a.m. in new york, 3:00 p.m. in london, 30 minutes into the trading day in the united states. i'm guy johnson. welcome to "bloomberg markets." we are down by 7/10 of 1% on the s&p 500. the dollar is roaring back on this news. the bloomberg dollar index getting a kick higher on that strongerignificantly than the market was anticipating. as it seeing a repricing comes to rates as well. a decent sized move, so we are seeing the right market selling off, yields moving a little higher. this is the markets digest that better-than-expected payroll number. let's take a look at what has happened here in europe. again, equities down a similar amount to what we are seeing on wall street. we areman ten-year continuing to see a lot of movement around this.

yields are moving a little higher, six basis points on the german ten-year. deutsche bank as well, starting to get the early look at what this story is going to look like over the weekend. we are waiting for christian sewing's big news related to how he's going to change that bank. we are expecting a meeting sunday, but it now looks as though the eye bank -- the i bank head garth ritchie is going to be stepping aside. u.s. employers added 224,000 casein june, diluting the for that fed rate cut in july. the jobless rate taking a little higher, but all in all a pretty positive number, or was it? let's get some analysis now. in washington, we have michael mckee, bloomberg's international

correspondent. your take on this number, and does it change the case for the fed? michael: i think there's a very good chance it changes the case for the fed. this is sort of the mirror image of the may number, revised down by 3000. still a lousy month, but it wasn't that they were jobs lost in may. the there were jobs lost in may. there were just no jobs created. we saw jobs created in every category. retail the only one that suffered. he saw may as something as a fluke. it does not change the idea that , notgrowth is tepid picking up even though the economy seems to be strong enough to do that. job growth seems to be strong enough to do that so if you want to make in an place in argument, maybe that is there but the fed has had that issue and has not felt like it needed to cut rates to get wages higher. to make a case that

the economy is suffering. , 172,000onth average jobs in the last three months. not much has changed this year. let's bring you into the conversation. the market is 24 when it comes to cuts for july. does that sound right? >> it sounds right and i do not think it is as good of a job market as it is made out to be. look at the different things that have happened. the average hourly earnings of 3.1% missed expectations. it is decelerating since the beginning of the year. suggesting inflation eventually headed downward. a figure we keep watching every month, which very little analysis is done. the number of people holding multiple jobs does not pay you enough of an income. we hit a new five-year high.

8.2 million people want 5.2% of the total people employed hold more than one job. pain in the jobs market -- yes, the jobs are created but the economy seems to be unable to raise more participation rates and keep the unemployment rate low and increased wages all of the same time. the economy has basic problems. does the u.s. economy have such a problem it needs wage cuts? is it concerned about the direction of travel for trade? or part of what you said, if you look at rates in the liquidity market as well as the bond market, but the rate the fed is going to see it is to see the stock market is going to

take governments badly and if you have more of a reduction in a woody prices going from here --the end of july, the raid rate cut will be very much in play. it is not so much in terms of the economy needing it. there was an argument and i am beginning to hear more about this. the u.s. needs to take advantage with what else is happening. germany is suffering in the trade narrative as a result of the ecb having to react. are dropping. that is having an effect on the states, which is lowering the effective mortgages. can the fed fit and watch others do the heavy lifting? that is what they have

been doing. there is a benefit to the event of states with everything going on. as long as the markets are doing the fed's work for them, they do not have to ratify that. after a while it might reverse. is whattion i have we're hearing from the officials are saying, is ceos it is straight uncertainty. it is not demand. capitalt cost of affecting business spending. retail sales old up along with job creation, it is hard to see how rate cuts do anything but spur but stock market and the fed is not in the business of spurring the stock market. they are going to take things badly today because they are thinking they are not going to get a rate cut. we see the stock market knee-jerk reaction get absorbed back into another rise. i can see -- it is hard to see why the fed would want to cuts.

they do not want to cut. it will be adjusting to see how this plays out over the next couple months. rates, youw market can argue the economy gets the the --s without to jump in on that, i agree with mike that rate cuts are not going to do anything with the trade issues. , i fed has a way of saying have a hammer. i am going to keep hitting up names. the they did was to say trade uncertainty is going to cause rate cuts and that is the reason why i think even though it will not be effective, they will not cut rates. if the fed disappoints in terms not cutting rates and also in terms of having a

hawkish press conference, to what he did last december, expect the dollar to shoot up in powell is going to hear it from the white house quickly on what it is publicly and in private conversations. he is not going to be happy -- it is not going to be a happy august. it is going to be hot. be: the fed is going to binding itself having to answer tricky questions. joining usike mckee from washington. omal will be staying with us. let's get to bloomberg first world news update. european governments are discussing whether the bank of governor mark arnie to run the imf. he is canadian by birth but holds british passports so his

selection would preserve the managing director. china sticking to its demand that u.s. remove all tariffs placed on chinese goods. trade talks will go backwards again i must tariffs are lifted. the white house said they are talking by telephone. face-to-face negotiations have been announced. the head of deutsche bank is leaving. his departure was announced days before overhaul is expected to be unveiled. the fort of doors will decide on a restructuring plan that includes job cuts. bloomberg lacked those cuts will go beyond equities and interest rate derivatives trading. bill klein was -- died in a helicopter accident. 600 people also died. he was the founder of foresight energy. he was 60 years old.

global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. i am viviana rotondo, this is bloomberg. pressure,s under treasury yields rising. the dollar pushing higher and well. the monthly jobs report clouding the case for the federal reserve rate cut in july. this is bloomberg. ♪

guy: i am guy johnson. this is bloomberg markets. quite a reaction from the payroll report. badhe payrolls number is

news for stocks. markets think the fed may not cut as much as we thought. seeing a pullback. the biggest overseas by you in europe. in the u.s., tech is leading the losses. a major pullback on some of the major industries. we all that over into the bond market. tenure up nine basis points. all the sectors sensitive to the rates like the financials. the best performers of the day, these banks, the big ones in the regional do well when yields are starting to rise. you see the financials, one of the only sectors in the green that otherwise is a sea of red. go, what thatb looks for the fed. we are looking at what is priced into the market in terms of rate cuts for 2019.

as you can see in june, we're looking at three cuts for the year. that has been way pulled back. the markets now looking at two 2019. cuts price and for i want to look at individual movers we are at. we had samsung earnings worse than expected. they saw earnings cut in half entree tensions and oversupply with the market. all the kingmakers fall today. analysts over bank of america had products for intel. they are facing a crucial second half of the year. china is a headwind but you need to take a look at the pipeline for these companies as they enter h2. taylor, great job. thank you very much. is our guest joining us from los angeles.

post the payroll number, do you think you are changing any of your views on allocation ? while get through where you are as anything has changed. komal: we are coming to the private stages of the bull market and today's job market does not change. clearly, if you are a traitor -- trader, you sold off on the basis of the jobs report. when the feds comes back, on july 31, stocks are going to shoot up. if you have 2.5 cuts for the rest of the year, if you have anywhere from 2-3 cuts coming for the rest of the year that is going to boost the market for some time the question is does that cost the session not to happen and i do not believe that to be the case. if you would not straight and

you're looking for a year come -- a year and a half ahead, i would say the sovereign bonds are going to keep giving you the gift they have given you over the last couple years. the acquisition has not changed at all. guy: how much lower do you think the u.s. tenure goes? 1.50. i expect i have been talking about it going to 2% when it sounded like an outlandish six rotation. -- outlandish expectation. we went below it earlier this week. my expectation is we go to 1.50. half of that very likely before the end of this year. guy: does that mean when it comes to the allocation and equities, i continue to buy the value stocks, utilities, the evaluations around utilities continually punchy when it comes to comparisons?

do i continue that rotation? komal: you continue for a couple reasons. they give you a limit of safety in terms of the economy going into recession. the second reason you do is many of these also act as substitutes. with global bond yields reaching low levels, negative levels this year, the utilities are going to compare not only with the growth starts but also on the fixed income side and that is going to lead you to more people doing value stocks other than growth. bondseople talk about em at the moment. in the scenario you are describing, em credit should do relatively well. is that the right trade? komal: em trade looks good over the next six months, the same thing is that about u.s. equities and the reason is if you have a great cut, that is

going to be positive for emerging-market debt. this week, emerging-market onset -- bonds benefited immensely from european yields going down. european bonds behave the same way as the italian paper has done over the last three or four days in terms of going down. they have similarities in terms of characteristics. look ahead one year -- 1.5 years, you're looking at may 20 22 band of 2020. i do not think the fed can sustain the economy. you are seeing the beginnings of a recession middle of next year. that will not be good for emerging markets. that will be an interesting scenario for the president. he will not be confident on his election prospects if he starts in a recession. stick around. komal sri-humar is going to stay with us. let's talk about another even

taking place -- event taking place this weekend. greek stocks skyrocketing, the afc the best form of stock market in the world this year. cap to six months of gains in june. that is the longest streak in more than six years. voters returning to the ballot box in a snap election. if you are a bloomberg user, cop -- find all the functions at gtb go. we will show you on tv. this is bloomberg. ♪

guy: i am guy johnson. this is a bloomberg markets. it is friday, etf friday. direct commodity exposure exchange rate funds are increasingly about one thing --

gold. a leading indicator for a dancing prices. here to tell us more is a bloomberg intelligence commodity strategist. mike, you focus on these accelerating gold inflows pointing out a decade ago, gold in 60% to direct commodity ef exposure. that number has skyrocketed to 80%. why? >> physically backed gold etf's attracts a gold price and the alleged difference between the gold price and the etf is the cost. when you track in other etf's you have to go through futures. you go through futures first and commodity second. there are two things involved. microeconomics and macroeconomics are favorable but the significance is etf are a better way to invest versus yields. you store and put it into a vault. what we show is gold etf's since

the bottom, the total holdings is up 60% versus the price since the bottom is up 30%. part of what is happening is gold etf's are pulling the market a long and it is a foundation below the market, a bit of a leading indicator for the gold price. guy: let's talk about what else is in the space. among the remainder of the commodity etf's not physically backed and related to precious metals, you show the benefit of soybeans versus crude. can you walk us through what we are seeing? out: i have to point soybeans. there is only one in gold. it is unique in that it closely despite anspot price expense ratio. the reason for that is soybeans have a typical situation where they are in back quotation. will roll that future

into a lower price and get a decent return. what we show is actual soybean etf's tracks closely. if you look forward to the end of this year, potentially you have an issue with the supply of the u.s. overlay that with the widely traded -- pdf. problems are rolling into higher prices. -- price ofs been etf has we underperformed. that is a keeping for investors to remember when they invest in commodity. etf's attract the physical commodity. physicaletting that gold or silver and that is usually not much different. if you know anything else, like oil, you arecrude going to futures first. track spotsically closely. it is unique. guy: thank you very much indeed.

at's turn our attention to bloomberg business/and look at the biggest stories now. let's kick things off with a look at what is happening at bmw. changes at the top. in speculation over his future by telling the board of the -- maker with he will not seek a second term. criticism over the pace of how he would build of a new generation of electric cars. nasdaq stocknew trading venue will open july 22. the way ofrt is keeping companies from not choosing new yorker hong kong when they go public. 29 size in tech companies will be the first.

and in the u.k., regulators are looking into steak in the fast-growing delivering services company. it believes the does go companies have either ceased to be separate businesses or merge. amerson will not be able to close the deal for now. in may, amerson said it would put 575 main dollars in deliberate. -- million dollars in deliberate. that is your bloomberg business class. coming up, europe's recovery continues to slide. concerns that the ecb will have to deliver more following today's german factory orders. this is bloomberg. ♪ >> etf fridays, and wide array of investment in wanting -- one etf.

guy: from london, i am guy johnson. this is bloomberg john -- this is bloom for markets. >> the latest jobs report may ease calls for the fed to cut

interest rates. it beat all estimates from economist. employers adding 200 24,000 jobs after a downwardly revised 7000. the unemployment rate rising .1%. on a tanker by british special forces has led to a diplomatic crisis. ship marines seizing the carrying iranian oil for syria in violation of european and u.s. sanctions. iran declared the action illegal. it summoned the british ambassador to explain what happened in spain says the seizure took place in waters it considers its own. nato says that russia is showing no signs of respecting a cold war era missile treaty. in february, washington begin the process of withdrawing from the intermediate range nuclear forces pack. -- pack. it blamed russia for bella being

a missile. -- for developing a missile that does not comply. the populist experience that brought alexi to power is expected to come to an end. on sunday voters are likely to give the government back to new democracy. that is one of greece's two traditional palm -- parties. they did a deal with creditors that restored face increase -- faith in greece internationally. global news 24 hours a day, on air and at "tictoc" on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you very much. it is going to be a huge weekend for deutsche bank. the board will decide on a restructuring plan which includes sweeping job cuts. bloomberg has learned that in the u.s. job cuts will go beyond equities and derivatives

trading. of dismissalsold as early as monday morning. , hefirst ago, garth ritchie will be leaving at the end of the month by mutual agreement. we have the following developments and joins us now. what can we read into garth ritchie going? what does this tell us about these transformational moves? >> they are trying to do a lot at the same time. he will be taking over as head of the investment thank as they are doing the restructuring plan. we have a u.s. had being one of the people overseeing the bad bank. this is all according to familiar -- to people familiar. the bank has not said anything. it is telling that they did not bring in an external head. ,here is a fear of deep cuts certainly beyond equities, they have a huge fixed income and -- franchise. guy: the focus seems to be on

the c rather than the ib. let us talk about where these cuts are likely to fall. deutsche bank made a strong push into the united states and it looks like it will be reversed. sonali: it was only four years ago that they were competing with goldman sachs, j.p. morgan and prime brokerage businesses. that is something that has all but gone away. they still have significant business, but the fear is that, as they are cutting, there is something that will not be part of the bank. there are brute -- there is room for rivals to step in. ,he rest of the investment bank they have lost senior leaders on the dealmaking side, which we are talking about a lot less. they lost a major ipo and private equity banker. these are all businesses stuck onto it and we have not heard anything yet. guy: what does it mean for

europe? sonali: it means it is retrenching to europe, but we will see what they do in cuts with the london hub. reporting shows there will be cuts in asia. will they stick to private banking? what does that mean? growly, are they able to significantly while making these cuts? they said that they do not want to raise capital and this will be a costly plan. how they will keep a lid on cost grip onaining their europe will be a big question mark. guy: plenty of coverage coming out of frankfurt monday morning. thank you. let us carry on the conversation. the slide continues, another aspect to the german economic story. factory orders plunging after a slight pickup. uncertainties around global trade is turning this temporary

slowdown into a permanent one. strategies global president and founder joining us. i kind of want to collide these two stories, the deutsche bank story and the german factory stories, i believe they are relevant. let us talk about what is happening in germany. germany is not involved in the trade spat between china and the united states, but it is the one feeling the pressure. what -- would wake up's work? what a rate cut have a meaningful impact on what we are seeing coming out of germany? >> it is a story very similar to the united states. just as we talked earlier, that the fed is going to cut, and that will not help with the trade is the big issue, similarly, in the case of germany, the ecb will be forced to cut, even while mario draghi

is still in office. definitely, with christine coming in. it is not going to do any good, let us eye. germany is the most export the pendant country in the world. 41% of gdp comes from exports. theare that with china, figure is 19%. in the united states, 13%. brazil, exports account for 8% of gdp. germany is hit more than the others. two more reasons. the biggest exports are automobile and related parts. that is in the crosshairs of the expectation, because the u.s. president believes that they are taking away jobs from american workers, and that is going to hit germany, and that is what

reflected in the surveys coming out of germany and the factory orders numbers. astly, you are talking about poor personal chemistry between president trump and chancellor merkel, and that is no help either. you have a confluence of several factors which are hurting germany all in 2019, and they are likely to go into next year as well. , that theesting merkel chemistry, there is not too much of it. let us talk about the impact that this will have on german banks. let us bring it back to deutsche bank. they are going through a massive restructuring, but in an environment where breaks -- where rates are likely to fall further, that is problematic. making money in european banking will be difficult. komal: absolutely.

what the ecb will try to do is to reduce the deposit rate from or -0.6%.0.5% in order to make sure banks are not unduly affected, i think they will say a certain number of deposits are exempt from the negative tax so that banks can make money. you are talking about distortion on top of distortion, on top of yet another distortion. i think it is going to be difficult for banks to make money on the european side, even --ugh not only germans deutsche bank stock went up, but italian stocks are gaining. greece are gaining. i think in the longer terms, the banking sector there will be under pressure.

caroline: thank you very -- guy: thank you very much. we should probably mention he is a bloomberg opinion columnist as well. coming up, chips and smartphones taking a hip. trade datas in the that is hammering this company's profit. this is bloomberg. ♪

guy: from london, i am guy johnson. this is bloomberg markets. theung has been hit by trade slow down it seats profits -- trade slowdown.

it sees its profits cut in half. joining us is alex webb. good afternoon. but us talk about -- i think people have had time to digest the numbers. let us take the numbers and try and figure out what they tell us about the rest of the landscape, particularly, apple. alex: samsung was rescued by a one-off charge. they did not outline what it was, but it was $800 million. it is being paid by apple, because they did not end up buying as many screens as samsung as they is demanded. apple did not sell as many phones in the most recent quarter as they expected. we have no idea if that has been built in, but it seems to indicate that iphone sales were not at the upper end of apple's range into the start of the year. guy: does a -- does it tell us more broadly about the demand

for technology? a, it makes a lot of the kit that it goes into everyone else. alex: we have seen a huge slowdown, partly you have come across some instant tea -- uncertainty in the economy. china is huge, demand for apple phones has waned, that is what has led to apple cutting forecasts. samsung is itself a big maker of smartphones. that market is saturated. phones have taken a bit of a blow and they've had to redesign. samsungside is that might be benefiting from the trade wars, because huawei is not going to be able to get the component it needs to make its phones and samsung might be a beneficiary. guy: you can extend that by a -- if youu want

are a nine -- non-chinese consumer, are you reconsidering your decision to buy a hauwei and to buy a samsung. auwei are getting? 's if they would be able to make the phones. american suppliers are not -- allowed to supply them anymore. the yearsecond half of is when we will see them. alex: that is the expectation. the backlog of components that they had over the past month or two, will gradually run out and we are left with them not being able to manufacture phones, leaving samsung the largest player in android handset. lg, who also play in that space, but samsung is the gorilla in the room. guy: we will leave it there. thank you very much. alex webb joining us with the

latest on the samsung numbers and the implications we can read into them. flash,ime for a business a look at the biggest stories in the news. let us kick off with iag, it says it has no plans to divide the takeover bid for the company. a spanish newspaper reported that it was likely going to be remade. iag tried to buy the wheaton, abandoned that effort in january. ofgermany, a sign uncertainty is weighing on global manufacturing. factory orders fell more than expected in may, slid 2.2% and was down almost 9%. the biggest drops, sport orders and investment goods. bmw is looking for a new ceo. harald kruger will be leaving in the midst of weaker profits and

questions about his dealing with new technologies. he told the board that he would not seek a second term. he has been in charge since 2015 and been criticized for cutting profits and also over an electric car plan that seemed a little too tentative. your bloomberg business flash. let us stay in the car sector. bmw loses a ceo. i spoke to jaguar and land rover's ceo about how he believes the future of smart mobility will be very much electric. take a listen. -- jaguar and --d rover are british bands brands and they have outstanding vehicles. employees,y of our localized in the u.k., very creative engineering -- engineers.

ofdeliver this combination bridges design and engineering integrity, and that is something we want to keep. therefore we trust them with things that at the end of the day, these very -- specific elements. we have an opportunity to be competitive in the market, globally and in their future also on a worldwide presence. one of the key things about making electric vehicles are the factories. you've talked about the need to have a gige factory to venue thatcher batteries in the united kingdom. -- to manufacture batteries in the united kingdom. would you need to form a consortium to make that happen? the future of small mobility will be electric, and whatever kind of form. , and hybrids.trol

in the future we can think about the electric calls -- cars, all of them need petrol. 40 percent of a vehicle is the petrol. it is heavy, not dense enough, and we also have to think about the dependency of materials. everything, we have to create a very special infrastructure, a lot of suppliers are prepared to deliver the elements in needed for a come -- needed for a competitive next generation. the ceo -- guy: the ceo of jaguar and land rover's. he announced that they would convert one of their factories into a fully electric factory. it is payroll factory. jobs growth bouncing back strongly following a weaker may.

this is bloomberg. ♪

guy: live from london, i am guy johnson. this is bloomberg markets. let us get a take on how the market has be priced the payroll number. the dutch by by division from lynn and associates. how are the markets repriced? >> it is the psychology. what the market does is it said, good news is bad news, because we added 224,000 jobs, and the market was looking for 160. it made the month of may's worse from 75 to 7010 -- 72,000 jobs. in the market is saying that

isn't the fed supposed to be cutting interest rates? the fed has two mandates, inflation and employment. you are having a problem arguing that employment is a problem. the problem is inflation, we cannot make the targets. i do not know if this takes the fed off of the july petal where it wants to cut rates. the fed is saying it would like to overshoot and get the economy a little more stimulated than necessary. the fear is that they take one of their bullets out of their gun. when you look around this guy and around the world, you see germany's orders are slipping. china is having nothing but problems, and it will get worse as portions of american companies are moving some of the operations out. purchases, --bean when we lose them you do not get

it back. it is the same thing with dell and the other companies. guy: the president speaking over the last couple of minutes, he says the fed does not know what it is doing. he reiterates that cutting rates would help the u.s. economy. rates,think cutting giving the trade narrative, would help the u.s. economy? ira: no. i think it is more psychological than helping the economy. get the trade deals done and you help the economy. it is not about the fed doing the wrong job. the president does not have the rights to keep telling the fed what to do. he knows they will not listen to them. it is more than a political ploy. the fed is independent and the data is saying we are not getting the inflation we want, that it is showing the job growth and some slowdown. does the fed get behind the

eight ball or in front of the eightball? that is the question to where you will be. break,s craving a market because it put that question front and center. this jobs data pulls people back. guy: let us talk about what is priced now and what will happen. currently around 25 basis place day spacious points for july, over 50 for the rest of the year. does that sound right? timing question is the of july or september. i have not been in the camp of a july cut, i have to say that. i am in the minority. when i see these numbers, i keep going why cant we wait? you have a meeting almost every month, why cant we wait until things get bad. what theike to know information is in the china and u.s. stocks.

have they agreed on intellectual property? sayingnot one person is where we are on that issue and i am bothered by it. guy: nice to get your thoughts. ira joining us from the cme. let us turn our attention to the stock of the hour, the industrial giant siemens. on, returning to negative territory. the temporary slowdown is looking more temporary. taylor riggs is looking at what is going on. walk us through the numbers. taylor: it is off 3%. at one point, all of the june gains going back to the lowest, having its biggest loss in 11 months. come into my terminal, it all comes down to the factory orders coming out of germany off 2.2% on a month over month basis.

8.6% over a year-over-year basis. that is the worst going back over a decade. a lot of the demand, trade tensions, investment goods, that is giving people some pause. it is a never a good time when you are comparing siemens to ge, because of the relative underperformance is only up 8%. that is only up to ge's 4%. those conglomerates diverging a little bit year. guy: great stuff. the industrial story getting a little bit more interesting. the president saying that china broke both the trade talks. this is bloomberg. ♪

>> 30 minutes left in the

european trading day. i'm guy johnson. this is "bloomberg markets: the european close," let's turn our attention to the markets. payroll is the dominant theme. stronger-than-expected number. 30 making itself felt. stories on both sides of the atlantic. big move in german 10 year yields. up 4 basis points. yielding -36, moving away from the rate we got under earlier in the week. backstory out of germany. hard to tell. factory orders bad. another factor. or is it what is happening at deutsche bank? fading at the close. big announcements expected this weekend, including the new plan for the bank. garth ritchie, the head of the investment bank will be stepping aside. quick look at the u.s. on