francine: copper heads for a low and the global rout continues. e selloffs. british government offloads its stake in rbs. why is george osborne willing to take a loss on the day? francine: as the first trader to be tried over libor rigging. we speak to the fraud office who brought the case against him. francine: welcome to "the pulse

," at bloomberg's european headquarters in london. manus: ahead, we have two big interviews. in 10 minutes we speak to the ceo of italy second-largest bank. paolo.n francine: then we are joined by continentale chief executive offers. manus: first, commodities are trading at their lowest in 13 years with oil, metals and crops being effective. francine: supply gluts and the slowdown in china and prospects of the yard -- the rise in u.s. interest rates extending the rout. us is the bloomberg managing editor for commodities. been oversold are we are expecting bad news? >> that depends a lot on what

happens in china, about how the story develops. we see data that shows a slowdown in the real economy. if you start to feel that, the bearish mood can continue. links one of the biggest is between china and the producers. we have had everybody through the door. if we look at what the miners are doing and the china story, how does that balance? will: even at these prices, miners will still be making money. there is little incentive for them to reduce production. we might see them start to reduce capex spending that they will keep mining. longer-term, compared with other commodities, there are reasons to be optimistic about copper. people feel at the world is running out of copper. francine: how difficult is it to predict stability in china? is it almost impossible? will: you would have to ask a chinese economist.

but people are always worried about the quality of the data. far wet is true is so have not seen really big changes in chinese demand for commodities but that could change quickly if we do see a more dramatic slowdown. manus: when we talk about oil, brent in a bear market, below $50. yesterday story about iran. i thought this was story. they said within a week we can produce half a billion -- francine: they are ready. manus: locked and loaded. within a month? will: this is one of the reasons why people are so bearish about oil. the iranians are talking a punch again about how quickly they can bring oil to the market. a marketwill come into that already has all this oil from saudi arabia and america. very few reasons to be optimistic about the oil market. francine: we are expecting a lot

of miners reported thursday and friday. will: i think you will see them maintain their dividends. that is true of the oil companies as well. the books balance as best at their able, you're likely to see cost cuts. people are likely to emphasize how they can cut spending on new mines and come down hard on operating costs. i would expect that would be the key message from rio tinto tomorrow. manus: in the headlines, fran was talking about platinum. but we also have got gold. the market has turned net short. traders are betting against gold for the first time since records began. that is a pretty big bet. will: but when i think when you take everything together, the fundamentals of gold are horrible. manus: don't hold back. you: on the physical side,

have china which is a big consumer slowing down. then there is the financial trade. with interest rates rising, that is horrible for the gold market. manus: thank you very much, our bloomberg managing editor for commodities. francine: here's a look at what else is on the radar. the u.k. government has started to selloff it 78 percent stake in the royal bank of scotland. it raise 2.1 billion pounds by offloading 5% of its shares and stock. george osborne is taking a looss as he tries to revive investor appetite in the bank. u.s. federal prosecutors are investigating billions of dollars of trades made by deutsche bank on behalf of russian continents -- clients. that is according to people with knowledge of the situation. it is suggested that justice department's probe focuses on mirror trades, which may have

allowed russian clients to move funds out of the country. francine: bmw, the world's biggest maker of luxury cars, says a slowdown in chinese demand might leave its -- to rethink. that came as it announced a second-quarter profit fell 3% from the year-earlier. sales decline cost the company its position as the world's top-selling automaker. suspending shortselling in china after regulators propose new restrictions trying to stabilize the world ticket largest equity market. investors who borrow shares in shanghai must now wait one day to pay back the loans. that should reduce fluctuations in prices caused by traders selling and buying back stock's all in the same day. in twitterhares slumped 5.6% yesterday to $29. that is the lowest prices than companies floatation in. november 2013 or drop pushes them below

market value of $20 billion. the company warned last week that it will be a while before it sends -- gets a slowdown in user growth. manus: president obama made his ideas to come back climate change. the new rules drew criticism even before they were announced. wyoming and oklahoma have sued -- to block them. speaking at the white house, the president said climate change posed the greatest threat to the human race. president obama: we are the firs the impactn to feel of climate generation. we are the last generation that can do something about it. we only get one home. we only get one planet. b.re's no plan francine: no plan b. he is talking about climate change but it feels like he is talking about greece. found ubs trader has been

guilty of libor rigging. manus: the first person to stand trial, hayes was sentenced to14 years in prison. the verdict underlies a point that bankers are subject to the same policy as the rest of us. our investigations reporter joins us now. how would we judge this in terms of significance? it is substantial for the sfo? culminationis the of seven years of investigation we have the first person to against the test of criminality and be found guilty. of the first scandals that led to a number of others like fx and gold. libor became the bog word -- by word for bad behavior. to be found guilty is significant. francine: 14 years seems harsh.

it is not a judgment -- but if you look at the story and here and look at some of the quotes by hayes, there was one that you picked up. manus: the mother teresa quote. francine: he is basically saying that mother teresa would've manipulated markets. this goes to the crux of why he was sent as for a long time? the longestars is sentence we have seen in many years. he has two things going on. what is he tried to play the game. he went to cooperate with the going toand said he was plead guilty and six month later changed his mind. that did not pay off. manus: he argued that he cooperated with the sfo because he did not want to get extra grade -- extradited to the united states. he has not said anything to get himself out of this. if we think about what he was

suggesting, which was that much more senior individuals than he knew were fully cognizant of his behaviors and toothers' behaviors. this is a rather damning indictment of what is -- of senior management. : this is the classic problem we have had throughout the crisis. these people did not act alone. they did not act without any direction. the evidence trail, senior managers do not put these things in an e-mail. secondly, as much as there may be called the ability-- culp ability from senior managers and does not excuse the fact that he was the one that decided to commit that behavior. francine: thank you so much. bloomberg's investigations and enforcement reports. great title. we will speak to david green the

director of the office which brought the case against tom hayes. manus: today's twitter question which i think is very assistant. there you go. the system or the individuals? whose to blame for market abuse? #the pulse. join us. tell us what you think. francine: and you can also tweet suzi. up next, we speak to the ceo of italy's second largest bank. it's a bloomberg exclusive. keep it here. ♪

francine: welcome back to "the pulse," streaming on bloomberg.com, your tablet and your phone. italy's second-largest bank increase inourfold profit last week as it set aside last money for bad loans and commissions jump to. the ceo says the country is pointing to an economic recovery. he joins us for a bloomberg exclusive interview. great to have you on the program. thank you for coming in. you have been in charge for a year and a half, and the shares have gone significantly up. this you must be pleased about but you feel extra pressure to deliver? mr. messina: you have to

consider that this has been the best semester in the story of intesa sao paolo. we succeeded in turning it into a european leader. that is the reason i am proud. francine: what comes next? we cansina: i think maintain this momentum and increase the generation of net income. i am really proud of the results and i hope that we can deliver very good results. francine: you have been over delivering. but investors want to know what you increase the debate -- the dividend? if you continue surpassing targets, it seems logical. mr. messina: that is the positive and the negative is you have pressure to give messages on dividend. it is clear that we delivered in six months the dividend that we promised for the full year. so now we can work with high

degree of flexibility on the item of dividend. i can confirm you that there is my first priority. so it means if you continue on this path -- there's a likelihood. mr. messina: i hope to be in the position to give good surprise to the market but we will see at the end of the year. francine: if you can give surprises, the dividends may follow? mr. messina: they can be very happy on the results of the bank. my management style is to motivate people and reward. motivational people is done. reward is on the way. if you consider that my shareholder pays 40% to 60%, i have to maintain them happy to stay with my bank. francine: you have been on the show and talk to me about asset sales and restructuring the bank

and looking at buying opportunities. where are we at? your silly assets and there are reports that you may be getting rid of consumer credit -- you are selling assets. mr. messina: we are considering a disposal of 2 billion euros of loans originated by brokers. it is a process that is on the way and we will see it in the next future. looking in the portfolio of oniness, we are very happy delivering, that we are doing on management. we have to consider world management. we are second in net inflows after blackrock. you think about ubs, but second is intesa sao paolo, not deutsche bank. we are delivering strong results organically. then there can be options for roles in the future. iron really committed to deliver on the organic growth. apart from consumer credit, is there anything else

you are looking at disposing? mr. messina: we are considering to increase the recovery to our nonperforming loans. with reform in italy for next year, we will be in a position to consider a possible disposal of nonperforming loans but we will see in the next future, we are so solid and so strong that toneed to -- we don't need work for disposal. now we want to maximize the prize. -- the price. francine: you told me you were not interested in consolidation. is that still the case? mr. messina: not at all interested in italy because we are so strong in our account we can deliver extra organic growth within our business unit. francine: i sometimes feel like i'm a broken disc, because every time you come on i ask about the fed and whether interest rates will go up soon. are we near the time? and that can only be a

positive for you. mr. messina: the point of interest rate is absolutely an issue for financial markets. for the real economy, if there could be an increase in the fed interest rate, then in the future we can have -- a devaluation of the euro but the possibility of a decrease in net interest in our really counted. in the end, a strong bank like us could have a strong opportunity. i hope they will increase interest rates. toncine: leaving your bank one side, but i know that you have been firing on all cylinders. are you more optimistic about the world economy, if you look at the possibility of raising interest rates? we have the possibility of a stronger -- u.s. greece seems to be muddling through. a. messina: greece is not significant part, apart from the

risk of contagion. i do not see any kind of problem in the economy coming from the greece situation. i think that china could be something that can be considered, but in the medium-term, you have 1 trillion of people that, one billion, fory, that can be consumer goods. in the end, it will remain an option for growth for all the world. so i'm not concerned. i think we are in a unique phase in the cycle. so there could be only positive and not negative. francine: on china, are you worried about market volatility? growth or the real economy seems to be insular. between the-- exporter and return related demands. there is a phase in which you have an increase in the possibility of people to make consumption within the country. so it is typical that you have volatility. do not forget that we have at intesa san paolo a 49% stake in

the seventh asset manager in china. it is 79 billion euros total asset in china. we think that china could be an opportunity in assets under management in the next years. francine: thank you so much for the interview. carlo messina, the ceo of intesa san paolo in a bloomberg exclusive. putting on the brakes. where details of bmw's china warning. stay with us on "the pulse." ♪

manus: welcome back to "the pulse," streaming on your tablet, phone and bloomberg.com. as sharp tbmw says slowdown in chinese demand might leave it to rethink's -- rethink goals. manus: sales declined and cost his company its position as the world's top-selling automaker. bmw, the numbers were very much in line but they warned substantially on china, didn't they? that is right. china is a concern from bmw and for all of the automakers. saying if china continues to remain weak, they may have to cut their full-year outlook. that comes after volkswagen and audi cut their full year global deliveries forecast on weak

china sales. we are getting some flavor on bmw's concerns on china at this hour. the bmw ceo is talking to reporters and he is talking about the fact that the normalization in the china market is quickening. now, that may sound positive but what that means for bmw is that these high costs they used to have -- the height price -- the high price they were able to receive for vehicles in china, that is changing. those high prices are coming down and that means that profitability in china is taking a hit. francine: we also had u.s. auto sales last night. the market seems to be on full firing steam. chad: yeah, it is really a tale of two totally different markets. in a reversal from a few years ago when china was the growth

engine and the u.s. market was weak. now the u.s. market is firing on all cylinders and analysts expect that growth to continue next year. that is been helping the likes of toyota. toyota outweighs their profit figures this morning. they beat estimates. the u.s. is toyota's most important market. toyota being helped considerably by the weak yen. those profits coming back from the u.s. at a higher rate because of the weak yen versus the dollar. manus: thank you very much for running everything up for us this morning. chad thomas in berlin. francine: up next, the u.k. government offloads to me and pounds of rbs stock. why is george osborne willing to take a loss on sales? we discussed that after the break. ♪

francine: welcome back to "the pulse," live fin london. manus: here are some of the top headlines. platinum has sunk to a six year low and copper is nearing a bear market. meanwhile gold is trading near a five-year low. brent is below $50 a barrel. francine: the first person to stand trial for manipulative libor has been convicted. tom hayes was found guilty of conspiracy to rig the benchmark

rate. the judge set a message had to be sent to the banking world. manus: the u.k. government has started to sell off its stake in the royal bank of scotland to it raised two point one billion pounds by offloading 5.4% of its shares. george osborne is taking a loss as he tries to revive investor appetite in the bank seven years after became britain's biggest casualty of the financial crisis. francine: now, let's get more on issuednd the rbs ceo has a statement saying "i am please the government has started to sell down its stake. it is an important moment and reflects the progress we are making to become a stronger, simpler, and fairer bank. there is more work to be done but we are determined to determine -- to build a bank the country can be proud of." manus: this was something that was warned about by the chancellor a couple of weeks ago. we's taking a loss.

this is a bit of a gamble. public opinion, yes. the chancellor does not seem to mind. the tried to lay groundwork. he said in june that he had adi cievice from mark carney and from rothschild which advised that sale now was the right thing to do. he is pushing ahead with that program. he wants to sell at a loss in share price rises in future and he can make more money on later sales. francine: how much does rbs need? richard: the bank will need to pounds tille billion 2019. most of those costs are coming out. that is why we are seeing it post losses seven years on from its bailout by the state. we might not see any dividend until 2017 from the bank, that

is what they said last week. it's expected to make a loss again this year. manus: it is just not going to happen, investment bank by 2017. what is going on at rbs. he has these huge unwanted assets. they got way ahead in terms of running nose down. now is about compacting that down to virtually nothing. richard: back at the height of the crisis, rbs was one of the biggest banks in the world. with a balance sheet of 2 trillion pounds. they have cut that in half. that is a big disposal even for seven years. that is huge. future isment bank in going to account for only 30 billion of risk-weighted assets, 15% of the balance sheet. that is tiny and compared to what it once was. dding a lot of people. that unit employs 18,000 people at the moment. the ceo has said there will be

significant cuts. he's refused to put a specific number on job losses. francine: thank you so much. banking report. appeared we have breaking news and the last couple minutes. this is construction pmi. it has fallen more than forecast at 57.1. it had an impact on the pound. manus: let's have a look at sterling. because it is moving on euro- sterling moore than it is on dollars sterling. construction is still important part of the u.k. economy. a bit of a move there. francine: we are still awaiting rate to have clues on what mark carney is going to do. manus: super thursday. francine: only two days away. we will have a slew of thinking out what bank of england monetary policy makers will do. 1.5590. on that weaker than expected construction pmi, the pound touched the day low. manus: we want to see what level

of percent is on thursday if at all. in the meantime, luxury food -- lobster is becoming less costly. like all commodities -- clawed crustaceans are more susceptible to market conditions. so, you might not be able to afford that much longer. tom gibson reports. >> 16, 17. to: from london all the way beijing, demand for lobsters is that long time highs. been driven mostly by chinese buyers. > that's chinese.

tom: lobsters bought in north atlantic water are 1/3 the cost. catches started to grow. canadians you can get all year-round. so, it's a good base for lobsters. we will have canadians throughout the year. in recent years, low prices mean more of us can afford what was once the highest in society. >> when i was growing up, lobster was out of our price range. now you can go to a fast food restaurant and have a lobster and ships for 20 pounds. tom: shipping 17 tons a week from nova scotia to london, they require on the margin. so far, it's worked. now lobster prices are rising. this year's catch is lower thanks to changing water

temperatures. >> we will have to increase our price probably next to. -- the next year. the lobster price in her letter were completely eat our margins. tom: while higher prices could hurt, that brand is considering making the market work for them. >> at the same time, we understand that chinese market, chinese restaurant market is a very big opportunity for us. starting from next year, we want to create a strategy of how we are going to enter the chinese market. the money we lost because of the increase of lobster price, we ckll make that-- make bacy by opening more restaurants in china. francine: who does not like lobster? most people do. continentale raises

its full-year earnings forecast, we speak to the cfo. manus: he will be with us. the commodity market. what is his view? ♪

francine: welcome back to "the pulse." manus: spanish unemployment fell by more than expected in july,

dropping to 70 by 74,000. as spain'smes government delivers its budget. a series of handouts are expected to secure a second term with voters as they go to the polls later this year. francine: emergency teams and the netherlands are searching for survivors in the rubble of several buildings that were flattened went to giant cranes collapsed. they were on a pontoon on the river rhine. to person has been taken hospital, but authorities do not know how many other people may have been inside the damaged buildings. manus: puerto rico has missed its first debt repayment. the caribbean island should have paid $58 million yesterday. but managed just $628,000. one expert says the puerto rico has taken the first move to commit financial suicide. francine: ever wondered what makes the perfect gin and tonic? we spoke to the head bartender

at the london gin club to find out how they do it. >> it is really nice when it gets -- we are able to offer them something. the guest says, i don't like gin. people do not understand the array of gins available now. you get small class distillery's that have popped up. far more ambitious and what they're using in their gins, more experimental and more creative. other than the average london dry. what makes a great gin and tonic is a -- we and sported -- import it from spain. put your nose into the glass rather than jerking from a st-- drinking from a straw. if you do not engage your nose by tricking from a straw, than you would -- drinking from a

straw. we double frees our ice. we hand pack it at the beginning of the shift. it keeps your drink colder for longer. when something like tonic hits water, it is going to go flat quickly. so the colder the better. garnish-wise, we like to offset match.ish we take sick something from the botanicals in the gin. or more lemon or plum cherry, something to offset the balance of the gin. francine: a little bit punchy for 9:43 a.m. in asia, it is 5:00 p.m. somewhere. top tips to improve your g&t. manus: all about the ice.

we are losing the children. up next, continentale beat second-quarter estimates. they raise their full-year guidance in terms of earnings. we have the cfo joining us on the "the pulse. stay tuned with us for that. ♪

manus: welcome back to "the pulse," live on bloomberg

television, radio, streaming on your tablet and phone and bloomberg.com. increased its 2015 profitability target as growth at the asian carmaker -- in asia helped the numbers. so, we have got the quarterly numbers in check. the company has been helped by lower raw material costs and sliding oil prices. joining us is continentale's efo. - cfo. a warm welcome to bloomberg. well done on the numbers, beating profits, raising your margins again. my question to you is this -- you had great tailwinds, a lower euro, lower commodity prices, is this as good as it gets for continental? have we seen the top? well, actually as far as the raw material prices are concerned, i think yes. we could not imagine oil prices

or natural or synthetic rubber prices to goad significantly more down -- to go significantly more down. we are concentrating on the megatrends in the automotive into chris -- industry, increasing the safety of the car, of all the power train emission reductions in the car. all these effects will have a positive long-term effect on our growth potential. no, we are not at the top point but at this point, raw material, i would agree. manus: we will talk about those innovations in a second. circle ofose off the commodities, are you hedging at the moment, taking advantage of low prices in rubb3eer and oil? if so, in what areas? mr. schaefer: we are not hedging, specifically on the market rubber side, the

is so small that a bigger hedge is not possible. actually, what we observed in the whole industry is that nobody does hedging. so everybody is affected a from a to a prices go up. then everybody has to make sure it gets compensated from the market. manus: talk to me about china p because it was cap -- we've had bmw warning that it could be at issue in terms of making their numbers. what is your experience? what is continental's experience on the ground in china? some of the german manufacturers are warning that china is going to impact their numbers. what is your take? mr. schaefer: we do see a reduction of the growth rates in the chinese market. 10%.ve seen 8% to forere expecting 6% to 8% china this year. probably it will only be 4%. we still see growth in china.

we are not talking about reduction in the market. just in the growth rates. we have managed to double as fast in the market in china. we expect to do this for the rest of the year. if i'm saying we have reduced our expectations on growth in ehina, we see a nic compensation and better market developers in europe and the u.s. this is compensating the effect we have in china. manus: what are you -- for growth in europe and the u.s.? then we move to tech. do expect 20.3e million cars in europe to be produced which is 2% more than we have seen last year. this includes the weak market of russia. is western europe actually growing quite nicely after many years where we did not see growth.

in th u.s.e, we are expecting 17.5 million cars to be produced, a record number never seen before. a growth rate of 2% to 3% as high contentve a of continental products this is good for us. manus: yesterday we saw audi and bmw announcing that they are doing a deal to buy nokia's maps business. are you having discussions with a consortium? they are looking for new partners. is that of interest to you? actually, here we are cooperating and doing projects together with them for our customers. those customers would approach us and ask us to join this consortium, we definitely will think about it. there is no decision made it continental how to react on such a request. manus: do you think it is a smart deal from what you have seen, an intelligent move by

auto manufacturers? mr. schaefer: it is a very logic deal for them. e-horizons with dynamic mapping and then that - -the dynamic navigation is important to make sure the driver gets from a to b and makes the car the most fuel-efficient. yeah, i think it is a smart deal. manus: let's talk about driverless cars. apple, google. the technological revolution do you want to own, that you want to be the vanguard of? is it driverless cars? mr. schaefer: well, you know, the driverless car was first composed of many components of cameras.ctuaries, and it is not only these hardware. these all need a lot of software

to operate right. a company like continental who has been in those components and developing those components and systems further and further is a strong inich will be those fields. in addition to that, we have the capability to build up and build up the environmental model around the car, which is important to make sure that the car reacts right in traffic and environmental situations. manus: from the research you have done -- this is what i am fascinated to know -- do we want driverless cars? is it high on our needs? will we adopt driverless cars effortlessly? mr. schaefer: yes. definitely yes. one opinionre more than poll and a high percentage of people in principle says that we are interested in it. and people are willing to spend

a couple of thousand euros more for a driverless car which were they feel more comfortable. please do not forget in many of the countries we are an aging population. and specifically in all of the populations, i remember in opinion polls from japan where we saw that as well in older forlations, the openness driverless cars is very high. manus: the cfo of continental. thank you very much for joining us from hanover. francine: let's recap the stories on our radar tuesday . the u.k. government started to selloff its stake in the royal bank of scotland. it raised 2.1 billion pounds by offloading 5.4% of its share of the stock. george osborne is taking a loss as he tries to revive investor appetite in the bank seven years after it became britain's biggest casualty of the financial crisis. prosecutorsfederal

are investigating billions of dollars of trades made by deutsche bank on behalf of russian client. as recently as this year. according to people with knowledge of the situation. it is suggested the justice department's probe focuses on mirror trays which have allowed russian clients to move funds out of the country without alerting authorities. a sharp: bmw says slowdown in chinese demand might lead it to rethink profitability goals. that came as it announced second-quarter profits are 3% -- up 3% from a year later. shortsellinging in china after regulators impose new restrictions trying to stabilize the world's second-largest equity market. investors are barred shares in shanghai must now wait one day to pay back loans.

that should reduce fluctuations in prices caused by traders selling and buying back stocks on the same day. francine: shares in twitter slumped 5.6% yesterday to $29, the lowest prices the company's ipo. while the drop pushes toward a below market value of $20 billion, the company warned last week that it will be a while before a slowdown in user growth. manus: president obama laid of his ideas to combat climate change calling on states to cut emissions. the new rules drew criticism before they were announced. wyoming and oklahoma have sued to block them. the president says climate change posed the greatest threat to the human race. francine: this is a picture for commodities. all down. we've seen a cookbook -- a global commodities rout. it is also the end of the first hour of "the pulse." coming up "the first word" for listeners. coming up, we are speaking to

the chief investment officer in china and we are talking gold. manus: a great interview with carlo messina in intesa san paolo. francine: back in two. ♪

♪ mannus: commodities crash plateauing at a six year low. a global rise continues in commodities. francine: the british government uploads 2.1 billion pounds and ibs. first traitor to be tried over liable he could be jailed for 14 years. we speak to the fraud that brought the case against him.

good morning to our viewers in europe. good evening to those in asia, and a warm welcome to those waking up and the united states. i am manus cranny. francine: i am francine lacqua. time at ae the first record low. the slump in china and the expectations on the fed. mannus: we trade below $50 on crude. at $45.67the nose wti. on's talk all of the issues commodities. we are joined by our commodities guest, rick hoffman. .- greg hoffman thank you for joining us. where are we in this great debate? china is under a great deal of pressure. i just spoke to a cfo who said

it has been a bit of a right, but getting things lower -- it will be a tough one. it depends on the metal you are talking about. the debate if china is in a mess is known. they have a lot of problems. in chinad for copper is down. the miners have not react this. the downside, you have to go to how much does it cost them to produce, and if they lose, will they shut down mines? they have not shut down mines, that is why prices continue to fall. francine: do we know when there will be stability in china? can you shed any light on do that? kenneth: the debate in china is how long the bear market will last. some say, we will clear it out

the rest of the year. some say it could be a 10 year bear market in metals. you have an overbuilding of the chinese infrastructure. as that chinese construction bubble deflates over the next 10 years the metal industry could be in rough shape. everyone is watching equities. minute by minute watching the shanghai exchange. can the government keep prices stable? if they cannot that would be bad news for the chinese economy, particularly commodities. mannus: when you see the measures the chinese have taken, today it is about pulling back on shortselling, are we misguided and saying there is no contagion from this equity market? literally doing everything to save the equity market. kenneth: there is a lot of confusion.

on monday of last week when the market fell 8.5% people were watching the markets saying why is the government letting this happen? faith in thefull government protecting the equity market. if they cannot that is true contagion. everyone believes, why would i buy a new car? there are a lot of problems. everything is on the equity markets and the ability of the market stable.e they are selling commodities because they see demand continuing to follow. kenneth hoffman joining us from singapore. let's bring in our chief investment strategist. it is great to have you on the program. how do you read into commodities?

this is a general china question. investor, even if you are not looking at commodities, you must be worried about china. been tieshere have that chinese growth is slowing. showing growth at 3% rather than 7%. in the past have said trying to gauge what is going on in china is tricky. inevitably demand for wemodities will decline if see a general global slowdown. not dramatic, but a bit of a slowdown. they have had a construction boom drawing in commodities. the government has attempted to restructure the economy to a consumer led economy, hence the boom in the stock market.

we are seeing a continuation of commodities slowing down. governments like rio and bhp billiton on have been increasing have beenliton increasing. glencore is below two pounds a share. the debate is output. output andthings are reduction output. it seems the mood has changed. and dividends and the risk for dividends. is it too big of a risk for holding commodities at the moment? howael: it is a question of much they cut commodities by. it could still be the best game in town. instead of getting 5% it could be getting 4.5%, which is still

good. the situation will be a it of a squeeze. in technical terms -- technical terms, prices are oversold. are going to get that sort of process. you have problems in brazil as well. -- of these issues ultimately it comes down to confidence. a lot of investors have an at which the speed shanghai composite index fell away. that could happen, we have seen knockoffs from the shanghai market directly to people in trading and commodities. we have seen commodities come out of the woodwork. francine: thank you very much. to stay with us. we will be talking about rbs and other companies, next.

the u.k. government has a 78% stake in the bank of scotland. they unloaded their share of the stock. taking a loss on sales. -- u.s. federal prosecutors are investigating billions of dollars in trade based on deutsche bank on behalf of russian clients as recently as this year. trade -- is on merrill on mirror trade which may have funds out of the country without alerting authorities. mannus: rethinking profitability as profit fell 3% from earlier.

francine: president obama has laid out his idea to combat climate change calling on safe emissions from power plant. the new rules drew criticism before they were even announced. the white house as climate change pose the greatest risk to the human race. >> we are the first generation to feel the impact of climate change. thate the last generation can do something about it. we only get one home. we only get one planet. there is no plan b. could very well be talking about greece. the first to stand trial for manipulating libor could be convicted to jail for 14 years. a message had to

be sent to the banking world. francine: that brings us to today's twitter question. the system or individuals? who is to blame? is at the system or the individuals? we are back in two. ♪

mannus: welcome back to "the pulse." live from the bloomberg european headquarters in london, we are back with our chief investment strategist. he has sold $3 billion of his stake and is taking a bit of a loss. where do you buy rbs? is it a company with longer-term? michael: one of the important things about this sale is it improves liquidity, which is important in institutions. we come back a long way with the public ownership of the bank already. when we talk about taking a loss, the bank is taking a broader review. if you set the profits from deutsche bank off, this profit of 330 implies a loss of one third on the buy in price. that is obviously not ideal.

politically it will be dynamite. i am encouraged by it. come under such pressure from the government. we have seen chief executives changing places quickly. there is no doubt the government has its eyes on the sector. we still talk about the rehabilitation. this was the big bank. it was tainted by the financial crisis. are they still in the rehabilitation phase? leaner,use they are have we moved on? michael: the only caveat is the general mood of the market. in globalme caution markets in the next six to 12 months. mannus: talk to us about barclays. they are all in the stage of

change. john mcfarland is there. not making light, but 150 senior management related to go. i was wondering about the change of strategy. how do you look at barclays in the context of the u.k. and globally? michael: you are always very reliant on the qualities of the people making the changes. mcfarland is experienced in turning around physicians. if you trust that, you say it will be all right. around decisions. if you trust that, you will say it will be all right. this is the global bank. , i am moderately encouraged. it is a question of how many more fines are coming down the

pipeline. i said the banks might be interesting, but the fines is making the cost of doing business very prohibitive. francine: talk to us about rsa. it is an insurance company. they may be a takeover target. consolidation seems to be the name of the game for insurance companies overall. ago, with short time tesla coming in, they have made some recovery which has been effective. it has been on our by list. it has performed quite well. it may not necessarily have been. you have to recognize that. toward the top end of its range, there is a pension liability of 3 billion sterling. under those circumstances other

billers might be cautious. they could not afford to be small. they would have to be big to take that in stride. grill a policy on dividends. saying that he would not commit. we believeear that in six months the dividend we promised for the full year. a high can work with degree of flexibility on the item of dividends. i can confirm to you that is my first priority. mannus: what i liked about that interview was he said 60% of the investor base is an international institutions, he has to please them. lloyds, and rbs, they are nowhere near dividends.

in banking, is the dividend play still part of how you look at the are? michael: absolutely. if we considered the global economy may be entering a slightly lower phase overall, the new executives coming in and wanting to turn around companies, they may be tempted to take away some of the dividends. people have to accept that. there may be alternative forms of income. we will not be in the dire situation we are in trying to get returns. francine: thank you. michael franklin. mannus: next, -- i love francine: it is your quote of the month. mannus: even mother teresa would .ig libor that is according to tom hayes who is the first person to be jailed for manipulating the rates. francine: you could not make that up. ♪

♪ francine: welcome back to "the pulse." live on bloomberg tv, and streaming on the ipad and .loomberg.com former citigroup trader, tom hayes, has been convicted to 14 years for manipulating liber. the verdict underlines the point

that bankers are subject to the same standards of honesty as the rest of us. joined with the latest. this is a very significant verdict. the first of its time. 14 years is a lot. >> one of the longest sentences we have seen for a financial crime in the u.k. for a long time. the judge said that bankers are no different than everyone else and will be treated the same. we knew this was going to happen, but 14 years is a staggering sentence to receive. told prosecutors in 2013, not even mother teresa would not manipulate liber if she was setting it and trading it. .> cheeky

when the judge says i will make an example of you, and you look at the quotes from 2013 implicating mother teresa, how much does this cheeky this have to do with this? we have seen a personality put to a name that has been tied to libor. he is a very interesting character. he is described as rainman. he had a superhero. he was not a playboy. -- you you could have se could have sense that he was obsessed with his job and wanted to do it right. he came with the expected line

that it was condoned. his manager expected it of him. onehave to ask, he was the at the end of the day that conducted the behavior. mannus: thank you for covering the story. he did not leave much meat on the bone of libor. thank you very much. at 10:40 we will speak to the director of the serious fraud office, the body that brought the case against tom hayes. francine: the u.k. government has started to sell it 78% stake in the royal bank of scotland. it is raised at 2.1 billion pounds by loading shares of its stock. i am is a statement saying pleased the government has started to sell down its stake. it reflects the progress we are making to become a stronger and

fairer bank. there's more work to be done, but we are determined to build a thank country can be proud of. i said tochard, as you earlier, this is a big roll of the dice for george osborne. any views on terms if it was well received. is he really rolling the dice? seen chairshave coming off a little bit off of the trade overnight. they are rebounding. a positive reaction amongst investors. part of the reasoning is a will be great for liquidity after the sale. there are more people who own stocks to trade other than the government. with 78% owned by the government, that was a big chunk not moving anywhere. that is now down to 73%. things are now in a better place

for future sales, that is the chancellor strategy. the bank has moved on a long way since the financial crisis. it has cut $1 trillion in assets . it was once one of the biggest banks in the world. it is now much smaller. it is trying to become more u.k. focused and centering on commercial and doing and business, retail customers. it has a way to go and they are going through heavy restructuring. they are spending 5 billion pounds on the process. they will not be complete to 2019. there's light at the end of the tunnel, but we are a ways away from that program. francine: next, putting on the brakes. details on the bmw china warning. keep it right here. you can find all of us on

twitter. for the twitter question of the day -- mannus: where is the responsibility? the individual or the system. join us on the debate. ♪

♪ francine: welcome back to "the pulse." live from bloomberg's european headquarters in london i am francine lacqua. mannus: i am manus cranny. the u.k. has sold 7% of its stake in the royal bank of scotland. chancellor george osborne is taking a loss on the sale as he tries to revive investor appetite in the bank seven years after it became britain's latest casualty of the financial crisis. ofncine: the first banker

manipulating leiber has been convicted and jailed for 14 years. the judge said that a message had to be sent to the banking world. a concern of race slacking demand and commodities. gold is trading at a five-year low. let's check in on the markets. jon ferro has the latest. jon: five days of gains in europe. benchmarkng, the dax in germany is in positive territory, but it is lost everywhere else in mainland europe. italy, the biggest gaining industry group -- the biggest losing industry group of the year in 2015. the miners go higher.

that is why the footie 300 is in the green one third of 1%. they catch a bit this morning. the commodities market is rebounding. the key thing that turns the news markets into one is china, china, china. in lineearnings get with estimates. the red flag is what happens in china. if they do get the downturn they may have to revise their full-year targets. 1.53 percent, a red flag for the commodities market. copper is flirting with a bear market. we are in the green one third of 1% but trading with a 2009 low. it goes higher this morning by 1.21%. the two dollars.

it is still in a bear market. the damage is done. going upt that we were in april and may, then it rolled over. in the commodity market and china, when you tie that together what do you get? maybe australia. the rba leaves rates unchanged. .he aussie dollar is up 1.34% it is in the statement. they did not say we need more depreciation of the aussie dollar. when you take out the job on the currency surges, making big moves across europe. 5 thank you. minutes, we are joined from new york. a big part of the show will be focusing on commodities. china had a great day to check their shelling. we saw a bid and commodities.

we will synthesize commodities over to other markets and some of the crises around the world. we have 2 wonderful guests. join us fromr will mgm advisors with a focus on gdm p. spirit is not happening in commodities. bill rhodes will join us and our second hour. europe,spend time on madame lagarde, and greece. we will talk to bill rhodes about puerto rico. this is an american story. thank you. tom keene with "surveillance". looking forward to it. maker ofhe biggest luxury cars says that a slowdown in china might lead to a rethink on profitability.

sales declined and cost the company its position as the world's top-selling automaker. chad thomas is standing by. is warning on china. the whole world seems to be warning on china. chad: good morning. it is a question of if you are looking at it in the short-term or long-term. within the last hour they have cut 16,000 units of production out of china on the market. same to investors. if the market remains weak we may have to cut our full-year forecast. they say in the long-term, china is a growth market where they will continue to invest. is facingbmw increased competition? richard: you hit the nail on the head. earnings aorted

couple of weeks ago. record second-quarter profit. despite the slowdown others are mercedes posted sales growth in china and the first half. part of that has to do with mercedes having new vehicles on the market. -- sew s is doing well losses doing well. bmw has an unfavorable product mix at the moment. we will likely see a boost for bmw when there flagship model comes out. have the u.s. dollars last night. the markets seem to be firing on full steam. it is all about renewals. people have cash, rates are low, things are not bad. the u.s. economy is doing

well. financing is cheap. oil prices are low. americans are buying cars. analysts expect this to continue next year. an interesting factoid is that for 30% of thent market. with the cheap gas -- coming from the u.s. i know it is cheaper than in europe -- people are saying we will buy suvs and the market is up. francine: thank you. by oliviae are joined price welker. it is great to have you on the program. what is your take on bmw? they are warning on china. olivia: they are experiencing the pain in china. they will have to discount, because they are facing competition from local brands. that is the profitability danger.

they will continue to try to grow there, it is the biggest vehicle market and they will not try to exit. mannus: where are we in the revamping of new lines? has come through with mercedes. they are -- all of the money they have spent will come to fruition. what is the lead time? in berlin was saying about mercedes, they face fierce competition from mercedes. it. they have revamped bmw is facing competition. they will continue to diversify. the electricus on vehicle segment and technology and the quality within their latest series is coming out. there is a focus on technology

in that. there is a partnership to invest on autonomous cars, all things they will major on in their new models. francine: a were talking about china. what is a carmaker that is putting out there? about we were talking mercedes. they have done a turnaround. tell you has done well, they are still leading there with quality and brand image. -- toyota has done well, they are still leading there with quality and brand image. in london uber has a 50% fleet ius.r known for quality. they will be able to grow on the. mannus: one is quality, another is technology.

what is your take on that deal? thoughtof continental it was a very smart deal. highlyit is a sophisticated piece of technology that incorporates time to me and a technology. it is a smart deal from a tech knowledge he company. are locking out icap companies. we talked about uber and google. unprecedented partnership between three key opm's that have kept it within the automotive industry. what the auto makers are looking for is a way to link to the consumer in the vehicle. if they maintain that relationship, no one else can

have it, that is why it is a smart deal. readyne: u.s. consumer is to spend 20 comes to cars? seeing a record sales volume globally. the u.s. is on track to be 17 million of that. brands, fiate chrysler, they are all doing well. looking at the consumers, it is interesting. berlin wasue in talking about suvs. the growth there is massive. it is partly driven by consumer confidence and lower oil prices. we are seeing generation y and buying more cars. america is leading the trend. challenges for the electric car market -- in my mind it is still the ability to recharge. it is the infrastructure that

must be the greatest challenge. are we ready to adapt? oliva: it is definitely consumer confidence. and you think car about what a nightmare it would be if you ran out of charge. are great, the themology works, uber runs and you can experience them. the cars comfortable and does not think noise. killer for the consumer buying one. if the structure as well. we need to prove you can charge your car when you want to. francine: thank you. up, former trader will be speaking to the director of the serious fraud office againstute the case

michael hayes. david greene joins "the pulse" next. ♪

♪ mannus: welcome back to "the pulse." live on bloomberg television. the first person to stand trial for manipulating leiber has been convicted and jailed for 14

years. the former citigroup trader, tom hays, was found guilty of conspiracy to rake at the rate. the judge said a message had to be sent to the banking world. by dave green. 14 years for hayes is a stiff sentence. does it send the right message to the banking community? i am interested in evidence rather than messages. it was a substantial sentence, but it was substantial fraud. that the serious fraud office has the capability to take on these and numerous investigations and bring them to a satisfactory conclusion. where are we?

this is an individual prosecution. for your area it is a success. we have not seen any senior board member at any institution held to kind in the quarter of law in regards to some of these investigations. should your institute the pursuing institutional prosecutions? david: we have a number of investigations currently which involve large companies. example.ce for we pursue the evidence. if there is evidence against the people at the top of the company , we will certainly get to them, but we do need evidence to proceed. francine: what was your reaction when you heard the 14 year sentence? david: i was a barrister for 14 years. i was pretty calm.

that is the last thing i would expect, but were you surprised it was so big? does it show the system is serious? the serious fraud office get a lot of flack. you are either too late to the game or too aggressive. what was your reaction? david: there is a professional satisfaction and a job well done, but more than that, i am on to the next case. deals, plea whistleblowers, the way that various investigators managed to do you think that we need more incentive, better incentives, to bring more whistleblowers out of the iti?work in c david: you know that whistleblowers are rewarded with

a cash reward for information they produce. here, we have never gone that far. mannus: it did help with libor? proper whistleblowers come forward under the sense of duty, civic duty, or they might be deeply disenchanted with their former employers, that kind of thing. we call it a harsh sentence because of the 14 years, do you think that your other investigations are more likely to plead guilty? .avid: that is up to them the significant thing is that the verdict shows that the jury regarded it as dishonest and that bankers are subject to the same standards of honesty and dishonesty as the rest of us. each individual will have to make up their mind. mannus: the credibility of the

it and the possibility that could be wrapped into a larger organization, is that threat gone? with the banner of publicity around the hayes trial does this deflect the possibility that to the sfo could be rolled into another entity? david: that is not a matter for me. it is a matter for the ministers. this helps your case. you can say i deserve more resources to do better next time. david: that is not quite how we speak to ministers. tonus: maybe we should speak ministers more forcefully. how will you address them? david: if and when this discussion comes out i will put forward forcibly the case for the sfo. we are built on the rescue model meaning that investigators -- we

are built on a model meaning that investigators and subject experts work together as a team. a is not a matter of police investigation. our independent is vital. if you are looking at companies like rolls-royce and barclays, these are important and powerful companies. there is a need for independence from the investigator and prosecutor. it is vital because serious fraud and its mirror, bribery and corruption, are a priority within the sfo. if you want to put it into a organization with competing focuses it will be watered down. it needs to be in an organization where it is the sole priority. that is the case.

francine: thank you for joining us. david crane, the director of the serious fraud option. fraud operation. mannus: my lobster cases will sewer. ♪

francine: lobster prices are about to jump.

reporter: from about london docks all the way to beijing, the demand for lobster is at an all-time high. it is being driven mostly by chinese buyers. -- lobsters caught in the north atlantic are one third the cost. exports skyrocketed as they catch began to grow. canadians, you can get it all year round. will have thems throughout the year. low prices mean more of us can look forward to it.

now you can go to a fast food restaurant and have a lobster and chips for 20 pounds. that is what they charge, shipping 17th tons of week from nova scotia. they are getting plenty of feet through the door. to so far it has worked. lobster prices are rising. lowerear's catch is thanks to changing water temperatures. to increase our price next year. the lobster price. we will use our margins. >> while higher prices could her change like burger and a lobster, the brand is considering making the market work for them. >> we understand the chinese restaurant market is very -- is a very big opportunity. starting next year we want a

full strategy of how to enter the chinese market. the money we lost from the increase of lobster prices we will make back by opening more restaurants in china.

announcer: this is "bloomberg surveillance." been ever so slight breather as oil finds a bid. this morning markets adapt. they adjust to global slowdown. there are many republicans but only one donald trump.

a bloomberg poll says jeb bush thescott walker are behind candidate. not sure. and they can do no wrong? the money machine known as espn stumbles. the morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. .t is tuesday, august 4 puerto rico is about those co-issues. one is about default fall, and the other is they cannot make a payment. brendan: also they are very similar to greece. they have made their own mistakes but they are caught in a currency union that they cannot control. people leave for the u.s. tom: headline item without question, default on an agency piece from puerto rico. top headlines with vonnie quinn. vonnie: good morning.