Transcripts For BLOOMBERG Countdown 20160805

It is 6 00 in london. Focus on the jobs data. We will talk about the bank of england as well. We are getting numbers from european corporate as well as reporting secondquarter numbers. That income coming at eight at. If we look at Second Quarter offering profit, 2. 4 billion euros. The estimate was 2. 47. What it says is that its on track for its four year target. Im not seeing any detail yet on pimco, but i will dig into that. That is one of the challenges with allianz. This is one of the challenges since the departure of bill gross. Anna of course they have new capital restatement. He arrives on november 1. Onwill be speaking later during programming to the cfo of allianz, talking to was on the move at 8 30 u. K. Time. Thanks for taking us through the headlines. This is the Worlds Largest cement company, confirming their outlook for 2016. Operating adjusted coming at 1. 7 billion francs against an estimated 1. 6. Coming in for the Second Quarter at 7. 2 8 billion swiss francs, an estimate of 7. 62. That looks to be a little late. Thats a little light. They are facing a number of headwinds in markets in demand in brazil. The Swiss Company under the stewardship of eric olson trying to deliver on profitability. They have suffered some highprofile executive departures that have further eroded investor confidence. Competitors have benefited from that. Also from improved command in north america and europe. They have made various pledges around profitability. We will see what they deliver through the morning and how the share prices react later on today. They have a 3. 5 billion swiss franc divestment target and have exceeded, their site. Lets get the first word bloomberg news. Lets get to Tom Mackenzie. Tom the number of those hired for permanent positions in the u. K. Slumped the most in seven years in july. Thats according to a record a report by the market federation, describing the job as a dramatic freefall. The day after the bank of england says the outlook has weakened markedly. The bank of australia released its quarterly statement saying the prospects of the local dollar and china rt uncertainties. It sees annual growth at 2. 5 at 3. 5 through december, accelerating to as much as 4 in 2018. Housing makers expect immediate little immediate change in unemployment. Monsantos books are being reviewed. Thats according to people familiar with the matter. Monsanto rejected and improved 55 billion takeover offer last month. Now bayer has signed confidentiality agreements with monsanto as a considers a new bid. New yorks top banking regulator has asked Goldman Sachs to supply more information about its work for the malaysian state thatsent fund, one mdb, amid investigations into whether any Money Laundering sanctions violations were other mixed conduct occurred. The head of the department of Financial Services has asked for a meeting with Bank Officials by the end of the month. Goldman says its been in dialogue with the dfs for some time. Bank of america has been called out by wall street top regulator for not adequately explaining executive pay. The sec broadly chided the lender for not describing what drove compensation decisions. Between particular interest in the 15 and a half Million Dollars paid to coo Thomas Montag, paid significantly more than other top managers excluding ceo brian moynihan. The Opening Ceremony of the real big games takes place later today the rio Olympic Games takes place later today. After doping scandals, mosquito worries, and collapses, the acting president will officially launch the event. The threehour show will feature highlights including some answers including samba sensors. You can find more stories on bloomberg at bloomberg. Com. This is bloomberg. We will have to see if we can stay awake long enough to catch the opening of the rio games. Lets show you where various Asset Classes have been trading. Nation stocks are the emerging asset. Asian stocks are the emerging asset. Also crucial in the pound, against the dollar, 131, 34. Get to itsid not postbrexit low. Analysts now forecasting a bounce in 2017 inner headlines. U. S. 10 year yields. We see an increase in volatility ahead of the payrolls number. Earlier in august we have seen yields go in higher in underdeveloped markets. Yesterday they dropped to below 150. 51. 5 . At exactly one jobs data later on today. Putting the focus on the divine between the fed and other central banks. The price of a barrel of crude oil, 4159, down by eight cents of a percent. Thats the biggest today increase in a month. Lets check out the latest Market Action in the Asian Session. . David david mentioned the bond markets. Put me get started their, there was a big drop in 10 year. We saw in adjustment in asian markets. Have a look at the japanese tenure. Not quite as. 1. As far as the bond markets, bond prices are going up generally speaking. The other big market story across asia is in japan. Butooks flat, or lower, this market has been flown all over the place. The dollar yen has been plunging a moment ago. That is the yen story. Another related to that is a lot of these japanese companys, icharm for example un is another that came out they are blending a strong yen on why they have to revise a they are blaming a strong yen on why they have to revise a lower forecast. Oil related currencies getting a decent bed. Aussiessie daughter dollar is going well as well. They are seeing inflation below 2 for the time being. In asia, fairly bright note. Volumes are quite thin in made that jobs report. Anna thank you david in hong kong. , focusing to the u. S. Jobs figures. They have flipflopped in the past two months, but economists see the july numbers returning to this years average. We have this report on what to expect later today. 180,000 jobs thats what the Bloomberg Media forecast projects when the u. S. Bureau of labor statistics reports july on foreign payrolls. Into two months prior you may remember the jobs number was usually volatile. Price 11,000 back in may, then 287 back in june. This hiring managers looked beyond Global Financial markets. But if 180,000 four july becomes reality it would mean a return to your average monthly gross for the first half of this year. That number currently stands at 172,000 each month. But will that be Strong Enough to change Market Expectations as well as the feds rate hike pass . Chiefberg intelligences officer tells us probably not. He says the jobs report would have to become somewhere near 250,000 jobs for the fed to even start to take about reassessing things. He says that even that would not definitively put september back into play for a rate hike. They are featuring in a 60 chance of a hike next month. 16 chance of a hike next month. The economy has only averaged about 1 growth. Is as if we dont get to 2 , there is zero reason to be raising rates. Average Hourly Earnings projected to have climbed 2. 6 year on year. If you that would match june if true, that would match june. The Unemployment Rate fold to forecast for 20 . More people enter the labor market looking for jobs. The july jobs report comes on friday 8 30 a. M. Wall street time. Bloomberg news, new york. Lets bring into the conversation our guest host, chief economist at wells fargo. Hundred 80,000 is the number we are looking for, not far from the average from the first half of this year, which would have been hundred 72,000. Well below what we saw in june. Give us your thoughts on this payroll number. Think it will be near the 12 month average, just over 200,000. If it brings the Unemployment Rate down to 420 , a lot of people will be cheering that. 4. 8 , a lot of people will be cheering that. Good news is good news. I think it stabilizes the possibility we see a rate hike by the end of this year, december, not september. People are saying this is an important report. I think they are saying it supported so they can go on a holiday it is important so they can go on a holiday for the next couple weeks. Anna will this really move the dial . And lack of job creation is not the reason that the fed is not hiked rates. No. We saw a nice bump in Hourly Earnings from 2. 6 to something close to 3 . Anna which could be something in the wages number. That is important to watch in the labor market. 280200,000 seems to be the median estimate regardless of the jobs report. Lets look at wages and see factor into will personal consumption forward. Anna we have a graphic that shows the Unemployment Rate and the lack of slack in the u. S. Economy. I asures, that you six the u6 and u3, illustrating a lack of slack that is an eight year low. That is obviously encouraging coming out of the Global Financial crisis. People getting back to work. But as a result, you can correlate that with u. S. Gdp. Is not particularly well correlated. This is a puzzle that needs to be solved when we see a trend of happier consumers, a happier u. S. Economy. I could be the trend for 2017. But if we dont see that trend already, that precludes the fed from hiking rates. Anna does any move in the dollar preclude the fed from hiking . We see the Interest Rate coming down in the white, and blue is the spot index. For the number of months weve had the fed talking about the dollar. At the moment you have to say the u. S. Dollar has been taking a bit of a retreat. Yeah. And that the euro is starting to show a little bit more backbone than it has done. The yen is showing more backbone than it has done. Even sterling in reaction to the bank of england did not fall as much as most people had expected. The dollar is not going to have a huge amount of strength. Is expectations for a december rate hike pick up above 5050 , 5060 , that will drive the dollar. 25 basis points will not see a seachange in evaluations. Anna get orange, we have the gdp number, nine bond payroll in white. Have a perfect correlation, but 76 . Which is not bad. In the face of that weakness in the gdp story, how does this engine hold up . Most of the weakness that we saw in that gdp number was away from the private consumption side of the u. S. Economy export numbers. Residential spending was 6. 1 lower or Something Like that. Something passed since then we have seen it pick up in data around the u. S. Housing market. I think moore present data is starting to show more encouraging news. Jeremy cook at world first. Here are highlights for your busy day ahead. We get the payroll data out of the united states, and after the European Market market closed, a rating update issued for turkey. Midnight u. K. Time, the Opening Ceremony for the summer olympics in Rio De Janeiro gets underway. 6 15 in london. Kearny wheels the stimulus . With signs of stimulus sledgehammer. Were live from south africa as the anc party suffers its worth electoral display since the end of apartheid. Cfo at the top of the next hour. This is bloomberg. Anna welcome back. To lose guys over hong kong. Blue skeis over hong kong. 6 19 in london. 1 19 and hong kong. Latest Bloomberg Business flash from Tom Mackenzie. Insurancees biggest saw a income declined to 1. 1 billion euros for more. 21 point billion euros per year. Allianz ceo at 8 30 u. K. Time. Its considering i direct london to first link that would rank among the first longest flights. Serves its first 77 will continue to defer delivery of its remaining 883 80s ordered. Toyota shares have risen despite predicting a 37 plunge in earnings because of the stronger yen. 5 billion off the operating income of japans seven automakers in the first quarter. Toyota alone has taken a 2. 3 billion hit. The companies have cut off and asked the government for help. Samsung is hoping the olympics will help generate interest with Virtual Reality at based. Is teaming up with nbc university to deliver the first dvr presentation of events. The opening and closing ceremony, diving, track and gymnastics. That your Bloomberg Business flash. Anna now mark carney has unleashed a package stimulus including the bank of englands first rate cut in seven years. The Bank Governor said more easing could come as written feels the effects as britain feels the effects to leave the european union. On the elements in this package have scoped to be increased. We can increase the size of the tfs and expense help for variety of assets held in the person facility. We are clear that we see the effect of lower bound as a positive number close to zero. The bank of england continues to stand ready to take whatever action is needed to achieve its objective for monetary and Financial Stability as the u. K. Adjusts to the realities and move forward to seize new opportunities outside the european union. Jeremy, some labels of the unreliable boyfriend showed up with flowers and chocolates, the whole works. Is it too much . Not saving enough for the future . Jeremy we have a point where Interest Rates are 5. 5 , he is drastically against negative Interest Rates as was made clear in the press conference yesterday. There was only going to be 50 basis points off. They want to keep it slightly positive. It had to be this unconventional policy, which can be ramped up, depending on whether they feel it necessary or not. It has swerved from the Interest Rates. Its more unconventional to be looking at this at the tfs. Hopefully it works. Anna talk to me about unconventional policy, what used to be dubbed unconventional policy, negative Interest Rates. All the places in the world, we have a chart where this is just normal business. We have heard from the bank of england governor that rates will not go negative in the u. K. Hes said before in his rolled at the fsb that he doesnt like negative Interest Rates that much. What you think hes saying in his role at the fsb, that he doesnt like them in japan, or the ecb, were all over the world . Jeremy i think the jury is still out on whether they can grow longerterm stability in these economies. U. K. ,nly here in the while a lot of people were yesterday saying this was a good plan, the biggest calls for caution came from the pensions industry. The difficulty with any further cuts and rates will hurt pensions and banking given the huge amounts of Financial Services exports the mckay economy still relies on concern trade environments. And it kicks to the body would be taking it while it is down. Its not my favorite policy by any stretch of the imagination. Something we should be looking at. Not something we should be looking at. Anna bank of england rate cuts sending yields to record lows, a continuation of that same story. Is a Broader Market story, isnt it . Jeremy yes, and this will likely continue lower. Until we see stable increases in inflation, these fields are going to stay at these ultra low levels. Unfortunately in expansion businesses a difficult place to operate. Come back in a couple of days for the aussie rate cuts. That dollar bounced back almost immediately to 1. 5 . Anna everything is relative. Is trying tongland get ahead of what they see as a deteriorating picture. We have seen the pmi performance all under manufacturing or construction. Just overnight we got jobs data talking about the number of people hired, permanent hires, decreasing the most in seven years in july. Thats just overnight data coming at. How weak does the picture get . What is your forecast compared to the bank of englands . Jeremy we are forecasting a recession in the second year. If the pmi numbers continue as they are, which they will do over the next 34 months. Government, anna did we reshape . Jeremy i hope so. I hope the inflection points are quick to rebound. Ata jeremy, chief economist world first stays with us on the program. The ruling anc party in south africa suffers his worst electoral display since the end of apartheid. We have analysis life from johannesburg live on countdown. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Anna welcome down to countdown. 6 30 in london. That was a live shot of tokyo. The dollar is fairly flat compared to the 1 , not much in the grand scheme of things. Lets tell you what it is featuring in todays additional daybreak, now available on your bloomberg terminal and your mobile. Lets take a look at some of the stories from today. We are going all out for the olympics on the front cover of daybreak. Rio olympics kicks off. If you can stay up late enough, you will be in for a treat with the opening ceremonies. After terrorism threats, disease carrying mosquitoes, athlete and terrorist kidnappings, doping scandals, and interceptor collapses maybe i will stop there its alternating off later this evening. Its all kicking off later this evening. And the Supermodel Gisele bush and will be a feature. Lets talk about the u. S. Labor market. Will the real u. S. Labor market please stand up, is the question posed by the debris came economist. Daybreak team economist. After jim, 287,000 produced. We will be below june in the number of job creation for july. Not far away from the average of this month. Finally daybreak focusing on bank of america and the sec, asking white coo Thomas Montag was paid froming earnings firming Net Interest Income 2. 1 9 billion. They focused on net income interest because, what is the extent to the Interest Rate globally, how is that hurting their ability to make money on it and crest . Net interest . We will speak with one of the longestserving ceos at a european lender. We will talk to the ceo joining us at 7 20 u. K. Time. Hes previously said the bank needs about a 5 growth in loans this year to keep interest stable in the face of this record low interest environment. Stocks have risen amid a surge in Government Debt after the boe policy has eased the market in the wake of the brexit vote. We have seen yields coming down in japan and australia after the 10 year guilt felt to a fresh record. Andn stocks gaining Energy Consumer stocks leading with energy on the asiapacific index. Wti holding above 41 a barrel. To focus on sterling after the bank of england decision. You can see the drop weve had at the end of the chart in this yellow section. We are at 131 121. 1. 6 ,gh sterling fell at it only felt a little scene last week. It held above 2. 5 higher than the 31yearold low reached in the aftermath of brexit. The pound trading within that post brexit range. Forecasting sterling from 141 will fall to 127 before rising to 133 next year and 29 in 2018. Thats the median forecast by bloomberg. It kinds of tallies with movements in the derivatives market. If we look at one year risk reversals on sterling, the premium for these twelvemonth options granting the right to sell sterling is actually close to an eightmonth low. As that rises, it shows that option becoming less bearish on the longerterm process acts for sterling. Longerterm prospects for sterling. Although we saw that drop yesterday, longerterm prospects still a little more positive. Finally with a tengion turning to the job status of the u. S. Treasury volatility on Merrill Lynch move index. Is climbing from a 19 the month. Low it is climbing from a 19 month low, heading for its biggest weekly increased sense june. Anna lets turn our attention to emerging markets. South Africans National conference was defeated in the local elections in Nelson Mandela bay. Results are being counted, the agency risks losing outright control over the capital pretoria and johannesburg in its worst electoral display since it took power 22 years ago. Great to have you on the program. Could list the reasons about this unprecedented loss for the anc. Not loss in these elections, but damage to their power base. Good morning. These local government elections have been the most fiercely contested in south africa, with a Record Number of candidates. Just aboutn as that 1 10 of the votes yesterday counted, agency is leading nationally about 55 . But thats down from 62 in the previous elections. It may be at risk of losing some of the major districts, johannesburg as well as pretoria. Maybe urban voters are showing their anger towards the flatlining economy. We know the south African Reserve bank has seen 0 growth this year. The Unemployment Rate is at 27 . No ratings agencies are keeping a close eye on whats happening in south africa, with s P Global Ratings possibly coming into the countrys Credit Rating to junk status later on this year in december. What we know is while the agency has showed a narrow while the anc has showed a narrow lead in johannesburg, theres still risk of falling below the 60 mark it has already held traditionally. Anna talk us through what markets have made the politics. We have seen the random rallying, and it reached a ninemonth high against the u. S. Dollar. Investors in the markets reacting quite positively. The lead opposition parties to be having inroads and winning districts such as Nelson Mandela bay. Analysts think this means the countrys democracy is quite strong, but also that it might motivate the Ruling African National congress to possibly increase its delivery. Without a number of we have had a Record Number of the six services protests. Basicck Services Services protests. This could include delivery on the ground. Thanks for the latest on those elections. Jeremy, i have a chart that inroads. Rand making there is a much broader question with what the fed and where the dollar goes. A lot of this rand strength is dollar weakness. We have seen a fairly peaceful vote. That is a good thing and should essentially lead to a change, not in government, putting the way the government holds itself within the country. Making sure the anc party is not just the as a power trip. That has to be seen as a net positive. On the emerging markets story globally, we have not said one word today, which is china. News out of china has gone quiet. South africa is intrinsically tied to china given the commodities space. If you are thinking you are trying rand because of the election results, the news out of china is almost unpredictable and criticized 20 quickly. And could sideswipe you quickly. What they are doing at the moment seems to be Holding Things in limbo. The politicaly battle we are seeing in asia will be an interesting dynamic through the second half of the year. The government starting to ratchet up the political territorial pressure they want to put on china. If china feel threatened, it could act as a cover for additional stimulus locally. Anna we have not talked oil price either. We have seen a change in the story in the last few weeks. We are still above 41. But down by 1 compared to the previous close. Well coming back on from canada and iran. Rings are going up in the united states. Which is oil due to the Global Outlook . We have seen the glut in oil start to pause. A glut in we have that, the demand for oil is taken lower. The supply dynamics still means anything above 52 a barrel. That is a nearterm ceiling. The u. S. Driving season was bad. Wasmajor demand factor again taking the price lower. Anna have you any currency calls for us around the emerging markets . We have not talked about japan. How have things changed . Jeremy japan is an interesting one. Taking it back to the bank of england, if it hasnt done positive easing quantitive easing, that would have been two qe in the past week. I think there is a possibility that while you should not judge physical stimulus by the , i think wekets continue to see that below 100. Owards 9592 judge thet seemed to fiscal status. Why is that . You could see a status where if the fiscal status worked, that might increase demand. Jeremy it might. It might increase inflation hopefully, therefore bring about necessity for higher rates in japan. Something we have not talked about in a long time. It is the only way people can do at the moment. They think they are going to buy the end because the economics it will be interesting to hear the conversations between the government and automakers at the moment. They are not happy with the strength of the yen. Jeremy coming thank you very much. Jeremy cook, chief economist at world first. Job data from usa. Will it align with the fed rate hike for this year . And as rbs reveals its latest results at 7 00 a. M. U. K. Time, we speak to the cfl. At 7 20, we speak to the ceo of erskine bank. More about the numbers and negative Interest Rates in the environment. This is bloomberg. Anna welcome back. 6 47 in london. The u. S. Equity trading day, features up over 1 10 of a percent. For the Bloomberg Business fl ash, here is Tom Mackenzie. Allianz says secondquarter profits increased. Allianz also said operating profits at its managing profit pimco velvet 41 Million Euros. Allianz ceoak to the at 8 30 u. K. Time. Met estimates amid growth in india and pricing. The Worlds Largest cement maker said before taxes and depreciation and amortization billion. 6 to 1. 76 the Company Remains under pressure to deliver on target a year after it was created for the merger. Useas Airways Limited to bombings 7087 and is considering i direct flight from london to perth that would rank among the worlds longest flights. They will continue to further its delivery of planes delivered from airbus. Unit shares have risen despite a 37 plunge projected and earnings because of a stronger yen. Wipeds a must 5 billion off the economy of japan in the first quarter. Toyota alone has taken a 2. 3 billion hit. Andcompanies have cut costs asked the government for help. Samsung is hoping the on the will help generate concept in interest for its Virtual Reality headsets. Its teaming up with Nbc Universal and the Olympics Broadcasting Services to distribute the first vr presentation at some events. Includes the opening and closing surmise, talking, gymnastics, and track and field. Anna Tom Mackenzie with the. Loomberg business flash u. S. Jobs figures have flipflops, but july numbers are returned to average. We have this report on what to expect later did. Jobs, thats what the Bloomberg Media forecast projects friday when the u. S. Blaber of Bureau Statistics reports july on foreign payroll. You remember the jobs number was usually volatile. A revised 11,000 in may, than 287,000 in june. Hiring managers looked beyond Global Financial markets. Reality,uly becomes a it would mean a return to near average Market Growth for the first half of this year. The number currently stands at 100 summary 2000 each month. Will that be Strong Enough to change Market Expectations as well as the fed rate hike past . Bloombergs chief intelligence economist tells us probably not. Be says the july jobs report would have to become between 225250,000 jobs for the fed to even start to think about reassessing things. He says even that when i definitively put september back into play for a rate hike. Fed funds futures are pricing at a 60 chance of a hike next month. He also points out the fed wants to percent growth, but in the first half of this year. The economy only averaged 1 growth. Get to 2 ,we dont rares zero reason to be ising rates. Average Hourly Earnings have climbed 2. 6 year on year, matching june as the fastest rate of this year. Unemployment rate forecasted to fall 4. 8 after climbing to 4. 9 in june. Thats happening as more people enter the labor market looking for jobs. Bloomberg news, new york. Anna lets bring our next guest into the conversation. Chris ra ising rates. Average Hourly Earnings have climbed 2. 6 year on year, matching june as the fastest rate of this year. Wiley, joining us on set for the next half hour or so. Great to have you on the program. Lets get your thoughts on the state of the u. S. Economy, using this gdp chart. Earlys back only to the 1990s and makes a broad correlation in the mid70 . We saw that disappointing gdp figure at the start of the year. Does that give you consolidate give you concern about the u. S. . Chris not at this juncture. At the beginning of the year there were well founded concerns that we might be potentially moving towards a recession in the u. S. I think thats what drove the weakness in markets at that stage. Since then i think the picture has been more of stabilization. In the last couple of months, a small bit of impetus in terms of Economic Growth in the u. S. , not particularly strong. Certainly enough to reduce the risk of a recession, which i think was concerning for markets six months ago. Anna if i put up the work function on bloomberg, we can see how it the market is factoring rates from the u. S. By the end of the year, 37 has come down of late. You have to go to the 20th of september 2017 to find the percentage going up about 50 . Would you wait that long for rates to go higher in the u. S. . Chris again, this story has flipflopped over the last year so much. Had the fed signaling several times they wanted to put rates up, but it had to drop back from that several times. We are onto the story of the third rate cuts. That seems plausible. What was going on in the u. K. Yesterday, what japan has been doing, more of subdued rates. It does not feel like the americans are likely to step out of line with that. Everyone wants a weaker currency, or at least a not strong currency. If the americans put into place too bigger Interest Rate differentials, the dollar will get strong again. Just a year ago we were experiencing that slowdown. I mentioned the rebels in the stock market and those setbacks. They will have to be careful about that. How far one projects that, nobody knows. The story in the next six months made to be one more tweak in Interest Rates, but i would not predict more than that. Anna its hard for them to go it a lot in terms of rate hikes. Factors does that influence are you looking at that divergence in rate policy . Chris absolutely. Is thegest one by far increasing proportion of Bond University becoming almost on investable for longterm investors. What i mean by that is when we contracts portfolios over 510 years, we are looking at a target return above inflation. If one of those Building Blocks of bonds, bonds which now are using less than expected rate of inflation, its very hard to build them into a portfolio. Its like starting a race anywhere 100 meters behind the starting line. The good news is that stock markets are offering these it returns. Anna when does that start to burst the bonds bubble . It seems people have been talking for years about montana being too low and the bonds market. Market. Too low in the still they are getting lower. Chris with talk about lowering bond yields all the way to the early 1980s. It was called the widow maker in japan. How people get into betting against bonds and consistently role. Everybody is wary against betting against bonds. There are a few straws in the wind in light of what i just to findt we might start flaws in bond yields. In the last month or two, we saw bond yields dip in the u. S. And edge backup. It could be the inflationary environment beginning to change. Perhaps more forcibly the physical environment changing and governments moving toward much more expansionary policy in terms of government spending. That would be a very good reason for a bond investor to price in a bit more risk and to pick yields a bit higher. Anna also with the olympics losing, talking about a metaphor with battling fiscal authorities. Chris, thanks very much. Program, rbse earnings are about to drop. We hear from the cfo. This is bloomberg. Manus asian shares climb and yields fall for a third day as the focus shifts to u. S. Jobs data. Bruised but not broken, sterling shows signs of resilience. 2017 resurgence. Sydni says its a spanking england decision could cut yesterdays bank of england decision could cut we are getting results from the royal bank of scotland. That is in just a moment. Manus you are welcome to countdown. Good morning. Anna i am anna edwards. Manus cranny is back with us. Markets over in asia looking positive come up. 6 on msci asiapacific. Manus what more is everybody else going to have to do to match the carney triptych of want of easing triptych of quantitative easing. You got london, paris and frank for it all rallying. Anna germany as well. Just crossing our screen. 0. 5 percent gain, that is outcome that is coming out of germany. Monthly pieces of data picture coming from germany, the cautionary word is always to not read too much into one month of data. Slumpeded driven by euro demand for investment goods. A slump in demand for the rest of the euro area. Manus we are waiting for the rbs numbers to come in across the bloomberg terminal. There we go. There is the Second Quarter net loss of 1. 0 8 billion pounds. Pounds. Billion lets get straight to the cfo, in terms of the number. We are a very liquid bank. A deposit ratio of 92 . Weve put on more volume growth. Manus it is going to squeeze your numbers. It will squeeze us on the interest margin. Weve already been lending at a decent rate. Manus do you think the governor has gotten that message . It is a demand problem, not a supply problem. It is different for us. It is probably more of a demand problem. Certainly not a supply problem. For some of the other banks, that Lending Facility manus will you pass through a quarter of a percent cut . Products and do what we think is fair and reasonable. Manus the governor had a their message, you have no excuse. I am not going to sit here we will be looking at it. Manus the one thing the camera , heading to a zero Interest Rate world in the u. K. How are you modeling to deal with that . How are you preparing to deal with 0 . As you saw, certainly in terms of terms and conditions, we are putting ourselves in a position that if we needed to, to be able to look at how we get to a fair and balance with liability customers. Where the noninterestbearing ondemand that is a tough place to be in a zero Interest Rate environment. We are heading into an environment that is structurally lower in terms of profitability for the large u. K. Banks and going to make it harder for subscale challenge events. Manus lets talk about brexit. Can you tell me what is going on . Is the demand dropping off . From the data you have seen since the 24th of june, what is it telling you . We are the biggest bank in the country. We have seen a slowdown among Corporate Customer base. Stalling decisions to invest in. Eople that continued after the referendum vote on the retail side pit we have seen a drop off in volumes. There is a slowdown going on. Manus would you call it a recession . No, i would not call it a recession pit we look to the numbers yesterday, we were quite pleased. Call it a recession. We looked at the numbers yesterday, we were quite pleased. Atus you and stevens, cfo rbs. That is conduct in litigation which is the perennial issue for all of the banks. For rbs, conduct in litigation billion 2. 8 Million Pounds. To get your ppi request in, you have now until 2019. Thornton 50 Million Pounds is what they estimate it will be 450 Million Pounds is what they estimate it will be between now and 2019. The profit misses. The estimate was for 806. One other piece of news is williams that is off the cards. It is a trade sale. They spend more than one billion pounds to get that ready. We know what all of the rumors say. Anna they will not ipo it as they say. He responded to what mark carney did. Lets talk about what other news. Well william hill giving us their earnings. 2016said the euro tournament generated a total 36 Million Pounds gross. Immediate priorities continues to be recovery of their online business. The impact of brexit on the u. K. Economy is unclear. Talking about falling mortgage volumes and a slowdown but not something you would call a recession. Back to the william hill story, rank and aaa are trying to buy william hill. That is a business that is bigger than the combined value of these two. Theyll be quite a big business for these two good well see of they manage it. 60 Million Pounds worth of shares that share buybacks. Theyre not seeing any reference to that the to offer from rank and aaa. Manus we got equity markets bouncing higher, picking up the theme from asia. Lets have a look at some of the on our risk radar could anna the pound in their. Manus down but not out. The best way to put it. Bouncing cable up to 133 if the stainless works and put the baseline under the 10 year Government Bond yields in the u. S. Dropping to 1. 49 . Those new lows, new movements. We did rally. Anna with a big to the increase, the biggest in a month. We are in bear market territory. Lets get bloomberg first word news with Tom Mackenzie. Anna. Hanks and number of people being hired for permanent positions in the u. K. Slumped the most in seven years. That is according to a report by recruitments and Employment Federation who described the drop as a dramatic freeforall. Dramatic freefall. The day after the bank of england said the outlook could weaken the market. The reserve bank of australia has released its quarterly statement saying the prospects of local dollar and china are key uncertainties. The rbcs annual growth 2. 5 to 3. 5 in december. Accelerated in 2018. Policy makers expect immediate change in unemployment and core inflation is expected to remain below 2 for that stable. Period. Le ow desk that is occurring to people familiar with the matter. Monsanto rejected an approved 55 billion stake over billion stake over billion takeover last month. It considers a new bid. New yorks top banking regulator has asked oversexed to supply asked Goldman Sachs to supply information. Any Money Laundering frexit violations or misconduct because the head of the department of Financial Services has asked a meeting with Bank Officials by the end of the month. Goldmans says it has been in dialogue for some time. Bank of america has been called out by wall streets top regulator cannot adequately explaining executive pay. The sbc chided the lender for not describing what growth compensation decisions did it took interest in the 15. 5 million paid to seal thats paid to coo. He was paid significantly more than other top managers. The Opening Ceremony of the living games takes place today after terrorism threats, zika carrying mosquitoes come and taurus kidnappings, doping scandals and infrastructure collapses, as those acting president will officially launch the event. The threehour show is expected to be highlighted which includes some advances. Global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. You can find more stores on the bloomberg at top. I am Tom Mackenzie. This is bloomberg there anna. Manus. Manus lets get into the markets. David ingles is standing by. They are buying etfs like gung ho. Of course i think youre talking about the boj really ramping up. Last policy announcement. Have a look at dollar, get to the other Asset Classes. The story is were getting enough tick and starts as far as biomarkers a concerned. That doesnt board what by well for japanese investors. Dollar yen back to 1. 01. Back to 101. Really through the mckay 225 all over the place just really through the nikkei 225 all over the place. Really through the nikkei 225 all over the place. The reason i have any charm of is the other team across forfeit japan is a much stronger yen could you charm came in with earnings. One of things that stood out is they blame the japanese yen on why they had to bring sales profits and net income are two things when you look at japan, fairly negative. Thats in the day on a fairly positive note. We are continuing to see this bank of england cut yields are on the way down. Are as show you where we far as these bond yields in asia are concerned jgb, negative nine. Have a look at equity markets. It is an update, volumes are quite then for obvious reasons. It is a fairly good hand. Anna thank you very much, david. David ingles in this giving the details of the Asian Session from hong kong good political news from south africa. The anc, the dominant Political Force conceding defeat and Nelson Mandela so thats Nelson Mandela bay. Local elections taking place nationally good where having local elections in south africa. The anc has withdrawn this is when something of a strong point, a place they have done well and they think they are not doing as well. Anc in thee for the desk compared to the postapartheid history it we heard earlier on from the ancs chief that there are some areas they were not happy about and Nelson Mandela bay. They have launched a dispute but they were in the process of withdrawing that. Where hang from a spokesperson that the we are hearing from the anc has conceded defeat. Mental this would be the worst performance for them under manus this would probably be the worst performance for them under the president. On mandela back in 1994 anna lisicki but, mark carney has unleashed a stimulus lets talk about u. K. , mark carney has unleashed a stainless package. Cio, chris wyllie is the he is still with us. Yesterday, the triptych of big guns that when all, quantitative easing, Corporate Bond buying, rate cut and ready to do more good a summit of message to help the economy . Christopher do more. A Strong Enough message to set to help the economy echo christopher top of economy . shock value of new weaponry so to speak is gone. I thought there is one thing he did which is slightly limited the impact and that was the fact he reaverted his reluctance to go to negative Interest Rates and talked about the zero balance being positive. The impact of the thing youre doing today, but that is also the promise of what is going to come next. The markets are always looking for that. Sometimes theres an element of blood. Bluff. Ent of you have to move you have to make the market believe that youre going to do what you said youre going to do. , i thinkterm impact he wouldve gone very happy thinking job done, i did all they could be expected of me and the markets have reacted. Anna interesting to hear the rbs response. They are not saying whether they are going to pass this on. Manus said to the cfo, you anna the governor quite bossy did you need to go in past this. In australia, where banks have not been passing on all of the rate cuts. It is a tough message that he is to deliver. He wants next to lend more. Accessing the demand is not there. The banks are saying demand is not there. Theyre warning of the strength of ukip economy. Chris it is gone getting gettingl it is all political which is a tough position for a bank to begin. The problem is that actually you are pushing on a bit of a piece of string when it comes to these policies. This is more of the Financial Market event, the reaction yesterday. Then it will be a main street event. Interest rates are not a hot button topic to consumers because they already recognize that Interest Rates are very low. Significant a balance of the sort of thing that is very political when rates are high, but they are not. Bluff. Bit of anna can we wait for statement from the chancellor . Everything that has happened in the u. K. Surely we need some kind of reset. Chris that is a bit worrying because youre seeing the bank of england been very responsive to shortterm data. Some people criticizing for being too responsive. The political world seems to be moving in its own stately pace. ,he real point about yesterday i am not sure consumer behaviors go to change as a result of small changes in Interest Rates. It is the corporate sector which is in lockdown. That is going to impinge on employment conditions. The corporate sector needs to carry on investing through this perio of political hiatus and that means the school responsed. Manus chris wyllie, cio of con a broadly. Thank you very much. Net income more than doubled. We speak exclusively to the companys ceo undressed try show andres treichl. Anna welcome back. This is countdown. Lovely shot this morning. The pound is bouncing. 131. 35. Manus austrias bank says it dont more of its income. 139 Million Euros from the sales of its stake and 30 Million Euros in risk provisions did provisions. Anna Andreas Treichl joins us on the line. If you could update us on how the business is going. He said in the past has you need a loan growth to make up for negative Interest Rates and how are you doing against that kind of target . Co we are doing quite draco is coal on Andreas Andreas that is the main reason why our held up that we made up for the loss of our securities for folio through business. We are quite happy about that. Manus no bank complains about doing real business and earning money. How is it going . We are living in a zero inches world. Class have money on deposit your time to move to wealth management. How is that going. Our clients reacting . Thats how our clients reacting . How our clients reacting . Ray andreas Retail Businesses are our main clients and they are very reluctant to move into higher risk investment. So we live in a cash society, it is becoming pretty digital. People are not going into risky stuff. They keep the money deposited in our bank. We have a serious situation. There are deposits growing. We are not charging them negative rates. We do not intended so. Thats we do not intend so. We do not intend so. Zero deposit rates and the lending that we do, and that still seems to work fine for us. Anna talking about the low Interest Rate environment, you have been quick to kill obvious in the past. Do you see rates going lower in europe . What message would you have for the ecb . Is stop. My message we are low enough. Moving rates even lower does not help anybody. I am fed up with quantitative easing. I would like it to stop as soon as possible. Manus you might have a bit of a problem with a few of the global central bankers. These that hated work, counterfactual. I hate that almost as much as you had quantitative easing. What you expect . Benefit a bit from brexit. Bankers tohappy those people that some of your countrymen want out of the u. K. We hope they return to the region in which we operate, czech republic, slovakia because we have a serious shortage of the workforce. Happens, if you kick them out, we are happy they come back. Anna within the enough to offset the slowdown from the u. K. . Andreas definitely. From the u. K. In our p l is hardly to be seen anywhere. Are the one of the issues is the italian banks and how best to deal with them and their nonperforming loans. What would you say if you had the opportunity to sit down with the European Commission in terms of bailing in the bondholders, the retail bondholders if need be in italy . Andreas i think the italian banks do have a domestic issue. We know what they are going through because we have that issue in our region. We have skyrocketing npls croatias like romania, and hungary. We have been dealing with that through the last years and it was a very painful exercise. We managed to do it and we brought the npls substantially down and we have the lowest level of npls ever, so if we can do it in our region, i see no reason why the italian banks could not do it in their region. Be ahave to do it and to bit more forceful and speedy about it. With regards to the squeeze between the bondholders and the depositors, that is a very interesting issue that he will have to deal with, because he has only two options. One is either all taxpayers in italy pay for the bailout so it hits all of them, not so much, but it hits them. Or it hits those taxpayers that have but italian bank bonds. I think he has to realize there is no escape. Either he hurts some taxpayers really badly, those who bought the bonds. Or, he distributes equally among all italians. That is a political decision here to take. Anna andreas, thank you so much. This is bloomberg. [hip hop beat] olympics 2016, let me get you on my level. So you never miss a moment, miss a minute, miss a medal. Why settle when you can have it all . Soccer to wrestling. Track and field to basketball. Fencing to cycling. Diving to balance beam. All you have to sa is, show me, and boom its on the screen from the bottom of the mat, to the couch where you at . Show me the latest medal count xfinitys where its at. Welcome to it all. Comcast nbcuniversal is proud to bring you coverage of the rio Olympic Games. Hohey s woiit ghong, estcak . Hoestcak. Th lais p hceotas hke hyso wn arett ey llkelica hotkes . Cwithstomcain business rnan fid e. Ju ddst aus a czetomimeey e y towiour rofi pas splgeh pa an ud yo ll yeachstr somer eie esr a adylr ju ddst aus a czetomimeey e y diresevicfi pas splgeh pa. Or upder. Odintrg ucin pwifiwiro, fi hthatpsyow usur bs. Ines u doe t eth dvery. Nebusiss. Ascomcbut t builbufor sssine welcome to on the move. 8 30 if youre in berlin. We are countinedwards alongside. She is in berlin. This is what were watching. Jobs friday that u. S. Payroll numbers are released today. What kind of figure would it take to change the fed rate cap . Rate path . The insurance numbers died due to higher claims for natural disasters. Cfo of theak to the compy