2009. imports slumping 3%. the global headwinds are hitting germany heart. -- hitting germany hard. i will stages a rally after yesterday's selling off. we've got brent up when 5%. .5%.ent up risk aversion is there. is always a little bit lazy at this time of mourning. we'll see how vw is opening. this is all about hiring a u.k. stock. comparisons are challenging. -- vw poppingup up .87%. concerns about pollution coming from their diesel cars. deutsche bank fell in u.s. trading. all about whether that evident will be crushed. back to you. jonathan: sit tight for a price on deutsche bank. bracingasia, we were for the reopening of chinese markets. shery ahn and hong kong. good morning. shery: chinese markets come back today after that week long holiday. shanghai composite closed 3% higher. it is less than investors is investors expected. there was a feeling that the government could do more to support the economy. despite of china's rise, we're seeing a mixed picture across asia. moving moreg is than 8%. there could be some -- more than 1%. there could be some moving. in august.fell the sx 100 gained .2%. despite downward pressure. minas in general feeling the pressure -- minors in general feeling the pressure. the korean won strengthening to --wo-month high as we see equities rising. the chinese yuan after the toernment changed, rising 2.17%. you.to jonathan: we have a price for deutsche bank. stock opens 3%. that is not what people anticipated. they thought it would open a lot lower. stock opens lower at 3.6%. here is what is going to happen on today show. deutsche bank unveils its biggest quarterly loss in a decade. the dividend may fall. carney in the hot seat. we get a decision from the bank of england as investors search for sharper relief. china goes back to work. we get the latest call from the man who saw the equity boom and bust. ♪ europe's biggest investment bank is bracing for its biggest loss in a decade. deutsche bank could strap its down -- after rising ryan chilcote is here. a surprise for some people. not surprised that john cryan is going to have to do this thing. an:ll -- right: -- ryn volumes 10 times the daily average. trading in deutsche bank looks like it is going to be a lot more than that. three things you need to know about this statement that we got from deutsche bank. the right down. it is going to be about $5.8 billion. in addition to that, on $.2 billion being set aside for legal costs. that adds up to a projected loss of $7 billion. the dividend, the ceo says they're going to cut the dividend or eliminated altogether. that is a very big deal. this bank has paid a dividend every year since the 1950's, all the way back to postwar reconstruction germany. the last time they cut the dividend was 2008. the last thing you need to know from last night statement, he said anchors are going to take a hit. they are awaiting their bonuses. he said the employees of the bank are going to have to share in some of the plane -- share in some of the pain if the dividend is going to be hit. getting not going to be as much money as they thought. jonathan: he has got to clean up some mess. let's go back to the fourth quarter of 2012. compare the write-downs in the coming months. they are a whole lot bigger. are giving the sour pill before the good news. john cryan is going to give this strategy report. -- that does not mean concerns are not going to remain. concerns about its capital position. what he is saying is the investment bank is worth less than we thought it was. he is flagging that they think postbank, one of their german consumer banks is worth less. they already said they are going to sell that. almost --ese bank also might be less. they might sell that as well as year. jonathan: a bit of trouble for or deutsche bank. the last three days, i've been looking at the data out of germany. tripleanageable debt -- -- it has been a triple threat. i want to bring in hans nichols. question, is the it too premature to make a judgment on what is happening in germany? hans: it is not to premature. the economists making the prediction. they have all been off. the biggest concern is how big the mrs. r. we saw sales decrease. economists were expecting a decrease of 0.8%. a series of 3, 4 if you count the resistance -- the revisions. the most concerning was the import number. imports down 3.1%. is that because of german consumers took a look around? a lot of the uncertainty greece was in because factories looked around and we are not going to be importing -- next month's numbers are going to be even worse. the member, september may factor in some of the volkswagen scandal, but not all of it. the volkswagen scandal is not going away. these numbers are not including the volkswagen diesel engine scandal. that is cause for concern. or we fire these economists we have been doing this survey with, because they have all been off. ask pau: let's morilla-giner. do we start with deutsche bank? let's start with germany. we should have seen that coming. with vw, nobody saw that coming. pau: germany is the canary in the mine for europe. it is the most exposed country outside of the continent. a lot of trade within the eurozone. some of the periphery is starting to stabilize. at who is looking more exposed to chinese activity, you've got germany on the west and japan on the east coast. economy is already struggling. jonathan: i am thinking about a slowdown in germany and how that affects the rest of europe. the big fight within europe. loses if we get a weaker germany? necessarilyy not the struggling eurozone. and italy or spain. implemented such a large amount of cost reduction, they have become competitive with germany. some french, some dutch companies tend to be more in competition. jonathan: you mentioned reforms. for the last six years, you look at the u.s. banking sector, clean up the balance sheets. they have pretty standard normal economy versus what we've got in europe. the stained story that's the same story for european banks. -- the same story for european banks. why that is what -- that is people remain excited about european banks. employees,y executives in these banks who tend to reap the benefits. in the bedtime, you got regulation and litigation. abouts moment, it is regulation. i'm amazed that people overlook some of the more interesting areas within those banks, capital structures. i would not touch the equity. debt. look at contingent convertibles. they are not equity, but these are protected species. deutsche bank with all of the -- target the bond side, there is huge opportunity there. maybe the bonuses will go up too much. jonathan: what would make you more constructive on the equity at deutsche bank? pau: nothing, pretty much. 2019, twove reached regulatory process ends, at that point, we will look at trade lending. i wouldn't really look at the equity side of things. pau morilla-giner, you're going to stay with us. deutsche bank releases its quarterly earnings. after this short break. ♪ jonathan: 16 minutes past the hour. deutsche bank is bracing for its worst quarterly loss and a decade. europe's biggest investment bank is expecting a loss of billion euros after writing down the value of its two biggest divisions. for 2016.dividends u.s. oil makers will hold a later in washington. saying he wasives first made aware of a possible emissions noncompliance issue in the spring of 2014. german exports unexpectedly .lump foreign sales declined 5.2% in august from the previous month. economist had expected the fall of just 0.9% negative. pays out withoup first quarter numbers. that fees growing 8%. the shares down. joining us now, is paul venables. also with us on set. pau, slightly below the estimates. why the disappointment. paul: i think we are line with that. we had a previous conversation. the fascinating part is acceleration of growth across the whole of europe. all about european markets. the all-time record in france, spain and germany. u.k. a little bit lower growth than the previous quarter. a continuation of slight recovery in australia. tonka -- jonathan: you look at the prices and see if that was a score. we are going to talk about the bank of england in a moment. have those pressures eased? know, i am not bothered about it. we are focused on however the markets? opportunities to grow our business. which country, city, and we need to do that pretty well. , thehan: the u.k. service's -- the service sector data. years.kest in some two where starting to wonder where the the economy is rolling over. what is going on? >> the interesting thing is the servicing sector has been seen as the engine of the u.k. economy. this is the second straight disappointing services pmi that we have had. question, is the the engine slowing down? and what does that mean in terms of tanking and lift off? -- in terms of banking and lift off? jonathan: are you seeing a slowdown? it was a percent in the previous quarter. thes consistent with numbers of the pmi data here it i see this as a little bit more than a few more businesses focused on cross control -- on cost control. we had a good july and august. september was weaker than we expected. a year ago we had very strong growth. this time we had modern -- we had modest growth. do i feel like there is any risk of slowdown? no i don't. we had to strong years of growth. at the moment, with everything , the public sector is sitting on their hands a bit more. there is more focused on cost control. jonathan: there are two ways to looking into an economy. you can look at the official data or via the company's that operate. you can gauge china through australia business or the china business. numbers, it tells me china is great. paul: yet be cautious. -- you have to because this. they are still a lot of structure growth. in the white-collar professional space. october looks good. i don't think we will see much of an impact across asia. we are growing at 11% in asia. i expect that growth to be closer to 20%. across europe we are still growing strong. we have the largest recruitment group in germany. our growth has accelerated from 6% to 10%. all of the fines are positive. i think more businesses are going to be more focused. that is different from cutting. i see no size of any cutting in investments. it is cautious focus on cost control. richard, a he paints a lovely picture. the guys who expect rates to rise in the back half of 26 in, they don't paint a lovely picture. whose story is right? reengage with when rates are going to rise? richard: if you look at what investors are saying, there is concern that the macro economic picture is more cloudy than it was. was ayroll number of u.s. uniformly bad number. you look at it and there is a not a lot of -- you can always look at something positive. there was nothing there to give any optimism. but iht be a one-off, believe there is a fear that this is the beginning of something that is beginning to take hold. that maybe we are on a downward trajectory. investors are concerned. jonathan: market expectations much more dovish than the expectations of the bank of england? markets arehink looking at what looks like a delayed fed lift off, impacting on the bank of england. the bank of england will not go first. jonathan: where talking about markets. do you care about a 25 basis point rate hike? doesn't it change anything in your world at all? some is going to happen at time. -- it is going to happen at some time. most businesses are expecting it. most businesses have a lot less that on our balance sheet. almost $200 million lower. the impact of interest rates is a little bit less. this is more about we had a very strong run, and companies are beginning to see that it is not the same growth that it was a year ago, but is still growth. -- but it is still growth. i take the economic conditions across the world and confident that we can grow our business. so far, we have not had shock. vw are important in the german psyche. they have potential to be a psych -- to be shock. i see no signs of that currently. well-run businesses read newspapers and there is good chatter between the various companies. why would i put my neck on the block? investmentsdcounts over the last 12 to 18 months. discussed,we have our growth slows down. europe, we can have much less economic growth, just brought stability to the structural growth opportunity is an extracted -- is an attractive market. jonathan: paul venables and richard jones, thank you very much. let's talk china. what does it look like for investors trying to get back to work today after a weeklong holiday. shanghai composite closed up near 3% today. unless you've got it right. our next guest hit the nail on the head. check the move on chinese stocks. this guy turned positive at the right time. on june 6 10, he said time for a notable crash. he nailed it. let's bring in hao hong. he joins us from hong kong. how, great to have you with us. tells what to do now. moment, we are having a tradable rebound from an oversold level. ms. flow has been positive. many investors in the market are interpreting what the central bank was doing for the second year and third year in terms of property down payment reduction. at the sign of more stimulus package to come. market andng kong overseas development had rebounds. at the moment, today we are seeing a reasonable technical reprieve, sort of catching up with the rest of the world. jonathan: it was is worth pointing out that you are not coming on the show and saying sell. is theis reminds me of back end of 2011 when there was competition on who could be the most bearish on the back of europe. i would ask what would make you positive on chinese equities? many of the domestic analysts are getting more bullish on the market. hasarily because the market cheapened substantially from the level of 5000 points. we are seeing the market focus switching back to fundamentals. that is very weak. stimulus is limited because the economy is weakening not collapsing. in the fourth quarter, we are seeing a pickup in infrastructure spending. traditionally -- a peak season for seasonal spending. there is a chance that the market would interpret that as a renewed physical stimulus package. they could get some people excited. my money, i am looking at two things. one, valuations on the chinese market are not exactly cheap. secondly, in terms of jim is probably a lots less room in terms of fiscal stimulus. that is the reason why i think use themoney, we will opportunity to get out of existing positions. jonathan: i want to wrap things up. the scoped for more stimulus was limited. most to policy is still quite high in china. -- monetary policy is still quite high in china. doing, wever we are offsetting the negativity. reserveseing forex position falling. it is probably because of the the yen from protecting -- the yuan. cuts, to largely offset forex position. is relatively high at this point in time. the central bank doesn't have to balance between the monetary policy and the need to not to generate. we're seeing sales price and volume starting to pick up. if you have a general reduction in interest rates, they are probably going to make property bubble hard to contain. --t are the constraints those are the constraints that we have to look out for when they are trying to roll out new monetary policy. jonathan: congratulations. great to have you with us. volatility receding somewhat in china. we have a huge spike in volatility that ripped through markets back in august. take a look. higher than it was during the financial crisis. -- black hawk coming out with how to handle how the equity market should come to a halt. fromhart on your screen is powell morilla-giner. -- pau morilla-giner. these huge swings that we keep seeing in the markets. individual equities, fx markets. what is the message? skin --elop a sticker develop a thicker skin. high levels of comfort. the world has changed. u.s. is about to lift interest rates. the implications of that, when the patient has been also much more pain for seven years, you know what happens when he gets the bill on the second half. let's focus on the quiddity. there's a lot less market depth. we trade our own fixed income directly with the market and it is incredibly low. he can be more difficult to have someone willing to take the risk . bit morele understanding that volatility is going to stay. tap into the consumer base. more defensive in europe where things are getting better but still we are not out of the woods. -- jonathan: are you in a position to take advantage of another spike in volatility? pau: trying not to turn the market when you have high level of volatility, you write it out. we have some long will a tilted orosure in terms of options hedge fund strategies. jonathan: pau, great to have you with us. thank you very much for joining us. we are 30 minutes into the show. here's what's coming up. volkswagen, the company's u.s. balls goes before -- the u.s. boss goes before congress today. do not miss this interview. oppenheimer.eter don't miss that conversation. it is coming up. ♪ junk of just over 30 minutes into the trading session. -- jonathan: just over 30 minutes into the trading session. ugly payrolls number. we've got a turnaround in energy stocks. we got a little bit of a pullback. 16.5%.e 100 down by -- .26%. caroline: let's look at the biggest news on the stoxx 600. down 3% now. -- haze down 3% now. u.k.,ou're looking at the doing it on the year-by-year basis. slightly worrying about the challenging outlook that they are outlining. numbers in line. still their business is continuing to grow around the world. achievementse harder for the year ahead. deutsche bank we've got to do -- we've got to focus on it. not moving nearly as much as anticipated. shares plummet. by 1.5%. out of bank of america, the underlying business is looking pretty good. amexumbers that meet expectations. they are taking on the threat of a capital raise. lastly, one of the top risers. dsm up 2%. --y are buying on the back the earnings are going to grow. self-help is working overall. jonathan: caroline hyde, thank you very much. volkswagen's u.s. unit will tell a congressional committee in washington that he has known the problem for 18 months. theadmissions may affect fines of the environmental protection agency. let's go out to berlin. hans nichols has more for us. just what did the u.s. executive know and how long has he noted for? he is known since the spring of 2014 of the emissions noncompliance issues. that is what he submitted to the house committee. the night before, they submit their testimony. a lot of the news gets licked out, and the day is filled with tension because lawmakers are trying to get an exacting cost on to the ceo. in this case the head of north american operations. ofer in 2014, i was informed the technical teams had a specific plan for remedy to bring the vehicles and compliance. a were engaged with the agencies. the head of north america did not know the device was installed. we'll get the epa side of the story. they are indicating that the -- here's ahe levy quote from them. they say the agency continues to assess the benefits of the depth -- of vw. muchld suspect how volkswagen is cackling that. -- is calculating that. this is united states congress. there could be some blood on that committee floor. some lawmakers will be looking to wound. jonathan: we'll be looking out for that story. to create the world's largest brewer has hit another snag. sab miller is saying no to a takeover. thomas barclay joins us with more. 65 billion pounds not enough for this company. it's worth looking back 12 much , fighting off glencore in a very different industry. thomas: he was the chairman of rio tinto. himself in the same position. what is interesting is the personality behind it. they're hitting this deal from both sides. a tremendous repetition. of -- ablt ab inbev inbev. jonathan: when does it become about the numbers? this offer is just too good to continue turning down. when i look at the holders of -- a price ofck, 42 pounds and $.15 for some shares. it includes a share alternative. in favor of the deal has put tremendous pressure on the board. the ability to negotiate. jonathan: he is sitting tight. thank you for joining us. thomas barclay. the deal is brewing. drama is brewing. we are alive at goldman sachs. their leverage finance conference where peter .ppenheimer why he sees opportunities after the short break. ♪ jonathan: good morning and welcome back to bloomberg tv. 43 minutes into the trading session. let's get a check on the equity markets. the ftse 100 coming off the back of the longest winning streak. by a pulled back, down quarter of 1%. the dax is flat on the session. they can to the index and there are remarkable things happening. ,eutsche bank starks -- stocks unveiling the biggest loss in decades. -- we are up by .1%. a suitable equities. let's head over to the conference where manus cranny is chief global -- manus: we've got peter oppenheimer with us. 2012 you wrote a note. to awas the preface bullish equity market. overnight, you least and another note. you said there appears to be a stagnation. market is in the final act of the global financial crisis. what you mean by that? is this a cathartic moment for markets? peter: the note is trying to link what we are seeing in terms of market concerns. e.m., commodity prices falling. other waves of financial crisis. the first wave being the u.s. housing market collapsing which ended qe. which ended. here now we have the slowdown in the end forcing commodity markets. the questioners whether this is generating a long-term secular stagnation which increasingly by the credit markets are probably pricing. stage of thefinal yuan as well. it will generate the recovery. we'll take a more positive view that we don't get secular stagnation. it will be a bumpy adjustment. you'll get the realignment with the unwinding of credit and balances. in that environment, equities continue to outperform bonds. it becomes a more positive outlook. manus: and more positive outlook for risky assets. potentially more easing from the ecb and make of japan. perhaps a delay from the fed until march. when i look at that seesaw stimulus, does that add to that momentum that you outlined? tug-of-wars a between growth expectations and policy stimulus on the other. there is a case for saying if you can't get to the point of left off, because you don't potential,ecovery then the fact you need low rates in the biggest economy of the , that is not a good thing. however, i think the crisis we are seeing in the yen are forcing commodity markets. this inflationary factors and the global economy. .rowth may be slower i don't think we get anything like a global recession. that may keep rates lower for longer. that may generate recovery. manus: let's focus in. the ecb, the speculations. , is that going to be your best case scenario? does that need to be more targeted to get the same bang for their buck in terms of currency? and the bond markets? peter: we do expect an extension of the current program through 2017. as we have seen with other waves and third second tranches become less effective. the principle here is clear. we have seen a rise in gain in the euro. because of significant weaknesses and other currencies. your scene current seat expectations falling back again. it will help to bring down the euro and readjust those inflation expectations it the key reason for starting qe in the first place. i don't think the effect will be as strong as potent for risky assets. i think it will be supported for euro stocks coming down again. a you lower euro -- a lower euro, what does that mean? peter: our view would be in that direction. getting the trade weighted euro down. giving europe's exposure tm, which is significant. the chinese moving to support the yuan. the consequences of all of this are? to me, that is the negative aspect for risk assets, compared to where we started the conversation. assets haveof these been held in fixed income markets. as you see a moderation for savings block which led to low rates. stimulus ander eventually qe. readjustment the of imbalances. you can see bond yields rising. see bond yields rising. while equity returns may be , the relative returns will still favor equities over bonds. -- manus: the most discussed issues are volkswagen. the magnificence, give me a sense of the conversation that you had with the ceo of volkswagen talking about a threat. conversations in terms of the past 20 days in risk and how you look at risk. peter: volatility is significant. part of it is due to risks. part of it is the lack of has part of its root in regulatory as well. the volatility has been a factor in all of the major asset classes, not just in the riskiest. what will start to see is a greater degree of confidence and consensus building up over the next few months. around the issue of the global economy with people can see can enter another global recession. that will start to bring volatility down. peter, great to have the time this morning. peter oppenheimer and chief for goldmanic sachs. back to you. jonathan: manus cranny, good to see you. 52 minutes into the session. the ftse 100 creeping back into the territory. ish a bank -- deutsche bank -- central-bank and a look ahead for the rest of the day after the break. ♪ jonathan: good morning. his your day ahead. all about central banks. ecb's an account of the monetary policy at 7:00 u.k. time. let's bring in guy johnson. lining up the pulse for us after the break. let's start with the bank of england. payrolls number on friday ugly. where do you begin? guy: if you look at sure sterling and replace it. a bank of england rate hike now, 16 late, 17 early. is there anything that can be price that? the facts have changed. maybe central banks will change. we'll wait and see how quickly that happens. it may happen today, but i expect it will happen at the next inflationary report. jonathan: a number from deutsche bank, around 6 billion euros. thinking the stocks are going to tank. we are flat on the session, why? guy: the market is pricing deutsche for recap risk. it is writing stuff off which should been written off years ago. underlying business is performing well. they're going to cut the dividends. at least at the margin, it does. that is why the stock is flat. the jamie -- the german data is horrible. its economict performance, how does draghi deal with that one? jonathan: that is a good question. up, it meansall something. guy johnson is going to try and work it out on the pulse. i am on twitter. we are almost 57 minutes into the trading session. the ftse 100 just in negative territory. to make the ball smile, it is a beautiful day in london town. the best of luck for the rest of yours. ♪ guy: crying shame. after writing down the value of its two biggest divisions. the dividends and bonuses are threat, but the stock is bouncing. the asian slowdown hits hard. vw's -- he knew of emissions problems as early as the spring of 2014. ♪

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