This is bloomberg surveillance. We have a packed show for you. We have that great interview that john cryan gave us, talking about the restructuring. We also have to look at the markets. We look at china, what the fed, janet yellen told us on friday. This is the picture overall. I want to put a lot of these european stocks, Deutsche Bank down some 5 . This is after john cryan said he has a new strategy, including asking the markets for 8 billion euros. You can see a little bit of dilution in the share is what we were expecting. 0. 6 it overall, seems that european shares are being cold lower, first of all because Deutsche Bank is tumbling, but also because the metals are lower. Investors weighing Growth Prospects for china and Janet Yellens statements on Interest Rates. Geopolitical tensions also bolstering yen. I want to show you topix. 1554, a little bit lower because of japan moving to its highest possible alert level after north korea fired of the state missiles. First, lets get to the bloomberg first word news. Heres nejra cehic. Nejra the former director of u. S. National intelligence has denied Donald Trumps claim that the Obama Administration ordered wiretapping on trump tower during the election campaign. A person familiar with the situation told bloomberg that trump relied on reports in conservative media including Breitbart News for his claims. Japan has moved to the highest possible alert level after north korea fired Ballistic Missiles into nearby waters. Tokyo says three of the missiles fell into japans economic zone, with one dropping about 350 kilometers west of the nations northern prefecture. Former french Prime Minister alain juppe is set to make an announcement in the next half hour after president ial candidate Francois Fillon again rejected calls to step down. The republican denies allegations that he used the money to pay his wife and children for carrying out fictitious jobs. The dutch Prime Minister has warned of economic chaos if the populist Freedom Party wins next weeks election. Opinion polls say the liberals are tied with the entire euro antiislam party of geert wilders. It is europes first major electoral test since the u. K. Opted to leave the e. U. This is an opportunity to stop the trend of the brexit and u. S. Elections. For the netherlands to vote for a policy which i want to deliver , of continuity, of making sure that the successful policies will be implemented over the next 3, 4 years. Nejra psa group has agreed to unit in a motors transaction valued at 2. 2 billion euros. It is expected to generate annual savings of 1. 7 billion euros. Gm is cutting ties after the division missed a target to breakeven last year. The deal creates europes secondlargest carmaker in a bid to better compete in the saturated market. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im nejra cehic. This is bloomberg. Francine thank you. Deutsche banks ceo is ripping up his own turnaround plan in admission that the 17 monthold effort has flopped. That change includes offering 8 billion euros in stock, selling part of the Asset Management business. Earlier i spoke to john cryan about his new strategy. John in order to retain postbank, i described it as a capital raising. We needed to finance it. It would have ago been much more difficult for us. I personally feel much more comfortable sitting in the seat i sit this time, this year, then i would have last year. We are feeling much more positive. The environment is good. Were seeing growth again. To some extent weve done a lot of the hard work. Theres still a lot to do. If the regulators are listening, were still focused on improving controls and efficiency. Francine when you say the markets are good, was it unicredit that really distilled the fact that there was appetite for share sales . John that would certainly have been a factor. Also, our shares hit a low at the end of september, i guess, and the sort of doubled since then. So the markets look as though theres mentum theres momentum behind the Banking Sector. It looked possible as well as desirable. Francine how many job cuts will be part of the strategy . John we havent said. It is not to be evasive but we want to take the same approach we took with restructuring the Branch Network in Deutsche Bank over the past 21 months or so. We want to do it in the german fashion. We want to involve all the relevant stakeholders. We want to come to an agreement. Once this agreement is struck, it is quite an efficient process. We havent said yet, but we will. Francine could it be thousands, tens of thousands . John it is unlikely to be tens of thousands. We are not that endowed with staff. Some jobll clearly be losses in germany. Francine could you talk to me about your debt trading . You vowed to regain market share. Given the lack of bonuses and the restructuring, how difficult is it to keep that promise . John we announced our Fourth Quarter results and we said they had been impacted by a loss of market share. Just talking to clients and counterparts, while we were discussing the settlement, they were a little more reluctant to deal with us. We also said that once we had settled two or three of those major cases, we saw clients and counterparts coming back strongly. So weve had a good start to the year. You can never extrapolate two months. But our Client Engagement is fine. One of the reasons we are raising the amount of capital we are is to underscore that we are not only strong, wellcapitalized, very liquid, but we are intent on growing the business. People, we our always knew we need to give them a vision, and it is difficult when you work when you are a company in construction. Now we can stop talking about that and Start Talking about how we engage with clients and counterparts, provide solutions, and do what Deutsche Bank does best. Francine so you are confident the debt trading unit will regain market share. John from where it was in the Fourth Quarter, it already has. Francine and it will continue. John it does seem to be. We will invest to the extent weve lost talent, we will invest. It is the core of our Investment Bank. Francine there will be questions on the market about your future. I was on the call yesterday and you said you are here to stay. Why the appointment of two deputy ceos . John i call it burden sharing a bit. It is a very large company. We have an enormous presence in the u. S. Here in the london market and our german business, were going to have to focus a lot on germany in the next three or four years with postbank. We will be adding staff to the Management Board to give a little bit more resource behind the efforts we need to engage with all the stakeholders in germany. ,ut i thought it was helpful and the Supervisory Board agreed, if i could appoint Marcus Schenck formerly as deputies so they can literally deputize when i have to be in two places at once. Juggling my diary is one of the frustrations of the job. It is helpful if we can have people who can step in and represent me and or the company on specific occasions. Francine that was of course john cryan, the Deutsche Bank ceo. You can see the full interview on our website. Joining us for more perspective is bloomberg gadflys [indiscernible] what did we learn with john cryan . Basically capital raising. I tried to ask him many times, but he said this is it. Will markets test on whether they need more Capital Increase . It is good in terms of stability of Deutsche Bank. Last year, there was a lot of worry over the existential future of this bank. I think this should put that to rest and even give it a best in class capital ratio that should keep clients coming back in. The big question is, when do we see a profit . Theres no deadline. This upfront cost. This is a costly strategy to reintegrate a bank they said they were going to sell. Francine what is at stake here . Is it john cryans job . He said hes committed. How much time do investors give him . I think that he so far has been the man for the job, but it has been two years of losses. Hes now saying, give me a chance again with a new strategy and theres very little Management Change up top. I think results have to be shown soon. Again, something that john cryan was saying, we will need a little more time because we want to get it right this time. What is the Market Perception of this uturn on the strategy . He was at pains last year, saying they dont need to raise capital, and they wanted to get rid of postbank. He now says it is a legacy issue. If you see how markets reacted to Donald Trumps election and this whole idea that the market is due a rating, people i think forgot that there might be a Capital Increase after all. There was a bit too much confidence. Maybe now theres a bit more reality on what is due for this bank. Francine i know you were arguing that there needs to be more consolidation. What does m a look like in germany . It is a very fragmented Banking Sector. That is part of the reason why Deutsche Bank had difficulty selling. I think in future we should see more deals and hopefully a Deutsche Bankcommerzbank merger. It is not such a bad idea even if it is politically painful. Francine thank you so much, lionel laurent, who writes on the banks for bloomberg gadfly. Remember, if you are a bloomberg customer, you can watch the show using tv as well as the video stream. You can follow all the charts and functions. Just type tv in your terminal. Johnan follow exactly what cryan told us. You can see what our columnist was talking about with the banks. To the also send ib producers directly. Now lets get straight to the Bloomberg Business flash. Nejra scotlands largest insurer has agreed to acquire aberdeen Asset Management. Standard life shareholders will group. 7 of the combined the deal values aberdeen at about 3. 8 billion pounds and creates one of europes biggest fund managers. South koreas special prosecutor has accused samsungs de facto head and other executives of conspiring to create fake documents to mark millions of dollars in bribes. Samsung says the company had not given bribes or made improper request for favors. U. S. President Donald Trumps protectionist stance may propel asian, middle eastern, and latin american nations into alliances with the European Union. That is according to the European UnionCommission Vice president , who told bloomberg that trumps rejection of multilateral deals and border tax threats are giving impetus to the use push for free trade. Somethingere has been to raise protectionism, especially from the u. S. Side, the rest of the world seems to be fighting back and saying this is not our line. Nejra and that is the Bloomberg Business flash. Francine after a week of hawkish tones from the u. S. Federal reserve, janet yellen weighed in on the rate debate on friday, saying that a hike this month is likely appropriate if the economy evolves as expected. That pushed Market Expectations for a rate hike for march to 96 . Speakers are now in a blackout period until march 15. All Market Attention is now squarely focused on the jobs figure this friday. The u. S. Is estimated to have added 190,000 jobs in the month of february. At our meeting, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate. Francine lets bring in gilles moec, chief european economist at Merrill Lynch, and Stephen Gallo, at bank of morale. Inc. You for joining us. Es, what did you learn on friday . Gilles we learned that they want to hike in march. Francine do they want to or other markets putting so much pressure that they have to . Gilles they want to. They could have explained that there is no smoking gun, that inflation is close to target, but it is their communication that got the markets to start pricing in a rate hike. They could have chosen otherwise. It means that they dont need to wait until theres clarity on the fiscal push from the Trump Administration. Trump or notrump, the economy is normalizing. It is probably time for the fed to do the same. Francine stephen, why does it take a lot of fed officials and president s to convince the markets . Nothing has changed in the last two weeks. Stephen i wouldnt say nothing has changed. The threemonth deflator from 1. 9 . Eeks report was it actually is getting very close to the feds objective on that measure. I think Going Forward it is very much about inflation. It is very much about what average earnings say in the Inflation Report and what core cpi says next friday. Francine you dont think the markets repriced on fed speak, for example from Lael Brainard . Stephen i do think the fed speak has had a major influence, but i wouldnt say nothing has changed over the last week or so. I think we are getting continued evidence that the economy is performing well even without this fiscal push that we are expecting. I would say theres a reasonably high chance we get a hawkish hike from the fed. We expect the fed to move. Francine how much . Stephen 25. I think theres a reasonable chance we get a hawkish hike. That would mean at least three for this year and possibly three for next year as well. Francine how much are you expecting . Gilles three as well. Thatwe find interesting is the u. S. Economy is performing well according to the new standards, but gdp growth is quite mediocre. The economy is hopping along at about 2 . Given the fact that it is above potential, the fed feels the need to act fairly quickly. I think it is an interesting shift. Francine are they concerned that they are behind the curve . Think the concern is that it took them time to recognize the fact that for tons of structural reasons, gdp growth in the u. S. Is much slower than it used to be, which means that for any given state, you need to react more quickly than would probably have been the case with the old estimate of potential growth. It is a big issue still in the u. S. Now 2 to gdp growth is considered ok and enough to get you to the entrance rate. Stephen as i said a moment or two ago, i think inflation is key. I suppose for the fed, the egg on the face in a radio is that Inflation Expectations begin to become unanchored. I think over the course of this week and next week, there may be a bit more evidence that that is a risk. So it is in some sense preemptive as far as the fed is concerned. Francine what does that mean for dollar . Stephen it is going to hold up well. We see 5 to 7 appreciation. But importantly, when you factor this scenario that weve been talking about into the equation, when you factor in the Political Risk is in europe, the dips are going to be very shallow in the dollar. Francine what is your target by yearend in eurodollar . Stephen we havent going to 97 and then in 12 months to 1. 04. Francine and you . Gilles 1. 05. , anden we see a dip ahead the combination of political factors in europe and increased Dollar Strength, then a small tapering off. Francine we were saying a couple of months ago, our markets getting it wrong . We were saying it would be very difficult for the fed to do anything until we had plans of this infrastructure and how President Trump wants to reflate the economy. We still dont have the plans but they are ready to hike. Gilles i think it is a recognition of where the data is. If you look at the strength of the economy, with this new low standards, things are ok. The labor market is now tense. On top of the net job creation on friday, what is going to be interesting to look at earnings. We had a surprise last time. You have a fully normalized wage growth story right now in the u. S. Are there todients say inflation is now at risk of exceeding the feds target. Trump or no trump, this is where we were without a fiscal push. If you add a fiscal push to the mix, you probably need to do more. Francine stay with us. Gilles moec and Stephen Gallo. Francine alain juppe is due to make an announcement within the next half hour after president ial candidate Francois Fillon again rejected calls to step down. The republican denies allegations that he used public money to pay his wife and children for fictitious jobs. In a tv interview yesterday, he vowed to stay on the race. Nobody can prevent me from being a candidate. I listen to what people tell me, but from a democratic point of view. Ive been designated. Frome 1500 signatures elected representatives. My Campaign Goes on. Nobody has the power to force me to withdraw my candidacy. Francine joining us now, live