Shatter at key support level question mark Second Quarter revenues are not as strong as the ceo would have liked. Matt miller will interview the man himself later this morning. What is going on at ficc . That is the rest are from the markets. 30 minutes into the trading day, this is how we are looking on the futures, little bit lower. There is a veritable feast of delivery from the corporate world. The question is how have we run an done on the european equities, the euro is rising. Asked is erica did not the one of its big trials astrazeneca did not meet one of its big trials. Bit a beat. Stocks are a little bit lower. How do you look at the fed, was it bullish for exit for equities, was it bears for bonds . You have south korea higher but we want to focus in on that currency, on the currency moved currency moves that you see. Also a little bit slower but this is where you want to focus on which is the dollar. The dollar is down by an eighth of 1 . It is the nuance in the language. The fomc says it all in terms of what janet yellen is focused on. Fomc give the dollar bulls a holiday . Is matt miller in the house, that is the question i ask myself every day. Are we there, matt . Matt i am here. We are waiting for more earnings to come out this morning, volkswagen is expected any minute and because of the it is embroiled in this new scandal, the alleged collusion scandal, we will be looking extra closely at these earnings and because the diesel concerns were reignited as well in the u. K. Yesterday. We will look and see how much of their earnings come from that portion of the markets. We are also obviously looking forward to the interview that we have later this morning. A number of questions to ask him in fixed revenue, and trading. Fixed income trading not as bad equitieseers but trading revenue is far lower. It will be interesting to see cryan has to say about the turnaround plan and how it is going as how he sees and how he sees revenue falling this year. Lowering the outlook for revenue. Straightats get across lets get straight across to Juliette Saly with the first word news. Juliette Deutsche Bank has reported a 10 decline to 6. 6 2 billion euros meeting analyst estimates of seven what one billion euros. And come from fixed income trading fell. We will be bringing you our interview with Deutsche Banks Ceo John Cryan later this morning. Chinas industrial firms kept up the heavy piece of Profit Growth, industrial profits increased nine pain 19. 1 in june from a year earlier. Accelerating from the pace earlier. It underscores the momentum and helps the nations Indebted Companies grapple with their giant debt load. The u. K. Prime ministers director of strategy has resigned aiming the British Government without the office of her brexit fission and at a vertical time. Chris wilkins will leave his post at the end of this week. The departure means that may has lost both of her top strategists in the wake of last months general election. Still in the u. K. , theresa mays government has commissioner commissioned a report about the economy. It comes a year after she became Prime Minister prompting questions as to why such a study was not conducted earlier. They have plans to develop to control migration after the brexit. The u. S. Has rejected a simple repeal of obamacare. This comes in the early stages of an unpredictable onslaught on and the and with failed amendment was stimulus the informal care act passed congress in 2015. And was vetoed by president barack obama. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Manus and matt. Matt thank you. U. S. Federal reserve Officials Say they will begin running off their 4. 5 trillion dollar Balance Sheet relatively soon. At the same time the central bank is expected left its benchmark Interest Rate unchanged as policymakers assess moves toward their inflation goal or lack of those moves. Reaction to the decision, janice billrsons bill gross told bloomberg that the fed favors a weaker bill. The have been estimations in the5 to 10 decline dollar and we have seen a 7 decline, that increases inflation by. 1 or. 2 for the next several years. You asked about Favorable Development for both sides, fit and policymakers. Ofus that is bill gross janus capital. Cudmore from mark the mliv team. Bloomms of the fed, as sat down he said the only thing that matters is Balance Sheet reduction. Would you agree . Issue,t is the key theres a couple of reasons. We are not exactly sure what the Market Impact will be. Is one of thers lord advocates for the fact that Balance Sheet reduction will help yield for while markets say they will rise. They are hoping for maybe a specific date given. The phraseology of relatively soon has but the market to confirm in their minds that it will be told in september, that october will be the date to start a Balance Sheet reduction. This should be positive for collecting yield and risk assets. There is nothing to do real the dollar bearish trend. That is it. Matt what do you think about the dollars prospects between now and when we get more on the Balance Sheet being trailed off for more on another rate hike, for example . Shoulddollar prospects be used in the same sentence. Theyre going to be unwinding the Balance Sheets for the next hundred years whether that starts in november or december should not worry you. Whether they do Balance Sheets in december and cut rates is in december is our view them at that is priced in. That is the rest of the world that is doing the fed 2014 which is we are going to normalize the ecb and we are looking for a counterfeit normalization which is the Balance Sheet is going to come up, they will raise rates, s have relaxed into Interest Rates. Years in the time sequencing and the dollar does not deserve the 2014 premium anymore. Magnus has a chart on that. Manus the dollar is in volatility in you said you are looking for a further retracement. Railingou look at the and 2014. We will have 3. 5 rates the next are but they do not but they start raising rates in december 2015 and that is the peak of the dollar. The trained upward stops there. The rest of the world is seeing this abnormal normalization and the dollar is giving back the market game gain which it was in the predictor of time three or four years ahead of the rest of the world. You have superior rates in the u. S. , that is over. We are looking elsewhere and the dollar is doing back those gains. News on vw. Ing take it away. Matt i am looking at the headlines coming across the terminal on volkswagen. They have revenue in the Second Quarter of almost 60 billion euros. Tina. 6 7 billion euros. Secondquarter adjusted operating profit for. 5 5 billion euros, a little more than 4. 5 billion euros. The Second Quarter operating margin at 7. 6 , a Global Operating margin, 7. 6 not a bad margin. Or relative to other large automakers. This is one of the worlds biggest automakers. Ofkswagen sees delivery customers moderately above the prior year so sales will increase, they say, in terms of unit sales. Interesting headlines from folks wagon. I will continue to look at these results and break them down for you. I want to turn back to david. I get your obstruction all view and why you are various the dollar. On the Balance Sheet reduction, when we get that announcement, you believe it is going to be a slow and gradual process. What will happen to the dollar on the day they announced the reduction and when they start the Balance Sheet reduction . More then markets are efficient, you cannot believe in totally otherwise we would not have jobs. They have talking about that since 2013. I am really ready for it. Give me a couple of months and i am there. I do not worry about Balance Sheet reduction and what i would argue is your reducing the Balance Sheet, youre not raising rates. We know higher rates are good for the dollar and Balance Sheet reduction may be good for the dollar, it may not be good for the dollar and to reprice a prospect that is positive, a rate rise or Something Else that may or may not be good for the dollar. You list bullish on the dollar because they are using Balance Sheet reduction to tighten rather than Interest Rates and that is slightly dollar negative. Manus those financial positions are very loose. , david bloom. Mark cudmore, thank you for your contribution. Our mliv contributor on the show. Matt, take it away. Tot we are still continuing look through the volkswagen headlines as you point out here. In a message, we are looking at a race to the forecast for sales in 2017 by more than 4 . We are looking at a profit margin target between 6 and 7 . They had a 7. 5 off margin in the quarter witches strong relative to other automakers. We will talk more about that through out program. Also about Deutsche Bank. If you are watching and you have a bloomberg, you can use the command tv to watch and follow along not only the video stream but also the charts. Any of the things we talk about we will be running down on the righthand side of your screen. You can click on them and click on the bottom of the screen on the blue link and write in. If you have a question for david loom, for example, put it in and we will get it to him. This is bloomberg. Matt welcome back to Bloomberg Markets, the european open. I am matt miller in front for looking forward to an interview with Deutsche BankCeo John Cryan bearing later. Heres your Bloomberg Business flash. Juliette cash flow from operations has risen to 11. 2 billion. The consensus illustrates how shells takeover of bg and cost cuts are paying off. We will be speaking to the ceo at 8 00 a. M. U. K. Time. Will payrican says it its first dividend since 2015. The Mining Company will pay out 40 of its first half underlying underlying earnings. The policy will continue in the future. The announcement highlights the success of its turnaround strategy and checking assets shrinking assets. We will speak to the Anglo American ceo at 8 30 a. M. U. K. Time. Airbus has reported a 27 drop in secondquarter profit as it cut production of its well selling a 33 jumbo. That was lower than analysts had predicted. At crash and whitney are undermining deliveries. Facebook investors are optimistic about the revenue potential for the Companies Check is this is messenger and whatsapp. That is after Mark Zuckerberg said he would like to move a little faster to make money from them. Earlier it was reported a secondquarter sales beat as tolyst estimates declining 9. 3 billion, 43. 5 . That is your bloomberg is this flash. Thank you. Lets talk about the pound. Chatting earlier and you said where is the rate rise and you said it is gone. It is gone like harry potters cloak. Has it really got away . Manus where did it go . David it just disappeared. These people tell you there will be a rate rise and they forget they said so. A lot of revisionists. There are two types of people, those with no memories and those with short memories. There is no way the u. K. Will raise rates and if they do, the pound will suffer because it is a mistake. Canada,ook at dollar that is a cyclical currency. It doesnt have structural or political problems, they can focus on the cycle, lower and implement rates and average earnings. We have a political and structural problem. That is the nature of the currency. The currency is not a cyclical currency that things about Interest Rates. This is a currency where we focus on the same day that retail sales are higher than expected, sterling went down. It does not respond to the data, a response to the politics and the structural nature of the current account deficit and budget deficits in the u. K. Those are the issues that hand, not the phillips curve. Up. Up. Matt it doesnt matter if we get continued inflation, if we do not get real drops in gdp . Seen he pound is not does not seem strong to you. David lets go through this. The pound is lower and inflation is higher. The pound is lower because of the idea of brexit and what happened there. Causelitical phenomena the currency to fall, it is causing inflation, inflation rises, incomes get squeezed, imports go down and the current accounts shrink. That is the way it works. That is what i am saying, it is a local and structural idea. It is because of the currency inflation is high and inflation is higher to slow down imports, encourage exports, and the current account needs to shrink and we are in the rebalancing phase with sterling being incredible helpful. Matt were covering these brexit negotiations so closely, i am off to brussels once a week these days. Is there any possibility of political change a political change could change the situation for the pound in the bank of england . David absolutely. No one has an advantage over there, even the politicians at hand. This is based on something that is totally unknown so i have to work within the parameters i have got. But if there is a delay was some kind of transition, that will have a massive impact. Manus this is the conversation under are underestimating the shift. They have talked about transition and the market is underestimating the value of that transition deal, about 40 and cable but you have do you agree that the political possibility that there has been a shift and where underpricing . Something not for castable, i just cannot do. Heot prepared to make has made a big speculate if did. That is fantastic and i agree. I do not know. I only know what i have to work with and that is a big current account deficit in the u. K. That needs financing and the way that is is sterling will fall, imports will slow down and the account will rectify itself. If you told me that something definite has happened i will reconsider but i cannot be in the place of speculating about politics because you will get absolutely crushed which i have been when brexit actually happened, when trump got elected, no one saw those events happening. When they happened, we all got a pretty big fright. Manus a pretty big fright. People are saying the market is short dollars, it is long euros. How is the market positioned in the pound, is there more fear about having a position in the pound . David i will Say Something that is very strange is that sometimes the consensus is correct. That happens and it has been correct. Since brexit has happened, sterling is going down. It has bounced and the dollar has been weak. People are short sterling. People are long euro sterling. One of the better ways to express the short town position is not through cable because the dollar is particularly weak area and you have a chart of euro sterling. We have the eurodollar at 120. At sterling at parity. View and itry big will remain under pressure. Manus the timeline on those calls, and of the year. Commentam not going to on the thieves at the airport that let me ask you who else is gaining on the pounds weakness. You mentioned euro sterling is the pounds loss. Europes gain . Whatt is gaining and is gaining on the pound is people in the u. K. What had to happen for them to become competitive is human beings had to have [inaudible] seenlummeted and we have them come back to the bond market only the other day. In the u. K. We have this release valve called the currency so lets use it. That is a weaker sterling. Stop saying weaker sterling is a bad thing, it is good for us in the u. K. And it is a safe haven, needs tolve, and it fall. This is saying the transmission mechanism we have in the u. K. Is the weaker sterling, lets use it. We all benefit. Manus we all benefit. Gettingy you and i are on planes. It will cost me more. David blue bloom stays with the team. We are counting down to the market open. For later focus, asters and a cup. You had all the rumors about the ceo and he dispensed with those that he was not off the table. The stock is called down in the market and anywhere between 10 to 15 . There blockbuster drug which was called mystic about attacking cancerous tumors and having a debtor impact than chemotherapy, they said in a Statement Today that their tests, their combo primaryid not meet the endpoint. You want to stay with us because we have a host of interviews to get through. Shell, the ceo of angloamerican. The dividend is back. That is good news if you are a shareholder. You have not seen that for a while. Is it sustainable . What is going on with the business with monsanto . Can they do the deal question mark what is he appeared to give up to get the eu on his side . Those are the debates. This is bloomberg. Manus just under 30 seconds to go until the start of your trading day. 85 Companies Reporting that this beasteast of the day of a day for stoxx 600. Astrazeneca potentially on drug trials. 10 to 15 lower. Futures lower. London down by. 2 . The dax up by. 4 . Matt, good morning. Matt Deutsche Bank indicated lower with revenue well short of estimates. Were looking for 7. 1 billion euros. John cryan warns Revenue Growth has not been strong university and this years revenue will be lower than last years. You can see that interview on Bloomberg Television or bloomberg. Com. Menace. Manus manus.