. Coming up, we hear from other executives leading europes biggest banks. David this is bloomberg best, i am david gura. The Global Growth story is part business and part government. Geopolitical tensions, trade and centralbank policy have been factors in Global Growth. We will start with the u. K. Top trade official. He spoke to bloomberg in where he began preliminary trade talks with the u. S. Against britains exit from the European Union. Were not willing to lower standards, but we are looking for are the areas where we have greater overlap. So, in areas for example perhaps like dispute resolution mechanisms, we may have a closer view to the u. S. Whereas a lot of areas we may be closer to the e. U. That is for us to find our way through. Ultimately, we are setting United Kingdom standards. We are neither going to be members of the European Union, nor are we bound to the United States. We will try to work to our mutual interest. Reporter what happened to inflation, and what is the fed going to do in reacting to the apparent lack of inflation right now . For a while, i think the cyclical explanation was dominant. We now know, as many of us suspected, there was more slack in the economy than the unemployment numbers had suggested. Under those circumstances it is not surprising that inflation remains soft. Now, though, after a long period of employment growth, substantially above the levels needed to deal with new entrants, one does begin to wonder whether other factors have been at work. Things like the end of the commodity super cycle. Perhaps, labor is finally getting a higher proportion of the returns to industry and that is being eaten by Companies Rather than resulting in price increases. Those sorts of explanations, i think, need to be considered. David what are the risks of going too slow in getting runaway inflation or asset inflation bubbles, as opposed to really slowing down the economy . Daniel one of the most important factors of the last several years, for people thinking about monetary policy, has been the fact that with Interest Rates low, still quite close to 0 should we get a shock to the economy, there is not much room to reduce rates. And when you consider the fact that in the normal recession, the feds response will be several hundred basis points of easing. There is not room to do that. Therefore, there has been a sense that risks in the structural sense or asymmetric to the downside. The risks on the other side of runaway inflation seem pretty modest at this juncture. Mark how important was the climb down in your relations with the e. U. . Our relations with the eu are not so rosy over the last 18 months, i believe there were a lot of misunderstandings. I know it is very difficult to explain in a couple of seconds, but everyone agrees that the postcommunist traditionary system needs reform. Because there were not too much changes after 1989 when we started the transformation. Now, the reforms have to be thought of by the judges, by the president , by parliament, opposition parties. And we will see what the next proposition will be on the table. Mark are you ready to take actions in in case sentiments turn against poland . Markets and investors are for me, critically important. What i can assure you is that we will do everything to make sure that investors are happy, they are certain about our democracy, legal situation, and so on. David multinationals play a major role in Global Growth. This week we spoke with top executives of Major Companies on their business plans. When we invest on the customers agenda, they respond well. It doesnt mean they want to pay more. They truly appreciate if the sausage mcmuffin is made with a cage free egg. Because if they go to the supermarket, they typically have to pay more. At mcdonalds, we make sure we are democratic and affordable for everyone. Why is it so challenging to make the transition to fresh beef . Actually, you can start all the way from whether you want to start from the supply side, because if you think about the way that, not just you, but just that you prepare the fresh patties versus the frozen patties, you have to transport them and store them. So, you need less chiller space and more freezer space. Then you get to the restaurant, and the handling of the food needs to be done differently. Cooking times on the grill are different. Ultimately, we recognize that and in test markets in dallas and in tulsa, we had customer saying that customers saying that it is juicier, tastier, and more beef flavor. It was very encouraging and we went ahead. Our job is to solve operational challenges, but deliver what the customer is asking for. Chipotle found out what it is like to get the supply chain wrong. Are you concerned are you mindful of their experience when you are working on something so challenging as fresh beef . I think we have been mindful since 1955, every day. We never take for granted we have 60odd million customers a day visit a mcdonalds all over the world. The absolute number one priority for us is food safety. There is one risk on the horizon that everyone is aware of and that is nonperforming debt. Your bank is not in that category by design, but it is a risk. Maybe you can tell us what kind of a risk it is and is it a hurdle or obstacle . Aditya the government has put in Good Measures which will lead to a resolution. The npa issue the government inherited over a period of time. They have brought in the insolvency act, asked regulators to be more active, forced the banks to have tighter standards. And the big borrowers that created a problem, have singled them out and the banks are required to swap them out in the next six months or they refer them to the bankruptcy court. So, i do believe that over the next 12 to 18 months, this problem should not be that much of an issue. Matt what about growth . Aditya we are, again, fortunately positioned. So, if you take where we stand today, we probably have the best brand in the system. We dont, as you rightly said we like the oldfashioned banking. I give you money, you give me my money back, or we have a problem. So, we dont have any asset issues. We are in a country that is growing at 7. 5 and could be going to 8 once capital comes in. We have also, during this time, with the use of technology, taken our products to rural to semi urban and rural india, where 60 of the population lives. Previously, it did not make sense from the cost of revenue basis, but now with our ability to deal with them on the mobile, the ability to take photocopies and send messages, the ability to provide them back up, train our people electronically, we have gone in there and that today accounts for 20 of the business. We are almost the market leader, we are almost the only Major Financial Institution on the asset side of the business. So, we should grow there. So, the country will grow. We will grow with a combination of increased market share and increased geographies. And i do not think growth is an issue to the future. You did the blockbuster deal, of course, the 50 billion. The question in my mind is, a, would you ever reach out for a deal of that size and that magnitude again . Not this year, i would say. But joking aside, it was a good deal for us to do. First of all, much of the result that you are seeing today, of course, is on the back of that deal. We had been able to bring in high quality assets in brazil, australia, with a lot of growth. But also places like kazakhstan and other areas. It has afforded us to upgrade our portfolio. It has come with a lot of Growth Opportunity that we are still harvesting. We are still growing our cash flow on the back of that deal as well. Altogether, it is a deal that has worked out very well. The synergies, we think, by the end of the year, we will be done with the synergies. The 4. 5 billion that we promised in Capital Markets next year, we will get by the end of this year a year early. Would i do Something Like this again . Yes, absolutely. Do we have something in our target at this point in time . I dont think so. The results that we announced in the Second Quarter are good, because all the three engines that ocv has has been doing very well. Looking forward, we believe the momentum is still there. But some of them are market driven. So, it is hard to forecast exactly what the future will look like. But i can say that the momentum created since the end of last year and continued into the First Quarter and continued into the Second Quarter. Wealth has done really well and and completed your acquisition of barclays in november. Have you fully digested barclays at this point . Samuel yeah, barclays is fully integrated into the bank of singapore platform. We have been able to cross sell the capabilities that barclays has into our original franchise. And so, bank of singapore penetration ratio has really increased. Are there plans to further expand the Wealth Management business, because when you take a look at the number of billionaires, one billionaire in asia is minted every three days. So, there is great potential. Are you looking to hire more, acquire more . What is the strategy . Samuel we will continue to build the business. Organic growth, as well through the addition of rms which will recruit from the market. With respect to whether there will be further acquisitions or not, it really depends on market opportunities. David youre watching bloomberg best, i am david gura. In addition to Deutsche Bank, credit suisse, and barclays also reported Quarterly Results this week. One of the leaders of these european inks what do the leaders of these European Banks have to say . We spoke to all of them. Lets start with the ceo of credit suisse. I think our strategy is working. As you say, it is 18 months out of 36. I believe that all of the things we identified, we are delivering. We said we had a challenge in growth. You have seen that we generated 23 billion of gna. So that is very good. Our best performance since 2011. So it is very, very good. Those were very good years for Wealth Management. Growth is back and profitable. Profit is up 21 year on year. We said that we would resolve the capital issue. We have seen move capital rates are now 13 . We said we would cut cost. We have cut 1. 9 billion in 2016, 600 million in the first half. We are well ahead of our target for this year. We said that we would reduce risk, it is now 47 down. We said we would resolve the legacy, the sru is half the size it was 18 months ago. So, we have been busy growing, cutting costs, raising capital, cutting risk, and dealing with a legacy. Revenue is beating expectations, but flat somewhat. Will that change . No, it is right on expectations, up 9 over the prior year. 9 is a very good growth. If we could grow 9 every year, that would be very good. Financial service is a very good performance. A bright spot. If you look at revenues, they grew even faster. Revenue and grew in switzerland and that was the first time. If you look at the statistics, we grew 5 while other companies in the market grew through. 5 . We are gaining market share. Francine on the swiss bank, it is one of the few units with high risk returns of capital. Does it validate your strategy . We have always said we could grow pti profit. In switzerland it is up over the past two years. Up 14 . Some say it is a mature market you cannot grow, but i think we can actually grow, and the Swiss Universal Bank is a very good leader. A very good model. It is the only country where we are a universal banking and we can play on every level. If i look across the board, very strong momentum. We had growth in our International Businesses of 6. 6 on a very high base. And this, in concert with the fact that we have been reducing accounts, and demonstrating that we can grow with quality. We are not focusing on quantity, we are focusing on quality. And we can perform in different Market Conditions. You mentioned the institutional client activity slowing down and i noticed the pretax profit of the Investment Bank being down 6 in the past quarter. This isnt anything surprising, considering what we have seen out of the u. S. Banks. But when do you think that could pick up again . When do you think Hedge Fund Clients could go back in . Sergio i think we are pleased. Despite the Market Conditions, a return of 18 on allocated capital. So, of course with volatility levels across all Asset Classes being so low, only situational clients have been on the sideline. And until you see a little bit of a pickup there in volatility, it is difficult to see a change in behaviors of by our clients and we are also entering in the middle of the summer, a time which is from a seasonal standpoint not the best time. But i am confident that most important for us is to show that with our Investment Bank, under any Market Conditions we are able to perform, not only to shareholders, but to clients. And this was the case also in q2. If you look at domestic markets, commercial activity has been doing well in a low Interest Rate environment. That is true. International Financial Services is basically firing on all cylinders. If you look at cib, it is doing very well. And will continue to do very well and grab market share. Was that offset by equities and the rest of your Capital Market activities . Yes. Actually, it is our diversity approach. So we are well capitalized. We restructured way back here at the bank and it it is very diversified. Corporate banking, security service, all of those activities. Revenues are up 5 . Cost, as a continuation of our Cost Reduction plan, are down. So, basically yes. It is a good result which has allowed us to continue to capture market share in the situation. Caroline fixed income was difficult. Have you seen some activities from clients there . Lars it is true. If you look at our cid, which is related to our institutional clients, it goes up with demand. At some point in time, there could be higher demand and if you compare to last year where there was probably more demand, it would also be related to the brexit discussions at that time, so that is how it goes. In these deals, linear with the demand. Caroline revenues are slightly down, 0. 1 . When do you expect the turnaround . Real turnaround. And do you expect the turnaround to be quicker, given a new government . Lars i think, if you look at our france activities, or domestic markets in general, you do see positive pickups to our commercial activities. In france, our loans are up 8 . We are there to serve our clients. There is this demand. But nevertheless, we are in a low Interest Rate environment. So, this will probably take a couple of quarters before we can shake it out. However, when comes to france, we are of course, very supportive for a continuation of a positive business momentum that has been going on for a couple of quarters. Anna in terms of the fx trading business, how happy are you with how that is performing . What action do you want to take there . With the Investment Bank overall we are quite pleased. In our advisory business and debt underwriting, equity underwriting, we had a great quarter. In fact, the first half of this year was one of the best results that the bank has ever had in that part of our business. In credit trading we did quite well. Rates and currency, we are still not happy with where we are. We were down in the Second Quarter. We have made some recent very important hires there. We will get that corrected. But overall, and i think the Investment Bank had a pretty good quarter. Anna and so you are still happy with the extent to which you backed the Investment Banking business at barclays and you think you have taken enough action to turn its performance around . We still have room for improvement. We are clearly very pleased with the strategy that was set out in terms of the transatlantic consumer corporate and Investment Banks. The Investment Bank we have a very strong position in new york. We were the number one Investment Bank in the u. K. With a market share of over 10 in the Second Quarter. We like the business. We think it is important to the overall strategy of the Transatlantic Bank and we will continue to invest in the Investment Bank. Anna sticking to the Consumer Credit story in the United Kingdom, lenders are in a spiral of complacency. Do you recognize that at all at barclays and has that forced you to change any of your policies with regard to credit cards . Jes we are definitely focused on it. We have been in discussions with the bank of england. What we have seen is a pretty sharp increase in Consumer Spending since the brexit vote. That has been matched by an increase in Consumer Credit. Per capita, Consumer Credit is now at a level roughly where it was in 2008. That being said, unemployment stays very low, and were watching it. We are adjusting our underwriting standards accordingly. We want to remain a bank with one of the highest quality Consumer Credit loan portfolios. So, we are focused on it and we are focused on unemployment, which continues to be quite low. But i think everyone should be mindful of the levels of Consumer Credit, both in the u. K. And actually in the u. S. As well. I just want to come inside the bloomberg. This is grr, where we are in the first half of the year. The tech outperformance of 23 . Health care is coming up next, 17 . The losers, telecom and energy, down double digits, as well. Ea , the wonderful function on the bloomberg. Look at the sales surprise, we have beats on average for companies that are reported on earnings. Just explore it. Wonderful function. Have a look at opec go, it really spells that everything you need to know. Certainly, a quick snapshot of where we are. The bloomberg has about 30,000 functions and we always enjoy showing you our favorite on Bloomberg Television. Maybe theyll become your favorites as well. Here is another function you will find useful. Quic. It will take you to our quick takes. You can get fast insight into timely topics. David heres a quick take from this week. Simple question. What is actually healthy for you to eat . We know this is good for you, but is this . What about this . This or this . If you are confused on what is healthy to eat, you are not alone. Knowing what to eat is complicated and a big reason it is so complicated is as green as your leave the vegetables. Here is the situation, a draft of the diet recommendations says a healthy diet is lower and processed meats and associated with increased risk for heart disease. That is in till the meat lobby caught wind of it. Now the caution has been dropped from guidelines. In addition to food lobbies, the unreliability of Nutrition Science adds to the confusion. Fats are a perfect example. In 1980s, they were associated with heart disease. Consumers switched to margarine. When scientists later concluded that trans fat in those alternatives were more dangerous, people started avoiding fats altogether, resulting in a dietary trend in the 1990s. That led many to increase their carbohydrates and sugars, which experts say helped cause the obesity and type 2 diabetes epidemic in america. Still, the connection between dietary fat is far from settled. That is because Nutrition Science relies on observation, which cant definitively connect cause and effect. So, for example, all of these are from observational studies. The problem is, it is impossible to know for sure if these connections are real. Because so many factors can affect the outcome. Now, here is the argument. The 2016 nutritional guidelines won praise for specifics on what you should eat like vegetables and whole grains, but criticized for keeping the what not to eat section, a vague list of nutrients. For example, instead of saying avoid soda, they said avoid excess sugar. Once again, critics say food lobbyists are to blame. At 204 pages, many city guidelines are simply too long, too complicated and too influenced outside forces. Some nutrition experts think the u. S. Should just keep it simple, eat in moderation, for its vegetables, and go easy on the salt and sugar. David that is just one of the many quick takes that you can find on bloomberg. You can also find them on bloomberg. Com with all of the latest Business News and analysis 24 hours a day. That will be all for bloomberg best this week. I am david gura. Thanks for watching Bloomberg Television. From our studios in new york city, this is charlie rose. Charlie Mark Halperin and John Heilemann are here, the cocreators of the circus that ended its Second Season in may. Theyre also the coauthors of game change and double down. Theyre at work on the third episode in the series, recounting Donald Trumps surprise victory over hillary clinton. Mark halperin is analyst for nbc news