Brexit and the bank. Mark carney is back in brussels. How hard willie how hard will he hit the league camp this time . We are a half hour away from the european open. How do we think ands or shaping up . How do we think things are shaping up . 3 here in europe. The euro stoxx are down three. 3 . We finished in negative territory yesterday. Eurodollar, keep an eye on what is happening with the dollar. It remains a focus for investors. The dollar getting a little bit of traction. Brent trading come still 4794. Gold trading down and 3 . Trading down. 3 . Keep an eye on what is happening with the turkish lira today. We are going to get more information little later on. What is the future on one of the moderate reformers . We will talk about that later. Thats get you caught up. Here is bloomberg first word news with Juliette Saly. Juliette china may need a bailout worth trillions of dollars. That is according to an analysts. Of the risk from chinas credit binge. She cautions that beijing will have to provide vast sums to . Bad debt. O tackle bad debt. Came, he chaos that yuan is down this month. The pboc has learned its lesson and will not let the market fall into panic. To the investment, one of the oldest and most expensive hedge investment,tudor one of the oldest and most expensive hedge funds is trimming. Will reducehe firm most rates. That is according to a letter sent to clients and obtained a bloomberg. 27 . Ee is worth after months of protests against Francoise Alonso government thats over Francoise Alonso government meanwhile the officers of the socialist party have been vandalized across the country. Most recently yesterday. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. Guy. Guy thank you very much. Deutsche bank in very specific terms has had its Credit Rating cut by moodys. The banks longterm deposit is to abovee rating is two above junk. Matt, you were there a few days back, you are watching will is happening. The good news keeps on going. Matt absolutely. These are problems i think Deutsche Bank knew about and have been and has been prepared for, especially on the sec side. Deutsche bank new and investors new that more losses were coming. More losses were coming. The chief Financial Officer has come out and said as long as we stay in the a levels for the longterm investment rating, then we are fine. Three is just as good a2. Wo as Deutsche Bank you can see over my shoulder. Guy you can look out the window and see what is going on. I dont know what details we are going to get right now. Matt, look. Heres an institution that is going to struggle to get its plan through. It is going to have to work really hard to make sure all of the details that he wants to see happen actually end up happening. That is a concern. Goinglly, the revenue is to limit his options and the ability to make its plan to make his plan work. Matt the have a few problems. Three main problems facing john cryan. The slope Investment Banking and trading has not helped his come back. The negative Interest Rate policy here and in asia are not is not helping the banks policy regardless of what mario draghi may suggest. These lawsuits, they have paid up 14 billion since 2012. That could get bigger. John cryan has said that is one of his main focus is is putting a stop to one of the big losses this year. First quarter profit fell 61 percent. When we were here last year, john cryan said he may have another loss this year. A Second Annual loss, there are a lot of problems facing him. The most interesting thing will be sit will to see if we get a turnaround in the slump and if this zero Interest Rate policy actually is helping banks as draghi has suggested. Guy matt, thank you very much indeed. Remember we are watching unicredit today. Will he be there at the end of the day . Coming up later, we are going to be talking in an interview with berkeleys ceo, just daily jess ceo, just daily staley. Got weve problems at Deutsche Bank, germanys biggest bank. We need to get this fixed. How far away are we . Moodys is concern that it is going to struggle. Jean it is all about the execution. Deutsche bank is still investment grade. The questioning is if youre on the outlook we have seen with Credit Suisse before, rather than any kind of critical view if you want other Banking Sector right now. That said, as you rightly pointed out, the Business Model for investment banks is challenged. Probably you need to be selective in terms of the kind of insurance you will invest in. Trading have deutsche incredibly low. Is there more bad news they could push it further south . To be honest, investors are priced in most of what they expect to be on the bad news front . Most one of probably the fixedred toward investors income. You got a lot more returns and a lot more attractive risk reward, buying bonds and equity. There is a very big question mark in terms of how reliable using book value as an indicator of the true value of these institutions. Guy james gorman of goldman stat of Morgan Stanley says things are going to get better. Is that your view . Q3,1 was just horrible and q2 are better, jean it is different if you look at things from a u. S. Perspective. As you rightly pointed out, we still have in europe some unresolved issues. Nonperforming loans which is crippling the italian Banking Sector. The u. K. Financial institutions institutions. Looking from a u. S. Perspective you have a slightly different view from what is happening in europe. Guy thank you very much for your time. E is going to stay with us we are going to hear more from Morgan Stanley. Tv. S on bloomberg he thinks the u. K. Will stay in the eu. We will bring you that interview next. Guy welcome back. Lovely, lovely, lovely. This is as good as it is going to get in london. We are going to see highs of 18 today. Yes, that is what we are going to have today. Lets get some details with Juliette Saly. Juliette thanks guy. Deutsche bank is the subject of an investigation into whether the they inflated the values of securities and the mortgage bond trading business. That is according to people with knowledge. In recording the losses that have helped boost the banks earnings for several quarters. John cryan has another headache with mood is cutting the banks ratings to two grades above junk. Touches performance has deutsches performance has been week. Macro economic uncertainty. Singapores central bank which has ordered bsi bank to shut its operations in the island nation. Pointedtary authority to poor management and growth misconduct by some of the banks staff. The group says the ceo is stepping down. Facebook is changing how it determines which news stories are trending. That is after recent allegations of bias and its selections. Sitesl no longer required require stores that are found on sites that are known as news leaders. Is recalling more vehicles linked to the potential lethal airbags. The latest recall involves nearly 1. 6 million vehicles in the u. S. Including certain corolla, and lexus lines. That is your Bloomberg Business flash. Guy. Guy thank you very much indeed. More with james gorman. He told bloomberg that he thinks britain will choose to remain in the eu. My guess is they vote to stay. Should they not, there is a twoyear transition. It will have some impact on global Investment Banking businesses. Some increased expenses, but it is not that meaningful. Im more concerned for the markets. Rightly for the state of the European Union which has been an extraordinary success over 70 years. Tinkering with that model just doesnt seem to make a lot of sense. Medecin is still with us. You listen to them and you think the market is still going to be fine. The market looks really relaxed about a brexit story. Jean the market has chosen to focus that is where the risk lies. If you look in polls, it is pretty even. When you look at the bookies, it is a very large majority in favor of the remain camp. The biggest risk might be complacency ahead of the vote. Kind of like a call, if the kind of wakeup call, if guy how do i position my portfolio back of walk me through my portfolio . Walk me through how i should set up. Jean the Financial Sectors, you need to be quite careful trading with that. Consequences on the british pound. Beyond that and more generally speaking, what you need to build right now is a portfolio. We have so many decisions like the fed coming in june or july. To need to have a portfolio look through those whatever the outcome of the brexit. At axample, if you look company which is on the verge of emerging right now, sabmiller with ab inbev. You have a very stable share price. Is shaving off volatility in your portfolio. A very diversified balance portfolio with companies which are not too dependent on these kind of geopolitical economic risks. Guy we get through july, what is the picture their . U. K. , july,ne people are saying the most likely fed decision will come there. Talked to me, the rest of the year looks like a pretty bumpy ride talk to me, the rest of the year looks like a pretty bumpy right. Ean stronger volatility we have seen some very sudden inversion of momentum. Investors will have it will have convictions. Changing momentum while all the think youging i need to be very clear in terms of what is the macro scenario . What do you believe in . Where do you think the fundamentals are strong and rely on them. One thing that is interesting in , when you look at the relative performance of one sector, it has been very much reasoned by the market is quite expensive. Put someger, you can very active relative trades. You. Great to see thank you for hanging around with us. It want to see the latest on the u. K. Referendum, you will see all of the latest news on that. We are minutes away from the market open. Up next, we will look at corbyn movers, including Deutsche Bank corporate movers, including Deutsche Bank. A look at those businesses when we come back. Guy 7 52 in london. Lets find out how the markets traded overnight. Work our way to the market open. Juliette saly standing by with details. Juliette not a great session tuesday for asian markets. We are on fed watch now. A likely would just the likelihood that we could see another lift off in june. The likelihood that we could see another lift off in june. The market down. 8 and asian markets. The hang seng is off 20 . Is off. 3 . Way down that we do have the yen summer today. The fed cash regional loss we have seen in three sessions. You can see when you look at the regional index that there was nowhere for investors to hide. The weaker oil price lang into the oil and gas sector which is. 1 . 1 . Mer stocks were down toyota has added to that recall. Toyota shares down 1. 4 in tokyo. To shareting for sony its outlook for the year. That was delayed due to the earthquake last month. You can see the weakness coming through through the commodity players. Just having a quick look at currencies. The aussie dollar in focus after the rba governor gave no signal that we will see more rate cuts and australia. The weaker rate cuts in australia. Aussie dollar guy. Guy Juliette Saly wrapping up the aging session. The asian session. Muchs are watching, very focus on Deutsche Bank. A2. To the stoxx look like theyre going to open down. We continue to work our way through the end of the week. Janet yellen could be the big story. How much focus are you putting on what the yellen story is going to be . Jean i think it is important. I think the fed is in an uncomfortable edition. Uncomfortable position. The economy is not that strong. [indiscernible] it is a very tricky for them. Guy he is go to stay with us. The market open, next. Guy good morning. Im guy johnson in the city of london. The start of european trading. Here is your morning moodys his worry that it will hit crimes turner plan. You have the latest from frankfurt on this story. Seo doesn Stanley James thurman that he expects a lot of upside after a charging c1. Governor mark carney is back in front of the mps today. This market open will go this morning, not very far. European markets close negative yesterday it looks like a close negative this morning as well. Keep an eye and Deutsche Bank and unit credit. The finance sector is firmly in focus. Lets get you those morning numbers. It looks like its going to be a light start to the morning. Those are the numbers. 0. 1 buther less than will soften a little bit. In the meantime lets get details about how these markets are trading. You say, there is a bit of a week legacy from asia. We saw them drop for the first time in three days. It looks like it is a pretty broadbased set of losses. Likee moment, it looks i. T. And financials are leading the losses but every Industry Group is down today. It is red across the board. Lets look at some of the stocks we are watching at the open. I look at the Deutsche Bank in a minute. What weve got here, First Quarter sales of 2. 7 billion pounds. That is broadly in line with estimates. , b and q saleser up 3. 6 . Bit of a gain. Just waiting for swiss come to move it looks like it is down 1. 5 . Cut if facing 74 pay the electorate votes to limit executive compensation at statecontrolled companies and finally looking at Deutsche Bank, this opening lower as well. It had its Credit Rating cut by moodys. The german lender faces mounting challenges in carrying out its turnaround. It is now cut it to levels above junk. On a couple of fronts pushing the stock lower. A bunch of stocks again today on the list. Going ex dividend. How what is it going to take for the u. S. To get back. We saw the lightest outflows from european equities we are seen in quite some time. But nevertheless very negative story. I think the momentums we have seen all the reasons why weve seen these like a lower Interest Rates, lower oh price, dollar over euro, as are all reasons from last year and not this year so obviously this will be quite difficult. If momentum is slowing down. You talked about the fact that they need a diversified portfolio. Walk me through the numbers. One of the key sectors we look at and europe is the housing sector. Thats the sector we like where we see that right now there is a little bit of overplayed negativity leading to the american president ial campaign on the Health Care Sector or you have plenty of very Strong Companies in europe. Certificate but he like this that gets one of our largest positions. This is definitely a sector where we feel extremely relaxed in europe. Inmentioned before a case point. Its a great company. Very Strong Financial discipline. You have quite a few stronghold in europe. You do notr is that have that many options in europe. Thats why you need to build a portfolio where you can actually meet folks not just in europe but also the u. S. And the rest of the world. Guy you just listed a number of his this is that are global. You are not playing the european domestic, maybe having reached its peak. You look at germany and im looking at a domesticdriven story. Why am i not focusing on that domesticallydriven story . It will remain very dependent on what is happening on the export front. One of the big issues with europe is that there is still a very unbalanced area. Its not just 1000 of europe which is breaking the rules in terms of budget deficit, its germany breaking the rules in terms of current account surplus which is way above the ceiling that we have in the treaties and agreements, which have been agreed by the partners. The problem for germany is what is happening in the rest of the world and the capacity of the domestic economy to compensate the headwinds globally that remain a bit of a . Downgrade to the euro targets for european equities. You aret be something on board with question mark on board with . We believe the capacity basically playing the overall performance of the market is quite constrained and also the relatively weak economic momentum on the other handsome probably want to be a lot more specific. Much more playing the specific story taking advantage of the volatility of the markets without reinforcing ourselves on the stocks and bonds that we like when there is a moment of panic among investors. Seeing volatility rises. If he took an average at the beginning of the year, european volatility is now at levels we have not seen since the financial crisis. Volatility is rising because we have these geopolitical problems compounded by the fact that we had so many liquidity injections by the central bank that it is creating instability in the market. This combination together with a lot of liquidity is creating this huge volatility which is why as an investor in need to be able to produce a pate and look through this volatility if you are trying to play the just trying to play the momentum game. We need to talk about france. I want to take on what is happening in that country now. Up next as well, we will talk about what is happening with the fed. Is it on the right path . San franciscos will you him saying the Central Bank Strategy is the right one. More that story next. Stay tuned as well because were having a sitdown with the barclays ceo. Francine lacqua will be speaking to jed bailey. From annual European Financial Services conference. February a look at exactly what is happening around europe. Toxics hundred down by 0. 4 . We will focus on deutsche once again. On the downside this morning that 60 where the focus is. There are a few activities the