It is all about Deutsche Bank, the worries out there about what investors can and cannot do. Lets focus on the banks. The banks, a story all through surveillance this morning. We will bring you the perspective, hopefully, without it sense of hysteria. A solid bid in the last hour. Francine a little bit better. Lets get to the first word news. Here is taylor riggs. Taylor leaders of dozens of countries are in israel for the funeral of shimon peres. He helped negotiate a Historic Police agreement with the palestinians. The clinton was president then. Israelstarted life as brightest student, became its best teacher. In a state ofars constant wonder. Constant wonder over the unbelievable potential of all the rest of us. President obama also spoke. He had a dynamic ideal. The u. S. Is weighing its options to stop a Bombing Campaign by russia in syria. Those attacks have left scores of civilians dead in aleppo. Russia has ignored threats by secretary of state john kerry to suspend talks on a diplomatic solution in syria. Congress having second thoughts about the bill allowing 9 11 victims to sue saudi arabia. Paul ryan and Mitch Mcconnell say the bill could open u. S. Soldiers overseas to retaliation by foreign governments, and they are willing to rewrite the measure. Compass overrode president obamas veto of the bill. May isinister theresa finding a challenge to her leadership coming from her own conservative party. She opened her First Party Conference since taking office. She is caught between competing factions when it comes to brexit. Boris johnson is among those arguing a heartbreak with the european union. Others are counseling caution. Global news powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom a great set of guests to give us perspective on finance and economics through the morning. Lets go to the data. Obviously a weight to equity markets. A euro weakness. No surprise there. Oil does not know what to do after algiers. 14. 5, near 12 a few days ago. A german negative yield. Deutsche bank debt is a lovely number after what we saw two hours ago, the breaching of 10 euros per share. A bit off the mark, but a that is note a primary statistic i am looking at. But i would call it a second order statistic to watch in the tensions within europe. You you are francine are absolutely right. Fueling demand for haven assets, fears of what the bank for doing. I want to quickly run through some of the stocks. European stocks. The Banking Industry down 2 . Haderzbank, yesterday we those job losses, 9600. The stock went up today. They want to restructure a little bit further. Rbs also with some changes with its natwest brand. If you are a bank ceo, you want to go back to your board, probably today or tomorrow, and you want to have a think about how if you are doing well you can communicate that to markets. The vix index is gaining 3 . That itback to the fact was set to be the best quarter of the year for global stocks, but when you look at our boards, it is ending on a sour note. This is because of banks. You can see a move to hedge. Yen at a 100 handle, stronger over the last six hours, after william kennedys report on Deutsche Bank for bloomberg. I want to be careful with the charts today. We are trying to show you the facts. We do not want to be inflammatory and get in front of a story we do not deserve to get in on of. This is not the fiveyear cds. It is the one year. It is more sensitive. It is a lot less liquid instrument than the benchmark fiveyear. See the blue banner at the bottom . That is a oneyear credit default swap. The leftare over on side. This is the Deutsche Bank when 11. Cds, a spike up at down we go to near normalcy as john cryan effects his plan and was critical as we come up once and twice above the lehman low. Is at to make clear this less liquid, less used cds, but you are seeing this out in the finance system as one measurement of tone on Deutsche Bank. Francine we will be talking feelings next. I like sentiment. Tom really. Francine it is that kind of morning. I am looking at disruption caused by Deutsche Bank. This is a board that just looks it is basically a benchmark. The blue line, Deutsche Bank. The white line is the and world country all financial index. I do not know if it is the catalyst, the focus. Deutsches line is when the doj announced that 14 billion fine. It is probably a number. It is not when they will end up negotiating. At was kind of a turn for deutsche. Deutsche bank shares falling to a record low. About the Banking Sector in europe are weighing on share prices. Covers our banks for Bloomberg News. By the we are joined head of fx stress. Lets can get off with the banks. Another day, another downturn. The story has not really changed from yesterday, but there is one fear on Deutsche Bank. Michael whenever you hear about clients pulling back, there are two concerns. There is liquidity concern. A lot of analysts have come out and said that concern is overblown. Deutsche bank has liquidity, has the ability to tap further liquidity from the ecb, and it has plenty and even the regulatory measures, the measure of liquidity, take into account some pulling back from clients. The other is the business impact. That is what john cryan has warned about. Lets not let the negative news impact our daytoday business. We saw that earlier in the year, where trading clients pulled back and that hurt their trading revenues. I think that is a concern many analysts have, is the impact on the revenue side. Francine there are two things. As you are saying, last night, we understood clients reducing exposure. And that may be share price nervous. Overall, the markets are nervous. John cryan today sending a memo this morning. He says it is overblown, it is market sentiment. Does he need to address issues head on . He says the doj settlement is not the concern weighing on the prices. It is, isnt it . Caroline it is the ultimate concern, the capital question. The doj settlement is the biggest impetus for that. Until they get a number they can go to the market with, there is not much tangible they can do, other than some other moves. We have seen the sale of some other capital boosting measures. Big doj question is the one, and that will hang over the stock until they get the settlement done. Tom i want you to help me. The good reporting of our william, noted on the cover of the Financial Times this morning. I want to make the distinction, Michael Moore, and you need to help me, on trust, liquidity, and solvency. Our reporting is hedge funds who utilize Deutsche Bank services are going, maybe we do not want to work there. That is different than the deep liquidity markets of commercial paper and shortterm notes, right . Michael yes, certainly. It is a client issue versus a funding issue. Deutsche bank has plenty of to cover,reserve according to their filings, more than two months of funding stress. So that is certainly a different issue. On the solvency front, certainly, we are talking about capital ratios. Potentially, in the case of a large fine, going below 10 that is a lot different than we were talking about 2008, where you had banks going below 0 . Tom beautifully explained. We need to be careful. Why did the stock moves so much off of williams reporting if it is about a set of hedge funds . Maybe they do not want to do business with Deutsche Bank. Versus what you explained about good liquidity and solid solvency why did the stock move . Michael i think it is a question of confidence and the potential impacts on the business itself. Problem for Deutsche Bank is that it has not produced the profits to internally build up its capital buffers. If you have a further hit to revenue in what is already a week environment, weak environment, the question of, can they build capital internally without having to build assets or raise it from other means. That is the big question, is the profitability going forward. Tom coming up for us this is important. We will be joined by someone from unicredit. An important conversation with the chief Financial Officer of commerzbank. We will do this on television and radio. Look for that in the 7 00 hour. We are live. This is bloomberg. Francine i am Francine Lacqua in london. Tom keene is in new york. Inghares of Deutsche Bank moved after reports the company will cut thousands of jobs. Reorganization would result in major job losses and may generate billions of dollars in savings. Ing is not commenting. As consumers appear to have shaken off initial concerns about leaving the european union. Sayst Research Firm gfk the uk Confidence Index has regained ground lost after the brexit vote. Household expectations for personal finances jumped, and so did the outlook for the economy. That is your Bloomberg Business flash. Francine thank you, taylor riggs. Let us bring it back to the markets with the head of global fx strategy at unicredit. Looking at banks, i guess the risk premium is driving off the back of it. Flags. , we had what will be the main driver for currency markets . Is it a simple risk on, risk off mood . Just to the extent that we maintain a balance, and do not escalate to something more worrisome than already, i think there are going to be a couple of things. Valuation is going to keep playing out. Gradual realization by the market the Monetary Policy has its limitation. Therefore, Central Banks will not be doing anything more material. Francine if you look at some of the pairings we were looking at ftse and yen. How do you compare . Given today, a risk off mood. Vasileios as far as the swiss is concerned, it is a separate story in itself. The fact they managed to sever the link between safe haven demand and the swiss franc back in january 2015. As far as the yen is concerned, i think it is going to be a confluence of factors. Dollaryens overvaluation still playing out. At the same time, you have increasing risk aversion. That is likely to play into yen strength. And of course the fact that the market realizes the bank of japan basically has delivered pretty much all that it had to deliver. Tom give me an update on something i do not think i have talked about in 100 days. This is euroswiss. Ferro and i were in davos during this massive drop in swiss franc. Going against economic energies flood switzerland with money. As you know, there has been a modest rollover i do not want to overplay this recently. This idea of recent swiss francs speaks volumes to me. Give me an analysis of the Swiss National bank. Vasileios i think they are determined to ensure that they do not see any material strengthening in the swiss franc. Key figures in euroswiss is not going to be something that is going to allow the central bank having said that, i think they delivered a very strong message. At the same time, we also had going negative into an economy which is a small economy. Holding any euroswiss downside from one year, no downside at all. Tom we have a conversation in the next hour. What would be the action you expect over the weekend and into next week from mr. Draghi and the regulators in the ecb . Ofileios you mean in terms the banking . Tom in terms of the european Financial System. Vasileios i do not really i depend onould largely handing down of this initial panic overnight. I do not think we are going to see anything coming out of the Central Banks. Francine we are getting headlines from mr. Abe saying he expects policy intent to be conveyed to the market. There is a psychological level for yen. If that is at 100, does that mean they do not need to intervene directly . It isios i think difficult for a central bank to set selfimposed limits, in a , something that, if it is above or below 100, we are going to do something. It is clear they definitely would like to avoid further yen strengthening, but at the same time and i think this is a general phenomenon. This is not coming from the bank of japan. All major Central Banks seem to have toned down the risk of session with currency risk of risk obsession with currency weakness. They have stabilized and started moving higher against the dollar. I do not think they are going to do more to revert the process. Tom there is a surveillance collection correction right now. Rinsing in london points out that tom is wrong. The Swiss National bank action was slightly before davos a few years ago. Francine you did not have to do it publicly. Tom but i did. I get put in the timeout chair. We will begin the hour with William Browder of citigroup, the chief economist. Really quite good on the slowdown in Global Growth. This is bloomberg. Francine this is bloomberg surveillance. The we were looking at swiss we are talking brexit. This is a big tom current account deficit. Francine the current account deficit widening for the second quarter. Lets get back to the head of global fx strategy at unicredit. Overall, what does that mean . Articlenot triggered 50. We do not know the u. K. Position a month from now. Gdp growth revised up. Current account deficit widening. Vasileios so, i think the current account by itself does not necessarily have to be a huge, sizable problem, largely because in the case of the current account of the u. K. , the deficit is largely being driven by the primary income balances. The issue that i have with the u. K. And the confluence of the brexit referendum result is, over 3, 4 years, these current account deficits have largely been financed by portfolio flows, which is hot money. It can reverse quite quickly. Problem you are having right now is, nobody knows what the yen story is going to be in five years time. In the interim, there is going to be a lot of uncertainty. There are going to be uturns potentially from both sides. The bottom line is, all these flows that came into the u. K. I see them halting and to a large extent being reverted. Francine what about inflation . We are seeing inflation, and that is a whole other set of things to deal with. To turn from worrying about deflation, turning to be excessively worried about inflation i do not think this is the thing to do. We know inflation is going to pick up, and they are going to look through that. Coming up, we discuss more on the european banks. Deutsche bank, the main focus. Also be talking about the main thing we need to look at, that it is infiltrating the markets with pressures and concerns about the health of the Financial System in some of germanys biggest lenders. We do not want to panic anyone, but it is arming story, so tune in. Tom in the last two hours, Deutsche Bank with a bid. For those of you just joining us widely predicted. Someone inut out to the bond world who talk about this quarters ago. Deutsche bank breaching 10 euros per share. A nice bounce back in the last hour or two. Here is our news with taylor riggs. Taylor in jerusalem, saying goodbye to former Prime Minister shimon peres. He died this week. He was 93. He won the Nobel Peace Prize for helping negotiate a historic peace treaty with the palestinians. President obama was among the dozens of World Leaders attending. He said the pursuit of peace was never naive but remains unfulfilled. Peres will be buried next to itzhak rabin, who was assassinated in 1995. India is try to reduce tensions after a crossborder raid with pakistan. There was an overnight attack on what it called militant assemblies. Will not cut they off ties. In hoboken, new jersey, investigators are looking for answers after a fatal commuter train crash. More than 100 were injured when the train snapped through a concrete and steel bunker and into a train station. One question is how fast the train was going when it crashed. powered by journalists and analysts in more than 120 countries. This is bloomberg. Francine Deutsche Bank shares falling to a record low. They are still falling. Concerns intensifying about the health of the german lender. We are joined on the phone from london. In new york, we have Michael Purvis, a chief global strategist. Thank you for joining us on the phone. Deutsche bank it is the same concerns, and it goes back to the fine. There is nothing uglier we should worry about. You can look at the Balance Sheet and see that deutsche has a lot of liquidity. It has a loan to deposit ratio of 56 , more than funded by deposits. It is all self funding. The Balance Sheet looks strong. You touched on the whole issue. Get hit with 14 billion, they would need more equity. And before they could get that from the government, if that is what was to happen, they could ofe a substantial bailin debt holders, or it could go out and try to raise money through issues that would be really deleted. Francine talk to me about the immediate concern. Deutsche bank has had a difficult week this week. Our investors in a panic . Fears are not unfounded. What do you make of some clients reducing exploiter exposure to deutsche . Christopher that occurred with Lehman Brothers and bear stearns. That may be part of the strategy. A lot of their liquidity was eaten up by clients taking their funds out before they were forced to be bought by jp morgan. I am a little bit skeptical of those moves, i have to say. Billion ofve 215 liquidity. What was taken out with a few billion. They still have deposits of 566 billion from the man on the street in frankfurt. Tom we have been in discussion this morning, the distinctions between trust, liquidity,