>> good morning. we are live from the european headquarters in london. i'm mark barton. matt: deutsche bank reports a 7% drop in fixed income. i have an interview with the ceo. we will bring you that live. cash trade less than 30 minutes away. mark: saving the slump, deutsche

without the maintenance position in fixed income trading. we will bring you are exclusive interview. a: 30 5 a.m. u.k. time. do not miss that interview. jean-claude juncker heads to washington to talk trade and donald trump calls for the eu to drop all tariffs and subsidies. will the two men find anything to agree on? as theresa may takes control of negotiations, the u.k. prepares for a no deal brexit. we will talk to the deputy government of the bank of england. at what isa look happening to european equities. the futures indicating stocks a little bit mixed today. futures down by 0.25% but yesterday we had european stocks

rising for the first today and four. investors do it by those measures in china to stimulate the economy. following on are the mixed end of the day in asia. dax futures also down. slight move up in cac 40 futures. have a peek at what is happening in our wonderful gmm function. this is the g20 economies. turkish asked 100, the stock index, which saw a whopping decline of 3.3. the central bank took markets by surprise by failing to raise interest rates. the speculation was, we spoke to economists and they expected the central bank to raise rates by 100 basis points.

seemingly, they haven't listened to the market and demanded a rate hike. push the lira higher. the opposite happened and we saw a slump in the near a. we saw stocks declining as well. those are some of the asian markets declining today. the dollar is falling against the lira. we saw huge selloff yesterday. today, a few other currencies. let's get the first world news. juliette: president trump's for the eu and america to remove tariffs between each other, and the european union is coming to washington tomorrow. john says, i have an idea for them, both drop all tariffs and subsidies. hope they do it, we are ready,

but they want. this comes ahead of a meeting with the jean-claude juncker. he was simply discuss possible solutions. >> they sound nice but they are rough. they are coming to see me tomorrow. they are all coming to the white house. i said you have to change, they didn't want to change. i said, we will terror of your cars. will tariffs your cars. donald has tempered his rhetoric towards iran today's at the recent all caps worried of future conflict. addressing the national convention of the fighters of foreign wars, he said his administration stands ready for ron -- for iran to come back to

the negotiating table. theresa may is taking control of brexit negotiations. the decision sidelines the troublesome issues she created two years ago. it follows months of tension between if warmer brexit secretary david davis and mays chief europe advisor, oliver roberts. today ingets the pulse a closely for election that would determine the future of the nature central the u.s. antiterrorism efforts and china's infrastructure. for the paving the way country's powerful military to face accusations of intimidating at critics and they have denied the accusations.

powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. thanks for a much. they mixed session for asian trading. the biggest three-day rally in almost two years. the yuan drop to the weakest against the dollar in a was the year. join us now is mark cudmore. you are believer in a chinese rally. we have seen a rally in the last few days. you think we will see a bigger rally. due to watch? mark cudmore: there's a number of reasons. valuations are very cheap compared to global or asian peers. or historical valuations.

the macro conditions are much better. back commodities came way off their highs in the last weeks. china is a major commodity importer. we have this big policy shift recently which has been massive. had an increasing number of measures to go towards easing. that's important because there's a lot of evidence to suggest that the weakness was right much part of the deleveraging drive. we haven't seen the economic impact to much. most of the equities have been exporters. if they in the deleveraging drive, that's really good news. got so, the world bearish on china without understanding the drivers. i think long returns have the potential for large gains. that doesn't mean we won't have more volatility. is, it's dollar

declining. against the you want today. -- against the yuan today. it seemingly used to be 6.6 that it was 6.7. is it now 6.8? i don't think there's a line in the sand. the pboc made it clear they're going to not worry about the macro fundamentals. using the shifter medically to an easing cycle. that should cause dollar you want to trade higher. they have left the market actions to work normally. on, it's moreere likely the next major move of it's probably for weakness. i think it's unlikely the yuan will vary from that. if dollar goes up, dollar yuan will go higher.

it's interesting to note that the euro cmy has returned to the levels of last year. the depreciation has just caught up. it's just returns to a stable level. dollars not the only currency significant in this conversation, at least i saw you put out a chart showing that bitcoin is maybe an important indicator when it comes to chinese stocks. please explain. i know how you love bitcoin. bitcoin, being speculative and volatile, is massively dependent on liquidity. it's collapse this year has tied up much of the deleveraging them for china area we saw at the end of june. that was probably an early sign

that pboc easing policy was starting to have an effect. we are seeing that from some on shore analysts in china. they were saying several times that they have changed their shift. chart, if see in the you overlay bitcoin with chinese equities. it's a very good guide. that suggests there's more outside to calm. the relationship may be up its various overtime but it's undeniable there is some connection there. great stuff. mliv on your bloomberg. what a wonderful function. as i said, mliv. exclusively to the chief executive. it said it is confident in its full-year net profit guide. this is bloomberg.

matt: welcome back. i'm matt miller. this is the european open. wizz air says it's confident in its full-year net profit guide's. it cut its capacity growth outlook by 2%. they said air traffic control

strikes and rising fuel prices would continue to disrupt business into the next quarter. ,ith us now is jozsef varadi the wizz air ceo. us first ask you about feel prices. we have seen oil slow down a bit. although, analysts tell us there could be more room to run. what's your view on the price of crude? jozsef: we have seen a change of the past six or seven months. the prices come down and is now reversing and going back up. it's hard to read the market to what extent this will further increase but my expectation is that the environment is not going to ease. if anything, more downside than upside. mark: to some of the first quarter, your first quarter

revenue was just slightly below the average estimate. what does it mean for the outlook for the full year? jozsef: we are fully confident in our items. what we previous gate to the market. basically, what we are seeing is there are certain issues affecting the performance of the industry. nevertheless, we are in a revenue environment underlined demand. it remains very strong. seeing that.e are this year, the market is probably more difficult than previous years. when business was pretty benign. once made it so difficult this year? one is the operating

environment. we were also talking about fewer and foreign-exchange. there are more uncertainties. brexit.st elaborate on to what extent is brexit affecting you? how might it affect you if we fear into the hard brexit direction? we opened up a brand-new , and it wizz air uk started operating in may. we believe this is a major contingency program. as far as we are concerned. we are going to be at both ends of the equation.

i know that everyone is worried about what a hard brexit could mean. i still take the position that we don't know the terms of exit. negotiated.ng contingenciesg on like every other business. i personally still hope that there will be a solution. i also think that if things go really bad, by having to airlines, we should breed pretty well-positioned. leaving brexit out of the equation, you previously said you want to buy about 20 new planes. airbus can meet those production targets?

jozsef: i think airbus will be able to honor their commitment. short-term, we are seeing some issues. but we are also seeing some signs of recovery. the situation will get improved. extent, this some is going to manifest but i'm confident that in the shortcut -- that despite short-term in issues, we will be ok. you worried by the amounts of capacity added by airlines across europe right now? it's growing at around 6%.

it's on the higher end of the spectrum. what you have seen as the airline industry has been growing at a rate twice of gdp. capacity is going to get as the outside environment and the operating environment it's more challenging. expecting some more capacity issues. essentially, we are taking capacity to distrust -- to discuss some disruptions in contingencies. mark: thanks for joining us today. chief executive. 11 minutes away from the open.

next up, your stocks to watch including deutsche bank. we will bring you an exclusive interview with the chief executive. that's the biggie. this is bloomberg.

♪ let's get your stocks to watch.

matt is on deutsche bank. him earlier this morning. we continue to see strong volume growth in latin america. despite the elections in mexico and brazil. we saw healthy growth in latin america. this is on the back of positive growth in the number of loyal digital customers. it grew in both cases close to 20%. europe, we sawn the best quarter we have seen in a few years. santander looks to be in pretty good shape. they published second-quarter earnings would slightly beat expectations. driven to a large extent by

brazil despite the puts go problems. brazil will continue to be a great market for them. hitpain, their profit was by a charge based on their acquisition of a bank. lvmh seems to because it would be trade war? second-quarter sales rose 11% beating analyst estimates. you may have heard there is a trade war and that chinese markets how plunged this year but it seems that hasn't really curbed amand for lv handbags or celine handbags. from the trade war hasn't materialized yet but you can't really extrapolate the first half results into the second half because of economic uncertainties. it should be a good day for luxury and lvmh.

mark: matt, deutsche bank. i obviously have gone over and spoken with the ceo, and we have an exclusive interview coming up in just about 30 minutes time to play for you. deutsche bank has come out with the numbers they preannounced back in the middle of july but thear, we know they have details. they had 401 million euros after-tax profits. revenue a drop in ficc by 17%. the compares to gains by other banks. they say they are on track to and willnue attrition continue to cut costs and promised to meet targets. his predecessors haven't been able to do that but he says now is the time for deutsche bank to turn around. he will bring you that live interview, that is exclusive and

you can only see it here coming up at 8:35. stick with us until that happens. coming up, the market opens. this is bloomberg. ♪ retail.

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and it can be included with your internet. which could save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. guy: check out what is happening to these assets. oil gaining today. an inventory report in the united states showing inventories declining, oil gaining .9%. by 1/5 of 1% against the dollar. theresa may taking control of the brexit negotiations. nikkei gaining, as well. what are the early indications for today's session? mixed to lower. futures higher.

the other three benchmarks are the asiany, narrowing session. we saw the first gain in european equities in -- propelled by measures out of china to boost its economy. tension turns to the trump-juncker meeting. the session is underway, as you can see by our populated monitor on the floor. this is populating. set for a mixed to lower open for european stocks, already evident in the ftse 100, down by .2%. control of, taking brexit negotiations, that was announced yesterday. yesterday,e on it dominic appeared before mps in the house of commons and seems to be more on the prime minister's side than his predecessor, david davis, which departed in recent weeks.

cac futures implied in the market would open higher and it has. about .2%. it is a mixed session today in europe. a lot of earnings to focus on. i want to show you our movers function which has populated the floor on our studio in queen victoria's street. this is the bloomberg european 500, mixed start to the day. the 500 is up by roughly .2%. fireworks for the beginning of the wednesday session. movers, circular is more red than green. into what isper happening among the stoxx 600. this is the .mov function that

gives you the best and worst performing movers today. the stocks to watch today include the company's reported better-than-expected earnings or stop, deutsche bank among them. itv shares are down by a little bit, the third worst performers today. rio tinto is also lower, the worst performer on the stoxx 600. keep an eye on the mov function. european stocks have opened today aftered chinese equities followed a three-day rally. matt: i want to bring in our guest for the hour. joining us now onset is stephen say well, senior multi-assets strategist at b.n.p. paribas.

kick it off with stocks because the market has just opened. session, but we saw some decent gains yesterday and have seen some great games around the world the past few days. what is your view on equities right now? speakd morning, nice to to you again. i would actually go back to the last time i was on the show and spoke about this topic, to remind you. constructive view at b.n.p. paribas on equities. our energy we like and financials and the key point we would focus on that are driving these sectors. think we will increasingly see higher yields in the eurozone from a steeper curve which will help financials and also with this strong oil price recovery we are seeing the last few months, we think that

will help the energy sector. overall, a fairly positive -- two but those suits sectors are our favorites as far as europe is concerned. matt: if financials do well, that is clearly a good sign for the economy, a good sign for --kets, but if energy dues does well, a means the price of oil is rising and is that good for european business? steven: look, certainly there is a component to that that goes into inflation cpi. as far as the ecb is concerned, they will look at core inflation. suggestre, we would there is a rising trend in inflation. it is a good topic to focus on, question.gged we will start to see inflation pick up in the second half of but year, not just from oil

on a broader perspective. one factor driving this will be higher wage inflation in the eurozone. from our perspective, we think higher inflation is coming. part of the reason we think the yield curve will steepen, but strong stance of domestic demand in europe currently, we think things will look fairly rosy. at the 10 year, it is at 38 basis points. the spread, 76 the top, 26 the base. what gives you believe, gives are going tolds move higher and with sustainability? steven: this is the key question, and i will make it clear. our view of bnp paribas is not consensus. we will see bund yields rise higher in the second half of the year. our forecast is 1.1% in 10 year froms, which is a big move where we are. the two things that will drive

this our domestic demand. we see domestic demand in the eurozone doing well, and secondly, we think things are really starting to pick up in the inflation front. we spoke about that with matt. growth in the eurozone is currently somewhat above trend and when you have a sustained level of growth above trend for some time, you certainly start to see wages pickup. we think that is a trend that will likely continue in the second half of the year. matt: we will keep you with us. steven saywell, senior at --asset strategist specialist at bnp paribas. itssche bank has defended position in fixed income trading after the unit posted its weakest second quarter since the financial crisis. income from buying and selling securities slumps 17% from a year earlier to about 1.4 billion euros. equity trading was also lower

following 6%. the ceo says he thinks the company has reached the turning point. they are going to start bringing down costs while they keep revenue little changed. we will bring you that exclusive interview at 8:30 a.m. u.k. time. this is bloomberg. ♪

mark: welcome back.

the trading day is nine minutes. look at that. we need to steal that for the european close, hint, hint. i want to steal that function to showcase european market. we don't actually use the floor, but wonderful use of our technology at bloomberg. it is a mixed day. asia was mixed, as you can see. spain down, germany unchanged. in the u.k., down a fraction carried italy down one third of a percent. it was expected after the first gain in four days yesterday. matt: yeah, absolutely. , tore welcome, by the way use any of the graphics we develop on the european open show in your program throughout the day. let's focus on the second-largest economy, chinese economic expansion will maintain its course this year in the face of an escalating trade war with the u.s.

that is the view of economists surveyed at bloomberg. still with us, steven saywell of b&b -- b.n.p. paribas. let me get your take on china. it has had a great equities rally over the last three or four sessions and it looks like monetary policy may get even more expansionary now. steven: yes, so look. our view is, clearly there is a lot of focus on this with the tariffs situation from the u.s.. we have revised lower our growth forecast for china this year and next year, calling for around 60% -- 6%. we are seeing negative impact from the trade situation with the u.s.. however, we think it will be met with more fiscal stimulus from the chinese authority. we think there will be some stabilization coming in to make up for that. the key point to focus on is the

currency. the dollar is doing extremely well against the renminbi. that is tending to drive most of what we are seeing in asia. h is thear cny, cn anchor that is likely to continue to set the trend for the other currency pairs in asia. em fx is off its lows and stocks are off their lows of last month, aren't they? there was an idiot syncretic story -- there were some idiosyncratic stories. is the fortune of e.m. tied to the fortune of china because the fortune of china is looking so bad? we have seen the worst for em overall as an asset class? i would refer to some of our quantitative models, foreignarly on

exchange. it is telling us the dollar is very overvalued currently. you can see that in dollar cnh and the way it has moved. what the market is focusing on is the concerns about the big current-account surplus countries and the u.s. will probably do better out of this. that is why the dollar is so overvalued, but i don't think it will last forever. in the short-term, you can see this continue to move higher but as things settle down, we'll probably get through these trade negotiations at some point, you will see the dollar start to weaken again. that is our big trend the next six months. we look for a weaker dollar and for em currencies to come back at in the short term, we think willrend of dollar higher continue and we will -- it will take other em pairs with it. matt: how does that jive with your view of the fed's rate path?

we always hear this rising rate environment is not good for em becausees -- economies so much em debt is designated in dollars and it seems to act as a magnet drawing assets out of em to the u.s. you see a rising rate path at the same time you see a weakening dollar? steven: sure, ok this is a great question. i highlighted with the trade talks, we recently lowered our global gdp forecast. that includes in the u.s. soho. we have a slightly weaker outlook for u.s. growth. despite that, we still see the fed continuing to hike rates. however, we think there will be two more hikes this year and only one in the first quarter of 2019 and the fed is likely to stop. the reason probably has nothing to do with the dollar or em gdpencies, but we think

growth in the u.s. is likely to be as good as it gets. in u.s. see a slowdown growth in the second half of this year and that slowdown continuing and the first quarter of next year. that is why we think the fed will hike twice more this year, but then stop with that single rate hike in q1 next year. matt: all right, thanks very much. we have more to talk with you about. steven saywell from b.n.p. paribas is our guest for the hour. let's get to our talk stop stories -- stock stories with nejra cehic. lvmh. let's start with we got numbers from the company toward the end of the european session yesterday. first-half profit hitting new highs, sales rising 7%. that was a beach. it showed they were working through the opening round of the trade war with chinese appetite holding up.

today, lvmh has been upgraded to outperform. higher one stock up point 9%. it is one of the best performers on the stoxx 600. i was going to talk about deutsche bank, but i don't want to take away from your great exclusive, so i will talk about dws. this is deutsche bank's main asset management arm, which held an ipo this year. $5.7 billion of net outflows. lows were hit in the second quarter because of factors including volatility in markets. and investor sentiment, and also u.s. tax reform dynamics. therefore, they are unlikely to reach the target of net new money inflows of 3% for 2018. the stock, down 3% for dsws. -- dws. vodafone off .2%. on that organic service revenue growth. pretty much in line for the

first quarter. the competition in southern europe was offset by gains elsewhere in the continent and in the developing markets. matt: thanks very much. a great look at dws . we see deutsche bank shares geeking out again in frankfurt. are not bank shares falling. we have an exclusive interview with the deutsche bank's new , gettingstian sewing into the charity at the right time possibly as the rates environment seems to turn around and he looks like he can from rising, costs even bring them down as revenue stays stable. that could be a sign investors like. check out that interview at 8:35 a.m. u.k. time. this is bloomberg. ♪

mark: welcome back to the open. 8:20 in london at ahead of the meeting with the european commission in washington today. president trump tweeted the eu and u.s. should "drop all tariffs and subsidies and washington is ready, but he thinks brussels won't do it."

he also said on twitter "tariffs are the greatest." didn't he once call juncker a brutal killer? i am not sure if it was a compliment or insult. a i think it was meant as complement, but the u.k. isn't sure, either. trump wanted to say he was a tough negotiator, so probably a compliment. mark: what's the best we can expect today? well, the u.k. will offer two options for rather signal the eu's willingness to discuss two options. the bilateral trade of manufactured goods with the u.s., to eliminate tariffs which trump tweeted he wants to, or plural lateral trade deal among

all major car exporting countries to cut or eliminate tariffs in the car sector because that is the focus of trump's friend plate, that the eu is charging too high tariffs on car imports and he is retaliating. whether trump will accept those two options remains to be seen. but i have noticed recently, europe sends diplomats and leaders to the u.s. not expecting very much at all. does brussels actually expect trump to accept its proposals? nikos: well, they are not very optimistic. juncker said as much. try.hey have to this is the last-ditch attempt thatert a punitive tariffs could deal a huge blow to the european car industries,

especially the american car industry. -- today fails, tariffs could be imposed. there is not much optimism, but doesn't hurt trying, right? mark: thanks a lot, bloomberg's nikos chrysoloras joining us ahead of the meeting between juncker and trump. we are slapping tariffs on your cars. the next minute, no tariffs. will we end up in the middle? steven: funny you ask about this. we just published a 20-page research report on the impact of tariffs. our clients can login and read this, but the point we would make here are based -- our base case scenario is tariffs probably are coming and coming on the car industry. we think this is going to hit all of the major economies. we can germany will get hit

particularly hard given it has a focus on exporting to the u.s. so will japan. they have a 40% market share of the u.s. car sales. we think there is going to be a downward revision to gdp, including also to the u.s. really, there are no winners in this game. the bottom line for us is all three of the major economies are likely to be hit and it is not going to be a positive one. , everybody talks about the importance of free trade and all these liberal capitalists, but when the president just suggests getting rid of tariffs completely, those people then balk at the idea. why not just get rid of tariffs in both directions for cars? well, in a strange way, this is what donald trump is after, as we have seen from the comments a few minutes ago. the bottom line at the moment for the u.s. is that the playing

field is not equal. is actually charging higher tariffs on u.s. cars coming into europe or the eu compared to what the u.s. is charging for cars going the what the, and i think u.s. administration is saying is this is not fair. we like things to be equal. we like a level playing field. as a way to put pressure on europe, this is why we are coming up with these tariffs in the u.s.. absolutely, donald trump would like to get there. it is just how that road pans out and whether we get to the end goal of euro tariffs. mark: great to steve -- see you today. , specialist at bnp paribas. he will be joining us on london dab digital radio. a quick peek at the stock of the hour, the wonderful gd function.

chosen lvmh, the world's biggest luxury goods company, talking trade. it survived the opening rounds of the trade war as chinese consumer appetite for french luxury items surging. shares up by 1.6%. the maker of louis vuitton handbags. the company reported double-digit percentage growth sectors from fashion to jewelry and cosmetics. shares are up and they were up as much as 2.6%. everything you need to know on the gd function, but we are afraid to ask. look at ryanair, getting news crossing the terminal. we talked about whizzair and now ryanair. in -- cut dublin by 20%. this company has been roiled by strikes. it warned days ago the labor

strike is starting to bite has profits slide. it has announced it will cut its fleet by 20% into 2018. a big exclusive interview with cheek executive of deutsche bank and anglo american. nd anglo american.

matt: savings slump. deutsche bank thousand to maintain its position in fixed-income trading after reporting its weakest second quarter and's 2008. we will bring you our interview with deutsche bank's ceo. he strikes and optimistic tone. christian sewing minutes from now. jean-claude juncker talks trade. donald trump calls for the eu to drop all tariffs and subsidies. will the two find anything to agree? on does anyone really want free trade? as theresa may takes control of

brexit negotiations, the u.k. publishes plans to keep financial firms operating after a no deal brexit. we speak exclusively to the deputy governor of the bank of england, sam woods. welcome to "bloomberg markets: the european open." i am matt miller in frankfurt alongside matt -- mark barton in london. mark: 30 minutes into the trading day. stocks are higher for a second day after gaining yesterday for the first day. -- $46 billion merger is on track, lifting shares by 2.6%. low among the other gainers. the swedish financial company bank is the big gainer. the flip side of the coin,

ryanair among the movers. gainersingly among the in that it will cut capacity in dublin by 20% for winter 2018. -- guidance no later than november, the firm's 20% lower today among other decliners. clariant, the -- is getting underway. here is sebastian sarlacc. called totrump was remove terror -- has called for the eu and u.s. to remove tariffs between each other. a idea.i have both drop all tariffs and subsidies. that would finally be called free market and fair trade. we are ready, but they won't. that ahead of the meeting with jean-claude juncker. >> they sound nice, but they are

rough. they are all coming in to see me tomorrow. they are all coming to the white house. i said you have to change. they didn't want to change. ok, good. we will tariff your cars. >> later on, we will speak to the cfo of general motors and ford as the u.s. carmakers announce second-quarter earnings. controlmay is taking over brexit negotiations in a move that reinforces her drive to keep close to the eu. the decision sidelines the troublesome ministry to leave the british withdraw from the eu. it follows months of tension between david davis, who led the department until he quit this month, and her chief europe in visor -- advisor, who she turned to for advice. touchdown goes to the polls today in a close election that will determine the course of the nuclear arms nation central to u.s.' antiterrorism efforts and china's efforts. the three none of

parties will earn a majority, paving the way for horsetrading to form a government. the country's power for military has faced accusations during the campaign of intimidating critics. it has denied those allegations. laos, the search is continuing for hundreds still missing from a collapsed dam. andad warned the government villages as workers try to avert disasters. engineering and construction said engineers struggled for almost 24 hours to prevent it. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more .han 120 countries this is bloomberg. we are 30 minutes into the session. a quick peek at markets. we will look at what is happening. stocks are higher. we had a mixed to hire session in asia today.

you can see from the cac 40, marginally higher. all right, deutsche bank has vowed to maintain its position in fixed-income trading after recording its weakest second quarter in that business since the global financial crisis. in an exclusive interview, deutsche bank's ceo, christian sewing had an optimistic tone. of these arel solid results and to be honest, if i look at the headwinds we if in the second quarter, look at the material transformation we did in all parts of the bank in the second quarter, i would say these are very solid results. revenues came in line with market expectations and some businesses above consensus. the pretext profit for the first half of the year is a solid number. , we havertantly

executed on all the targets we have set. tom cost side, we went through the material reduction with the lowest headcount in the bank since may 2010, the acquisition. we have further reduced our leverage and that results in the capital ratio of 13.7%, which is a real solid number that speaks to the strength of the bank and toes us now the possibility grow in the second half. actually, i feel it is very solid numbers. matt: one of the analysts that citi says the revenue attrition has been moving at a faster rate than cost reduction. can you use this extra capital, this extra leverage to implement cost-cutting strategy that slows that are terms that around? christian: exactly that.

with the capital we have, it is our clear strategy to redeploy some of that in order to further grow in the core business is where we want to grow in the second half and that already started now. in a time liket the second quarter, where you reshape your business, where you purpose certain things -- therefore, i said at the beginning, we're above market consensus. i think we are in a stall a development -- solid development. matt: can you give us some plans to reduce cost? for example, you talk about the headcount reduction. you want to get to 93,000 by the end of the year, 90,000 by the end of 2019. how are you going to achieve that? what are you doing that to cut these costs? of all, it isst

all about having a fundamental plan in hand and have the discipline and execution to execute on that on a weekly, daily, and monthly basis. that is what we started since april. we have ton where reduce, we have to adjust our headcount and i think we have been very disciplined. it is not only about headcount. wage comell make our in below 93,000 this year and below 90,000 at the end of next year, but there is more than that. in all their cost categories, we will materially reduce the cost -- of 2017. we are not only working on headcount number, but with more discipline on all other cost measures. therefore, we have -- with technical programs, strategic programs. matt: let's talk about the individual businesses and start with civ, maybe the most

important core business. ,ou talked about trading their 17%.ere, dropped is it due to headcount reduction that you have seen this drop? christian: first of all, i am glad you are saying most important business because for me, it is also very important. the corporate investment bank is the key ingredient and dna of deutsche bank and that will remain the case. the business, a core business within the investment ain't, we had a very good second quarter 2017, in particular in that credit rating. yes, went through a transformation in the second quarter so you see one or the other adjustments we have done. we did it in one quarter. now we built up the capital, bring it back to the business and with processes we have, the franchise we have, i am confident we will see growing

revenues in the business going forward. matt: you said you remain confident about maintaining your position is the fourth-largest house globally. what gives you that confidence? christian: the clients we get. in this position, i have seen more than 150 clients globally. they see us as the european bank offering the full range of corporate investment banking services. mes clientele gives confidence. secondly, the expertise and products we have, and also if you look into the underlying business and developments i have seen over the last month, classic kapoho -- capital position we have, i am confident. matt: what about the private commercial bank? this is close to your heart because of your experience in retail banking. why do we see revenues dropping 10%, even without selloff included? christian: the one offs compared

to last year compared to this year, we have reflected a lot. in her interest rate environment that we have in europe, in an environment where the second quarter, we completed the largest merger of banks in germany since the european central bank is in place in 2014, that is actually a good result. we have shown resiliency there. despite the focus on the merger. hence, we are growing in the lending business. we are growing assets and speaks to aand that business and bank with more stable revenues, which is sustainable, profitable and we need more from the investment bank and i can see that with grown -- grown lending and asset management. matt: we seem to have a pretty clear path now from mario draghi and the ecb. how confident are you we could

see rates increase and how important is this to your business? this management focuses on the next 18 months. we have set ourselves clear goals for the next 18 months, for 2018 and 2019. we want to have a return on equity of 4% at the end of 2019 and that does not depend on a rates increase. hence, we have to plan what we can actually -- cost, capital, and that is what we are doing. of course, it would be nice to have a rate increase. however, that is not my hands -- in my hands and that is not an underlying driver for the next 18 months. it is always hard to predict rate increases and this is not part of the plan. matt: you came into this position at the perfect time from a rates perspective because we seem to have troughed and now we are getting ready to climb in the next 13, 14 months.

christian: i expect a rate increase over time. whether that happens in 2019 or later, hard to say for me. i think it is necessary to have that in europe, but it is hard to really predict the timing and hence, for the next 18 months, the plan does not depend on it. matt: let's talk a little about brexit. deutsche bank in the u.k. look like in 2019, 2020, 20 to 21 -- 2021? what is your idea of a post-brexit deutsche bank? christian: i think the u.k. will always be a key place in the financial industry. london has the infrastructure which almost no other location in the world has and therefore, i think it is wrong to predict that there is no major financial location in london. that is very important for us. remain inank will

london. we will have a material location, but looking at the events and the development, there will be certain tasks which we will move over to frankfurt but that also depends on the final negotiations and we are observing closely and will take our action. matt: do you have a plan in place? there has been talk about a know bill -- no deal brexit. christian: yes, we have a plan in place for the scenario and we are working diligently on this one. as i said, we need to be very close to this one, but we have all the key issues in hand in order to be prepared for either scenario. matt: do you have a headcount number in mind for the u.k., for deutsche bank in the u.k.? honestly, it, and would be wrong to issue any headcount numbers but one thing is clear, and that is that deutsche bank will always have a material location in the u k and london.

it will remain a very important place to do banking and therefore, deutsche bank wants to be in the u k and london. matt: i can assume that you will always have immaterial place location in the u.k. -- u.s.? in trading to remain globally, is it imperative to have a u.s. presence? , andtian: absolutely that's the client we will get. it is not only that clients around the world want to have one bank which can offer the corporate investment banking globally and with the full range , it is also vital for a german bank to offer the support services for our german and european clients in the u.s.. secondly, we have businesses in the u.s. where we are market-leading. when i look at the market share we grabbed in the leverage and structure business, which is done out of the u.s. in the second quarter, this is a

fantastic development, we want to do this. in the commercial real estate in the u.s., we are very successful. we will remain in that business. deutsche bank is a global bank. to be want internationally successful, you need to have a meaningful location in the u.s. and we stay there. matt: how has the business there been affected? i think of major issues out of the u.s.. one, the tax reform moves president trump has put through and the other is trade concerns that have developed. policies -- have president trump's policies been a headwind or tailwind for you? christian: long-term, to be honest, on the tax reform, it hit us in 2017. that was the reason from a pretax profit, we turned into a net loss but over time, that will be positive for us. lower tax rates, and hence, it doesn't impact our day-to-day

business. on the trade side, that is actually something which, in particular hits the underlying economy. i am still of the expectation we will find an agreement and the politicians will find agreement on the tariffs side, which is mutually beneficial for the economy. that would be good for deutsche bank, but has not impacted our business. matt: jean-claude juncker headed to washington right now. we have heard concerns from german carmakers and other industry about the possibility. what are you hearing about the possibility of tariffs? christian: of course, everybody wishes the increases do not come because i am absolutely convinced that it is negative for the global economy overall. on the other hand, i think in particular the german industries, the german corporate have shown not only resilience, but they have shown the

flexibility and the adjustment capability in the past to react to various global trends and came out not only in a resilient but in a more profitable way. therefore, i do believe that even if this happens, that there is the capacity to adjust and we will also as deutsche bank will be in very good business with german corporate's going forward. matt: that was our exclusive interview with deutsche bank's interview with -- ceo christian sewing. -- extended losses to more than 2%. now back up to a loss of 1%. deutsche bank shares trading at about 10 euros -- 10.33 euros. mark: fantastic interview. britain's regulators warning trillions of dollars of contracts are at risk if the u.k. crashes without a deal. withplain -- discuss it sam woods. this is bloomberg. ♪

mark: welcome back to the open. theresa may taking control of brexit talks. the troublesome ministry has been a charge of the negotiations. to keep financial firms operating in the u.k. in the event of a no deal brexit. joining us, sam woods, deputy

head of the bank of england. firms under telling your umbrella how to prepare in the case of a no brexit reality? which if you listen to the noise, is becoming an increased probability. sam: good morning and thanks for having me on your show. we are dealing with brexit now as a dominating issue in terms you just talked about. our message to the firms and your viewers is we are very much on the case in two ways. one is a big picture way, but we are 10 years on from the financial crisis. we spend that decade repairing the financial market and that job is pretty done. the other element is on brexit more narrowly, we are putting effort into restructuring across the border, something we call

contract continuity and we have 140 staff dedicated to that. mark: are firms ready? what are they telling you and what are you telling them? firms can do a lot to prepare themselves. particularly the larger firms we oversee are well advanced in setting up new bases in the eu or discussing with us how they get authorized to remain in the u.k. there are some where we think the authorities have to play a role and the biggest one of those is what do we do about the 96 trillion of derivatives contracts sitting across the border? mark: but you have a different view -- he says leave it to the companies, you say leave it to the bosses. sam: i am hoping the sides will come together and we have a working group looking at this issue.

someiew is there are things firms can do but in the end, particularly for derivatives and to a lesser extent insurance, the u.k. government and eu authorities need to put a backstop in place. the u.k. is committed, we are hoping the eu will do the same. matt: i am assuming a cliff edge scenario isn't as likely as a long rolling downhill brexit. isn't that more likely? this is a drawn out and turkey process? -- murky process? -- paidare prepared to to prepare things if things go badly. andre mitigating cliff edge that work is going ok. the important thing behind that the last 10orked years to make banks more capitalized so even if things go badly, they will be robust enough to provide services to households and businesses. not even to put a value

judgment on it, badly or well, there are certainly going to be issues that are cliff edge in nature. you mentioned derivatives contracts. can you give us other examples banks will have to deal with, that change completely from day one today two. sam: the other important issue is data and whether banks and insurance companies will be able to pass data across the border. that is different from the derivatives and insurance contract. it affects a lot of sectors. i am concerned about that because of broad effects put in place. new regulation, meaning we are in the exact same position to start with. i am a bit less worried about it them where we are with the derivatives. mark: we talked about a number

of financial jobs leaving the u.k.. you mentioned five to 10,000. could you update that figure? have you moved it at all? had 5000 to 10,000 jobs for some time, which you .an think of as .5 of 1% relatively small. day one, it will be the bottom end of that range. if anything, slightly below that. the question, where does it go after that? mark: any ideas? way, it is fullest estimate. mark: there are crazy numbers, are there? sam: there is a wide range. there is an upper end number out there, but it depends a lot how the relationship develops and how the eu response. mark: sam woods, deputy governor .f the bank of england thank you for coming in for that

exclusive interview. i am going to bring you more of our exclusive interview with deutsche bank's ceo christian sewing. a bit of a mixed day for european equities. this is bloomberg. ♪ rg. ♪

,> deutsche on the offensive because of their weakest second quarter. we bring you our exclusive interview. trumps take talks. the president called for brussels to drop all subsidies. will the two men find anything to agree on? conglomerate is set to be considering a $10 billion offer for the belgian shares. it could be its boldest move yet.