francine: shanghai slump. china's benchmark index has its worst drought since 2007 amid concerns of a rally sparked by government intervention being unsustainable. manus: income from managing funds for the wealthy more than doubles. francine: and, drug deals. teva is said to buy a generic drug business for more than $40 million. welcome to "the pulse" live from bloomberg's european london headquarters.

manus: i'm manus cranny, and you are? francine: i'm francine lacqua. breaking news. it is a little better than expected. a lot of people were expecting this july number to be changed maybe a little pressure from greece or from the ongoing concerns about china. not so. better than expected at 108. manus: this comes in with five straight months of declines. people are saying it is beginning to look like the purchasing managers index for the whole of europe which just slipped a little bit but is still showing overall growth. this is three years off from when mario draghi said he would do whatever it takes to save the euro. good numbers there. francine: current assessment better than expected. expectations also better than expected. china's stocks have tumbled with the shanghai composite index falling the most since february 2007.

there is a concern that a rally sparked by government intervention is unsustainable. manus: caroline has all the details. down over 8% on the shanghai market. caroline: this is phenomenal. this equates to $500 billion knocked off the valuation of the shanghai composite. $500 billion. equivalent to three children -- 3 trillion yuan. let's check on who the biggest fallers were. it was about the iron companies, the infrastructure companies. the worst performers off by more than 10%. we saw across the board miners sinking. those related to infrastructure sinking. it is a concern that the government cannot crop this particular composite up. steps have been taken. the imf already criticizing these moves, we understand according to people familiar.

it is putting it back in focus. we were talking just a few weeks ago about a $4 trillion route that had happened across chinese equities. this sense of calm that prevailed over the last week has been shattered. a little bit of bad economic news. their earnings, industrial company earnings, were down in the month of june. when you are facing these economic woes the government can't prop it up. analysts and investors we've been talking to have said they think the biggest fallers today have been those companies that have been most propped up over the last few weeks by the government. think of what the government has done. 1400 companies with folded trading. they restricted shortselling. they suspended initial share sales. the imf urged china to eventually unwind the support. have they started to do that? is this why we are seeing the

selloff? of course this is feeding into the commodity route as well. the second biggest economy in the world and the biggest demand or of copper. copper is currently trading lower. oil trading lower as well. supply glut, one issue. demand side of the equation another. will china not be demanding quite so much fuel? this is playing into europe. let's check the stoxx 600. every single industry group is lower. in particular, it is tech at the moment trading lower, and financials. you've got to be keeping an eye on how this is affecting miners. manus: thanks very much. let's get into the conversation. harold joins us. he is had of asia equity strategy at hsbc in hong kong. let's try and make some sense of this. we have a market which had recovered with government intervention.

we have an equity market. here we are, the sting in the tail. down over 8%. how concerned should we be that these efforts by the government are running out of steam? >> clearly, if you talk about the feeling, this must be in. it shows that the confidence is still extremely fragile with regards to domestic sentiment toward equities. you can see actually that the markets are reasonably ok this morning. it was after one or 2:00 local time that we saw the selloff shock. maybe it is because of the week economic data, but that came out last week. sometimes, you just have data where it is not clear but it is just an accumulation of factors which can drive the market down. before you know it, you have

some self fulfilling prophecies and sentiment playing a role in this as well. francine: how concerned are you? i guess we should be more nervous because there's nothing in particular that points towards a route. it is general sentiment. is it likely that we will reach that level? herald: 2500, i think, is a bit too low. a couple of things. a lot of things have been pointed towards. it is not a very elegant way of trying to stabilize the market. if we look at europe and the u.s. and we look at the financial crisis, shortselling market intervention, it is not something which is unique to china. we have seen this in other markets as well. some of the fingers being pointed at china, it is not that they are unique in this regard.

we do of course see that quite a number of stocks have been suspended. they have to roll that back. the sentiment is still extremely fragile with regard to that. if we talk about china, for me there are three china's. you have the shenzhen index something like 80 times earnings. that clearly needs to come down. you have the shanghai index which is still expensive. we thought some value started to emerge. then you have the hang seng market in hong kong where valuations are much more reasonable, but it is being dragged down as well as the shanghai market needs to correct. there are three china's. there are pockets of china where valuations look reasonable. it is more outside china and in hong kong than in china. manus: you mentioned the three distinct parts of china. the shares in hong kong are the

ones that sound as if they are interesting to you. a lot of people are saying this drop has given them an excuse to not be long china. do you see this as an opportunity to buy into those hong kong shares? which areas would you think offer value if that is the word one can use? herald: it could well be in the near term. sometimes in these situations you have to keep calm and take a step back. there are certain theories in china, where growth will continue irrespective of the moves in the market irrespective of the general macro environment. think about for example, new energy. particular, the wind sector. we see growth coming through earnings growth as well. valuations for the h share stocks are not very high. you could look at macau, where valuations have continued to

decline. we see a little better news coming out. there are pockets of growth in china where i'm actually quite confident. it is just for the moment, the market is extremely volatile and these stocks are maybe being ignored. i believe there are opportunities for those people. francine: looking at some of the charts this morning, it seems that the capital outflows are accelerating to a point that some would call alarming. do you expect the government to intervene after the shanghai was down 8%? herald: difficult to say. i suspect with what happened the last couple weeks, since mid-june, that they might well intervene and get some state funds to do a little bit of buying. before we saw this h share market turn, march, april, may early june, the government tried

to intervene. they called down the market. it came with a couple regulations that made it more difficult for people to trade on margins and things like that. it is likely that they will do the reverse at the moment. francine: thank you so much. manus: here's a look at what else is on our radar. ubs has smashed its second-quarter earnings with a profit rise of 53%. income from managing funds for the wealthy more than doubled on the lower costs. the bank published its results a day earlier than scheduled after an incorrect report in a swiss newspaper yesterday. net income came in at 1.2 billion swiss francs up 53% on a year earlier, and beating analyst estimates. francine: fiat chrysler has been hit with a record penalty of $500 million by the u.s. department of transportation. it follows an investigation into

whether the company delayed acting on safety defects on trucks and cars. fiat chrysler has agreed to buy back more than half a million the alkyl's. effective suspension parts could cause a loss of control. manus: phillips the company spinning off a unit to focus on consumer health care, as reported earnings that beat analyst estimates. adjusted second-quarter earnings before interest taxes rose 27%. the company says it was helped by rising demand in north america, europe, and india. it is a different picture in china. >> we are quite cautious about china. we have seen a significant slowdown in our health care business. the consumer spending is still ok. slower than what it was before. francine: teva pharmaceuticals

is nearing an agreement to buy a generic drug business. that is according to people familiar with the matter. the deal could be announced as early as today. the acquisition would extend a wave of mergers that has swept over the health care industry this year. manus: the greek government is set to begin talks with creditors on a new bailout agreement. officials are due to start negotiations with their greek counterparts by tomorrow. they will discuss many policies the country needs to implement in return for emergency loans of up to 86 billion euros. it comes as capital controls and the shutdown of greece's financial markets enters its fifth week. francine: earnings season is in full swing and peaks on thursday in europe when 76 report. tex, the spotlight this week. manus: let's start with those banks.

on wednesday, it is barclays. what happens to that institution? thursday, we see deutsche bank. on friday, bnp paribas. francine: a lot of people at the top leaving. as wti trades in a bear market we get updates from the oil majors. bp reports on wednesday, total on wednesday, and shell on thursday. manus: finally, rounds two from the titans of tech. we get earnings from twitter and facebook on tuesday and wednesday. will they continue to run disappointing news that we saw from apple, microsoft, and yahoo! last week? stay tuned to bloomberg. we have all those reports, the earnings, the analysis, and we will break it all down right here. ♪

francine: welcome back to "the pulse." we are live on bloomberg tv and radio. manus: switzerland's largest bank, ubs, eclipsed estimates. francine: net income climbed to 1.2 billion swiss francs, up from 792 million the previous year. the result was published day earlier after the wrong figure was leaked in a newspaper over the weekend. manus: the chief executive told bloomberg that despite working

in challenging environments he's optimistic about the future. >> we have been in asia for 50 years. our strategy in asia is long-term. the prospects in asia and china are very important. you should look at the opening of onshore markets in the near future. i think it is really an engine for growth. francine: let's get more with chris wheeler, banking analyst at atlantic equities. great to have you on the program. thank you for hustling in. it is rising to the upside. chris: yes, there are some important positive points in numbers. if you strip out some of the actions, good net inflows of cash. equities in line with the u.s. market. m&a, not bad, also pushing back on costs. i think they will be pretty happy. manus: part of the reason why

anybody owns the stock is, the payout. he has a capital buffer. are we anywhere near peak capital building, and could they review the dividend even more generously to shareholders, or am i being too optimistic? chris: look at the model of the u.s. banks. we saw pretty decent results. the fed has doubled the globally systematic important buffer they had. these guys are already paying out in the case of goldman sachs, 81% of earnings. in the other banks, 80%, 60% in some cases. you can get there. the problem for swiss banks is there is some uncertainty around where they have to be on leverage. they've done a great job even on capital. i think they are being cautious, and rightly so. francine: we understand that it will be by the end of this year

that we may have new targets. chris: that is probably the case. they must feel they are almost there. they are doing so much at the bank, driving down deposits trying to get the leverage as strong as possible, but it does seem that in europe, we have still not quite got to where the u.s. is. there is a line in the sand and we know at what basis they are operating. manus: the whole world is revising their business model. barclays is in a state of change. deutsche bank is in a state of change. we ran through these this morning. he wouldn't answer me when i spoke to him this morning when i said, is this your opportunity? how do you use this moment of a state of change to your advantage? chris: sorry to keep going back to u.s. banks, but i do cover them. when you look at that, look at the market share they've been taking ubs, barclays deutsche

it is an opportunity. your point is well made. there is still so much flux. three new ceo's. that must be an opportunity for ubs to step up and continue to take share in the areas they want to play in. francine: as manus was saying, everyone is kind of shifting and changing their modus operandi. we saw credit suisse saying they want to be more of a ubs model, ubs having the largest private bank in asia. what can they do to be sure they remain on top when everyone is almost attacking it at every side? chris: that is absolutely right. if you are the wealth manager and you are not strong in asia you are not the wealth manager. manus: that is what he said this morning. chris: but the growth needs to be in asia. when you are the biggest, there isn't a big cadre of wealth

managers in asia as there are around the world. you have to train them and you are in danger of losing them to people who will pay up. what he has to hope is that banks are more disciplined and not just hiring his financial advisors. these guys are the number one team and will pay up because it will be ok in the end. i'm not sure it will be for the whole industry. manus: very quickly before we go, the china route and the federal reserve. there is a push and a pole. which is going to be the dominant theme for ubs? chris: i think it is going to be china. it is such an important market. let's just that away from investment banking, where they've done pretty well. if you are not strong in asia and you see wealth flows start to go backward, you definitely have a challenge on your hands. francine: chris, thank you so much for joining us. manus: coming up, a $40 billion deal. the latest on teva's potential

accord with allergan. ♪

manus: welcome back to "the pulse." francine: trv pharmaceuticals -- teva pharmaceuticals is nearing a deal to buy the generic drug business of allergan. manus: the deal could be

announced as early as today. the acquisition would extend a wave of mergers that has swept over the health care industry this year. francine: ruth david joins us now. ruth is one of the original reporters that broke the story on friday. another nice bloomberg school. well done. why is the allergan deal now? ruth: you know the guy come brent saunders, is a very acquisitive ceo. he really needs to focus more on branded health care. he is more of a branded health care man. the generics business which is slightly less profitable profit margins are like 50% compared to 80%, if he gets rid of that, that helps them focus on the branded side of the business. one thing to keep in mind is, they only completed the allergan acquisition and renamed themselves in march. this kind of lets him take a

step back and focus on what is going on with the branded health care business. for teva, it is pretty great news. manus: teva have been pursuing miler. is this saving face, or is it stepping away from that focus to knuckle down on this allergan deal? ruth: i think it is a bit of both.the they are the largest generics company in the world. they are thinking, we need to acquire to grow. here is mylan, where they've had an almost ugly battle more risks involved. if you look at allergan, the man who is teva's head of generics now used to be at the company. the risk is much less.

if you look at the fact that what allergan's generic business does in revenue is like 8.4 billion compared to my lan -- the price tag is almost the same. francine: thank you so much ruth david. ♪

francine: welcome back to "the pulse." we are live from bloomberg european headquarters in london. manus: ubs smashed second-quarter earnings. income for managing funds for the wealthy war than doubled. that comes a day earlier than markets anticipated. we will break away from those top headlines and bring you some breaking news. francine: on friday, we came out

with the scoop. allergan it was going to sell its generic unit. we were talking about it with one of our m&a reporters. this is great news for tama if they managed to buy it. we have confirmation. manus: part of the drive kind this is tax savings of about $1.4 billion. we have been covering this story. we are getting a breakdown. it's a two thirds cash and one third shares approximately. ryan: we were expecting this. we got all kinds of news over the weekend. they were going to buy allergan's generic drug business.

this is quite the acquisition for them, making the giant on the market even bigger. this really frees up mile and. mylan was originally the target. it was a very protracted and very unsolicited bid. teva had launched for mylan. they are free to pursue what they want to do. a lot of analysts think this makes sense. allegan this frees them up to be a branded drugs company. they make botox and they can continue to do that. the ceo shows more interest in branded drugs. the profit margin is much better in that area. it really makes teva a much larger generic drugs business.

we were expecting an earlier this morning and it has finally come. we are anticipating $40.5 billion. that is what they were willing to pay for mylan, that was not going to happen and it became increasingly clear at the end of last week. an independent fund block the deal. they are buying the generic drug business of allegan area that is the news this morning. francine: thank you so much with the latest on teva. we have china. we have teva. let's talk commodities. let's bring in how the air. -- heavy air. let's know straight to you. the whole question for the commodity complex is growth and supply. where do you see this?

china is slowing down. kevin: most of the things seem to be going against it. there are lots of concerns. we have had a poor economic data coming out. i think we shouldn't get too pessimistic. i suspect that as a result of this, we are going to see a greater effort by the chinese government to support growth. we've become positive on copper. one of the levers that the chinese government can pull is increase infrastructure spending. it's one of the things they have always done. that is starting to come through and could potentially be supportive. oil may be another story. old is not going to get much support her in there are some

pockets of optimism. francine: if we focus on oil, we are expecting them to report this week, what are we expecting from the big european lenders? javier: we are going to have shell and bp and the americans have exxon mobil. this is going to be down. quarter on quarter, we can have positive news because the refining sector is doing very well. the demand for oil products has skyrocketed in the united states. they have managed to drive a record number of miles. in europe, the news is quite positive. the economies are turning around in the big european countries. the demand had been contracting. that is something that we have been writing about for many years.

this year, we have positive growth. that's very good for refining. they are doing very well in refining and that is supportive. manus: that's the plus side. it's good to find something that is remotely constructive. the market, we are back in a bear market. the rising number of rigs despite the crashing price of oil and the long positions in the market, it's not as long a since december 2012. kevin: one breaks but is gasoline. the rest is still a scene of desolation. supply is just too much. when prices first started falling, people focused on the u.s. and what was happening there with shale oil and how that would responded to lower prices. that growth seems to have stopped. that's a good thing. the problem is opec is massively

increasing its production. they said they were not going to cut production in november. they are going to increase production by a couple million barrels a day. that has negated the slowdown in europe. demand apart from gasoline is pretty poor. one thing i would be concerned about is how long these refining margins are likely to last given the weakness on the demand side for everything else apart from gasoline. francine: what about trading? javier: it was very strong in the first quarter. bp made $400 million more. that was not to push the profit number above the market. quarter to is not going to be as good. the market has been less volatile. oil prices coming down the key

is going to be what the company can do for the second half of the year. you're going to see an announcement on cuts and we will see more people fired. manus: our credit ratings coming into pressure? it's all fine and nothing to worry about? when does it become a concern? kevin: people are starting to get concerned and the cost-cutting is coming in. that has become a big focus. we are likely to see more of that. we have seen an article about 200 billion -- $200 billion worth of projects being canceled. with all of this cutting, at sun stage in the future, we made find that the supply we need if the demand slows may set up a

much more volatile market in the future. we are still battling against this week demand. the credit ratings may come under review. this is a rather bleak environment. francine: thank you so much for joining us. manus: ok. the greek government is set to begin talks with its creditors on a new bailout agreement this week let's get more with nicholas. it's monday morning. here we go. creditors are due to roll back into town. how do we think the week is going to play out? they are not going to be welcome with open arms, are they? necklace -- nicholas: the two sides have agreed on logistics. officials from the central bank and the european commission and

the imf will begin talks tomorrow with the government. this is a memorandum of understanding. it's a very long and technical document detailing all of the conditions that greece needs to fulfill over the next three years in order to gain access to loans. this is going to be a challenge for the government. those documents include lots of us dirty conditions and painful economic overhauls the greek people blame the memorandum for the woes over the next five years. officials from the greek government say it's going to be difficult to agree on a memorandum over the next two weeks. before a payment of 3.2 billion euros becomes due. if they don't succeed, greece

will have to ask for a new loan from the european union in order to avert a default on the ecb next month. francine: is there still a chance that everything can fall apart in august? nicholas: of course. these memorandums of understanding include conditions from the rules of bank capitalization to conditions relating to the pension system. this is a very sensitive issue for the greek government. we've already seen a report, a mutiny from governing party lawmakers. this mutiny intensifies and spreads through the ranks of the governing party we could see

snap elections as early as september. this will derail talks between greece and its lenders and it will be back to square one for the summer is over. francine: thank you so much. he is our athens bureau chief. manus: obama shakes a leg in africa. francine: that is some pretty good dancing. manus: he moves. francine: technology is changing the way people across the cotton and can follow the president stripped in africa. ♪

francine: welcome back to "the pulse." we are at bloombergs london headquarters. manus: let's get you up to date. a 25% increase in first quarter earnings. net income rose. the company says it has been booking strong. francine: there is an animated flight by pluto gathered by the spacecraft earlier this month. it reveals enormous ice flows and temperatures as low as -220 degrees celsius.

scientists think it's soft enough to move like glaciers on earth. manus: president obama has praised economic growth in africa. he criticized corruption. he saluted kenya's status as a safe harbor in africa. he is arrived in ethiopia for a two-day state, the first american leader to visit africa second-most populous nation. francine: more than 600 million people lack access to electricity. most rely on kerosene to light their homes. solar powered technology is changing that. manus: bloomberg has been finding out how.

> we are selling the system. it's a battery and it's linked to the solar panel. you can see that. my name is julian mitchell. the thing about kenya is it's a very large territory. it's very rural. the grid hasn't spread everywhere to give electricity to people. we are leapfrogging the grid at the moment. we are coming out to these places and weaken get this kit and we can help you purchase it at an affordable rate and you can have electricity this evening. kenya is the home of something

sophisticated. we link up a mobile telephone with this device. you have a monitor on your phone. we send the device and the credits you just paid. we ask people to pay $.40 a day. that gives them power and light for that day. they then on the system after $200. we've got 30,000 units. i could not give you an exact number. the number goes up so quickly. we are selling 500 units at the moment. there are several million homes that we can electrify in kenya. developing the market. i'm not sure. to get power at two rural homes is a long way.

the only real way could make that profitable from the electric company is through subsidies. this technology does not require subsidies. this is paid for by the client themselves. i think we will see an increase in use of solar. i think the solar parks will get better and better. the rural population will increase in the type of products we can give to them. i think they are going to find that they don't need the grid eventually. francine: all right. it's always good when electricity comes to the most remote parts. we have breaking news about teva . again was selling its genetic unit and now that has been bought by teva. that has been confirmed. manus: they have raise their

guidance in terms of their earnings per share. that was the first thing. they are up from five dollars. they are the biggest maker of generic drugs. they are going to have cost savings. that is going to come in at $1.4 billion. it frees them up. they walk away from pursuing mylan. it's all about yorkie area. francine: this is good for teva. they can walk away from mylan. we will have a little bit more thinking behind their decision. for out again, they can focus on the generic business. it also means that they've got a hefty premium and they are pleased with the price they got. manus: the rest of it is in stock. francine: where can you find it

♪? we go on the hunt next. ♪

manus: welcome back to "the pulse." we are streaming on your tablet and your phone. francine: these are many of the cities that are going to have

the world's best pizza. london is on the coming. manus: we have been to a few of them. we sent our food critic richard to find the top italian chefs. we had to find the best slice in the city. >> i am the chef at this vehicle place. today, we did something different. i am going to go with richard to find the best pizza in london. it looks good. this is a new york size. this is mozzarella. very good.

it feels like a lasagna pizza. >> i don't know much about new york pizza. i will give you five. >> the first time for me having new york pizza in london. >> cheers. >> this is really good. how should the crust be? >> bubbly, but crunchy. this pizza makes my day shiny.

pizza is a happy food. i feel like i am back home. i will give this eight out of 10. get that. this is really good. this is good quality pizza in london. this is another eight out of 10. the quality of pizza has improved a lot. i'm sure they will get as good as italy in 10 years. we should stop making different

kinds of pizza. pizza is italian and let's not forget that. for those listening on bloomberg radio,

manus: china's benchmark is it's worse since 2007. francine: bank bonanza. ubs smashes profit estimates. manus: drug deal, teva is buying the generic drug business for more than $40 million.

good morning to our viewers in europe and a warm welcome if you are waking up in the united states of america. this is "the pulse." china is one of the biggest stories on the radar today. the stocks tumbled. caroline: these are phenomenal moves. we are looking at how much we sank in one day on the shanghai copper. -- composite. we are off 8.5%. that means $500 billion. wiped out in one day in terms of market eluate should. that is 3 trillion wiped out at the moment. we are back to worrying about

whether it can be stemmed or healed the government. think of the dramatic steps the government has already made. 1400 companies were halted in terms of training. you had major soul -- shareholders barred from selling. you've got a stop on initial share sales. the government is doing everything it can. we saw a route these are the ones were propped up by the government. we saw $4 trillion eradicated from the market. we started to see some calm come back and today, the panic is set back in it. can be government do enough to stop the selloff. these are companies in significant amounts. we are seeing the companies exposed to infrastructure

sinking the most. many have been propped up by the government. many are speculating the government was easing off on its work to prevent a selloff and look what has happened. you need the government. when you get the chills of what is happening in the economy, a shiver goes down the spine that corporate earnings were falling in june. it was enough to scare investors and the economy is having problems accepting the commodities market. it is down 7/10 of 1%. this is having ramifications across the rest of the market. on oil, u.s. companies are drilling more. we are getting more rigs open for the third week in a row. on the demand side of things china is not going to be powering quite as much. they will not be demanding oil quite as much. this is felt across the world.

we are watching this from europe. currently, the stocks are off by a percentage point. oil and gas is foreign poorly. the miners are falling in china. we leave you with the fact that 75 stocks dropped for every one that rose on the shanghai composite. that is equivalent to $500 million. manus: let's bring our -- in our top asia analyst. what a day of riding the market. is there any specific reason? is the government stimulus not subsiding? what is the feeling on the ground? tom: i think the obvious cause today is disappointing numbers for industrial profits are in

they came in at -0.3%. that was down from 0.6% gain in may. that's not a huge movement. this is not something that gets a massive amount of attention in china. it comes at a time of heightened concerned about growth and it comes hard on the heels of that disappointing reading for the inflation flash, the index last week. i think that has compounded concerns about weakness in the real economy. a little bit more spec intimately, there are -- spec italy the international monetary fund may be exerting pressure on china to step up from its interventions. they do not pay huge amount of attention to what the imf says. this year, they are getting for

the basket. that may mean that china is paying a little bit more attention to what the imf has to say. francine: is there rick -- real link? what does this mean for the wider economy? are we going to see more of this? does it mean it's a lot worse in china? is it just capital outflows from the market? tom: i think the concern the policymakers have is we're going to see a negative spiral a self reinforcing feedback loop. the weakness in the market will trigger weakness in the real economy and more use of weakness deals another blow to investor sentiment. industrial profits is where we

can see that kind of negative feed mac -- feedback loop. when the equity markets are on the way up, industrial profits rise with them. now the equity markets are on the way down and that's one of the reasons we are seeing weaker industrial profits. i think it's that negative feedback loop between week markets and a week real economy. this is going to be keeping the policymakers awake at night as they think about whether it's time to take more steps to stabilize the market. manus: tom, thank you for putting that in context force. francine: it's official. teva has acquired al again in eric's. -- generics. that has swept over the health care industry. ruth david joins us with the

latest. she was part of the team that broke the story that allergan was looking to sell. give us an idea of why they are doing this now. ruth: the ceo is a guy known more for his expertise in branded health care. this will give him a chance to focus on that. the generic business as slightly lower profit margins. for teva, it's great news. it gives them more bargaining power. they are the world's largest generics company. when they are sitting across the table from governments and companies, he gives them were negotiating power. this deal has been so much smoother compared to the acrimonious process with mylan.

manus: this was going to be filled with acrimony. they are saving $1.4 billion from this deal. talk us through some of the nuances you have seen so far. ruth: they are going to spend most of the money in cash and the rest in stock and there was some chatter about this not being in antagonistic deal. the offer from mylan was similar numbers. when you look at how much they make in revenues it's $6.5 billion compared to $8.4 billion. it seemed like a slightly bigger is this and they are paying a lower price. teva is a former allegan command. it gives mylan a push for its

acquisition. maybe we will see more deals in the weeks to come. francine: this goes to the point that health care and m&a have gone hand in hand this year. we may see more the next few weeks. ruth: we hope so. i am sure we will. francine: thank you so much for the latest on teva and the abandonment of the mylan deal. manus: let's take a look at the rest of the radar. ubs smashed earnings with a rise of 53%. income from managing funds for the wealthy has doubled on lower costs. the bank published its results a day early afternoon correct report in a swiss newspaper yesterday. they were up 53% from a year earlier and beating analysts estimates of 915 million swiss

franc's. francine: chrysler has been hit with a record fine. this follows an investigation if a delayed acting on safety specs on trucks and cars. they have offered to recall half-million vehicles. they had defective suspension parts that could cause a loss of control. manus: phillips has recorded earnings that beat estimates. this is just the second quarter earnings. it rose 27% to 501 million euros. they have rising demand in north america. it's a different picture in china. >> we are quite cautious about china. we have seen a significant slowdown in our business. the consumer spending is still

ok. it's lower than what was before. francine: the greek government is set to begin talks with creditors. they are due to start negotiations with the greek counterparts tomorrow. they will discuss the policies the country needs to implement. it comes as capital controls on the shutdown of the greek financial markets in a fifth week. manus: earnings season is in full swing. that is when 76 on the report. we are going to talk about banks and oil and u.s. tech. it's going to be a feast of results. francine: let's start with the banks. we had ubs this morning. manus: west texas intermediate

is already in the bear market again. we will get updates from the oil majors. shell on thursday and the u.s. on friday. francine: round two from the titans of tech. we get earnings from twitter and facebook. will they continue the run of disappointing news that we saw from apple and microsoft last week erie make sure you are staying tuned. next week we start all over. we have two weeks of earnings to go. manus: the swiss bank reported strong earnings. we will speak to the ceo. stay tuned for that conversation. ♪

francine: welcome to "the pulse." join us over the phone from zurich is the ceo. great to have you on the phone. give us a sense of how disappointed you are that the profit increasing definitely because of how you manage the

money but your share prices down. guest: i am responsible for the earnings. we will see how the markets adopt to our results over the next few days. we think long-term. we are not worried. francine: you think they have missed understood something? the share price is not off by that much. are there concerns about asset management in general? what are they concerned about in your figures? guest: so far the feedback has been very construct of what we talked to analysts and research people. they have a strong appreciation of our organic growth. they feel happy with the progress we have made on operational leverage and they appreciate our capital management. our earnings are up 60%. we will see how the results sink into the market over the next two or three days.

it's too early to tell. francine: we have had reports from ubs. we heard from credit squeeze last week. the primary target is switzerland. do you feel there is a danger of it coming overcrowded? guest: i am very positive for the long-term prospect of the swiss financial sector. you have a unique position to be one of the winners because we have a unique combination of first-class advisory. we have long-term independence. we will profit from that process. francine: how much d you have four m&a? is there anything else on the table? you have a treasure trove you are willing to spend. guest: our firepower is around

500 million swiss francs. it's all core capital. we have a very conservative balance sheet that we could leverage. there is enough firepower under our belt. we are hoping to use it. we want to be cautious and disciplined. francine: do you feel you might be a takeover target? we have a lot of big groups shopping around for asset managers. guest: it's off the table. we are committed to our independence. we have strong numbers. we have strong organic growth and we have a very independent course. it's obviously a huge challenge. the consolidation of our assets

have taken away some assets from us due to the changes in the exchange rate. thanks to our strong organic growth, we were able to offset that. our cost/income ratio is down. it's under control. it's a challenge we have to manage very tightly. francine: we saw this huge route in china. we are nearing a normalization from the fed. as the seo of a swiss bank what concerns you? guest: what concerns everybody is the way china has for the world markets, we work -- watch the situation closely. i would like to mention that we are the provider for our quality growth boutique in new york. we are one of the emerging products.

we have always argued that bottom-up investing is the only way to do investing in emerging markets and frankly, volatility like today is previous right. francine: thank you so much for joining us. manus: coming up it's another swiss bank in focus during this time it is ubs. they published second quarter profits a day early. we are going to find out why. what the bank chief executive says about the appointments -- importance of china. ♪

manus:: welcome back to "the pulse." ubs the clips earnings estimates , a 53% rise in profits in the second quarter. that was the previous year result. it was published a day earlier. the wrong figure was leaked in a swiss newspaper over the weekend. the chief executive told us that despite working in a challenging environment, he is optimistic about the future. guest: we have been in asia for

50 years. our presence is a strategic and long-term and a prostate -- prospect that is very important. if you look at onshore markets in the future, it's an engine for growth. manus: for more, let's bring in ryan. he has been looking at these numbers. this is a blockbuster set of numbers. was he that optimistic? ryan: i think it was reserved outlook. he is confident in the future. this is a private wealth management story. income was more than double what it was this time last year. for the private wealth management unit, this is the second best order since 2009. they beat estimates. as you well know, there is a big time wealth manager.

they are getting more exposed. there was a lot of volatility in equity markets and that help them. it's interesting. the shares are still down. all the indices are down except for -- also, citigroup says some of the reason these they did so well were a lot of one offs. one of the issues was that new money. francine: this is basically the money that attracted to wealthy clients. this is because of the asians? ryan: primarily. they have new money coming in. why? they change their pricing on a lot of accounts. the bank says we knew that was going to happen. francine: ryan, thanks so much.

manus: we are going to talk about greece. ♪

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francine: welcome back to "the pulse." we're live from bloomberg's european headquarters. manus: we have top headlines. there is a selloff in commodities continuing. there is a big week for oil with many of the major companies reporting earnings. that contributed to the commodity index expanding a low. francine: ubs smashed second-quarter earnings. that is income from managing

funds for the wealthy doubling. they published earnings a day early because of incorrect reporting in a swiss newspaper yesterday. manus: the greek government is set to begin talks with creditors on a new bailout agreement at they are due to start negotiations with the greek counterparts by tomorrow. they will discuss many policies that the country needs to implement in return for emergency loans of up to 86 billion euros. it comes with capital control. francine: on to the main story of the day, china. let's check in on the markets. it's been quite a rout. jonathan: the dax is down 8/10 of 1%.

a pull back on the periphery, we are down in spain. if you look to the bond market the spread is widening. there are some risk aversion in europe. last week, the worst week for the stoxx 600 and couple of years. that's a little bit of a bounce back this morning. as you say, forget all of this. go east and had to china and look at this. it is down 8.4%. 8.48% this is the second largest economy of the world. this is remarkable. it's the biggest drop since 2007. industrial profits are down. forget the data, this is an economy that is intervening so heavily it's a managed equity market. ipo's a been suspended and people have been told they can't

sell. the big stockholders can't sell for six once. we have had rate cuts. the market still drops like a stone. that is contributing to risk aversion here in europe and he commodity market slowing down in china. this is fueling the selloff in commodities. this is a bear market. this is another 6/10 of 1%. this is a huge week for the people that hold the stuff out of the ground. they are reporting through the week and there are some big earnings releases coming up. i want to pull something out for you. this is the weaker dollar, a stronger euro this morning. i bring up euro swiss. straight days, they have traded stronger despite the risk aversion. this is a weaker swiss.

we had 2/10 of 1% higher. this is the longest winning streak since 2013. the swiss national bank might have a smile on their faces. manus: thank you very much for putting that in context. surveillance will take over and 25 and it's rude tom keene joins us. this reminded me of a dirty martini. it's like the chinese market and it's a murky market. tom: i like the idea of murky. that is what we are going to focus on it, not just the chinese equities lunging. it was a route. what we have seen this morning is the effect. we move on to a perfect day to

speak to the ambassador. we will look at iran and isis and the presidents trip in ethiopia. we will go to china and the global commodities. we will look at the nation's budget as well. manus: tom in terms of the greek story as well the creditors are going to arrive in can i use the word calm? will the markets move on? tom: i think it's the people that are there. they are back in town. if there is a calm, i think it will be deceptive or secondary to what's really going on it which is the back-and-forth of their real economy. what i would follow in the calming -- coming weeks is the

economic data and how the real economy dovetails with all the financial backing north and -- back-and-forth. manus: thank you. francine: let's get more on this with nicholas. we thought they had agreed on a bailout. they are back in athens. why? nicholas: this is the real work that starts now. they are negotiating the memorandum of understanding. this is a technical document. this details all of the policies that greece needs to implement over the next three years to get access to emergency loans.

this is going to be a challenge for the government. these are dozens of policies that will include the pension cuts and tax hikes. the governing party complained about this area if the two sides do not manage to agree on a number and him of understanding, this is a precondition, greece will probably need a new bridge loan from the european union in order to avert default on bonds held by the ecb next. this is going to be a challenge for the greek prime minister who has seen already a mutiny from his own party. manus: what is the chance that this could all fall apart in august? the landscape is not set for a warm, engaged process.

nikos: no. it's going to be difficult. he has already seen more than 30 of his own lawmakers revolt against his. if the mutinies rads further, -- spreads further, we may see a snap election as soon as september. the negotiation process for a new bailout will fall apart. we will be back to square one. the drama is not going to end anytime soon. francine: thank you so much for the update. he is our athens bureau chief. kent pizza in london ever rival italy? we will discuss that.

♪

manus: new york, chicago naples. there are many cities that claim to have the best pizza. francine: london is on the,. we sent our chief food critic

out with a top italian chef to find the best slice in the city. they are also live in the studio. let's see what they chose. >> i am the chef at this beautiful place. this is my new home. today, we are doing something different. we are going to go in search of the best reads it in london. -- pizza in london. this looks good. this is new york size. this is mozzarella. it's really heavy. there is a lot going on. it feels like a lasagna on a pizza.

i do know much about new york pizza. i will give this a five. that was the first time for me having a new york pizza in london. that was interesting. >> should we talk about this? >> chairs. >> this is really good. >> how should the crust be? >> bubbly but crunchy. this is a classic pizza. this pizza makes my day shiny. pizza is a happy food.

this is italy. i feel like i am back home. i will give this eight out of 10. look. try that. look at that. this is really good. this is good quality pizza in london. this is another eight out of 10. the quality of needs a has improved a lot. if england carries on, they could be as good as italy in 10 years. we should stop saying your pizza or bombay pizza. pizza is italian. let's not forget that. francine: they join us now.

it looks like you had fun. i am so excited that we are sitting on a massive pepperoni pizza. it doesn't get better than this on a monday. thank you for doing that. were you supply -- surprise by the quality? >> when i first came, the pizza was bad and now it is fantastic and they needed of time it, but they will get there. manus: in terms of the restaurant, it looks like you have a lovely day. as you went around, what stands out? it's not just about the pizza it's the ambience and the place. >> to places stood out for us. one was home slice.

it's incumbent gardens. it's very buzzy. you saw some pictures. then there is pizza pilgrim. they were surprised to see us. they really took care of us. it was a friendly ways. the pizza was fantastic >> to british boys go around italy and bring it back to london. i was impressed. this was the best pizza of the day. francine: what's the secret to great pizza? we have all tried it at home. >> you need an oven that keeps the temperature. pizza is a simple food. don't do too much. best oil best mozzarella. it's about quality. manus: where does london stacked in terms of pizza? everybody raves about new york.

where do we rank in terms of the global pizza? >> i think he will put us ahead of roma. but behind naples. >> if you compare to london the quality is really high. the pizza i tried in london was spot on. i don't know new york that well. francine: you have a new place. we draw parallels between working in a kitchen or opening up a new place. you have to find talent in funding. what's been the biggest concern? >> we are now open. the biggest challenge is finding

staff here at you find everything you want in london. finding the right staff and people is the main challenge i would say. francine: thank you so much for joining us. manus: here are some of the other top headlines. ryanair reported an increase of first-quarter earnings. the company says it's been a good summer for looking. francine: nasa has released an animated flyby of pluto based on information gathered. their is an enormous ice flow and temperatures as low as 220 below celsius. it is soft enough to move like grit -- glaciers unearthed. manus: president obama is in

africa. he warned leaders about tribalism discrimination and corruption that is holding the continent back. he saluted kenya's status as a tech hub in africa. he arrives in ethiopia 48 two day stay. he is the first american leader to visit the second-most populous nation in africa. francine: solar powered page ago technology is changing africa. we have been finding out how. >> this is a battery with a

control unit. it's linked to the solar panel. my name is julian mitchell. the thing about kenya is it's a very large territory and it's a very rural economy. the grid hasn't spread everywhere to give electricity to people. we are leapfrogging the grid at the moment. we're all the way out in these places. we can buy this kit and help you purchase it and afford it and you can have electricity this evening. kenya is the home of mobile money. we link up a mobile phone with this device. you have money on your phone. we send the device and the credits you paid your it we

asked able to pay $.40 a day. that gives them power and light for the day. they own the system after $200. we are across kenya and uganda. we have sold 200,000 -- 230,000 units. the number goes up quickly. we are setting up 500 units a day. there are several million homes we can electrify in kenya. there is a lot of focus on developing the market. will the grid ever get here? i'm not sure. to get power out to the world homes, that is a long way. the only real way you could make that profitable is through subsidies. this technology does not wire subsidies.

this is paid for by the client themselves. we will see an increase in use of solar and the products will get her and better and you will find the rural population will just increase the product we can give to them. i think they're going to find they don't need the grid eventually. manus: ok. we are going to catch up with hans nichols. i wonder what can a reception they are going to get. ♪

francine: we have a little bit of breaking news. they can ask citizens what they think. manus: that might be the summer of next year. in the meantime, let's take a look at hans nichols is standing by. that's an interesting one in terms of the politics to get a deal done earlier. hans: it's clearly an effort by officials to bring you to brussels to have you in francine spend the next few months in brussels.

there is still a long way to go between the u.k. and the eu have any agreement. this seemed like a's decorative question. most politicians don't answer hypothetical questions. mr. osborne did you now we have the possibility of a referendum on june 2016 before the u.s. presidential election. what you do? which you cover? francine: luckily we have enough reporters to cover both. hans: we are going to see whether or not the government in greece comes up with enough exceptions that are satisfying to the ecb. they rejected their efforts to reopen the market today. it may be open later in the week. it depends on what exceptions and protections they have for the great tax are probably traded. francine: thank you so much. that's it for the pulse. manus: stay tuned to bloomberg

tv. surveillance is up next with tom. that's it for us. we're back tomorrow. francine: you can all us on twitter. ♪

announcer: this is "bloomberg surveillance." tom: china plus stock markets reverse. petro trying -- petrochina kleins almost 10%. will government actual sale?

commodities weaker as well this morning. this week, will oil find in bid? and the iran deal will not stop the spread of nuclear weapons. richard haass on the council of foreign relations. this is "bloomberg surveillance ," live from our world headquarters in new york. it is a busy monday, july 27. i'm tom keene with vonnie quinn and brendan greeley. brendan, what are you focused on this morning? brendan: here is what is significant. the shanghai composite has dropped more than that china's index. the industrials are suffering more right now than the smaller companies that were suffering in the drop for. tom: many of them down as much as 10% this morning. we will go to jon ferro in asia and moments. here's vonnie quinn. vonnie: we begin with china. the benchmark shanghai composite