>> this is an acceleration of our business plan that we set. it means we will look at efficiency in some areas. francine: bnp's cfo tells bloomberg the bank's biggest rebound since the financial crisis is not just about slashing costs. france's largest lender turns in entire list -- its highest quarterly profit in years. manus: bg group second-quarter profit falls. francine: the troika gets its first official meeting with greek government ministers since syriza came to power. the imf has said it won't fail

the country out unless there is a commitment to debt relief. welcome to "the pulse" live from bloomberg's european headquarters in london. manus: coming up, we are speaking live with a ceo. that is at 10:10. make sure you stay tuned for that. francine: bnp paribas has published its biggest quarterly profit in more than three years. manus: the beat comes after france's largest bank announced they are considering changes to the securities union. the overhaul which could bring the deepest cost cuts since the financial crisis is a response to tougher capital rules. >> as a consequence of this, the

cib teams are working on a plan to crystallize all these accelerations. first is to further improve efficiencies and returns. at the other hand and at the same time, to continue to invest in order to capture further market share. that's what we are doing. that takes time. francine: the cfo there speaking to caroline connan. she joins us from paris. what can you tell us? caroline: he did confirm that he's still reviewing the investment bank unit. however, he did not confirm that the cost measures could reach as much as 20% as we reported yesterday.

he said this is not a cost-cutting exercise. this is an efficiency exercise. how to make more profitable the cib business. he didn't want to confirm whether there will be job cuts in the plan. there are 3600 traders at bnp paribas. we don't know yet what the plan will be for these traders. the cfo of bnp paribas did tell me that we will know more buy the full year results. that is not until february 2016. manus: let's talk about the broader earnings. they've had the highest quarterly profit in more than three years. there's more to this bank then just the corporate and investment bank. isn't there? caroline: absolutely. it is a very different story from just a year ago.

that's when they had published 4.2 billion euros loss after this huge fine from u.s. authorities for breaking the embargo with some countries. today they are reporting the highest quarterly profit in more than three years. net income is around 2.6 billion euros. revenues are up 16%, to more than 11 billion euros. there are mainly three reasons for that. first is the good performance of the cib business. the pretax profit of the investment bank is up 26%. second, they posted one gain following the sale. finally, that is perhaps the most interesting, they are seeing the european recovery. i asked the cfo how sustainable this is.

>> for us, as a eurozone bank when we look at domestic markets, we indeed see those green shoots. credit demand has gone up 1.5%. we also see that in the cost of risk going down. we see in total the bottom line going up by 40%. we see the first progress. caroline: of course uncertaintuiesies remain. if you look at the french retail bank, we are down. italy also down. but the cost of risk is going down. manus: caroline thank you very much. caroline connan in paris. francine: here's a look at what else is on our radar. the slump in energy prices has hit e.g. group hard. -- bg group hard.

the company has reported a 60% drop in second-quarter profits. net income fell from a year earlier. it still beat analyst estimates. manus: airbus has beaten second-quarter estimates, reporting earnings of 1.23 billion euros. the aerospace company has benefited from demand for new, more fuel-efficient jets as airlines seek to protect themselves from fuel cost volatility. francine: lloyds banking group says it will continue paying dividends and share buybacks after first-half profit climbed to 1.2 billion pounds. britain's biggest mortgage lender will pay a dividend of 0.75 pence a share even though it has taken a 1.4 billion pound charge for improperly sold loan insurance. manus: china's stock has fallen again, the biggest monthly drop since august 2009.

the index tumbled almost 15% this month, the worst loss among 93 global benchmark gauges tracked by bloomberg. francine: meeting greek cabinet ministers since syriza swept to power in january. the finance minister has welcomed representatives this morning. it comes after the imf iterated that it won't support a bailout for the country without an explicit commitment from the euro area to ease greece's debt burden. manus: the city for the 2022 winter olympics will be announced shortly in kuala lumpur. beijing has been a front runner with kazakhstan's capital the outsider. a lack of natural snow could melt beijing's chances. you've just seen some live pictures from that particular discussion.

now, keeping it real is seen as a dig. human rights groups say neither city deserves to host the games. francine: another busy week of earnings coming to an end. our next guest says equities remain a good buy. he is manish singh. give us a sense of what you are looking for. we have the fed. we are looking for a rate hike. we have a slow burning need to navigate exchange markets. this is across the board. what is driving europe? manish: let's look at the financials of bnp. in terms of fed, as i mentioned in my notes as well, it is not about whether the fed is going

to raise rates. but should it be zero or not zero? to me, i think the fed is going to raise the rates in september. all the data we are seeing is more how soon are they going to raise the second one. manus: one or two people have said why are you complaining about people raising rates? it is good news. the u.s. is in recovery mode. europe is not on its knees. you should be happy the u.k. and the fed are getting ready to go up with rates. would you agree? manish: i would agree that rates should go above zero. the personal consumption number is higher. if you really want the recovery to pick up from the consumer side, you should see the rates a little bit higher. francine: when you look at the consumer growth and the banking industry, a lot of people are chasing the asian consumer.

that is where there is going to be a lot of growth. with the fed possibly hiking sooner than expected, we are going to see capital outflows. how do you combine them? manish: i am underweight emerging markets. there will be some sensitive sectors. i don't think germany will do very well. it is more italy and france. when you do european stock locations, don't just buy all the german stocks because that is not going to help. emerging markets are underweight. it is going to hurt emerging markets. japan is all about earnings for the region. for me, these two, u.k. and u.s. are going slightly higher. financials is a different play. manus: what about the commodities? commodities down nearly 10% in

china, the worst performance since 2011. the whole commodity complex, there's two ways to look at this. one is on the input sidet. . two is the threat to dividends. how do you create a portfolio for 2016? manish: look at the oils. if you think that nobody's cutting down production, then you will get the business from that. look in the sector, but don't buy the whole sector. even if you see the correlation based on the chart i sent yesterday, the correlation is down. you are not going to buy the market and get the return. you have to choose your market and choose your sector. the energy and miners didn't do very well. francine: thank you so much. manish singh stays with us and

we will be talking oil next. we are just getting a headline. mr. tsipras. manus: the prime minister of greece says he has given the order to yanis varoufakis, the emergency plan which we made such a big deal of yesterday setting up a plan b if greece was bounced out of the euro. francine: the varoufakis plan was shed the light, or the light was shed on it when he was explaining it to hedge fund managers on the phone. what he was trying to do was tap into a parallel currency by tapping into -- manus: it was the tax system for greece. francine: and through that, trying to get money back if they were to exit the euro. we now understand that mr. tsipras gave the order to varoufakis. manus: many people have said it would have been surreal. had they not been working on some kind of a plan b.

a little more clarity day by day. francine: it is the stuff hollywood writes about. up next, bg group hit by falling energy prices. ♪

manus: welcome back to "the pulse." we are live on bloomberg tv and radio. we've had a little breaking news.

this is the greek prime minister, alexis tsipras speaking to lawmakers in athens. he says the greek government had prepared contingency plans in case talks with creditors failed. tsipras says he never planned to leave the greeks out of the euro and he gave varoufakis his finance minister at the time, approval to do so, giving the order to look for an emergency plan. hans nichols joins us. this is putting some clarity around the situation to a certain extent. hans: this is both a denial and a confirmation, a denial that mr. tsipras had plans to leave the country out of the euro, confirmation that they did have a contingency plan. now the question becomes what sort of insight did mr. tsipras have into the specifics of the varoufakis plan b? did he know they were planning on hacking into the computer system? did he know they wanted this

parallel liquidity system? seems like he's giving varoufakis a little political cover. mr. varoufakis was concerned that he may be facing treason charges. mr. tsipras is saying it was authorized. that may give mr. varoufakis a get out of jail free card. it may not. no charges have been brought. it is clearly an effort by mr. tsipras to keep mr. varoufakis within the syriza tent saying i authorized this, it wasn't a plan to take the country out of the euro. if you look down the line of it there's going to be a big reckoning within the syriza party. mr. tsipras has done a u-turn. he is accepting everything the troika is demanding. he is using the truck as arguments for his own internal argument. yes he staved off and bought himself a little time yesterday. there won't be a sunday vote within syriza on this plan to go

forward. there will be something in september. mr. tsipras could be looking towards september to make sure mr. varoufakis stays within his camp. varoufakis voted no on that first bailout package and yes on the second one. maybe an attempt to keep mr. varoufakis a little closer. francine: this also allows mr. tsipras to hang on to the rebels a little more. he's saying, i'm with you, we tried this. this is something i actually thought about. we decided not to do it. it kind of makes him a little more that gray area within the rebels. hans: we will see to what extent opposition lawmakers focus on the past and demand that mr. tsipras come clean on what he knew and when he knew it and how first he was in this plan.

mr. varoufakis has indicated he wasn't. going forward, it looks like mr. tsipras does recognize that he's got a challenge within his party. he also has to stay within the center. he's going to need opposition votes. he's going to need other party support to get this passed through parliament. manus: hans, thank you very much. let's bring in manish singh. you are still with us. it is interesting here. tsipras reaching out to -- what is it, and all of branch to varoufakis but at the same time, challenging the rebels. manish: i think the fact that they don't have a meeting going on in september indicates that there is no real crisis in greece. every sovereign crisis have been solved by default and then

restructuring the economy. we had a greek crisis in 2010. five years on, there's hardly any money going into the economy. that is the question you have to answer. anybody who thinks greece is going to come out like ireland is wrong. the two economies are very different. ireland is an open economy. ireland gets five or 10 times more fdi than italy, greece, or spain. it is not about austerity. it is the economy. francine: let's say the right off is possibly a done deal. would you be concerned by a snap election? tsipras is the most popular politician in europe. manish: i think he will win. to me, greece is the world of europe now and they will decide what to do.

francine: thank you so much. stay there. we will be talking oil next. bg group is hit by falling energy prices. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio. bg group which is being acquired

by royal dutch shell for more than $70 billion as reported a drop in second-quarter profit. the company beat estimates, but net income fell to $429 million from $1.2 billion a year earlier. bg's chief executive told bloomberg the result is related to the slump in oil prices. >> we have a very volatile situation. we have seen that demand has increased but the supply side is stronger right now. i think partly because saudi arabia is gaining market share and perhaps because the u.s. has more than we planned. we have to assume that this industry will face volatile pricing moving forward. manus: manish singh is still with us. he is listening to that from bg.

in terms of -- and we also have philipp. welcome. let me come to you first. this deal, is it a deal worth doing at any price? philipp: you can say somehow. it is all about lng liquefied natural gas, the fuel of the future. it is much less emission intensive. if china replaces its power generation with gas, you will have a huge demand growth rate. francine: does it mean that even if they overpaid this is such a great asset that it means shell will be leagues ahead of everyone else? philipp: that is correct. if this deal goes through, the combined company will be the biggest energy producer in the world and it will be difficult for its peers to catch up. francine: and lng is the future?

manish: i think it is. when you talk about energy, it is the demand side. if you see the u.s., we had 1.3% in 2012 2.6% in 2013. the growth is stagnating. these sectors -- i'm not a holder of oil majors, but when the time is right, we go back into oil majors as well. anybody that says chinese growth is going to decelerate a lot, we are not talking about china getting rid of bus rides. manus: ok, thank you very much for coming in and going through all of that. great conversation with you both. francine: we've covered oil quite a lot. the difference ceo's had different predictions. up next, how the micro crisis is

playing into the eu referendum argument in britain. ♪

francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. manus: let's get you some of our top headlines. bnp paribas swung to its highest quarterly profit in three years. its trading revenue rose and france's biggest bank benefited from one-off gains. revenue gained 16%. francine: the slump in oil prices has hit bg group hard. the company which agreed to be

acquired by royal dutch shell for $70 billion as reported a 65% drop in second-quarter profits. net income fell to $429 million. that's still beat analyst estimates. manus: david cameron is to chair an emergency meeting today in response to the calle migrant prices. it comes after he was accused of stoking fears by saying that a swarm of migrants was coming across the mediterranean, seeking a better life in britain. let's have a conversation about this and get more on the situation in calais. we are joined now by our u.k. political correspondent, rob hutton, and reporter tom mackenzie who spent a day in the camp yesterday. rob, why is it that necessary that these migrants want to come to the u.k. more so than staying in france or italy?

rob: tom has been talking to them but the straightforward answer is theat a lot of them will be english speaking. we have a lot of places where you can come and work. this is slightly self-fulfilling. your brother or cousin is working on a building site. he can get you a job on a building site too. britain is an obvious destination. francine: tom, you spent a day at one of the main camps in calais. i guess you are asking a lot of people why they were there. the answer was? tom: the answer was, for many of them a lot of them have friends or family here. a lot of them know the economy is doing ok. and the language is a big issue. i was surprised by the number of people who said they want to stay in france. whether that was that they were

cautious about telling me, and english turn -- english journalist, i'm not sure. the majority seemed to be wanting to get to england. manus: rob this is turning into a minefield of rhetoric. cameron has been berated for his use of language last night. at the same time, he's fighting this -- the two areas are becoming very muddy, aren't they? rob: minefield is the right word. cameron has to appear to be sort of on the ball. one of the rules of british politics is you don't say -- britain does not have a refugee crisis. jordan has a refugee crisis. that is a crisis. 4000, 5000 people is not a crisis. but you can't say that if you are a politician.

you have to feel people's pain. a lot of people are trying to get on holiday. they are upset because they can't get through the tunnels. we have a meeting of the crisis committee. there isn't actually a huge amount you can do. a lot of people are very determined. there is also the distinction between migrants in calais coming illegally or to claim asylum and legal migrants coming from poland or bulgaria or whatever to work. in most people's minds, the distinction between these things is very fluid. there is a feeling in the country that we have had an awful lot of immigration in the last 10 years and people would like it to slow down. manus: the resentment in the refugee story. francine: so the main message from david cameron has to be the u.k. is not a safe haven. rob: exactly. he has to push back at the

margins. they are doing things to make it more difficult to employ or render house to illegal immigrants. clearly, some people are always going to come. manus: tom, you got some footage. we will see that early next week. give us a sense of the cap. how is it set up? tom: there was about 2500 migrants there now according to the people i spoke to. that is down from 3000 about six weeks ago. it is a sprawling camp. it is very open. they have very few facilities. what they do have they've used to quite ingenious affect. there's a number of restaurants. there's a number of shops. there's a nightclub. there's a church. there's a mosque. these are smart people. they have wood and that's about it and they've created this mini

community in the cap. they are provided one meal a day by the french government. charities are working for them to provide clothing and would. they've made the most of what they have. francine: they are in a kind of weight and hold situation. their papers are trying to be processed? tom: interesting point. those who want to stay in france have registered with the authorities and given their fingerprints. the others who are looking to come to england have tried to avoid that. that's the situation. as rob was saying, in terms of security measures, most people i spoke to our determined to come to england. the extra security measures won't do much because they have gone through life or death to get here already. manus: that level of desperation must be incredible. gentlemen, thank you very much. rob hutton and tom mackenzie. francine: time to wrap up the

week in tech earnings. social media giants twitter facebook, and linkedin are beating expectation but the stocks falling after hours. nejra cehic joins us with the latest. we were talking about twitter earlier this week. we had this great conversation about facebook. twitter possibly a little more potential longer-term. nejra is here to give us a lowdown on linkedin. nejra: forecast for full-year sales beat estimates. also second-quarter sales were a beat. like facebook and twitter, we saw the shares initially rise and drop afterwards. this is because the company attributed the bond in its revenue forecast to the acquisition of education website lynda.com. that has raised concerns that growth is slowing in the main business. manus: it has been a heck of a week. we had twitter where that

didn't do prices a lot of good. you've got facebook saying, be patient with me. rep of the week for us. these are the blockbuster names. what stood out? nejra: what stood out is that there are a number of challenges for all of them. i just outlined the issue for linkedin, concerns of growth slowing. facebook said that spending climbed 82% in the second order. that was more than double the rate of sales growth. that said, sales crossed the $4 billion mark for the first time. revenue is good, but analysts have been questioning, when are you really going to start making money from whatsapp, instagram messenger? that is what analysts were asking on the conference call. one of the things they said was, until these apps reach a billion users, it isn't worth making them into a business yet. manus: you don't get any value

unless you've got a billion. nejra: this is a bit of a dig at twitter. this was its biggest challenge. it is much smaller than the competition. what the ceo and cfo said is that their efforts to improve user growth have minimal impact so far. minimal success. they said, their message was we've got a lot of work to do. don't expect any great progress anytime soon. basically, they squashed that initial optimism from the numbers on the conference call and said, it is much smaller than the competition and that is the issue. francine: nejra cehic there with a roundup of the tech news. manus: that takes us to our twitter question of the day. francine: to brighten your mood today, check out manus cranny's tweet. the real question, facebook

twitter, linkedin -- which has the brightest future austin mark -- future? manus: did you retweet any? she at least has a little bit of high-caliber standing. francine: just go and check out manus' tweets. banks are leading the way in europe. we wrap up a warm and fuzzy week for financials after the break. ♪

francine: welcome back to "the pulse." manus: here's some of our top headlines on bloomberg today. the british trader accused of contributing to the 2010 flash crash is making another attempt to reduce his bail. navinder singh sarao spent the last three months in jail. his appeal is set to go before a london court in august according to a person with knowledge of the situation. francine: a u.s. official says a part number on a wing that washed ashore on a french island in the indian ocean says it was from a boeing 777, the same model as the malaysian airplane that vanished in march 2014. the fragment is on its way to france. it will be examined further. manus: the host city of the 2022 winter olympics will be announced shortly in kuala lumpur.

beijing is the front runner. a lack of natural snow could melt its chances. the slogan, keeping it real, is seen as a dig at the chinese capital's reliance on artificial snow. human rights groups say neither city deserves to host the games. just bringing you some pictures now from kuala lumpur where the international olympic committee is evaluating reports ahead of the vote. francine: more bank earnings were released this morning. good news for lloyd's and bnp paribas. lloyd's reported a 38% rise in first-half profits while france's biggest lender swung to its highest quarterly profits. the banks are the biggest contributor of gains in european quarterly earnings. for a closer look, we are joined by the managing director of

cycle. great to have you on the program. it seems earnings here in europe aren't doing too bad in banks but we are still a far way off from the u.s. >> in terms of returns on equity and things like that, i think you are right that the european banks have improved nicely. there are legacy issues like lloyd's. there is still a big one-off charge or several one-off charges diminishing statutory results. the core earnings are starting to come through strongly for many european banks. once you look at the operating results and returns on equity and things like that, i don't think they are far off anymore. manus: otto, we've seen a lot of change, a lot of restructuring. corporate investment banking did quite nicely today. of the banks engaged in change

who is ahead? i'm taking ubs out of that equation because they are quite ahead, but of the others, their performance reflects it. who else is doing a good job? otto: as you said ubs certainly was early in that, probably because they had to the most. the others, a bit of an on perception issue. it seems, looking at the last results, credit suisse barclays weren't really doing so badly. yet there was somehow still a need i guess for an acceleration. manus: a need for blood. otto: exactly. they were actually reasonably advanced in the restructuring. deutsche bank they took a much longer time. they were much slower so far in bringing these changes.

partially i think because for deutsche bank, especially fixed income business, is so core to what they do really. it almost defines deutsche bank. francine: is that a similar situation to credit suisse? we've had two new ceo's at both those banks. otto: a slight sort of difference for credit suisse. they have always had a stronger franchise in the higher-yielding corporate credit in emerging markets and things like that. you could argue that going forward, those areas might be affected by the changes coming in. the regular changes that drive most of these restructurings really hit the lowest yielding big balance sheet items the most. that's where a lot of the fixed

income gets affected. the sort of large holdings of sovereign credit, of investment grade, big ticket and those kinds of things. they weigh strongly on the number of newer regulatory measures. credit suisse, i think they always had a stronger niche in things like high-yield. i think that's why they tried to hang onto that a bit longer. manus: otto let's talk about the broader concept, stoxx 600 in the banks, up. when you look at the italians they are up on the leaderboard, the main chargers ahead. one or two of the brits are at the bottom of the board. in your notes, you said nonperforming loans is going to

be one of the big issues. it is a big issue for the italians, you say. otto: indeed. maybe that is an explanation for all this. in italy, there's still a big question mark over nonperforming loans. the stock has still been increasing, but there are some indications especially for the stronger players, the largest banks some of the second-tier banks also that maybe we are starting to top out in the deterioration, if you like. in market terms, that is when performance starts to pick up. investors can start to see through the deterioration. look ahead to the improvements that will come through in the future. in italy, that is sort of where

the situation is at at the moment. although still with some uncertainties. francine: what is your favorite bank in europe? otto: oh ddear. francine: would it be a u.k. bank as opposed to a swiss bank? otto: not sure i can really answer. from a credit perspective, i would like a very diverse a fine bank. on that, you could name some of the still very large ones like bnp paribas or maybe even santander. it always depends a little bit on what the next problem is, if you like, that comes up in the market. manus: that is an optimistic feel of banking. it depends on what the next big problem is. thank you so much. francine: next, did you know that saudi's are the biggest consumers of youtube per capita

in the world? we went to meet one of the country's biggest producers of content for the site. ♪

manus: welcome back. welcome back to bloomberg television radio, streaming on your tablet, your phone, and bloomberg.com. francine: saudi's are the biggest consumers of youtube per

capita in the world. in a country where official censorship is common, we spoke to the ceo of one of the country's biggest producers of youtube video. >> this one goes to my peeps. >> it is an online entertainment network. we started mid-2010. the whole idea was to create content. it is actually what people in the saudi streets are talking about. it is the things they go through. you get to see a female show where she talks about female-related issues. in this episode she says the most important mail in a saudi females life is her driver. we have 1.6 billion views so

far. we have 30 million followers and subscribers across different social media platforms. on average monthly we do 80 million views. >> ♪ no woman, no drive no woman, no drive ♪ ♪ >> since we started, we tried to be balanced. we are aware of where we are. we are aware of what is happening around us. this does not mean we try to do it the safeway. we try to push the bar. we try to be a little bit edgy. manus: ok, we are going to break away from that saudi video and get the results from the olympics.

the next winter olympics. >> all members should be in their seat at least 10 minutes before the announcement ceremony starts. following the announcement or money -- the announcement ceremony, in the hotel at level one 7:30 p.m. the signing of all contracts will take place before the press conference. the press conference starts at 6:50 p.m. in the press briefing room. thank you. >> ok, feel free to move. francine: we were expecting an announcement for the 2022 winter olympics.

we will get it shortly. as you can see, we didn't get it right now. this will be announced in some other part of the city. manus: will it be beijing or kazakhstan? we have to wait and see who is going to win that title. in the meantime, for those of you listening on bloomberg radio, "the first word" is next. for our viewers, a little bit of time actually. francine: for our viewers, a second hour of "the pulse." we have plenty of news from greece and from earnings. we had 45 major european companies coming out with earnings in the last two days. for our radio listeners, it is "the first word" next. in terms of earnings, we have bnp paribas. it posted its biggest quarterly profit since 2012 this morning. yesterday, we got news that it

will overhaul the investment bank. manus: caroline connan sat down with the cfo and he -- and spoke to him about his plans for the reorganization. >> if you look at cib's, we had a strong result in q2 and q1. that demonstrates that our franchise is fairly strong. it also is a validation of our concept. it works very well. it is also showing the efficiency of what we've done in the past. we adopted very swiftly as of 2012. we basically see in those results that it is working well. as you mentioned, we see still some uncertainty looming on the horizon. that is why we announced earlier in the year that we would have a new organization around cib to

accelerate that business plan. that led to the creation of one global market to bring closer the security service activities and simplify our original approach. as a consequence of this, the cib teams are working on a plan to crystallize all these accelerations. first access is to the efficiencies and the returns through things like industrialization. at the other hand and at the same time, to continue to invest in targeted domains in order to capture further market share. that takes time. we will get an update on that plan when we publish our full-year results. caroline: do you think your cost cutting may reach as much as this is an acceleration of a business plan we set. we will look at efficiencies in some areas.

at the same time we will continue to invest in specific areas to further capture market share in these domains. manus: welcome back to "the pulse." live on bloomberg television and streaming on your phone and on bloomberg.com. headlines at this hour. francine: bnp paribas is the largest french bank. it beat estimates thanks to trading. manus: bg delivers their numbers today. the ceo spoke to bloomberg. he spoke about an optimistic view about where the company goes as it beats profits. despite a 65% drop to four hundred $29 million. francine: the greek prime minister confirms he gave llamas

varoufakis -- yanis varoufakis the order to look for a plan b in the grexit. manus: good morning to our viewers in europe. good evening to those in asia. a warm welcome to those waking up in the united dates. -- united states. i manus cranny. francine: i'm francine lacqua. let's talk about guest. manus: absolutely. the finmeccanica ceo moreover ready -- mauro moretti is coming up. it was only a couple of months ago we were talking about the deflation threat that was

sitting on our doorstep in europe. plus 0.2%. the unemployment rate 11.1%, in europe. francine: thank you so much for coming in. we have a lot to ask you about greece. let's get through the breaking figures first. inflation is a 0.2%. >> we can do a bundle. what is striking to me is that we are very far from the kind of level rate that would be consistent with an acceleration in wages. wages start accelerating at about 9.8%. don't get me wrong, the drop in unemployment is a good thing. at the same time we are

definitely very far from the level that would be consistent with a proper acceleration in core inflation. manus: breaking this down for you. court inflation -- core inflation accelerated the fastest in 15 months. far be it from me to get enthusiastic, but are things beginning to look a little bit better? >> everyone started talking about the need for the ecb to taper qe because inflation was running wild, but it went back down to 2.8%. i would not read too much into this. for the ecb to be completely comfortable with the pace of inflation, you need to bring core inflation by the middle of next year, to about 1.5% higher than that.

you need to see some engines of inflation to switch on in the eurozone. how can you do this if you don't get the proper acceleration in wages? if you look at the countries where you could argue that they are already in a situation of full employment -- germany -- wage growth is solid but it is not accelerating. it is the same pace for the last six quarters are so. in countries such as france and spain we are still in a situation where we cannot expect any acceleration in wages. don't get me wrong. i'm the first to say that the recovery is there. i'm saying that the ecb should remain on the committed side of its communication. francine: spain is not doing too badly when you look at the figures of gdp. france is a little bit more worrying especially when you

look at factory orders that came in below estimates. was it a blip or is it something more sinister? >> that is what i am saying. it tells you how far we need to be before we see anything. france come a have had conflicting data. -- france, we have had conflicting data. my sense in france is that there is the benefit from the lower euro, which is always a positive for countries such as france. a continuation of the acceleration in credit, it should be ok. getting anywhere in gdp growth in france is going to be very hard given the structural issues that still need to be dealt

with. on unemployment, it is the country that is bucking the trend. it is still not being reduced. it is having to do with the fact that in 2008-2009 french employment did not have the crash layoffs like we had in the 1990's. the business sector absorbed the shock and kept people in employment. it would be normal, now, to expect exactly the opposite. when you would have companies waiting to see if the recovery is really taking full speed before starting hiring. manus: on greece, we have news that tsipras gave varoufakis to have a plan b. the imf said it is about debt. is the bigger risk with the creditors than the internal divisions in the greek

government? >> i agree. the greeks tried to play the internal conflict of the troika. you cannot ask for the imf to be involved in the bailout, which has been the german position from the beginning and reject the central tenant of the imf's view of greece, which is that the country needs debt relief. at some point, you have to reconcile the positions. germany is not completely consistent. one thing on the plan b. of course they had to think about the plan b. manus: i have to agree with you. have it and sneak it out quietly. the chief european economist at bank of america merrill lynch. francine: finmeccanica beat estimates. first-half operating profit rose. let's cross to anna edwards, who

is with the finmeccanica ceo. anna: thanks very much. yes we are talking italian defense, aerospace, and security with the ceo of finmeccanica. thank you very much for joining us today in london. your results are in. they beat estimates. concerning our guidance, what gives you confidence about the future? >> finmeccanica is involved in important matters. it is an important task. the figures are quite positive. we have some very important results. 210 points more than the next year. in the same period, we have an

increase of 50%. a positive result of 411 million euros than the previous period. anna: why this reorganization if the results are so good? mauro: it is at the disposal of the transport sector. we have concluded this part. that can give us the opportunity to focus on the aerospace, defense sector. we are reorganizing governance. [indiscernible] we are giving more integrated

and decentralized structures in our governance. so we can have more flexibility for our customers on the market. anna: you are in the process of reconfiguring, very fast, the business. which assets to sell, which to keep hold of. the u.s. electronics unit was up for sale and now it may not be for sale. what is the thinking? mauro: it is in a good position. the plan in the u.s. has worked quite good. we are gaining important figures. double-digit announcements. we have all of the time in the future. for example, exchanging business with business.

reinforcing our core activities. anna: but for the moment, you hold onto it? mauro: not for the moment. [indiscernible] at the end of the year we can consider other opportunities. anna: let's talk about a business that you have a 25% stake in, a missile maker. what is your thinking around the ownership of that business? you have already said already today that you will decide later on this year. tell us why you might sell it or hold onto it. mauro: this is an important business. it is an important business giving us important results. [indiscernible] consider the campaign. the economics are going in the defense sector. we are going to wait until the

best conditions arise to discuss with our partners. anna: you probably will sell it, it is just a question of the right price for the right time or you have not reached that decision yet? mauro: we only have some discussion with people. [indiscernible] we are discussing. without decisions at the moment. anna: what about the helicopter market at the moment? we have seen consolidation in the united states. how is that changing the competitive landscape? mauro: we don't think it particularly changes things. we have to view the situation differently in the defense sector. it is quite difficult for us. [indiscernible]

for the u.s. market the venture of the presidential helicopters -- we cannot have the opportunity to spy. on the other hand, we have the oil and gas situation. [indiscernible] we have some redundancy, depending on the gas and oil sector. we have a good position in this because we have new helicopters. the new 189 is a bestseller in the new generation of helicopters. [indiscernible] we will be dedicated to this kind of service. at the moment, we do not have negative effects. anna: thank you very much for joining us.

thanks for talking us here at bloomberg. the ceo of finmeccanica. back to you. manus: thank you very much. great interview there. an exclusive interview with the finmeccanica ceo. francine: coming up, major cost-cutting changes despite the highest quarter. we are live in paris next. ♪

manus: welcome to "the pulse." live from bloomberg's european headquarters in london. bnp paribas has published its biggest quarter results in three years. second quarter profits at 2.5 6 billion euros billion euros. the overall cost cutting is in response to tougher capital rules. >> as a consequence of this, the teams are working on a plan to crystallize all of these accelerations. the first axis is to improve the efficiency and the returns through things like industrialization or the further optimization of the use of the balance sheet. on the other hand, to continue to invest in targeted domains in order to capture further market share.

that is what we are doing. that takes time. we will give an update when we publish our full-year results. manus: the cfo spoke to bloomberg. i mean come this story, yesterday's scoop was a run the corporate and investment bank. the numbers are good. what more on this reorganization? >> the cfo did confirm that he is still reviewing the organization of the investment bank unit. of course, they have to face tougher capital rules. the fixed income business and the equity derivatives. however, the cfo did not confirm the information that we reported yesterday that the cost cutting in the business may reach as much as 20%. he said he could not confirm

these numbers because they are still reviewing the unit, trying to make it more efficient. we also know there are 3600 traders working at bnp paribas. they did not mention whether the plan will involve -- what the plan will involve. they will give us details by february next year when they published the full-year earnings of bnp paribas. francine: they basically had a very strong performance this quarter. when you look at some of the key measures for financial strength the trend is also on the upside. >> that's correct. the ratio is up. they are trying to reinforce their capital. if you look at their investment bank they are less reliant on

the investment bank business than some of their rivals, such as deutsche bank. the ci be business represents -- cib business represents one quarter of their revenue. it is more than 50% at deutsche bank. they saw a 26% increase in pretax profit. bnprising today. they are also benefiting from the recovery of the european economy. here is what the cfo told me. >> for us, as a eurozone bank, when you look at domestic markets, we see those green shoots. credit demand has gone up by 1.5%. we see the cost of risk is going down, notably in italy. in total, we see the bottom line

going up by 14%. we see the first progressive evolution. >> despite those green shoots, the cfo told me there are still some uncertainties in the euro zone economy. if you look at the french retail bank, their main domestic market, revenues were down 2% last quarter. francine: thank you so much. still to come on "the pulse" we will talk the priests -- about greece. tsipras gave varoufakis the green light to talk about a plan b. details after the break. ♪

francine: welcome back to "the pulse." live on bloomberg tv and streaming on the ipad and bloomberg.com. let's get to the latest on greece. alexis tsipras. let's go straight to hans nichols with the latest. as you were saying, he did not have any intention to leave the euro, but he did ask varoufakis to look into it. hans: he gives varoufakis some cover. he said he authorized him to come up with contingentive planning. this time, tsipras got authorization to go ahead and negotiate this deal, and 86

billion euro deal for a bailout. here is what he said to his own party members. he said, whoever thinks another government or prime minister would do better should better speak up. it now looks like he will have than it -- the authority to negotiate after a bailout package is likely to be considered. francine. manus: this is manus. the biggest risk now is about internal squabbling between the creditors. is the imf going to be part of this bailout? hans: in some ways, it has not changed much. there will have to be substantial and significant debt reduction or some sort of relief if you want the imf on board. in some ways varoufakis predicted all of this in that july phone call. here is how he describes that. >> on the one hand, we are being told that they will only provide

this loan of more than 80 billion if the imf is a board. the imf is coming out with the debt analysis that the greek debt is not sustainable and the imf cannot participate in a bailout. they have already violated the rules twice. i don't think they will do it a third time. at the end of the day, the imf will not be able to coordinate. hans: francine, manus, the imf is participating with these talks, but they have not indicated if they will put any money in. and if they do, what sort of requirements and if they would -- when they would add that new money. manus: hans nichols in berlin. thank you very much. coming up next, we will talk about the migrant crisis in the eu.

stay with us for that. we will also talk about amazon and their version of "top gear." ♪

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francine: welcome back to "the pulse." i'm francine lacqua. manus: i'm manus cranny. bnp paribas has its highest quarterly profits in more than three years. trading revenue rose. france's biggest bank benefited from gains. revenue rose 16%. francine: the slump in oil prices, the company which agreed to be acquired by royal dutch shell in april has reported a

65% drop in second-quarter profits. net income fell to $429 million. manus: david cameron is in meetings this morning in response to the calle migrant crisis -- calais migrant crisis. he has been accused of stoking fears. francine: 10:31 u.k. time. let's check in with the markets. jonathan ferro has the latest. jonathan: thank you very much francine. the ftse 100 is down 0.1%. where did july go? it was the best month since february. a decent month for european equities. a dreadful week.

the worst month for the shanghai composite since 2009. let's go to the commodity market. brent is below $48 per barrel on wti. a 2002 low the worst month in years. it has been that ugly for the bloomberg commodity index. it is the inflation numbers that we see in japan, and europe this morning. eurozone cti stays in line with estimates. core cpi taking up from 0.8% to 1%. here is the fallout of the bond market. as inflation takes up bonds start to sell off a little bit. the 10-year german bonds are still ridiculously low. core cpi just pushing that

little bit higher. what to watch. francine: thank you so much. manus: ok. in 25 minutes, tom keene will take the airwaves on "surveillance." latin america is one of those ones that we have not focused that much on. you want to go there. you also want to keep an eye on australia. >> you said that nicely, manus. we have a bias of transatlantic or transpacific. there is a cultural hesitancy in america to look south. we will do that across "bloomberg surveillance" today. as you just are jonathan ferro say, commodities continue ugly this morning. i'm not going to call it a plunge or a route, but brent crude is $52 and gold cannot find a bid this morning.

we will carry over to australia. of all the "surveillance" guests, the single best guest on australia will be here. he has been doing it for decades. we will get a briefing in the 6:00 hour on australia. it is a nice twist on those commodity implosions you hear about from jonathan ferro. manus: ok. let's focus on that, as you say, it is all about that commodity implosion. tom keene. francine: let's get more on the calais migrant crisis. david cameron is chairing an emergency conference this morning. tom, great to have you on the program. how did it feel? you went to the camp. how big was it? did people seem desperate? why do so many want to come to the u.k.? >> we have all seen the pictures

of crowds of largely young men and women trying to get onto the lorries. we wanted to find some of their stories. it is very open. there are about 2500 migrants there. that is down from around 3000 six weeks ago. they have very basic facilities. they get one meal a day. they have pieces of wood they make structures out of. there have been some fairly ingenious creations by the migrants who have created restaurants, shops, a nightclub, a church. why are they there? many of them have spent 3-8 months. they are traveling from mary trieste -- from eritrea. many of them have made the perilous journey across the mediterranean and they're very

determined to make a home in france or get to england. manus: therein lies the difference. there are those that want to remain in france and those who have started the process. did you get the feeling that the mission to get to england is something that they have sacrificed everything for? why do they see england as being that destination over italy or france? >> it is a combination of factors. there is an awareness that the economy in the u.k. is more robust. many speak english or a bit of english. many have family or friends here already, which helps with connections. yes, they have sacrificed a huge amount. the security measures are making it more difficult. they are having to take longer to attempt to board the train's longer each night those is that

they want to go to england said they will continue to try on a nightly basis to get here. some of the stories are incredibly sad. i met an afghan businessman who runs three businesses in afghanistan. he was threatened by the tele-ban. -- he was threatened by the telaliban. he had to flee because he was being threatened. francine: so he arrived with the four children? >> no, he left his wife and four children with his cousin. he spent $10,000 trying to get here and now he is living in a tarpaulin, wooden structure and he is desperate to come to england. francine: thank you so much. they are heartbreaking stories. we will have plenty more from tom throughout the week. manus: coming up next, it was

about amazon signing up jeremy clarkson and his cohorts. it is the remake of "top gear." amazon, netflix. francine: this is all about content creation and who is going to be the winner. we will have that next. ♪

manus: welcome back to "the

pulse." live on bloomberg television in london. bg which is being acquired by royal dutch she,llll for more than $70 billion, reported a drop of more than 65% in profits. bg's chief executive told bloomberg the result is directly linked to the drop in oil prices. >> we have a variable situation. it is due to the lower prices. the demand has increased. we have some sort of a structural decline. saudi arabia is gaining market share. the u.s. unconventional is more resilient. we just have to assume that the industry will face more problems. manus: let's bring in our senior

oil and gas analyst. this is a ceo who is really quite optimistic about his outlook. he was really really -- >> there is a great demand. on the supply side, there are projects coming on stream. they will take a lot of time. the market will stay tight for gas and energy, especially. there are assets and egypt.

the used to be an exporter. a drop in domestic production and a surgeon domestic demand.

francine: we spoke to the shell ceo yesterday. we understand that they were paid because the oil price went down. could they have gotten in now? or was it actually the right thing? it is very volatile. >> outside of north america, it depends on where the oil price is flowing. francine: we have to cut you off. we are getting the announcement from the host city. >> lausanne!

♪ ♪ ♪

[applause] >> many congratulations to lausanne. i was going to say, please ask you to take your seats. we are about to prepare to find out who will be the host city for the olympic winter games. >> a chance to say thank you to our host here in the city of kuala lumpur. here is why so many people come to visit beautiful malaysia. ♪

francine: they are very good at teases. we are expecting this announcement. they keep on telling us it is imminent. manus: as to whether it is china or cousin asked on -- kazakhstan. francine: we are going to take a short break.

francine: welcome back to "the pulse." competition in the video streaming services industry is picking up pace continuing since amazon said it will invest more money in creating its own content. amazon confirmed jeremy clarkson will be joined in a news car series which will be launched next year. bien, great to have you on the program. this is a huge win for amazon. >> absolutely. it is absolutely fantastic as a brand franchise. if you look at jeremy clarkson and "top gear" it was such a successful program worldwide for

the bbc. for amazon, it is a great c oup. this is their equivalent of "house of cards." it depends on the return. it drags people in. one of the things you are seeing in terms of subscriptions is the propensity for people to take subscription services is a lot more than some of these operators thought would happen. as long as you don't type people into a contract and you have content they are willing to pay a reasonable amount of money poor -- four per month, people will come. someone like jeremy clarkson there will be a big demographic you will like it and if you're amazon, you have other services you can throw on top. overall, this will prove to be a

good deal for amazon. francine: is amazon a real contender in buying content? >> you have to look at it with content in a way that you have two markets. there are formats that sell globally. "house of cards," "top gear," etc. game of thrones is another one. if you look at podcasts or respective markets, there are local markets that attract based on market. what you are seeing is that you have two parallel markets. you have a couple of big hitters and you have other content on top and then you have traditional who are focused on local content. i don't think the two will impact one another. the other thing to bear in mind is that, in terms of the amount

of time available to watch video content it has massively increased over the past couple of years. it used to be that you had to be in your living room in front of the tv set and now you can watch it on the go. that has massive implications. manus: the implications for the advertising market. the lowest overall audience share in 15 years. the whole thing has dramatically changed. the advertising model. how does all of this play into the advertising? if you take amazon or netflix, they are very much going down a subscription route. if you're asking people to pay $10 per month i don't think they are competing for ad dollars, but it becomes a question of audience and the various challenges. there are a couple of factors to consider. despite the fact that audiences

are going down, broadcasters can still deliver a mass-market audience. tv advertising works, which is key. another thing that will be increasingly important is that at the moment, the measurement of tv content on mobile or online is still very much in its infancy. as that starts to get better and better than your traditional broadcasters will be able to monetize that more. it is a point that sometimes gets missed. increasingly it is not about are you watching tv? it is about, are you watching their content? francine: on that basis what we will end up paying for that content is going to increase significantly. there is going to be a race. >> yes. but for key formats, there will always be big demand. top franchise shows. a lot of content bear in mind

there is a glut of content out there. if you go on sky and see the number of channels on sky, huge amount of content very little value. francine: that is the problem. thank you so much. manus: a little bit of breaking news for our viewers. this is david cameron. in regards to the crisis that has been referred to at calais . david cameron will speak to francois hollande later in the day. this has been an escalation through the week. 4000 at the camp. in terms of that real challenge of getting to the united kingdom. francine: here is hans nichols. we are watching greece. we are watching commodities. we are watching china. hans: we have a couple of economic data points coming out later today.

we have the chicago pmi numbers. four of the last five months have shown contraction. we have the strong dollar. it is supposed to be in positive territory. we are also looking at the university of michigan bloomberg consumer confidence survey. it is supposed to take up ever so highly. that has to do with oil and how much richer consumers feel when they are at the tank. manus: it is going to be a pretty big week. we go into a very interesting week next week. there is a lot to play for. it just continues on. hans: the jobs report, we no longer look at the headline number. we look at hours worked and wage prices. if those of upward pressure, that makes janet yellen's job in september that much easier. francine: that is it for "the pulse." stay tuned for the "surveillance" team. follow both of us on twitter.

we were talking about social media, whether you prefer linkedin, facebook, or twitter. tweet us. ♪

announcer: this is "bloomberg surveillance." tom: good morning, everyone. beijing over kazakhstan -- it is as simple as that -- for the winter olympics a few years out in front of you. this is the beijing stadium from

the 2008 olympics, seating 80,000 people. all of those people in front of you will be making snow come 2022. we welcome you all worldwide, "bloomberg surveillance." we focus on one of the challenges of china, commodities. also interesting news out of greece. i think we should chat about the importance of this. the olympics -- our take is that boston does not want them, but beijing does. brendan: a lot of the infrastructure of the ioc, there is no question whether beijing will have the resources to get this done on time. tom: particularly after maybe what we saw with fifa when you want to keep your head down. brendan: and rio is definit