manus: commodity crunch deepens as wti crude slides below $80 a barrel and gold near a five year low. trouble. tissue but -- tissue but chairman steps down. -- toshiba chairman steps down. and greg's it is going -- grexit is going nowhere. 70% of responders in a bloomberg survey thinks there's a danger that of the country will be out of the eurozone by the end of next year.

manus: welcome to i am manus cranny. -- welcome to "the pulse ." i am manus cranny. the story of day from the asia. the president of toshiba along with two other executives, their resignation and their formal news conference and this was a $1.2 billion scandal restating their earnings over the past six years, unrealistic led to what is a systemic flawed accounting process, challenging the culture within japan. probably one of the single most important issues that will be addressed here which is so much power for people as of the top and no way for anybody to really challenge the toshiba accounting methods. everything from nuclear reactors

and ships. a is now falling on hisao tanaka the president. if we have any headlines, we will bring them to you. our top story and that is commodities. bloomberg commodities index dropped to a 13 year low yesterday. right? ryan: you have to go back to 2002 to see commodity prices where they are now. a five-year low. 2012 when we had the darkest days of the euro crisis and commodity levels were higher then than now. 2008, the darkest days of the financial crisis and yet commodity prices are lower than they were then. gold is the biggest component in bloomberg's commodity index. we talked about gold yesterday and had the 4.2% drop the biggest in two years.

heading to a five-year low and a bit of a recovery. today, it's a slumped. 1100 bucks per ounce for a gold where it is trading and north of yesterday's intraday low. gold suffering. part of that is dollar strength. that does not of the only issue in the commodities market. iron or not part of this but the commodity everybody is watching. goldman sachs has a note out and 2 analysts in iron ore will suffer. earlier this month, down at a six year low. the reason for that is not just the price of the dollar and dollar strength but we do this on the demand side and oversupply to china. goldman warning fell big suppliers, rio hp supplies china in will overwhelm the weakening demand picture.

and extraordinary day for commodities. manus: your favor subject which is oil. $50 on the nod with the wti. is it a big new way to the downside? ryan: you said under $50 for wti and is an important level. $56 for brent. a story where fundamentals, to the picture and people saying iranian will continue to the glut. they are saying we will talk oil and supplied to global markets as soon as we can and the sanctions are lifted because we want to take back market share. iranians talking to their counterparts. not just dollar strength story. that is how it is painted. a lot the fundamental issues. you see that with iran an existing glut.

also iron ore they might keep on playing out over the next few weeks. manus: let's see where it goes to the next. if it will ever get to $100. ryan chilcote. our question of the day. will the fed stick to the 2015 rate hike guidance? join us on twitter in terms of what you think the response might be. for more now, joined by fidelity worldwide investment global economist anna. great to have you with us. commodities, which way do you look at it? oil as it were dropping and a 13 year low on commodities. a boost to economies? guest: it depends. we are now back to the

differentiation we have been talking about. that is usually energy commodities benefiting from lower commodity prices and many markets will face this head went and most will benefit in terms of consumption. the biggest question mark is what is inflation? many central-bank want to boost inflation and come back to the target especially the fed and want to hike. it will make it more problematic for them. manus: core inflation in the u.k., not wages rising -- sorry the fastest in five years. but not embedded yet. not something which is embedded into the numbers. how real a prospect do you think the central bankers will think it is? anna stupnytska: really, a

combination. in at the u.k., it looks like we are at full capacity. we will have reached the equity and of course, though falling commodity prices is kept low. in the u.s., probably not at full capacity yet. still no pressure from the economy. and none from commodity prices. i really think it will take a few more months to start picking back up. we need to see progress in the labor market. manus: a you have a strong dollar. no big question for most people, are you entering a new super cycle and the dollar on the upside? on the converse side is the commodities on the downside. as jenny yellen looks at these issues, 70% of our survey is say

we will get a rate hike in december. is there anything that can blow it off course? anna stupnytska greece and china and the question is, why are commodities falling so fast? oil has fallen mainly around the supply side reasons and maybe something else going on in china we do not know about. growth at 7% are you how real is the number? maybe they are heading towards. a reason the fed will take. many reasons why they will hike in december. manus: you sound skeptical on china. anna stupnytska: the story itself is good. if are trying to rebalance and reform. i think the equity markets is not going to have any major implications for consumption.

it is a big head went for everybody else and deflationary for the rest of the world. the story in china is ok and probably more sustainable, but a head went for global economist -- head went for global -- head wind for global economist. men's thank you. you will stay with us. ibm shares fell after second-quarter sales declined across major business units. the 13th straight period a fall in. investors are losing patience as they rebranded themselves. j.p. morgan chase is short by as much as $12.5 billion in meeting new capital rules which were approved by the fed yesterday. extra capital requirements or surcharges arrange from 1%-4%. as of the biggest bank,

jpmorgan. spacex boss elon musk said the fire that destroyed one of his rockets probably was because of a weak strut as that the company might be complacent because they have a time to the staff since their last launch. grexit on the agenda according to a new bloomberg survey. we will break it down. ♪

manus: welcome back to "the pulse.” greece's creditors are said to be aiming for august 6 deadline to wrap up terms of the new bail out and disperse the first aid. a bloomberg survey shows 71% think there's a danger of greece will be forced the eurozone by the end of 2016. the thoughts from globe economist anna stupnytska she is still with me. anna, it does not go away. our poll is saying 70% saying they will be forced out and 50%

say 86 billion euros is not enough. anna stupnytska: it is up to the greek government to make steps to push structural reform and get the economy going. get some kind of recovery going and that will make it easier to pay debt and easier for the european creditors to have debt relief. it is all about incentive structure. they do not want to give them a huge bail out package because it will reduce incentives. and they do not want this to repeat again. people are just skeptical to push through this very tough reform. manus: even this morning, part of the story at bloomberg is a they have to water down the seconds that -- set up -- water down the second set of proposals with some of the taxes. that brings an alarm bell immediately.

a government dependent on opposition living in a minority. that's the critical risk, isn't it? anna stupnytska: yes, another round of elections this year and next year. as long as syriza is in power, i do not think we will see anything very different. that is the biggest problem. the political will in place to keep greece in the euro area. the bigger picture here is about the geopolitical risk is greek leaves then that might mean russia might expand its influence into europe and the balkans because it is very -- manus: that has not been part of the foreground discussion that has gone on. anna stupnytska: it is the bigger picture.

what a merkel had in mind. manus: overreaching again in terms of land and power? anna stupnytska: i think so. they have already stretch into the balkans. when he level phil stayed in europe and access to the mediterranean -- when you have a failed state in europe and access to the mediterranean. manus: sounds like your, i did not -- europe, i did not think i was say that is recovering. and growth is returning. how strong a growth story could we get for the back half of this year in 2016? anna stupnytska: quite remarkable. intact despite greek dominance, sentiment has not been disappointed. the headwinds and low energy prices and critically, we have

much more support across europe these days. everywhere except for greece. it is working to boost recovery. it will continue through the year. once we get to the next year much more complicated. you might have the fed hiking and tightening financial conditions that was ill over into europe. the ecb could do more as well. manus: you perhaps qe to go on for longer or bigger in size? anna stupnytska: it depends if we have the greece issue, it might increase the size. otherwise, it could extend beyond september 2016 if inflation is not picking up or recovery is stalling. manus: give me indication of the consequences of that for the currency. currency critically important piece of this discussion. anna stupnytska: yeah, in terms

of the euro, the wickedness against the dollar -- weakness against the dollar, help export us and boost inflation to recover. ultimately the commodity price growing and so we might actually see more in terms of qe. manus: as european jobs, remind me in terms of that and propensity to export. we are talking about a rebirth within the eurozone and a lot of people saying the euro is going lower. as an export a group, where do export stand? anna stupnytska: some countries like germany and france and that is the important part of the growth. some countries not as being exporters. you have competition from japan given weakness --

manus: can it rise again? anna stupnytska: boosting growth but ultimately monetary policy. the ecb cannot help put on a sustainable path one structural reform after the politician. manus: the last, i heard one of the politicians say show no mercy for greece. anna stupnytska thank you from fidelity worldwide investments. toshiba under pressure. one of the most favorite brands injure -- in japan and uncertain future after an accounting scandal and hisao tanaka's resignation. we have the full story. ♪

manus: welcome back to "the pulse.” streaming on your tablet and phone and bloomberg.com. the toshiba president, hisao tanaka and two other executives quit taking responsibility for a $1.6 billion accounting scandal. the news conference. there is flash photography, i should warn you a pretty strong flash photography. hisao tanaka resigning but cause of an accounting scandal. what will happen next is what we

want to discuss. how did it happen and the consequences? caroline hyde, caroline, the news conference on going. caroline: it comes flooding back. in 2011, another scandal. this is a phenomenal amount of money. this is 140 euro company that makes everything from televisions to chips to nuclear reactors. it is huge. $1.2 billion, so much how far the scandal is racking up. three times what was originally thought first announced in may. today, heads rolled. hisao tanaka president has quit along with two other executives. including norio sasaki who was

in charge for most of the six years. they are taking responsibility. they said it comes down to them. on third party committee has been involved trying to piece of the puzzle together. manus: is it here article -- is it hierarchical? caroline: this external views saying it wasn't the president who thought to delay -- was the president who thought to delay and the workers he told to do this and cannot talk back and had to follow this party line. it is to stem it what are they called it. -- systemic is what they called in. the biggest since olympus. that was back in 2011. back into the 90's, bank of japan sent shivers. manus: i remember when that was

like $4 billion sprint i am not putting get in the smaller basket. right now about $1.6 billion. what happens next with this brand? it is across a broad broad-spectrum. caroline: we understand it was in regularity, percentage of completion estimates of infrastructure. your project and nuclear, that is what it is related to. they are expanding the probe the looking at pc parts and computer parts. first of all, a new management team. people resigning today have to be replaced. that will be announced in mid august. we heard the new board may have majority of outside directors. this what people are worried about in japan breaking in outsiders and made sure managers do not have too much control.

as revealing of fiscal year 2014. we will go to those numbers in the end of 2014 and will need the numbers from the beginning of this year. there could be asset sales not reported in july. already, the size of this company is shrinking. $3.6 billion wiped out in terms of market capitalization. still have to see what the charges could be put forward to the executives. so far, none. manus: a real situation in terms of accounting and structure. caroline hyde, thank you on the toshiba story. commodities crunch, why everything from gold is on the slide and indications of the global economy pretty you do not want to miss that. let's check on the markets. a good run. 98 in a row. a little bit lower.

stoxx 600 down. crude, still below 50 bucks. a little bit of pressure. old is managing a little bit. commodities discussion after the break. -- and is managing a little bit. ♪

manus: welcome back to "the pulse.” i am manus cranny. up to speed with our top headlines. the president of toshiba is resigning after a $1.2 billion accounting scandal. according to a third-party investigation, it was caused by executives setting unrealistic targets skillfully hidden from outside. spacex boss mosque said the explosion that destroyed one of his falcon nine

was probably caused by the failure of a strut. he admits the company may have become complacent because it has eight times more staff than when it last experienced of failure. u.s. oil has fallen below $60 a barrel. and gold and a five-year low. commodities at a 13 year low. bloomberg commodities index dropped to its lowest since 2002. weaker than we saw in 2008 than the crisis. the other commodities have strengthened the u.s. economy pushing the fed towards boosting interest rates for the first time since 2006. speaking of the u.s., a look at the results of from morgan stanley and ibm. a bit of a shocker. they may the headlines.

su keenan has the headlines. su keenan: ibm shares tumbling into the monday's session at the computer giant reports 13 straight quarter of revenue declines and saw declines in almost every major business category. beat estimates and the revenue but looking at profit items, that beat the three dollar estimate of analysts. it had to reduce by almost 5% in the past three months. after hours trading saw it dropped 5% from $173 share close. the ceo has been trying to shift the tech company away from traditional foundation toward more viable cloud computing and data analytics. analysts are saying it has been slow and this quarter proves that. the fallout from the traditional

businesses at ibm dwarfed the company's ability to capture new revenue. likely translating into some of the trading we will see in the tuesday morgan. morgan stanley reported a very different story not only beat estimates but saw the biggest jump in a brokerage fees and trading of the six major banks here in the u.s. to quote one analyst, it is still the pulse. the prophet was $.79 a share in beat estimates by five cents. the ceo has use growth to avoid revenue declines that has been plaguing his rivals. in new york, su keenan. manus: let's check in with some of the big themes in europe. european stocks just off our record highs it down by 2%. stoxx 600 down by 0.8%.

crude below $50 a barrel pretty is the new super cycle on the downside what you will see? is there any possibility of iran flooding the market? gold has been righted in many sessions. you saw gold from the losses. stronger dollar. 1107 on the dollar. morgan stanley talk about selling uk's stocks in evaluation as being too high in deteriorating earnings. a couple of stocks to watch. let's check in. one of the industry groups driving european stocks lower is health care driven primarily by novartis. novartis cut sales on the performance over the year to date. this morning, the stock is down 2.3%. down the most since the 29th of

april this year. you are looking at -- wiped off of the market. the dollar strength is really hitting the numbers in novartis this morning along with that, competition within the lens business. 1.27 and that was below the estimates. it's takes us to a touch of luxury. hermes. the value still there. trading over 16% on hermes. with that in mind, we will talk about hermes and what is driving it was not what is happening in hong kong and australia. andrew, good day to you. talk me through the numbers first of all and give me a

glimmer of hope. not all bad news, is it? andrew: hermes is bucking the trend it is quarter. if we look at burberry, they reported decelerating sales and a quarter but hermes+++ acceleration. the reason is predominantly japan and it beat estimates by 10 percentage points and a record 27% there. and i think what it shows is two things. firstly, we have hermes'

business model and less greedy then appears and not opened as many stores in place like hong kong ke andpt supply -- and kept supply and distribution under control. we are also seeing a migration of shopping patterns especially chinese consumers and not spending so much in china but not spending so much in hong kong. and what is happening is places like japan and europe as well are benefiting from the transferral of demand. manus: andrew you laid out the issues clearly. this is a big broad industry issue about how to deal with asia. call to deal with pricing and we saw some of the companies adjust pricing last year if memory serves me well. how are they dealing with asia? will your bolster that story in perpetuity? andrew roberts: hermes has been an outlier in this. raise prices by 4% on average in january. and in japan, it raised a by 9%. in terms of actually harmonizing

prices across geography, they held back from that. that shows part of the benefit they have had in places bowls in asia and in europe -- both in asia and europe. analysts would like them to move their pricing more. but riseborough -- hermes has been fairly careful and prudent and their business model is bearing fruit. i would not expected them to be making major prices revisions over the coming months. given the balance a demand in different geographies. manus: andrew, thank you for the update and driving that company in perpetuity. andrew roberts, thank you very much. still on luxury goods. there is one of big think at

bloomberg and that is commodity. you are looking at the commodities market trading down at the levels will not seen since 13 years ago. the worst we have had since the financial crisis in 2008. as europe crisis in 2012. what is next for commodities? stay with bloomberg for the answers. ♪

manus: welcome back to "the pulse." oil has fallen below $50 a barrel and gold near a five-year low and the selloff in commodities sliding golf in -- sliding golf in what will not -- off in what you have not seen in 13 years. a little bit of context. paul, help us here. commodities, the longest stretch of the clients since the march. back to 2002 levels. we have a discussion about six or seven months ago. is it the second wave of a big commodity move or act we the bottle question -- or are we at the bottom? paul: it has to feel like the bottom. i am getting it is about as

tough a time is anybody can remember. that includes 2008 and 2009 in terms of how bad it is for the mining industry given where the price is. when we talk about the commodity index going back, it was the worst level we had seen in nearly two or three decades prior to that point. 2002 and 2008 are very low levels in terms of the commodity margins these guys can make versus what they continue to make it new capacity, new minds and new supplies. longer term. manus: we will talk about the miners they have all run amok and gotten it wrong. i want a seal, you look at this, everybody raising about the dollar in china. what are you focused on? is it the demand side are mathematical equation? paul gait: both the demand and supply.

both aspects are important. what is important over the past few months as the its celebration in china's demand and starred in q4 last year. wilson the dramatic slowdown in chinese demand for steel, iron ore and the base metals and aluminium. really tied to the chinese sector. that is being very significant source of demand. all of the industrial commodities. the house building has slowed down in china and had a huge not across the board -- not across the board. the supply side has continued to excel a rate. over the boom years, huge investment plans. billions into new holes and the ground in western australia. a time for when they make the investment and the supply goes online. the supply calming online --

common goal at the perfect wrong time. it has been that mismatch between the 2 between supply and demand. manus: after the mismatch moment. a little bit the supply taken out of the system. maybe they have gotten the timing the wrong and iron ore trade and copper at a six year low. has the mining industry are there prepared to say it will now flooding keep on selling? paul gait: back to your point about the point one person has made and not just him, a number of commentators, you have a number of commentators including ourselves talking about the key issue for value maximization is matching supply and demand. not about volume growth but maximizing the price of your commodity and timing of when you bring product into the market.

what would've seen as a gradual shift in the sentiment and language at a number of the bigger mining companies are around supply. a tempering of some of the language around volume growth. and we have seen talking about modifying your rio tinto talking about whether effects they have had and all of that means. the big question for us is what will hp billiton say? the next of the big 32 come out with our production numbers. people will look for the language and color around to announcement later. manus: are they all painting around the right color which is money? copper will make it to $10,000. paul gait: to get the attention. manus: quite bullish. and slight based in iron ore.

take me through the stocks. paul gait: copper is the easiest. it is geological material deterioration the great profile of the existing copper deposits required to supply the metal into growing demand. that's a demand has certainly does celebrated but hardly -- decelerated. we are above demand outlook. we have never had a period for copter over the last 120 years of negative demand growth. we can require the new supply. it took us $10,000 a time to get the wave of mine supplies. the question for us, would the level right now where miners are struggling to reinvest, what will take tell remus it defies the next copper -- what will it take to incentivize the next

wave of copper projects? we will have a period of cyclical low and copper price and not structural or secular low. not a back to the 1990's, early 2000 where we had a decade decade half retreat in copper price. whether it is a cyclical slowdown maybe last another year or so. it will require higher prices to incentivize the next way. manus: time is running doubt. one last sort of type comment. is the dividend really at risk? paul gait: we saw a cutting of the dividend and one of the main sources over the last five years. they cut in this morning and that is of the a negative -- and it has to be a negative signal. manus: paul, thank you.

we covered commodities. paul gait senior mining analyst. some of the top headlines here on bloomberg. creditors are saying to aim for august 6 deadline to wrap up the terms of a new bail out. meanwhile, a bloomberg survey of economists shows 71% still think a danger the country will be forced out of the eurozone by the end of 2016. novartis reported several percent decline in second-quarter earnings. the u.s. dollar and currency fluctuations stripped away almost a full percentage point from the profit margin at the world's biggest drugmaker. the stock is down 2.39%. the worst performer on the swiss market index of this morning and certainly on the lows of the day.

ibm shares fell after the company reported second-quarter sales climbed across all major markets. investors were losing patience and ibm struggles to reinvent itself as a seller of cloud computing and data. a french teenager has effectively been cured of aids. showing no sides of active infection after more than a decade stopping treatment. a development that is running -- that is looking. we are joined by our health reporter. tell me little bit about this french teenager, the background to her miraculous recovery. reporter: she was infected at birth by her mother. treated initially as a child until she was six years old and

dropped under the health care system. doctors lost track of her. her parents took her off of treatment a usually what you would expect is the virus to run rampant in the body. when she came back to see doctors a year later, it seemed her immune system was controlling the virus naturally without the help of drugs. the doctors said we want to start you on error ps see how it goes. 12 years later, no return of the virus. -- we want to start you on therapy to see how it goes. she is patrolling without drugs. manus: they do not intend to start her with drugs? there is still traces of hiv and the dark recesses of your blood system. what actually happens next? simeon bennett: as long as the virus does not back she is

fine and does not need to go back on therapy. questions scientists are asking is can we reproduce on a broader scale? there's a trial reading planned with more than 100 people were they will take the people and treat them early and interrupt their therapy and see if they can keep them off therapy without the virus. manus: it goes to the huge push with an hiv knowledge around the world which is test early as you can to receive any treatment possible. it has radically changed since the days of the hiv epidemic in this country. if the trials ago according to plan, you are looking at a market and some of the countries like africa, what is the financial economic implications? simeon bennett: potentially

huge. a long way off but you can imagine a cure for hiv being a multibillion-dollar opportunity. we are not talk about new drugs but the ones we already got, using the much earlier to treat patients in the early stages of infection. and so the likes of gilead and glaxosmithkline are investing in hiv cure research and really you can see it being a huge opportunity. manus: thank you for a heartening story on a day on pharmaceuticals. simeon bennett bloomberg health reporter. a cell of the financial times. receiving interest and potential buyers. for more now joined by manuel. where have i heard this story

before? i heard it last year. they chatted. costly to run ft. is $1 billion right? manuel: this time around, they are trying to sell it. let's see if it goes through. we have seen it in the media industry this year quiet compared to other sectors like health care and telecom and technology. this is a trophy assets. manus: is it where it comes into the fray? manuel maigorri: exactly. media companies looking for traditional media companies. which is in talks with the germany. also nontraditional billionaire investors from europe, middle east asia might have an

interest. manus: you spoke about devaluation. he would eat his hat if it was one billion. manuel maigorri: i think it will be between 500 million pounds and one billion pounds, something in between. as much as one billion pounds. it has been declining in the past few years. one day, it will be fantastic. manus: it would be a trophy assets and also important asset in terms of financial landscape. where it will fit in best with digital seeking print or vice versa? manuel maigorri: it could be both ways for more traditional media or print to try to diversify and have really good

well-known brand or online on based media to try to get more traditional. i see both type of companies looking to it. manus: thank you for coming down. manuel maigorri bloomberg deals reporter. pearson buys the ft. bloomberg first word is next on the radio. on tv, another hour of "the pulse." a look of what else we have planned. you can follow me on twitter. the twitter question is really to do with commodity meltdown and what it might have an impact on the said. if it continues, will the fed stick to the 2015 rate hike? i am at manus cranny.

join me on the next hour. we are back after a short break. ♪

manus: commodity crunch deepens. crudest slides back below $50 per barrel. the toshiba president and two executives resign amid a scandal. grexit going nowhere. 71% of respondents think there is still a chance of danger that the country will be out of the eurozone by the end of next year.

a very good morning to our viewers in europe. a warm welcome if you are waking up in the united states. this is "the pulse." the bloomberg commodities index has dropped to a 13 year low. what is the story? ryan: this is a five-year graph. 2010 2012, you have to go back. go back a bit further to 2008. commodity prices were higher.

go all the way back to 2002. gold is the biggest component in bloomberg's commodity index. we had the biggest intraday fall in five years. today, we see more gold weakness. that is because there is still concerned about -- concern about gold and more dollar strength. you have a weak demand picture for iron ore in china. even though we have seen iron or fall by 26% this year, we still

have this issue where we could have iron ore prices go even further low than they are right now. manus: i know that you like oil, ryan. ryan: you have a fundamental story there. iran is back online. the iranians are saying we want to take back our market share, your respective of the price we have to do it at. they could contribute to the existing glut of oil we have around the globe today.

you have wti going below $50 per barrel. shale producers have proved pretty resilient, haven't they? manus: absolutely. if the commodities continue will the fed stick to its 2015 rate hike guidance? it is a fairly straightforward question. does it impact the market at all? we will wait and see if physical will beat fiat currency.

tim, great to have you in the hot seat. to an investment manager, what does it mean to you? how do you interpret it? >> it is not surprising that you have all the commodities going down in one go. it is largely because the expansion of monetary policies we have seen, particularly from the fed. breaking it down to the individual names -- it has always been saudi arabia's goal to put the squeeze on individual producers. you never saw any large-scale

fallout, in terms of u.s. shale players. until we see that fallout or consolidation in the u.s. market, i think there will be onward -- ongoing downward pressure on the oil price. manus: we have inflation in the u.k. on the back of our wages. the fed is not going to want to see a dramatically lower oil price. what is the risk of this for central banks? >> it certainly puts them in nature key place. no central banker can say, we want high oil rices. it puts them in a very difficult place.

with regard to your twitter question of the day, the fed is looking at what is happening with inflation. we thought we would see the first rate rise in december. as i said earlier, they will struggle to raise rates if this deflationary pressure continues. manus: you still go the fed, we still expect rates to move by 25 points in december. the fed sounds fairly entrenched. >> the fed will be expecting inflation toward the end of the year.

having said that, if oil and other commodities do fall from the current levels where they ended last year at deflationary pressures will still be on. manus: we have our new survey which is that greece will exit the euro by the end of next year. 70% reckon it is fine for this year. 50% reckon that the roadmap to the new bailout is not enough. have you moved past greece? >> it definitely enters conversation less and less because it is impossible to avoid. when and if we will see a greek exit, that is not something we lose too much sleep over.

the bond markets and currency markets are much more sanguine about a grexit. we understand that anything like that is going to cause short-term volatility in the market but greece has been masking all of the positivity elsewhere in the eurozone. manus: that positivity we are going to touch on some of those themes. you are going to stay with me. here is a look at what else is on our radar this tuesday. the president of cuba and two other executives -- the president of toshiba and two other executives every signed following a scandal.

ibm shares fell after second-quarter sales climbed across the board. investors are losing patience as ibm struggles to reagan -- reinvent itself. the explosion that destroyed one of spacex's rocket was probably caused by the failure of a strut inside an oxygen tank. the company has eight times more staff then when it last experienced a failure. up next, how a grease deal -- greece deal has impacted stocks 2% away from record highs on the stoxx 600.

tim crockford is more bullish. ♪

manus: welcome back to "the pulse." live from london. stocks fell within a 2% level of the record high after greece and its creditors reached a bailout

agreement. let's get some perspective tim crockford is still with me. you have the euro, the ecb, a little bit of progress. >> the signs we have been seeing coming out of the euro economy are very positive. we are seeing passenger numbers

being up. we think it is a sustainable consumer-led recovery. mario draghi is ending up as the most dovish of the world's central banks. that looks good for the long-term european equities. manus: that has a number of different issues. that has to do with quantitative easing. but it breaks down in some key areas. you mentioned the autos. they are good. run me through the thinking.

>> iran is a positive. it has not shown up as much of a positive sense the comeback. what is driving it is more of a big picture story. you have the country more dialed into europe and basically less dialed into the china story when compared to the german and the u.s.. from a topline point of view that is very well. you had this restructuring of business. and increasing modularity within the business. increasing leverage when they finally do pick up. you have seen costs come down. costs per unit have come down. you are waiting for a pickup in

topline growth. manus: the germans have a little bit more exposure than china. to that end is that one of the potential issues? >> they have much less exposure. they do have exposure via nissan. when you put the whole group together, it is much more diluted. manus: in the break, i was mentioning one of the worst performers and the tech area but you are digging in a little bit more into the numbers and there is another stock. talk me through the numbers. >> we have been positive health care, european health care

specifically. one of the main drivers of the positivity has been the move toward biological away from chemical drugs. sartorius is one of the biggest benefit is of this thing. novartis' ceo expects 20% to 30% growth in bio. these are big numbers. i think they are probably being slightly conservative in the guidance they are giving out. manus: what concerns you the most? what would you stay away from. ibm was tragic last night.

the quick line on that? >> you have seen this divergence . markets are becoming way more fragmented. manus: thank you for sharing your thoughts. coming up, toshiba is under pressure. it faces an uncertain future. it's 1.2 billion dollars scandal and ceo resignation. ♪

manus: welcome back to "the pulse." the toshiba president and two other executives quit today to take responsibility for the $1.2 billion accounting scandal. we have a news conference which is been ongoing. lots of flash photography during this news conference where the

president announced his resignation. the size of the accounting scandal is quite substantial. how did it happen? what happens next? how are they going to deal with this? caroline hyde joins me. the resignations are there. this is one of the most fabled brands in japan. how did we get here? caroline: this is a 140-year-old pillar and it is going up in smoke at the moment. today, we have the announcement that the president has quit. also, predecessors, $1.2 billion. that is the scale of the accounting scandal. that is already three times of

what it was originally thought a few months ago. why they have had to quit is because it has been labeled systemic involvement of the management, of the active lives of the company in the improper accounting. they are basically saying that these people skillfully hit the irregularities that were coming about. manus: this speaks to a cultural issue, doesn't it? challenging it is difficult. japan does have a few issues. caroline: especially when things come to light like this. the president himself was seeking to delay booking losses and workers were unable to go

against management orders. they look into the biggest accounting scandals. looking back since late 1990's. olympus was fined $5 million. three officials were suspended sentence as. they underestimated bad loans. manus: that rocks global markets. caroline: because then the supreme court ruled against to the three executives. the supreme court said, you are justified in using the old accounting this is. these things have a way of

haunting investors. it will be very interesting to know whether we see the executives in the case be charged. whether we see the company be charged. toshiba has already said that the new board will have a majority of out side direct there's an that will hopefully instill confidence in the investor base. you have the announcement of what happens in the first quarter fiscally. there is still plenty to come. manus: thanks for breaking that all down. caroline hyde on the toshiba resignations. after the break, hermes is big

in japan. we will find out just how big. crude, $50 on the nose. ♪

manus: welcome back. i'm manus cranny. novartis' sales were eroded. spacex elon musk said the explosion that destroyed one of his company's rockets was probably caused by a failure of

a strut inside an oxygen tank. the company may have become complacent because it has eight times more staff than when it laste experienced a failure. commodity prices slide to the lowest price in 13 years. that is weaker than after the 2008 banking meltdown and the eurozone crisis of 2012. the strengthening u.s. economy is pushing the fed toward boosting interest rates for the first time since 2006. let's get a check on the markets. it is jonathan ferro. jonathan: manus cranny, thank you very much. we are on a nine-day winning streak.

if we make it 10, that is the longest winning streak since 2006. the ftse 100 is unchanged. we are dead flat on the periphery in spain and italy. what is interesting is that it is not the miners who are the biggest fallers today, it is health care. there is a dollars story there. the commodity route, though, has been the dominant theme. gold is coming off a 2010 low. gold is really falling over another 15.5% over the last 12 month. you can blame china and the prospect of a rate hike, but people will be talking about the prospect of the strong dollar.

this is what we have to talk about. the dollar has appreciated by 20% over the last 12 months. you saw the impact. as we come into a huge day for tech earnings you ask the question about whether we will see the impact in those earnings, as well. surveillance takes to the airwaves in 25 minutes. tom keene joins me from new york. jonathan ferro was making the point about the strength of the dollar. we are going to talk about commodities. the question is is this super cycle to in demolishing the commodities? >> we will get those articles written. if you look at the fancy mathematics, it is real simple.

they are all going down as a general statement. usually that is because it is expressed in the dollar. there was not enough discussion of the supply and demand dynamics. it is all about a lot of stuff out there. a lot of iron ore, and a lot of gold. manus: it is interesting. the miners say they have never ever had it so tough, in terms of the actual margins. that is going back to 2002 and then 30 years before that. are they prepared to change their town and reduce their supply. >> reducing the supply is one of

the overlays. there are a lot of financial challenges to the companies in the united states. there have been some bankruptcies. there has also been the margin erosion you are talking about. it is not just a simple story. australian dollar is plummeting versus the u.s. dollar. those rates have changed. they are something we will talk about today. we will lead with a discussion of commodities. we have a real earnings focus. part of that is a technology angle of apple, microsoft, and yahoo!. manus: we've got your bloomberg intelligence. we are going to talk tech

tonight. have a great show. will pick it all up tomorrow. luxury brand hermes is is something you can live without -- can't live without? they reported a 22% increase in sales, mainly due to a strong performance in japan. we are joined by andrew roberts. a very good day to you. this is a bit of déjà vu in terms of what we heard from burberry. japan is the savior. >> the headline from hermes is that the demand for leather goods remains very strong. it represents an acceleration on the first quarter and it is largely to do with japan. the economy in japan is benefiting from a slowdown and a decline in hong kong and the

general slowdown in china. there are three things going on in china. chinese consumers are slowing the rate of growth or spending on luxury goods as the government clamps down on lavish spending. that does not mean wealthy chinese are not spending elsewhere. they are just choosing not to do so in hong kong. they feel that they are being made that there is a backlash. the beneficiary of this are places like japan and europe as well. demand remains pretty strong. it has been a pretty good quarter. it does contrast with burberry. manus: if we look at the overall

landscape, it is a question of whether it is a hard landing or a soft landing. to that end, the graph, the change in policy it is still a big issue. how are the luxury brands actually dealing with asia overall? >> with difficulty is the short answer. ms is an outlier here. the business is all about not being too greedy. they charge incredibly high prices for some of their products. they limit the amount that they actually distribute. they do not mess around with too many discounts. competitors have felt the backlash in china. we can point out companies like gucci and product, they have

both struggled both from the point of view of their product not being seen to be as exclusive as it once was before maybe because too many people had it and at the same time, they have been playing different price points. when you put that against the backdrop of a clampdown or push back against highly visible brands, they are the first to suffer. manus: thanks for rounding all of that up for us, and true. we just want to bring you an interesting line. president putin is to meet f ifa's sepp blatter. this is according to a kremlin spokesperson. it will be during a tandem meeting derek for the -- a

tandem meeting for the world cup in russia. sepp blatter will not run for reelection next year. he is never far from the news headlines in regards to fifa. who will win that job? ok, coming up it is tech tuesday. stay with us for a preview on the numbers. we will talk to a man who knows a thing or two about the beast of technology. ♪

manus: we are back. it is "the pulse." over the next 24 hours, you are going to know more about u.s. corporate earnings and you ever wanted. apple microsoft, bloomberg intelligence analyst paul sweeney is in the house with me. it is great to have this opportunity. you are this side of the water. apple, it is in my life, it is an the ecosystem. >> the stock is done great this year. it is up 40% over the last four years. investors are expecting good things. it all comes down to the phone. street expectations are close to 50 million units. investors might want to hear a little bit about the watch.

we are very early in the wearable segment of the market place. the watch is very early stage. it could be another category and investors are trying to decipher that a little bit. manus: china is part of the iphone story, as well. is the watch going to be something we benchmark? it needs to pull in good numbers. >> we are a quarter or two away from people putting a lot of stock in the watch. is this a new product that we really need or is it not? is it more of a niche product? there is a whole wearable market people are looking at. manus: does carl icahn have a point?

>> he has had a tremendous amount of success with netflix. the apple bulls sit back and say that they tend to do very well. the music streaming business. spotify and pandora they took a major step back to say that apple is into the market. how are they going to define the market? wherever apple goes, it tends to generate investor interest. manus: i like how you say that. they can certainly disruptive market. a huge shakeup. we now have pcs and business production. we have three pillars and a clear strategy. >> it is interesting. the stock is kind of flat year to date.

investors are trying to step back. they are looking for were the growth is coming from this quarter. investors have pivoted a little bit and are starting to focus on the cloud. tech investors are bullish about the cloud. we had some good numbers. amazon just broke out for the first time last quarter. microsoft is in that business. there is a question of how big they can get in a very competitive market. manus: and the breakdown for the conversation, you have sap and they are aggressively growing. talk to me about pricing. >> the cloud business. you think about all the stuff that is going up on the cloud. personal apps to the corporate

infrastructure. there is a lot of interest in the cloud. it is a very big and fast growing market. the big players are going for market share on price. we see price cuts almost monthly by the largest players. it is a large and growing market and it appears that the big players sense that and they want to get their market share today. manus: back to core at microsoft and dell. it is called operating software. windows 10 is slated for the 29th. how important is that? >> i don't think it is going to be a catalyst. investors think it is a nice product refresh, but is it going to be something to be a catalyst to drive topline growth? early expectations are that it is not. it will be a strong product refresh, but not something to get the core business moving again.

that is one reason we see investors focusing on the cloud. that is something were microsoft can create a significant growth term for the company. manus: who is best in school on the cloud? who is defining it? >> the public disclosure we get we get a little bit from microsoft. amazon did a good job of trying to define their leadership position by breaking out for investors last quarter some key metrics and some of the metrics on the revenue were very impressive. we know it is a fast-growing market. it is also profitable for amazon. that is something investors were really concerned about. those are the big players. i think amazon would like to position itself. manus: we have just over a minute left. i want to try to tie in yahoo!.

what is your feeling? >> the stock is been almost completely driven by the asian financial assets. it has been a tremendous home run for marissa mayer. the next milepost is getting a tax-free spinoff of the alibaba assets. it is coming under pressure by u.s. tax authorities. there was a little bit of investor concern. investors want to see an updated their. once you get past the monetization you have to come back to the core business. the pressure is building on marissa mayer to deliver growth. manus: as you say, pressure is going to mount on her. we will bring you back tomorrow and see how they have all done. paul sweeney from bloomberg intelligence. we also understand here at

bloomberg that there could be a deal in the air. the sale of the "financial times" is being explored. the sale could be valued at one billion pounds. we have brought in our deals reporter. he has said he would eat his hat -- is the price a bit rich? >> it is a really rich valuation , but we are talking about the brand. we are talking about equality trophy asset. a lot of media companies and investors with a lot of money will take a look at this. manus: in terms of the bidders

it has got to be somebody with very deep pockets. run me through the potentials. >> one company we have heard looking at it is the german media company. that would be a good one to look into. other than that, other companies , french companies, european companies in the media space to u.k. companies to german media conglomerates. two north american, european asian, middle eastern. they are all going to take a look at this. manus: where would it fit best? that is the question. it is a great read. you've got to say. >> it is a great fit for both type of businesses.

it is true that pearson has been pushing big time in terms of their website. any company with great belief in online will try to buy it. manus: thank you very much for the update. our bloomberg deals reporter. thank you so much. if you have ever started up a business, you know how challenging it can be. but how about your own country? that is exactly what one man is trying to do on a small patch of unclaimed land between croatia and serbia. ed kiernan went to the free republic to see what it takes to start a nation. >> meet vid. he is the president of what he

hopes is the world path newest country. you don't get permission. you just do it. >> he founded it on a small patch of unclaimed patch of territory between serbia and croatia. >> anybody can use any currency whatsoever. there are only going to be voluntary taxes. the nation will be run by crowdfunding companies. >> it would be the third sovereign -- third smallest sovereign state. >> it is just like any other nation in the world. we already do have a government and we do have diplomacy. the croatian government decided that they would block off the territory from all sides.

>> they have raised over $45,000 through crowdfunding. the corporation has a claim and offered shares of one swiss franc apiece. >> i put up a facebook post about shares. they were sold out in 40 hours. >> this money funds the work of the liberland. they say they can outlast croatia. >> a.b. 70% of the entire border police, they are running out of options. the more they beat our settlers and activists, this stronger they make our movement. >> it is a movement gaining traction all over the world. >> we have registrations around

365,000. people from the united states russia. right now, if we excepted everybody, we would be larger than iceland. >> liberland may be a long way from becoming a real country, but to its founders, it is only a matter of time. manus: manusland has a bit of a ring to it. or maybe it isn franusland. francine will be back at the end of the week. you have health care stocks and little bit lower by novartis. stoxx 600. crude is jockeying for position at around $50. commodity levels have not been this low in 13 years.

morgan stanley says sell to u.k. and by some of the periphery. ok let's have a look at apple. this is going to be the stock that you want to keep an eye on in terms of performance later today when they deliver their numbers. it is all going to be up to the iphone. the watch, have you got an apple watch? we cover a broad church year but apple is on a different ticker. how will the watch do? how will the iphone do? take a look at novartis. it is the worst performer on the smi this morning. novartis has had problems in terms of competition from the likes of bosch and loan.

-- lomb. that is it from "the pulse." we are back tomorrow morning. we will do it all again and break down all the numbers. ♪

this is "bloomberg surveillance. tom: commodities drop to levels not seen in decades and australia confronts industrial and mining collapse. corporate america does better

than good cutting costs awaiting the return of true animal spirits. apple does not care that the watches a fail. they are making billions on your next iphone. good morning, everyone, this is "bloomberg surveillance." it's a grease free day? brendan: i would like to announce that i will buy the "financial times." i have $157 and i've got some backers and some ideas of what they can do. i am excited. tom: it is not a pink paper, it's salmon colored. vonnie: it's like "economist." brendan: it may be up for sale. tom: we will have much more on that but let's get to our top headlines --