good morning and welcome to bloomberg markets, the european open. we are live from our european headquarters in london. say it does markets not matter if it is academic or not. highern futures point following comments from john williams even after the new york fed tried to tone them down.

>> aggressive policy, stocks get a boost. sellers deal. ab inbev of is selling carlton united for a $11 billion. and an ipo of its remaining asian unit is still in the cards. and a downed drone. oil snaps several days of losses after president trump says the u.s. has downed an iranian drone. matt, good morning. matt: we are less than 30 minutes away from cash trading across europe and in the u.k. take a look first at the 10 year yields. a big debate today about whether the fed rate cut, almost a foregone conclusion, will be 25 basis points or 50. as a result, the yield continues to come down. up a little bit today.

still, if it is a 50 basis point cut, expect to see the yield fall further. look at futures. european equity index futures pointing up. dax futures gaining. cac and ftse gaining also. : the markets have faith in the original statements from william. the asian equity market getting a boost from officials despite the walk back. the market buying into the idea that perhaps there is a little more than 25 basis points in july. not convinced of 50. certainly, we see a live conversation in the market. the markets seem to be wanting to go along with the narrative that maybe there is more to it

than 25 basis points. equity markets getting a boost from the risk on narrative in the market. let us go to the other side of the gmm. commodities. brent. and this is in contrast to what we see the rest of the week, the general direction of travel this week has been downward. we do see a bit of a turnaround today partly because of the risk on and the markets are talking about a more generous fed but also because of the tensions in the middle east with president trump saying americans have downed an iranian drone. let us get to the markets. mark cudmore is in singapore. i want to start with the question of the day. years sincemarks 50 the moon landing and we have a question.ooned theme will the fed take a small step or a large leap?

we are inughly where terms of market expectations. mark: i think the market is hoping for a giant leap for fed policy but there will be only a small step. after yesterday, it should be 0%. i see no chance of 50 basis points unless we get a black swan between now and the fed meeting. coming out to clarify williams comments. -- william's comments. i thought it was an important and unusual move where they did not want to market to get the wrong impression. bullard,dovish member, said 50 basis points is justified. where -- why know

we are having this conversation. fed'sms crazy given the clarification. tonight, the blackout communication grid starts so unless we get a bunch of fed speakers today saying 50 basis points is it likely, then we are not going to get 50 basis points unless we get a black swan. if we get a black swan, the whole game changes for every other asset. quickly jump in here with an m&a headline. pioneer foods -- it looks like it says pepsico making a purchase offer for it at 110 south african rand a share. there is so much m&a news, a flurry including ab inbev with 11 plus billion dollar sale.

is the effect of all of this cheap money? 25 -- the feds or is cutting interest rates of an economy growing at 3% with unemployment below 4% and wage growth twice what the core inflation figures are. what will this do to the economy? is there concern about overheating? mark: i don't think there is any concern over overheating. i think come i have not checked from last week, the gdb inder kick -- gdp indicators are under 1%. unemployment normally spikes after a recession starts. we do know there is softness in the unemployment.

looking at the moving average from the last two months, it is coming down a little bit. and the phillips curve has not been working for years. think the idea of overheating economy is not a risk at the moment. i think there is a chance that all of this cheap money does cause a problem with assets. for the last decade, there has been a large disconnect between inflation and real economy growth. last decade come around the world, we have seen lower growth rates and we saw precrisis. era forwe saw the best financial assets. there is zero risk of the economy overheating. anna: and where does that live us --leave us on oil prices? renewed bounce of

political tensions. in the on people's radar bond market conversations? experts, it seems the risk of some kind of middle east tensions is underpriced in the market. concern if we do get a full on military escalation. the strait of hormuz are so it -- is so important. would then have no other avenue to fill the gap. there are other things going on. at the refinery in the u.s. and the spread between innt and wti could grow

coming weeks. towardswe will get back nine dollars. eastnk we see middle tension causing crude prices to go up. i think there is still concerns about the end demand. until we get a u.s.-china trade deal, it continues to be a concern. it does not look like there is loads of progress there and we have other trade problems on the margins. think the end demand is not there at the moment. on the supply side, there are concerns and that could cause a's like at some point. -- that could cause a spike at some point. matt: got it. expectations for the next gdp, next friday is 1.8%. that could move a lot in the next week.

mark cudmore joining us out of singapore. you can join the debate on today's question of the day -- will the fed take a small step i.e.,iant leap in july, 25 or 50 basis points? let us get the bloomberg first word news from debra mao in hong kong. debra: the u.s. and china has spoken for the second time since the two sides of called a truce. beijing washington and spoke over the phone. president trump reiterated he tariffspose additional on chinese goods if he wants. president trump has distanced himself from a "send her back" chant that broke out during a campaign rally. the president said he was not happy when he heard it and

disagreed with it and felt badly about it. the ok parliament has moved to stop a no deal brexit. toryrry lawmakers -- 30 lawmakers have rebelled. hammond divideip party orders and abstained. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. anna: thank you, debra mao. up next, we speak to pekka lundmark after second-quarter earnings beat the highest estimates. bloomberg radio is live on your mobile device and the digital radio. this is bloomberg. ♪

matt: welcome back to bloomberg markets, this is the european open and we are just about 15 minutes away from cash trading across europe. the earnings news decidedly better today. certainly from fortum. the company posted second-quarter profit that beat analysts' estimates.

uniper -- how will the combination work? joining us now on phone is the ceo of fortum, pekka lundmark. the earnings clearly much better than the street had been expecting but the numbers have your a backseat to discussions with uniper. it looks like you may need to prepare a hostile takeover bid? want to speculate on anything like that. the important thing is we have agreed with the new management of the company that is now in discussions and we will continue. we believe that fordham and -- fortum and uniper working in close alignment would be

well-prepared to deal with the future landscape and we are looking forward to those discussions. but more than that, i do not want to speculate. matt: what will you have the officials that control half of the board seats and are saying you have not given them enough job security commitments? do you believe you have done that? what do you need to do further? we have met with employee representatives and the newest members of the management board as well as the supervisory board. theave explained in detail various steps to move forward and we understand very well the importance of the employees and stakeholders in oil companies and especially in german companies.

and of course, going forward, with these talks, the interests of the employees are of particular importance. --a: what do you make sticking with this topic, do you think you would go ahead with this deal even if you did not have the support of the unions? what do you think the finnish prime minister will make of it? finnishirst of all, the fortum.nt owns 50.8% of the government has said several times that we are not the political will for them. we are a normal business. normal investment. so, from that point of view, i believe the likelihood that they would somehow be involved in this is extremely low. but once again, we understand

the importance of unions and we have agreed that the discussions will continue. of course, the discussions will be taken through the new management board but employees are an extremely important stakeholder in those discussions. and we are certainly convinced and confident that we will be that isfind a solution ultimately good for all stakeholders. anna: just getting back to the business exactly of your earnings, i want to get your take -- you do not create the earnings estimate that analysts come up with what you do seem to have exceeded what they came up with. this was actually a combination of multiple things. in allimproved a result

of our business segments. achieved a good portfolio. situation hydraulic has been increasing increasing our hydro production. in ouro the result russian business has been pretty good. we have higher capacity payments and clearly lower debt provisions. multiple things. not one particular thing driving this improvement. matt: most importantly, for not just your business that others in the market, what do you expect for the short-term, the midterm, let us say wholesale electricity and carbon prices in

europe? pekka: we do not publish our price estimates but it has been interesting to see that now when it comes to this price, it has taken a driver's seat in the oil price development. this is because of the new dts directive that came at the beginning of the year with the market stability reserve putting the market into a deficit. that has driven the price in just a couple of years from 4-5 28.50 and this is starting to push through some well needed call to gas switching. it makes the price more closely coupled with gas price development then coal development which is clearly a supporting factor in the overall

price development at the moment. ,nna: ok, thank you so much pekka lundmark. ceo of fortum. keeping an eye on fortum shares. and we will add some of the other stocks we are watching including tech shares. like her soft expectations. the broad story is the fed and how generous it will be with rate cuts when it comes to the end of this month. more on that shortly. this is bloomberg. ♪

anna: welcome back to the european open market. start ofo go to the the equity trading day. let us go to elizabeth who is focused on bmw. influencingrnings the sector. youabeth, let us come to first. we know a little bit more about management at bmw. us theynight, they told had picked the head of production. with that decision, they are butrly going for facility at the same time, he has been injecting more daring technology into bmw as

well as navigating the cost challenges. matt: what about the tech sector -- do we expect it to go the other way? >> microsoft yesterday reported earnings that eat analysts -- analysts'expectations. shares could certainly welcome some good news today after they were the worst performing sector yesterday dragged down by sap. sap was a gloomy picture yesterday. the stock isike going to pop at the moment. calls for 1% or

2%. matt: thank you very much. latest stockll the stories from our equities team go. this is bloomberg. ♪

until thenute to go start of cash equity trading this friday morning. let us look at how markets are positioned. the msci asia-pacific up. encapsulating the optimism that seems to have infected equity markets in the last 24 hours. suggesting there could be more than 25 basis points to come from the fed. they did not directly say that. a market seems to be running away with that expectation. despite the new york fed walking back some of the comments from williams. -- u.s. 10 year yields

on the chart. u.s. futures pointing higher. as the fed narrative giving a boost to the markets. we will see if we get any read across the earnings story. narrative is expected to miss markets in the european equity market session. the new york fed -- walking back some of the dovish comments from williams. the market seems to be running away with this narrative that maybe the fed will be more generous. mark cudmore says there is nothing to it. the market seems to want to test of their pricing. this is the equity market picture. -- 0.4% on the ftse 100. the gains ino see

equities and drops in the yen. the pound -- volatility in recent sessions. , there was news flow around brexit. more today. yesterday, the vote in the house of commons was what pushed the pound up. the sectors.t broadly speaking come the big narrative around the fed -- it is obvious to see because there is no sector in the negative territory. financials firmly in the green. showing some areas of green. i suppose we are set up for a rebound in texas got -- in text stocks.tech setting up to positively react to the open delivery by microsoft. int: we do see some rebound

tech stocks but it is not happening in sap. let me to you about some media stocks. itv and bbc a great to launch a streaming service called brick box in the u.k. 3.7%so see fortum rising after his earnings beat estimates. gainingrs -- 470 stocks , 107 down. almost 5-1 to the upside. anheuser-busch a gain or after a unit sale and reports that it is still considering an ipo of the budweiser aipac unit it shelved. text docs on the plus side but look at the you -- but look at the losers. because 0.4 percent but

it is such a big company on the stoxx 600, it is erasing the most points from the stoxx 600. that stock is down almost 5% after warning market conditions are worsening. that distinctly disappointed, stora. 0.7% which is dragging on the stoxx 600. anna: let us talk about where european markets are with our guest. joining us now is andrew cole asset.cket

good to have you with us. let us start talking about the fed. we saw dovish comments. it may cutthinking by more than 25 basis points. what are your thoughts? arend: think it would be -- andrew: i think it would be pretty extraordinary. would feel that a 50 basis point move is necessary. bebviously think that would a sign of panic so i would be surprised if it was 50 basis points. to natural order seems typically be about 25 basis points. i would be surprised frankly if it was anything other than that. anna: global coordinated policy moves. andrew: we are clearly not there, right? yes, we have seen some weakness in the economic data.

to a large extent, that has been the result of an inventory overbilled. i am more inclined to think this is a midcycle pause rather than the start of something more dramatic. matt: when you look at the 10 year yield, we have had over the , a bull market here that has brought it down. there has been a little movement lately taking it out of range. as you can see from the chart. where do you expect the 10 year yield to go? andrew: i think inflation expectations have fallen a long way. there is a search for yield going on and part of that is regulatory. forcing pension fund and life companies. i think that has all had a structural impact.

in the united states, you can still get a positive real yields. there are investors, particularly in europe and japan, that would bite your arm off for that. is that in terms of inflation expectations, we are probably not too far off. indon't see a lot of value this. we are slightly more optimistic about the economy going forward and also because i think we have seen signs that core inflation and potentially heads higher from here. you do think inflation could head higher. real yield in the u.s. as zero is what we are looking at and that is enviable from your -- from the standpoint of the japanese or the europeans. from their standpoint, real

yield is very negative. what will it inflation do? will the fed have to reverse course after the next cut? andrew: like the rest of us, the fed will watch the data. we have seen a particularly week industrial production data. employment remains strong and remains robust. what we have had to some extent inventoriesbuild of from the beginning of the year. and in the auto sector, it has volatile. i am not about to suggest that it turns around on a sixpence and it is acceleration from here. but i do think we are a long way off from being in -- from

thinking a recessionary environment would be required to justify the rate cuts priced into markets two or three weeks ago. -- pioneering news 29%s climbing as much as after pepsico made a $1.7 billion offer. in the context of what we are talking about with rate cuts and where the fight goes next -- what about what we see equities do once it the fed starts cutting? this point that cutting will be good for equities. is it an insurance cut and not in the midst of a crisis? andrew: we have had strong equity markets to date driven by expectations.

downward revisions to earnings. i am comfortable -- we see this juncture.mfortable i think analysts still have probably overoptimistic expectations about a rebound in corporate profitability in the second part of the year. you have risks from there and the risk that the bond market is overplaying rate cuts. we are sort of defensively positioned. anger-term, we do not see recession. i think there is an uncomfortable mix right now for the equity market. we will keep you with us. andrew cole, head of multi-asset london at picket. us.ill stay with

of next, trading wars. wall street post the worst first half trading revenue in more than a decade. we will discuss that here on bloomberg television. ♪

anna: welcome back to the european open. tradinges and of the

day. here is a picture of equities. it is all about the fed. u.s. lenders reporting earnings this week. still butd get lower share price reaction was mixed. big takeaways the from the banking reporting season is dani burger. >> morgan stanley was the last of the big six to report. a trading revenue drop of 14% and that was the steepest among the major banks. across the banks, we have seen a rough quarter on the banking and trading front. even so, the banks keep setting records cracking $30 billion in quarterly earnings for the first time on record. this does little to smooth investor concerns that earnings have peaked. we have been warned by

executives. has pushed traders to the sidelines. ,nd the traders and the lenders lenders warning of a more challenging lending environment. banks mostly lowered the bar for the rest of the year and the fed has not even announced a cut yet. clients getting more cautious. they are trading revenue as a whole at a percent. fourth consecutive decline. market sharening from its peers. the u.s. consumer is the one bright spot. this is telling as we are in the middle of the debate on when the credit cycle will turn. u.s. economic picture -- you can see each and every quarter, the itunt of loans default

increases. driving retail divisions at bank of america for example to a record profit. i think that is fascinating. a u.s. consumer is spending more than it ever has in this back-to-school season. getting wage increases of more than 3%. at least 50% more than core inflation and defaulting less on their loans. a key indicator that even bears will have a hard time shrugging off meaning the u.s. consumer must be in pretty good shape. andrew coleat p -- management ist still with us. , caner this week, we asked u.s. stocks continue to rally? net interestey if

income is way don so heavily? on so heavily? andrew: a decade ago, we would banking given the increased regulatory environment would be a tough business. decade.next and here we are and that is the nature of the game. to the extent that the economic recovery we have seen has largely not been funded i banks but by the corporate bond market. banks have been under regulatory pressure. consumerhat the u.s. is in pretty good shape but over time, i would expect banks to lend more given the right environment and the right yield curve. i would not be overly pessimistic about banks here. volumes, as you have

seen in announcements this week, there have been winners and losers. goldman is a winner. we are in a disruptive industry. anna: an industry changing structural a. about -- i read a piece yesterday suggesting that maybe these banks will have more streetfor lending. or they turned to wealth management but it is a crowded story. andrew: i think that is right in terms of public equity and bond trading. the advancement or the sheer size we have seen in the growth in private markets means there is less volume in daily public trading markets. operations --king

it is in a very tough environment. let me get back to the i ammer and ask you -- thatng at publicis shares have dropped almost 8%. we have seen a lot of companies that are not getting or don't seem they are getting the retail spin coming through. consumer whotrong is spending more money that it does not seem to be hitting company revenue or getting companies to invest in advertising. throught this feeding to the corporate side what is happening on the retail side? andrew: it is clearly a tough environment. we have big disruption and the

way consumers shop. that was identified 20 years ago. it has taken 20 years post dot com to realize the changing --ure of shopping brick-and-mortar versus online shopping. havee last week am you seen the difference between amazon and ebay. vyingisruptors and now with each other. i think that is just a sign of how tough it is to try and get monetized about consumer spending. anna: andrew, thank you. bring you the stocks on the move so far including ab inbev which has rallied after saying it will sell a unit. as you can see, up more than 4%. this comes after they had to

curtail their ipo plans over in asia though they also said they still think they will allow for the ipo in asia. this is bloomberg. ♪

back to bloomberg markets. this is the european open. i am matt miller in berlin all longs ride and edwards in

london. across thegains equity indexes both here and on the continent. ftse is gaining more than two thirds of 1% as well. let us take a look under the hood at some of these indexes to see what some of these individual stocks stories are. >> starting on the upside, ab inbev up by more than 4.5%. the australian company -- enterprise value of more than $11 billion. pioneer foods absolutely surging nearly 20 9% as pepsico expanding into the emerging market has agreed to purchase the company. to the downside.

one of the biggest losers on the stoxx 600. they say they are slashing their revenue targets and weathering the storm with work in the u.s. with consumer clients and tv and billboard. pushing for digital to make up the growth in the second quarter. thank you. let us get some final thoughts with andrew cole. let us get your thoughts on gold because we saw the opportunity to unite two things -- one that gold is doing well and 50 years since the moon landing. to infinity and beyond. and: and to the story -- toy story is also out. anna: what do you expect from gold? , a move to the negative interest rates as we mentioned earlier -- trillions

of dollars of bonds yielding less than nothing. i think there is a real realization that this is effectively savings and investors are looking --how do i protect the real value of my money? gold is that attraction. you might argue that one of its competitors has been cryptocurrencies for the last five years. and clearly, there is a bit more of a cloud giving increased regulatory oversight and regulators wanting to perhaps crackdown on it. tensions in the middle east. it does not strike me that investors are as long on gold as they were a decade ago. that difficult to fathom. i suspect there is still some to

go. matt:. interesting mentioned. interesting mention of bitcoin. ownyou or your clients this? notion that if you think central banks and governments are trying to financially repress you, for savers to get an uneconomic return on their savings, real assets have some attractions. and cryptocurrency and gold fall into that category. you, andrew it will be joining the conversation with me on bloomberg radio at 9:00 london time. let us get a quick check of the markets. trading for about 26 minutes. bouncingequity markets

strongly on fed expectations. the production chief -- we hear from the head of the .uto giants china division this is bloomberg. ♪ we're the slowskys.

we like drip coffee, layovers- -and waiting on hold. what we don't like is relying on fancy technology for help. snail mail! we were invited to a y2k party... uh, didn't that happen, like, 20 years ago? oh, look, karolyn, we've got a mathematician on our hands! check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. matt: 30 minutes into the

trading day, let's get your top headlines. stocks get a boost as that's growth -- debts grow. deal.ing a this beverage business is selling carlsberg to a sake for billion.asahi for $11 road -- downed drone. pedro andtrump says was shot down in the strait of

hormuz. welcome to bloomberg markets, the european open. i am matt miller in berlin alongside anna edwards in london. higher,8 stocks going that gives you a sense of bill rally we have got -- of the rally we have got. from richard pushing markets higher in asia and in the session as well. as a result, we have some sectors gaining. most volatile or those set to benefit from a weaker rates. urecia is up. selling a unit in australia to asahi, they also say there is room for an ipo of the asian business.

we have an interesting story moving things around, particularly in the appetizing sector. this group is down nearly 8% on the back of the warning. concerns about appetizing in the united states. we also see this finish paper business down. upm down, perhaps in sympathy. let's get a first word news update in hong kong. >> senior federal reserve officials are stressing the need to act sooner rather than later. vice chairman richard clarida and john williams says policymakers need to act quickly. bets thateinforced the central bank will cut rates, potentially by as much as 50 basis points. the u.s. and china has spoken for the second time the two sides called a truce.

spoke over the phone but there were no details on what was discussed. president trump reiterated he could impose additional tariffs if you want -- if he wants. a $4.9 billione charge as it reports earnings as the fallout continues. the charge covers potential compensation for airlines who have had to cancel flights. it will flip more than $5.5 billion from revenue in the quarter. his disposing of assets after the failed listing of hong kong brewing. to asahi for over $11 billion. , 24 hours a day on air and on tictoc on twitter. powered by over 2700 journalists

in over 120 countries. this is bloomberg. anna: thanks. bmw has promoted the production chief to the chief executive officer, resetting its leadership to catch up with arrivals in the transition to an era of self driving, election cars. they will succeed harald kruger who stepped down after four years at the business. expect a renewed focus on asia from the bmw chief. >> our aim is to be slightly better than the premium segment. we expect the premium segment to grow single digits, so this is also an orientation for us. the 17% is because we have a lot of new models. we're launching a new models in china, therefore there is high growth in the first half.

the second half, will be closer to single-digit growth. >> do you think the overall market will start to bottom out? >> i think you can see that already. talking about the total passenger market, the decline is slowing down. so i think we are quite close to the bottom of the total markets. and in the second half of the year, probably driven by additional models, we believe the car market will show growth in the second half of the total segment. >> there has been change at the top. does that send in terms of the direction of travel for bmw and the company priorities? >> as i am responsible for china, let me comment on china. krueger wasir, mr. instrumental in our china strategy. last year, we successfully implemented pensions and equity

increases. so i think we got a lot of strong support. and the new ceo is a long-term china friend. we have got one of the biggest production basis for a group overseen by him. perspective, we expect continued support of the chinese strategy. more, let's bring in our bmw reporter in munich. what does this tell us about the next few years at bmw? >> good morning, matt. what this tells us is that bmw is looking for stability. there were a couple of candidates floated for this role. he was one of them, and also floated was the engineering had.

zipse is the candidate that represented them moving forward in the way they had before. he is a measured guy, stable in terms of direction. that is what they are looking for a month to continue what they have been doing the last two or three years. should continue with a been doing in the last 8-10 years. they were the first to come out with pioneering electric and have done pretty much nothing in that vein since then. are we going to see a lot more revolutionary electric vehicles? >> it is a good question. the thing is, the zips of -- zi pse represents a portion of the board that is cautious of electric vehicles. he is a champion of the hybrid reduction vehicles. that is their way of hedging their bets about saying we don't know how this electric thing will go.

but just in case it does not go as big as some people think that we're still going to be able to make cars. that is what he champions. so if you're looking for a revolution, i don't think you will find it to him. matt: oliver, thank you, zipse takingoliver over as ceo. anna: oil has snapped four days of losses. it is headed for the steepest weekly decline since the end of concerns about global demand for clips fears that crude flows from the middle east maybe disrupted. what is the latest on the story? it seems to be contested the exact developments in the strait of hormuz. what we know is that donald trump said of u.s. shot down an iranian drone when it came about 1000 yards away from the uss

noxer, and amphibious -- a amphibious vehicle. they shot it down because they thought was a threat. this is really the latest episode in this growing conflict between iran and the u.s. in and around the strait of hormuz. in may and june, there were six merchant tankers that were attacked. but denied responsibility claimed responsibility for shooting down a u.s. drone earlier this year. reason this is important for energy traders is that about one sea-bourneaboard -- oil comes through the strait of hormuz. iran has threatened to shut it in the past, and most recently, the foreign minister told bloomberg news that they could

shut the straight -- strait but they really don't want to do that. anna: thank you for the update, aaron clark, energy editor for bloomberg with the details of that story. up next, setting the tone. second-quarter earnings kickoff in europe. we evaluate the outlook for the region's largest economy. this is bloomberg. ♪

anna: welcome back to the european open, 42 minutes into your trading day. equity markets are getting a broad boost from the fed but big questions have been raised about earnings season. will be getting a raft of results from european companies next week. let's focus on europe's largest economy and how global headwinds and a domestic impact -- domestic downturn have impacted german businesses. annmarie: big earnings next week from germany that may further erode the taxes performance - the dax's performance. you can see it losing out to france, which is looking particularly strong. it points at the growing strength of the cap versus the -- cac versus the dax.

the first on want to talk about is basf. already, shots were fired earlier this month. they are saying they are seeing a slowdown and warnings from things like autos to crops and the trade war biting into the profits. they cut profits by 30% this year, saying they do not perceive the situation improving. one problem may be that the german economy is still accounts for 11% of revenue. the second company is a daimler. of course, autos are huge for the economy. this was the third time in a year they cut out looks. the credit rating agency cut their outlook from negative to stable. and this week, goldman sachs put a sell recommendation on a daimler. one thing to watch up next week are dividends.

these levels are very relevant to the dax. you can see the dax performance versus the dax performance minus the dividends. and if you look at it minus the payouts, german shares have done nothing since 2000. matt: thank you very much for the setup. annmarie hordern talk about the kickoff of german earnings season. about its to talk more is the portfolio manager at dws. i am most interested in automakers in germany. today, got news on bmw profit cuts four and daimler kicks off this world of hurt with its omissions cheating scandal -- emissions cheating scandal. if we look at the forward price-to-book ratios and the autos and parts index, we can see that it is looking at the lowest i can see since 2009.

obviously, these shares have gotten killed. can these automakers make a comeback? >> good morning. still, it is a difficult environment for the automakers. you are right, valuations are quite low. side big difference between the stocks and the cyclical ones. easyhe situation is not and q2 is not an easy quarter for the whole manufacturing space. so it is not easy. some could always be short-term rallies, for sure, but structurally the situation is still difficult. also, they have a lot of investments to do for the future. capex.s a lot of rnd and ,e would say that, structurally

the situation for the automakers is not easy. anna: talking about other sectors in focus, good morning. our colleague talked about basf. andalarm for you -- alarm -- how alarming was it for you? it was a very important message we heard here. unfortunately not positive. right, basf is widespread over a lot of economies so it signals for many things, especially in the manufacturing space, that things are not easy. people had hope for recovery in the manufacturing space and the guidances of a lot of companies were based on it. this becomes less probable and more difficult because we see q2 is also not a good quarter, probably. differentiating

between the companies but it is not an easy environment. also, the hopes for recovery in h2 are becoming more difficult. and we heard from some analysts that in july, the first month of q3, is not easy. i think the problems still persist for the manufacturing space and can continue for some weeks or months. i know you don't want to talk about individual companies, but in the german tech space, amongst huge german tech companies, we have had a bit of a stumble in terms of the share price. do you expect a recovery going forward? we saw a lot of companies in the space performing quite well because

they held up better than the manufacturing space for example. gotten valuations have pretty high for these defensive names and pretty low for the manufacturing names. so when you report in line results or slightly worse than expectations with no big negatives, still some people will take profits. i think that was the reaction. but the i.t. space, for example, is a sector which is still quite good here. earnings development is still positive. i.t. spending is still positive. course, i.t. spending could be reduced if the economy further tumbles. anna: ok. christoph: but it is a sector which is quite solid. and we have other factors which are still quite solid in comparison to the manufacturing space, for example the insurance sector or health care.

so in germany and europe, there are still some sectors showing earnings growth here. anna: maybe those are the sectors that could decouple from a weaker trend overall. kristof, thank you for your time, portfolio manager at dws in frankfurt. coming up, 50 years on from when man first walked on the moon, we take a look at the new space race. this is bloomberg. ♪ >> we meet in an hour of change and challenge, in a decade of hope and fear, in an age of knowledge and ignorance. why some say the moon? why choose this as our goal? and they way -- may well ask why climb the highest mountain? why fly the atlantic? we choose to go to the moon. we choose to go to the moon in this decade and do the other things. not because they are easy, but because they are hard.

♪

>> one small step for man. one giant leap for mankind. columbia, this is houston -- matt: 50 years ago, we were gripped around the world, not everybodyly 45, but

else, by historic images of neil armstrong. it was the height of the cold war and the charts were filled with the david bowie's space odyssey and creedence clearwater revival's bad moon rising. the world is a very different place than it was five decades ago, but how has the space race changed? dani burger took a look. ♪ dani: in the half-century since man first walked on the moon, the space race has fundamentally changed. a battle between the u.s. and the soviet union, but now, most missions are by private companies. the number of objects launched has skyrocketed from just two in 1957 to over 450 last year.

and while and in my to sound like science fiction, industry is using satellites in completely different ways. companies can monitor the parking lots of retail outlets to get data on footfalls, months before official releases. and commodity companies are getting in on the action with projects that scan minds and gauge factory outputs at much more granular levels. the last 50 years has seen a seismic shift in humanity's understanding of space. but while it is still vast, unknown to him and unreachable, it is also a resource that businesses can start to utilize. right.ll so the 50th anniversary tomorrow will be the 50th anniversary of neil armstrong landing on the moon. than buzz aldrin getting out and neil taking pictures of buzz. if you see the pictures of the guy holding the flag, it is actually buzz.

let's check in on the markets as we close out the week. 1%,ee the ftse up 6/10 of the cac up .7 and the dax up as well. so gains across the equity indexes. and anna, some of the reasons are m&a. rising selling to asahi. the new bmw ceo has been named, the continuity candidate. that was the message we were getting from our colleagues in germany. and publicist, scrapping sales targets by 7.3%. blicis,icists -- pu scrapping sales targets by 7.3%. next, theyce" is up will be taking you through the markets. u.s. futures continue to point to the upside.

up by .5%. factoring in the increasingly dovish comments from the fed. and microsoft numbers are helping to lift the nasdaq. that is it for the european market open. this is bloomberg. ♪

global stocks rally as to senior fed officials stressed the need to act quickly. 50 years after the moon landing, will the fomc take a small step or a giant leap? destroyed! downsrican warship and and iranian drone new the strait of hormuz, oil snaps a four-day losing streak. and as a bmw names a new chief executive, the chinese boss tells us sales growth will