caroline: china's of stock swing. trading in shanghai after shares fell more than 5% after the biggest one day drought since 2007. crude extends declines in a bear market. how energy giants are dealing with low oil prices as they release earnings. troika talks starting in greece as capital controls and the shutdown of the financial market into their fifth week. plus, the not so secret exit plan. -- grexit plan.

welcome to "countdown." i'm anna edwards. 6:00 in the morning this tuesday. let's start with the oil story. two things to talk about -- we are back in a bear market once again and we will come to that chart in just a moment. statoil is the other thing -- major oil is reporting numbers. second-quarter adjusted net income is coming in at 7.2 billion norwegian krone, ahead of the estimate. the net income bottom line number looks much better than markets were looking for. we will get further into the dividend story as we go through the morning because that could be some interesting stories. q2 sales -- once again above the estimate. they are talking about how much

of an impact the maintenance cost are having on the business in the 2015 number -- they talk about maintenance being 45 million barrels per day. it is in line with the overall 2015 trend, what they expect to see in the third quarter. they also say they will declare a quarterly dividend in u.s. dollars from the second quarter. plots to talk about on both dividends when we speak to the ceo of the business -- we will be talking to the ceo of statoil, first here on bloomberg, how they are doing today. that is coming up in just a little while. that brings us to our twitter question of the morning. willy did in oil prices be the cause of more and and in the sector -- more m&a in the sector? we have seen the bear market

back for a second time -- will that drive another ways of m&a? it is a contentious subject. three minutes past 6:00 your london. over to china now. after stocks saw the biggest one-day route, the chinese government has kept stakes in place. juliette? juliette: good afternoon, anna. good morning, rather. we've had another update from the government -- the chinese government is saying that they have conditions for healthy stock market development but after we have seen that big selloff yesterday and that 5% plunge, that these government controls one working. we have had a little bit of a comeback -- the second composite came down by 1.5%. there is positive movement in banks, giving support to the market, and we have seen shares listed in hong kong rebound from

that selloff yesterday, down 1.3% at the moment. you can see a little bit of positive momentum. we are seeing quite the selloff we were seeing in the early session in china, but as we head into the afternoon session it is still holding onto weakness. a couple different calls coming through -- we have had hsbc saying that the route they are in is a buying opportunity. at the same time, some analysts are saying there is another 14% fall to go for china shares. let's look at the main movers in china and on the hong kong market. ibaidu is forecasting that quarterly sales will miss estimates, that's china's biggest search engine but it has been weakening the domestic economy in china. it's not listed in china, but let's look at the stocks that are -- significant selling pressure in early trade

after announcing it would celestica delta airlines. we at one point saw china shares in shanghai fall to the 10% daily limit. they are down 2% shares down by 4.6%, and we still see weakness coming through in mining prices. petra china is a stone that we have been watching closely -- consider this market support fund. let me start with it, up 3.7% a turnaround that we have seen in hong kong this afternoon. shanghai is still weaker, down by 2.2%. it is helping to support that route, but as we mentioned, it has been another week session

following that they can drop yesterday, the biggest drop on the shanghai composite since february, 2007. this two-day fall is now the worst we've seen since before the government intervened in early july. anna: thank you very much. juliette saly with the roundup of the market. let's return to the theme of oil, where we started the program. earnings from statoil at the top of the hour beating analyst estimates with an adjusted net income of 7.2 billion norwegian krone. here with more is javier. great to see you. great to look ahead in terms of what we are getting here. these numbers are coming in better than estimates -- is that a sign? javier: i think you are absolutely right. it was the theme of q1 when it was very conservative, seeing a big drop in oil prices during the first quarter. analysts were expecting of a

drop and they were surprised. this is already indicating that it could be to conservatives, and we see statoil beating the estimate and bp will have reports and 50 minutes in the market is looking at $1.7 billion for adjusted income, and we could see a higher number. anna: what are investors asking management to do next? javier: i think the focus will continue -- there has been a huge focus on cost cutting. i think they are delivering there. they have been able to contract suppliers to get a cost resduction and that will be what investors will be asking. anna: it's interesting to talk about m&a with statoil.

may 11, the ceo is talking about how acquiring barrels might be cheaper then exporting. we have a chart of the year to date showing weakness. this that going to drive -- javier: you're absolutely right. the statoil ceo that he thinks buying a barrel as much cheaper today than trying to drill. the total has already passed shale properties, and i think that as we go to the end of the year, that oil price will continue to go down and it will put pressure on shale producers in the u.s.. it could be one of the players to look out. anna: they have declared a dividend this morning, 1.80 krone for the quarter.

they were talking about the capital expenditure plans. i know one of the analysts over in norway was talking about whether they could keep up the dividend. javier: i think that is a question for the whole sector not only big oil companies. can this dividend to be sustained? so far what we will hear will be very important to bp later today and shall on thursday. -- and shell on thursday. more importantly, the company's have received many assets. they have big infrastructures and supply lines that are appreciated, so they can put that on the market. sticky question for the oil companies is if the oil price remains as low as it is for the next two years, the big question for dividends will appear. anna: bp is reporting and 50 minutes -- what will be the key focuses for you? javier: for me, the key question

is how well refining can do. bp can be the best the first indicator of learning seasons for other companies, for how well the integrated model works in the second quarter. it works in the first quarter. refining was outperforming expectations of analysts. second quarter it will be the refinery sector that will be delivering. another question is obviously the settlement. they will take a big hit in a non-adjusted income -- we will see atit. anna: great to get your thoughts this morning. as we had to break, here are a couple of offense we will be keeping our eye on today. u.k. gdp is out at 9:30 london time. it is said to have regained some traction in the second quarter, according to economists. the fomc starts in washington

d.c. as an interest rate decision is due tomorrow. it's unlikely that the fed will move but members may signal intentions about that crucial september meeting. we will talk about both of those things on the other side of the break analysis of the global economic seen. coming up, how john yanis varoufakis planned a grexit. ♪

anna: welcome back. you are watching "countdown" here on bloomberg. 40 minutes past 6:00 here in london. there are the stories you need to know this morning. another volatile trading day in china. the shanghai composite is down around 1% right now after sinking as much as 5% and gaining 1%. the index dropped more than 8%

yesterday amid concerns that the government's efforts to prop up shares are unsustainable. volkswagen has surpassed toyota to become the biggest carmaker i delivery -- by delivery. car making has accelerated at the fastest pace in five years. the company is one step closer to becoming the world's largest automaker. oil declines in a bear market amid signs the global drought will continue. they closed 20% lower than its peak in may. investors are weighing the prospect for a fed rate rise as u.s. policymakers meet today and give us their verdicts tomorrow. let's get more on the commodity story. we are joined by andrew, the center economic advisor at the npc -- a warm welcome. let's start by talking about

commodities. how do you look at the commodities space at the moment? andrew: we are going through a fairly weak point in the commodities cycle, and that is driven a lot by slowing growth in china, and some of the other emerging markets that were driving up commodity prices in the past. but i'm not sure we should look at it to negatively in terms of the economy. a lower oil prices good for many -- price is good for many countries, and also the europe and the united states. it's just that it takes time for that affects to come through. i have been expecting in the second half of this year perhaps not so clear in this quarter that the effect will be more noticeable in western economies. it will be interesting to see whether we get counterbalancing good news from the west to offset the decline in the oil price. anna: that all sounds very sensible.

lots of people said that about the united states at the start of the year, didn't they? they said it was going to be good for the u.s. because people would go out and spend more the pumps -- but in the end they ended up saving more than people thought they might. you just have to wait longer? andrew: and economics, we talk about uncertain lag. we saw this in the 1980's when the oil price fell. the people most directly affected tended to respond more quickly, and the consumers respond more slowly. it's a reversal in the oil price goes up. i think we just need to be a little bit patient and not be looking -- i would say about a year from when the oil prices started falling, roundabout september last year -- before we see more effects. anna: this sets us up for an

interesting story in the second half of the year around commodity currencies, commodity driven economies. we've seen some weakness in some of those -- in canada, in australia. do you think that will be a story that gains momentum? that those parts of the world will struggle because of the nature of their economy, being oil exporters? andrew: yes i think we are already seeing that. there are other factors with russia, they are a big oil producer. brazil is also a big commodities producer. canada had significant downgrades and they are expecting to go 1.5%. we shouldn't expect to see no effects from the oil price fall but we have to look at the other side of the equation as well. the big story for the next couple years is a number of factors that could be favorable for the western economies. with europe coming out of the doldrums, the united states -- i

don't think we should expect strong rates of growth. this is the new normal 2.5% with unemployment still coming down. anna: what is the new normal look like in europe? you have written recently about how eastern europe has exceeded expectations since the downturn. there have been a number of drivers that have driven europe into a stronger position in its most recent recovery. do you see that as being sustained? is that something we should look to? andrew: i think we need to look at the european economy as a whole at the weak parts of it like greece at france and italy not being the dominant elements. northern europe is the dominant element. you have the six fastest-growing eastern european economies, including: and slovakia -- including poland and slovakia, a $1 trillion economy.

eastern europe as blocks a bit off the radar but that part of europe has been doing well. germany hasn't been growing spectacularly but it is expected to grow. the united kingdom could be the leading g-7 economy. there are quite a few blind spots. anna: we will talk plenty more about the u.k. through the broadcast. andrew stays with us. let's turn now to africa. barack obama toward the eastern region. kenyans economy -- kenya's economy is becoming a starter begin. it is working with corporate partners to incubate more than 150 tech startups that have created over a thousand jobs. bloomberg spoke with julianna ratiche about the scene. . julianna: we are in nairobi kenya, on the fifth floor of a

foreign -- on the fourth story of a five-story building. what it provides is a chance for an entrepreneur someone u.s. just finished college and is still trying to figure out how can they apply their technical skills, who can they collaborate with to make this a reality, to have that first prototype? i think brink is also a very important example of a company that spun off, and is part of this ecosystem that grew from a very small team. it is a redesign of the router for emerging markets. one of the key questions we asked ourselves -- why do we use technology made in new york or elsewhere when we live in nairobi?

here, we often have to deal with power blackouts. we have a great team here that is working towards scaling that. it's already shipped to 54 countries. it is really showing that there is a frontier around hardware and software. we have got different incubators that support startups in the logistics phase, in entertainment, and financial services, financial tack, and emerging spaces -- start up in the hardware industry. what is needed now is an acknowledgment of the importance of places like this. the contribution stands at 8.4% of the kenyan economy now. i do expect that to grow. plaintiff semple, the importance

of ecosystems like this is to create startups that then create jobs, that create value, that give back to the economy and influence the gdp. anna: the eastern africa and startup scene. let's get back to greece. greece and its creditors meeting in athens today to hammer out reforms needed for third bailout. the talks come after another bombshell from former finance minister yanis varoufakis sharing his secret plan to get degrees out of the eurozone on a conference call. yanis varoufakis: i authorized them -- i know. anna: they are referring, of course, to the plans that he had to hack into the finance

systems. hans nichols joins us now from berlin. these tapes make for fascinating listening, don't they? hans: he was told at the beginning of the call that they would be recorded, so what we have here -- and this will affect negotiations in athens --s between the troika and greek officials -- it will give everyone an indication of how close certain elements were to wanting to leave the euro having contingency plans to leave the euro. this is all about parallel liquidity. the plan was to hack into the finance ministry, his own ministries website, gather all the tax information to have a parallel liquidity system so if you wanted to switch to the druckman, you could do it with the flip of a switch. here is how mr. varoufakis described it. yanis varoufakis: we were

planning to create surreptitiously, reserve accounts for every tax file number, just to have the system function under wraps. hans: the reason for hacking into his own ministry -- they didn't actually control the software, they didn't control the numbers. that was being controlled by the troika, by his creditors, so we had to do it surreptitiously so as not to alert them that they had been planning to have a separate contingency plan a separate currency in place. mr. varoufakis put out a statement saying that he excepted, acknowledged that he had the plan. he said it was authorized by mr. tsipras, and said it would have been remiss had he not have a contingency plan. what he did is he asked a childhood friend, who then went on to be a professor at columbia university/ .

they led a team of 5 -- if it had been implemented, it would have needed a thousand workers to put it into place. there was an economist at the university of texas, a close associate of mr. varoufakis, he was in on the plan. there is how he described it in a statement yesterday. he said the job was "prickly to study the operational issues that would arise if greece were forced to issue scripts, or if it were forced out of the euro." here's what's interesting to me -- mr. varoufakis is claiming that mr. tsipras off the rise this plan. he never greenlighted it to go into effect -- he authorized it, though, in december, before he was prime minister. mr. varoufakis does face charges of treason, which he apparently is worried about. his argument seems to be that this would authorize via ct sipras. anna: amazing story, thank you.

coming up on "countdown," orange reports earnings. we will bring you an exclusive interview with the company's cfo. ♪

anna: welcome back to "countdown." you are watching bloomberg tv at 6:30 in london. we just had numbers from orange a mobile phone operator concerning their for your target depreciation, they say, has come in at 3.2 9 billion euros, against an estimate of three 3.14 billion. the sales is also just ahead of estimates. the cfo is saying this morning that they have "room to maneuver

on andm&a." there's a lot to talk about in m&a with this business. talks are only just starting. there are more customers and synergies coming through from the cfo. speaking of which, let's talk to the cfo. he joins us now on the phone -- great to have you on the phone this morning. to wonder if you can give us an update on current trading as it stands at the moment in the french market and elsewhere -- how are things shaping up for orange? >> good morning. things aren't very good for orange, because we have been insisting on a strategy which is driven by investment and making the difference through the equality of our network.

this second quarter in 2015, we are going back to growth. if you exclude regulation, we have a group in revenues, and if you include that configuration during the first half of 2015, we are stable both in growth -- we are coming from a few years where it was constant decline, so this is good news for us. anna: you say you are back to growth, but what are the ambitions with regards to m&a? is orange looking for large acquisitions? it is very topical across the sector as a whole in europe. ramon: well, we have been quite active in the past year. we have been successfully organizing a takeover in spain, a 3.4 billion euro deal. it has been a success and we

will have a squeeze out in august. we will own 100% of the company and be able to proceed with the integration. more recently, we have increased our stake in morocco, which would be consolidated in our accounts. we have open discussions -- opened discussions for the acquisition of four countries in west africa. we also have been selling some steaks in some places where we did not achieve success. we have been out from ug anda, in gauging in discussions for the sale of our operations in armenia. we are very active, both on the

buy side and the sell side when we think it is the best thing to do. anna: ramon, what do you make of predictions that the european telecoms seen will consolidate around three or four big players? do you see that is likely? ramon: yes, this is very likely. it will happen. no one knows how long it will take, but the european market is currently highly fragmented. you have more than 100 operators. at one point via a single telecom market, it will become a reality, and you will have fewer operators, and of course we want and we will be one of them. anna: talking about africa, you mentioned your plans -- how big do you want to be in africa ramon? how quickly are you going to

grow on that confidence and how big do you want to become? ramon: well, today, we have more than 100 million clients in africa. we also have 14 million plans with orange money, which is mobile banking, which is extremely interesting in africa. we are in 20 countries. we have a 5% growth, even a bit more, in fact. we have more than 400 billion euro revenues, nice profitability. what we want to do is to keep on developing, organically, our activities in these countries. and if we find good opportunities to engage into discussions with partners, this is what we are doing, trying to buy these four countries in west africa. we have also put all our

countries on the one, single holding company, which will give us the capacity to be probably a bit more maneuverable. anna: just briefly, how do you plan to finance all these potential acquisitions? there has been talk about an ipo, potentially, for your spanish operations. how are you going to fund all this m&a? ramon: well, we have currently the activities which are delivering results and providing the cash flow which is necessary and then, as we have said, we have m&a policies which provide resources. we are selling our stake in ee to british telecoms -- this is an operation which should be closed by march 2016.

it is a very significant operation, so we will have a few billion euros coming in and this will give us some room to move. anna: thank you so much for joining us. the cfo of orange. let's talk about what's happening in the technology world. china's a slowdown could be hurting its tech and. caroline hyde has the breakdown. any hints from the economy? caroline: we are seeing a bitter disappointment surrounding baidu, in terms of sales and profits for this quarter, which seemed underwhelmed the market. second-quarter sales are up 38% -- let's remind ourselves of what a juggernaut of a company is. it is basically the equivalent of google. it has 629 million active users monthly.

there are only 668 million users. this is a company that dominates the market -- that we are seeing a slowdown. second-quarter profit is up 3%. third-quarter forecasts were equivalent to the sales of this quarter. you want to see its speed up not keep pace. clearly, that was underwhelming the market. many are wondering if that is due to the economic slowdown. so why is the company diversifying itself? let's look at what they are doing in terms of building their business. they are diversifying from their core search and advertising area because it is so hot in terms of competition. the other juggernauts -- alibaba, 10tencent -- suddenly there is a frenzy. you have google, facebook, amazon trying to get hold of the

same internet unifiessers. so what is baidu doing? focusing on mobile. but also online to off-line. this is about getting a taxi offline, about ordering your digital wallet, about being to able to pay. research and development is what it takes -- a 56% uptick in r&d. the video streaming, even in music streaming -- that takes money and that takes rmb, so profits will -- that takes rmb, &d. anna: thank you very much. caroline hyde. coming up next on "countdown," we speak to the ceo of the energy giant here on bloomberg. ♪

anna: welcome back. you're watching "countdown." you are the stories you need to know this morning. it's a volatile trading day in china. the shanghai composite is down more than 2% after sinking as much as 5%. the index dropped to more than 8% yesterday amidst concerns that the government's efforts to prop up shares would be unsustainable. reese is set to begin talks with its creditors about the country's third bailout today. technical experts from the ecb imf, and european commission are in athens to discuss policies. the talks, day after the former finance minister was caught on tape revealing details of the secret grexit plan. second-quarter profits of statoil beat estimates. however, they said adjusted

earnings after-tax fell 37% following a plunge in crude prices. statoil just revealed those second-quarter numbers. let's talk to the business right now -- an update on what's happening. the ceo statoil joins us first on bloomberg, here to talk to was about the company's performance. thank you for joining us. how can you mitigate these weaker oil prices? they have to be the key concern for anyone running in oil business. eldar: obviously, we are impacted by the low oil prices environment. we have seen a drop compared to the previous quarter. what we can do is mainly focus on the operational performance and we have done that. we have delivered a strong production growth of 4% an underlying 7% in production growth if we adjust for

transactions and secure and stable operations with comprehensive improvement programs. we have seen some significant impacts from that into our cost base. anna: we are back in the bear market. where do you see the oil price heading? nobody knows for sure, of course, but what kind of assumptions are you making toward the end of this year and into next? eldar: i think what we should expect going forward in the short-term is one of volatility. more supply and demand in the market, pressure on the oil price. i think that is a situation that will remain for some time. we have indicated that by 2018 we should expect an oil price -- but the shape and form of that development is something that is highly uncertain. anna: yes, indeed.

talk about dividends for us, if you could. you have given your dividend number for the second quarter -- 1.80 norwegian krone. tell us how you will develop the dividends going forward. you say you will maintain dividends at the current level -- or you said that previously. where do you see dividends heading, as a result of your most recent performance? eldar: you know, we have a dividend policy which says that the intention is to grow the dividend in line with the underlying years earnings. there was no change to that policy so that is our intention for the three quarters of this year. we have decided to maintain at the level we had last year. we will have to decide on the next dividend next year. anna: talk to me a little bit about m&a and the m&a opportunities that might be

thrown up by further weakness in the oil. back in may of this year, he talked about how acquiring barrels may be cheaper than exploring. eldar: i think it -- the m&a market has been quite quiet, and i think this is going to hinge on the development and the oil market, what it will look like going forward. i think there might be opportunities, particularly in the market, but we haven't seen anything that has been attractive for us to work on. anna: do you have any plans to continue selling assets? you have been selling various assets in the past few years -- is that still part of your plan? eldar: portfolio management, active portfolio management both selling and investing in assets and buying assets -- that

is an integrated part of our strategy. in the current environment, it might be even more attractive to buy and sell. anna: if you were looking for assets to buy, what kinds of assets might you look for? which boxes would you be looking to tick? eldar: the starting point is that i don't have to buy anything, really. we have a good, diversified portfolio. we don't have to make any moves. we just have to be strong and strategic with good synergy and that is what we will be looking for. anna: tell me about your cost-cutting plan. you have an extensive efficiency program in place. is that -- could you make even greater savings and how will those be found?

eldar: i think there are always possibilities, but i think we have a very ambitious program ahead of us. we have launched a plan to take out $7 billion in cost savings, of additional value by 2016. it shows that we are on track according to this plan, and we also see this progress is well documented into our second-quarter numbers. anna: thank you very much for joining us. the president and chief executive of statoil, speaking exclusively to bloomberg. let's shift gears -- a german powerhouse is set to surpass toyota as the global car leader. this comes after euro carmakers predicted a rebound in profits. hans nichols has the story from berlin. let's look at this race between

vw and toyota. these two have been locked in a competitive bid for the top spot for some time, haven't they? this is a long-standing goal of vw. hans: vw announced it in 2007 -- they want to be the world against auto producer. -- the world's biggest auto producer. we are talking 10 million vehicles per year. right now they are at the halfway mark. they are only different by 20,000 cars. it is a consultative picture because geographically there is so much going on. yes, there has been a rebound in europe, but these last few months people were concerned about what was happening in grace. then you take a look at the china story -- china is volkswagen's biggest market but there has been a slow down. take a look at the numbers in china. toyota is that around half a million vehicles folks like and

is at 1.7 4 million. then the u.s. -- the numbers are better overall, but it looks like toyota is still doing better. but they aren't giving it that much better. then you get to the japan market, where toyota is the market leader. that i have scaled back on higher taxes. there was a new sales tax in place that has affected toyota. they are down by 8.2%. volkswagen in japan is down 70%. but-- by 17%. in europe they are still rebounding and no one is quite certain what all the grease uncertainty is going to do. in the u.s. there is modest growth but nothing like what we've seen in the past few years. that puts volkswagen ahead by a nose. one quick note on this -- when you look at the stocks in europe, at least the auto index it is down some 16% since march.

a lot of that is greece concerns, now that it looks like it could be turning the corner you could see stocks pick back up. it is at this point i make fun of your driving, but i know you drive on a postage stamp. anna: we've had that conversation before, heavenly? hans nichols in berlin. let's get back to our guest host. one of the market events of the day is the u.k. gdp. andrew, give us your thoughts on the u.k. we will dive into the productivity conversation in a moment, but where does this gdp stories set for you? andrew: i think they have been performing pretty well. we had a weakish first quarter. even though we have seen some election uncertainty affecting

the figures, business has been relatively good. there will probably be a growth figure of .5% ofr above. the u.k. is likely to be the fastest growing economy in the g7 again. it would benefit them to have a business friendly economy, diverse sectors, internationally focused. those are all advantages for the u.k. anna: is that the backdrop? do you think they are wrestling with what happens if they move forward with rates? andrew: i think they are probably hoping that the fomc moves. the bank of england has been nervous about taking the first step. it would give them more cover is the u.s. rates went up first. i think the case has been there for some time verizon u.k.

rates. the worry is that they keep on putting it off, they will have to move more quickly than people expect when they do push up interest rates. anna: let's bring in tim coulter, who joins us from our website. good morning. let's talk about china she all we? the plunge in that stock market -- how bad will china get? pretty bad? tim: well, if you believe tom to demarc. he became well known because he picks the bottom in the shanghai composite. we spoke with him yesterday and asked him -- what is your view on the china stock market? his response was that he expects another 14% decline, but worryingly, he compared it to the 1929 u.s. stock market crash. anna: let's hope he's wrong.

does china hold that kind of significance? is still quite insulated, isn't it? in terms of international investors ability to get in? andrew: one thing we have to remember is that these falls are coming off a very large ride and the chinese stock market is still 80% above where was a year ago. it's not necessarily going to take it below where was a year ago. the thing that we really need to watch is the chinese economy. we know the chinese stock markets are very volatile. the stock market went up when there was a lot of economic slowdown. i think we need to really look at the growth of the underlying economy. that's what's most important. anna: and 10, let's talk about hedge funds. tim: what's happening is that a

lot of -- is available. they are looking for alternatives. there is one reason -- the tech regime is a little more favorable. there are a number of reasons. we surveyed a number of hedge funds all of whom are planning to expand and hire people in london. anna: you have to wonder if any of them will be investing in things a little bit differently. the people may want to take a look at that some classic posters. tim: the story is much broader. it has everything from the original apple computers to movie posters -- the original apple computers are selling hundreds of thousands of dollars. -- are selling for hundreds of thousands of dollars. it was at a goodwill. anna: i'm tweeting out these stories as we speak. they can find them coming their

way. tim coulter. andrew stays with us. coming up on "countdown," we will talk about bp and how they are dealing with sliding oil prices. ♪

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>> chinese stocks fall. oil prices continue to drop as brent returns. statoil beats estimates. we are about to get results from bp. capital controls and the financial market shut down into the fifth week. plus the grexit countdown. details of a plan b for greece to leave the euro.

a warm welcome to the second hour of "countdown." let's start with another conversation about what is happening to energy and commodity markets. we should be getting numbers from bp. we had numbers from statoil at the start of the last hour. let's look at where we are on the oil price. there has been a high of $67 a barrel. we are back in a bear market once again for brent. let's get back to the bp numbers. q2 coming in at 1.31 billion dollars. it seems that number has missed estimates. they are going to pay a quarterly dividend of $.10.

24.8 billion. they are talking about production plans, but the headline number really coming through. the adjusted profit an estimate of 1.66. the average was $62 a barrel. that means it is weaker year on year. it is up compared to the previous quarter. some complicated metrics. some concern about what maintenance costs might do. they are talking about how the contribution may contribute because of the higher crude price. they are giving us an update. it will be below $20 billion.

they are guiding a little bit lower. that is something deutsche was talking about. the focus was going to be on the pace of the capital expenditure. the third quarter reported production is going to be broadly flat with the second quarter. this takes us to the twitter question. another bear market in oil. we have rants down in fair market territory. does that double-dip bring about more m&a? he was telling us the starting point is he doesn't have to do m&a, but there could be some m&a prompted by the weakness we are seeing.

it would have to be a strong strategic fit to contemplate doing m&a. we are just getting other breaking news. caroline hyde has the details. >> a little bit of m&a. this is a u.k. based investment be -- vehicle. 3.3 billion pounds is the price we are getting. it is what i have it home that runs my water and heating. honeywell is buying an asset. this makes up two thirds of the group revenue. the company wants to diversify. it is getting 3.3 billion

pounds. u.k. companies selling an asset to honeywell. >> fascinating stuff. a little bit of m&a. over to asia. trading has been volatile. juliet can bring us up to date with the latest. the shanghai composite now down 2%? >> it keeps changing. it is very volatile. we were seeing the shanghai composite down another 3%. now the afternoon selloff like yesterday. there has been good buying and the banks. -- in the banks. we have seen a little bit of positivity. it did start the day down by

5.1%, adding to the 8.5% loss, which was the biggest one-day drop since february of 2007. the hang seng index is looking more positive. the shares doing quite well. supporting the hang seng after we did see a selloff yesterday. we are closing and south korea. it looks like it is going to be a pretty flat chrome -- close. let's have a look at this volatility on the shanghai composite. about 10 minutes ago every sector was in the red. we are seeing good gains from financials. up by about 1% and limiting some earlier losses. technology stocks are down by 3.6%. oil and gas is down by 4%. mining stocks under pressure.

certainly some support coming through. let's have a look at some of the players that are looking ok. all the major state-based banks are looking quite good. that is going to give positivity to the fear the chinese government has stepped out of the market. there have been comments. a spokesperson saying the economy is stabilizing. also, they have not withdrawn these capital controls. hsbc also coming through with a quote saying now is a good buying opportunity. however, the analyst read it did the 2013 fall in the chinese market saying -- who predicted the 2013 fall in the chinese market say we have an hour to go.

anna: it has been a wild ride. more breaking news. more m&a. caroline has more details. hot on the heels of the pharmaceutical industry. we have more farm and news. >> this time it is a $2.6 billion price tag for rock same labs -- roxane labs. the winners seems to be a london-based pharmaceuticals. this is the german drugmaker is looking to dispose of this asset. overall this is a company that is comprising manufacturing and supply chain overall. it is all about potential asset swaps, but it's all about pharmaceuticals and $2.6 billion

in cash and shares hitkma will be paying. >> let's get back to our guest. you used to be at the bank of england. we talked a little about commodities at the start of the hour. no surprise we are seeing some major oil companies during the brunt of a spectacular fall in oil prices over the last year or so, even if we did see a bounce in recent months. we are back to a bear market. do you see a weakness in prices? >> i think the bank of england and the fed try to look through the fluctuations in commodity prices. at the time of the financial crisis we had high inflation driven by high oil prices. it didn't stop us cutting

interest rates. to some extent low inflation driven by low oil prices is actually a boost for the economy and the u.k. so should actually make the fed a bit more prepared to raise interest rates in the medium-term. in the medium-term it should put pressure on wages and inflation. if you look at two to three years it should make them more inclined to raise interest rates. >> in the short-term it can be dis-inflationary. does that make them think we cannot raise interest rates because we haven't got enough inflation? >> if it is driven by the short-term commodities price movement it shouldn't have a big bearing. we should look at the underlying drivers in the economy. which growth is an important thing. we growth is picking up in the u.k.

later this year we may see the first rise and u.k. interest rates. >> let's talk about the u.k. a bit more. we have u.k. gdp do this morning. this is one of your -- it reminds me of goes back to the 1960's. with how to improve u.k. productivity. that doesn't bode well, does it? >> this is not a new issue for the u.k. we have in beating ourselves up on productivity for a long time. i think there are two. one is a gap with other countries in terms of the level of productivity. i think that is a bit overstated by exchange rate movements. the pound has been quite weak. if you try to measure it out at the current exchange rate, it's more or less in line with france

and germany and a bit ahead of italy. the other thing people are worried about is lack of productivity growth. productivity growth in the u.k. has been dragged down by a number of sectors. if we look at the core of the economy and manufacturing productivity growth has been recovering. it took a hit in the recession. productivity is perhaps stronger than it appears. >> interesting. we get back to the commodities story. bp missed estimates in terms of adjusted profit that came in at $1.31 billion. stay with more from javier. refining what is the key to the second quarter. what are your key takeaways? >> for me we are looking for bp to beat on the strength of the refinery sector.

the refinery sector which much stronger. it was not nearly as strong as the street was expecting. bp was also weaker. even if oil prices in the second quarter would have been higher bp has a lot of maintenance. in the gulf of mexico that is high-profile and high-volume. we were expecting that. the refining sector has been a lot weaker. bp is indicating he is getting the message they need to cut. it is down not drastically, but i think they are laying the ground in case they need to really go down. bp was guiding around $20 billion.

the guidance is it was going to be low -- below $20 billion. >> thank you very much. let's take a short break. here are a couple of events weird keeping -- we are keeping an ion. u.k. gdp is likely to have regained some traction. and interest rate decision is due tomorrow. it's unlikely the fed will lose, but we will -- will move and we will take a short break on the program. ♪

anna: welcome back. it is eight:17 if you are

watching in frankfurt. signs the global glut will continue. rent in london closed more than 20% -- brent in london closed more than 20% lower. u.s. policymakers begin a two-day meeting today. bp second quarter profit dropped as crude prices slumped. bp shares have dropped 5.8% this year in london trading. adjusted net income came in. the oil and gas producer said adjusted earnings after-tax sell 27% following a plunge in crude

prices. let's get more on the commodities story. andrew is with us and francisco blanche. great to see you. thanks for coming in. we are back in a bear market on brent. a double-dip for oil. what are the numbers you have in your head for the future? >> we think it is lower. we can see them heading to 45 and a little bit low. sprint needs to go down in the $50 range. -- brent needs to go down to the $50 range. this meltdown has been a surprise to many.

the issue is what happens to the economy. anna: it is interesting you raise that as the dominant factor. yet you think china is key, even though the rise of the chinese stock market wasn't really about the economy. why so much focus on chinese stocks? >> the drop is going to take you , is going to allow them to come into the market. it limits u.s. production. effectively the markets are oversupplied. we are going to be in this range. if we don't have the demand the price will slide lower.

over the next six months or so supply will start to come down pretty quickly. we are looking for declines in oklahoma, the denver area, the colorado area. they start to head lower. that will start to rebound markets as the oil comes online. we need the demand. anna: on the supply side we have seen it going higher as opposed to lower. it is not just opec. it is the u.s. as well. text there are basically three things at work. we saw saudi arabia every month.

we had shale production. then there is everything else. in some ways we have lost saudi arabia's weekly supply management. we are starting to see a lot of big returns drop off. that is what is across the board. i would expect them to drop first and a drop in production in the next six to 12 months. ultimately three years out you

will see the impact from offshore investments. >> the china story is key. what about the dollar story? is that in the background or is that key? >> it is not just an oil story. commodities are down 8%. the one thing i will say is it feeds through the supply side. i say you have a lot of exposure in your portfolio. i say, what do you mean? everyone is competing with you.

they have basically enabled them to shut out u.s. exports. >> the conversations of the fed must play in. where do you see the federal reserve heading next week? andrew: they have been fairly consistent. we have similar levels of interest rate. there is a strategic need to get it up.

it is about the long-term issue. andrew: a straight --anna: a strategic need. i like that. thank you very much. let's return to the theme of greece and its creditors. they meet to hammer out reforms for a third bailout. the talks come after another bombshell from varoufakis. an investor conference call. >> i authorize it. >> to the others listening. >> i know they are. i will deny it.

>> hans nichols is standing by. how are these going to play into the negotiations taking place? taxpayer going to let everyone know how close greece is to leave -- >> they are going to let everyone know how close greece is to leaving. the tape is so good. here is how he described the plan. >> we were planning to create reserve accounts without telling everyone just to have this system function under us. >> this was never greenlighted,

but it is a remarkable story. hopefully we will get into more detail later in the morning and wait for reaction. >> we will. thank you. we are back with the latest on the chinese market. ♪

anna: welcome back. you are watching "countdown." here are the stories you need to know. it is another volatile trading day. the shanghai composite is down. the index dropped more than 8% amidst concerns the efforts to problems shares are unsustainable. crude prices slumped. bracing for low prices. bp shares have dropped.

statoil second-quarter profits beat estimates. the oil and gas producer said adjusted earnings after-tax sell . -- fell. caroline is watching the market this morning. what have you got? caroline: a bit of a rebound after the bloodletting. continued volatility. we're looking for the ftse 100 to gain. a similar move for the cac. we are looking for an upward day

in terms of equity markets. i want to focus on one stock in particular. today we can see it raised higher. it has increased outlook for profitability. that is up from a previous forecast. another big up raid. the reason? warm weather. they sold more clothing and are keeping at full price. they grew three and a half percent. >> caroline hyde with the latest. let's check in on a chinese session.

chinese stocks fell. a commodities slumped. we have seen bloomberg commodities extend their slumped for a fifth day. in hong kong with more. what is driving the bearish mood in china? >> it's another negative data in china. we hada a period of calm, but there isn't any particular trigger that caused the selloff. it has reminded people that growth is quite weak. the second quarter will not be

there. we are seeing a reflection of wider sentiment for china right now. >> is it possible to separate our sentiment for what is going on for the government intervention plan? >> if anything it indicates they cannot step away in a hurry. they threw the kitchen sink at this. we had a calm, but it goes to show you when people think the government support is not there, the stoxx go for a run. the government cannot step away until they are sure the market can hold itself up without

crashing. the authorities will have to choose their timing of the exit very carefully. tax it is interesting. --anna: it is interesting. what happens next? >> we have heard they haven't pulled their weight in support. we had a statement that they can provide liquidity support when they need to. i think the policymakers haven't gone away. at the least economists say we may see more interest rate cuts. we may see intervention in other areas. the chinese central bank has been experimenting in targeted lending. they are recapitalizing to clear

shantytowns and make sure money is floating -- flowing. we have to keep an i out for some of the extraordinary prevention measures we have seen. >> thank you for joining us. let's get an investors take. i am joined by the senior investment manager. maybe we will start with what we are seeing in china. another wild ride. yesterday was a big selloff in chinese equities. how do you view with they are doing? it's a fascinating way to manage your stock market. that is an interesting concept, as it it? >> from our perspective i think it is all about the slowdown in the real economy and how that is

going to impact our economy. if we are moving to a new world where that growth is not there. >> there is a fundamental story that was there before we started to see this selloff. we still had concerns about where the chinese growth story is going. >> in the attempt to try to stabilize the stock market, it asked questions. it has tried to do the same to its own economy. >> most governments don't face this problem to such an extent. they don't attempt to.

some governments have put in place all sorts of blocks. there have been attempts. >> generally the government attempts to try to stabilize stock markets are pretty ineffectual. i am not sure they did much to address the fundamental issues. what that means in the economy is they are providing commodities. anna: chinese slowdown could be

hitting the tech industry. caroline: 629 million active users this company dominates. we are seeing profit something we are likely to see similar growth. in the second quarter profit was up 3%, still growing but not nearly as fast as people had been hoping. is this touchdown by the economic slowdown. this is by do looking to ask --

baidu looking to extend out of advertising. in the u.s. you have google and facebook fighting to be the one everyone goes to for video streaming because they are desperate for more companies to them and raise their revenue. a similar battle fought in china between alibaba and by do. they are focusing on mobile. also online to off-line, the fact you don't just go to google. you look at maps. they are looking at helping you

use your money, digital wallets. getting a restaurant deal. this takes money. r&d costs 57%. clearly this is an area they are having to double down on. anna: thank you very much. coming up, the global car race heats up. for wagon overtakes toyota sales for the first half of 2015. we will look at what vw needs to do. we will take a short break. back in two minutes. ♪

>> welcome back. here are the stories you need to know. it is another volatile trading day in china. the shanghai composite is down

after sinking as much as 5% before rebounding into positive territory. concerns of the government's efforts to prop up shares are unsustainable. greece is ready to begin talks about the bailout. they will discuss policies greece must implement in return. this comes after her a fracas -- for a fracas -- varoufakis was caught talking about it. the oil and gas producers said profit fell after a plunge in crude prices. vw is set to top toyota. the news comes after european automakers bore the brunt of the

greek crisis. analysts call for a rebound. half nichols has the story in berlin. how long have these companies been in competition for the top spot? it seems like eight years. hans: it looks like it is going to be north of 10 million vehicles this year. here is the halfway point. folks oregon is finally in the lead. toyota is five point 02. that is a difference of 20,000 vehicles. there are a lot of different crosscurrents. it's interesting to take a look at the auto industry. yes, we had a modest rebound in europe with the auto story especially in spain. in china there has been a big slowdown.

volkswagen has a much bigger market share. toyota has half a million vehicles. it is volkswagen's biggest market. this year was strong in the beginning of the year. it's slow down a little bit may be because of concerns in greece. in the states we had a modest slowdown. then we get to the home story in japan. you had a big decline. toyota is down 8%. you look at volkswagen. they are down to extend percent. it is going to be the. there is no assurance toyota will finish the year second place.

full swag and is making progress as they look to be the biggest auto producer. -- volkswagen is making progress as they look to be the biggest auto producer. anna: m&a continues. hikman bought in another generic drug deal. more news on the pharmaceutical. it is all generics. we are reeling from the news. >> another deal that's another day, another deal. we got one in the u.k. with hikman buying roxane. generics is a volume business. we have seen big deals announced.

they are selling for over $40 billion. now we are seeing inroads in the u.s. there are a lot of deals happening as we speak. >> it's interesting because the wave of m&a seems to have gained more momentum. we started seeing buyers combine. some of the insurers as they gain more weight we see some of the drugs businesses emerged. >> it is not just about drugmakers emerging to try to gain volume. it is also about insurers. also biotech. we have seen huge deal. providers are trying to reduce

costs. they are also having an impact on drugmakers, which need more volume to compete. >> we have seen a strong year. there has been all kinds of talk about where pfizer might go next. they failed to buy astrazeneca. go next? >> exactly. now they are all turning to pfizer. it is around 17 billion. it is nonstop. pfizer is desperate to build. they have a lot of cash. other than the branded products they have, it could be a good target. there are a lot of other huge companies that have not grown

this year. there are many that could also make significant moves. >> thank you for the latest on the m&a story. let's get to the senior investment manager. is the m&a team something driving your invest in strategy, or is that nice to have as it happens? >> it is nice to have as it happens. we never look at companies because they are going to be taken over. we like to think others might share the appreciation from time to time. another that comes to mind is the software technology company that had a majority stake. it is high-quality businesses with long-term prospects the companies want to buy. if they want to come to us with an attractive offer we are happy to consider it. >> what about the engineering

business? they agreed to by the aerospace supplier -- buy the aerospace supplier. how do you feel? >> i think it is important they are strategic and what they are trying to do. they want to do more in the aerospace side. it is a nice set of assets. i think it increases the net debt. it is maintaining a strong balance sheet and adding a useful set of assets. that is what we like to see. >> what kind of earnings are we seeing? that is a sector struggling because of weak oil price.

>> you see what they can control. it is all about cost may selective m&a. on that side of things they are cranking into gear. that is their real focus. you see that across the sector. they have announced a continuation on that. i think it's going to be about setting up the strategy for the next four or five years. anna: we have been asking whether this might drive another wave of m&a through the oil industry. thank you for joining us. that is the question on twitter.

7:53 in london. on the move is the program that finds -- follows this one. jonathan: expect a little bounce back this morning. futures higher after the ftse 100 erased all of the gain for 2015. shanghai, the biggest drop since 2007 dropped as much as 5% and then coming back a little bit. a lot to discuss when we talked china. statoil mrs. crude. brent back in a bear market. -- statoil missed crude.

we will be talking about that through the show. anna: i think he was pretty surprised. keep an eye on all the companies that have reported. we have the numbers from bp. we talked to statoil a little earlier. keep an eye on those. some of the luxury names reporting after hours last night. that will do it for "countdown." stay with us for "on the move" with jon ferro. ♪

>> good morning, and welcome. we are just moments away from the start of european trade. shanghai swings. another volatile day in china. shares drop before rebounding. mixed fortunes for big oil. statoil beat estimates, but bp missed. details emerge about how yanis varoufakis developed a plan b

for greece. a lot coming up in what is a busy morning. the ftse 100 futures higher. will we get a rebound in the european market open? caroline: it has been five days of losses. it has been 400 billion euros wiped out. a 5% decline. today a rebound we are expecting. gdp figures are likely to be increased. a little more optimism amidst the earnings season we have. the gdp numbers basically flat. keep