As the British Asset manager posts 16 billion pounds worth of outflows in the first half despite some strong market gains. And china sets its yuan fix at a slightly weaker than expected level, the trump team plays down fears of a drawnout trade war. The nato secretarygeneral tells cnbc the tension goes beyond trade. We need to assess security consequences for all of us of the rising military power of china and also see that china is coming closer to us in europe, in africa. A very warm welcome to street signs. As you can see, a fragile calm taking hold of markets today in europe this follows a mixed session in asia and a rebound on wall street the stoxx 600 trading about 0. 7 higher the calm really has come on the dak back of stabilization in the yuan the pboc fixed the Reference Point for the yuan slightly weaker than expected, but overall no more escalation in the u. S. china trade tensions and currency tensions. We have plenty of corporate earnings coming through today in europe lets look at the markets and see how the different regions are faring green across the board strong gains in the dax, up nearly 1. 3 . Leading the charge across european markets we have some earnings from banks coming through, basic resources. So a lot for investors to digest on the corporate front banks under pressure we heard from abm, commerzbank, unicredit displaying the impact of lower for longer when it comes to rates and what this is diddi i doing for profitability. The picture for europe is green. There are banks under pressure as i mentioned relative to the best of the group. Banks up a half percentage point. Were seeing pressure for some of the names reporting basic resources in the red down 0. 15 there we heard from glencore overnight. They have reported that 32 drop in first half earnings, due largely to lower prices for copper and cobalt. The basic resources sector has been a key victim of the selloff driven by an escalation in u. S. china ftrade tensions in asia, no massive changes. Shanghai ended about a third of a percent lower. The hang seng ended up 0. 15 so this fragile calm followed a relative sense of calm in the asian markets. Lets talk about banks. Yu unicredit reported a jump in Second Quarter net profit thanks to the sale of its stake in finnacle bank, but the disposal of bad loans will accelerate in the second half. Commerzbank has warned itself target for higher 2019 net profit has become significantly more ambitious the german lender blamed a worsening Macro Economic and geopolitical environment but lower taxes helped it beat Second Quarter profit forecasts. Joumanna bercetche is in frankfurt outside the Bank Headquarters what did the bank say was the cause for the gloomier outlook in profits we have predominantly the macro backdrop which has been underwhelming to say the least when you look at german manufacturing data, lending slowing down and the prospect of lower Interest Rates in the eurozone xher bank is commerzbank is exposed it lower Interest Rates they got their Corporate Banking and retail banking, and both of those activities are very much geared to Interest Rates if you look at whats happened in the latest quarter, you will see theres a couple of developments which raise a few questions for investors, namely that their loan provisions have gone up to the tune of about 155 million euros. They have not given detail in the press release as to what that pertains to they have cited single cases this is one potentially problematic issue going forward. If a bank like commerzbank is starting to raise loan provisions, that raises questions about the macro uncertainty. I also talked about the Interest Rate environment so far whats interesting is the numbers are up 9. 5 Percentage Points on the year its a relative Positive Side in the report here. Namely because they have been managing to gain more customers on the private side and on the retail side of the business. Putting that altogether, investors are concerned about the guidance that theyre giving the fact that the loan provisions have gone up, and look the return on tangible equities, still 4. 1 thats way below other peers in the sector, which are returning tangible equity north of 8 , 10 , or striving to get to 12 still very much below competitors, and also the valuation is cheap to reflect the fact that people are concerned about where profitability will come from just one thing to add to this. The last Earnings Release for commerzbank came on the heels of the breakdown on the discussions between commerz and deutsches tieup. Since then theres been a couple other banks circling around commerzbank as potential acquirers. A couple names are unicredit ing said they put the talks to rest unicredit singled out commerzbank as being the bank where they are putting things on hoed so its interesting to see whether they raise this idea of inorganic growth, which is a trade term for a tie up an acquisition to boost that profitability. Certainly these are questions i will be posing to the cfo. I will speak to him right after street signs. Lots to contemplate here essentially the market is underwhelmed by these numbers. Operating profit is still down 26 for the first half of 2019 versus 2018. Thank you very much for running through those details. We look forward to that interview later on Sonia Forster joins us on the line and christopher is here in the studio. Sonia, we heard details why commerzbank thinks theyre struggling with net profits. Looking at the german Banking Sector more broadly, what is your view about the challenges the sector is facing i do think its a number of factors. Obviously already mentioned the lowrate environment, which is a particular drag on german banks, which have ample liquidity that is one factor also in the german market, the cost structure is relatively high and compared at least to certain other european markets, its more time consuming for the banks to reduce that cost structure. In addition you have to bear this mind that for the german private banks they compete to a large public Banking Sector, which are basically price leaders. So its difficult to push through significant price increases, notably in the segment, so all these factors play a role. There are also other factors overall the digitalization rate is relatively low in german banking. Theres a lot of cash used in the economy. A lot of small factors that all add up you have run through clearly the challenges to profitability and weve seen on the screens how the major german banks have performed in terms of the stock Market Performance i want to ask about beyond profitability challenges, are there systemic risks in the german Banking Sector that you think investors should be paying more attention to . Its difficult to tell in a benign environment, but the ratios look low. There are the typical factors that everybody is concerned about. Notably the sector commercial real estate, Leveraged Finance and the auto sector. We have to bear in mind the German Economy overall is geared towards exports. So all the geopolitical issues going on currently are impacting the German Economy nonetheless we believe that underwriting in germany in general has been relatively conservative i want to bring in christopher peele. What do you think of banks we heard longer, lower rates but its also one of the most unloved sectors in europe when i look at valuations is it an attractive space for you here well, to a certain degree its the graveyard trade the european banking index has been reasonably volatile over the last ten years its close to the lows when you look at it in comparison to the u. S. Financial sector, its underperformed. This is an area where it should be attractive. But the i believe that the Banking System the Banking Industry tens to follow the economy. The fact is the european economy is really struggling the dependence on the auto sector, export oriented, is a problem especially if one feels well have a hard brexit that will push more pressure back on the German Economy that economic weakness is a big part of the reason that the ecb is looking to ease further is there anything that the ecb could do that would make you more optimistic or more excited about the Banking Sector probably not. They already have negative rates. They have trillions of euros worth of european debt on their books. I think they played their last cards. What they really need is an uplift in the Global Economy and to export their way out of the Current Situation. Sonia, what do you think the low Interest Rate environment that we just talked about there and the challenges for the ecb in finding new tools, whats that meant for the behavior of depositors in germany . I mean, we have seen over the past years, we have seen a clear trend towards overnight deposits, a proportion has increased significantly. To that extent while higher rates are positive for banks, there is a fair concern that deposits might be priced in if there is a change in Interest Rates or temporarily that could be a negative impact from the shortterm nature of the deposit base we heard from many of the banks, including in germany, about this push to focus refocus portfolios back on the core strengths. Deutsche bank is trying to refocus towards its roots of being the bank for german corporates what do you think of this strategy is Deutsche Bank going to be able to prosper under this new strategy, refocusing on the german Corporate Market without a Global Equities business that, of course, is a complex question i could cite the example of commerzbank where we do see the benefits of that strategy having been implemented earlier you knowed earlier that Net Interest Income has been growing, which is the effect of very focused investment efforts in that area we do believe Deutsche Bank has the potential. We also think that trading has changed very much. Reducing equity trading, getting completely out of the business by itself should not necessarily impact the corporate business. But the problem is there has been a lot of headline risk that could be spilled over into other areas of the franchise, even though theres no direct connection thats something were going to watch going forward. Thank you very much for weighing in this morning and joining us Sonia Forster from dbrs. In other banking news, lower rates have made things more challenges for abn amro. They beat expectations still abn benefited from lower impairments on bad loans and an increase in interest income. The cfo gave cnbc his take on the current Interest Rate environment. Weve seen rate cuts, as you mentioned, thats driving rates lower along the curve. Low rates are not good for banks. So weve mentioned we see the margin environment getting tougher in the next year or two as those low rates work their way through our margins, which means we have to work hard on our asset margins, make sure our margins and lending to customers is solid. Assets under management at Standard LifeAberdeen Rose 5 market gains offset net outflow theres that totaled 15. 9 billion pounds over the sixmonth period adjusted pretax fell 6. 1 . The markets have come a little bit our way, when i look at the volatility around in the first seven months of the year, im pretty confident that we will have a sustained improvement in performance i come back to the fact that its not just the First Six Months of the year, its been Strong Enough to deliver something over the last three years. Coming up, u. S. Markets rebound as the Trump Administration says it wants talks with china to continue well bring you the latest developments on the trade war after this break when i was diagnosed with breast cancer, i went straight to ctca. After my mastectomy, i felt like part of my identity was being taken away. My team made me feel whole again. Cancer Treatment Centers of america. Appointments available now. Int easy. R Treatment Centers of america. 12 hours . 20 dogs . Wheres your belly rubs . After a day of chasing dogs you shouldnt have to chase down payments. vo send invoices and accept payments to get paid twice as fast. danny its time to get yours vo quickbooks. Backing you. Hey i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Welcome back to street signs. The yuan is trading weaker against the dollar in the offshore market but it remains shy of record recent lows. Chinas central bank fixed the currency under the 7 mark at a point that was close to expectations President Trump has played down the impact of a trade war with china on the domestic economy. He tweeted massive amounts of money from china and other parts of the world is pouring into the United States. The president also promised to maintain the federal governments Financial Support for American Farmers after beijing suspended purchases after u. S. Agricultural products white house economic adviser larry kudlow insisted that the Trump Administration does want negotiations with china to continue the president said many times that hes willing to negotiate were still planning on the chinese coming over here in september. The president was not happy with the progress when secretary mnuchin and lighthizer went over to shanghai. There were no ag purchases, as you know in the course of his tweets and conversations with the trade team, he would like to continue negotiations he would like to make a deal has to be the right deal for the United States. Beijing hit back at washingtons decision to label it a currency manipulator. Chinese authorities says the designation represented projectionist behavior china pointed out that the imf said it believes the yuan is in line with fundamentals eunice yoon has more details from the Chinese Capital reporter beijings priority appears to be to stabilize the yuan despite allowing the currency to weaken past the psychologically important 7 level earlier this week. The central bank today set the mid point slightly stronger than 7, even though the currency is at the weakest level in 11 years. Chinese authorities are wary of disrupting the markets further after china was labeled the currency manipulator by the United States. China called it unilateral protectionist behavior it pointed out china does not meet the u. S. s own criteria for the label. Larry kudlow believes the label fits theyre down 10 in the past year or so so that is something that we cant tolerate now, ironically, that actually lowers prices. That takes the pressure off any Consumer Price increases at home thats the wrong way to do it. That after all if china keeps devaluing its currency, than money will just flow out of there. Its already started reporter the bank says previous conversations with the imf they determined the Renminbi Exchange rate is in line with fundament fundamentals James Bullard says it is not realistic that the fed will respond to each threat in a titfortat trade war. He said the Current Situation was like a pandoras box and predicted further volatility he insisted the most recent rate cut was sufficient to counter growth concerns that may stem from the trade war were joined by christopher peel still. I looked at your notes you sent through in the lead up to this conversation you seem rather blase about the trade war. What gives you a sense of optimism that were in the later stages and that were approaching a deal i think works for the white house to get a deal done at some point over the next six months as you enter 2020, the run up to the next general election, and also i think the trade war is hurting china more than its hurting the u. S. So xi has every ep seincentive o make this go away. I suppose its handbags the way theyre calling each other names. Were getting to the end of i think were getting into the last sixmonth stretch and trumps reaction a couple days ago was focused at powell as much as xi. Lets not lift off the rate cuts he wants to keep the pressure on the fed because hes running for reelection so it was atwopronged tweet a the fed and the chinese markets. What would you say to investors who want to buy the dip . This is august. A lot of big decisionmakers are in the south of france, the hamptons you know, these are thin markets. Im not going to read a lot into price action in august the same way i dont read a lot of price