Stellantis Takes $2.7 Billion Hit, Yen Gains After Japan Election | The Opening Trade 07/21

0:02 GUY: GOOD MORNING. I'M GUY JOHNSON, LIZZY BURDEN IS HERE, SO WHAT DO YOU NEED TO KNOW? COMPLICATED TRADE TALKS WITH EU OFFICIALS PREPARING FOR A NO DEAL SCENARIO WITH WASHINGTON AND WE TALKED TO THE CEOS OF DEUTSCHE BANK AND SIEMENS FOR THEIR TAKE ON THE TRADE STORY AND PLANS TO INVEST BILLIONS OF EUROS IN GERMANY. LIZZY: HAPPY MORNING, MONDAY MORNING. WE'VE GOT THE ECB MEETING ON THURSDAY, INCHING CLOSER TO THE

0:49 AUGUST 1 TARIFFS DEADLINE WITH EUROPEAN STOCKS DECLINING ON FRIDAY. U.S. STOCKS HOVER AROUND RECORD HIGHS, BUT WE WANT TO SEE MARKET REACTION TO THE YEN. THE COUNTDOWN TO THE OPEN STARTS NOW. GUY:

1:39 WHAT I WANT TO TALK ABOUT WAS A SENSATIONAL PERFORMANCE OVER THE WEEKEND AND I DON'T KNOW WHETHER TO START WITH JAPAN, THE ECB, OR THE EU NOT GETTING A DEAL WITH THE U.S. AND WE ARE LIEKLY TO -- LIKELY TO SEE TARIFFS IMPOSED. ENVOYS MAY MEET THIS WEEK. LIZZY: THEY ARE PREPARING FOR THE NO DEAL SCENARIO, BUT WHAT WILL

2:27 THEY DO? ONE OPTION IS A RETALIATION. IT SPEAKS TO DIVISIONS WITHIN THE EU WITH SOME MEMBERS WANTING TO AND OTHERS NOT. SOME WILL ACCEPT HIGHER TARIFFS WITH EXEMPTIONS. GUY: PEOPLE WILL NOT BE GETTING THE CARVE OUTS THEY WERE HOPING FOR.

3:16 IT FEELS GERMANY IS FOLDING TO THE IDEA EUROPE WILL TAKE A FIRM STANCE. LIZZY: I WONDERED IF TRUMP WAS SERIOUS IN THE RUN UP TO AUGUST 1ST AND NOW IT LOOKS LIKE THE THREAT PUSHED A DEAL FURTHER AWAY. GUY: THE ANTI-COERSION TOOL, HOW SERIOUSLY SHOULD WE TAKE THAT ? U.S. NEWSPAPERS ARE TALKING ABOUT IT

4:02 AND THE U.S. ARE AWARE JUDGING BY THE MEDIA OF WHAT THE EU COULD DO. LIZZY: TRADE UNDERPINS THE AGEND A AND IF YOU TURN TO JAPAN, ISHIBA HAS LOST THE LOWER HOUSE AND THE MAJORITY IN THE UPPER HOUSE, HOW MUCH DOES THIS WEAKEN JAPAN? SCOTT BESSENT SMELLED WEAKNESS. HE SAYS THEY COULD GET A GOOD DEAL. HAS HE SMELT BLOOD?

4:52 GUY: MAYBE, IT WILL TAKE AWHILE TO FIGURE OUT AND COULD LEAD TO HIGHER SPENDING. CLEARLY THE POPULACE IS ANNOYED AND THE RICE STORY IS MAKING HEADLINES, SO WHAT IS THE EFFECT AND DOES JAPAN NEED A MOMENT BEFORE THE TRADE DEAL TO UNDERSTAND WHAT IT COULD MEAN? EVERYTHING IS MOVING TOWARD HIGHER AND NOT LOWER TARIFFS

5:45 AND YOU ARE GOINF T-- GOING TO SEE HIGHER GOVERNMENT SPENDING -- HOW DOES THE BOND MARKET IN JAPAN RESPOND AND WILL THE BOJ RAISE RATES? MORE UNCERTAINTY IN A WORLD THAT IS HARD TO NAVIGATE. YOU BUY THE YEN, IT FEELS COUNTER-INTUITIVE, BUT THAT'S WHAT MARKETS ARE DOING. LIZZY: YOU TURN TO THE CENTRAL BANKS, WE HAVE GERMAN INVESTMENT

6:38 ALLIANCE SUMMIT KEY INTERVIEWS, THEN U.S. HOME SALES, THEN GERMNAY'S MERZ, THEN GLOBAL PMI'S AND THE ECB DECISION. FINALLY, UK RETAIL SALES DATA. BUT ON THURSDAY, WE DON'T EXPECT A MOVE BECAUSE OF THE TRADE AND TARIFFS. WILL THIS BE A PAUSE OR END TO CUTS? GUY: THE EXPECTATION IS ONE MORE CUT BY THE END OF THE YEAR? LIZZY:

7:23 YES. GUY: IF -- IF THE DATA IS DOVISH, HOW DOES THE EURO RESPOND? IT HAS BEEN TEMPERED BY THE DOLLAR, BUT COULD THAT STORY TURN AROUND? RATE DIFFERENTIALS COULD MATTER AGIAN. LIZZY: HAVE TO BE DOVISH OR IT WILL LOOK LIKE THE END OF CUTS.

8:10 THE VICE PRESIDENT OF THE ECB SAYS IF WE GO HIGHER, WE HAVE TROUBLE, BUT WE HAVE RISKS TO CORE INFLATION, SO IT IS A BALANCE OF TARIFFS AND SPENDING. GUY: THE EU AND CHINA MEETING WILL BE FUN TO WATCH BECAUSE THEY HAVE PRESSURE ON BOTH SIDES. LIZZY: THIS COULD CREATE HEADACHES. GUY: A STEEPER CURVE?

8:56 WE WILL FIND OUT. THE LOMBARD CIO WILL JOIN US AND THE ALLIANZ CIO. OLLIE CROOK WILL INTERVIEW THE CEOS FROM DEUTSCHE BANK AND SIEMENS AND I'M LOOKING FORWARD TO THEIR TAKES. LIZZY: DOZENS OF COMPANIES WILL INVEST INTO GERMANY AND THIS IS A KEY MEETING. WHAT ELSE YOU NEED TO KNOW, ISRAEL WARNED IT WILL MOVE INTO

9:41 A TOWN IN THE HEART OF GAZA. THE MILITARY TOLD PALESTINIANS TO EVACUATE TO THE SOUTH AND A TOTAL OF ALMOST 1000 PALESTINIANS HAVE BEEN KILLED WAITING FOR AID INCLUDING 67 PEOPLE YESTERDAY. ELSEWHERE THE WASHINGTON POST REPORTS A CHINESE-AMERICAN EMPLOYEE OF THE COMMERCE DEPARTMENT OF THE U.S. IS BARRED FROM LEAVING CHINA SINCE APRIL. HE WAS DETAINED WHEN HE ARRIVED IN CHENGDU.

10:28 THE MAN IS BEING HELD BECAUSE HIS CASE IS LINKED TO HARMFUL ACTIONS. THE ALASKA AIR GROUND STOP HAS BEEN CANCELED AFTER A TEMPORARY GROUNDING OF ALL PLANES. IT IS THE SECOND TIME IN JUST OVER ONE YEAR ALASKA AIR HAS HAD TO GROUND THEIR FLEET. GUY: RYANAIR NET INCOME MORE THAN DOUBLED. A STRONG SUMMER. THE CFO JOINED US AND WE WILL HEAR FROM HIM AGAIN.

11:14 EARNINGS SEASON WRAPS UP ON BOTH SIDES OF THE ATLANTIC. UP NEXT, THE BOND MARKET WITH TRADERS HAVING THEIR EYES ON THE ECB THIS WEEK. OUR NEXT GUEST BELIEVES WE ARE HEADING FOR STEEPER CURVES. ANY QUESTIONS FOR US, IB+TV TV IS THE FUNCTION ON YOUR BLOOMBERG. THIS IS BLOOMBERG.

12:04 >> WELCOME BACK, MONDAY MORNING. STELLANTIS DROPPED EARNINGS. THIS COMPANY SUSPENDED GUIDANCE AND ARE NOW TRYING TO MAYBE TO TRY AND MAYBE ADDRESS A GAP IN EXPACTATIONS AND WHAT THEY ARE SEEING. THE NET PRE-TAX CHARGE THEY ARE TAKING IS SUBSTANTIAL AND WILL

12:51 IMPACT, UH, EXPACTATIONS. LET ME GO BACK TO THE PAGE I NEED. THE MARKET ANTICIPATED A PROFIT AND IS NOW ANTICIPATING A LOSS, SO WE WILL SEE HOW THE MARKET REACTS, BUT IT LOOKS LIKE A GAP. LIZZY: WE WILL KEEP OUR EYES ON THAT AND THE RESULTS OF THE JAPANESE ELECTION, BUT IT IS MARINE DAY

13:38 WITH THE PRIME MINISTER ISHIBA INSISTING HE WILL STAY ON, BUT WE CAN LOOK WITH VALERIE TYTEL ON THE YEN REACTION. VAL: THERE COULD BE TWO THINKINGS, THE MARKET EXPECTED WORSE AND THE MARKET IS HAPPY ISHIBA IS STAYING ON. BUT THERE WILL BE SOME RISKS AS THE LAST THREE PM'S DID STAND DOWN AFTER SUCH RESUTLS, BUT THE MARKET SEEMS HAPPY AND YEN

14:29 IS STRONGER. THE ECB MEETING, THE ONE THING THAT IS DIFFERENT IN THE RENEWED TARIFFS THREAT FROM THE U.S. CHRISTINE LAGARDE SAID RISK WAS TILTED TO THE DOWNSIDE, SO DOES SHE AMP THAT UP? LASTLY IN THE EU, BANKS REPORT

15:14 AT THE TAIL END OF THE WEEK AND THEN LLOYD'S AND NATWEST, GUY. GUY: THAT GIVES US AN IDEAR OF WHAT IS HAPPENING AND HOW DOES FIXED INCOME RELATE TO THIS? A FUND MANAGER IS JOINING ME. ON JAPAN, WE HAVE THE LDP LOSES ES IT'S MAJORITY WITHOUT A BIG REACTION, WHY?

16:01 >> ISHIBA'S SAYING HE WANT TO STAY IN POWER, BUT STILL, WE DON'T KNOW HOW, YOU KNOW, THE REST OF THE LDP LEADERS WILL REACT, SO MARKET IS TRYING TO EXTRACT INFO ON HOW IT WILL GO AND THE YEN WEAKENED BEFORE THE ELECTION -- MAYBE THE MARKET EXPECTED THE WORST. GUY: DO YOU THINK IT COULD IMPACT

16:48 HOW THE BOJ REACTS? PEOPLE ARE UPSET WITH INFLATION, COULD THAT IMPEDE THE BOJ'S PATH TO RAISE RATES? >> YES, I THINK IT COULD. BEFORE THE ELECTION, WE HAVE LOT OF INFLATION IN JAPAN. IN ANOTHER COUNTRY, PERHAPS IT WILL BE TOO LATE. USUALLY, THE BOJ SHOULD HAVE HIKED RATES DUE TO INFLATION

17:35 AND FISCAL WILL BE ON THE TOP OF THE AGENDA, HOW THEY WILL HELP AND FORCE THE BOJ TO HIKE RATES. THE MARKET IS LOOKING AT THE BOJ AS TOO LATE IN THE CYCLE. LIZZY: I JUST WONDER, ISHIBA HAS LOST HIS GRIP ON BOTH HOUSES IN JAPAN WITH PRESSURE ON FISCAL LOOSENING, HOW WILL THE JGB AUCTION GO?

18:23 >> IT IS DIFFICULT TO POINT ONE AUCTION AS YOU COULD HAVE THE BOJ TRYING TO BUY TO CALM DOWN THE MARKET -- IF THE BOJ DON'T HIKE, IF THE BOJ IS LATE, YOU WOULD PROBABLY HAVE BAD AUCTION. THEY KNOW THERE IS SOME NOISE, EVEN HELPING THE MARKET TO DIGEST THIS ONE. LIZZY: I WONDER, IS THE CURVE STEEPENER TRADE THE BEST

19:09 DEFENSE WHEN THE U.S. IS FUNDING SPENDING WITH BILLS? >> UM, UH, AGAIN, IT IS A QUESTION OF INFLATION, INTEREST, BECAUSE IT'S NOT JUST PEOPLE SAYING THE THIRTY YEARS, IT IS PEOPLE LOSING THE LONG PART OF THE CURVE AND EVEN U.S. GOVERNMENT WILL REDUCE THE WEIGHTED AVERAGE OF THEIR DEBT, YOU HAVE LESS INTEREST IN THE

19:57 BUYERS. I'M TOO OLD AND MY KIDS ARE TOO YOUNG TO INVEST IN 30 YEAR BONDS, I DON'T KNOW WHO HAS INTEREST ON THE 30 YEAR. SO YOU COULD HAVE STEEPENING BECAUSE PEOPLE ARE NO MORE INTERESTED IN BUYING OR SELLING. GUY: I,UH, I,UH, HOW FAR ARE WE FROM THE END OF THE PROCESS?

20:47 >> I'M JUST SAYING THIS IS A CHEAP HEDGE AND VERY CONSENSUAL, NOT VERY NEW. IT IS TOO BIG AND THE GAME THAT WE ARE IN THE MIDDLE OF THE PROCESS, WE COULD HAVE MORE STEEPENING. GUY: WILL THAT BECOME THE NEW NORMAL FOR A TIME? THERE WILL BE LONG TERM AFFECTS IN THE U.S. IN THE MORTGAGE MARKET AND OTHERS AS WELL.

21:38 >> IT HAS SOME IMPACT, I'M NOT SURE THE MORTGAGE IS ONLY THE 30 YEAR BUT LET'S SAY THE CENTRAL BANK WILL CUT -- I DON'T KNOW WHEN, BUT THE NEXT MOVE FOR THE FED IS CUTTING RATES WHEN INFLATION IS ABOVE TARGET WITH CURVE STEEPENING, NOT JUST IN U.S., YOU HAVE FISCAL PLUS INFLATION FEARS GOING INTO THE CURVE. LIZZY:

22:29 WHAT IS DRIVING THE 2 YEAR YIELD MOVES? IS IT THE FED OR THE DATA OR THE DOVISH SPEAK? >> KIND OF ALL TOGETHER. YES, THE FED STORY IS IMPORTANT EVEN THOUGH POWELL WILL LEAVE. IF THE BOARD ISN'T CHANGED, I DOUBT IT WILL CHANGE THE STORY OF THE NEXT MOVE. LIZZY: YEAH. YEAH.

23:18 >> IT IS A WEIGHT ON THE LONG PART OF THE CURVE. LIZZY: ALL RIGHT, FIXED INCOME MANAGER WE THANK YOU. TO GERMANY NEXT, THIS IS BLOOMBERG. >> 30 MINUTES TO GO UNTIL THE OPENING TRADE, WE HAVE THE ECB ON DECK WITH A QUIET START AS WE WORK OUT WHICH DIRECTION WE ARE HEADING IN, BUT YOU HAVE TO FOLD IN JAPAN, A LOT GOING ON.

24:04 LIZZY: WE ARE FOCUSED ON GERMANY, THE 10 YEAR LOOKS LIKE THERE WILL BE NO U.S. AND EU TRADE DEAL AND WE HAVE OLLIE SITTING WITH GERMAN CEOS. GUY: THAT IS LOOKING LIKE IT WILL BE HARDER AND HARDER TO GET CARVEOUTS, SO HOW DO YOU TAKE ADVANTAGE OF THIS IN GERMANY? LET'S HAND IT OVER TO OLLIE. OLLIE:

24:55 THE NEW CHANCELLOR MADE A CENTRAL PROMISE TO TURN THE ECONOMY AROUND, UNLEASHING ONE TRILLION EUROS IN FINANCING, SO WHAT REFORMS ARE NEEDED TO MAKE A MEANINGFUL RE-ORDERING OF THE ECONOMY. WE HAVE SEIMENS LEAD THE WAY AND DEUTSCHE BANK, THE BIGGEST LENDER IN THE BIGGEST ECONOMY. CHRISTIAN AND ROLAND, THANK YOU

25:41 FOR JOINING US. YOU ARE MEETING WITH THE CHANCELLOR ON THE MADE IN GERMANY INITIATIVE, WHAT DO YOU HOPE IT CAN DELIVER? >> THANK YOU FOR THE INVITATION. WE STRIVE TO FINALLY HAS GROWTH AND COMPETITION IN GERMANY AND EUROPE. GROWTH IN GERMANY IS GOOD FOR EUROPE AND IT CANNOT ONLY BE STIMULATED BY THE GOVERNMENT, SO A SMALL GROUP WAS IN A

26:28 COUPLE OF MONTHS SAYING WE ALSO WANT TO SHOW WHAT POTENTIAL GERMANY HAS AND I THINK IT IS AN IMPRESSIVE WITH 61 COMPANIES AND MORE TO COME. IT SHOWS WE HAVE A CHANCE. OLLIE: WE ARE IN THE AGE OF LARGE PLEDGES TO GOVERNMENT SPENDING SO I WOULD LIKE TO GET AN IDEA FROM SIEMENS, HOW MUCH OF THAT MONEY IS COMING FROM SIEMENS AND WHAT ARE SIEMENS TARGETS? >> THERE ARE 631 BILLION EUROS

27:17 WE ARE TALKING ABOUT, IT IS COMPANIES AND SMALL AND MEDIUM ENTERPRISES, THEY ARE GEARED TO PUT CAPITAL INTO THE COUNTRY. YOU NEED STRUCTURAL CHANGES. SO WE HAVE IDENTIFIED NINE ACTION FIELDS, THEY ARE IN SYNC WITH THE REVENUE AND COALITION CONTRACT AND SIEMENS IS

28:03 INVESTING IN MANUFACTURING AND INNOVATION. THE INDUSTRIAL LEADERS DRIVING DIGITALIZATION. WE ARE ABOUT TO DEPLOY CAPITAL AS WE SPEAK IN BERLIN. IT IS COMPLETELY NEW, LEVERAGING ALSO OF THEIR CAPITAL. FULLY DIGITAL, LIVING AND WORKING AT THE SAME TIME AND SO ON WITH MORE THAN 15 PROJECTS WERE COMPANIES SAY THIS IS WHAT I USE THE CAPITAL. >> ZOOMING OUT AND LOOKING INTO 5-10 YOU SHOULD NOW, TRYING TO

28:54 IMAGINE IF THIS IS SUCCESSFUL, WHAT DOES THE ECONOMY LOOK LIKE AND HOW DIFFERENT IS IT FROM TRADITIONAL IDEAS ABOUT THE GERMAN ECONOMY? VERY ENERGY DEPENDANT. >> HARD TO ZOOM OUT FIVE OR TEN YEARS, BUT HISTORY TELLS YOU WHAT IS POSSIBLE. WHEN I STARTED BANKING IN THE AREA I STARTED, THIS WAS A LOCATION DOMINATED BY TEXTILE AND PRINTING. IT COMPLETELY CHANGED AND I

29:44 THINK ABOUT HOW THEY APPLY AI FOR INDUSTRIAL PROCESSES, GERMANY CAN BE A TECH-LED COUNTRY. WE HAVE NOT TALKED ABOUT SUSTAINABILITY, BUT GERMANY HAS THE LEADING TECH TO EXPORT AND GERMANY WILL ALWAYS BE AN EXPORT COUNTRY. YOU NEED UP TO DATE, SO WE HAVE TO INVEST. THIRD POINT COULD BE DEFENSE, I'M GLAD WE ARE

30:34 UPSIZING TO DEFEND OUR CONTINENT AND THESE WILL DO WELL FOR FUTURE TECH, SO YOU CAN START A NEW INDUSTRY AND WE WILL SEE FURTHER DEVELOPMENT, BUT TECH, AI AND SUSTAINABILITY WILL BE SOMETHING WHERE GERMANY WILL LEAD. >> ROLAND, YOU ARE DOING EXACTLY THAT, SO HOW DO YOU PRAISE GERMANY'S ADVANTAGES? ROLAND:

31:25 SO LET'S TAKE AI TECH AS ONE OF THOSE FUNDAMENTALLY CHANGING EVERYTHING. WHAT YOU NEED IS BETTER DATA AN D WE ARE SITTING ON MASSIVE DATA. THEY ARE CREATING DATA FROM BUILDING, MAKING AND ENGINEERING, SO IF WE PUT THAT INTO MODELS WITH AGENTS ON OUR BEHALF, MANAGING ACTUALLY LINES

32:13 OR PLANTS TOGETHER WITH PEOPLE TRAINED ON AI TO USE THIS TECH. THE COMBO OF THIS WITH THE DATA AND KNOW-HOW, WE NEED LESS REGULATION TO RELEASE POWER AND SPEED, SO WE HAVE TO CHANGE A COUPLE THINGS. OLLIE: THE ROADMAP TO GETTING THERE, WHAT HAVE YOU BEEN ENCOURAGED BY AND WHAT REFORMS DO YOU WANT TO SEE?

33:04 >> WE HAVE NINE FIELDS IN SYNC WITH THE GOVERNMENT ANYHOW. INNOVATIONS, LABOR MARKET, WE NEED THE BEST TALENT AND TO DEPLOY THE WORKING FORCES. ANOTHER IS INVESTMENT CLIMATE WITH INCENTIVES TO DEPLOY MONEY. WE TALK ABOUT LESS REGULATIONS, FASTER DECISIONS.

33:52 IT DOESN'T HELP UNLESS YOU CAN DEPLOY CAPTIAL. L -- CAPITAL, JUST TO LAY OUT SOME OF THOSE AREAS. IT IS ABOUT DOING IT. OLLIE: WE HAVE HEARD ABOUT CUTTING RED TAPE FOR DECADES. CONCRETELY WHAT WOULD YOU LIKE TO SEE? YOU HAVE SPOKEN TO EVERY BASICALLY BUSINESS, WHAT ARE THREE THINGS TO PUT INTO PLACE TO ENCOURAGE COMPANIES TO INVEST? CHRISTIAN: THE MAIN COMPLAINTS ARE REGULATION, BUREAUCRACY AND

34:43 SPEED. IT'S NOT ONLY GERMANY, ALSO EUROPE WITH LEADERSHIP AND STRONGER GOVERNMENT. NUMBER TWO IS THE ENERGY CRISIS AND THE GOVERNMENT IS GOING IN THE RIGHT DIRECTION AND THIS IS THE BACK. THE GOVERNMENT HAD A GOOD START AND I DO BELIEVE IT IS IMPORTANT THAT WE HAVE SECURE A SYSTEM IN 10 OR 15 YEARS TIME,

35:33 THAT IS THE KEY TO SUCCESS AND MORE INVESTMENTS WILL GO INTO OUR ECONOMY IS WHAT WE NEED. I THINK MORE FOREIGN INVESTMENTS WILL RUN INTO GERMANY IF WE FOCUS ON THAT. OLLIE: HE SAID GERMANY WILL REMAIN AN EXPORT ECONOMY AND THAT IS BEING CHALLENGED BY THE U.S. BUT I WOULD LIKE TO KNOW HOW CLIENTS ARE WEIGHING THE OPTIMISM WITH THE RISKS FROM THE U.S.? WHAT IS WAITING FOR BUSINESSES? >> IT IS ABOUT DIVERSIFICATION AS WE LEARNED THROUGH COVID ALREADY.

36:25 NOT ONLY SUPPLY CHAINS BUT ALSO COMPANIES LOOKING INTO MORE AGREEMENTS BUT I HEARING NO ONE TALKING ABOUT FOCUSING ON GERMANY ONLY BECAUSE IT'S TOO SMALL AND WE NEED A STRONGER EUROPEAN MARKET. THE STRONGER WE ARE, THE BETTER IT IS VERSUS THE U.S. AND THE STRONGER YOU MAKE YOURSELF, THE BETTER YOUR STARTING POSITION IS BUT I BELIEVE MOST COMPANIES ARE NOT

37:11 TRENDING AWAY FROM GLOBALIZATION, THEY DO NOT WANT TO BE TOO DEPENDENT ON ANY COUNTRY. OLLIE: WE WILL GET TARIFFS OF 10-30% IN THE NEXT TWO WEEKS, HOW ARE YOU APPRAISING THAT RISK? ROLAND: THERE HAS BEEN HIRED TARIFFS VIS-À-VIS THE UNITED STATES, WE DON'T WANT THAT BECAUSE FREE TRADE STIMULATES ECONOMIES SO THAT WOULD DRIVE INFLATION BUT ONE RELEVANT POINT WE HAVE TO STOP UNCERTAINTY.

37:59 THE DEAL SHOULD BE THE DEAL AND THEN YOU CAN DEPLOY CAPITAL. HOPEFULLY THEY ARE NOT GOING TO HIGH. IF WE MAKE FREE TRADE AGREEMENTS IN YEARS AND NOT DECADES THAT IS RELEVANT BECAUSE WHAT WOULD YOU DO IF YOU HAVE LARGE ECONOMIES? WE HAVE THE ASIAN REGION, MIDDLE EAST, SOUTH AMERICA. I'M NOT SAYING THE UNITED STATES IS IRRELEVANT, THEY ARE THE MOST RELEVANT. BUT THERE ARE OPPORTUNITIES.

38:48 >> TALKING ABOUT INVESTMENTS OVER THE LAST YEAR OR TWO, 5 BILLION WORTH OF DEALS ON AI, DO YOU NOT SEE THOSE OPPORTUNITIES IN EUROPE OR ARE THE COMPANY'S NOT THERE? ROLAND: THERE IS A 10 BILLION INVESTMENT IN ARTERIAL INVESTMENT SOFTWARE AND THE PHARMACEUTICAL MARKET. IF YOU LOOK FOR SOFTWARE ASSETS YOU END UP IN THE U.S.. THERE ARE SMALLER EUROPEAN COMPANIES.

39:43 LOOKING INTO COMPANIES THERE, DAY CREATE DATA AND IF YOU LOOK SIEMENS HAS INVESTED 25 BILLION OVER 40 OR 50 YEARS IN SOFTWARE FROM THE UNITED STATES. >> WE'VE BEEN TALKING ABOUT PRESERVING COMPANIES AND I WANT TO UNDERSTAND WHEN YOU LOOK AT DEUTSCHE BANK AT THE END OF A LONG TURNAROUND, IS THIS A MOMENT FOR DEUTSCHE BANK TO BECOME MORE AGGRESSIVELY EXPANSIVE ACROSS BORDERS? WHAT DO YOU WANT DEUTSCHE BANK'S ROLE TO BE?

40:29 >> GEOPOLITICAL AND ECONOMIC UNCERTAINTIES, THERE WAS ONE TREND WHICH WAS THE SAME ACROSS THE WORLD, STRONG AND CAPABLE U.S. BANKS BUT IN GEOPOLITICAL UNCERTAINTIES THEY WANT A CAPABLE GLOBAL EUROPEAN PLAYER AND THERE ARE NOT MANY LEFT. THAT IS THE RULE WE CAN PLAY AND WANT TO PLAY BECAUSE IT IS EASIER TO DO FROM A COUNTRY

41:15 WHICH IS ON THE RIGHT PATH AND PULLING EUROPE. THE ONLY GERMANY AND EUROPE BUT ALSO DEUTSCHE BANK AS A CHANCE TO CONTRIBUTE TO CLIENT GROWTH AROUND THE WORLD. DIVERSIFICATION NOT ONLY TO RELY ON ONE BANK BUT MANY BANKS HAS NEVER BEEN BIGGER THAN NOW. OLLIE: IS THE BUYING EUROPE TRAPPED AND LASTING THING FROM INVESTORS, WANTING TO MAKE MEANINGFUL COMMITMENT TO EUROPE AND WHAT DOES THAT LOOK LIKE? >> FOR THE FIRST TIME WE SEE REALLOCATION FROM FUNDS INTO

42:07 EUROPE WITH HUGE INTEREST, INVESTORS WANT TO UNDERSTAND GERMANY AND EUROPE AND IN ALMOST SIX MONTHS AGO MOST INVESTORS SAID GERMAN COMPANIES NEED TO DO MACRO IMPROVEMENTS AND THAT IS WHAT WE WANT. THE GOVERNMENT STOOD UP WITH THE FISCAL REFORM AND IF WE DO SOMETHING MARCHING IN PARALLEL I BELIEVE WITH FURTHER REFORMS TO COME, THE TREND OF REALLOCATING FUNDS WILL NOT

42:54 STOP. IF WE JUST RELY ON DEBT THAT DOES NOT HELP, WE NEED REFORMS. OLLIE: EUROPE DOES NOT WANT TO BECOME THE U.S. BY FROM WHAT WE'VE SEEN FROM TRUMP AND THE U.S., WHAT CAN EUROPE LEARN WITHOUT SACRIFICING? >> WE HAVE TO HOLD ON ARE VALUES THAT BROUGHT US WHERE WE ARE, THEY ARE GOOD. YOU HAVE TO MAKE STRUCTURAL REFORMS WHICH REQUIRE COURAGE

43:41 AND SOLUTION ORIENTATION, BUT ALSO BOLD MOVES. YOU CANNOT JUST TAKE ONE ACT WHICH IS MIS-CONSTRUCTED. SO WE HAVE TO THINK ABOUT HOW TO ACCELERATE ECONOMIC DEVELOPMENT AND INNOVATION, MAKING BOLD DECISIONS FAST. >> THANK YOU FOR YOUR TIME CHRISTIAN IN ROLAND. MADE IN GERMANY, MORE THAN 600 BILLION EUROS FROM A DOZEN DIFFERENT COMPANIES ACROSS GERMANY AND THEY WILL BE MEETING UP A LITTLE LATER THIS AFTERNOON. THIS IS BLOOMBERG.

44:38 ♪ GUY: WELCOME BACK, LOTS TO THINK ABOUT WITH TRADE FRONT AND CENTER AND EUROPEAN STOCKS ARE FLAT. ROLAND AND CHRISTIAN TALKED ABOUT GERMANY AND BOLD DECISIONS WHEN FACING A TRADE WAR. EUROPE NEEDS TO BE READY. LIZZY: KEY VOICES LOBBYING FOR A DEAL, IT DOESN'T LOOK LIKE WE WILL GET ONE, BUT THIS IS THE FOCUS NOW. GUY:

45:30 ROLAND SAID WE NEED CERTAINTY, THAT IS NICE. IT DOES NOT FEEL LIKE WHAT WE HAVE RIGHT NOW. ♪ TOM: MONDAY MORNING. CONSIDERING ALL THE THINGS THAT ARE ABOUT TO HAPPEN, ALL POTENTIAL RISKS THAT LIE OUT THERE. THIS IS A MARKET SHRUGGING HIS SHOULDERS AND SAYING, MEH, NOTHING TO SEE HERE, MOVE ON. NOTHING TO ACTION, NOTHING TO TRADE ON. THIS IS FRIDAY'S TRADE. WE TRADE LOWER IN TERMS OF THE EUROPEAN NARRATIVE. EUROPEAN MARKETS DRIFTING SIDEWAYS. U.S. MARKETS DRIFTING FOR MOST OF THE SESSION. MONDAY MORNING FEELS VERY SIMILAR TO THAT. WE WILL SEE WHAT THE FUTURE'S PICTURE LOOKS LIKE. THERE ARE SOME BIG CORPORATE

46:16 STORIES. STELLANTIS IS ONE WE WILL TALK ABOUT, BUT THERE'S OTHERS AS WELL. BUT THIS MARKET IS UNFAZED BY ANYTHING. HOW DOES EUROPE RESPOND TO AUGUST 1 APPROACHING? IT COULD BE A FAIRLY FEROCIOUS FIGHT. FTSE FUTURES, ABSOLUTELY UNCHANGED. WE WILL WATCH WITH LSC GROUP THIS MORNING. BUT WE ARE UNMOVED. WHAT IS IT THAT SHAKES THIS MARKET? I DON'T KNOW. BUT THIS WEEK IS LITTERED WITH EVENTS THAT COULD POTENTIALLY PROVIDE SOME SORT OF CATALYST. LIZZY: YOU TALKED ABOUT STELLANTIS.

47:01 LET'S GO THERE FIRST. THEY RECORDED A 2.3 MILLION EUROS NET LOSS IN THE FIRST HALF. ANALYSTS WERE EXPECTING A PROFIT. THEY HAVE TRIED TO GET AHEAD OF IT AND EXPLAIN IT. THEY HAD PUT IT DOWN TO RESTRUCTURING AND THE IMPACT OF TARIFFS. IF WE STAY IN TRANSPORT, WE ARE ALSO HAVING RESULTS FROM RYANAIR . THE CFO SAYING THINGS ARE MOVING IN THE RIGHT DIRECTION. THEN A BIT OF M&A. CAREEFOUR WORKING WITH ROTHSCHILD. WE LOOK AT THAT AS WE HEAD TO THE OPEN. GUY: LET'S GET YOU INTO THE OPEN. DO NOT EXPECT FIREWORKS, DO NOT EXPECT LIGHTNING TO STRIKE BECAUSE YOU ARE EXPECTING A MARKET THAT IS EXPECTING TO BE UNMOVED, AND THAT IS EXACTLY WHAT WE ARE GETTING. FTSE 100 BARELY BUDGING.

47:49 IN AND OUT OF POSITIVE TERRITORY. I EXPECT HE WILL SEE SIMILAR STORIES AROUND EUROPE THIS MORNING. THE STOXX 600, WE WILL GET MORE CLARITY ON WHAT IS HAPPENING THERE. THERE IS THE IBEX, BARELY BUDGING. THE CAC IS NOT EXPECTED TO DO MUCH. THE DAX COULD BE MORE INTERESTING. I THINK THERE ARE SOME STORIES WORTH WATCHING. WE'VE GOT STELLANTIS. YOU HAVE VOLKSWAGEN THIS WEEK. WE WILL SEE NUMBERS OUT FROM THE GERMAN GIANTS. WHAT DOES IT TAKE TO MOVE THESE MARKETS? WHAT IS IT GOING TO TAKE THIS WEEK? THE EARNINGS STORY IS ONE YOU WILL WANT TO PAY ATTENTION TO AS WELL, BUT WE ARE COUNTING DOWN. THE DRUMBEAT ON TRADE IS

48:34 BECOMING MORE AUDIBLE, AND YOU WONDER WHETHER OR NOT WE WILL BE FOCUSING ON THAT NARRATIVE MUCH MORE. BUT FIRST THING MONDAY MORNING, THERE IS NOTHING TO SEE HERE. SINGLE STOCKS MAKING THE SECTOR STORY MORE INTERESTING. LIZZY: STELLANTIS DOWN MORE THAN 2% ON THE NEWS, RECORDING A LOSS IN THE FIRST HALF AFTER THE EXPECTATION THERE WOULD BE A PROFIT. THOSE SHARES CURRENTLY STRUGGLING. WE ARE WAITING FOR THE INDIVIDUAL NAMES TO OPEN. THE FT HAVING REPORTED IT IS PULLING A CHINA PRODUCTION EXIT BECAUSE OF CRAZY DOWN CYCLE THAT THEY HAVE BEEN FACING. THOSE SHARES ACTUALLY RECOVERING NICELY OFF THE BACK OF THAT CHANGE OF DIRECTION FOR THEM.

49:22 WE WAIT FOR CARREFOUR TO OPEN AND RYANAIR. SICK CHARLIE, YOU HAVE JUST OVER HALF IN POSITIVE TERRITORY. BASIC RESOURCES LEADING THE GAINS. ALSO AT THE BOTTOM, BECAUSE OF THIS WEIGHT FROM STELLANTIS, THAT SECTOR DOWN 0.6%. SOME OF THE OTHER WINNERS, TRAVEL AND LEISURE, REAL ESTATE, MEDIA. BUT NONE OF THESE MOVES PARTICULARLY BIG IN EITHER DIRECTION. GUY: MATERIALS STOCKS ARE UP. THERE IS A STORY MOVING OUT OF CHINA ABOUT MOVING THE IRON ORE TRADE, WHICH IS WHAT IS HAPPENING WITH THOSE MINING STOCKS. MAYBE THERE IS SOMETHING OF A NARRATIVE TO WATCH THERE. THE MARKETS ARE NOT RESPONDING A GREAT DEAL TO THIS NEWS. YOU WOULD THINK YOU WOULD GET A BIGGER REACTION. THAT IS NOT WHAT WE ARE GETTING

50:08 THIS MORNING. LIZZY: WHEN YOU SAY IT IS DOWN TO THE RESTRUCTURING, MAY BE AN INDIVIDUAL STORY RATHER THAN THE TARIFF STORY. LET'S NOT OVERSTATE THE IMPACT OF THE TARIFFS AND WHETHER IT WILL BE A CONTINUING THEME ACROSS THE SECTOR. BUT LET'S GET MORE ANALYSIS WITH OUR GUEST, CIO AT LOMBARD. GREAT TO HAVE YOU BACK ON THE OPENING TRADE. GUY: THAT IS A BAD THING. WE WILL COME BACK. LIZZY: WE WERE TALKING ABOUT HOW WE WERE WAITING FOR SOMETHING TO HAPPEN. IS THIS A LITTLE WE ARE SEEING IN MARKETS -- IS THIS A WALL WE ARE SEEING IN MARKETS?

50:59 IS IT NOT THE PROSPECT OF RATE PUTS IN THE PIPELINE? BUT YOU STILL HAVE THIS CONTINUED THREAT TO POWELL. SURELY THAT WILL CONTINUE. GUY: IF YOU NEED TO COME TO THIS MARKET AND LOOK AT THE RISKS THAT EXIST AND SAY, ARE WE GETTING A MARKET REACTION TO THIS? IN ISOLATION, YOU SAY, THESE ARE BIG STORIES. BUT NOTHING MOVES THE MARKET RIGHT NOW. NOTHING SEEMS TO PROVIDE A REASON, A DOWNDRAFT, A SIGNIFICANT UPDRAFT. THERE IS NOTHING HERE THAT IS EXCITING THE MARKET ENOUGH TO GET IT MOVING. I AM LOOKING AT THESE MARKETS THINKING HOW ON EARTH ARE SOME OF THESE STORIES NOT HAVING A BIGGER EFFECT THAT WE ARE SEEING RIGHT NOW?

51:45 WHY IS VOLATILITY BEING CRUSHED? WHY ARE EQUITY MARKETS DOING WHAT THEY ARE DOING? BUY IT IS THE BOND MARKET DOING WHAT IT IS DOING? I AM STRUGGLING TO UNDERSTAND WHY THE MARKET IS SO UNMOVED. IS IT THE RIGHT REACTION? THE DATA IS TELLING US THAT IS WHAT WE SHOULD BE DOING RIGHT NOW? OR ARE WE SO IMMUNE TO THESE RISKS, WE ARE PUNCHDRUNK IN TERMS OF WHERE WE SIT, IN TERMS OF HOW BIG A HIT IT WOULD TAKE TO ACTUALLY MOVE THINGS? LIZZY: LET'S ASK THE TRUE EXPERT. CAN YOU HEAR ME? LIZZY: YES, I CAN. GOOD MORNING TO YOU. LIZZY: VERY GOOD. GUY WANTS TO KNOW WHAT WILL LIFT THE LID ON THESE MARKETS. YOU SAY THE S&P IS TREADING WATER AT THE MOMENT. AS A REMOVAL OF THE TARIFF

52:34 UNCERTAINTY TO GET EXCITEMENT, TO LIFT THE STOCKS HIGHER? >> IT COULD BE BOTH WAYS, BECAUSE AUGUST 1 COULD VERY WELL SEE TARIFFS COME INTO EFFECT. RIGHT NOW, THE MARKET IS BEHAVING A LITTLE BIT COMPLACENT WITH COMPLACENCY, JUST IMAGINING THAT AUGUST 1 WOULD PERHAPS LEAD TO THE NEXT TARIFF, AND SO FORTH. I THINK THE MARKET AT THE MOMENT IS A BIT OBLIVIOUS TO THE POTENTIAL THAT WE MAY BE WAKING UP AND SEEING SOME OF THESE TARIFFS COME INTO EFFECT. SO, I THINK THERE'S BOTH WAYS A POSSIBILITY.

53:20 EITHER SOME YIELDS THAT HAVE COME INTO EFFECT BEFORE, AUGUST 1, THE THREAT, OR THE RIVERS. LIZZY: LET'S LOOK AT IT THE OTHER WAY. LET'S SAY AUGUST 1 IS A CLIFF EDGE FOR STOCKS. WE ARE LOOKING AT THE S&P. HOW FAST GOOD THAT UNRAVEL? HOW FAST GOOD THAT DROPPED TO 6200, 6000 EVEN? >> THESE MOMENTS WHEN ALSO VALUATIONS SEEM TO BE HIGH, AND WE ARE AT THE START OF THE EARNINGS SEASON, AND THE FIRST BATCH OF EARNINGS HAVE NOT BEEN BACK. WE COULD EASILY GET TO A 5% HERE IF THERE IS REALLY MAJOR

54:06 NEGATIVE SUPPLIES. I THINK THE SAFEST ASSUMPTION IS TO VIEW THE VOLATILITY CURRENTLY THAT MAKES UP 16 AS REALLY LOW, BUT THAT WOULD PROBABLY BE LIFTED HIGHER RELATIVELY FAST. WE SAW THAT WHENEVER THERE WERE MAJOR SURPRISES. GUY: BUT WE ARE NOT GETTING IT. GOOD MORNING. AND THE LIST OF THINGS OUT THERE THAT COULD UPSET THIS MARKET IS LONG, YET THE RATE TRADE EVERY TIME SEEMS TO BE TO BET OWN RISK. I'M JUST WONDERING WHETHER OR NOT -- HOW BIG THE SHOCK NEEDS TO BE TO CHANGE THE MARKET SENTIMENT. THE SENTIMENT CONTINUES TO BE,

54:54 MAY BE MORE WITH RETAIL AND LESS INSTITUTIONAL, BUT THE TRADES CONTINUE TO BE BUY DIPS. ANY DIP THAT IS OUT THERE, YOU SHOULD BUY IT. OTHER ANY CHANGES TO THAT IN THE NEAR TERM? >> FOR AS LONG AS THERE IS NO REAL MATERIAL RECESSION THAT WOULD PUT US ON A COMPLETELY DIFFERENT PATH, I THINK YOU ARE RIGHT. THE MARKET IS GOING TO BE BIASED TOWARDS USING THE OPPORTUNITIES OF SETBACKS THAT COULD BE TRANSITORY, THAT COULD BE GIVEN BY ANYTHING. WHEN VALUATIONS ARE REALLY LOFTY, SUCH AS THEY ARE IN CERTAIN SECTORS IN THE U.S., IT DOESN'T TAKE MUCH TO GET A SENTIMENT CHANGE HERE.

55:39 BUT WHAT WE ARE GOING TO SEE IS A BIAS TO BUY THE DIP. ALSO HISTORICALLY, IT HAS BEEN THE CASE THAT WHEN THE MARKET IS SELLING OFF BY 10%, FOR EXAMPLE, YOU COULD BLINDLY GO IN AND BENEFIT FROM IT BY TAKING AN ENTRY INTO THE MARKET. I THINK THIS BIAS WILL REMAIN FOR AS LONG AS THERE IS NO RECESSION PROBABILITY THAT IS MATERIAL IN 2025, AND THAT IS ALSO OUR BASE ASSUMPTION. GUY: IS THIS THE LAST SET OF EARNINGS THAT ARE GOING TO BE OK, THAT AREN'T GOING TO BE AFFECTED BY THE TARIFF NARRATIVE? I AM SEEING A FEW HINTS HERE AND THERE AND COMMENTS COMING THROUGH FROM SOME COMPANIES TALKING ABOUT TARIFFS, BUT IT DOES NOT SEEM TO BE MATERIAL YET. IS THIS THE LAST TIME I CAN EXPECT THAT TO BE TRUE?

56:28 >> I THINK STARTING THE THIRD QUARTER, WE ARE GOING TO SEE BOTH. AN IMPACT ON EARNINGS THAT IS GRADUALLY GOING TO SHOW, BUT ALSO AN IMPACT ON THE REAL ECONOMY. SO FAR, YOU COULD ARGUE BOTH ON THE RESULTS OF COMPANIES AS WELL AS ON THE DATA, THE U.S. ECONOMY AND THE GLOBAL ECONOMY BY AND LARGE, WE HAVE NOT SEEN SO MUCH EFFECT OF THE TARIFF THREAT. BUT THAT IS ALSO VERY WELL EXPLAINABLE. THERE HAS BEEN A TARIFF PAUSE, SO NONE OF THESE REALLY UNRAVELING TARIFFS HAVE COME INTO EFFECT. SECONDLY, AS A PRECAUTION, A LOT OF THESE COMPANIES HAVE

57:14 BUILT THEIR INVENTORIES AHEAD OF ANY TARIFF COMING INTO EFFECT. SO, ONCE THE FIRST ONES ARE LIKELY TO COME INTO EFFECT AUGUST 1, WHICH IS A VERY REASONABLE ASSUMPTION TO HAVE, THEN WE ARE ALSO LIKELY TO SEE IN THE TWO QUARTERS THAT FOLLOW EFFECTS ON BOTH, RESULTS OF COMPANIES AS WELL AS THE REAL ECONOMY. LIZZY: YOU SEE THREE FED RATE CUTS THIS YEAR. IF YOU DON'T SEE THOSE EFFECTS SHOWING UP IN EARNINGS IN THE ECO-DATA, IS IT REALLY POSSIBLE WE WILL GET THOSE RATE CUTS SO SOON? BY THE SEPTEMBER MEETING, FOR EXAMPLE. SURELY THE FED WON'T BE ABLE TO SETTLE THIS DEBATE THAT IS DIVIDING THE ROOM RIGHT NOW ON

58:04 WHETHER INFLECTION -- INFLATION WILL BE TRUMPS. THERE IS A STOCK. >> WE HAVE THE ASSUMPTION THERE WOULD BE TO CUTS IN 2025. MOST LIKELY SEPTEMBER, THEN LATER IN THE YEAR. THE REASON IS, FIRST OF ALL, WE SHOULD BE SEEING THE NEGATIVE IMPACT NOT SO MUCH OFF TARIFFS, BUT OFF THE UNCERTAINTY ON CAPEX PLANS, THEN ON THE U.S. ECONOMY. WE ARE ONLY EXPECTING HALF AS MUCH AS WHAT THE U.S. ECONOMY IS GROWING AT POTENTIAL. WE ARE EXPECTING 1.2% GROWTH IN

58:52 REAL TERMS IN THE U.S. THAT SHOULD GIVE THE FED SOME ROOM TO CUT INTEREST RATES, ESPECIALLY IF THOSE TARIFFS WOULD ACT AS THEY TYPICALLY DO WHEN YOU HAVE A PLAN TO INCREASE. THIS IS SOMETHING MOST ECONOMIES ARE MUCH MORE FAMILIAR WITH. WHAT IT DOES IS IT TRANSITORY REALLY PUSHES UP THE PRICE OF CERTAIN GOODS THAT ARE AFFECTED, BUT THERE ARE OTHER PRICE CATEGORIES COMING DOWN BECAUSE OF THE GROWTH. TYPICALLY THIS IS A CASE FOR SERVICES. AND AT THE END OF THESE THINGS MOVING OUTCOME ON LONG-TERM INFLATION EXPECTATIONS ARE REMAINING UNCHANGED.

59:39 SO, THE FED SHOULD BE IN A VERY GOOD POSITION TO HIKE INTEREST RATES. -- TO CUT INTEREST RATES. GUY: WHAT ARE THE CHANCES OF A SIGNIFICANT DOWNDRAFT IN ENERGY PRICES? AND HOW DOES THAT FEED INTO THE BROADER NARRATIVE THAT WE ARE TALKING ABOUT HERE IN TERMS OF THE INFLATION PICTURE COMING? >> WE HAVE BEEN EXPECTING THAT THOSE ENERGY PRICES WOULD BE LOWER THAN WHAT THEY ARE NOW. THE REASON WE HAVE SEEN PRICES MOVE UP AGAIN FROM THAT PATH ON WHICH WE WERE ENGAGED IN THE FIRST HALF HAS BEEN THE GEOPOLITICAL TROUBLE IN THE MIDDLE EAST THAT HAVE IN PARTICULAR AN EFFECT ON TRADE

1:00:28 OF ENERGY GOODS. AND THEREFORE, ENERGY PRICES GOT TEMPORARILY MOVED UP AGAIN AND AWAY FROM THAT PATH LOWER. FOR US, THE PROBABILITY IS VERY GOOD THAT WE RECEIVE LOWER ENERGY PRICES, NUMBER ONE, ON HIGHER SUPPLY OF ENERGY GOODS, IN PARTICULAR OF OIL, AND NUMBER TWO, AT SLOWER ECONOMY. GUY: IT WILL BE FASCINATING TO SEE HOW THAT FEEDS INTO THE EUROPEAN ECONOMY. THANK YOU VERY MUCH INDEED. A QUICK LOOK AT THE CORE SIX TO FIGURE OUT WHAT IS HAPPENING THERE, THEN WE WILL MOVE ONTO THE MAIN EVENT, WHICH IS THE AIRLINE SECTOR. A MIXED PICTURE THIS MORNING.

1:01:14 NO REAL STANDOUT STORIES WORTH FOCUSING ON. THERE IS A STORY THIS MORNING AND THE AIRLINE SECTOR. LET'S FIND OUT WHAT IS GOING ON. >> LET'S START WITH AIRLINE'S THIS MORNING. WE GOT REALLY GOOD NUMBERS FROM RYANAIR. IT'S PROFIT DOUBLED IN THE FISCAL FIRST QUARTER. IT REALLY BENEFITED FROM THE RECOVERY IN FARES FROM STRONG TRAVEL DEMAND. AND ALSO BECAUSE THERE IS AN EASING OF THE DELAYS ASSOCIATED WITH AIRCRAFT DELIVERIES. THAT IS PUSHING UP THIS STOCK, 5% THIS MORNING. ALSO DRIVING UP EASYJET AND WIZZ AIR, THE OTHER NAMES IN THAT LOW COST BUDGET AIRLINE SPACE. MOVING ONTO A LITTLE BIT OF A PAUSE -- LESS POSITIVE STORY, IN THE AUTO SECTOR THIS MORNING, STELLANTIS RECOVERED A 2.3 BILLION EURO LOSS COMPARED

1:02:04 TO EXPECTATIONS OF A PROFIT. A LOT OF THAT HAS TO DO WITH TARIFFS, AND IT IS REALLY DRAGGING DOWN THE STOCK, BUT PERHAPS NOT AS MUCH AS WE THOUGHT IT WOULD, DOWN ABOUT 2%. A LOT OF THESE ISSUES ARE COMPANY SPECIFIC RATHER THAN A SECTOR STORY. SO IT IS DRAGGING DOWN THESE NAMES IN THE CAR SECTOR, BUT NOT MUCH. WE HAVE VOLKSWAGEN AND BMW DOWN A LITTLE BIT THIS MORNING, BUT RENAULT IS QUITE RESILIENT. NEXT, WE HAVE THE MINING SECTOR. IRON ORE IS SURGING HIGHER AND THAT IS DRIVING THE STOCK IN RIO TINTO AND GLENCORE THIS MORNING, UP 2.3% AND 2.8%. FINALLY, WE HAVE SOMETHING IN THE REAL ESTATE SECTOR.

1:02:51 IN FRANCE, A REAL ESTATE COMPANY RAISED ITS PROFIT FORECAST THIS MORNING. IT IS BENEFITING FROM A STRONG RESIDENTIAL MARKET. IN GERMANY, IT ALSO SAID THERE WAS A STABILIZING ENVIRONMENT IN THE OFFICE SECTOR, WHICH IS INTERESTING KNOWING THE WEAKNESS THERE HAS BEEN RECENTLY IN THAT MARKET. THE FORECAST IS PUTTING UP THE STOCK 2.4% THIS MORNING. LIZZY: THANK YOU. CHLOE MELEY WITH OUR MOVERS. WE WILL DIVE INTO THE RYANAIR STORY EVEN MORE NEXT. EUROPE'S BIGGEST AIRLINE REPORTING A DOUBLING OF NET INCOME IN THE FIRST QUARTER. WE WILL WORK OUT WHAT IS DRIVING THAT VERY STRONG LOOKING FOR THE HOLIDAY MONTHS NEXT. THIS IS BLOOMBERG.

1:03:42 >> WE ARE SEEING NO SOFTNESS AND PEOPLE WANTING TO TRAVEL. WE HAD LIMITED GROWTH THIS YEAR. WE ARE ONLY GROWING BY 3%. THAT IS 206 MILLION PASSENGERS. BUT DEMAND IS EXCEPTIONALLY HIGH. GUY: THAT IS RYANAIR'S CFO SPEAKING TO US EARLIER. EUROPE'S BIGGEST LOW-COST CARRIER REPORTING DOUBLE NET INCOME. IT IS GETTING MORE PLANES THAN IT WANTS OUT OF BOEING. THINGS MOVING IN THE RIGHT DIRECTION. YOU CAN SEE WHAT THE STOCK REACTION IS. LET'S GET OUR AEROSPACE AND AVIATION DEFENSE COVERAGE TALK ABOUT HOW THIS IS HAVING AN IMPACT.

1:04:27 BIG MARKET REACTION TO THE RYANAIR NUMBERS. IT ALL LOOKS PRETTY GOOD. IT DOES SEEM AS IF THE AIRLINE IS EXECUTING PRETTY WELL RIGHT NOW, IN A MARKET THAT SEEMS FAIRLY FAVORABLE WITH MAY BE PEOPLE NOT TAKING LONG HAUL TRIPS THAT THEY USED -- THAT THEY ONCE DID. >> YOU ARE RIGHT. GENERALLY SPEAKING, WHEN DEMAND IS TOUGHER, THAT IS WHERE REALLY THE LAW -- LOW-COST CARRIERS COME TO THE FORE. PEOPLE ARE TAKING SHORTER TRIPS IN TERMS OF TIME SPENT AWAY AND TERMS OF DURATION. RYANAIR HAS A LOT OF THESE ROUTES. COST CONTROL IS DOING WELL AT RYANAIR. WE HEARD THE CFO SPEAKING ABOUT IT JUST NOW. THAT IS ALL HELPING THE COMPANY. THIS IS ONLY THE FIRST QUARTER, SO A LOT OF ANALYST REPORTS I READ THIS MORNING POINT TO A

1:05:13 VERY FAVORABLE OUTLOOK, SAYING THERE IS REAL UPSIDE IN TERMS OF WHAT THEY CAN DO THIS YEAR. ALSO AN INTERESTING CONTRAST TO SOME DEGREE WITH EASYJET, WHO REPORTED LAST WEEK AND THAT QUARTER WAS SABOTAGED SOMEWHAT BY THE ATC STRIKES WE HAVE SEEN ACROSS EUROPE, IN PARTICULAR FRANCE. RYANAIR DODGING THAT BULLET A LITTLE BETTER THAN EASYJET. THE STOCK ALMOST 10% TODAY, AT AN ALL-TIME HIGH NOW. LIZZY: WE HAD THE CFO ON BLOOMBERG EARLIER SAYING ANY TARIFFS WOULD BE ON BOEING'S ACCOUNT, NOT OURS. TALK TO US ABOUT HOW THAT WORKS FOR THE NON-AIRLINE EXPERT IN THE ROOM. IS IT AS EASY AS SAYING, WE ARE NOT PAYING? >> THAT IS SORT OF THE FIGHT WE ARE IN RIGHT NOW.

1:05:59 IT FEELS AS WE MOVE INTO THIS AUGUST 1 DEADLINE, NOBODY KNOWS HOW IT IS GOING TO PLAY OUT. THIS IS AN INDUSTRY THAT HAS LIVED IN A TARIFF FREE WORLD FOR THE BETTER PART OF 44 -- 45, 40 EIGHT YEARS. NOW THEY HAVE TO COME TO TERMS WITH WHAT PAYS OFF. WE HAVE HEARD THE AIRBUS CEO SAY WE ARE NOT GOING TO PAY IF WE SHIP OUR PLANES TO THE U.S.. WE HAVE HEARD DELTA AIRLINES IS A BIG CUSTOMER FOR AIRBUS SAYING, WE ARE NOT GOING TO PAY. YOU HAVE THIS BIT OF A STALEMATE. RYANAIR NOW SAYING THE SAME THING, SAYING WE HAVE FIXED CONTRACTS WITH BOEING ON OUR PLANES, SO WE DON'T WANT TO COUGH UP THAT MONEY. HOW THIS WILL PLAY OUT WILL BE VERY INTERESTING. THESE ARE MOBILE PRODUCTS, THE AIRCRAFT, SO THEY MIGHT FIND A

1:06:46 WAY TO TAKE IT SOMEWHERE ELSE FIRST AND THEN IMPORT THEM. BROADLY SPEAKING, THIS IS UNCHARTED TERRITORY FOR THE INDUSTRY, AND WE ARE HURTLING TOWARDS THAT AUGUST 1 DEADLINE. THE GENERAL VIEW IS EVERYONE SAYING WE HOPE THAT COMMON SENSE PREVAIL, BUT AGAIN, TIME IS TICKING. GUY: GIVE ME YOUR TAKE ON THE DEMAND PICTURE THAT RYANAIR IS SEEING AT THE MOMENT AND HOW STRONG IT IS. THERE IS SOME EXPECTATION MAY BE THAT WE WOULD START TO SEE DEMAND FADING. WHERE IS IT COMING FROM? WHY DOES IT REMAIN AS STRONG AS IT WAS AND WHY IS THE OUTLOOK SO POSITIVE? >> THEY ARE DOING VERY WELL IN SOME FRINGE MARKETS, FLYING INTO SCANDINAVIA MORE. THEY ARE BASICALLY ABLE TO MOVE

1:07:33 THEIR KIT AROUND FAIRLY NIMBLY, AND GOING TO PLACES, SWEDEN, EASTERN EUROPE IS A BIG MARKET. THEY ARE ALSO BENEFITING FROM THE WEAKNESS OTHERS ARE EXPERIENCING. WE KNOW WIZZ AIR HAS HUGE PROBLEMS WITH THEIR FLEET, SO THAT IS HELPING. GERMANY IS NOT MUCH OF A BRIGHT SPOT FOR RYANAIR, SO THAT IS PROBABLY ONE THAT IS HURTING THEM A BIT. IT HAS BEEN DIFFICULT FOR A LONG TIME. BUT THEY CAN MOVE INTO PLACES LIKE IBERIA. THEY CAN MOVE INTO PLACES LIKE SPAIN, LIKE GREECE, SCANDINAVIA. THOSE ARE THE STRONG MARKETS. IT IS A MIX OF PEOPLE GOING TO LOWER COST AIRLINES BECAUSE THEY MIGHT RECONSIDER THE BIG EXPENSES, AND THAT SOME OF THE OTHER CARRIERS, IN PARTICULAR WIZZ AIR, IS HAVING A TOUGH

1:08:19 TIME. LIZZY: BLOOMBERG'S MANAGING EDITOR FOR GLOBAL AEROSPACE AND DEFENSE COVERAGE BENEDIKT KAMMEL. A MORE NEGATIVE STORY FOR STELLANTIS. CHEERS MOVING AFTER AN AUTOMAKER RECORDED A 2.3 BILLION EURO NET LOSS IN THE FIRST HALF. RESTRUCTURING EXPENSES, WANING SALES, AND THE IMPACTS OF U.S. TARIFFS HIT. WE GET MORE WITH OUR REPORTER. WE TALK ABOUT THE TARIFF HIT HERE. IS THIS ACTUALLY A THEME WE ARE GOING TO SEE ACROSS AUTOMAKERS IN EUROPE? OR IS THIS A MORE INDIVIDUAL STORY UNIQUE TO STELLANTIS? >> I CERTAINLY THINK IT IS A TWO WAY STORY HERE. THE U.S. TARIFF HIT IS SOMETHING FOR THE COMPANY.

1:09:07 WE STILL DO NOT HAVE FOUR-YEAR GUIDANCE FOR THIS COMPANY. IT WAS GIVEN AT THE BEGINNING OF THE YEAR AND THEN SUSPENDED BECAUSE OF TARIFF UNCERTAINTY. AS OF TODAY, WE DON'T HAVE GUIDANCE. WHAT PROMPTED STELLANTIS THIS MORNING, THE MAKER OF JEEP AND SUVS IN THE U.S., TO ISSUE THIS STATEMENT IS THIS LACK OF GUIDANCE AND THE DISCREPANCY BETWEEN ANALYST FORECASTS AND THE REALITY THEY ARE FACING TODAY. SO, THEY DO CITE A 300 MILLION EURO HIT FROM TARIFFS. THAT INCLUDES LOST PRODUCTION AS PART OF THEIR RESPONSE PROGRAM THAT STELLANTIS HAD SHUT DOWN SOME OF THE PLANTS IN THE U.S. WHILE THEY AWAITED MORE

1:09:53 GUIDANCE, MORE NEWS ON THE TARIFFS. BUT THERE CERTAINLY ARE OTHER ITEMS AT PLAY HERE. THERE ARE IMPAIRMENT FIGURES. THERE IS A CLOSURE OF PROGRAMS. AND THEY WILL BE GIVING MORE DETAILS ON THAT WHEN THEY PRESENT A FULL DETAILED RESULT ON THE 20 NINTH OF JULY. BUT SOME ASPECTS ARE ALREADY EMERGING. FOR EXAMPLE, STELLANTIS DECIDED RECENTLY TO DROP INVESTMENTS IN HYDROGEN. THAT HAS AN IMPACT TODAY AND IS ALSO SHIFTING A LOT OF THE FOCUS ON HYBRIDS. THE FORMER CEO WAS PUSHING ALL OUT ON ELECTRIC VEHICLES. THEN DEMAND FOR ELECTRIC VEHICLES IS NOT THERE TODAY AS

1:10:41 WAS EXPECTED, NOT IN THE U.S., NOT IN EUROPE EVEN. SO, I THINK THERE IS A LOT OF READJUSTING OF PRIORITIES HERE. THIS IS PART OF WHAT WE ARE SEEING TODAY, BEYOND THE GENERAL SLUGGISH DEMAND FOR AUTOMOBILES WE SEE EVERYWHERE. GUY: WE DO HAVE A NEW CEO IN, AS YOU SAY. MAYBE PART OF WHAT WE ARE SEEING THIS MORNING IS HIS FIRST REACTION TO WHAT HE HAS FOUND UNDER THE HOOD, AS LIZZY WOULD CALL IT, AT THE BUSINESS. I WOULD BE INTERESTING TO SEE WHETHER THAT IS WHY WE ARE SEEING A MARKET REACTION. COMING UP, WE WILL CARRY ON OUR CONVERSATION ABOUT WHAT IS HAPPENING IN GERMANY. WE ARE GOING TO HAVE THE CIO ON NEXT. THIS IS BLOOMBERG.

1:11:42 LIZZY: THIS IS THE OPENING TRADE AND WE ARE 30 MINUTES INTO TODAY'S SESSION. YOU'RE LOOKING AT THE STOXX 600, PRETTY FLAT AT THE MOMENT. A BIT ABOUT PERFORMANCE FOR THE FTSE 100. THAT IS THE BEST PERFORMER ACROSS THE CONTINENT AND THE BEST PERFORMING SECTOR IS BASIC RESOURCES. SO THE TWO OF COURSE LINKED. THE MINERS DOMINATING THE FTSE. IRON ORE AND STEEL PRICES CLIMBING ON THE BACK OF CHINA'S PLAN FOR A MEGA DAM IN TAIWAN. THAT IS BOOSTING THE LIKES OF CLINT GO -- GLENCORE. AS WE APPROACH THAT AUGUST 1 TARIFF DEADLINE, THE EUROPEAN UNION IS LOOKING TO SEND SOME OF ITS ENVOYS TO MEET TO FORMULATE A PLAN FOR MEASURES TO RESPOND TO A POSSIBLE NO

1:12:29 DEAL SCENARIO WITH U.S. PRESIDENT DONALD TRUMP. THE U.S. SEEMS TO WANT A NEAR UNIVERSAL TARIFF ON GOODS, HIGHER THAN 10%. BUT HOW WILL BRUSSELS REACT? WE ARE JOINED BY BRENDAN MURRAY. WHEN YOU LOOK AT ALL THIS, I WONDER HOW LIKELY RETALIATION FROM THE EU IS, WHAT FORM THAT WOULD TAKE, AND WHO IT IS OUT OF THE MEMBER STATE PUSHING FOR THE HARDEST FORM OF RETALIATION. >> THESE NEGOTIATIONS SEEM TO BE GOING ALONG PRETTY WELL A COUPLE WEEKS AGO, BUT SOMETHING HAPPENED AND THEY GOT BOGGED DOWN ON SOME OF THE KEY ISSUES. WE HEARD COMMERCE SECRETARY LUTNICK OVER THE WEEKEND SAY HE THOUGHT HE WAS CONFIDENT THEY COULD GET A DEAL, BUT HE ALSO SAID, I THINK IT IS BECAUSE THE MEMBER STATES ARE GOING TO REALIZE IT IS GOING TO BECOME MORE PAINFUL FOR THEM IF THEY

1:13:15 DON'T. IT IS NOT LIKE THEY WERE OFFERING CONCESSIONS AND WE WILL SEE EYE TO EYE IN THE MIDDLE. SO, THE EUROPEANS HAVE A BIG CHOICE TO MAKE. DO THEY ESCALATE? DO THEY MEET TRUMPS TARIFFS WITH BARRIERS OF THEIR OWN? OR DO THEY ACCEPT UNFAIR NEGOTIATION AND TAKE THE ECONOMIC PAIN? THEY HAVE BEEN SAYING THEY WANT THAT UNIVERSAL TARIFF RATE TO STAY AT 10%. THE U.S. IS AT 30%. COULD THEY GET TO 20% WITHOUT A LOT OF OTHER MEMBER STATES SAYING THAT IS TOO MUCH FOR OUR OWN AUTO INDUSTRY OR OTHER INDUSTRIES? GUY: BACK IN APRIL, THE MARKET FREAKED OUT. THEY GOT REALLY UPSET ABOUT WHAT WAS GOING TO HAPPEN ON THE TERROR FRONT.

1:14:01 WE ARE NOW IN THE ALMOST EXACT OPPOSITE SCENARIO. THE MARKET IS UNMOVED BY ANY OF THESE HEADLINES. WHAT IS YOUR ASSESSMENT OF THE LIKELIHOOD OF SOMETHING SIGNIFICANT HAPPENING HERE? OR IS THE MARKET RIGHT TO CONTINUE WITH THIS LACK OF SENSITIVITY TOWARDS THESE HEADLINES THAT DROP ON A MINUTE BY MINUTE BASIS? >> I THINK WE HAVE A GOOD ENOUGH TRACK RECORD NOW TO SAY THE TRUMP ADMINISTRATION'S STRATEGY IS MAXIMUM PRESSURE, MAXIMUM LEVERAGE, APPLY THAT TO THE VERY END. WE HAVE TWO WEEKS UNTIL THE AUGUST 1 DEADLINE AND THERE SEEMS TO BE THIS COMPLACENCY THAT EVENTUALLY THEY WILL SEE EYE TO EYE AND THEY WILL NOT MOVE FORWARD IN THE TRANSATLANTIC TRADE WAR. THIS IS THE WORLD'S BIGGEST

1:14:47 TRADE IN INVESTMENT RELATIONSHIP. THERE IS A TRILLION AND A HALF DOLLARS WORTH OF ECONOMIC ACTIVITY BETWEEN THE TWO. BLOWING THAT UP WOULD BE DETRIMENTAL TO BOTH SIDES. I THINK THERE IS A SENSE THEY WILL GET TO SOME AGREEMENT. SOMEONE IS GOING TO HAVE TO TAKE THE SHORT END OF THAT. AND THE EUROPEANS ARE TRYING TO FIGURE OUT RIGHT NOW, WHAT IS THAT PAIN THRESHOLD WE WILL BE ABLE TO ACCEPT THAT THE U.S. IS GOING TO APPLY? GUY: WE WILL WATCH. THE NEXT FEW DAYS COULD BE INTERESTING. BRENDAN MURRAY UPDATING US. IT WILL BE AN INTERESTING WEEK THIS WEEK. NEXT WEEK, REALLY INTERESTING. WE ARE WATCHING ALL THIS UNFOLD AS WE THINK ABOUT HOW THE GERMAN ECONOMY IS MOVING FORWARD. MORE THAN 60 OF GERMANY'S LEADING COMPANIES UNVEILED AN INVESTMENT DRIVE WORTH 100

1:15:33 BILLION EUROS THIS MORNING. NEW PROJECTS WE ARE TALKING ABOUT. THE WHOLE IDEA IS IT WILL HELP LIFT EUROPE'S BIGGEST ECONOMY. WE SPOKE EXCLUSIVELY WITH TWO OF THE LEADERS OF THIS GROUP, SIEMENS AND DEUTSCHE BANK. THE CEOS OF THOSE GROUPS. THEIR ASPIRATIONS AND WHERE THEY EXPECT FUTURE GROWTH'S TO LOOK. THEY ALSO TALKED ABOUT HOW THE TARIFF STORY WILL IMPACT OUTLOOK AS WELL. >> LET'S PUT IT THAT WAY. WE WILL END UP WITH HIGHER TARIFFS BECAUSE OF THE UNITED STATES. WHAT WE DON'T REALLY WANT, WE WANTED TO HAVE LOWER ONES BECAUSE WE BELIEVE IN FREE TRADE. IT STIMULATES ECONOMIES. THAT WOULD DRIVE INFLATION TO SOME POINT. HOWEVER, THERE IS ONE POINT WHICH IS THAT WE HAVE TO STOP

1:16:18 THIS UNCERTAINTY. ONCE THERE IS THE DEAL, THE DEAL SHOULD BE THE DEAL, THEN WE CAN DEPLOY CAPITAL AGAIN BASED ON FACTS. >> WE HAVE BEEN TALKING A LOT ABOUT EUROPEAN CHAMPIONS AND CHANGING THE WAY WE THINK ABOUT PRESERVING COMPANIES AT THE NATIONAL LEVEL VERSUS THE EUROPEAN LEVEL. WHEN YOU LOOK AT DEUTSCHE BANK, WHICH IS NOW AT THE END OF A VERY LONG TURNAROUND PROCESS, BUT NOW IS FEELING LIKE IT IS IN A STRONG AND CONFIDENT POSITION, IS THIS A MOMENT FOR DEUTSCHE BANK TO GET INTO A MUCH MORE AGGRESSIVE MODE, EXPANSION MODE, LOOKING AT M&A ACROSS QUARTERS? WHAT DO YOU WANT DEUTSCHE BANK'S ROLE TO BE IN THE WORLD OF EUROPEAN CHAMPIONS? >> I DO THINK WHAT WE SEE IS THE GEOPOLITICAL UNCERTAINTIES

1:17:05 WITH ALL THE ECONOMIC UNCERTAINTIES. THERE IS ONE TREND WHICH IS THE SAME ACROSS THE WORLD THAT OUR CLIENTS WANT TO HAVE A EUROPEAN ALTERNATIVE TO THE U.S. BANKS. WE HAVE VERY STRONG AND CAPABLE U.S. BANKS. BUT IN THIS WORLD OF GEOPOLITICAL UNCERTAINTIES, THEY WANT TO HAVE A CAPABLE GLOBAL EUROPEAN PLAYER. AND THERE ARE NOT SO MANY EUROPEAN BANKS LEFT WITH A FULL INVESTMENT BANK, A FULL CORPORATE BANK, A GLOBAL NETWORK IN OVER 60 COUNTRIES. THAT IS A ROLE WE CAN PLAY. THIS ROLE WE NOT ONLY WANT TO PLAY BECAUSE WE ARE A LOWER BANK , BUT IT IS EASIER TO DO THAT IF YOU'RE COMING FROM A COMPANY THAT IS ECONOMICALLY ON THE RIGHT PATH AND IS ALSO PUTTING IT EUROPE.

1:17:51 WE HAVE A UNIQUE CHANCE NOT ONLY AS GERMANY AND EUROPE, BUT ALSO AS DEUTSCHE BANK, TO BE THE ONE FACILITATING AND CONTRIBUTING TO CLIENT GROWTH AROUND THE WORLD. THE DIVERSIFICATION ALSO IN BANKING, NOT ONLY TO RELY ON ONE BANK BUT MANY BANKS THAT FROM A REGIONAL PROSPECT HAS NEVER BEEN BIGGER. >> YOU TALK ABOUT DIVERSIFYING. IS THIS BUY EUROPE TREND A LASTING TREND? IS THIS SOMETHING YOU ARE SEEING FROM INVESTORS, THAT THEY ARE WANTING TO MAKE A MEANINGFUL COMMITMENT TO EUROPE? AND WHAT DOES THAT LOOK LIKE IN TERMS OF NUMBERS? >> FOR THE FIRST TIME, WE SEE SINCE THE LAST TWO OR THREE MONTHS, A SIGNIFICANT REALLOCATION OF FUNDS, IN PARTICULAR TO EUROPE. THE INTEREST IS HUGE.

1:18:37 WHENEVER WE TALK WITH INVESTORS, THEY REALLY WANT TO UNDERSTAND WHAT IS GOING ON, IN GERMANY, IN EUROPE. ALREADY IN DAVOS THIS YEAR SIX MONTHS AGO, MOST OF THE INVESTORS SAID, MICRO, GERMANY IS REALLY GOOD. WITH THAT, THEY MEAN THE GERMAN CORPORATES, COMPANIES. MACRO, YOU NEED TO DO IMPROVEMENTS. GUY: ARE WE GOING TO START SEEING THOSE WITH THE MERZ GOVERNMENT COMING THROUGH? SENTIMENT REALLY QUITE POSITIVE, DEUTSCHE BANK AND SIEMENS. BUT IN THE BACKGROUND, WE STILL HAVE THIS HUGE THREAT COMING IN THE FORM OF POTENTIAL TARIFFS. THE CHIEF ECONOMIST AT ALLIANZ COMING TO DISCUSS.

1:19:24 IN TERMS OF WHERE WE ARE RIGHT NOW, WE HAVE THIS INCREDIBLY POSITIVE PICTURE BEING TALKED ABOUT BY GERMAN CORPORATE'S. WE JUST HEARD FROM DEUTSCHE AND SIEMENS. THERE IS THE POTENTIAL FOR SIGNIFICANT TARIFFS TO BE IMPOSED OVER THE NEXT FEW DAYS. AND THE MARKET IS BASICALLY IGNORING ALL OF THAT. WHERE DO YOU SIT CURRENTLY IN TERMS OF YOUR EXPECTATIONS FOR HOW THE EUROPEAN ECONOMY IS GOING TO DEVELOP GIVEN THE THREAT IT FACES FROM THESE TARIFFS? >> IT IS A PARTICULAR CROSSROADS BECAUSE WE HAVE A WEEK TO KNOW WHAT WILL HAPPEN WITH THOSE TERROR THREATS. THIS IS A HUGE UNCERTAINTY FOR ALL THE CORPORATES THAT ARE

1:20:13 MAKING HUNDREDS OF BILLIONS OF TURNOVERS IN THE U.S.. WE HAVE TALKED 163 BILLION LAST YEAR FOR GERMAN CORPORATE'S. IMAGINE HOW MUCH OF A STAKE THERE IS IN THIS TRADE WAR TO BE MUTED IN THE NEXT QUARTERS. IT IS A BIG TOPIC. I THINK THIS NEWS FOR GERMANY IS WELCOME. GERMANY IS SLOWLY BUT SURELY GOING OVER ITS ETA'S FROM 2022 WHERE THEY REALIZED THE MODEL WAS OFF. I THINK THIS ANNOUNCEMENT IS VERY IMPORTANT, ALONGSIDE THE ANNOUNCEMENT OF PUBLIC MONEY THAT IS GOING TO BE A KEY DRIVER OF GROWTH. ALONGSIDE REFORMS. BUT THE KEEP MISSING IN ACTION PERSON, THE ONE PART VERY IMPORTANT IS THE

1:21:00 99% OF GERMAN COMPANIES THAT ARE SME'S AND NEED TO GROW THEIR INVESTMENT. BETWEEN 2019 AND 2024, CAPEX, INVESTMENTS BY CORPORATE AND GERMANY WENT DOWN 70%. SO, THE GOVERNMENT IS ALSO TRYING TO DO SOMETHING ABOUT THIS. IT IS PART OF PSYCHOLOGY, BUT IT IS ABOUT THE MOM AND POP SHOPS, THE HOUSEHOLDS. THIS IS WHERE WE SEE RECORD HIGH SAVINGS. SO, THERE IS STILL SOMETHING THERE TO UNLOCK FOR GERMANY AND EUROPE IN GENERAL. IT WILL BE BETTER FOR EUROPE TO GROW ON ITS OWN WITHOUT WAITING FOR GROWTH FROM THE OUTSIDE, ESPECIALLY WHEN IT COMES TO THE TRADE WAR. GUY: WHICH OF THESE TWO FACTORS WILL

1:21:46 END UP BEING MORE DOMINANT, THE IDEA THAT GERMANY NEEDS TO INVEST, THE IDEA THAT THERE IS THE MONEY THERE TO UNLOCK AND THAT CAN BE DEPLOYED AND DELIVER SIGNIFICANT RESULTS, BUT AT THE SAME TIME THE OVERARCHING THEME IS THAT WE ARE FACING A TOUGHER TRADE NARRATIVE WITH THE UNITED STATES, A KEY MARKET FOR MANY OF THESE SMALLER MIDSIZE COMPANIES. WHICH OF THOSE TWO THINGS DO YOU THINK WILL END UP BEING DOMINANT? IS IT POSSIBLE TO HAVE A POSITIVE STORY WHEN A TRADE WAR IS LOOKING MORE AND MORE LIKELY? >> THE ANSWER IS YES BECAUSE THE DOMESTIC MARKET IN EUROPE IS PRETTY HUGE. WE NEED TO DEEPEN OUR SINGLE MARKET. WE NEED TO FIND WAYS FOR US TO BE INDEPENDENT.

1:22:32 I THINK THE TRADE WAR IS A MASSIVE HEADWIND. LET ME START WITH THAT. ADDITIONAL TARIFFS IS COSTING 0.5 PERCENT IN GROWTH FOR EUROPE. IF THE TARIFF FROM THE U.S. IS LANDING AROUND 15%, THEY HAVE TO DROP ANOTHER BASIS POINTS SO THAT WE DON'T GO INTO RECESSION. BUT THERE IS NOT A LOT OF INITIATIVE THAT COULD BE BOOSTED HERE. THE CEO OF DEUTSCHE BANK WAS TALKING ABOUT THE ALLOCATION INTO EUROPE. I TALKED A TON OF CIO'S IN EUROPE WHO SAY MONEY IS

1:23:20 FOLLOWING DEFENSE. IT IS COMPLICATE IT, BUT IT LOOKS LIKE YOU GUYS ARE ON THE SOMETHING WHEN IT COMES TO MAKING SAVINGS PRODUCTIVE. SO, THERE IS A CORRECTION OF THE BIAS THAT WAS IRRITATING EUROPE FOR SOME TIME. ALSO BECAUSE WE LOOK MORE STABLE AND RULES DRIVEN. WE ALSO ARE MORE FORWARD-LOOKING IN TERMS OF WHERE WE WANT TO SPEND THE NEXT FIVE TO 10 YEARS OF OUR MASSIVE EFFORTS COME UP WITH PUBLIC MONEY BEING UNLEASHED, BUT ALSO THE INITIATIVE GOING ON RIGHT NOW TO MAKE SURE WE ARE CREATING A DIFFERENT ECOSYSTEM. IT DOESN'T SAVE US FROM THE THUNDER OF WHAT THE TRADE WAR IS GOING TO BRING, AND ALSO THE FRICTIONS BETWEEN THE EURO'S -- THE U.S. AND EUROPE. BUT IT IS A MOMENT WHERE IT IS QUITE INTERESTING.

1:24:07 I THINK THE EUROPEAN UNION, THE EUROPEAN COMMISSIONER CALLED FOR ACTION BY EVERY BUSINESS LEADER IN EUROPE, WHICH IS VERY INTERESTING TO SEE AS A REVERSE CALL FOR ACTION. WE ARE WANTING THEM TO MAKE A BOLD MOVE SO THERE IS A FORM OF TRICKLE-DOWN OF THIS WHOLE EUROPE NARRATIVE. LIZZY: IT WAS INTERESTING YOU SAID THE ECB IS GOING TO PAUSE RATES THIS YEAR. I TAKE IT YOU DON'T SEE ANY MORE CUTS FOR THE REST OF 2025. WHEN WE THINK ABOUT THE ECB, IT IS NOT JUST TRADE. IT IS ALSO THE THREATS TO CHAIR POWELL. WE HAVE THE ECB SAYING THE EFFECTS OF OUSTING POWELL WOULD BE FELT OUTSIDE THE U.S. I WONDER WHAT YOU THINK THAT

1:24:53 WOULD LOOK LIKE FOR EUROPEAN MARKETS, AND IF YOU AGREE WITH HIM. >> FIRST, WE STILL HAVE TWO RATE CUTS THAT ARE PLANNED FOR SEPTEMBER AND OCTOBER, JUST TO GET THAT OUT OF THE WAY. BUT THE REAL QUESTION IS INDEED WHAT IS HAPPENING ON THE EURO-DOLLAR. IT HAS BEEN A MASSIVE ROLLER COASTER SINCE THE BEGINNING OF THE YEAR. THERE IS NOW THIS MOMENT WHERE WE ARE IN A DIFFERENT COLT SITUATION WHERE WE DON'T WANT THE EURO TO BE TOO STRONG. THERE IS SOMETHING HERE ABOUT BUILDING AN ALTERNATIVE TO THE DOLLAR AS THE DOLLAR ERODES IN THE EURO BECOMES A CURRENCY WERE EMERGING MARKETS WANT TO ISSUE IT, OR A CURRENCY WHERE THE FINANCING OF THE DEFENSE EFFORTS WANT TO BE.

1:25:40 JUST LIKE THE ENERGY SECTOR NEEDS TO LOWER THE DEFENSE. I WOULD SAY WHATEVER IS HAPPENING NOW ON THE U.S. AND THE FED IS A MASSIVE DRIVER OF EVERYTHING MARKET RELATED, INCLUDING EUROPE. BUT THERE IS ALSO FOR US A BIT OF TIME TO ENGINEER SOMETHING SLIGHTLY DIFFERENT. I THINK ABOUT STABLECOINS MAKING THEIR WAY TO THE MARKET RIGHT NOW. EUROPE NEEDS TO HAVE AN ALTERNATIVE TO THIS. WE NEED TO HAVE AN ALTERNATIVE. I THINK A LOT OF US ARE THINKING , HOW IS THIS A WAY FOR US TO GET SOME OF THE CRUMBS THE DOLLAR IS LEAVING BEHIND AND MAKING IT A STRENGTH AT A MOMENT WHEN EUROPE IS

1:26:25 READY TO TURN AROUND AMID THE PSYCHE OF INVESTORS, FINANCIAL MARKETS, AND TRYING TO MAKE IT A HOMEGROWN MARKET THAT IS DECENT? GUY: YOU TALK ABOUT A CALL FOR ACTION. IS THAT CALL FOR ACTION GOING TO BE DELIVERED OUTSIDE OF GERMANY? GERMANY SEEMS LIKE IT'S OWN SITUATION AT THE MOMENT, AND THE REST OF EUROPE DOESN'T. I'M WONDERING IF THE TWO FIT TOGETHER. THE REST OF EUROPE DOESN'T HAVE THE POTENTIAL THAT GERMANY HAS A RIGHT NOW. IT DOES NOT HAVE A DEBT BREAK TO RELEASE AND POTENTIAL TO SPEND ALL THIS MONEY. ARE WE CONFUSING GERMANY WITH EUROPE SOMETIMES? >> TO BE FAIR, IT IS TRUE THAT IT LOOKS LIKE HEAVY LIFTING FOR

1:27:10 DEFENSE AND EVERYBODY IS LOOKING AT GERMANY. I OFTEN TELL MY FRENCH FRIENDS, IF YOU EXPECT THE GERMAN MONEY GOING TO DEFENSE IS GOING TO BIG COMPANIES IN FRANCE, YOU ARE WRONG ABOUT THIS. THE GERMANS HAVE BEEN SAVING FOR THAT MOMENT. THIS BEING SAID, I THINK WE SEE SO MANY GOOD VIEWS FROM ITALY AND SPAIN WHO HAVE BASICALLY BEEN BACK ON A PRIMARY SURPLUS VERY FAST. ALSO BECAUSE OF THE CRISIS IN 2014, BUT ALSO BECAUSE THEY HAVE THEIR REFORMS ON THESE SECTORS AND REVISING A LOT OF PRIVATE INVESTMENT GROWTH IN THE COUNTRIES. IN FRANCE, WE HAVE A LOT OF BIG COMPANIES IN THE SECTORS WHERE

1:27:58 THAT IS THE MOMENT OF THE SECTORS, THAT IS THE MOMENT OF THE ENERGY TRANSITION, AND IT HAPPENS THAT A LOT OF THESE BIG COMPANIES ARE IN FRANCE RIGHT NOW. SO, I WOULD SAY THE ONLY WAY THAT THIS GERMAN MOMENT BECOMES A EUROPEAN MOMENT IS IF WE LOOK FOR COMPARABILITIES. WHICH IS SOMETHING EUROPE HAS NOT BEEN HISTORICALLY VERY GOOD AT. WE HAVE ALL BEEN VERY SANITIZING AMONG THE EXPECTATIONS OF COUNTRIES. IT LOOKS LIKE COUNTRIES HAVE SOMETHING TO OFFER. NOT ALL HAVE MONEY TO OFFER. BUT IN FRANCE ESPECIALLY, THEY MAY NOT HAVE A LOT OF MONEY. EVERYWHERE I LOOK, THERE IS A VERY HIGH SAVINGS RATE. THERE IS LOW CAPEX GROWTH. THAT IS WHERE THE PSYCHOLOGICAL

1:28:46 LIMIT IS IMPORTANT, BECAUSE HOUSEHOLDS AND COMPANIES HAVE SOMETHING TO UNLEASH RIGHT NOW IF WE WANT TO FINANCE THE NEXT FIVE TO 10 YEARS, INCLUDING THE SECURITY TILT. LIZZY: WE HAVE A MEETING THIS WEEK. BOTH HAVE BEEN IN LONDON THE PAST COUPLE WEEKS. MAYBE A SIGN OF PROGRESS. THE CHIEF INVESTMENT OFFICER AT ALLIANZ, ALWAYS GOOD TO HAVE YOU AND YOUR BEAUTIFUL ART ON THE OPENING TRADE. WE THANK YOU. COMING UP, BRACING FOR A SLEW OF EARNINGS THIS WEEK FROM SECTORS SUCH AS BANKING, TRAVEL, AND TELECOMS. WE WILL GET YOUR PREVIEW NEXT. THIS IS BLOOMBERG. ♪

1:29:42 LIZZY: 51 MINUTES INTO TODAY'S SESSION. WELCOME BACK TO THE OPENING TRADE. THE STOXX 600 TRADING LOWER. THE WAS PERFORMING SECTOR ARE THE BANKS. WE ALREADY HEARD FROM CEOS. THE BANKS ARE THE BIG SECTORS TO WATCH. THEY ARE AFFECTED BY INTEREST RATE CUTS AND GEOPOLITICAL TENSIONS. WHAT ARE WE EXPECTING OUT OF THEIR RESORT? >> WE GOT A TASTE WHEN THE CEO MENTIONED THERE HAD BEEN A BIT OF A BUMPY QUARTER. HE KIND OF READJUSTED EXPECTATIONS DOWN TO THE REVENUE THERE. AND HE ALSO MENTIONED WEAKER THAN EXPECTED PERFORMANCE IN

1:30:30 THE ADVISORY BUSINESS. WE KNOW THE EARNINGS MIGHT DISAPPOINT A LITTLE BIT. A BRIGHT SPOT MIGHT BE THE CORPORATE BANKS. BARCLAYS RESTRICTED THEIR SUPPLY CHAINS. THEY ARE LOOKING TO INVEST IN THE DEFENSE INDUSTRY AS WELL, ESPECIALLY GERMANY. THAT MIGHT BE A BIT OF A BRIGHT SPOT. WE ARE ALSO LOOKING TO HEAR ABOUT COST CUTS, THE PERFORMANCE IN THE PRIVATE BANK, AND THERE MIGHT BE A BUY BACK. SO, THINKING ABOUT THAT. GUY: IS IT THE ONLY BANK REPORTING THIS WEEK? >> WE HAVE A FEW OTHERS. WE HAVE BNP. THE KEY THING TO LOOK OUT FOR THIS EARNINGS SEASON IS ALL THOSE BANKS COME THROUGH IN THE SECOND QUARTER IS LIKELY TO BE LESS RESILIENT THAN THE FIRST. THINGS ARE STARTING TO CATCH UP.

1:31:17 AS YOU MENTIONED, THE INTEREST RATE CUTS ARE STARTING TO FEED THROUGH TO LOWER NET INTEREST. WE SAW THAT WITH THE NORDIC BANKS EARLIER. THE TARIFFS AND THE UNCERTAINTY IS FEEDING THROUGH THE COST OF RISK AND INTO HIGHER PROVISIONS AS WELL. THE U.K. BANKS MIGHT PERFORM A LITTLE BETTER, BUT THEY HAVE STRUCTURAL HEDGES AND THAT IS ALLEVIATING THE IMPACT OF RATE CUTS IN SHIELDING THE REVENUE. THAT MIGHT BE BETTER FOR THOSE FROM FRIDAY. GUY: CHLOE MELEY. THE GERMAN INVESTMENT ALLIANCE SUMMIT IS TAKING PLACE BEFORE THE HEARING FROM THE CEOS OF SIEMENS AND DEUTSCHE'S. WE HAVE U.S. HOME SALES TOMORROW.

1:32:07 MERZ AND MACRON ARE MEETING IN BERLIN. IT FEELS LIKE A THREE WAY TRIANGLE BEING FORMED BETWEEN PARIS, LONDON, AND BERLIN. WE HAVE EU AND CHINESE LEADERS MEETING IN BEIJING. THE MAIN EVENT ON THURSDAY WILL BE THE ECB RATE DECISION, ALTHOUGH IT IS UNLIKELY TO DELIVER MUCH OF AN OUTCOME. PLUS ALSO, WE HAVE U.K. RETAIL SALES OUT, WHICH IS USUALLY SOMETHING OF A WEATHER FORECAST. LET'S SEE WHAT VALERIE IS GOING TO HAVE HER EYE ON THIS WEEK. WHAT ARE YOU WATCHING? VALERIE: I THINK EUROPEAN BANKS WILL BE INTERESTING. THE OTHER HIGHLIGHT FOR MONETARY POLICY IS GOING TO BE THE ECB DECISION. WHAT HAS REALLY CHANGED BETWEEN THEIR JUNE DECISION AND NOW IS

1:32:53 THE FACT THAT THIS RENEWED THREAT OF TARIFFS, THIS 30% NUMBER THREATENED BY PRESIDENT DONALD TRUMP, AND ALREADY AT THE JUNE DECISION, CHRISTINE LAGARDE CHARACTERIZED THE RISKS TO ECONOMIC GROWTH AS TILTED TO THE DOWNSIDE. SO, THE MARKET WILL BE WATCHING KEENLY ON IF SHE CHANGES THAT LANGUAGE, IF SHE SOUNDS A BIT MORE BEARISH. IF SHE DOES, I THINK THE MARKET WILL START TO PRICE IN THE CHANCE OF A SEPTEMBER RATE CUT. THEY DO HAVE A SEVEN WEEK PAUSE IN BETWEEN THIS DECISION ON THURSDAY AND SEPTEMBER, SO THERE IS A LOT OF TIME BETWEEN THOSE TWO POINTS. MAYBE WE WILL GET MORE CLARITY ON THE TRADE POLICY AND MORE CLARITY ON THE RATE TRAJECTORY FOR THE ECB. LIZZY: I WANTED TO TALK ABOUT JAPAN BECAUSE GUY TOLD ME NOT TO TRY TO ANALYZE THOSE MOVES RIGHT

1:33:40 NOW. THE BOND IN STOCK MARKET ARE CLOSED, BUT WHAT DO YOU MAKE OF WHAT WE ARE SEEING OF THE LIMITED REACTION TO THAT? VALERIE: THE YEN IS STRONGER SO IT IS HAVING A BIT OF RELIEF. ALSO, LOOK HOW GOVERNMENT BONDS ARE RESPONDING. WE ALSO SEE A RELIEF RALLY WHEN IT COMES TO JGB'S WHEN THEY REOPEN. IT SEEMS LIKE A MARKET FAVORABLE ELECTION RESULTS. I THINK MAYBE THE MARKET WAS BRACING FOR SOMETHING WORSE, OR MAYBE THEY PRICED IN A LOT WORSE IN THE WEEKS GOING INTO THIS DECISION. WE KNOW THAT THE HAD STRENGTHENED AROUND 3% -- SORRY, WEEKEND AROUND 3%, AND SOME YIELDS HAVE HIT TO DECADE HIGHS. LIZZY: DO YOU THINK IT IS ALL ABOUT JAPAN? OR THE MARKET IS LOOKING THROUGH JAPAN AND ONTO THE TRADE STORY, THE ECB STORY?

1:34:28 VALERIE: I THINK JAPAN HAS DEFINITELY SET THE TONE WITH HOW FIXED-INCOME HAS TRADED. THIS COULD SET US UP FOR A DECENT SUMMER RALLY AHEAD AND INTO JULY IF THOSE FISCAL WORRIES ARE PUT TO BED, FOR WHATEVER REASON, WHETHER WARRANTED BY THIS RESULT FROM THE ELECTION OR NOT, BUT IT SEEMS TO BE THE READTHROUGH. VALERIE: WE WILL KEEP -- LIZZY: WE WILL KEEP AN EYE ON IT TOMORROW. WE THANK YOU FOR THAT SET OF WHAT IS ON THE DOCKET FOR THE WEEK. WE HAVE A BUSY WEEK FOR EARNINGS HERE IN EUROPE, AND THAT ECB MEETING OUT OF FRANKFURT. A HOLD EXPECTED FROM THE DUMB LAGARDE. WE ARE LOOKING AT THE STOXX 600, TRADING -- TREADING WATER. SLIGHT OUTPERFORMANCE FROM THE FTSE 100. BUT THINGS ARE YET TO PICK UP SPEED. I WILL BE WITH YOU NEXT HOUR.

1:35:17 GUY: WE WILL FIGURE OUT WHAT IS HAPPENING IN THE BOND MARKET, ANALYZE WHAT IS HAPPENING IN JAPAN, AND PREPARE OURSELVES FOR WHAT WILL HAPPEN ON THE TRADE FRONT NEXT. THAT SEEMS TO BE THE NARRATIVE WE ARE BUILDING ONTO.