To run another step closer to being able to build an atomic bomb. Ran closer to being able to build an atomic bomb. The turkish lira falls after the Prime Minister fires a central bank governor. Bloomberg has learned erdogan told lawmakers they need to get behind his delete that high rates causes inflation. Global news 24 hours a day, onair, and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im renita young. This is bloomberg. It is 1 00 p. M. In new york, 6 00 p. M. In london, 1 00 a. M. In hong kong. Im vonnie quinn. Welcome to bloomberg markets. From bloomberg World Headquarters in new york, here are the top stories on the bloomberg and around the world we are following. Radical surgery for Deutsche Bank. A massive revamp of the german bank, closing its equity business, cutting a fifth of its workforce and scrapping its dividend. Sees theays he still need for a lot of things to go right. Powell in the line of fire. President trump keeps the pressure on the Federal Reserve to cut rates as markets price out more rate cuts this year. Focus turns to powells testimony before the house and senate this week. Insight on how hedge funds are hedging geopolitical risk, that is later in the hour when rob christian. We are halfway into the monday trading session. Taylor riggs is with us. Seems to be tech shares. Taylor leading the losses off, the s p 100, down to the lows of the session. I want to throw the 10year up here as well. The largest move in terms of a oneday loss. We are not seeing any more moves off of that, hovering right in at about 2. 03. If you come into my terminal, the story continues to be a low volume. Volume in the s p 500 still off 20 . Consumer staples, communication seeing volume off anywhere from 27 to 33 . Those are the biggest declines in terms of the volume not being traded. We are seeing some individual stock movers going on. Juniper networks. Citi cutting it to a sell. Citi saying with Juniper Networks off 3. 5 , expectations for the company are too high given recent competitive market share gains by other Companies Like cisco, which is losing, but losing less than Juniper Networks. One interesting thing that caught my eye was the airlines, which are actually advancing today. 5 and it index up always interesting in an otherwise down day. Credit suisse cut American Airlines to an underperform due to the grounding of the 737 max, and a labor dispute with mechanics, but they are upgrading jetblue and alaska airlines. They are saying both of these airlines are poised to benefit from strong domestic demand. Vonnie taylor riggs, thank you for that. Sticking with markets, investors eyeing this week Federal Reserve chairman jay powells testimony in congress after the latest payroll report signaling the American Economy is on track at least labor market wise. Zook bring in christopher from houston. Jeffries saying it is time to get out of the markets. Are we close to a toptier . I think we are. This market has become quite schizophrenic. Bad news is good news, good news is bad news, and then bad news is almost good news. The market is expensive. We have a lot of headwinds in the world that we need to be mindful of. Could make it difficult for stocks to advance from here. Vonnie seems Like Technology has been leading the way weather for gains or losses. Does that continue . For stiffer technology Christopher Technology what youeaking have now is everything revolving around trade will have an outsized impact on technology or at least the perception that it will have an outside impact on technology, is going to cause this tugofwar to go on for a while. Thatyou add to it valuations being as high as they are in technology, there is no margin for error. While they are growing as companies, the market is pricing them too expensive for the growth they will deliver. That will create a lot of volatility. Vonnie obviously, we will be watching jay powell this week. What kind of message does he sent to congress, what kind of message does he send to markets after fridays payroll report . Christopher the chairman is smart not to focus too much on one particular piece of data. The payroll numbers were very good, obviously. But he will not talk too much about one specific data point in an overall big picture. I think he will stay on point, which is they are standing by and ready to cut rates as the economy softens. But i would be very surprised if he did anything other than stay on message from the minutes of their last meeting. Vonnie you talk a lot about valuations coming down. We interview ballew investors from time to time and their are waiting for this to turn. Where are you on that point . Christopher we will love to see better valuations. We would like to see a healthy pullback that stated that way for an extended period of time. Nobody likes a bear market. But a good 10, 15 pullback like we saw in november, december would be ideal because of the fact that we are too far extended for the lower growth rates we are seeing in Companies Earnings and profitability. We would feel better if we saw better valuations where we could own Great Companies a good value and expect to ride through the cycle most likely the next recession coming in next couple years. We really want to see better valuation to ride through that cycle. Vonnie the market has been focused intensely on one or another thing through the first half of the year, inverted yield curve, Federal Reserve trade cuts, trade war. What do you think the themes will be for the second half . Christopher great question. Curve is a yield very bad thing for equity markets, its been that way every time it has happened in the past that it lasted this long. That is the big warning sign. Does the economy really soften . Trade, iran,se of or something that we dont know about, if the valuations of the markets they elevated and the economy softens, it will have a bad ending for the second half of the year. Vonnie what is your favorite idea in the market . Christopher we like our emerging markets. We think they are a better place to be on a valuation basis. International markets in general. We see an overvaluation in the u. S. , undervaluation in the international markets, which we think provides opportunities for traders to reposition their portfolios or put on a trade of being short the u. S. Come along emerging markets. E also Like Financial Services growth of private equity as an asset class, that is a big game for us. There is a way to take advantage of that in the public markets, more in the private markets, where we are in active player. Vonnie our thanks to christopher zook. Coming up, Deutsche Banks restructuring includes job cuts that hit hardest in london. Will that be enough for the beleaguered banks to stage a turnaround . This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Time for the latest Bloomberg Business flash. It has been a while since wall street has the in this pessimistic about apple. A company downgraded them to a sell bringing the total number of bearish analysts to five, among the 57 tracked by bloomberg. Nevertheless, the highest number of sell ratings they have had since 1997. British airways faces a fine over computer hacks that exposed customer data. It is the first time british regulators have applied eu rules to tighten hacking measures. Bloomberg has learned broadcom has secured financing for its acquisition of symantec. It could value the firm at 22 billion. Broadcom estimates the synergy would allow the combined companies to say 1. 5 billion. Shaking up itss Equities Division with plans to cut 18,000 jobs across sales and trading in asia, new york, and london in particular. A german bank is restructuring in hopes to achieve profitability targets. The chief Financial Officer had this to say about the retrenching. We are taking the decision to retrench and step back from elements of our Global Markets franchise, in particular equity sales and trading. That is a significant step in reorienting the bank. Vonnie here with whether the cuts will make the difference necessary is our Investment Banking reporter sonali bassett. You have been all over the story. Basak. Is it enough, what is the reaction now that it is over . Sonali it is quite dramatic, 18,000 jobs, the biggest restructuring we have seen, even after four other restructurings. There is a lot of risk in this restructuring. Coco bonds initially rose in reaction to this but now they are falling back. It is not onlys going to be a costly restructuring. How is Deutsche Bank want to find enough revenue to offset that restructuring . Vonnie we have a chart showing what it is targeting. 8 in 2020. Uity by there was a lot of profitability issues for some time, and it is rosy for Deutsche Bank. I am not bringing this up to be redundant, but this tells the story of how wall street feels about the restructuring plan. It is rosy for Deutsche Bank but still below barclays, jpmorgan. They are entering a lot of businesses that are very competitive across wall street. The red bars, the yellow circle is what Deutsche Bank is targeting. It is a radical overhaul. Is it for sure that it will meet those targets . Sonali that is the thing. That little yellow dot is out in the horizon in 2022. We dont know what will happen between now and then. A lot could happen to the economy. They want to keep their fixed income business, private wealth, they want to keep asset management. All of those areas are very competitive businesses. What they want to hone in on also is global transaction banking. Turnaround all of this while also balancing cuts is something that is a question mark. Vonnie does this fix everything . Like citi did. Sonali it takes a long time. This is something that people saw similar to ubs, when they were exiting certain businesses. A lot of people think this is what Deutsche Bank could look like, the ubs turnaround story. But you dont know what the economy will look like in two years. With german years where they are, there are a lot of headwinds to this reduction plan. Vonnie we stall the stock , nothe stock retreat today massive given the year, but is this an indication that investors are not willing to wait . Sonali we dont really know. Remember, the stock was up and then down by the end of the day. Initially at least people had a lot of faith in christian sewing, but the reality is we dont know how it will work out. , the ends not work out game could be pretty dire. That is another reality. Vonnie im sure you have been speaking to some of these 18,000 im sure they dont know yet, these are over several years. Is Deutsche Bank a harbinger of things to come in other banks, is this business going away, or did deutsche particularly fail in these businesses . Sonali optimists say that this is a oneoff, but others feel that this is a harbinger of things to come. European banks struggle to find profitability, especially in the u. S. Questions we have had all day today is where these 18,000 people go. Are there enough jobs on wall street to take them on . Unclear. Equities, prime brokerage, first of all, the Hedge Fund Business has their own secular issues. But they are already working with jpmorgan and morgans daily and ubs. Morgan stanley and ubs. How big of a story was that . Obviously, a great scoop, but that is a big signal. Sonali they had been doing it for months. They kept money with Deutsche Bank. One of their longest standing most sticky clients was already pulling back in the face of this. We dont know why they were pulling back, but the fact that they were going to barclays, bank of america, shows that people are not as patient with some of these issues. Let alone, bnp is now picking on some of the prime brokerage. Wehink what will happen is may see a lot more Movement Across wall street moving forward. What i want to see is how much bnp ends up keeping up at the end of the day. Vonnie a lot more to come on Deutsche Bank over the years i imagine. Thank you. The outlook for the second half of 2019. How hedge funds are hedging geopolitical risks. This is bloomberg. For a look atow hedge funds and how theyve been navigating this year in the markets. The years to discuss so far is rob christian, senior managing director for k2 advisors. K2 has approximately 11 billion in asset. Management. Overall, what strategies have been doing well so far . Good afternoon. Thank you for having me. Overall, its been a very liquidity driven market. Back in august, september, the fed look like they were going to raise rates. They pivoted and changed in january. That has been most favorable in equity long short managers. Particularly managers with a growth tilt. Vonnie it seems like managers are getting more active. In a market where all you have to do is on the s p 500 to do well, you have to find a company that could be acting faster, quicker. Rob we see that in our managers. We have seen the short side of the book do very well. Managers are very supportive to take both long and short bets and we have seen the directionality of our underlying managers has been very conservative, especially relative to where the market is. It tells me it is a stockpicking market. Vonnie how is this year different in terms of the fed cycle changing relative to previous years . Surprised the market by pivoting. A year ago, everyone thought rates would be much higher than we would have had four hikes already behind us. Things, thating surprised us. That is why we are up at these levels in the equity markets. Vonnie you say equity long short has been one of the better performers. At what point does that change . Seems like we had a President Trumplet market, now a Federal Reserve, trade market. What about global managers . Think the next roadside is the fed meeting at the end of the month. Do they surprise and cut 50 basis points . Now people are talking 25. That will be the big road sign. It is not so much what the fed does. It is also important what the fed says in there forward guidance, as well as the markets reaction to that. To meeti know you want the point that est investing was growing in importance to hedge Fund Managers. Many of them went say that they always had an eye to that. Eye has been on the governance side. We have seen a shift to the e and the s, social side. Absolute return managers, about a third of our managers have an esg policy, they use that framework to evaluate companies. The new thing that we see which is a big change, is going to persist Going Forward is activism. Hedge Fund Managers working with youanies to instill change there by proxy voting, engagement with management, those types of things that you would see from a typical activist manager but now a focus on esg. You say Certain Industries are more predisposed to having an activist come in . Rob Certain Industries are predisposed to the e, s or g. Mining companies are environmentally focused, but Consumer Goods Companies can be socially focused. It depends on the industry type on where the focus is. Vonnie have we seen any successful campaigns in the area . Rob we have, yes. Vonnie any examples . Rob not that i could talk about. Vonnie do they also provide investor upside . Rob yes. There is a big component of the managers working with underlying companies. Ino embracing peers consumers. Social media has been a strong part of this. I would say the change has been subtle and slow. You will see more of it. Vonnie briefly, in terms of talent, if you are eyeing the Hedge Fund Industry to get into it now, hearing about job cuts at Deutsche Bank now, where would you be advocating people for leading a successful career . Is obviously, the industry shrinking from a personal point of view, fee wise. I encourage people to focus on what they do best. If you are one of the best that you do, the capital will find you. Vonnie thank you for coming in to see us, rob christian. Coming up, Turkeys Central Bank governor ousted by president erdogan. The move pushing down the lira and escalating investor fears. That is next. This is bloomberg. Most of us dont know how much data we use, but we all know were paying too much for it. Enter xfinity mobile. Americas best lte with the most wifi hotspots, combined for the first time. When youre near an xfinity hotspot, youre connected to wifi, saving on data. When youre not, you pay for data by the gig. Use a little, pay a little. Use a lot, just switch to unlimited. Get 400 back when you buy the new lg g8. Call, visit or click today. Renita im renita young. Lets get to the first word this afternoon. California representative Eric Swalwells campaign has scheduled a News Conference for 1 00 pacific time at his Northern California headquarters. The announcement is feeding speculation the congressman may leave the democratic president ial race. Small well has struggled to raise money or gain traction in the polls. He made the cut for the first debate in late june but his prospects for qualifying for the second debate later this month in detroit have been in doubt. The democratic president ial candidates will take the stage on july 30 and 31 for the second set of debates. This time in detroit. Cnn is hosting the debate. Tocandidates will be invited participat