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 meeting, with markets

pricing a 40% chance of a cut. will draghi he forced to move? boris and the brexiteers. the u.k. prime minister packs the cabinet with loyalists. with earnings season heating up, we talk to the ceo's of unileve r, roche, astrazeneca and anglo american, all within the next hour. a busy morning. matt: very busy. less than half an hour from the european open. as we waitat bunds for the ecb decision. yesterday, down to a record low for the german 10-year debt yield, at one point -40 basis points. right now we are at -38. i believe the mliv question of the day is, how low can they go?

we will talk about that today. how high can stocks go? futures continue to rise across europe today. we have had a pretty decent run now. cac futuresup 0.5%, gaining 0.9% and ftse futures bringing up the rear, only up 0.3%. maria: roche raised its sales .rowth view twosales company cites its treatments as main drivers. the company ceo said to investors that he's excited for the approval of new cancer treatments. ceo. talk to the thank you for joining us. i read the positives in your release, guiding higher on sales and eps, clearly things going better.

but i want to start with changes in the u.s. biosimilar versions coming in and investors wonder what impact this will have on business. can you give us some guidance, metrics, analysis on the impact this will have? severin: certainly. thank you for having me. biosimilars have already entered the market outside of the united states, and you've seen continued growth. we were able to overcompensate for the effects of biosimilars due to strong demand of our new medicines, and we see this continuing. as expected, we see the biosimilars in the u.s., and we will probably see more of an impact in the fourth quarter than in the first. but we believe we can continue to grow out sales, not only for the parent year, but beyond for

the years to come. productsch of the new do you think will grow quickly enough? which will grow quickly enough, to offset negatives from the biosimilar competition? a range of's important medicines we recently launched. a treatment for multiple sclerosis, for hemophilia, for a number of cancer types, all those franchises will continue to grow. on top of it, we've launched a which of new medicines will also contribute to ongoing growth. matt: we see u.s. lawmakers proposing a new round of

price measures for the medicare, the prescription drug program that would make manufacturers liable for some share of the costs. how concerned are you? what would it do to your u.s. business? severin: there is no doubt reform is needed in the united states. the key focus and concern in the united states is the relatively high copayments, the burden for individual american citizens in the u.s. whilst medicines only are 50% of total health care spend, there's an over proportional spend of individual patient copayments. the measures discussed at the moment will be closer to fix this issue. we're veryoche, protected because of the innovative nature of our portfolio, our highly differentiated, lifesaving medicines. willch, we're confident we

continue to be rewarded for such innovation. matt: what markets are most important to you right now in terms of growth? how do you see the chinese market panning out for growth? severin: certainly we see an inflection point now in china as far as our portfolio is concerned. china for a long time has very much focused on basic infrastructure, and what we now see is increased access to more sophisticated, innovative, high-value medicines. with our portfolio, which is very specialized for such kinds of breakthrough medicines, we benefit from the broader access to those medicines in china. anna: let me ask you about the sparks therapeutics acquisition. you pushed back the expected closing date. should investors

be? some are worried this might not happen. severin: the review of the american authorities is ongiong, and i am not -- ongoing, and i am not able to speak to the specifics, but we are very confident we will be able to close the transaction by the end of this year. anna: close it by the end of this year. and what do you say to regulators who might be concerned on be of hemophilia patients, on the impact this will have? how is it not bad for hemophilia patients? gene therapies really offer the opportunity for a cure, not only for hemophilia a., but beyond, for other rare diseases. s believe combining strength

will help accelerate the opportunities to bring such new breakthrough therapies to patients. andhis is really exciting, we look forward to closing the transaction. matt: the concern of regulators is that you will shut down spark's experimental hemophilia gene therapy, for the benefit of your drug, hemlibra. can you assure regulators that won't be the case? severin: absolutely. and we look forward to support and ortfolio of spark, actually we can do even more by bringing the capabilities and assets together under one umbrella. again, we're very confident we can answer all the questions theh will come up and close transaction by the end of the

year. matt: one final question here, severin. help me with my homework a little. we will talk to the ceo of your smaller british rival, astrazeneca. the mostou think is important question facing a ceo of a big drug company in this world? severin: it is very clear. in our industry, it's always about innovation. we constantly have to improve the standard of care constantly have to improve the standard of. that's what the industry is all about. that's why we'll come to work. that is true for roche, and certainly true for other players in the industry. matt: thank you very much for your time. roche, schwan, ceo of joining us live from basel, closer than it up next, an interview with alan -- basel, switzerland. up next, an interview with alan jope, ceo of unit lever.

later today, an interview with secretary of state mike pompeo, one you won't want to miss. this is bloomberg. ♪

anna: welcome back to "the european open." 18 minutes until the start of cash equities trading, in westminster tracking the european political story. in the markets, european futures

suggest a fairly strong start to the day. let's get a first word news update. here is debra mao, in hong kong. debra: prime minister boris johnson cleared out more than half of theresa may's team, installing a string of e.u. -- string of brexit enthusiasts. patel becomes home secretary, and dominic raab foreign secretary. former special counsel largely disappointed democrats on capitol hill, who wanted him to read aloud potentially damning parts of his report, but he declined. others asked about potential obstruction of justice, but mueller did not offer clues. australia's central bank could ease policy further, if the

recent back-to-back cuts failed to revive economic growth. reserve bank rate is at a record low of 1%. asked president trump to shorten his 150-year prison sentence, filing a request with the justice department, hoping to finish his life in freedom. madoff is jailed for running the biggest ponzi scheme in u.s. history, costing investors $20 billion. tesla reports a worse than expect a loss for the quartered, ,m inspired a record number of deliveries. another major management change ththe electric carmaker, e co-founder stepping down as chief technology officer and becoming an advisor. global news 24 hours a day, on air and at tictoc on twitter forward -- powered by more than 2700 journalists and analysts in

over 120 countries. matt: debra mao in hong kong, thanks very much. ver reported second-quarter sales growth of 3.5%. alan jope, the ceo, spoke to annmarie hordern. let's listening. topline showed good and bottom-line growth, well within range. we said this year we'd grow between 3% and 4%, and in the second quarter grew 3.5%. meanwhile, we're preparing unilever to be a future-fit and focused company, and one distinctive feature this quarter, a good step up in emerging markets. in the half, emerging markets group 6.2%, 7.5% in the quarter. so overall a good set of results. annmarie: one thing in earnings, that the weather weighed on results.

but this year might be the hottest on record in the u.k. will that change 3q sales? alan: we have to point out that in q2, ice cream sales were lower than expected because of cooler weather versus last year, what'sing that point on likely to be the hottest day ever recorded in britain. fortunately, we're a big, diversified business, so we try to not focus too much on the weather. what conversations are you having about the dual legal structure coming under one roof? alan: unilever has a unique, dual legal structure, and everyone agrees it would be simpler to be a unified company, but it is difficult to see a path to get there. we're exploring several options. we're not in a hurry.

it may result in us doing something in the future. important, but not urgent. a long-term issue, and something the board will manage carefully. any real is there pricing power in the consumer goods industry right now beyond commodity inflation related increases? alan: if you look at our results, it's 2/3 price, 1/3 volume, and quarter to quarter that moves around. the reason it is more tilted to price this quarter is because of forex and commodity pressures. price increases for the sake of price increases isn't a good strategy. we have to innovate and add value, the only way of taking price increases, adding value sustainably through the quality of products and innovation. you able to boost margin by price increases, or does it need to come from

cutbacks? alan: margins typically get improved by a mix of the business moving into more premium price, more profitable segments, and every business is an ongoing efficiency program. tothe areas we'd cut continue to evolve margins. annmarie: what are you bullish about in the second half of the year? a brand, a region? a certain product? alan: i am excited about emerging markets. looking east of here, we see good performance across all of asia, africa, the middle east, all grown well for us. the other thing, our brands that can demonstrate through tangible actions how they are improving society, or the planet, we see dramatic growth from those brands. two areas we are excited about. anna: ceo of unit lever, alan jope. he's excited about emerging markets, and no doubt excited

about the warm weather we are going to endure, sorry, enjoy, here in westminster. and recording has more. interesting to -- annmarie ho rden has more. interesting to hear about the weather. today, a contrast. annmarie: ironic, since today might be the hottest on record. 100 degrees fahrenheit, for american viewers watching, possibly in the u.k. that weighed on sales, the rainy sprinh. -- spring. he joined a chorus of european companies blaming sales on bad weather. he is seven months into his tenure at unit lever, so it -- he'sver, so you can see very bullish on emerging markets. given that you are, manus called you the duchess of

brexit. i spoke to him about brexit. they said they were stockpiling things like deodorant and ice cream, going into the summer. now that the new brexit deadline is our tober 31st, probably -- october 31, probably stockpiling less ice cream, more deodorant. matt: i am happy they are bringing back the double-pop popsicles, which in my opinion is the best use of high fructose corn syrup. justin bieber tweeting about it, they're bringing it back. we'll hear more from unilever through the day. we'll look at stocks to watch at the open next, including volkswagen. the german automaker decided to go against the grain and stick to its full-year outlook. fairly daring, but it is the biggest carmaker in the world. this is bloomberg. ♪

anna: welcome back. six minutes to go until the start of trading day in europe. we've gathered together lynn thomasson, looking at anglo american, and our equities team covering the volkswagen story, and dani burger with a focus on all things chip. lynn, highlights from anglo? lynn: the message is that it looks like a good day.

they announced a one billion-dollar buyback, and beat earnings estimates. iron ore, they are making a lot of money from iron ore, earnings quadrupling in the first half on the back of higher prices around the world, on supply disruption from brazil and australia. to mark will talk could funny -- cutafani in just a little bit. the story on volkswagen? j.p.: watching volkswagen, the profit fell 8%, but still better than expected. the only carmaker that was able to stick to its outlook, saying that efforts on pricing are helping to weather a potentially difficult market in the second half of the year. shares have clawed back 1% in frankfurt. rallydani, we saw a tech help lift u.s. markets yesterday. what is the story in st micro? dani: the tech rally might be

reversing. they cut their growth outlook for the full year. they say it is older products that they see weaker demand for. on the high end, $9.65 billion for the year and, before it was $9.8 billion on the year end. even though we saw arrivals signaling demand is coming back, we had a story today saying iphone demand is stabilizing as micro's older products are struggling. matt: dani, thank you very much. lynn, jan-patrick, thanks all of you, from the bottom of my heart for joining us. you can get the latest stories by going to first go on your bloomberg and via the mobile app. ecb decision today. we have maria tadeo standing sweltering heat,

and anna in westminster. everyone is outside today, except for me in the berlin bureau. futures are pointing to another gaining day. this is bloomberg. ♪

anna: one minute to go until the start of cash equity trading in europe this thursday morning. let's get right to the markets. annmarie hordern is standing by in the studios with the latest. annmarie: let's look at what happened overnight in asia. muted trading, digesting corporate news. euro-dollar, ahead of the ecb meeting. everyone will be parsing mario draghi's words on whether they will make a move in september. the pound just under 1.25 against the u.s. dollar, with a new membership of boris

johnson's cabinet. and futures slightly higher as u.s. tech companies deal with regulatory scrutiny. european futures are looking positive head of the open. 40 futures all the upside in the green. another mega upside to earnings. let's look where we are at the gmm board. we don't have it just yet. that is the german bund yield, in negative territory. but we have the european market likely goingwe're to see a positive start to the european open. here we are. spain's ibex up nearly 0.3%. ftse 100 up nearly 0.2%. 0.7%, a sea0 up of green. excited to see what the individual movers will be, given the slew of earnings. matt, what are you seeing?

ant: we see for one thing incredible breadth, 500 winners in 100 losers, so five to one on the upside. huge focus on the companies with earnings, doing well. nokia, up over 8% this morning. roche gaining over 1%. we talked to their ceo moments ago. one of the biggest companies on the stoxx 500. hennessy,moet leading this morning. on the downside, very few losers. thiso is one, down 1.7% morning after earnings. to dani burger with more breaking news. dani: the numbers coming in for nissan forr earnings. recall yesterday, a 90% plunge

in operating profit, they said those numbers were accurate. we have the exact numbers now, and they are ugly. first quarter operating profit, ¥1.61 billion. the estimate was over ¥37 billion. that's a huge miss. also, how much they are cutting staff, reducing headcount by about 12,500, so certainly a big reduction, emphasizing how much nissan is struggling to get back on stable footing after the arrest of carlos ghosn. looking at the rest of the numbers, they are keeping the full-year dividend and the full-year outlook, so that is not changing, but they certainly have a lot of catching up to do, given this quarter's numbers. analysts don't see the picture getting much better until perhaps 2021. let me show you the chart. year revenueon growth for nissan. the march number, the first panel, that's the actual number. it continues to be red, dropping

70%, 60% declines in revenue. it looks like june 2020, but because you have a calendar year, that's not growth until the first quarter of 2021, so the ugly numbers today, analysts see them continuing. a quick look at how autos are doing. you can see most autos moving higher. volkswagen gave earnings today. the earnings picture might be looking better. they hyaad a miss, but kept ther full-year outlook. peugeot also higher. so maybe markets see this as a nissan-specific problem. anna: interesting to see volkswagen gaining after sticking to the full-year outlook, and profit beating. contrasting with nissan. thanks very much for that. back to broad market movements, european markets opening higher with the cac 40 heading to the

highest level in 12 years, ahead of today's ecb rate decision. nearly are pricing in a 40% chance the central bank cut rates. columbia threat needle investments -- thre adneedle investments, multi-asset manager. the stock markets on a tear, the new40, u.s. markets, records. does that sit comfortably with you, records on equities? maya: we can sort of see how equities got there. we have quite a powerful discount rate shock, or lower interest rates feeding through. the ecb expectations for today, markets expect the federal reserve to custody -- cut interest rates, too. -- equity markets are reflecting a narrow path where central bank cut interest

rates to avert a recession, but don't really managed to stimulate inflation whereby they would subsequently need to raise interest rates. that's the narrow path equity markets are navigating. markets are comfortably up 20%, 23% as you mentioned. andthe risk of a misstep, even eventually, are greater today than they have been in the particularlyview, given underlying earnings momentum and earnings applications, which continue to -- expectations, which continue to come off. we are set at neutral on equities, and have less specific date -- risk appetite than at the start of the year. matt: thank you very much. we will keep you with us through the hour. right now, i want to get to another ceo interview.

astrazeneca has raised its annual sales forecast thanks to growing demand for new cancer drugs. 019 product sales are expected to increase by a low double-digit percentage. the u.k. drugmaker also reaffirmed its forecast for to $3.70 ait, $3.50 share. joining us is the ceo of astrazeneca. pascal, thank you for your time. what gives you confidence to raise your forecast, and how does it look on the bottom line side of things? pascal: good morning. thank you so much. we had a fantastic second quarter, 19% growth rate. we're now growing by 17%, which gives us a great confidence for the revised guidance for the year. and japan by 35%, more than 30%.

58% to fourw billion dollars for the first half of the year. so many of our growth platforms are doing very well. we leave we can achieve this provides guidance. and profit will follow. this year, the focus is on driving the top line, improving margins and profitability and increasing cash flow over the next couple of years. anna: good morning morning. you mentioned to china, and how the business is doing there. previously you suggested there would be slower growth of sales in the second half of the year, because of government bulk buying programs. how is that working out for astrazeneca, now that we are in the second half? what can you tell us by? china changing rapidly, turning into a country

that rewards innovation. so new products, they are reimbursed faster, and as we can demonstrate ourselves, the new products are doing very well in china. on the other hand, the chinese government is trying to save money and expand access to medicines to patients, so we olderrice pressures on products. the second half, we will be slowing down, slower growth, i should say, but still doing very well. so far, the impact of price pressures hasn't really been coming as quickly as we thought initially, but they are coming, and we assume in the second half we will see slower growth, but still doing very well. we have tremendous momentum in china. we are launching new products. we're doing well. emerging markets outside of china are also doing very well. matt: we spoke earlier with severin schwan.

innovation, the most important question facing the ceo of a global pharmaceuticals company. where are you spending the most on innovation? are you concerned about cash flow, giving you are buying into other drugs, like daiichi sankyo's cancer drug? pascal: that drug has the potential to transform breast cancer care. it's a very important product. we'll continue investing in r&d. the core of our industry is coming up with innovations that help patients and reduce health care costss. if you can keep patients out of the hospital, you reduce health care costs. our focus is on cancer, on respiratory diseases, on party vascular, diabetes. the biggest killers in the

world, cardiovascular diseases continue to kill a lot of people around the world, and our research will continue to go to those cortices areas. anna: you mentioned r&d -- those core disease areas. anna: you mentioned r&d. does that mean that m&a is out of focus? some investors were concerned about cash flow, after the cancer deal. now is the focus on r&d, not m&a? pascal: our focus is definitely on r&d. we will continue to be open to potential acquisitions of products or businesses, as they become available and if they really fit our strategy. if we can add value. we will only acquire assets we theadd value to, like cancer drug we partnered with daiichi sankyo, but we also have to improve cash flow. hopefully people will see with the q2 sales growth that cash

flow movement will soon follow this rapid growth of our topline. we're very focused on topline growth, improving operating margins, which will drive improvements in cash flow. let me finally ask about south korea, vietnam. when do you expect a return on those investments? actually already doing very well in those countries. we have, half of lung cancer in asia, they have a specific mutation, and it addresses the needs of those patients. we're doing well in korea, investing a lot in research and development in korea. we believe vietnam has enormous

potential for development, a little like china had many years ago. vietnam has a smaller population, of course, but still a large country. patients need our products. we have great growth, and we are already doing well. as i said a minute ago, outside of china, doing very well. a word about russia. we had tremendous growth in the first half in russia, too. so we're not only doing well in china, but in many countries. ceo opascal soriot, astrazeneca -- of astrazeneca, after raising his sales forecast. american, marko next, after they announced a share buyback on iron ore profits. the shares are up 2%. this is bloomberg.

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welcome back to the european open. 15 minutes into the trading day, and a positive session underway for european equities. one company reporting, anglo-american, plans to buy back close to $1 billion of miner, after the minor h-- had bumper profits from iron ore . let's get more from ceo mark

cutifani. thank you for joining us. a share buyback, why is the timing right for that now? what is the assessment? mark: most importantly, we have done a lot of restructuring of the business. we dropped costs almost 30% in nominal terms in the last five years. we've done well on pricing. ebitda margins. we have 25% growth locked in through the news projects we are developing, and we still making cash. from our point of view, we think it is important we share the good work and results of that good work with shareholders, and that's why we think the buyback was appropriate. matt: iron ore has been the biggest profit driver. how sustainable do you think the prices are, and what is behind it? mark: well, certainly the drop in production has veen -- been

an issue. general demand has been good. two key drivers. we might see a little coming back, but that won't come in a rush, so from our view, the fundamentals are good. china might come back a little products,e produce we're favored, and we expect quality to remain good for our products we produce. we're in a good place. anna: that is the iron ore story. let me ask about coal, what ot hers are doing, and you also. rio said they're selling their bac considering. glencore. you seem different from the rest of the business, in that you are so far still committed. an update on your thoughts on

that part of the business? the: well, i will makwe observation, we reduced our imprint in thermal coal over the last three years by 50%, so we have already done things. as we look forward, we're working with customers, stakeholders,s governments in how we look forward. we will not invest in new thermal coal mines. we will look at how we will transition over time production, but we have already cut 50% and will progressively reduce production over the next few years. another point, it represent about 5% of ebitda at the moment. it represents not a big part of the business, but it is important to manage this with stakeholders in a responsible way. the electrice see car market really driving prices in a lot of different reas -- a

reas. certainly in copper. how do you see climate change affecting your business, in a positive way, in terms of demand? it,: well, i think you said in terms of copper, the prognosis for copper is very strong with electric vehicles. productsse, we produce used in the hydrogen industry, fuel cells, which is also part of the electric vehicle story, so that's a real positive. we also produce nickel and manganese, so we've got the consumer-friendly type of products pretty well covered. it makes up about 57% of the portfolio. we think that our portfolio is really fit for the purpose of a greener world, a consumer driven world, and in terms of climate change, we are well-positioned. in a good place. where we supply infrastructure, we have very high quality iron

ore and metallurgical coal which we believe will be key as demand changes. anna: about the coking coal si de. you had news on the project, some ambitious production targets in the area. are they fixed, or flexible? some are concerned about whether there will be demand for all the product, not just from you, but the rest of the industry, with the global trade story and china? the good thing, it's very high quality, and it will actually replace other production as that tales away in 22 anyone, 2022. so for us, it is a replacement project. in terms of production, we've been the most significant

improver in australia over the last five or six years, winning a number of awards. we think targets are solid, and the market is getting a good price for our products, so confident it is a good call. anna: thanks very much for your time this morning. mark cutifani, ceo of anglo american, with us on the european market open. coming up, a shakeup at number 10. boris johnson wastes no time appointing brexit hardliners to the cabinet. we are live in westminster to discuss u.k. policy and the impact on your investments. this is bloomberg. ♪\

anna: welcome back to the european market open, 24 minutes into the trading day as the sun comes up on another scorching day in westminster. it could be the hottest day on record in the u.k. as a new team takes shape. boris johnson wasted no time in shaking things up, appointing brexit hardliners. sajid javid, new chancellor of the exchequer, priti patel new home secretary and dominic raab new foreign secretary. mohnson will meet with the before setting out goals in the

house of commons behind me. how are markets digesting the political upheaval, if they are as well -- at all? 's stilllk to maya, who with us. i was taken by comments that boris johnson made in his maiden speech outside 10 downing street, those who bet against the u.k. will lose their shirts. i'm not sure if he was talking to investors in u.k. assets, but he might've been. do you think those who bet against the u.k. will lose their shirt? that our expectation is hase the tory party changed leaders, it's much harder to alter parliament, and we know we don't have a consensus for any of the options currently on the table. boris johnson would need to win back all the defectors to the you'reparty and some, so

left with a situation whereby in order to change the parliamentary map you need to call a new election, and it doesn't seem like either party really as things stand has appetite to do so. so as such, from our perspective as investors, all scenarios remain in the cards. in global portfolios that are g, we havein sterline, been careful with any u.k. risk we take. but of course for sterling based portfolios, in our view the sharpest edge is with sterling. you could see, depending on which way things goo, quite a meaningful move in sterling, and quite a meaningful move in our holdings. somewhat perversely, a hard, har d brexit that is there is a -- delivers a plunge in sterling delivers an outsize return to

offshore holdings. is going tohandari stick with us, our guest host for the hour. coming up on 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, and let's get the top headlines. piling on the pressure. european sovereign bond yields hit record lows ahead of today's ecb meeting, with markets pricing in a nearly 40% chance of a cut. will mario draghi be forced to move? boris and the brexiteers. the new u.k. prime minister loyaltiescabinet with -- loyalists, sajid javid as chancellor and priti patel as home secretary. volkswagen keeps outlook unchanged, despite a drop in operating profit. the cfo told me the environment is unlikely to improve. >> we know the overall

environment is weakening. we are fully aware of that. that's why we have to be cautious, and pay attention. matt: in an interview not to miss, i will be speaking later with the german finance minister, olaf schulz. one question i will put to him, will they start spending more to improve the crumbling infrastructure here in germany? welcome to "bloomberg markets, the european open." i'm matt miller in berlin, along with anna edwards on the green in westminster. anna: here once again in westminster. blondy after the night of "thes, as it was dubbed by sun," in reference to the number of theresa may's extended cabinet who are now gone, 18 out of 29 of the extended cabinet no longer in their jobs. it was widely expected boris johnson would really rethink the cabinet and reshape it, and now

we know he really wants to appreciate it in favor of the pro-brexit voices, surrounding himself with pro brexit voices and those who were loyal to him during the campaign. we know sajid javid has become the chancellor, former deutsche bank managing director, the first chancellor to have worked in the financial services sector since norman lamont, in the 1990's. the businessm, secretary. liam fox is out. those are the more business facing one's. the big picture, he stuffed the cabinet with brexiteers, and the back benches will be stuffed full of those who could act as the opposition to the government, in the sense they have a very different view on no-deal brexit. you have the former chancellor, former justice secretary, former international secretary, all on the backbench, and possibly even disobeying occasionally. we'll wait to see how that

shakes out. that's what we heard from our last guest. in brexit, many paths are still open, and many are talking about if a new election will come, and whether that would be the only way to break the parliament tree math, which hasn't changed since although manyip, tory parties say that a general election is not the plan right now. let's get a news update from debra mao in hong kong. former special counsel robert mueller largely disappointed democrats with his testimony on capitol hill. some wanted him to read aloud potentially damming parts of his report, but he declined. others hoped for fresh details on possible obstruction of justice, but mueller did not offer any clues. setey's central bank looks to cut rates. president erdogan has long believed higher rates because inflation. ready toal bank looks put that unconventional theory

into practice. the president ousted the former governor, installing his deputy. has askedoff president trump to shorten his 150 year prison sentence. the 81-year-old filed a request with the justice department, hoping to finish his life in freedom. theff was jailed for biggest ponzi scheme in american history, costing investors $20 billion. the all-male board is officially a thing of the s&p 500 past. the last company without a director, copart, has hired a female director. have taken almost 20 years to close the gap. day, onews 24 hours a air and at tictoc on twitter, powered by more than 2700

analyst and journalists in over 120 countries. matt: debra mao in hong kong. first word news. the ecb's policy decision today good add more fuel to the fire when it comes to the european bond rally. yields across the continent keep the s&p 500n -- closed yesterday at an all-time high, and if we finish the day up today, we will have gained on the stoxx 600 five days in a row. but can the rally stay in place? maya bhandari, columbia threadneddle multi-asset -- edle multi-asset manager is still with us. negative yields don't seem to scare investors away? maya: within bonds, it's not

just what is happening at the longer end, but also what is happening to the curve overall. majorort rates along the markets today are expected to be lower than they are today, 2, 3, 5, even 10-year, depending on where you look, in both germany and the u.k. those interest rates are expected to be below inflation, for at least 10 years, as suggested by negative inflation, negative yields. that situation, isn't particularly constructive, the messages rather bearish. by contrast, equities have rallied quite smartly and are coming off double-digit year-to-date gains. this is sort of like cognitive dissonance. while i can see it's difficult

to reconcile those two on the face of it, i think there's a credible path for both of those to occur in tandem. that credible path is a very centralne, one whereby ecb, lowerfed and interest rates such that they reduce the risk of recession, but not so successful that they raise inflation and inflation expectations, and therefore have to raise interest rates. so that narrow path, which is consistent with bond market pricing, and equity markets liking it because they don't see policy tightening any time soon.

so a relatively constructive environment for equity markets, where you have weak, middling growth and not much inflation, and central banks lowering interest rates. anna: what do you make of the rally in stocks? when you think about the way the market has been evolving structurally? you pointed out in the past, wisdom of crowds in the equity markets, the assessment of the earning reports, the prospect of individual companies, added together, adds to the optimism. but in this age with passive funds, index trackers, does this still apply? do we see the sum of the parts reflected, or something that's insightful the rally is telling us? what i think if we look at equities are telling us under the hood, if you like, with earnings expectations, company guidance, those things are not

moving positively. we discussed earlier on, how earnings expectations for this year, for global equities, have come down to roughly flat, from being 10% a year ago. theso, to our minds, combination we just discussed, it's ok for now. but we are sufficiently concerned, if you like, about a misstep in either direction. we have lowered equity allocations too much more towards neutral, rather than the favorable we had previously, and we're being mindful of how does earnings evolve. it's still early in the earnings season in the u.s., and so far so good, earnings have been reasonable. but i think this earnings season will be a good and important litmus test, if you like, for some of those expectations. matt: ok.

maia, thank you very much -- maya, thank you very much for your time. maya bhandari, joining us. up next, we speak to the ceo of nokia. the stoxx urging this morning after they said that their plans are on track. we'll talk about huawei, among other things. this is bloomberg. ♪

anna: welcome back to the european open, 42 minutes into the trading day. let's talk about the earnings season and nokia, which adjusted operating profit for the -- excuse me, the adjusted operating profit for the second quarter beat even the highest analyst estimates at $451 million. with demand for 5g, they expect a strong fourth-quarter. that is a good place to start the conversation as we are suri. by the ceo, rajeev very good to see you. nokia shares are doing well, you beat the highest estimates, and yet you stuck to guidance. what you say there is upside risk to the 2020-21 guidance? rajeev: thank you. we delivered a strong second quarter, driven by 5g demand. we have a strong portfolio, and

maintained operational execution. there are risks and opportunities for the full year. we have maintained our guidance, and we expect that there will be a soft third-quarter. we had a strong second quarter, quarter, a.t normal seasonal trends in our industry. matt: is there opportunity around the trump attacks on huawei? do you see customers who are uneasy about using that supplier, and maybe also for legitimate security reasons, and switching over to you instead? rajeev: we are very pleased with our end-toend portfolio. we are the only player who has that end-to-end portfolio and plays in all markets. we are confident we are competitive based on our technology alone, and when customers want to talk to us, we are there to help them with multiple technology alternatives, should they want

to move from their 4g vendor. comment on national security matters, but we are monitoring developments and controlling what we can control. matt: let me ask you how much more expensive it is to switch to nokia. say i built my 4g network with huawei, and i want to use you for my 5g network. is it a huge leap in costs, or are you able to do it for a reasonable price? rajeev: the networks we have for 5g, the ones that our customers are launching, are what we call 5g non-standalone architecture using the 4g layer. if you want to do that and replace your current 4g vendor, we have multiple alternatives. you can do a full swap, a layer of nokia 4g to connect to 5g, meaning you don't need to do a full swap, or you can go with standalone as an alternative,

open interfaces. there are three or four technology choices, such that you don't need to delay your rollout or swap out everything that you have. anna: are you seeing any impacts directly on sales or profit from the woes of huawei? think of customer opportunities or conversations that definitely opened up as a result of the travails of your rival? rajeev: we are closely monitoring, maintaining a neutral position. having said that, we are seeing benefit from the fct t-- fact that there's this circle of investment. if you are an operator and you want to move to 5g, you have to first upgrade the transport layer. so we see a big benefit from 5g in the ip routing business, up 15% year by year, the optical business up 9% year by year.

peaks,u avoid two capex and going to 5g radio next. we see investment -- benefit from this investment circle andy the end-to-end. nine 5g45 contracts, networks. real, and and it is it will start to scale from here on. anna: erickson talked about strategic contracts, dropping prices to win market share. is that something you're doing? rajeev: no. we will be very disciplined on pricing moving from 4g divide g. we will benefit from a higher while the chair, because we have share, because we have the end-to-end. prudent, managing

profitability. anna: thanks very much. rajeev suri, ceo of nokia. fascinating industry to talk about with huawei in the crosshairs of tensions between the u.s. and china. let's get back to movers on the market. and re-horton has those -- annmarie hordern has those. annmarie: astrazeneca up nearly 6% this morning, increasing their sales forecast, seeing a demand for their new cancer drug. morgan stanley said one of their outstanding performances was emerging markets. lvmh to the upside, up over 1.5%. i wanted to show this stock, because this morning shares hit a record, as second-quarter results were a standout, breezing passed analyst estimates. the key for them, any luxury brand, fashion and leather goods, coming in at 20%. the market was looking for 14%. they are seeing a lot of growth in china, but the cfo says they

are also seeing a letter growth in their home turf. clariant, plunging 9% this morning, booking a provision of 231 million swiss francs, and suspending talks with saudi arabia due to market commissions. mader has removed clariant fro top picks, calling the results a complete mess. matt: thanks very much. some of your individual movers. up next, we hear from my interview with frank vitter, cfo of volkswagen. the biggest carmaker in the world is not joining rivals and cutting forecast, but still says there are downside risks in the auto industry. this is bloomberg.

♪ matt: welcome back to "bloomberg markets." this is the european open. almost one hour into the session, with about seven minutes to go. we are looking at gains across the board. if we hold onto the gains, the stoxx 600 will have risen for five sessions in a row. so it is not just fixed income. equities are doing quite well here, after another record high on the s&p 500 yesterday in new york. second-quarter's operating profit fell 8.1% on

fading demand in key market, but the world's biggest carmaker is sticking to its full year outlook, bucking the trend of most of its competitors. the company's cfo frank witter discussed the results with me earlier. frank: this is a strong foundation. you rightly refer to sales being down 4%, but we have been able to grow operating profit before special items by 2%. is main reason, our mix improving and we have been successful with pricing. we know we are forecasting a potentially difficult second this strong foundation gives us the comfort to stick to our guidance for the full year. matt: are you concerned about the german economy? yesterday we saw the manufacturing pmi's drop to the lowest level in seven years, and of course here in berlin they do start letting go of spending. the roads need work.

the internet coverage isn't great. is the infrastructure partly to blame for what we see happening here, in this country? frank: i wouldn't go that far. the infrastructure needs to be revamped. that's probably true for many countries. we havethe, key issue great product momentum going for us. share on suv's is growing from 25%, which it was at the end of last calendar year, to 35% by the end of this year. this is certainly improving, and helpful for us. we have more launches to come. the new golf 8, right after the holiday break, and the fully electric vehicles, another big venue for us. not taking away anything from the new stuff coming from audi and porsche. overall, product momentum counts. we know the overall environment is weakening.

we are fully aware, and that is why we have to work cautiously on costs and pay attention to it. but nevertheless, nobody said it is going to be easy, but we stick to the guidance. matt: let's talk about corporate structure. following the successful ipo, what's the plan? even on a conservative worth morewould be than the entire company. are you preparing an ipo for the sports car business? frank: you are very right, that the volkswagen stock is undervalued. we are fully aware, and we are pushing hard. our focus as a potential next step is assessing options for the engineering businesses. this is what we announced. we're looking for industrial solutions, to look into it more closely. this is our plan, our current focus, and we are fully can

since -- convinced this year volkswagen stock should do better, but we are also part of an industry that is currently trading at low levels. matt: so a porsche ipo in the future, can we expect that? no, i at the very moment, would not go that far. this is not a priority. matt: that was volkswagen cfo frank witter. he told me they are getting a lot of advice from people about what to do on the business. they listen to it, but they have their own plan. by the way, i will later be speaking with the german finance ms. and mr. -- german finance minister, olaf scholz. you don't want to miss that. the spending or lack thereof that the german government is doing certainly affects companies like the world's biggest carmaker and germany's biggest, employer volkswagen. anna: and spending plans in the u.k. will be in focus, with boris johnson gathering his team for the first cabinet meeting

under the new prime minister. we will keep our eyes on downing street, and then the action will shift to the houses of parliament, where boris johnson will set out his brexit priorities and beyond a little later on this morning. this is bloomberg. ♪

. the ecb as mario draghi tweets the guidance. boris on the brexiteers. the new prime minister taxes cabinet with loyalists as the chancellor as home secretary. shareholders plan to return more shareholders. we will speak to the chief executive shortly. good morning, everyone. i am francine lacqua in london. this is "bloomberg surveillance." these are your markets. we are seeing news out of pmi yest