Tom, we had a little bit of eurozone data out. Continue watching a lot of the banks. We are waiting for Standard Chartered. Hsbc all about costcutting. I do not see how that could be a good strategy. Costcutting is front and center but all the focus is away from Standard Chartered on those European Banks. Bid thisbit of a morning. Francine they do a little bit. Certainly some of the stronger banks. Standard chartered coming up, we have to look at pretax, worse than expected. It is the Capital Buffers that investors are watching out before out for. Ct1all, that first half capital ratio 13 13. 1 . Pretax a little bit below. Capitalirst half ct1 ratio 13. 1 . Tom Standard Chartered is an emerging market proxy. Youve got the mexican peso out to to 19. That is all you need to know about emerging markets. Ian markets more than Central America but you make a very good point that this is not really a u. K. Bank. They are headquartered here but it is an asian bank. Lets get to first word news. Taylor for the first time, north korea has fired a missile that landed while japan considers its economic zone. The missile launched fell into waters 160 miles of japans coastline. Shinzo abe called it a serious threat to japan security. Japans Prime Minister may be about to raise tensions with china. Hawkish l. A. He is about to appoint a hawkish ally. A reporter,g to he is about to appoint a hawkish allly. Trump is ignoring advisers and Party Leaders who want them to move on. He is told a tv station he has no regrets. Trump is refusing to endorse the highestranking elected republican paul ryan. Ryan has a primary election next week in wisconsin. Ryan spent several weeks before deciding to endorse him. Trump also withheld his endorsement from two republicans facing primaries, senators john mccain and kelly ayotte of new hampshire. Global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. This is bloomberg. Tom really front and center. Of last 24 hours president ial politics in america has been unique. We will talk to a trump supporter in her next hour. Ands a most nuanced interesting moment. Yields assuring 1. Churn 1. 54 . American oil making real news yesterday. 39. 78. 13. 78 a little bit of equity angsty. Yen, yen, yen nowhere near 99 but im going to call it a strong yen. Mexican peso up to 19. That really show some of the more global tensions were seeing as we focus on yen. Francine i love that you look at the mexican peso. You know what i reminded of, the brazilian games start friday. We need to look at what is happening in brazil. We do not even know if they started. The currency has been under a lot of pressure there. European stocks are fluttering. What i really want to show you is banks. Rebounded because a lot of the stocks or earnings were not as bad as expected, but maybe it is also a different crop of banks. Hsbc was ok. Socgen was ok. Standard chartered just coming out. The capital ratio is not bad at all. A beatinghey took yesterday. I will give you a green in the bounce but what an ugly day yesterday. I want to look at history. This is a chart i made 14 years ago. I updated it. I did it for facebook live. Manufacturing in america. Population adjusted. Its set in todays number which is 13 Million People in manufacturing. Thell know the yellow line, slow markdown in manufacturing overtime. Absolute francine, the implosion in the last 15 years in manufacturing is something. We can talk all day about this. Withs a little bit to do currency, and it mostly has to do with Technological Progress and the idea of the new manufacturing, which is a less peopled manufacturing. What do you have . Francine i like that chart, because the more we drill into some of the issues, and underpins the earnings. Tom and cutting costs. Francine it is not a vanilla bank chart. It just goes back to showing that European Banks that have be en under pressure are also cheap at the moment. When you look at the pricetobook ratio which is in the white line. Tom very cool. Francine not all banks are created equal. You cannot compare china to the u. K. Banks. Is basically a comparison towards the stoxx 600. Lets get back to the markets. Heads of europe g10 affect strategy richard joins us. Great to have you because everything is linked and nothing has ever been so linked in terms of currency markets. Currency market stability or fx currency stability makes it how theyr ceos to see will make money. Are we going to see less volatility . Richard when we look at most of the series across Foreign Exchange, a lot of those are near the lows. Its not just currencies. Youre seeing in and fixed income and equities as well. We had a bit of a backup yesterday but in the much broader picture, the vol is low. Its looking to remain that way. From a policy perspective or centralbank perspective, a lot of them are happy with that. Francine i would argue that one of the biggest stories this weeks treasuries. Its really change. What is underpinning that . Richard underlying this flattening trade that was out receiving trade of rates that ultimately when people are looking a fixedincome they are expecting curvehis is just the should continue to flatten out Going Forward with an expectation of liquidity. A lot of this has been postponed in terms of how the Central Banks are going to look at their policies till september. The bond market is getting nervous. What is going to go on with the bank of england tomorrow . And perhaps is there going to be any tub of a backup, or steepening over the shortterm . Tom look at yen. Bring up the chart of japanese yen now. I want to back up away from the mumbojumbo we talk about, massively strong yen. Richard, is the yen a domestic story, or is it being buffeted by for an activity . Forein activity . Richard over the mediumterm, without a doubt it is the trade surplus japan has. That will set the mediumterm exposure. J, thereinto the bo were some expectations that perhaps we would see more Monetary Policy, rate cuts or in that did not, and get delivered. Investors are unwinding some of those positions and waiting to see what actually happens in september. If policy is not adjusted, that animately the eyyen is in environment where it should appreciate. Tom ultimately it is out of whack. Adam pozen writing and the financial times. Thepozen talks about received wisdom. What is the received wisdom on intervention . Do you have an idea of the when intervention . Are they going to be so bold as to do a unilateral intervention . Give us an update on that. i think the ministry of finance has been somewhat clear. They see currency movements, the five big figures are more, they see that as extreme. We have had them on the tapes a few times talking about this type of pressure on the yen seems onesided. I think investors need to be cautious. Ultimately, it is going to be difficult to consistently intervened to weaken yen. I think that is where the market approach is that the market will continue to apply pressure. At times, there will be some intervention if this does push up dollaryen it is hard to see that as being stable. Tom i agree. Richard any of those types of strength in dollaryen, more than likely that will get offer into. Tom i would agree, checkered history to say the least about unilateral intervention. Coordinatedy rare intervention as well. In our next hour, someone for some excellent guests. We will talk about the Glass Ceiling. I want to talk about miss paratt at google. And a president ial candidate that just knocked up against the Glass Ceiling. York, gorgeous, new metsyankees, what could be better . This is bloomberg. Inncine im Francine Lacqua london. Lets get straight to the Bloomberg Business flash. Says the new report bank of england probably will cut Interest Rates close to 0 to ward off a recession. The report comes from the National Institute for economic and social research. The tightening of financial and Credit Conditions will slow down investment and Consumer Spending. Economists will predict the boe will cut rates t omorrow. Socgen had lowered professions for been provisions for bad loans. Hsbc has announced a 2. 5 billion share back to reverses stocks slump. The bank is backing away from annual dividend increases and hsbc removed its target of surpassing a 10 return on equities by the end of next year. Quarterly profit fell 45 from a year ago. The prospect of a recession in the u. K. You are sticking with banks. Francine thank you so much. Yes, i am sticking with banks. The most interesting earnings story of the week. Lets get to our banks reporter. When you look at the banks, you cover a lot of the e. U. Banks very in depth. Hsbc was pretty much as expected but it is all on cost cuts. Richard the surprise was the buybacks they announced. This is an institution where they pledged a progression of a progressive dividend. There is concern about whether they are able to grow those. However, the disposal of the brazil unit they sold earlier this year, that was a fantastic boost for the business that ofbles them to do2. 2. 5 Additional Return to shareholders. Francine what we know about Standard Chartered, this is a Different Bank skewed towards asia. There is so much focus about capital ratio. This is kind of the one thing that shareholders want to make sure they have. Richard this is the good news from Standard Chartered breaking in the last few minutes that they have managed to maintain her capital ratio as a measure of financial strength above their target of 13 . That is really good news. There was also concerned about their capitalization given they have rising loan and parents. However, that is another thing we see from Standard Chartered, they are not as bad as we had previously feared they could be. Institution which is experiencing a slowdown in those asian economies that could hurt its Balance Sheet but not as bad as we feared. Tom have you seen a good study dilution expected when the European Banks go on to do what they need to do which is recash . Ution. Ys had an 81 dil i know that banks a total mess. Have you seen a good study of what the dluti dilution would be at Deutsche Bank . Richard if they did have to raise new capital, that would be a negative thing for the shareholders. Weve seen Deutsche Bank is down 50 yeartodate. A tough ask if you are shareholder to take up a new capital on these institutions but hopefully we are not going to require that. The stress test confirms that their relative stability to these institutions apart from the likes of monte di paschi. Tom is this in august story or do we go on holiday and we come back in september and readdress it . What is the urgency right now after what francine and i witnessed yesterday . Richard there is a great deal of urgency to solve the situations in the south of europe. However, in the u. K. Here we have fears of the brexit which are not being realized at this moment in time. Hsbc this morning was saying they have not seen a particular slowdown, and that they do not expect to see any issues with rising impairments of credit quality. This is something that will play out over the next couple years. They also see that we will get more loan growth picking up through september, with taking a pause as a consequence of the referendum. As we go into the fall, hssbc seeing things picking up. Francine tom is obsessed with european holidays. Take my days. Tom i think it is really important. What we witnessed yesterday was not good for anyone. I mean, those declines in Deutsche Bank were shocking. Francine right. We focus a lot on these banking stocks that have to go through restructuring. Its new ceos. At the end of the day, its to do with Central Banks. They have anemic growth, huge regulatory fits which means they need to curb risk. And there is nowhere to make money. Richard it comes down to what is the sovereign curbs . Curves continue to flatten out due to Monetary Policy or just investors demand for yield. That is a tough environment for banks to make capital. Are reflectinges that, and europe is reflecting that as well because, as one of the more extreme policies ou there out there. Francine thank you so much. The two richards. We will talk about some of the more secure but important currency move straight coming up later, the conversation on banking continues. We speak exclusively to carlo messina, the ceo of intesa sao paulo. Thats coming up right here on bloomberg surveillance. Francine this is bloomberg surveillance. Dom, this is what i picke out for the morning must read. I read it twice. Donald trump speaking to the press, Interest Rates artificially low. The only reason the stock market is where it is because you get free money. Almost. Ving stock pixcks bizarrehas been a couple of days. I think it is a terrific quote. Again. Hng the quote up it is econ 101. Interest rates are artificially low but the only reason speaks to the servitude of most statement we get from mr. Trump. He love to speak and certitudes but i cant conveying a enough how much it is front center for america. For our global audience, the journal a republican paper. Trumps missteps and goopp unease. The New York Times trump swipes at republican. Theres the basic idea of where we are. It is original and america at this moment. Francine original. The only other head of state whoever spoke to me was Silvio Berlusconi back, i believe, 2008. Richard, how do you model donald trump . Dollar positive or negative . The more pressure that donald trump is under or them issues that arise, the more that is less going to be dollar next rade. Trade. Investors, when they look at the dollar, there is not a fear of the fed. That remains the base case, it is going to be in a private where the dollar weakens. Francine im a european to it i keep being told, even if he is elected president , there are checks and balances and he talked about removing janet yellen. How should an investor look at that . Richard yellen is the Guiding Force on the fed. It creates uncertainty of volatility. To a large extent, until it is done, it is difficult to position for it. This far ahead of the actual election, it is one of those tail risks in markets, but something moving currencies now, still out there. Francine rebound is banks is what we are seeing. European stocks are little changed. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Olympics 2016, let me get you on my level. So you never miss a moment, miss a minute, miss a medal. Why settle when you can have it all . Soccer to wrestling. Track and field to basketball. Fencing to cycling. Diving to balance beam. All you have to sa is, show me, and boom its on the screen from the bottom of the mat, to the couch where you at . Show me the latest medal count xfinitys where its at. Welcome to it all. Comcast nbcuniversal is proud to bring you coverage of the rio olympic games. Tom good morning. Bloomberg surveillance. A lot going on, important interview coming up with the leadership of intestate, of intesa. Are they a troubled italian bank . Better than the others. Sort of like the boston red sox. Francine good analogy. Tom lets get to first word news. Report the Obama Administration secretly airlifted 400 million to iran. Iransncided with r release of four prisoners. Meg whitman has endorsed Hillary Clinton. Once ran for governor of california as a republican. She urged all members of the party to reject trump. Experience maker the far better choice, she says. And don trump is urging individual investors to get out of the stock market like he did. The republican president ial candidate told foxbusiness that Interest Rates are artificially low and inflating markets. Trump says the only reason stocks are the way they are is because investors are getting free money. In japan, Prime Minister shinzo abe has added an Economic Policy radical to his cabinet. Advocated Firm Political oversight of the bank of japan. His appointment comes amid signs that investors are losing confidence in abenomics. News 24 hours a day powered by 26 hundred journalists and more than 120 countries, i am taylor riggs. Tom thanks so much. D, we goand me pumpe beneath the headline data on jobs day. Were the usual suspects. Mike the weird thing about the Economic Data lately, its been relatively good. Strangeet these outliers with big numbers. Everybody really nervous. They are looking at adp as a canary in the coal line for what is coming with that. You look at the chart, and it is extremely unreliable. You can see that white line, adp much more stable, then payrolls. Its narrowed it margin of errors. Big misses. June. W by 93,000 in most useful for trends, whether we are going up or down and it does show the labor economy has downshifted an average of 204,000 jobs in 2