More brexit european stocks recoup the losses caused by the uks vote to leave the eu. Investor sentiment has not bounced. Why . Caroline key question. As we and this week of extraordinary records being broken in stocks and bonds, we look at how we are going to open. We saw a records hit in the united states, currently flat to lower on the cac 40. We are edging into the green with the ftse 100 up 1 10 of 1 . Flat, zero point 00 in the futures market for the euro stockxx 50. Guy im going to pull up a couple of charts. Im going to start up with my gmm. What is going on around the world the echo equity markets yesterday delivered a Strong Performance in the united states. It was partly driven by oil. Aussiedollar, the kiwidollar, all trading lower. The dollar index is 1 10 of 1 higher. The Commodity Markets are looking reasonably buoyant, but the real story is what is happening with wti crude and brent crude. Let me roll a chart in and show you what is happening. This is the oil rally over the last couple days, and as you can see, its a decent one. Now up 4. 74 . That is a contributing factor into the equity market story, but it is interesting to see what is happening with the saudis, again talking the market up, talking about moves of stabilization. We will see whether or not that rally carries on. We are seeing energy out sick caroline we are seeing energy significantly outperforming in asia. Look where it hit in the united states. This is the chart of the week, the First Time Since 1999 we had record highs not only on the s p 500, not only on the nasdaq, but also on the dow jones in just real average. A beautiful industrial average. A beautiful chart, showing us the extremely times in which we live. Since 1999 have we seen this kind of bubble, going back to the. Com era. Us search for yield drives to riskier assets that are the equity markets. Guy does everybody believe that equity markets go higher from here . That is what we need to look at for the moment. If you look at cash positions, probably no. Cash positions remain particularly high. But bring in the head of g 10 Currency Research at credit agricole. We live in very strange times. Indeed. You can describe the currency situation as goldilocks. The Global Economy is doing ok. At the same time, its not good enough for Central Banks to say, we need to tighten. Weak Commodity Prices have been helping, but there is always a limit. In terms of risks ahead, i think we just saw one risk materializing earlier today. The data out of china was not encouraging. It is the case that the valuations we are seeing, stocks, bonds, or a function of the underlying fundamentals. Guy the bond markets are a big driver of all of this, what is happening in japan, what is happening in europe, people direct buying treasuries. That has been a part of this story. Why is that going to end . What is going to pick this up . If you look at multiples, they are elevated, but the market still goes higher. In the case of the bond market, i believe the increasing number of bonds yielding negative yields is an indication of what you could describe as secular stagnation, an imbalance between savings and investment, and that is not going to go away anytime soon. What worries me is the impact of that imbalance on a global growth, the fact that growth is not going to recover anytime soon irrespective of how much cash the Central Banks are pumping into the economy. So long as the data is what it is, some growth, not necessarily a disaster, is encouraging further rallies in the equity markets in the search for yields. That is until the point of the data starts disappointing again. I worry we may get a bit of a slowdown, and we are seeing some forwardlooking indicators pointing out that. Affected . Onds be potential less so. Stocks, however, could be vulnerable. Caroline i think it is important that you shed a light on what is happening in china, a phenomenal slowdown in private investment. This chart shows the disparity, the difference we are seeing between private investment, and meanwhile, the white line shows a follow way in private investment. With the blue line, you are seeing the state, in. We see the blue line continuing to be much higher in terms of growth. What is the showing you for china in terms of fixed Asset Investment being below where you expected it . The latest data and the chart you are showing does highlight the severity of the problem. The chinese are trying to rebalance their economy, moving towards more Sustainable Growth at the cost of higher growth, and the key is how much success there will be. That could lead to potential for the problems ahead, the socalled Access Industries. We are talking about steel producers, coal producers, and the hope is that some of the workers employed there, or some of the Production Capacity still employed there, could be seamlessly moved to different sectors. The property sector, one potential target. The sheer scale of the problem is so huge that i think the latest data is highlighting how , how it could be a slowdown in the chinese economy. The number of people employed in the socalled Access Industries could be as high as 3 million. That is the total number of the unemployed and the u. K. If indeed that has to be restructured, if they need to ultimately give way to a more productive industry, the transition may take time. It may not be as seamless as many are hoping. The growth impact could be negative. That is a worry, and that worry is still very much there. Guy lets talk about where we can get the biggest bang for our buck in terms of this unwind. Let me take you inside the bloomberg. This is one point 15 two. This is the russian ruble. This is the record low. We have come all the way down. Story, partly oil a carry story. What happens to some of these big plays . Its potentially liquid. Drupal is a case in point. We have seen other cases in the brazilian real. All of these are inherently vulnerable currencies. The turkish lira, always pretty vulnerable. You will always be picking lows for an unwind. In the g tens base, we think the theme or the persisting theme related to any unwind will be the correction lower in Commodity Prices. If anything, Oil Production out of the u. S. Is picking up again, which is different from what we had earlier in the year. Dollar, qee aussie dollar might be close to turning against the dollar, and certainly, timing is key. We think we are not far from a turning point. Those three could be interesting candidates for short positions to express that particular view, a potential unwind. Caroline fascinating times. Thank you very much indeed. He will be sticking with us from credit agricole, talking more about the fx repercussions of this more extraordinary time in which we live. Later, we are going to be talking about the low in oil, as well. Hard. Hit maersk revenue at alibaba accelerates to the fastest pace since its ipo. We will take a closer look. Was the suspected russian hack of the dnc wider than first thought . That story, ahead. This is bloomberg. Caroline welcome back to on the move. Its a gloomy friday in berlin, not much risk on the dax. Currently flat. Remember, the bull market that weektered this remains low. Here is tom mackenzie. Tom thanks, carolyn. Maersk has reported an 88 drop in second carter profits. The figure missed estimates, although its ebit number was a beat. The company has been suffering from falling prices in its oil and container division. Noble reported a net loss of almost 55 million in the second quarter. The Commodity Traders said its priority is boosting cash flow. Novo group has lost its bluechip status and investment great rating amid sliding Commodity Prices and a tax on its accounting. Decision to diversify alibaba is paying off shares jumped in new york after results beat estimates. Revenue increased 59 in the First Quarter driven by streaming and cloud computing. Net income and sales also beat expectations. Itsaba said achieved goal in target revenue. Jpmorgan says it will liquidate a japanfocused fund after a surge of investor withdrawals. The japan Market Neutral fund will liquidate after assets dipped to around 70 million this month following significant redemption. The fund has lost 16 since it was launched five years ago. Joyce started this week with germanys largest bank and will report to the head of credit sales in north america. That is your Bloomberg Business flash. Caroline thanks very much indeed. A First Reading of italian gdp release this morning as the country struggles under the huge debt load carried by the banks and the government. Our reporter is standing by in rome ahead of that release. How good or bad is this number expected to be . There is anticipated a slight slowdown. Whichare expecting 0. 2 , is still positive, but it will be down on the previous quarter, which was 0. 3 , and more worryingly, even though this would be the sixth quarter of consecutive growth, is getting weaker and weaker. Both the bank of italy and the International Monetary fund have reduced their expectations for the year to 1 . Guy what is holding you back . Is it the banks . Is it debt . Is it concern about political instability . What is going on . Tick all of those boxes. There is also the heavy Political Uncertainty due to r encis own political prospects because of the reforms he is trying to engineer, which are going to culminate in a referendum at the end of the year. Renzi, what is he going to be able to do to inject some growth . How can he get it going if hes got the referendum to be fighting, as well . Hes got little room to maneuver, and his aim is, with the budget in october, to try to get some incentives, to woo the voters ahead of this key referendum on which he staked his clinical future. He said he would quit if he loses the referendum. Numbers are not allowing him to budget,ery expansionary and we may see some clashes to and fro with brussels as to what the eu would tolerate and how much flexibility it might award. Guy always a great morning to see you. Thank you very much indeed. We are looking forward to that referendum. It . D renzi blow there is the nonnegligible risk. If youre asking me, what is the big risk for the eurozone the next two or three months, its the referendum on the reform in europe. The ecb is in no hurry to ease any further. From that point of view, what could happen is in italy without government, and the prospect for general elections with the fivestar movement leading in the polls. That could do it for the eurozone. That critical risk could have economic implications. It may mean the ecb will have to step up to the plate. That is a risk for the time being. Guy lets talk about the skill of that risk. We have learned from brexit that we can ignore these things. Talk to me about the symmetry and the asymmetry of what is going on. Talk to me about how much the market has priced it in, and the scenario you talk about, how much of that is into thinking . It is clearly flying under the radar. Political risks in europe they could certainly stage a comeback in september. Its a fallout people havent bothered to consider. That will come to hot the euro, especially if we get an outcome whereby renzi may have to step down. How is that going to evolve . How is that going to impact the political outlook for the rest of the country . General elections in the netherlands next year. President ial elections in france in april. In september of 2017. By implication, the ecb may have to respond promptly and preamp lee. What we are thinking is the most likely scenario would be the ecb may have to reconsider the Eligibility Criteria of the assets it is purchasing in its asset purchase program, even suspend the capital key. We do not think the political italy or europe will be an existential risk for the euro given all the kiwi. Europe will not break up, but the economy could slow down significantly. That could mean that the ecb left to step up to the plate and do more. That will ultimately make the euro more attractive, but i see that as a risk for the next 36 year, potentially next rather than the nearterm, but the italians, the referendum will be the catalyst to bring things back to the four. Caroline you are talking about 36 months, and on the bloomberg, we are looking at volatility this is the fear gauge, the european version. Weve come swooping down from the highs before the brexit. Now we are down at 18. 35. What about elections in germany . They come as soon as september. Could we not see volatility, whether it is in stocks or bonds . Could we see that pick up on the back of the afd doing particularly well and local elections in germany . That is clearly another potential risk. Three potential sources are looking atbonds . September and october. I talked about the referendum and the senate reform. Plus, Regional Elections in germany. Plus, the rerun of the austrian president ial election. All three of them are the centrifugal forces in the eurozone. By implication, that is not going to be great for confidence or business sentiment. As we know by now come in the u. K. , the result of all of that may delay investment, may delay hiring. In the big scheme of things, however, what the biggest impact those events could have is to bring to the for the political in the eurozone and its impact on the regions growth outlook. With that in mind, i think these some we are monitoring. They could impact of the euro. It could put more pressure on the ecb to do more before long. Guy very quick question renzi loses, eurodollar, where does it go . It could drift lower still. Depending on what the ecb does guy yeah. That could trend lower. Guy more to come from you, valentin. Europeannutes wishful equity open. Up next, we will look at some of the potential corporate movers. Maersk with earnings out this morning, a disappointment. 9 30 u. K. Time, were launching . Rexit of what snacks that is going to be happening every friday. We will speak to mario monti. This is bloomberg. Caroline 7 54 in london, 8 54 in a gloomy berlin. Lets have a look at what you should be be keeping your eye on. Maersk. T storm for profit slumped 88 . Your Overall Container valuations, going down. Of thetainer part business, slumping. It is not managing to get as much money. You are also seeing the Oil Price Slump comic eating into the prophet. That stock could fall 2 . Guy we are watching very carefully. Be a very flat open this friday. That open is coming up next. This is the weei function. The open is next on bloomberg. Guy welcome. We are a bloombergs European Headquarters in the city of london. Im alongside Caroline Hyde in berlin. We are moments away from the start of european trading. Caroline has your morning brief. A party like, its its 1999. The s p and nasdaq all hit record highs in the same session; that hasnt happened this century. Are you invested . Crude heads for its biggest weekly up. Talks may include action to stabilize the market. The worlds biggest producer talking of the price again. And brexit . What brexit . European stocks recoup losses eu vote. However, it has not bounced. Why not . Guy interesting. A lot of cash positions are being fairly high. It looks like its going to be fairly flat, a rally into the close. Lets talk about what is happening. The lines are heading upward into the close. The ftse and cac beginning to open up, i think you will see a very flat nature. We are looking for clues on whats happening with the oil price, with whats happening with the Economic Performance story, about what will come out of wall street later on. All of those need to be priced in this morning with markets taking a cautious approach. Lets get more details with manus cranny. Manus european stocks have had a pretty good run but overall the complexion energy is the only one. Oil rallied near 5 and they are really trying to get up with the oil price. 60 could be attainable next year, german gdp coming in better. That is of course a meetingtation, the opec and back in the bear market can they afford that . Where do we go next . Of three stocks i am watching, rio at the bottom. These are the three stocks we are keeping an eye on. You saw iron ore go a little bit better, the commodities was slightly better bid. Couldre saying we still do m a. Oil and container markets slump. They really are under pressure. When it comes to putting the foundations to your house, that is when you look to this. Foundation company in germany, first have revenue dropped. Firsthalf revenue dropped. Market and gilt equity market as a comparison over the past you havent seen the differential for stocks relative to the footsietse. It hasnt been this wide in 10 years. Does that momentum continue or is it being driven by sterling and the zero bound world . Hot money comes into sterling for the moment. Back to you. Caroline manus, that is exactly where we are going next. Perfect idea. With the bank of englands post brexit stimulus crashing bond yields, equities are becoming even more irresistible. Companies are all sharing and index return of 3. 8 in dividends and that is near an alltime high relative to 10 year guilt. It is benefiting from a weaker. Ound been Cap Companies have jumped to their highest levels in more than a year and small cap was at a record. A great reason to pour yourself into stocks, the yield is there. Lets bring in the head of g 10 currencies how much of this is down to the pressure we are seeing on the british pound, and is that pressure going to be sustained . You would think that the weaker currency is helping these stocks of exporters, and if anything, you do see that reflected in the narrower ftse index compared to the 200. But on the whole, what i think is quite telling about the outperformance of the uks stocks is the fact that they have already exceeded levels before brexit. Ahead the biggest fears of the european referendum vote was the fact that we could have to go through a balance a Statement Crisis in the u. K. , associated with Portfolio Outflows in the u. K. Bond and stock market. Is if indeed then, there are buyers of those u. K. Assets, why am i then selling at pound, and if indeed least part of the rally in the stoxx is in response to the bank of england qe, and on top of that we have evidence that qe good work in the u. K. In supporting growth, or at least preventing recession, or helping the economy recover or deal with the shock, why are we selling the pound . In reality it is about a question of growths positive impact, and currency negative. Qe they will be negative for the currency, but it may also be positive for the economy, and overtime become positive. I think thats an important point to make. The boe, next to the fed, is the only central bank that in the past has put an end to qe. Why . Because it worked. Chances are the qe may need help, and i think we are seeing early indications of that happening. I think that will put a lot of question marks on all these excessive shorts in the market that we are still seeing. That they will help the pound consolidate. Guy i think the pound shouldnt be going down. How to make this work . Try putting a position on it in sterling. How wide do my stocks need to be . If you are thinking of cable, it is from a technical point of view the post brexit lows, clearly it is something you have to take into consideration. The various accounts, the technical accounts, are still targeting. Notlongerterm outlook is brightening up anytime soon. The fact is that is a level to consider. Is a case of eurosterling, we have already reached that post brexit high. From that point of view the next big level could be as high as 87. 50, a multiyear high. But the stops should be pretty wide. That is also highlighting one point about the latest price action, especially in august liquidity. The moves we would like to link to fundamentals are sometimes if not most of the time reflecting sporadic flows by implication, stocks have to be wide. Guy u. K. Also seems to be ahead in the thinking of fiscal policy. Indeed. Guy and that is something that could work here in a way that it is not capable of working elsewhere. I agree and historic evidence suggests a combination of qe and fiscal stimulus, did indeed work and that was different from what we had in japan and in the eurozone. From that point of view i think the combination of the policy makes obviously we have to wait for the autumn statement, may well support the recovery at a time when the private sector is trying to deal with the brexit shocks. Is, givenpositioning what valuation metrics the pound is looking cheap. One of the scenarios you would consider what i want to say here is thats a trade on the convergence between the boe policy outlook and ecbs policy outlook, as well as the hope that the external imbalances between the u. K. And the eu will be on the back of a weaker pound. At least historically, a weaker pound wont help much. Its going to make matters worse rather than improve them. The other thing is there is a hard stop for the boe when it comes to rate. I dont think they want to go negative, both in terms of yields or rate, so there is going to be a divergence between what the boe will do and what the ecb will. The cross they stop well short of parity. Caroline valentin, i just want to show viewers that we are overbought in the ftse 100. If you are digging into the relative strength, we will be seeing rsi above 70. We have picked above that redline, a technical cell signal. We will wait to see if they do. Flat on ftse. You were talking about where the pound will go. What are you hearing and seeing in terms of flows . You dont think negative rates will be tested by the bank of england. Do foreign buyers believe that . Are we still seeing the purchase . Can you still see Foreign Investors wanting to remain in the pound and in u. K. Bonds . So far, some data releases arent available, and if anything, i can only refer to anecdotal evidence. Weve been talking to some asian property investors; theres some interest. The way they see it as the u. K. Property market is 10 , 11 cheaper than it was two months ago on the back of the brexit vote, of the underlying fundamentals of the market remained fairly sound. There is the expectation that, as part of the fiscal package, there may be an adjustment in the tax, which could stimulate what we had after the Great Recession of 2008. As it regards the behavior of other Foreign Investors that are invested in the u. K. , the overall impression is that falling data they just want to see what will happen, and the key message is that brexit will be a multiyear process. During the process, potentially they will not necessarily be over investing or hiring or building Production Capacity. The fact is that over that time you will not be with petri aiding profits repatriating profits before you know the outcome. That bit to me is important, because one of the biggest risks was the risk of a balance of payment crisis associated the Portfolio Outflows, and Foreign Direct Investment coming from abroad may have led to a situation that could have led to a sharp selloff in the currency. Were seeing that the businesses are staying put for now. They really want to see what will happen, what deal the u. K. Will get, and because of that, investors are repricing the risk of balance. I think that could help the pound stabilize as well. Guy been great to see you. Thank you very much. Valentin marinov. We have been talking about this we will look at european stocks post brexit. 10 minutes later, the chinese ecommerce giant sores. We will go to hong kong for more on that. And the shipping giant profits sinking. Well breakdown the earnings. Thats at age 30 a. M. U. K. Time. I apologize for my nordic pronunciation. This is bloomberg. Guy lets talk about what is going on. Lets run you through the stoxx 600, mrr, all the stocks of the the index and shows us whats going on. There are couple things you want to take away. This is where want to focus the stock is down, the businesses really struggling at the moment. On the oil side and shipping side, profits coming down. But expectation is very important when it comes to analyzing housetops respond, and you can see that the operating level it has outperformed and we will be talking about this shortly, treating higher, up nearly 4 . Thisare also talking about some positive news coming through. Lets talk about would also need to know and find out whats going on around the world with tom mackenzie. Tomko thank you. Rose for ther gdp seasonally adjusted 0. 4 through june, twice the rate forecast which signals the regions largest economy they be robust enough to handle the fallout from britains decision to handle the european union. Yuan isnt anywhere close to being a fully convertible currency, even as they enter the reserve market. Thats the view of every economist and analyst interviewed by bloomberg. The true free float is a decade away. Meanwhile, j. P. Morgan chase has produced a still to do list, which includes easing capital controls. Responded toon has Donald Trumps economic plan, saying it will increase the burden on the middleclass. She didnt outline any new policies, instead trying to undermine donald trump. When it comes to creating jobs, i would argue its not even close. Even conservative experts say trumps agenda will pull our economy back into recession. Japans sluggish economy is stuck in an almost impossible position. Global shareing to fund managers, who oversees 30 billion u. Ssd. He thinks there is little evidence that Prime Minister shinzo abes stimulus measures are working and says the country needs to make changes to the labor market and welcome new migrants. American swimmer Michael Phelps has become the most successful olympian ever, surpassing a 2000yearold record. His medal earned him a 13th solo gold medal, his 22nd overall, including relays. And puts them ahead of an ancient roman. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Im tom mackenzie, this is bloomberg. Caroline what history lesson. Thank you. Busy earnings season conclude in germany, which saw the dax into rubble market. Withts were varied, insurers and banks unsurprisingly crushed by negative rates. Yesterday, the stoxx 600 erased all its losses from the post brexit turmoil. Can the upswing last . Lets go to frankfurt to find out, joined by the german asset manager, rolf mueller. Thank you for joining us. First of all, on my bloomberg, we have steadily, slowly but surely, raised losses from the brexit selloff. That europe has been slower. Is there perhaps a reason why europe has lagged . Has the earnings season been underwhelming . How do you think it has gone . Compare thei situation we are looking at to a crash or boom phase, im not sure we will see either. Toont think it is too bad have a certain stabilization in the indices, the good earning situation, which isnt that bad either. We do not expect to see anything from the earnings aside a really positive from the Third Quarter, but heading into 2017, i think things will get better. The framework is still the same, low Interest Rates, low inflation. Some support,give as well as sectors that offer services. No crash available, no boom phase, steady but slowly growing, looking forward. Ralph, how much of a we are seeing at the moment in equity markets is driven by the fact that people are looking for yields . They cant by the bond market because of what is happening, they dont want to buy it. Give me the relationship between these two. Lets distinguish between a situation of is the equity market cheap, which it is no t. Is a comparable cheap . Yes it is. If you compare the situation with the Interest Rate market, where was higher than the equity market, there are price increases in the equity but the fundamental situation is quite positive. Its a way you can put a positive spin on it. Do we see a boom . No. Do we see a bust . No. The framework is fine. The operations of the company are mostly in favor of prices, and the risk is shifting into equities simply because there is no real return on the bond market for the time being. Many factors will get positive. Caroline briefly, i know you talked about how oil, companies have performed, what i am noticing is the correlation between oil prices and stocks. Is that correlation going to continue do you think . Well, i am a longterm believer in the oil price. Its a kind of bottlenecks factor. On average, we will see higher prices, which gives it 100 top or barrel. At this point in time, we are on the lower end, which is clearly a supply figure, and therefore not sustainable for the years to come. We are going to see a shift into Renewable Energies as a production, but if you compare the good factors the oil has, its really not good to simply burn the energy. The low price we have is not sustainable. We will see higher prices; the question is when. For the companies, at this point in time, it bytes into their cash flow, into their earnings. They have to distinguish whether they can keep their dividend yield, which they pay whether they can have the same speed with their investment, which they need looking forward to the future. Maybe they can use the cash they still own into chasing the assets. But if they keep on spending as they do at this point in time, clearly it will have to and. To end. Caroline ralph mueller, thank you very much for joining us. A rather dreary frankfurt, it looks like. Up next, alibaba shares surging in a 15 month high after earnings beat estimates. Should we be optimistic about the Chinese Consumer . We discussed that. This is bloomberg. Guy shares closed at the highest in almost 16 months after its predecessors results. The Company Looks solid. Our tech reporter, lili cheng, joins us from hong kong. Over the highlights . What were the highlights . Lili pretty much the 59 growth in revenue. This Revenue Growth was the fastest since alibabas ipo. Looking across all metrics, they were beating analyst estimates, including net income. Guy great stuff, thank you. Right, that was the numbers coming out of alibaba. That is the share price we have been seeing, to the upside. Up next, merck shares are shipshape despite operating profits sinking on lower oil prices. We will have more on that story next. Plus, a derivative of this story is with having surrounding the oil story, and that is one of the big focuses we will be going on. We will be joined and talk through what we have been getting over the last couple days. The ftse is trading at 69. 10, 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. Guy will the back. 30 minutes into the trading day. Lets see how things are shaping up, with the picture around europe. Markets negative, the dax down by 3 10 of 1 . But otherwise we are pretty flat. Given the week we have had, the rally yesterday afternoon was fairly strong, and it took the u. S. Markets to a triple high, both for the s p, and dow, and the nasdaq. Amazing stories out of the united states. We also saw big oil yesterday, wti had its biggest weekly advance since april, which came through clearly yesterday after saudi arabia came through and talked about the fact that maybe we will see things the stabilize the market. We are joined now by our executive of energy and commodities. Good morning. They are checking the price of again right . That seems to be part of whats going on. We got to the bottom of the range, so we are talking about top and, when shell comes back on. Bottom and, when they start going bust. Everyone is coming out, talking up the price. Guy is the next weeks meeting going to be the new doha . Doha was entertaining. It was special. I dont think it is going to be quite as chaotic as doha. Hopefully the are going into this with a more diplomatic tone. Whether they can do a deal, it does seem unlikely, if only because they need nonopec to be part of this, and russians dont do that. But words alone may be enough to bring us up a couple percent yesterday. Caroline if thats because the market is so short, are we getting squeezes where is the market currently stationed in terms of that respect . We were incredibly bearish. With what we saw during the financial crisis, the moment you get a rally, everyone has to cover. That magnifies the rally, and if you look at this chart, well se e from the data what the position was. The u. S. Regular tour data comes out today, and that will give us some flavor, but really the action was yesterday and. We wont capture it until next week. Buffer now the rally seems to have called down so you with the you would assume that we have covered most of that by now. Guy it is fascinating to see the relationships right now. Just before we came on their we were talking about the fact that saudi is really hot, but they are straight on it. Exactly. It, they areok at all producing at record levels and that tells you something about this fights for market share that started two years ago it is still going on. There is no suggestion that will end anytime soon so you can see little anomalies because of the demand, but fundamentally the trend is intact. Much. Ne thank you very great to get your perspective. We are going to another area an 88 nt on oil, with drop in secondquarter operating profit. It didnt be on the interest front. Has added to the wells on the revenues for the worlds biggest shipping group with several perfect storms going on. A Senior Analyst joins us on the phone to discuss this were you surprised by the pain we saw in the numbers with an 88 drop off and profit . I think that was pretty much expected by the market and they are really struggling at the but i think they are being pretty good at taking out cost of their businesses, trying to defend earnings as best they can do but they are trapped in the perfect storm and that really takes out a lot of their earnings that we have to get used to. Guy what difference is new management going to make . Think they are trying to take it even closer to their customers, with more hands on the daily operation, trying to push the limits in some of the other Business Units, trying to a some of their cosseting and that is the main goal at the moment, to take out as much as possible, since the coming. Are guy into his utilizing the equipment that they have, what is capacity what does Capacity Utilization look like . Compared to the rest of the industry. Looking at the auto industry, they are actually doing pretty well. They have a high utilization at the moment that has seen subcontracts terminated early, but they are getting some economic compensation for that. Looking further ahead for the auto industry, things are looking really grin. I think most trailing is going most to drilling is going to be pressure on the earnings. Caroline you were talking about how costs are being taken out of the business. We saw the day before the brexit and we get the ceo, a Strategic Review by the end of Third Quarter what are you expecting to come from that . I think we will see a different mercy after the Third Quarter it was struggling so much and now they have to shake of the business and do things differently. They have to decide where they want to invest in future business platforms, and in my startingit is the best point for them to develop for the future. Caroline so do they spin off the oil unit . Do they sell it . Is it a good time to be selling . It is not a good time to sell, but nevertheless, i think they will communicate that is not going to be part of the future businesses in the global oil industry. They have to invest a huge sum of money if they want to be competitive in the long run, and that is probably not going to be the future of maersk, but it is not the best time to try and sell an oil company mostly operating in the northern see. Guy it will be interesting to see what a share flip will do as well. To wrap things up, what do you think the conglomerate discount is on maersk . Well, there is definitely a discount as i see it. So if they decide to communicate that they are splitting up the conglomerate, i think we will see some of the hidden valuation inside the company. But that will not materialize. It will take time to split up a group like maersk, in some of the Business Units cannot stand on their own as the markets are looking at the moment. Caroline it has been great to get your thoughts, on a day when we see the stock trade higher, but down 40 over the last few years. What a story. Thank you. Up next, negative rates a reality. A german bank says it will start charging customers to hold their cash. Full details, next. And stay tuned for our new political briefing. At 9 30, we are launching brexit what next . We bring you all the analysis around the eu. This is bloomberg. Guy welcome back. A quick look at the gmm function to show you whats going on around the world. Asian markets have rallied, and you can see it clearly in hong kong despite the data. Seeing some of the related currencies doing well, and that is because oil is fading ap, wti up, little bit on the rally, but still close to 5 . The european curves are flattening out that we did see the back into bed, just beginning to reverse. The gmm is a great way to start your day lets talk about what else we should be paying attention to with tom mackenzie. Tom thanks. J. P. Morgan Investment Unit said it will liquidate a japan focused fund after a surge investor withdrawals following a four performance. ,t will liquidate after assets following significant redemption. They lost 15 since it was launched five years ago. Japan has taken another step to reestablishing its industries, switching on the fifth reactor after the fukushima read as after. Fukushima disaster. The leading gains today are among asian utilities. On that loss of almost 55 million u. S. Dollars in the second quarter. They say the priority is boosting cash flow inimitable chu is 18 months, they lost their bluechip status and Investment Grade rating and and striding Commodity Prices and attacks on accounting. That to Bloomberg Business flash. Caroline thank you. A great story on the bloomberg negative rates have arrived in the real world. This week a German Cooperative savings bank in a bavarian village with a population of 5000 senate will start charging retail customers like you and me to hold our cash. It was only two weeks ago that the ecb reiterated there was no risk of cash hoarding, reinstating the message that a is for the policy and not for the people. We are joined from frankfurt fantastic story. Until now we have never seen banks pass on the cost to retail clients. Have negative rates filtered into the real world . Yes, they have, but in a very limited way. What we are about here is a very small bank in a very small town and a very small proportion of that banks customers. But nevertheless, a taboo has been broken, which is that you dont charge retail customers for parking their money in your bank. Thats whats happening now. The question is how far does that go to other banks following it . What is it mean for the ecb . Guy our customers reacting . Do we know that . The indications we have from those customers are fine, they have been in direct contact with banks, they are ready to take that on, and maybe that works in such a small place, but if a large commercial bank were to do Something Like that for hundreds of thousands of customers all at once, and you can imagine what kind of pr disaster would ensue after that. You wonder what the effect will be. You wonder if this is what europe needs. I know it would be a pr disaster, but walk me through what it would mean in terms of german thinking and german spending and ability to drive economy forward. What would be affected be . You make an important point. Lets go back to 2014, when this was first introduced in the euro area. The attention is obviously to encourage banks to lend the money that they have, and for investors to invest the money instead of just sitting on cash. If we get into a situation where negative rates are being passed through all the way through from the central bank to retail customers without there being a significant pickup in investment or even bank lending in the euro area, then you would have to say, has that policy been successful . Askedne and also, you the leading question of what this means for the ecb. We know that the head of the bundesbank was very critical on ecb policy thus far and that builds this desire. What will the ecb do if this becomes a hot potato with politics . Yeah. Negative rates have never been easy to digest, especially in germany. There have been very loud complaints, to some extent justified, about the squeeze on profitability. The ecb has a tough time in germany already with the expensiveness of its policies. This is another brick in the with the ecb policies really not popular here. Caroline just another brick in the wall, thank you very much. Lets shift gears and talk the u. S. Hillary clinton has ripped into Donald TrumpsEconomic Policy plan, saying it will only benefit the wealthiest. She didnt lay out any new policies in her speech, trying instead to undermine trumps claim that his business experience gives him the edge and boosting jobs and wages. We have a lot of urgent and important work to do and that is what i will talk about today, because all the people that i have met throughout this campaign really prove how wrong this negative, pessimistic view is. Americas best days are still ahead of us, if we make up our minds to actually go out and make that happen. One, we willay work with both parties to pass the biggest investment in new, good paying jobs since world war ii. Trump would roll back the tough rules that we have imposed on the financial industry. Ill do the opposite. I think we should strengthen those rules so wall street can never recommend street again. And then theres the estate tax, which trump wants to eliminate altogether. Now, if you believe that he is as wealthy as he says, that alone would save the trump family 4 billion. Ofwould do nothing for 99. 8 americans. So they would get a 4 billion tax cut, and 99. 8 of americans would get nothing. Just think of what we could do with those 4 billion. We could pay for more than 47,000 veterans to get a Fouryear College degree. We can provide a years worth of health care to nearly 3 million kids. Guy hillary clinton. Next, we are getting plenty of data on how the eu is dealing with the brexit vote. We will dig into the data next. This is bloomberg. Caroline welcome back to on the move. The stoxx 600 is shaping up lets dig into the individual movers. We are pretty much flat on the day, after a rally yesterday. Check out the leader of the charge. It seems the operating numbers came in better than expected on an underlying basis. This is a company that many investors think could restructure itself and selling off their oil unit, a perfect storm when you are exposed to trade and oil, but for the day they outperformed. Keep an eye on germany, currently up 3 . We are seeing now that is flat, kms once again on the downside, down 2. 7 , a bad performer yesterday in numbers once again feeling the strain. Mrr, always a function to go to to see individual movers. Lets get on to the highlights. In a few minutes we will get gdp data from italy. That was better than expected that it is numbers for the eurozone. At 1 30 p. M. U. K. Time, 2 30 in germany, we get u. S. Retail sales. Guy we certainly do. Plenty going on; the world is a weird place. It is getting weirder and weirder. Yesterday, three major u. S. Indices hit records on the same day. Havent seen that since 1989. 1999. Put it together for us, richard jones. Richard the world is a weird place, isnt it . Guy how are you writing this . How are you getting this story out there in a way that makes sense . Richard the thing that i think is driving this and lets rewind to december of last year i think you look across the board, Central Banks have been a lot more accommodative, including the federal reserve, than anybody imagined they would be nine months ago. I think that is what underpins everything. We have the bank of england easing rates, the have the bank of japan eased, the fed de facto easing by not hiking at all. Looking very unlikely, or not quite 5050, you look at december of last year and that was a completely different story. I think easier Monetary Policy is the underlying thing here across all asset classes. Guy the markets are ignoring the Central Banks in a way. Nobody believes what the fed says. Yet at the same time the Central Banks of the biggest dominant factor in the market. Richard i think it is because the standout was the fed wanting to raise rates and cut against the grain, that every other central bank globally seems to be easing. I think that was a disconnect. Way,t want to put it this but the fed has thrown in the towel on that rate pass. As a result, easier Monetary Policy is in line with the rest of the world, and that is was underlying every asset class now. Caroline and that accommodative policy probably helping u. S. Retailers without outperformance yesterday. Give us a sense of where we will see the numbers in the United Kingdom next week. For me, that was a story of the week. Intooe struggled two days quantitive easing. Pension holders do not want to sell longterm debt. Next week we get cpi and retail figures. Will this change the bank of englands course at all . Richard what i think is interesting is if you look at the pound this week, i think we have fallen for the fourth straight week in a row. Were approaching those multiyear lows in sterling versus the dollar, euro versus sterling, that we saw in the immediate aftermath of brexit. Remember, next week is the first hard data we get. We had lots of survey data, but the first hard data we get next week on post brexit in the u. K. Could be an interesting week. We might be up for the next move, should that data disappoint. Guy richard jones, joining us from bloombergs first word. We will continue this conversation on the radio. Jon ferro and i will be on bloomberg shortly. Stay with us. , up next it is the pulse. Brexit u. K. Time, whats next . We will bring you the discussion surrounding the decision to leave the eu. We will speak to mario monti and labour party mps. Thats going to be what francine will be delivering. Jon and i will be on the radio. From carolina and i, have a great morning. Its going to be a fabulous weekend. Get out and enjoy the sunshine. This is bloomberg. Francine party like it is 1999. The s p, down, and nasdaq hit record highs. Stocks over gilts. U. K. Equity returns near an alltime high. The doe purchases crushed yields. We break down the referendum fallout. And created heads for its biggest weekly advance as speculation that saudi talks may include action to stabilize the market mounts. Watch for currencies of crude exporting nations