>> we are live from our european headquarters in the city of london. i am anna edwards. , now what?say trade less than 30 minutes away. ♪ does it. the fed cuts rates for the first time sense 2008.

chairman powell says this is not the beginning of a move downwards. capital gains. boosting the ratio and outperforming rivals and equities trading. the ceo says he will not let brexitange his plans -- change his plans. >> it is a question mark. we are not making changes of saturday -- strategy because of the exit. prices slump. we speak to the ceo shell. >> take a quick look at my terminal. the u.s. 10 year yield, the dip you can see right after news of the fed rate cut. at first, and investors were buying bonds and pushing down the yield.

then during the press conference, it came back up. it does not look like the market is convinced jerome powell will keep cutting. clear in the press conference he never said this is the only cut. there could be more to come. take a look at where we see futures trading. it is a down day. drops yesterday. futures up 0.6%. ftse futures falling by half. >> we see the aftermath of the u.s. session. selling over and asia. the japanese market cushioned a little bit because of the moves. weaker in the japanese yen the fx story. u.s. equity markets, closing

closer. negative reactions compared to what we saw from jerome powell. dollar strength has been a feature here with the market readjusting expectations, how much rate cuts you are going to get. we see some dollar strength coming through and we see weakness and some of these emerging markets. let show you what has been going on with treasuries. treasuries keep popping in and out. essentially, we are seeing movement in the curve. you mentioned some of the volatility around the press conference. big moves at the end of the day. a little movement 5-10 year horizon. commodities really slumping. we will talk to the shell ceo in a moment.

iron ore down. some of the dollar effects, translation if we are not going to see more interest rate cuts, that does not ask that -- support the economy route -- globally. let's talk about the fed meeting with our market manager. thisould you cast decision? would you say this is the fed buckling to the pressure of president trump? sensible midcycle adjustment, extending the cycle for the u.s. economy? very hard forwas powell. i don't think he could win whatever he did. trump pressing for more rate cuts. some markets hoping for 50 basis points. some people think they should not be cutting at all. it was impossible for him to

win. turn out this will not to be a midcycle insurance cut. i think the positive data we have seen tends to be coincident or lagging. , industrial production, there is generally a global growth slow down. it is unlikely the u.s. can avoid that. this will be the start of a severe rate cutting cycle. test whether there is a lower bound in the u.s.. >> how concerned are markets when they are worried about central-bank independence? looking like you are doing with and you aret says

answering to markets directly, can't be a good look for a fed chair? >> i think that was completely fair. he was being boxed into this corner. i am not sure he did much wrong but it was such a hard position he was in. some can criticize he let himself get boxed in. maybe they needed better communication. it does undermine the credibility when it seems like it is being driven by pressure from governments, the market. an extra riske premium. it undermines the transmission mechanism. but not in the short-term. howhe question of the day jerome powell kills the everything rally. your thoughts.

>> i think he is going to be blamed for killing it. we are at the end. we passed the positive time. the chance the fed might cut by 50 basis points. the ecb might surprise. did not happen. the u.s. and china might hit a trade deal. the chance might be wonderful. the guidance and estimates were or. there is all the potential good news behind us. it looks like we might have seen the peak of stocks. higher, we have struggled to make topside progress. s&p closed 1.2% above three months ago. seen thee might have top or thereabouts. in hindsight, powell will be blamed for killing that rally. did not deliver

on completely unrealistic expectations for the market. >> that is a bold call. kudos to you for making that. calling the top in stocks today. he is a bloomberg mliv manager. you can join the debate. give us your theory on what you think. has jerome powell killed the everything rally? reach out. up next, shellshocked. oil majors earnings fall short of estimates as natural gas prices slump. we will speak to the ceo next.

>> this is the european open. right now, we are 18 minutes away from the start of cash trading. fell 1%. even after apple's numbers. that tells you what the markets. about the fed. s&p futures trading lower. euro, weaker at 110. the fed had real implications

for asset prices. mariota as well. let's talk about the earnings season. specifically, shell. a natural gas price slump. sales volumes slipped 3%. despite weaker than expected earnings, shell will continue their buyback program. joining us the ceo of shell read welcome back rate good to have you with us. are responsible for the performance of the business analystshe estimates have created. can you tell us where the mismatch is? numbers have come in below what analysts are looking for. to be on the program and thank you for the opportunity. we are not responsible for the consensus. had a lowero say we

corridor compared to last year. a number of reasons for that. first of all, we have seen severe economic headwinds. most pronounced in a downstream business with refining margins. time, we have seen particularly and gas and ngo realizations. the wellhead, a significant bearing on the results. look at the results which are lower, there is a leg effect. the gas prices are priced off the oil prices, four months earlier. it to come through in the integrated gas business.

it does not explain everything. we had a bit of accounting noise. half a billion dollars of issues to do with provisions. accounting methods. about 20 of them. that predominately means earnings have come down. in the cash side, which is what matters most for a company like us, it is a good quarter. $11 billion of cash from operations. 10.5 is a good quarter. also, two strong cash generating assets. as well as the offshore lng plant in australia. that will help going forward. down where this

volatility is coming from. these analysts are intelligent, educated people. how could you beat the highest estimate and miss the lowest estimate in this quarter? analysts get it so wrong in either direction? what do you think they are >> let me, and in the analysts. i think it is good for us to have an ongoing discussion to understand how we can make our earnings. the misses and earnings, not cash so much. tohave worked quite hard make elements in what we call the corporate sectors neater and cleaner. a tech settlement, do

a provision for an environmental liability from the 70's or 80's, these things are hard to see. we have to do the right thing. we cannot manage our earnings. be irritating or frustrating for us. more so for people whose profession it is to give a prediction. i fully understand the discomfort. there's not much we can do about that aspect of it. me ask you about the lng business. one aspect,em to be the pricing. you talked about a big gas supply gap. do you still think that is the case? >> i think it is still the case if you look at the growth.

growill believe it will strongest, more hydrocarbon sources of energy. 4% is realistic and to be expected. i would look at china. the first half numbers of china, lng imports have gone up 50%. that is a trend that will continue to be there, not just in china. many countries where governments went to increase the share of for airhe energy mix pollution reasons or decarbonization. that will continue. we should not mistake the fundamental trend which could happen in a season. what we are seeing this year, the confluence of starting up of new lng producing facilities. coming on the heels of a weak

winter. short-term, week prices over the summer season. which is always kind of a season. if you look at the bulk of our brent or, priced off formedas hubs, 70% are not by short-term prices. when it comes to short-term prices, we buy as much as we sell. we are not directly impacted. but there is a lag effect. some of the weakness is actually a result of the oil price months ago.-five >> how is that going to play out? oil are predicting an oversupply. we are seeing numerous signs of a global economy. those things are going to converge into a lower oil price?

the predictions in oil price, it is too difficult to get right. there are a number of factors at play. i don't think it is the long-term fundamentals that play. it is much more sentiment and shorter-term aspects. weakening of the macro environment a slowdown, a trade war. all of these have a direct effect on the growth of oil demand and also the sentiment around it. time a see at the same tremendous amount of belief and potency in the shale segment which has an effect on sentiment have opec discipline on the other side of the break i do believe the negative sentiments

are winning out. ask about the environmental record. one of your shareholders recently wrote an open letter saying they were divesting their stake because of the growth in oil and gas production. some might be concerned how you will meet your commitments around the paris climate agreement. how do you respond to shareholders who take the stance they are taking? we listen to our shareholders carefully. there was a lot of noise in this race. a lot of noise around divestment. just noise is not going to help us. at the same time, we are indeed dialogue with our larger shareholders to understand how a company like us needs to play a role responsibly and profitably making the energy transition.

anding our customers society making a transition to a lower carbon economy, if you like. the plans we have come of the sensible and we have committed ourselves to a 50% reduction in the net carbon reduction pyramid that is exactly what society needs to do if it needs to meet the commitments of paris. just not something we can do on our own. we have to work with our customers to make it happen. we are committed to doing that. many have shareholders as well. i believe it is fundamentally the collaboration to make this change happen that is going to make it successful. >> thank you so much. really appreciate it. here is the ceo of royal dutch shell. minutes away, taking a look at

your stocks to watch. lcluding bmw after profits 20% as the carmaker tries to accelerate its rollout of electric vehicles. this is bloomberg.

>> five minutes from the open. looking at rio tinto. covering bmw. dani burger, focusing on

barclays. what have you got? miner second-biggest came in line with estimates. >> let's get to the bmw car story. what is the latest? >> second-quarter earnings fell 20% on electric car development costs. line.gures were in at the same time, the stretchy cannot be developed until the new ceo takes over. >> what is the story on barclays? was corporatespot investment banking revenue. analysts saw a decline of 3%. that does not necessarily mean the shares will be higher. there was struggling. >> thank you very much.

thank you very much for the heads up. let's go with the function in your bloomberg. also keeping an eye on siemens. we just talk to the ceo citing macro headwinds.

anna: a minute to go until the start of cash equities trading for this thursday. welcome to "bloomberg markets: european open." this is how we are positioned, ed -- the japanese markets, we see equities selling off with the dollar stronger. markets readjust. 0.25%und in focus, down after instability yesterday. this is the volatility in the treasury market on the 10 year yield around the fed conference yesterday. yields picking up a little this

morning. s&p futures suggest we will be weaker at the start of the u.s. trading day. we are not done digesting the negative from the fed from the market perspective. what the market anticipates now. european futures point lower. what we heard from the fed yesterday, evening time, and they are not as dovish as the market expected the fed to be. unwinding a we see little bit. general down by 0.25%. the spanish market down as well. the dollar gained story of yesterday after the fed rate adjustment midcycle

rather than the start of something much longer. the dollar strength and euro weakness, something that could boost european exporters. we have the earnings season to overlay on that. this is how european equity markets are opening. shall share price is having an impact. on,s look at what is going financials look mixed. a big area of red is the energy space. industrials look mixed. we heard guidance lower from that large european industrial business. health care looks negative. staples fairly mixed. not a great deal of guidance. you can certainly see some of these individual earnings stories coming through. matt: absolutely you see them,

kicking it off with british american tobacco giving and optimistic forecast. rising 1.9% helping boost stocks across the board. most stocks are down. only 146 winners. in terms of earnings winners, anding street estimates, talking about a return of the capital program that is being welcomed by investors. bmw also a big gainer, up more than 1%. on the downside, shell off 4%. shell taking away a quarter-point from the stoxx 600. rio tinto falling as well as

other minors, glencore down. minors and oil producers lining inat the top six losers terms of taking away points on the stoxx 600. european markets are lower as a result, this is after the federal reserve cut rates for .he first time since 2008 jerome powell warned against expecting a lengthy u.s. monetary easing cycle. to lower the today target for the federal funds rate i a quarter percentage point, it intended to ensure against downside risks and policy trade uncertainty, and trade tensions which seem to on the effect economy, they evil in a different way. inflation running below target. we see those as threats to a favorable outlook. this is the right move for

today. we think it will serve. davidjoining us now is owen, managing director, cee, jefferies international. let me ask you about jay powell making what the market would have read is a blunder. how do you read him? been a great not year for central bank medication surrounding the u.s. fed and the ecb. this is another example. flagged, cut was well we do not understand the economic fundamentals why the fed is doing this. if the economy does weaken, they could cut rates again, but if the economy continues to be relatively robust, and the market powers ahead, there is the question why you are doing this. it is about trade disputes, we

know trade globally is flatlining at the moment. a rate cut of 25 will not do much. you are in the camp that sees this. let me ask about parallels with history. the 1990's.ck to some are saying this use of midcycle adjustment is similar to what happened in the mid-1990's. an insurance cap, call it what you will. as it makes sense to look back to the 1990's? david: it is always good to look at parallels. the issue we have is that we are coming out of the financial crisis and trade is flatlining. which will hardly

help world trade dynamics going forward, and at the same time the ecb has pork medication, but they will step up again with bond buying, which will drive down yields, and there will be a search for yields and this will lead to stability risk. a lot ended up in u.s. credit. anna: is it significant the two dissenters yesterday have been concerned about financial stability? where do you focus, corporate debt? david: there is a search for this cycle will end. what we do not want is another financial crisis, which is partially orchestrated by central bank action. if world trade is the issue, we need to address that. at the same time, this go policy should be used more actively in other countries.

i am not talking about the u.s. but europe. particularly aimed at germany. up its bondit steps buying program, that will be aimed at u.s. credit. trillion of debt outflows from the eurozone when the ecb was doing bond buying in 2015 and 2018, a lot of that ended up in the u.s. credit market. u.s. credit was favored. this will lead to stability risk down the line. the: i wonder if you think u.s. economy really is showing signs that it needed a rate cut in the first place. with growth over 2% and inflation at 2% and wages rising at 3%, why did the fed cut? does it look like they have lost their independence? good. it does not look

the u.s. economy is pretty robust. my colleague is despairing the communication, but why you need rate cuts at this point. central banks have to go back and see if we can generate cpi inflation we are targeting. wages have accelerated, when phillips developed the phillips curve he was looking at the relationship between wages and unemployment. wages have accelerated in the u.s. and europe. inflation. cpi central banks may have to admit they cannot achieve these inflation target at the moment. like the it also looks president has browbeaten the fed into this cap. -- into this cut.

doing ahad jay powell u-turn when he saw stocks falling sharply. is this fed really independent? david: optically it does not look good. everyone on that committee is acting as they see it fits, that they should not be following the equity market. back to theem comes weakness of world trade, then the fed cutting rates by 25 bips is not the answer. anna: it looks as if we will see a restart of trade talks in september. thank you david owen, managing director, cee, jefferies international who stays with us on the program. up next, stocks on the move. shell is the biggest loser, missing estimates on slumping lng prices. macro economic headwinds for the

business as well. this is bloomberg. ♪

matt: welcome back to "bloomberg markets: european open." let's check on the markets after the fed cut rate for the first time in over a decade. you can see what it did, in the press conference after the u.s.

stock market session, down more than 1%, including nasdaq, which i find fascinating after the positive apple news the night before. s&p futures lower by a bit. euro-dollar is weaker. guess the ball is in the ecb's court. we get another rate decision from another central bank today. anna: from the bank of england off the heels of the federal reserve, no move is expected, but it comes amid the rising risk. david owen, managing director, cee, jefferies international still with us. i feel like i am only talking about the 1990's today. colleagues said to think about the early 1990's and the fight with markets over sterling in 1982.

it is not black wednesday or anything, but let me ask you what we learned from that episode and how far the bank of england will go? 1976 is when the imf was called then and there was a run on the pound, and a fantastic story where the governor had got to the lounge at heathrow, the results came back immediately because the bank was losing its reserve. loan.e had a bridging that is in u.k. history, a bad example where you had a run on the pound. 1976, a lot of policymakers who grew up in the u.k., that is the most worrying and let's hope we do not go there again with brexit.

1992 was a good experience, the economy recovered. 2007 when sterling fell in the crisis, that was a good thing. what could happen is a massive supply shock with a new deal. -- a no deal. carney wantss mark to communicate a hawkish boe or convince markets he intends to raise. but all the markets are expecting cuts. how can he change that? david: he cannot really. he has made it clear that a no deal brexit, interest rates could go two ways. if the currency collapses, it is difficult to see them in position to think about cutting rate. they could restart qe, but it is

fiscal policy, if it is a supply shock induced by the government, then fiscal policy and structural forms, you will see more priming in the u.k. easing will be aimed at innovation and technology, infrastructure projects, all that will come through. anna: from the market perspective, will that go down well? david: i do not think the gilt market is thinking ahead. if there is a run on the more and at does the same time the government is inducing a massive fiscal response to offset the shock from brexit.

if it is spent in the third quarter, that will have a meaningful impact on gdp. whered see a scenario they see this is not great news. but it is so uncertain. matt: david, you will stick with us. david owen is the managing director, cee, jefferies international. i want to give you the latest pmi from spain. 48.2 the forecast was for 48. we are tracking european pmi's. .hey do not look so fantastic spanish pmi's at the beginning of the year were well above 50. 56 to kick off the year, and they have fallen steadily down.

it looks like this one day euro graph as well. let's get to our top stock stories, 70 minutes into the session. upsident to start on the . guidancehe earnings for france, and they reported twice the growth that analysts expected in the second quarter. this is yesterday after the bell. siemens down 4%, europe's -- they are wearing their automation and energy unit will make it hard to reach their financial goals, really sounding the alarm there. profits came in less than expected. than dutch shell down more 4.5%. natural gas prices hit another big oil major, all fell into the same trap.

they missed estimates there, and for shell they are focused on natural gas. i was hoping in the interview they would give future prediction on the price of oil. anna: thank you very much. the case fording stimulus, european growth data this week comes in below estimate. we will look at the underlying economics. this is bloomberg. ♪

anna: this is "bloomberg markets: european open." .1 minutes into the trading day let's check in on how the global market stand. at thes the picture u.s., 1% lower on the u.s. the equityhe end of trading day. this is what s&p futures look like now, flat. the u.s. 10 year, there was volatility. we see movement in the 10 year now, and the euro a great deal of movement, but dollar strength across the board driving that. let's talk about the week euro. growth slowed to 0.2% in the second quarter.

today via manufacturing pmi. this -- today we get manufacturing pmi. david owen, managing director, cee, jefferies international is still with us. i am struck i the weakness in the euro which will not please trump. how significant is that? david: for the ecb it does matter. that is why they are thinking about doing more quantitative easing. the currency tends to move before we get qe occurring. all good news. the eurozone is an open bloc. but mario draghi looking out for his legacy. he wants the eurozone to be anding when he leaves christine lagarde takes over. matt: he has the problem no matter what he does, he controls

monetary policy and is not on the same page with anybody in terms of fiscal policy. we talked to the german finance minister who says there is no crisis with the german economy and he is not planning on spending more are cutting tax rates. what can draghi really do? he provides some support for the economy, but interest rate have gone a long way down. lending is accelerating. quite but, not getting closer. this is true of several other countries in the eurozone itself. line that will lead to financial stability risk. lendinglooking at bank growth of this magnitude and interest rates in germany going negative.

you have to worry about financial stability risk down the line. at these levels of yields, there are problems, insurance companies, fund managers trying to find returns. anna: you worry about financial risk, but isn't that the point, they want to spur that? david: when you listen to the bank of england, they have a .onetary policy with stability they worry about these things. , iterms of the euro system has not so far developed. in theot have stability euro system the same way we have it in the u.k. at the bank of england. that is where we need to go. forth, they and so have to worry about stability risk. matt: you do not worry the negative rates will crush the banks? every time we talked to a bank

ceo, he tells us these negative rates are killing them. that is what they say, but if you talk to the is asked, the ecb these questions, they give the same answer. we regulate the banks, levels of yields are the issue. in some countries it is the banking model. the eurozone needs to flush out it's a banking sector problem. it is easy to blame negative yield as a problem, but this is not what the regulator is telling us. it has been a pleasure having you with us. david owen, managing director, cee, jefferies international. up next, trump wants more, he was expecting deeper rate cut

from jerome powell. we discuss the first rate cut further, next. this is bloomberg. ♪

matt: 30 minutes into the trading day. let's get your top headlines. easy does it, the fed cuts rates for the first time since 2008. jay powell says this is not a move downward. now it is over to the bank of england for its decision today. capital gains, socgen rises the most in two years after it loses its capital buffer, the ceo tells bloomberg he will not let brexit change his plan. question mark. we are not making changes because of brexit.

matt: shell shocked, the oil majors earnings fall well short of the estimate. natural gas prices slump, and the stock drops its most this year. did morning and welcome to -- good morning and welcome to "bloomberg markets: european open." anna: 30 minutes into the trading day. stoxx 600. upside.ks to the despite the selloff we saw in the u.s. yesterday and into asia, the balance of moves across these stocks on the stoxx 600 is to the upside. stories, thernings health care space up 11% on their numbers. up.an retail space london stock exchange, giving

this stock -- socgen, the brexit story boosting their capital by 4.9% for that business. let's look at the downside. here is the biggest loser on the stocks down by 5%, guiding lower for the markets. weakness in the auto sector for the next three to four quarters. paper and packaging down by 4%. as a resulty 4.2% of weaker lng prices and global macroeconomic headwinds. let's get first word news update. here is debra mao in hong kong. debra: u.s.-china trade tensions

did not stop the charter from delivering results that beat expectations. they report $7.7 billion of underlying revenue. a one milliony buyback program announced in april. ,> lower on the reported basis they were flat with last year. the costs are under control. ing is reporting an increase in lending. the amsterdam-based lender invested in staff and control systems to prevent money laundering. net income rose in the second quarter exceeding estimates. has boostedrale after equities trading, after

the largest restructurin begins to take shape. .hey are on track --we are taking into account figure,look at the there is no reason to cut dividends. debra: global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you very much debra mao in hong kong. the federal reserve has cut rates for the first time since 2008. that is half the story. chairman jay powell gave investors more than a little food for thought and what has as a midcycle

adjustment. stocks hit session lows. the 10 year and two-year spread flattened as powell went on to say it has an insurance aspect, rather than signaling extended easing cycle. further adding to the confusion, his later comment where he said, i did not say it is just one cut. the u.s. president took to twitter to criticize the decision, saying "powell let us down,: ." the fed announced the end of its balance sheet reduction, that came earlier than anticipated. andrew francis wilson, ceo / co-head global fixed income, us inn sachs joins london. i want to get your thoughts on the fed. clear at the end of the

press conference what the fed is trying to get across? andrew: it is a midcycle adjustment, he wanted signal this is not the beginning of an easing cycle. he talked about the economic helook being favorable, is trying to prolong. he is trying to balance the insurance cut, the preemptive move to sustain the economy. he talked about the uncertainty as it relates to trade and the global slowdown, but also well below their target. this is a balancing act he is trying to do. i want to come out with some banking news. headcounteduced its by over 3000 employees in the second quarter. barclays has about 80,000 employees and have cut 3000.

the bank has no intention to cut headcount in investment bank .lient facing role it looks like barclays has cut jobs i 3000 in the second quarter but does not intend to cut in the investment bank. let's get back to the fed the the fed discussion. you said before this cut it looked like the banks were looking toward a rapid easing cycle. have you changed that view, and do you think they are wrong not to do that? andrew: we have to look at the different central banks in different visions. the fed is adjusting to an economy still growing, and inflation that is close to their target. different toolicy what mario draghi has to do at the ecb are clearly the euro zone economy is softer, and

inflation is well below the target. you previewed what is happening in the manufacturing sector and pmi's across europe. there is a different dynamic in the u.s. versus europe. the central banks are adjusting to the relatively different speeds. -- 62% probability of a rate cut in september, that is coming down a little bit. what do you factor in from the fed? what does a midcycle adjustment translate to? more thiskely one year, whether september or october, it is more academic than economic. one more cut to come, then they will wait to see how it plays out. that havetensions been acute and then seemed to

calm down, they will have to adjust to that. in the background is brexit. there is a certainty of unknowns to deal with. similar inthing 1998, and the fed cut three times. one more cut, possibly a third. matt: let me put the mliv weston to you, how does jerome powell killed everything rally? we have seen a rally across asset classes up until now. stocks have turned around drastically. eels are floating up today. -- yields or floating up today. has this killed the everything rally? is not toe fed job cause markets to rally the have a sustainable economy, full employment, and inflation at their target. that is what they are focused

on. the immediate reaction is negative because the markets have taken out more aggressive policy action they had priced in. this is an economy growing around trend with inflation a little below target and likely to stay stable. low interest rates for extended period sounds like a constructive environment. anna: you cited the 1990's, i have a chart that reminds us of the moves over that period. parallels and what happened there? is of my colleagues referring to a pause in the 1990's that refreshed markets extending the cycle. are there parallels? think there are parallels. we have lower interest rates, but nevertheless it is the pause that maybe refreshes, there is no reason to think we will go into a recession.

on anption growth 4% annual basis. the consumer in the u.s. is healthy. this is likely to extend the cycle. matt: thank you very much for joining us. andrew wilson, ceo / co-head global fixed income, goldman sachs. bring you stock movers including rio tinto falling along with all the miners. despite announcing a special dividend of $1 billion. this is bloomberg. ♪

anna: this is "bloomberg markets: european open." shares in societe generale are gaining this morning, beating analyst estimates. the ceo told bloomberg the ecb should consider further measures. encouraged by the rethinking indication of the ecb saying they are considering something like this. it can impactd profitability and the ability to invest. the ecb cannot just look at this , and should look at other

countries who have taken similar initiatives in such situations. this situation has become counterproductive? the banks atjust stake, beyond the question of the economy, what i believe is we are still certainly in europe very accommodative to financing situations, and if there is a slowdown, it is more related to macroeconomic and macro political elements which creates uncertainty. i am not sure a change of interest rate would deal with that. we see what the ecb would be doing and what the fed is going to do going forward. we are confident we can damped to the environment. -- we can adapt to the environment. today i think there is a mix of

things, like the risk of a trade war or brexit which creates uncertainty, then you have more issues in certain sectors. i have in mind automated industry where there is a mix -- the automated industry where it is related to climate change. habs weaker markets in china. -- perhaps weaker markets in china. we saw that scenario, and we are positive for 2019 for the u.s., for france. in china we have a 6.2% gdp growth. we see potentially a slowdown. matt: that was the ceo of societe generale. pmi's continuing to get out across europe.

we got spanish pmi's out that beat by a little bit, but lower than they have been at the beginning of the year. we are getting italian pmi's out , manufacturing pmi's. 48 was the number we were looking for. at can see we were higher the end of 2018, above 50, now down at 48. not as drastic as what we have seen in spain. still a drop. socgen is a number of banks we are focusing on. ing posting results today. let's get more with dani burger. trading revenue has been a sore spot. how much of that weakness is present in the european results? dani: we have got a lot of surprisingly positive results

from european banks when it comes to trading. yesterday we saw credit suisse, they had stronger-than-expected trading results. today we see that from socgen. we are suffering from priming bias. expected this wide growth between the u.s. and european trading results, that the u.s. would've taken a lot of market segment, but we are not seeing that. you're seeing trading results .lat and down 5% to 10% it is not all clear skies and sunshine, but less bad. anna: on the specifics of societe generale, are we starting to see it bear fruits for the business? dani: we are definitely seeing signs of this. and are cutting costs slashing jobs in the hope to reduce riskier assets to prove

their solvency ratios. 12% ahead ofching estimates. they have about 8 billion euros they want to cut from risky assets and they have cut about 4.5 billion euros. this helps alleviate concerns they will have to take on additional capital. anna: thank you very much, dani burger. coming up on bloomberg, we will speak to the ceo carlos mussina at 9:00 a.m. london time. let's get our top stories. exchange, thek $27 billion agreement will be the biggest for the exchange. the market likes it this morning. the transaction is expected to be completed in the second half of 2020. zalando, second-quarter sales

accelerated. more than upbeat tone for operating profit. this as they face a lot of competition not just from bricks and mortar but the likes of amazon. rio tinto down 3% after the announce a special dividend of $1 billion. we see a lot of minors down, the fed affect. demandtting their steel around the world. to make steel, you need iron ore. matt: i want to break the french pmi's coming down below 50, we are looking at 49.7. the preliminary reading was 50. france pmi's also falling. at the beginning of the year, 58 down to a and now contraction below 50. shell mrs. the lowest analyst

estimates. the lowestsses analyst estimates. this is bloomberg. ♪

anna: welcome back to the european open. the 53 minutes into your trading day and the markets are fairly

mixed. u.s. futures quite flat. underperformance in the london market versus the french market, which is performing well. the stocks countering weakness in oil and energy and commodity stocks in london. shell is sliding the most this year after its second-quarter earnings release. profits missed the lowest analyst estimates after a slump in natural gas prices. the ceo told us the price action was only seasonal. >> what we are seeing this year upthe confluence of starting of new lng producing facilities on the heels of a weak winter articulately in north asia. pricessult, short-term over the summer season which is a week season. anna: a little different for the

mining sector were iron ore surged. let's discuss that story with our mining and metals editor. i just looked at the iron ore .rice, down 2.5% that is not the story reflected in the numbers on the likes of rio. iron ore is the cash cow for the industry. what are companies doing with that money? >> iron ore has delivered a windfall for these mining companies. we are seeing in rio tinto they will give it back to shareholders. rio tinto announced a special dividend. they are clearly trying to wrap up returns for investors. matt: it looks like a different , what is thes reason for the difference? has weaker results

because they are relying on iron ore prices to make steel so they are getting hit with higher costs. and there's a demand overall for steel, particularly the automotive industry, there is a slowdown. overall the steel industry is getting hit hard. matt: thank you for joining us. our mining and metals editor out of london. this afternoon we will speak with john sebastian jock, the ceo with rio tinto. time.that 3:30 london i want to break the german pmi's that have come in at 43.2, actually a little better than the forecast for 43.1, but a huge drop from the beginning of the year when german pmi's were approaching 63.

for the german2 manufacturing pmi's. that is it for the european open. up next, "bloomberg surveillance." this is bloomberg. ♪

francine: the fed cuts rates for the first time since 2008. continue president attacks on the fed chair after saying the cut was not big enough but credits the fed for an early start? brexit loomsf hard faces a mark carney tough new conference. welcome to "bloomberg surveillance," good morning from europe a