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tv   Bloomberg Daybreak Europe  Bloomberg  July 25, 2019 1:00am-2:30am EDT

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nejra: good morning from bloomberg's european headquarters. this is bloomberg daybreak: europe and these are today's top stories. laying the groundwork. sovereign bond yields hit record lows. today's ecb meeting may set the stage for a rate cut. we speak to the german finance minister. boris johnson tears up the cabinet and promotes brexit enthusiasts to top positions as he prepares to take britain out of the eu. earnings avalanche. we get numbers from some of europe's biggest names. don't miss our interviews with vw, roche, and many more. tech giants of the but and amazon report -- all the bet --
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alphabet and amazon report. ♪ nejra: welcome to daybreak europe. it has just gone 6:00 in london. earnings onslaught is a great way to describe it. roche numbers are coming through. at 30.4lf sales come in 7 billion. the estimate was 30.53. first half core operating profit. the red headline, let me get to that. view toits sales growth mid to high single digits. that's very interesting. raising its sales growth view to mid to high single digit. that's the red headline on roche. at 11.1.comes in the estimate was 10.65. that's a beat on first half core eps. core operating profit for the first half comes in at 12.36.
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the estimate was 12.16. there's a beat on some of the numbers. the headline you want to focus on is the fact that it's raising its sales growth view to mid to high single digits. there were some pressures whether it would've raised guidance a second time this year. to the ceowe speak of roast. don't miss that interview at 7:30 a.m. london time. dani burger is standing by with the nokia earnings. beat are looking at a across most of these numbers for nokia. they had a big miss last quarter. there adjusted eps coming in at three euro cents. three.imate was second-quarter net sales at 5.69 billion euros. that beats the estimate. they are maintaining their guidance for the full year for 2019. this is something analysts have been pouring over. the fears that their five g
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network wouldn't be up to speed. they have maintained their outlook and operating margin. everything looks good for 2020 as well. how much market share are they able to get from huawei? coming up, we will be speaking to the nokia president and ceo. don't miss that interview at 8:30 a.m. london time. nejra: let's get to a be in beth. revenueuarter organic rises 6.2%. the estimate was 5.1%. that's a beat. the second-quarter adjusted rises 9.4%. that's a beat. underlying eps. that's one dollar 16. we are beating on a few of these numbers here. , theecond-quarter adjusted key 1, 5 .8 6 billion dollars.
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in terms of some of the commentary, still seeing strong growth in the four-year revenue. if we look at first-half net debt, that's $104.2 billion. this is one of the key things. it does have that big debt pile. the context here being that it agreed to set an australian unit. this after it pulled a-shares stale -- a share sale. that will be something to watch for, whether that ipo might be back on the cards. still got more numbers to get through. moving now to be asx. the ceo saying, currently low visibility and poor predictability. it has been a challenging time. bloomberg intelligence says it hopes for a second half rebound.
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is to gaugelenges the depth and timing of a drop in earnings. on data on cross controls is the we could be looking for when we dig into the details. it is confirming its outlook as reside -- rhythm -- revised on july 8. estimate ofn the 966.3 million. second-quarter sales come in at a beat. 15.1 6 billion euros. sayingrg intelligence akita modeling the bottom will be the second-quarter discussion of the factors that drove a recent guidance cut. lots of earnings. let's get to the full market. we saw the s&p 500 and nasdaq hit records. nasdaq futures taking more of a head. you have facebook gaming in after-hours. tesla plunging.
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we saw drops in european yields as well. some of the pmi's coming through in germany. let's take a look at the euro. that's trading near an eight week low in terms of euro-dollar volatility. index, treading water for the past couple days. crude up 3/10 of 1%. much get a check on the markets in asia with juliette saly and ignore -- in singapore. good to see you. we do havelthough most of the key indices tracking higher, the msci asian index up for a third session of gangs. -- gains. the nikkei up by one third of 1%. positive news in terms of the trade talks between the u.s. and china. the cost be is underperforming. second-quarter gdp was a beat. corn is are selling futures. people aren't willing to buy on the dip on the cost be.
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4/10 of 1%.y weird from the rba governor saying, if there's back to back rate cut in australia, they are willing to act again. fa aussie has fall and -- llen. i want to focus on the tech sector. we have been looking closely at high decks in seoul. it came through with numbers that were amiss. it's going to rein in its chip output amid the trade concerns. that seems to have impressed investors. shares tracking higher in seoul. we heard from apple supplier saying they see demand for new iphones starting to stabilize. you have one of the biggest apple suppliers in taipei off by 3%. samsung coming through, saying that it is ready to launch its foldable phone by september. that was put on hold a few months ago after early reviewers
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saw a defect. samsung shares up by over 1.5% in the afternoon session. nejra: thank you. underway.eason well we've seen second-quarter numbers coming in better than expected. the s&p 500 and nasdaq closing at record highs yesterday. estimates for the third and fourth quarters are moving the wrong way, worsening over the last two weeks. companies beating estimates now are refusing to raise guidance, effectively lowering the outlook for the second half. .oining us now is the cio at -- busy earnings time in europe in the u.s.. let's start with the positive side. if you take a look at the chart thanake it back further this earnings season, and we go back a decade, earnings growth largely explains the s&p 500's gains during the past decade.
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while we start to question why we are at record highs again, does this chart say there's no bubble here? >> it's a question of how you define a bubble. what we are looking at today is a position where the valuation on the u.s. market isn't actually at stratospheric levels. it's nowhere near where it was and 87. the idea of us being in a bubble situation is really not the case. if we move into the third and fourth quarter and there is the potential for earnings disappointment, with should -- we should be more cautious. if companies start missing on their earnings, people will get worried. nejra: a growing number of companies are not raising their for your guidance. that's looking at 2019. the market also is not pricing any kind of worsening in earnings beyond 2019 into 2020. >> that's right. you have to look from the big
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picture and individual companies. picture,ok at the big an environment where companies are on balance to disappoint rather than outperform, the market is going to take that pretty poorly. waysgoing to look at other of creating opportunity rather than actually pushing the equity market ahead further from here. this is a pivotal moment. that's what is being reflected in some of the federal reserve's, thinking about cutting rates to support the economy as we go through the second half of the year. early we are still quite in earnings season. even though it feels like an onslaught. you are getting a bit of a mix. some of the names that point to the industrial side, the bellwether to the economy, not doing as well as some other companies. semi-conductor stocks have been doing well. looking through their earnings, you could look at u.s. and europe, is it telling you
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anything about the economic backdrop right now? >> it is quite difficult to actually extrapolate out from individual companies. what we are seeing, we saw it through the pmi data better yesterday, that the pmi data is not strong at this point. that will be signaled by more companies as we go through the rest of the earnings season. there are some concerns ahead of us rather than the continued growth we saw through the second half of last year. nejra: now, on dividends, i asked this question a couple days ago. i think it is still relevant. the fact that dividend policy has been maintained. dividends have been increasing in the u.s.. does that tell you that ceos and cfos are quite positive about the future? even if they have not been raising those four-year outlooks. there's a lot of conflicting messages here. >> i admire your optimism.
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nejra: [laughter] companies that it's trying to bolster their share price. -- aey increase dividends lot of these dividends are not being paid out of cash flow. they are being paid out of borrowing. the same with company buybacks. that's a way of share prices being supported and bolstered rather than actually driving further growth. nejra: that's a really good point. i will bring some cynicism in now. lowball stocks have been outperforming as well. if you take a look at the hedge of choice, open interest has been climbing in august. is this a warning signal that volatility could start to pick up? how will that translate to the outperformance of lowball? fall -- of these low
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vol stocks are set up for disappointment going forward. -- i have been really surprised at how little volatility we've had through 2019. considering the geopolitical turmoil, considering the ongoing trade talks we've talked about many times on the show. actually, it has been the fact that companies have generally performed really well. if we go into an environment where companies are not performing so well, the geopolitics of volatility may actually start causing problems going forward. nejra: great to have you with us. our guest is with us for the hour. we have a lot to get into. let me recap some numbers from roche. we had a few more lines coming through, details on some of the specific products. it is seeing its core eps
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in-line with sales. second quarter sales coming in at 1.6 billion swiss franc's. a bit of a mess. 1.86 billionarter, swiss francs. upbeat on the estimate. second quarter tech centric was 374.3.mate that is a strong beat. the key line with roche was the fact that it raised its four-year sales growth few to mid to high single digits. as get the bloomberg first word news with debra mao in hong kong. prime minister boris johnson has cleared out more than half of theresa may's top team. he's installing a string of brexit enthusiasts to his first cabinet. the new chancellor of the executor, home secretary. former special counsel robert
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mueller largely disappointed democrats with his testimony on capitol hill. some wanted him to read aloud potentially damming parts of his report. he declined. oners helped refresh details possible obstruction of justice by president trump. mueller didn't offer any clues. turkey's bank looks set to cut rates. president erdogan has been a believer that higher rates cause inflation. ready toal bank looks put that unconventional theory into practice. this month, the president ousted the former governor, installing his deputy. board is a thing of the s&p 500 past. the last company in the index without a field director has now appointed diane moorefield. gender balance has been slow. in 2000, 80 6% of s&p 500 companies had one fema board member. the last 14% have taken almost 20 years to close the gap.
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global news 24 hours a day on air and i tictoc on twitter, hour by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you. coming up, volkswagen report earnings shortly. we will speak to the cfo. catch that interview at 7:00 london time. this is bloomberg. ♪
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nejra: this is bloomberg daybreak: europe. just got some breaking lines coming through here from gazprom. worth about $2.3 billion on the market today. that is something to keep an eye on. shares will be sold in a single lot. it is selling 694 million shares, worth $2.3 billion at current market prices. we are talking about europe's biggest natural gas supplier.
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let's check in on the markets now. a third day of gains on the msci asia-pacific index. we hit records on the s&p 500 and nasdaq yesterday. nasdaq futures looking soft right now. the euro near an eight week low. it was driven lower along with a lot of fields in europe including the 10-year bund yield which got to -38. concerns around pmi numbers in germany has been rising. 10 year yield dropped in the u.s. yesterday. cable also struggling for direction. we have a new cabinet. boris johnson has appointed a number of new people. let's get the bloomberg business flash. here's debra mao in hong kong. tesla is reporting a worse than expected loss for the quarter despite a record number of deliveries. the company lost $1.12 a share. another major management change has fret -- cast doubts on their
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future. the chief technology officer is stepping down. showing its business can weather all kinds of regulatory scrutiny. the company is settling a $5 billion case with the federal trade commission in the doj has announced a looming antitrust probe. socialaven't stopped the network's ability to real in users and advertisers. of the image sales chopped expectations as creative revamps at louis vuitton and christian dior helped fuel growth. sales grew 12%. fashion and leather goods dropping 20%. the luxury company is writing out global economic uncertainties and slowing growth in china. to deutsche bank, saying goodbye to its equities business, it seems parting is such sweet sorrow. the lender now wants to keep some of its stock trading revenue after all. the chief executive says the change of heart isn't a watering
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down of the banks revamp. that is your bloomberg business flash. nejra: thank you so much. its decision day for the ecb. policymakers set to signal a rate cut as they step into support the flagging eurozone economy. we will have to wait into september for the real drama. our guest host is still with us. market is pricing in a 40% probability of a rate cut today. that did increase after we got those pmi's from europe yesterday. what draghi move before the fed? chris: that's the key point. i think draghi would prefer. he is coming up to his last couple of press conferences before he steps down. therefore he's going to want to go out with a bang. today, whatates will that allow him to do in september? i think it's probably likely that he will differ.
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he won't make a decision to cut today. nejra: in terms of the bond yield, european sovereign bond yields falling further below the global debt market. we got to -38 on the bund yield yesterday. yieldly, the 10-year bcp closing below 150. where is the bottom for european yields? do you see is getting to a bottom anytime soon? chris: it's hard to judge. if we had said 10 years ago that yields in any bond market, particularly a huge one like the bund market, were going to get negative, we would've laughed. there has to come a point where people are not prepared to receive such negative funding from lending to the german government. it's difficult to say where it is at this point. what i look at more is when the italian bond yield is trading 50 points inside the u.s. yield.
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i think i prefer a u.s. yield rather than italian bond yields at this point. nejra: looking at the euro as well, we've seen volatility rising. , implied volatility spike into its highest in 13 months ahead of the ecb meeting. is that the market saying that they are bracing for some sort of surprise, in whatever form that might come? is thatris: i think it the european economy is weak. action byneeds some the ecb, whether it's a signal or action today. the euro is definitely very weak. been.s. dollar has relatively strong. one wonders if the was economy starts slowing down, whether we could be getting towards the
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bottom of the euro at this point. nejra: are we getting to the bottom in terms of ps -- pmi's? the market seemed to be taken by surprise by the weakness of the numbers yesterday. chris: i doubt it. if we see a slowing global economy, europe could be harder hit than that because it's more exposed to china where growth has been slow. there could be trade tensions between the u.s. and europe as we go into election season in 2020. you could see further weakness in the pmi data in europe. nejra: given all the challenges that european banks are going do you think draghi will be listening to that and trying to put messaging across that might give reassurance to the european banking sector? chris: we were just talking about deutsche bank in the way they are restructuring their business. what draghi can't afford, what
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the eu can't afford, is the european banking system to have any systemic failure. there has to be some support that is provided to it, even if word toy sort of support instead of physical action. act thatn balancing draghi has to do. wants to be who seen bailing out the european banking system. nejra: our guest stays with us. lots more to discuss. coming up, we speak to olaf schulz, german pregnant -- finance minister. later, the u.s. secretary of state mike pompeo. tune in to bloomberg radio live on your mobile device or on digital radio in the london area. this is bloomberg. ♪
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nejra: this is bloomberg daybreak: europe. let's get to some more breaking news. another update on the semiconductor sector. stmicroelectronics, second quarter net revenue comes in at a be. the estimate was 2.11 billion dollars. the second-quarter growth margin is a slight miss. 38.2%. revenue uper net about 15.3% quarter on quarter. third-quarter growth margin at 37.5%. the key number is the second-quarter net revenue coming in at a beat, 2.17 billion dollars. we have been seeing
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semiconductor stocks improving a little bit, maybe it means we will get enough left in the second -- uplift in the second half. that is something we are keeping an ion. chip stocks in the u.s. trading at record highs. let's move onto carmakers. the story for daimler was about cost-cutting. now we are looking at vw. confirming its 2019 operating margin outlook. it still sees 2019 deliveries slightly higher. it is confirming the targets before special items for 2019. a couple of lines coming through their from volkswagen. we will wait for more details and we will be able to get into those details when we speak to the volkswagen cfo, catch that interview at 7:00 a.m. london time. let's get a check in on the global markets. standing by in london is annmarie hordern. great to have view.
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-- you. how is it feeding through into the broader markets? >> another huge earning stop this morning. corporate earnings across asia have been mixed. we see the msci asia-pacific index getting again. not massive moves across the individual equity indices. australia up. new zealand up. focusing on australia. look at the aussie dollar. look at the 10 year yield. the r.b.i. governors saying he's prepared to cut interest rates again. central banks in focus. mario draghi speaking later today. i want to look at what happened yesterday. last night when the session closed, lvmh reported another standout quarter. you always want to focus on fashion leather goods. that's were you can tell how a business is doing. for them, it rose 20%. they were looking for 14%.
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for them, the growth accelerated. --was not a story for lg mh of the mh in china. the cfo is just not a china show. they are doing well across the board. nejra: thank you so much. let's get to some more lines from volkswagen. first half adjusted operating profit, a red headline that has just broken. 10 billion euros. we have a number for first half revenue now at 125.2 billion euros. confirmed, 2019 operating margin outlook sees deliveries higher. the is that adjusted first half operating profit coming in at 10 billion euros. , cominguarter revenue in at a beat. 65.2 billion euros. estimate, 62.15. let's move on to danone now.
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first half recurring operating income comes in at 1.86 billion euros. that is a slight beat fortune on on first half recovering operating income. second quarter sales, 6.5 billion euros. a beat. second-quarter, light from light sales growth. 2.5%. the estimate was 2.3. it is confirming its 2019 target and says it's well on track for 2020. those are the numbers. it is confirming its 2019 outlook. it has gotten a sales boost from the china baby food rebound and from the plant-based area. what a good detail for danone. let's turn to brexit and the u.k.. than halflaced more the cabinet since yesterday. boris johnson is bringing and brexit hardliners. he doubled down on his
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commitment to the october brexit deadline. though i am today building a great team of men and women, i will take personal responsibility for the change i want to see. nevermind the backstop, the buck stops here. nejra: joining us live is bloomberg's anna edwards. great coverage. good to see you again. the new chancellor. who else has key jobs? >> exactly. purges the extent of the we have seen of theresa may's cabinet. the sun newspaper dubbed it the night of the blonde knife. may's of 29 of theresa extended cabinet are gone. the former managing director at deutsche bank in the first to have worked in financial services makes his way from home office to number 11 to become the chancellor.
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also from a business perspective, we see liz trusts take on the trade briefly. what we are seeing here is a cabinet that has been stuffed full of brexiteers and loyalists. people who supported boris johnson, outgo those who supported may and jeremy hunt. he put in place the team he thinks will enable him to deliver brexit. as we heard in that clip, the buck stops with him. he doubles down on that commitment to the 31st of october. nejra: even though boris johnson has stuffed the a lovely loyalists and brexiteers, is he now in a situation where there's going to be a lot of backbenchers who aren't going to support his version of brexit? >> indeed. we have a new manhattan number 10. it doesn't change the math in parliament. that's why the appointments are interesting.
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he has stuffed his own cabinet with brexiteers. that means he has stuffed the back benches with no deal opponents. he does want to go down this no deal rue. many people are asking how he's going to make the math work. we know this current parliament doesn't support no deal. that's why people start talking about a general election. does he want that? he says that's not the plan. that is something that could happen. when you look at the makeup of the cabinet he has put together, some suggest this would be a good cabinet to try to fend off the brexit party is akin to a general election. times,ave seen so many the path ahead looks uncertain. nejra: indeed. you will be all across it. thank you so much. chris ralph is still with us as well. listening to everything. how likely is a general election
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, even though boris said he doesn't want to have one? >> it has to be a possibility -- chris: it has to be a possibility. majority thatl boris johnson has in the house of commons. that might become even smaller. there -- his room for new for is quite limited. is quite limited. he's a gambler. he may feel that he can create sufficient momentum. he may feel that the labour party is damaged good at the minute. he may want to go to the country early. nejra: the gap between three and six month cable implied volatility has a most closed. is this a sign of the market keeping calm or just not knowing where we go from here? >> -- chris: it seems to me there's a bit of a relief from cable in terms of the fact that we've gone through this conservative party election. we got a new prime minister in
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place. we have a new cabinet in place. he's committed to the 31st of october, which removes uncertainty. think, to some extent, that will go for cable in the short-term. there is still quite a lot of uncertainty going forward. if the october 31 date becomes less clear that that's achievable, we could see further volatility in sterling from here. nejra: how are your asset managers positioning around u.k. assets? chris: it's tricky. during the conservative party election, they been holding back because it wasn't clear who would be put in place even the boris johnson was a very strong favorite. there are still some very good quality companies in the u.k. if you are in overseas fund manager, looking at u.k. assets,
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they don't have good value at this point. nejra: how high do you put the risk of no deal brexit right now? chris: i've been a believer that, common sense will prevail. i may be ridiculously overoptimistic in that. nejra: i was optimistic earlier. you are now. we coulde idea that plunge ourselves into this completely uncertain environment , take this enormous risk, feels not the sort of risk that a reasonable prime minister would take. i would put the probability at less than 20%. clearly, as we approach october 31, with johnson's commitment to achieving brexit on that date, it may be that probability will rise. as my guest ralph host this hour. we are switching the roles of optimist and cynic as we go along. coming up next, the cfo of ecuador. that's after the norwegian oil producer missed estimates for
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second-quarter profits on the were crude and christ -- gas prices. -- low were crude and gas prices. this is bloomberg. ♪
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nejra: this is bloomberg daybreak: europe. reported a drop in second-quarter profits on lower oil and gas prices. it's adjusted net income fell $1.13 billion. joining us on the phone from oslo is the cfo of ecuador. way to have you with us. these numbers hit by the low -- lowell in oil and gas prices. what is your outlook for european gas and lng prices in the years ahead? >> good morning. thanks for having me.
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we reported results today. dropwere affected by the in both oil and gas prices. that's the main reason you see behind the drop. it comes to the question about the outlook for gas prices in europe. againieve it will pick up in the third quarter, especially in winter. you see this reflected in the prices. nejra: you said that you will dedicate more of your norwegian explanation efforts specifically at natural gas prospect. are you reconsidering that? from discovery to production, it takes 5-10 years, dependent on whether this is something you can tieback twin existing installation or not. tenure timehe horizon, there will be spare capacity in the pipeline for gas
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export to europe. why we said what we said when it comes to increasing discovering gas in the norwegian continental shelf. nejra: what about your efforts to acquire gas assets that would allow you to build -- fill an upcoming gap in your portfolio? if that is still valid, where are you looking and where are you seeing opportunities? >> we do so through the drill bit and expiration rounds and things on the norwegian continental shelf. our drill rate success will determine if we discover oil and gas or not. exxon is looking to sell its entire norwegian oil and gas portfolio. it could be the biggest oil deal in the country in as many years at as much as $3.5 billion. would that be something you are
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considering? would you be concerned about the norwegian authorities putting their foot down because of a risk around concentration and competition? >> we don't see that there will be a risk for than a region government to set its foot down. we will pursue that opportunity. we will get it. i think it's important to be aware of that. we are the raab rate or -- portfolio it -- whether we are looking at the portfolio or other opportunities, we are not traditional. like what we saw with regards to the recent deal. we were able to increase our equities across assets. nejra: can you give us an update on the project in norway?
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i believe you said before it would start in november. your partner is hoping you can start earlier. what is the timing on that project right now? startall hope that we can , the sooner is the better. ,his is a very big project across assets. our current plan is that it will start up in june of this year. we have taken down the capital estimate for the development from 86 to 83 billion. since the plan for development on operations was approved by the authorities, we have taken down the capital estimate to 40 billion. that,her news today is when it comes to ramping up we say that we will be able to do so by summer next year. that's a couple of months faster
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than previously announced. nejra: we will see if the market takes that positively. another thing the market might be listening out for is that you signaled that there is an emerging scope for share buybacks. since then, what you've done is prioritize raising the cash dividend, reducing debt. has anything changed in terms of the scope for buybacks? >> we have said and repeated many times that are priority, when it comes to returning cash to our shareholders, is cash dividends. we would like to strengthen our balance sheet, which we have done. we will look at the different opportunities for making changes in our portfolio, from a defenseman point of view and an organization point of view. i think it's worth reflecting on the fact that the recent drops in volatility and oil and gas prices merits to keep a very
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strong balance sheet. this is one of our key priorities. earlier, you were saying that you expect natural gas prices to start picking up. do you have the same view for oil prices? >> yeah. fundamentally, we believe that oil prices will come up. remedy to build a resilient company and be robust in this environment with such extreme volatility is to keep on working on constant capital structure. you see from the quarterly results that we are able to keep the improvements that we were able to achieve during the downturn. and working further. we are investing in world-class portfolios that will bring more value to the company over short, medium, and long term. nejra: thank you so much for
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joining us this morning. thank you for giving us some of your time. let's get the bloomberg business flash. here's debra mao in hong kong. sales topped ma expectations as creative revamps at louis vuitton helped fuel growth. sales grew 12% with fashion and leather goods dropping -- jumping 20%. it is riding a global economic uncertainties and slowing growth in china. bankit comes to deutsche saying goodbye to its equities business, it seems parting is such sweet sorrow. the lender now wants to keep some of its stock trading revenue after all. the chief executive says the change of heart isn't a watering down of the banks revamp. tesla is reporting a worse than expected loss to the quarter despite a record number of deliveries. 1.12 dollarsost per share. another major management change has cast fresh doubt on the
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carmakers future. the chief technology officer is stepping down. facebook is showing its business can weather all kinds of regulatory scrutiny. the company is settling a $5 billion case with the federal trade commission and the doj has announced a looming antitrust probe. these haven't stopped the social network's ability to real in users and advertisers. that is your bloomberg business flash. nejra: thank you so much. sticking with tech, deborah was telling us about tesla and facebook. western to chris ralph. let's start with facebook. as deborah was saying in the business flash, showing that it's weathering these regulatory challenges that are looming. would you be positive on the things -- faangs? chris: for now.
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i think that the regulatory environment is changing against those stocks, particularly amazon, google, alphabet, and facebook. i thought it was really that despite the $5 billion fine to facebook yesterday, the fcc commissioner dissented from the view. he wanted a bigger fine. we are also seeing debate between the european and u.s. regulators. , the't think the president u.s. president wants the europeans to be regulating the u.s. tech industry harder than the u.s. regulators are. think there's a lot more to play for here. to some extent, the results we are seeing from the tech stocks are immaterial to the market's perceptions of capabilities going forward. nejra: at the risk of you calling me an optimist again, i
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wonder if facebook and others were to be hit with fines, surely they would be able to absorb a lot of that. with facebook, the take away from earnings seems to be, as long as they have the user growth, they are ok for now. if they were able to absorb the fines, what is your biggest concern? i thought the article yesterday was really good. these internet companies being systemically important happenings to the united states. that means they have responsibilities to the public as well as to their shareholders. therefore, if they are cited and in focus, that may mean their ability to deliver advertising growth and earnings growth may be curtailed. painting -- it's not possible to paint a clear picture. i'm just saying what needs to be cut listen of the changing environment be sort of companies had. nejra: i guess you want to be
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more cautious. with chipmakers, there was a lot of caution at the start of the year. we keep getting earnings out. giving signals that the second half is going to be better for chipmakers trading at record highs. i want to point you to a chart that shows south korea's semi conductor exports falling. this data is going to the end of june. perhaps we could have an update from that. is this an area -- of those two signals, are you the optimist or the sinecure -- cynic here? chris: this will be driven by global demand. the performance of the global economy. it's difficult to say what is happening in the korean number without looking in some more detail. my sense is that if we start seeing weaker global demand, generally, we have talked about the pmi data earlier on, that
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will affect the chipmakers whether they are based in korea, europe, or the united states. nejra: quick thought on tesla. we have seen that plunge in after-hours on profit doubts. the cofounders surprise step down. is this a stock you would have any interest in at this point? i've always been cynical of its ability to deliver agile, profitable, long-term growth. one has to would the rendition and the way in which they have changed technology in the sector. can they mass-produce cars for the global market over the long-term? much betterrs are placed and experienced to do that. nejra: thank you. chris ralph. up next, chris is taking us to it. we speak to the volkswagen cfo after the carmaker reported adjusted operating profits for
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the second quarter above analyst estimates. that is coming up in just a few minutes. bloomberg users can interact with the charts shown using to tv . browse recent charts, catch up on analysis, and save charts. this is bloomberg. ♪
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nejra: good morning from bloomberg's european headquarters. this is bloomberg daybreak: europe. laying the groundwork. european sovereign bond yields hit record lows. we speak with german finance minister olaf schulz. the great purge, boris johnson tears up the cabinet and promotes brexit enthusiasts to top positions. earnings avalanche. we get numbers from some of europe's biggest names. don't miss our interviews with the volkswagen, roach, and many more. alphabet and amazon report. ♪
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nejra: good morning. welcome to daybreak europe. just gone 7:00 in london. let's get into the earnings. assets inning to sell 2019. mostly in emp. that's one of the key lines we are getting out of hotel. -- total. was 2.98. that's a miss for total on second-quarter adjusted net income. basically, profit also dropping with lower oil and gas prices. offsetting rising output. this is a similar story to what we heard from ecuador earlier this morning. challenges for some of these oil and gas companies in europe. to buyonfirming a plan
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back $1.5 billion of shares this year. that's another key line coming through here. it's going to develop big -- it's energy market. total developing energy market. -- you areng is; are looking at aloe america. >> is the opposite story of total. week oil prices hurt their earnings. strong iron ore allowing them to beat. first half adjusted eps coming in at $1.58. the estimate, 1.48. that was a b. we are looking at a share buyback of up to $1 billion. we are seeing approval of some of those coal projects. that's also helping here. generally, it's the iron ore story. we will have to look out for thou outlook to see just how much. coming up, we speak to the anglo
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american ceo. that will be 8:00 london time. nejra: let's get to unilever now. 5.0 5 billion euros. .he estimate was 5.06 it still sees underlying sales growth at the lower half of the range. first half revenue comes in a despite mrs. well. estimate was 26.13. if we look at what they are talking about for the 2020 target, on track. second quarter underlying sales up 3.5%. slight miss on the estimate. second quarter underlying volume, 1.2%. slight miss on the estimate in terms of the gain of 1.9%. a bit of a miss on some of the numbers there for unilever. the poor weather in ice cream season is in focus. extently focused on the to which poor weather has affected though second-quarter sales. to theup, we speak
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unilever ceo. don't miss that interview what 7:30 a.m. london time. let's go to another one of our big earnings stories today. that's volkswagen. they reported adjusted operating profit for the second quarter that topped analyst estimates. it still sees 2019 deliveries to be slightly higher. let's go to matt miller, who will be speaking with the carmakers cfo. welcome to the show. matt: let's talk now to the biggest carmaker in the world. the auto industry gets so much attention. we will talk about volkswagen's earnings. let's start with your outlook. you are sticking to your target for the full year. even though daimler and bmw have cut their targets. it's been difficult with european car sales falling. we've seen the all-important chinese car market falling.
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that has hurt a lot of people. why aren't you cutting your forecast as well? even though we see that falling demand around the world affecting your second quarter numbers. frank will join us in a second from wolfsburg to talk about exactly what's going on there. very interesting to hear about volkswagen. we will ask them about this as well. the outlook for the global economy but especially here in germany. yesterday, pmi numbers came out at a seven-year low. how does the biggest carmaker in the world, the biggest employer in germany, feel about that? is the german government doing enough to help the german economy sprout its wings? there's been a lot of concern about whether berlin is spending enough. there's a lot of infrastructure work to be done in germany.
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driving around the country, you see the audubon under construction everywhere. it seems like no one's working on it. there are still problems with internet coverage across the country. really, the infrastructure question is an important one that we want to put to volkswagen. we will get back to the cfo and asking those questions and many more in just a moment. nejra: really looking forward to that. the earnings onslaught is continuing in london. let me get to some numbers from bellagio. i just broke unilever. it's funny to talk about the challenging weather. now we are in the midst of a heat wave in london. let's take a look at diageo. four-year organic net sales growth, up 6%. the estimate was 6.2%. a bit of a mess there. four-year net sales, 12.8 7 billion pounds. the estimate was 12.79.
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it's planning to return to holders up to 4.5 billion pounds. planning to return 4.5 billion plans to holders by fiscal 2022. let's get back to matt miller in berlin. he's with the volkswagen interview. take away. matt: now we are going to get to the cfo of the world's largest automaker. you put out numbers that were affected negatively by the drop in global demand for cars. you are sticking to your profit target, your rivals happen cutting. what makes you so confident? what makes you so resilient compared to other carmakers? >> good morning. thanks for having us again. we are very grateful for the first half. this is a strong foundation.
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you rightly referred to sales being down 4%. we still have been able to grow operating profits before special items by 2%. our mix is improving. we have success with this pricing. we know that we are forecasting a potentially difficult second half. the strong foundation gives us a comfort to stick to our guidance for the four-year. matt: are you concerned about the german economy? yesterday we saw the manufacturing pmi's dropped to the lowest level in seven years. berlin, theyre in are not letting go of any spending. the roads need work. the internet coverage isn't great. is the infrastructure partially to blame for what we are seeing happen here in this country? >> know. i wouldn't go that far. infrastructure certainly needs to be revamped. that's probably true for many countries. weez, the key issue is that
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have great product momentum going for us. our share on suvs is growing 35% by the end of this year. this is certainly improving and helpful for us. we have important launches to come. the new gulf eight is very exciting. just after the holiday break. obviously the id family, the full electric vehicles, that's another big venue for us. we are taking away anything from the new stuff coming forward. overall, product momentum counts. we know that the overall environment is weakening. we are aware of that. that's the reason why we have to work cautiously on our costs and pay attention to it. nevertheless, nobody said it's going to be easy. we stick to the guns. matt: i have been testing out the new audi michon. the product is certainly
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impressive. i'm a lifelong gearhead. yet, i'm really impressed by it. i do notice that the infrastructure isn't there yet. there are 100 high-speed chargers in europe. tesla's supercharger network totals about 450. why don't you invest more in building out that infrastructure fast? >> we do that. event with big chancellor merkel and a lot of representatives of the industry. that was very encouraging. we all know that the them for structure has to improve. we will do a lot it our own premises. we are working closely with retailers and other companies to improve the situation. we are quite comfortable that there is sufficient infrastructure. still, something has to be significantly improved over time. piece,er important
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products are going to excite the customer. they have their own body language. the exterior is totally different. the interior experience, connectivity. these are great features that will make the inroads. we're absolutely comfortable that this product will sell. we have to get people into those cars because the driving experience is fun. pricing will be ok. we will be competitive to what people are used to. infrastructure is continuously to be worked on as a concerted effort. matt: let's talk about the corporate structure for a minute. following a successful ipo, what is the plan going forward? porsche, even at a conservative valuation, on a standalone basis would be worth more than the entire company. are you prepping an ipo for the sports car unit?
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>> i think you are very right. volkswagen stock is undervalued. we are aware. , we are assessing options for the power engineering. this is what we announced. we are looking for industrial solutions that will allow us to look into it more closely. this is our current focus. we are fully convinced with you that the volkswagen stock should do better. we are part of an industry which is currently trading at low levels. a porsche ipo in the future, can we expect that? moment.t the very i wouldn't go that far. this is not a priority. we informed the market on what we are looking at. we get so many helpful advice, so much hopeful advice.
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it is currently not a subject for us. matt: let me ask you about bukhari. they won 15 of the first 25 world superbike races with their brand-new bike. it's amazing for a twin maker to do so well with such a different product. will you keep this brand under the volkswagen roof? said, our current focus is on power engineering and everything else is to be looked at down the road. currently, i'm not firing of speculation. nothing to be added on ducati at this moment. [inaudible] matt: yes. i'm happy you have it in your portfolio as well. me ask you about china. we've seen other german carmakers raise their stakes in chinese joint ventures to more than 50%. are you ready to go into that
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market? it looks to be in decline. strategically, more options seem to be open. at this moment, the priority is to be successful in an increasingly difficult market environment. the market is contracting. we expect the market for 19 to be below the numbers from 18. our focus is to improve our performance in the marketplace. is forategic discussion the future. at this moment, not an issue we are working on. matt: thanks so much for your time. the chief financial officer of volkswagen, listening to advice, maybe not taking it. focused on the volkswagen id brand. nejra also talking about audi, porsche, and ducati. i will hand it back to you in london. nejra: thank you so much.
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matt miller speaking with the volkswagen cfo. broadert to the markets. we saw the s&p 500 and nasdaq it records. four days of gains for european equities. yesterday was flat. it looks like we are set up for another day of gains, judging by the european futures. in bond markets yesterday, we saw unprecedented lows hit in terms of fields. we closed at -30 gate on the tenure bund yield. we stay there right now in terms of the tenure bcp. the tenure treasury yields also steady on a tool for handle. aroundthat drop to concerns about global growth. germany disappointing. joining me now is bloomberg's mliv fx and rates strategist. welcome back to london. great to have you with me. we saw the reaction in bond markets yesterday.
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basically an increase in the probability of a july rate cut. 40% is what traders are pricing in. looking at euro-dollar overnight volatility on the chart, traders embrace position. what can we expect from today? surely not draghi preempting the fed. >> i don't think we will get president draghi preempting the fed. the probability being as low as 40%, that gives the ecb a pass. the market is saying, we don't expect at this time. the ecb will set up a move in september. at that time, they will have the cover updated forecast. he gives them more time to look at more data. if the markets is to draghi, we don't expect a rate cut this time around, he won't deliver it. nejra: that totally makes sense. we keep seeing lower and lower yields in europe. where is the bottom? we are set up for some moves from the ecb.
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you said, it's a question of when, not if. >> it is. the fact that the fed is going to be cutting rates, this is not a one and done this month. it will be a cycle. that will put pressure on bond yields globally everywhere. other central banks will have to follow suit. the fed is going to lead the way. i think it's difficult to put a floor on it. jones stays with us. swiss reported net income for the first half that beat estimates. this is bloomberg. ♪
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nejra: this is bloomberg daybreak: europe. swiss asset manager of onto bell has reported net income that beat estimates. the company has warned of a challenging second half as well. joining us now to discuss everything is the ceo of monta
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bell. great to have you with us this morning. you've talked about the fact in the report that asset management is the main earnings driver. talk to me a little bit about the inflows and asset management. why did they do so well? >> thank you. we are very pleased with the growth we were able to generate in our asset management division. it's the proof that are high conviction positioning is endorsed very well by clients. in an environment of ever lower yielding and an environment where investors are looking for income and solutions. our high conviction product resonates very well with them. growth.generated 9.6 that with stable margins at 44 basis points. that is proof to the very
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specific positioning of our high conviction approaches. we are pleased with the fact that inflows do come from different channels, different markets, and also from different product lines. from strategic in town -- income fund or to the emerging market. sg -- our bsg program. down to sex -- sector-based clashes. you have to make a difference to the clients. we seem to do it. nejra: you also talk about second half risks. can you elaborate a little bit on that in terms of the behavior of clients and investment trends? >> perhaps first, the first weeks of the second half show the same pattern as the first. seeing strength where
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we have been strong in the first half of the year. bringsond half always some finality with it. second, we think we have a challenging environment in terms of geopolitical tensions and ever lower interest rates. this will be a challenging time to navigate and protect client assets. therefore, we just wanted to highlight that were investors. nothing specific to worry about. nejra: how are you passing on negative interest rates to your clients in wealth management? >> yes. first of all, we are not predominately a bank. for us, net interest income is only 7% of our revenue. it's a topic we think about but it's not a main -- make or break topic. as we see ourselves as the wealth managers and partners of our wealth management clients,
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we are very reluctantly passing negative interest rates on as we are also not the main cash deposit or for our clients. we are their advisor in partner when it comes to wealth and asset management. we do that only of cash would reach tremendous relative amounts relative to the overall wealth that clients have. we serve our clients as investment advisors. it's not a big topic for us to pass it on to clients. see theell me how you inflows into wealth and asset management developing over the rest of the year. we've talked about the strength you've had an asset management. does that see you more -- mean you see more demand for asset funds? wealth and asset management going to develop for the rest of the year? to lookalways difficult
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ahead in terms of investor sentiment and flows over half a year. many things can happen. currently strong visibility on the asset management side. the demand for active managed solutions remain strong. we also gave an update to our investors on the performance of our products, performance is very strong. we are very constructive on flows and asset management. side, wealth management we had more of a specific event that we had to digest integration from last year and from an integration process. there may be some fallout. we have some of that follow. we believe the underlying strength will return to our target of 4-6% annual growth. we confirmed that target today to our investors. nejra: thank you so much for joining us. great to have you on the show. coming up, we speak to the
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unilever ceo after a reported second-quarter sales growth below expectations. we will speak to the ceo of roche. you can catch these two great interviews just after the break. a very final thought with richard jones. you were listening to that interview. negative rates here to stay in europe? >> they are. we might get even more deeper negative rates in switzerland. nejra: pythias always. daybreak europe bloomberg markets: european open is up next. we will be back with you tomorrow. tune in to bloomberg radio. live on your mobile device. this is bloomberg. ♪ hey! i'm bill slowsky jr.,
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anna: welcome to bloomberg markets, european open. i'm anna edwards in westminster alongside matt miller in berlin. matt: long live the everything rally. european futures point to big gains, after the s&p 500 closed at another all-time high. the cash rate is less than 30 minutes away -- trade is less than 30 minutes away. ♪ anna: piling on the pressure. european sovereign bond yields hit record lows ahead of today's ecb


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