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tv   The Pulse  Bloomberg  June 8, 2015 4:00am-6:01am EDT

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francine: deutsche bank departures. the co-ceos resign from germany's biggest bank. john cryan will replace them. manus: a whole lot of work still ahead. angela merkel's warning on greece as she hosts the g-7 summit in bavaria. francine: turkey's currency and markets tumble as the ruling party loses its parliamentary majority in a vote for president erdogan. welcome to "the pulse" live from
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bloomberg's european headquarters in london. manus: over the course of the next 20 minutes, we are going to get it all covered. we are going to be joined by the citigroup global head of equity trading strategy. francine: anshu jain three years at the head of germany's biggest bank are coming to an end. the vegan bank co-ceo helped build the business and will step down at the end of the month. manus: he will be replaced by john cryan, who will run the firm until the co-ceo leaves next may. shane has the story in frankfurt. how much of a surprise is this that we are seeing jain go now and the other go in a year's time? >> it does come as a big surprise, particularly because jain just received more power within the management board. he was just given oversight for the new strategy and execution.
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it looks like he's going to be the first ago. on the other hand, there have been lots of investors calling for a change at top level management for quite some time. it is something people were expecting, but maybe the timing through people off. francine: were you surprised that investors reacted very positively? >> well, they've been waiting for change. there is finally a freshfaced coming in. the bank has been trying to change its image. now they have a freshfaced and bring in. people have been saying, you really have to do this. it is difficult to do that with management that was already there. you need a new face. the guy coming in, john cryan has an excellent track record of turning around a bank. he was at ubs. the reaction has been positive
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so far. manus: let's talk about john cryan. reaction is positive. he was at ubs during their crisis. the strategy do we think that's what he is going to vary in a major way? >> that is the big question. when he went into ubs, the bank was in trouble. they had problems with huge losses when the subprime mortgage market collapsed. he came in and really crunched the numbers, got costs under control and by the time the bank was profitable again. expectations are high that he can get costs under control. the question is, how will he do that? the bank hasn't released the exact details. we have to wait and see. is it a new face for the same strategy or will he radically change something? manus: shane, thanks for rounding up that's very.
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francine: g-7 leaders are meeting in bavaria, hosted by angela merkel. the conflict in ukraine is on the agenda. hans nichols joins us from the summit. what is being said about greece? hans: well, the latest is, we have a new deadline for greece to come up with an agreement. that is june 14. that is according to a french official. there is great concern that you need to get something through the german parliament. not a lot of optimism here. what you are hearing from greece , and we spoke to the economy minister, is that they are not concerned about a banking crisis in greece. >> it seems to be under control. it would seem to be well-supportvive of the
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current period, taking into account of the economic situation that we do not face any real problems in the banking sector. hans: francine, contrast that lack of concern on the greek side with an almost uniform voicing of concern in the bavarian outs. here is what angela merkel said last night. all of us were of the opinion that a whole lot of work still lies ahead. we want to make every possible effort but we aren't there yet. the other negative comments are from jean-claude juncker. he presented the plan to mr. tsipras on wednesday. juncker is talking about a minimal level of basic things you need to do to sustain a friendship. we will see what the rest of the day brings in terms of new deadlines, new commands for greece. what everyone seems to want to see is actual progress from greece on the deal they offered.
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manus: let's talk about ukraine. it is also on the agenda. we've had some comments coming from obama in regards to, stand firm with russia. can we expect any development? hans: this was about half of his meeting with angela merkel. ukraine really dominated the conversations. later on in june, we will have a conversation in brussels about extending sanctions against russian officials for another six months. the u.s. side and the german side seem to be fairly optimistic. it has to be unanimous within the european union that they will be able to extend those sanctions. however, there is very little talk about escalating sanctions. what will be seen as a victory if you get an extension. that is as we have numerous reports, and the white house was strong on this, talking about
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russian incursions into eastern ukraine. russia continues to destabilize the peace process and the minsk peace agreement is slowly starting to unravel. manus: hans, enjoy yourself there. lovely backdrop in bavaria. francine: we are joined by the citigroup global head of equity trading strategy. great to have you on the program. greece is still front and center. the markets are a little worried, but they are still saying, this is going to take a couple weeks. we have all the banks and then we have turkey. what do you worry about? is it greece or are we sterilized to greece? >> the biggest worry right now is greece creating uncertainty. nobody is doing anything. volumes have gone down. you could look at equities outperforming the other asset classes, which probably means we are underweight. we can go through it.
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the flip side of the coin would be, you can't really judge the prices. what are you looking at and how much is it telling you? francine: so it doesn't default? >> something probably comes up by the end of the month. our european economist said that we still see a risk of not having things happen smoothly. to put it into context, it is not as if it is crisis mode just yet. the lack of liquidity would worry me the most. manus: that lack of liquidity some would say has manifested itself in the bond market. you have seen bonds trade back up towards 1%. there is an argument that you will see another dose of quantitative easing. what wins, the lack of liquidity
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or the force of the ecb? >> they are kind of interlinked. one of the reasons why qad is concentrated around a few positions i think the regulatory framework has made the banks absorb a lot less risk. therefore, the concentration in these big reversals ought to be expected. in the context of bond purchases in europe, there is still a lot of bond purchases ahead of us. imagine yields going all the way back to 1.5%. it is probably too much of a stretch. we are currently at 1%. we should settle somewhere in between. i think our long-term target is about 80 basis points. we should probably be inside of 1%. we have gone wide in terms of yield.
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we have gone from 20 to 95 basis points. we are still below one. francine: what is your favorite trade? >> we feel that -- francine: buying them now? >> probably buying half now, half on the dip, if the dip does come. the economic recovery in europe is much better. we saw some very similar stock-specific stories this morning. the banks are getting access to economic leverage, credit growth dividends, and so on. we still very much like europe. that's where greece plays such a big role. manus: 10-year government bonds in the states 2.4%, that is nearly 0.5% more than you get in stocks. dividend yields are rising in the u.s.
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is it a time to still be long the u.s. relative to the bond market? >> the u.s. dividend yield is a lot lower than it is in europe. we don't compare that well. but, you do have to increase your share buybacks. share buybacks plus dividend yields, you probably have 5.5% which does compare well to 2.4%. we think the mix of buybacks dividends, and m&a, is a global story. the leadership was very much u.s.-based for the last five years. that is probably decreasing at the margin. the leadership is being brought. we would find more excitement on the japanese side. francine: i know you mentioned banks and we will get back to that later.
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there is still a lot of regulations and fines. you are confident that they look attractive at the moment because of dividends. is this overall or just in europe? >> you are seeing a global demand for banks. look at the u.s. banks, the chinese banks because of the capital which has been issued to help the balance sheets, the european banks also. you are a little bit further away. we are seeing demand for banks. i think part of that is a mix of yield, economic recovery and equities regulation. i'm not sure i would use the word "confident." after years and years of headwinds coming from immigration, a plateau would be enough. francine: thank you very much.
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we will be talking about china next. manus:t here's ah look at what else is on our radar. e the turkish lira has fallen to the loss of a parliamentary majority. the results raise the possibility of a fragile minority administration, weaker coalition bargaining, or another election to break the deadlock. francine: shares in diageo surged in early london trading after a report that brazilian billionaire is considering a takeover bid. he and other executives are in early stages. spokespeople have declined to comment. manus: the outgoing ceo of credit squeeze as shared with bloomberg his thoughts on banking regulation. brady dugan said that a lot of positive change has been achieved, but he added that at some point, "enough is enough."
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we will have more on that later in the program. francine: let's take a closer look at what the turkish there is doing. mark barton is standing by. mark: get in on this chart. here's what is happening. dollar versus turkish lira. i've circled the movement today. as you can see, the dollar earlier rising as much as 5.6% against the turkish lira. not quite as high now. that is a massive, massive move. this year, the lira is the worst performing major currency out of 31 versus the dollar. a decline of 16%. when you expand that to 155 countries, it is the eighth worst performing currency in the world. falling to an all-time low today after the ruling ak party was denied a majority government for the first time since 2002.
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it is not just about the decline in the lira. we've also got big moves in the turkish stock market. this is the assemble index, the benchmark in turkey. it sank as much as 8%. there is the one-day move today. it sank as much as 8%. all but seven stocks are falling . today, 32 billion lira, almost $12 billion, has been wiped off the index. it is now the second worst performing major stock benchmark in the world in 2015 out of 93, dropping 10%. francine: mark, thank you. let's look at what else is coming up. at 9:30, we will be going live to istanbul for the latest on the turkish elections. manus: at 10:00, we will be
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looking at the situation in greece with a special panel. francine: at 10:40, we will be speaking to the ceo of gett. that is a global taxi app hoping to take on uber. manus: this is the first twitter question. francine: have turkish markets overreacted? you can tweet us. that is the question we will be asking when we are back in just a couple minutes. ♪
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francine: welcome back to "the pulse." we are live on bloomberg tv and radio. manus: we are back with citigroup's global head of equity trading strategy. we've had big moves on the lira record low this morning as the ak party failed to get a majority. this is an emerging markets story, a fed story, and a politics story. how does it matter to you? >> it has underperformed quite a lot already. turkey -- going into these elections, some negative news had been priced in. turkey was cheap. it is even cheaper this morning. if you look at china, greece, a
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whole bunch of other things to look at, do you want to enter a market where you don't know what the political landscape is going to look like? the turkish lira is taking a hit. in the context of a stronger dollar potentially going to lift off, what is the central bank going to do? what will be the impact on the economy. it is cheap but it is going to be a difficult position. i guess in the coming weeks, we will see how likely is it that the former united government versus a coalition may make a call. i'm not sure that's the way to look at it. there are other things we can look at and find more interesting positions. francine: what is your take on china? they are still so dependent
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five dollars to every dollar spent in the u.s.. china is still so dependent to the u.s. consumer. >> i think they are trying to decouple and the authorities are trying to move to a local story. i think what has been interesting is, the amount of liquidity is significant. partially because the economy is turning down, so they have to do it. at the same time, they've dumped a huge amount of work on their banks. they've made sure that they are in a position to provide loans again. if you look at the way china has been trading for three or four years now it is very much a one-to-one coalition with credit. the fact that chinese equities are starting to break away from credit, investors are saying there is some growth, and there are some very technical drivers
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there. the shanghai trade connect and so on. as a house, we like china. we think there are some bubble characteristics, but bubbles can last for longer. the additional liquidity and the fact that the authorities are sponsoring the equity markets should be good for chinese shares in general. we find the h-shares cheaper than a-shares. francine: thank you so much for joining us today. manus: coming up next, the outgoing credits we ceo, brady dugan, shares his thoughts on banking regulation. stay with us for that. ♪
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manus: welcome back to "the pulse" live on bloomberg television and radio. the outgoing ceo of credit suisse has shared with bloomberg his thoughts on banking regulation. in an exclusive interview, brady dougan said that at one point enough is enough. let's take a listen. >> a lot has been done. the regulators have done a lot. the banks have done a lot. a lot has changed. a lot of that has been positive. when you look at increases in capital, reductions in leverage, that is one of the things i always felt was the least looked
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at, the liquidity side of things. where you had problems with institutions was around liquidity. i think a lot has been done in those areas, which is good. the biggest issue is, where do we stop? are we going to continue to ratchet up the requirements? my belief is that the financial system is very important. the banks are very important to promoting financial growth economic growth, job creation. we have to keep that in mind. at some point, i do think enough is enough. manus: you can catch that full interview at 7:00 p.m. tonight right here on bloomberg. francine: up next, the turkish currency plunges as the country's party loses its majority. we have the latest from istanbul next. the twitter question of the day have turkish markets been
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oversold? you can tweet us. we are back in just a couple minutes. ♪
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fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. manus: welcome back to "the pulse" live from bloomberg's european headquarters in london. francine: here are bloomberg's top headlines. manus: deutsche bank co-ceo anshu jain has resigned. jain will step down at the end of the month. supervisory board member and former ubs cfo john cryan replaces him. francine: you can see deutsche bank shares jumping on the news. world leaders expressed their
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concerns about greece at this weekend's g7 meeting. as the standoff with creditors continues, the country's economy minister told bloomberg the banking system is secure. >> it seems to be under control. the people seem to be well supportive of the current period , taking into account the economic situation. i think we do not face any real problems in the banking sector. manus: turkey's ruling ak party has lost its majority in parliament. it is a major blow for president erdogan. turkish stocks and the lira are plunging on the news. francine: let's check in on the markets. mark martin is standing by. mark: the dax is in a correction. who would have guessed it?
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just a few months ago, the dax was one of the best performing markets in the world. since the april high, the dax has fallen by 10%. 10% being a correction. what a change it was. the low for the year was on january the area -- on january 6. look at it right here. from 30's percent up to 10% down. that is the fortunes of the dax in 2015. it is linked closely to the german bond market. what an extraordinary run we had in yields last week. the yield on the german 10-year bond had its biggest weekly rise since 1998. i charted the german bond yield for 12 months. the low for the year, you will remember it, was just a couple months ago. it was almost at zero. what a move last week, biggest week in moves since 1998.
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the yield was at 0.75%. now the yield is at the highest since october 2014. how long before the 10-year bond yield touches 1%? quickly, i want to talk about the msci emerging markets index in light of the decision by voters in turkey to deny the ruling ak party the majority government for the first time since 2002. we also had some data from china showing imports declined 18% in may from a year earlier. those factors are driving down the msci emerging markets index once again. it is down for an 11th consecutive day. that is the longest losing stretch since september 1990. i charted it for you. in that period, the msci emerging markets index has fallen by 5.86%.
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it is now 8.3% below its high on april 28. 10% is deemed a correction. very close to a correction for the msci emerging markets index because of that turkish news. germany already is in a correction. francine: what a day. and it is no only 9:30 a.m. after running turkey for 12 years, the ak party suffered a major blow, falling short of overall majority. manus: the lira and stocks have tumbled on the results. elliott gotkine is standing by in istanbul. this is a shocker. this is everything that erdogan did not want to see. a state of discussion over coalitions for the next 45 days. elliott: precisely. very interesting that the ruling ak party founded by president erdogan has won these elections. it is still the biggest party,
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but it is a defeat the first time they will not have a parliamentary majority. now, discussions over coalitions have to begin. we are here to discuss the impact of that. i am joined by a partner at capital. you are about to close your fund as we speak. it is being signed over in luxembourg. >> that is correct. elliott: does any of the uncertainty that is now hitting stocks, hitting bonds, does any of that translate into people thinking, maybe i won't be investing in french capital? >> i don't think so. i think venture capital investors take a longer perspective on their investment period. this type of turbulence is isolated from the venture capital asset class in general. elliott: as we see evaluations
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on the turkish stock market declining, is there anything now for potential investors? >> it is to be seen. we don't think it is going to have a major impact on any side. in the medium-term, i think it will get normalized. elliott: one thing people don't know is what is going to happen politically. we have yet to hear from president erdogan. he has been more hands on then people would have expected from a president whether it is berating the central banks, raising interest rates or calling off 4g licenses for mobile phone networks. >> of course. technology infrastructure is a core component of venture capital investing. in general, the business world has learned to ignore the political outbursts and have
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watched the markets and let the markets make decisions on things like which invest in's -- which investments seem to be more reasonable when it comes to infrastructure. elliott: one of the concerns going into this election was the main team in charge of the economy was going to be leaving anyway. how much of a concern for the broader turkish economy is it that the hands that have been looking out for the economy over the past few years is going to be leaving? >> i think the big reassurance that the elections have delivered to the global investing community has been that there will be a democracy remaining in turkey. with its proper functions in place, like rule of law and separations of powers. i think there is general belief that the team will step in to take over the economic decisions and there will be checks and balances.
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now, the parliament is not as one-sided as it was. elliott: what is the best case scenario, a coalition government, fresh elections? >> we think that an ideal scenario would be a statement by the parliament laying out a plan for what lies ahead. we do think there might be some early elections coming up, but not very soon. maybe about a year out or so. with some reassurances that some of the corruption points will be addressed and the separation of powers that i mentioned will remain in place. elliott: you are investing in startups in turkey. what is going on here? is it catching up with the likes of tel aviv? >> not as close as we would like. however, turkey is a magnet for
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talent in the region with a great legacy of science and technology education. we think it is an anomaly that turkey has not produced a tech success story yet. there is also a large domestic market. we are seeing large technology companies being built here. a food company exited for $600 million to a german company. large businesses can be structured here in turkey. plus we have brilliant engineers graduating every day with aspirations to build great companies. up to now, the infrastructure has been lacking. now, that ecosystem is coming together. we expect to see some global tech success stories. elliott: i guess you are helping to change that a little bit. thanks very much for joining us this morning. the election results leave the ruling ak party without a parliamentary majority for the first time. for now, back to you. francine: thank you so much.
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beautiful view. up next, what does the future look like for deutsche bank as the co-ceos and us their departure? manus: after the break. here's a snapshot of what the markets look like. francine: here they are. mark martin with the market check. the dax falling 10% since the first of april this year. manus: it has indeed. diageo not exactly supporting the ftse at this point. it is still up on the day. european markets are lower. let's see how the u.s. opens. the longest stretch of calm in u.s. equity markets in years. ♪
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manus: what? francine: welcome back to "the pulse." manus: they let me on here for the first time. i'm too excited. at deutsche bank, co-ceo's anshu jain and jurgen fitschen set to step down. francine: let's dig leader into deutsche bank. joining us now from frankfurt is an analyst.
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great to have you on the program. when you look at shareholder happiness, it is not much of a surprise. a lot of people saying mr. jain and mr. fitschen were not decisive enough. what does that mean for shareholders? francine: the new person, i think, is well-known. he was at ubs before. he had a lot of investor appreciation for the role he had at ubs. he starts with a big bonus with investors. i think that is a big positive. secondly i hope that he will review the strategy which deutsche bank announced a couple weeks ago and will make some important amendments there especially with regard to the size of the investment bank. manus: good morning. let's just talk about what the possibilities are. anshu jain came from the investment bank.
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he built up the fixed income business. does that need to seriously be altered? does that need to be radically downsized to deliver an achievable return on equity? somewhere north of 10%? >> i think that is absolutely the case area what anshu jain did was make regulatory changes that were about to happen to the business that he built up. the risk-weighted assets that he still needed to run the business were too high to achieve good returns in the crisis environment. this has to be radically reviewed. they need somebody from outside to do that. francine: when you talk about reviewed doesn't it mean you think the investment bank will shrink significantly? >> they probably have to shrink the part of the business which consumes a lot without
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contributing sufficient returns. we tried to preview what deutsche bank should be doing in their strategic review. we said at the time that deutsche bank should cut 450 billion in balance sheet assets, just as an estimate, to run the bank on the level which would probably make it profitable enough. they only wanted to cut it by 130 billion. i think this was the main reason for the disappointment. investors want to see much more radical changes. then the returns will also go up. manus: you used the phrase "radical change." if cryan can deliver that, he's got to deal with the politics of changing the retail bank, which is a very big employer in germany. there's a lot of political opinion against change. >> i think the decisions about
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the retail bank have already been made. the decisions were pretty radical. it has been an asset which never really fit deutsche bank from the business focus point of view. i think selling this was a good idea. running down the branch network is probably also not such a bad idea. it consumes a lot of costs. most of the transactions are done online these days. i think the decisions are already radical enough. what needs to be changed is the strategy on the investment bank. francine: were you surprised that they and pointed a non-german? as far as i can run, this is one of the main things that was pointed to anshu jain. >> well, they have to appoint
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somebody who is also accepted by the investment banking side. the new ceo almost had to come from that site in some shape or form. it seems that john cryan spent a lot of his career in zurich with ubs. he speaks reasonably well german. maybe they found a good compromise. i think john cryan has a good chance to be accepted. the german government seems to have been not too fond of anshu jain. manus: are they going to have to raise capital? would that be one of the solutions to move deutsche bank forward at a quicker pace? >> i don't think he should really raise capital. raising capital would mean he would have to find ways to generate more return on this additional capital.
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i think that's the problem of deutsche bank. deutsche bank doesn't generate significant returns. what he will probably prefer to do is downsized the business and release capital from parts of the business that are not profitable enough. the capital ratio of deutsche bank currently is high enough. he can't produce sufficient returns on additional capital. francine: thank you for the insight. here are bloomberg's top headlines. manus: eu president donald tusk once a quick decision on extending sanctions against russia. it comes after a new offensive by russian-backed separatists in ukraine. current sanctions lapse at the context of july. tusk says a six-month extension could be agreed. francine: a brazilian billionaire is said to be
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considering a takeover bid for liquor giant diageo. diageo shares are trading up 6% on the news. manus: global management has offered 3 billion euros. it says it is in exclusive talks with the private equity giant. francine: up next, we get a branding expert's opinion on which presidential u.s. candidates are hitting the mark. stay with us. we are just getting started. ♪
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manus: welcome back to "the pulse." we are everywhere. francine: we are. the u.s. election is more than a year away, but the candidates are already making their mark. the right image is important for any campaign and that includes the logo. we spoke to a branding expert to find out who is heading the right mark and who is missing it. >> i wanted to find out what separates the good campaign logos from the bad ones. he is a partner and designer. seems like a fun place to work. you've probably seen some of their designs. the chase logo mobile, the library of congress, and many
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others. >> in general, what makes an effective logo? >> it is to help people remember you. a good logo will be appropriate simple, and memorable. >> let's talk about ted cruz. >> we can see that there is a clear nod to tradition. when you think about his strength with the far right and the religious conservative audience that he is very much vying for but it is extremely awkward the cropping of that star. it is kind of a crippled star. what we look for is a magical moment where the image and the type are merged beautifully. they were able to, because it is italic, create negative space and make a torch. the idea of liberty, which is
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very much his hallmark, is appropriate. all around, pretty good concept and execution. >> marco rubio. >> going all lowercase is pretty smart. he is saying, i'm the leader of tomorrow. very appropriate. however, the shape of the united states, which is a vast country, he shrunk it to the size of the dot on th3e ie i. >> what are your thoughts on it? >> very bold. the arrow saying, moving forward. fedex is a very famous logo. it has a silent arrow. the other thing about this mark is that, very strategically, it is not her name. in 2007, she had a big "hillary." now, it is just the h.
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it is a focus on the movement and not her personality or her name. francine: i'm not judging, but that h is very cool. just saying. this is our twitter brand. @manuscranny, is it lowercase? manus: in may. the question is, should we bring your men in, the branding expert? francine: franus or mancine. for those listening on bloomberg radio, "the first word" is up next. for our viewers, it is a second hour of "the pulse." manus: we have a great roundtable discussion on greece. varoufakis is back on the scene. francine: i love it when guy and anna asked the economy minister how it is going. breaking news the greek economy
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minister. we have our middle east editor elliott gotkine, on the ground. we will look at markets, at the turkish lira. tweet us. we are back in two. ♪
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manus: anshu jain resigns from germany j k biggest bank. john cryan well replace him. a new leader low. turkey's currency tumbles. a blow to president hurt no one. francine: good morning.
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manus: mrs. "the pulse." -- this is "the pulse." ak party's crushing blow in the elections. a middle east editor joins us from istanbul. elliott, this is a shock for air to one -- and his party. elliott: it is not accustomed to failing to win a parliament majority. it is not accustomed to defeat, but it's hopes for ruling alone in parliament they have blown
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it out the window. that is said to have been from the senior ak party officials. that said, i think it is intriguing that we are still yet to hear from president erdogan himself. the man who is officially above politics still seems to be in control of what goes on in government. fran: we have seen lire, stocks declining. the turkish economy has been slowing. investors hate uncertainty. elliott: one of their hoaxes that -- one of their hopes is that the ruling party would be able to roll in a single party government even if it were
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falling short of enough votes to change the constitution automatically or by way of referendum. we were speaking to the ceo of their division in turkey. it is a bit of panic following these results. his advice would be to remain calm for now and if you are invested, wait and see how things pan out. the talks have yet to get going. we are in the dark as to what is going to happen in terms of coalition negotiations or any possible outcome from these elections. manus says this is a 45 day window of negotiation with the other parties who have laid out and said we are not prepared to go into government. that was their position before the results areas -- before the
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results. elliott : it seems they're going to have to enter negotiations of some sort. the party is likely to remain in government in some form. it coul as a minority government as long as he gets agreement from other parties not to topple it on particular votes. from the j k perspective, the most likely scenario will be one in four chances that the party will go in coalition with the ruling actak party. they love each other, so the possibility seems unlikely.
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we are in the dark as to what the outcome is going to be. 45 days they have to form a coalition government. manus says thank you. friend that brings us to today's twitter question. you can tweet us. @flacqua. manusmanus: and he will be replaced by john, who will run the firm with co-ceo until he leaves next year. shane has the story and frankfurt. are we surprised? the vote that went through at the recent meeting was
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underwhelming for jain. >> a lot of people have been talking about this for quite some time. the timing was surprising. anshu jain was given more power within the management board. it looked like he was taking on more power and now he will be the first to go. it is a huge reversal. fran: how have investors reacted? >> initial reactions have been positive. we have moved out the post crisis management and now they can focus on the image going
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forward. they are trying to push through the image of client-focused. that is easier when you do not have people in the bank precrisis running the bank. the new ceo, john cryan has a reputation as someone who can punch the numbers and keep costs down. manus: what do we expect john cryan to do? go into strategy review mode? what do you think the priorities are? shane: that is difficult to say at this point. we do not know if it is a new phase to the strategy they are developing or if he is going to bring bigger change with him. at ubs the bank was taking losses and within three years he
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turned around the bank, or helped to make the bank profitable. he has the reputation of someone who can push through change. massive job cuts at ubs in the time he was there. increased profitability. the expectations are high. we do not know with the details of the strategy will be. we will get details on that soon, hopefully. it looks like he is the guide to push through the strategy. fran: we will see. everything we have heard is that this guy is the right guy. shane thank you. g7 leaders are meeting for a final resolution to the group's standoff. manus: hans nichols joins us from the summit. what is being said by greece about grace? -- greece?
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hans: there isn't much to be concerned about. in the past, they have said they are close to a deal and from creditors we are hearing we are far away from a deal. those saying we are far from a deal are the important heads of state like on july merkel. -- like angela merkel. the economy minister said he was not concerned about outflows from the banks. >> it seems to be under control. people seem to be well supportive taking into account the economic situation. we are not face any real problem in the banking sector.
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hans: comments like that are not holding water by creditors especially here. you heard mr. yunker be critical over what was a violation of the rules of their friendship. he almost accused him of the trail. he did not give an accurate portrayal of the deal that was offered to the greeks. there is not a whole lot of trust or reason for optimism. in berlin, there will be a meeting between mr. varoufakis and --. we will see how that comes out. madame lagarde may stay around and may be here tomorrow in this region for a meeting with creditors if they try to figure out what their next offer will be in what the next move will be. right now, it does not seem as if the two sides are talking about the same offer. fran: i always thought yunker
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was closest to the greeks. the ukraine conflict is also on the agenda. hans: what you are hearing from officials and german officials, they want to see the sanctions extended. no one is talking about additional sanctions. they want a condition -- a continued sanction of the existing kent state -- of the existing sanctions. we have a status quo. a status quo to keep the pressure on russia. there is some acknowledgment that russia seems to be responding to the pressure. that is one of the things being talked about. angela merkel and mr. obama spent half of their meeting talking about the situation in
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ukraine. you can say ukraine is dominating conversations, greece is, and then all of the other issues. it seems ukraine is playing a prominent role. fran: thank you. if you were to have heated conversations, that would be a great laced to be. i can hear the birds tweeting. manus: we know what he is talking about. recovery in the euro area and accelerating growth void demands. fran: the maker of guinness stout and johnnie walker surged
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on reports that a brazilian billionaire is considering a takeover bid. executives are in early stages of acquisitions. spokespersons have declined to comment. manus: and exclusive interview. a lot of positive change has been achieved. enough is enough. we will have more on the interview later. francine: still no deal for greece. it was probably -- we will talk about it after the break. ♪
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fran: welcome to "the pulse." manus: heads of state have united to demand a resolution on greece. talks between the greek government and creditors are due to resume today. we are joined by jonathan and an analyst. we seem to have reached an
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impasse in terms of the greece and europeans. fran, you said it has to do with yunker and not taking telephone calls. what is your assessment? >>'s statement shows we are moving into the last weeks or days before we need to reach conclusions. it was only extended to the end of this month. if you want to vote, they want a deal to look at. we are going into the last phase here. fran: will greece default? are we going to see a default in the next eight weeks? manus: the only -- >> dion
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waiters get it to sustainable levels is a major form of a default. they make holiday restructuring. there will have to be a default at some point. it may be further down the line. at some point, it has got to come. manus: the finance minister said debt restructuring is not on the table. debt restructuring has to be had. we were expecting a deal that would allow the completion of the current bailout and that would get greece through the next month or two to sit down and try and work out a
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longer-lasting solution. we have greece saying no, some sort of restructuring has to be part of this deal. francine: will they look at default? it is not done in the most subtle way. they are making creditors angrier by the week. famke: both sides are trying to get the maximum they can still get out of these discussions before they reach a deal. a majority of the creditors want greece to stay in the eurozone. that means angela merkel will try and find a deal. he cannot be seen as being responsible for greece leaving
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the eurozone. manus: the greek situation the lesser greek impact than it would have had two years ago. the contagion is limited. that weakens the ability of greeks to garner support. is novotny right? >> in his right to say that the impact would be less than it would have been three or four years ago. we supposedly have policy in place like the bond buying programs to stop some sort of domino effect. i feel the markets or a bit too -- about this. i think there would be an enormous amount of uncertainty.
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francine: we will continue the conversation after the break. ♪
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francine: welcome back. manus : let's highlight the novotny headlines. markets are rightly seeing
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greece is a special situation. greece has no negative impact on the euro economy right now. francine: we are joined by jonathan and thank you for seeing you around. it seems like this is a case of don't worry, we have this one, the markets are right in seeing this. we do not know i happens to the markets are what happens to the banking system if greece were to default. famke: a majority of the comments we hear are saying if greece leaves now it would have
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less of an impact on the european economy because we have oversee qe in place. i think we agree that ultimately, it would lead to uncertainty. we do not know what it would lead to in the future of the eurozone. manus: it might be for greece to get out of the euro. he said he is not prepared to sign a deal to extend. they are on their knees, quite literally. should they say, we have gotten another five years of misery? >> that would be a nightmare.
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gdp might fall. the economy has contracted by a quarter. staying in has not proved to be a successful alternative. history is riddled with examples of countries that have left unions undergone competitive devaluations. almost certainly combined with some sort of major default. i am under no illusions that it would be good for greece from the start. it may be the best option for them compared to the alternative of another five to 10 years of austerity, week growth and high public debt. manus: still come, stocks have
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plunged. francine: you can follow us on twitter. we are back in two. we are focusing on turkey, greece, and volatility. ♪
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francine: welcome back. i am francine lacqua. manus: i am manus cranny. here are the top stories. deutsche bank ceos anshu jain and jurgen fitschen will step down. former ubs cfo john cryan replaces them and will work with jurgen fitschen until his department next year. francine: deutsche bank shares soar on the news.
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a standoff with creditors continues. the greek banking system is secure, according to the finance minister. >> it seems to be under control. the people seem to be well supportive of the current period, taking into account the economic situation. we do not face any real problem in the banking sector. manus: turkey j.k. rowling ak party has lost votes in parliament. it is a blow to the current president, erdogan. turkish stocks are plunging on the news. francine: jonathan ferro has more. jonathan: we pull back this monday morning again. the ftse dead flat.
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it would be lower if it were not for a speculation of a takeover. the dax is off by 4/10 of 1%. it would be lower if it were not for this. i will show you the big mover this morning. deutsche bank stock over 6%. over 8% at the open. anshu jain and jurgen fitschen stepping aside and you will see one man in charge, john cryan. investors are getting what they wanted. the big headline last week was the worst selloff for german bunds since 1998. over the last month, we have been talking about the correlation between the bond market and germany and the equity market. the correlation at a 1.5 year high. this is the shape of the dax
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over the year. a year to date record high. 10% lower. the dax in correction territory. it feels like a long time ago it was only april. the lira against the euro at 82015 low against the dollar. a record low against the dollar. the ruling ak party not getting their majority. q the brutal selloff for turkish francine: markets. -- of the turkish markets. francine: tom joins us with a preview. i'm excited. tom: give us perspective. i am going to do my francine look while impersonation --
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francine luke walton impersonation. -- francine impersonation. tensions between edinburgh and london. looking forward to that. the other thing is deutsche bank news. there is an american spin to that. deutsche bank had alex brown and baltimore years ago. very much a new york operation now. chris wheeler will join us. francine: it is great to hear his analysis. this was expected by some shareholders. if you are anshu jain and you have done so much for the banks, what does it mean for him? for as long as i can remember, he was in charge. tom: the ratio is 60% of tangible book value.
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that is unacceptable. it is about how poorly mr. jain was represented by institutional shareholders at the latest meeting. francine: co-ceos do not work if you cannot take bold decisions. i am looking forward to the program. tom: send me notes -- help. francine: thank you. manus: a major blow in sunday's elections, falling short of a majority. the lira is falling to record lows. stocks are tumbling. elliott gotkine joins us. he is standing by with a guest. elliott: thank you.
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shocking results for the ruling ak party. they will pass the role if they end up ruling without a parliamentary majority on their own. we are here to discuss the implications. i am joined by the ceo of a bank , a division of the largest lender, bank audi. i do not want to go into too much politics, but what do you make of the results? >> there is a lot of volatility. anything can happen. i do not see a major risk on turkey.
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turkey has been seeing political tension over the last 1.5 to two years. it is being heard by the global dollars and outflow of portfolios from emerging markets. that was -- than the local tensions. eventually, there will be a government acting, as long as they adopt the policies and the institutions are there. the central bank, the banks. it should be all right. elliott: what do you make of the selloff? we have seen stocks. your bank is not listing here. banking stocks down. are these knee-jerk, panic reactions or do they have longer-term concerns? huseyin: turkey has been
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diverging from other emerging markets. we see that in the stock market and interest rates. we are seeing in undervaluation of turkish lira. an influence on what should be the case. it has come back to 2.77. also, supports by global flows. long-term, turkey can still phil the policies -- can still fill the policies and form a government. it will bring the turkish back to its feet. elliott tete the central bank set to meet later this month, do you expect them to raise interest rates? huseyin: we expect the turkish lira, the central bank is going
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to follow monetary policy and you'll probably see an increase in rates. elliott: are you confident about the economic outlook? huseyin: i am confident. my bank has been open the last two sony:2.5 years. we are seeing, i am confident about the outlook. in his going to turn positive the turkish story. elliott: thank you for joining us. an understatement that things can be difficult for the months ahead.
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for now, i will hand it back to you in london. francine: thank you. coming up, apple's week long developer conference kicks off. we will talk tech. stay with us. ♪
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manus: -- has 30 million passengers. you are the man to dislodge uber car. >> it is a matter of time. we are expanding very fast. expanding in europe, the u.k. and in the u.s. uber is a fair competitor. we have respect for them. we see ourselves growing and leading the way in europe definitely. francine: you are smaller than new burner -- smaller than uber.
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they can expand quickly. what is your concern? are you able to get the funds? do you think it takes a while longer? >> we are talking about -- and we have very good direction with investors. we raised 200 million dollars. i do not see any limitation this. funding is still smaller than uber. we are good at monetizing. the international operation is profitable. we subsidize our development center. i do not see any limitation. manus: you are beyond picking us up on the curb and taking us somewhere. you will pick up dry cleaning
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my delivery. where is the margin? where the big margin? tal: it is in both. one factor we have not spoken about is corporate platform. the on consumer states, we are a unique platform. we serve big audit firms. we have 2500 corporate clients that we serve. these clients ask for the commuting. the margins the corporate space has high repeated usage, higher margins and so on. francine: tell us your biggest concern. you are a cross between uber and task rabbit. do you have to go big
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straightaway? i have an app and you want to make sure it is yours and not your competitors's. tal: we are picking up downloads and traction with new consumers all the time. we are increasing the pace of the new clients all the time. i do not see any limitation. if you ask about the next six months, we have three growth verticals. the first one is expanding in our own territories. in russia, the u.s., there is so much space. second, extension into new territories.
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the third one, new verticals like your dry cleaning, flowers sushi, other services. francine: how much money will you make? how much are you expecting to make any the next couple of years? will you make a loss to get market share? tal: i would prefer not to go into the numbers at the moment. we are profitable and all operations. we are good at monetizing. we keep very good margins. as we grow and expand, our margins expand as well. francine: tal come back with numbers. manus: top stories on bloomberg.
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a quick decision on expanding sanctions on russia. current sanctions labs at the end of july. a six-month extension could be agreed by the eu members before a summit later this month. francine: a brazilian billionaire is said to be considering a takeover bid for a liquor giant. his chairs are trading up. manus: apollo global management has offered 3 billion euros to buy a glass packaging unit. the outgoing ceo of credit squeeze has shared his lots on banking regulations -- of credit squeeze -- credit suisse shared
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his lots on banking regulations. >> the regulators have done a lot. a lot has changed. a lot has been positive. during the crisis, one of the things that was leased looked at was the liquidity -- that was least looked at was the liquidity side of things. a lot has been done in those areas, which is good. the biggest question the biggest issue -- where do we stop? are we going to continue to ratchet up the requirements? obviously the financial system is important. the banks are important to promoting financial growth. we have to keep that in mind. i think enough is enough. manus: you can watch the
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exclusive interview with brady dougan tonight at 7:00 p.m. london time. francine: we are outside the g7 meeting to get an idea of what to watch for today. we are also looking at turkish markets with mark barton. stay tuned. ♪
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francine: welcome back to "the pulse." manus: let's get into the
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turkish lira and the equity markets. market is by. these are colossal moves. what is happening now? mark: say hello to the worst-performing currency. this is a one-year chart. this is what happened today. voters denied the ruling ak party a majority government. earlier the dollar rose high, now it is up a mere 4.6%. the lira is the worst performing major currency out of the 31 major currencies it trades against with a decline of 16%. when you expand that, it is the eighth worst performing currencies.
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it is the worst-performing stock market today. that is the one day move. the biggest drop is june, all but -- is june 2013. 32 billion lira has been wiped off the index today. i have looked at the benchmark stock index. dropping almost 10%. it is not in correction like the dax. the worst performing -- ukraine.
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francine: you should have been quicker to save us, mark. let's head to hans nichols. he is in bavaria. hans: we are having a good time. we are watching sanctions with russia. it is raining here. we are watching the weather. we are watching a meeting in berlin. these are the two finance ministers that have squared off, almost like sparring partners. we have seen an escalation in the rhetoric from leaders. we will see if the dynamic flips today. if there can be some sort of step back. what we have from greece is a rejection of the proposal that angela merkel, yunker, everyone
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came up with a week ago. looking to see what madame lagarde says. she has arrived. ukraine is on the agenda here. what do you do about stopping military incursions and what you do to fix the economy. friend -- francine: everyone has had enough of the antics that we have been seeing. it will be interesting to see that. thank you. hans nichols will be live throughout the day. manus: tom keene and the whole team. the leader of the scottish national party. it took the political system by storm. francine: she is there to raise funds. she said her party would lobby
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for the u.k. to stay within the eu. it seems like the pot as calling the kettle black. we will have more on that next with tom keene and his team. ♪
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announcer: this is "bloomberg surveillance." tom: call up the sunday purge. jane is out at deutsche bank. can european banks compete with j.p. morgan and goldman sachs? g7 leaders meet in bavaria.
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the demand greece chart a way forward for more meetings and phone calls and potential compromise. jean-claude juncker looks for minimal rules. in this hour, we focus on the future of scotland with their minister. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. tom keene with brendan greeley. we are on scotland today. i guess we have to go to the president a beer and breakfast sausage? brendan: claiming it was a knock on -- cleaning -- claiming it was a nonalcoholic beer. tom: so it is a greeley scandal? brendan: i really think this is an international incident.


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