francine: they beat. highest profits in 2007. the ceo tells us exclusively that cutting costs is the way for at france's second-biggest bank. manus: the dollar climbs to a four-month high. the central bank is close to raising rates next month here at moving its magic, disney shares fall after hours. >> we can fix it. we just have to get back to headquarters. ♪

francine: welcome to the pulse. live from bloomberg's european headquarters. and francine lacqua. manus: and i am manus cranny. we are joined by ubs senior economic adviser, george magnus. francine: france's second-biggest bank has posted its second -- its second -- its biggest profit since 2007. manus: she spoke exclusively to the banks ceo. this performance driven by trading. the capital is building as well. investors like the story of the decision this morning. the shares are opening 9%. they like they say it -- they like the story of cost saving.

nextillion euros for the two years. of capitalhe raising targets. their ratio came out for the second quarter. from 10.1% last quarter. they are planning to raise this target to 11% by the end of 2016. i sat down exclusively with the ceo and asked 10 how he could explain his performance in the second quarter. >> we actually have a strong set of results across the board. close to 9% organically. we also have lower cost of risk. underlying profitability of 10.3%.

>> france and europe, would you say the recovery is still fragile? >> i would say it is more progressive. -- europe [indiscernible] a low euro versus the dollar. low interest rates. i think it is freezing the economy aggressively. -- i think it is speeding the economy progressively. .e are at 1% gdp 1.5 next year. not a miracle, but it is going in the right direction. -- inmost europe p.m. most european countries. >> russia may be a difficult market. you were telling us your seeing the normalization -- even though it you have a loss of 45 million euros.

this situation is going to improve. >> the economy will probably go down by 3.5%. the risk can remain high, so we cannot change our governess for the year. fundamentally, we see a progress. we expect a slight increase of gdp in 2016. affecting effect -- we are affecting our business model. i think we are doing a good job. business is independently funded which was one of the goals. no more money from the parent company. -- >> so evenven in russia which could've been a -- he even expects an increase in gdp in russia in 2016.

finally, regarding the cost-saving plan, i asked him whether that plan will involve -- he told me it was premature -- of if we would have course, jobs will have to change in order to a debt to new regulation. back to you. francine: sterling conan there in paris. manus: the dollar has risen to a high. is close tobank raising rates next month for the first time since 2006. carolyn i has more--caroline hyde has more. up inne: we have a surge the dollar at six clock p.m. yesterday. to change his opinion on a rate hike it would have to

significantly deteriorate in the economy. this is when we started to see a sudden surge up went. -- upwind. dollar down in the earlier in the trading day. he is saying look, we would have to see the economy deteriorate for me to think we should hold out past september. a bets think it is about that we will see a rate rise in september. the first time we will see a rate rise since 2006. dennis lockhart thinks we should go now unless you start to see the adp number that comes out later today. initial jobs claims come out tomorrow. only if they significant discipline, they say they will

go for a rate rise in september. -- i'm to see on my screen, the dollar over the course of the year, the best performer if you're looking at the bloomberg correlation index. back to you. francine: staying with the fed in india, we spoke to raghuram rajan about a rate hike. it is best if the fed starts normalizing. prepared,everyone is but you can never rule out the possibility. guest is the ubs senior economic adviser, george manus. gettinga voting member ready for september. the market is flipping the coin, 50-50.

george: i think it is going to be in september. there is only a possibility -- there is always a possibility of a getting hijacked by a rogue number over the summer. is they will start to do it in september. francine: there is no danger if they's -- if they hike in september. look at china, we do not know what is going on in the market. been chapter has -- there's been chatter about the short shrift given to china and the fallout in the equity market. i think the shenanigans in china -- at least we will have significant defect in the united states. i think they want to do this. when they do it, i think they're going to do with their hands like this. i think there is a nervousness.

that the basis points are going to cripple the economy, but how the market aligns itself. manus: i love how you said, not looking. the dollar, looking at it against -- it is only been trumped by the swiss franc. are we in a new super cycle higher for the dollar? is the fed covering their eyes? what do you make of the dollar? george: it is a bit early to be honest. this is -- we are in the foothills of the third bull market in the u.s. dollar since the collapse. we had one that coincided with the regime. that coincided with

the.com crash. ,t has done what it has done even without interest rates going up. the issue will be is this a normal tightening cycle? how far will market expectations move in terms of where the expectations of interest rates to be over the next year or two. three to five year interest rates. nonfinancial companies, critically emerging markets. -- particularly emerging markets. that is going to have repercussions. or 2017.2016

but we will have to see. francine: senior economic adviser at ubs will stay with us. we would talk about china. manus: let's take a look at the imf. the fund made a decision on changing the spr. welcomedtries have china's push for the u.n. to join the dollar -- for the yuan to join the dollar. the fed wanted to keep moving. francine: shire has made a bid for drug maker. box elder which specialized -- baxalta has rejected the advance. named michael has evans as president.

leaving him in charge of global expansion. the coveney says he will work -- the company says he will work -- bringing shoppers -- bringing chinese shoppers from around the world. his goal is to get half of alibaba's revenue from china. disney's third-quarter sales missed. disney is a top for -- is a top-performing stock. it is exactly one year until the 2016 games start in rio. said dyingnt has concerns about pollution. it comes after the world governing body said they want virus testing carried on after a report on water quality. francine: the cost of oil has

bounce. the crude stock has declined. lowestrading at the price and five much. the crash has had a major effect on the industry. -- posted its results for the second quarter. its revenue down on estimates. manus: the company's cfo joins us on the phone in a bloomberg exclusive. a warm welcome to the show, sir. these numbers, what i want to mess?s coming is it a you have been bolstered by the margins in your refining business. what i want to know, are you sticking to your time? is that really achievable? jyriki: what we have been

seeing is the global product is very strong. for this year, it is more than doubled. we have been benefiting. strong, so the finals are doing well. we are very confident about the content work. operating profit will appear better than last year. very confident about that. manus: i am confident to hear you're confident. as we look at the european refining industry, you got about 2.2 million pounds a day that you're responsible for. libya andtially from iran coming on board, are you going to have to cut back in

terms of capacity? is there a necessity to make cuts? ki: we are seeing that kind of scenario. -- we are not seeing that kind of scenario. the point here is the refineries are running today in europe -- compared to 75 last year. for 2006 in, it is very strong, [indiscernible] crude oil is cheap. higher than it has been for many many years. looks very possible for this year and 2016. manus: that is going to be good news for some of the oil copies,

including yourself. .ou mentioned the benchmark i want to get a sense of russia and the sanctions. are you experiencing a blot from russian oil? position asee that we are going for it? : we are following all the sanction issues. buying from russia. we have been doing that for the last 50 years. issues.ot seeing any were following very closely -- we are following very closely. in the have a business st. petersburg area. we are not seeing any issues. we have to be very careful going forward. manus: that is the billion dollar question.

thank you for joining us this morning. cfo at mystic oil. francine: we had breaking news from standard chartered, in terms of dividend. it was cut by 50%. will get to that in just a second. more on oil prices. ubs senior economic adviser, george made this, we joins us. ,hen you look at the commodity it is linked to the fed, especially for some of the qualities. how worried are you about the volatility that we have seen on the market? it, we havet of seen a lot of decline in intodity prices agricultural commodities. we have had precipitous decline in energy.

agriculture has come down to. much less so. i think it is better protected over the medium-term. take aht consider five-year view, if you think about india and china and energy consumption. per capita it is still very low by comparison with western companies -- western countries. consumption is going to be ok. what is happening now is china is going through a difficult transition. the commodity intensity of its growth has dissipated, gone away. i think as much as we were bullish about commodities, as china's share at will went fromn of copper

negligible amounts to 6%. -- 260%. going to spell over it? , it is have -- it has had a huge impact. in the united states, the numbers are good. we are good to move on in a moment, on that we have seen year,nors, in the past are we at that supply constraint that is are we at the end of that supply constraint? -- are we at the end of that supply constraint? george: i don't think so.

when we have a logbook. in which prices have been rising , it encourages producers to produce more. the producers at this level. george, let's leave it there. george magnus, our senior adviser from ubs. theline, printing give us headline on the dividend. caroline: they are willing to raise capital is needed. standard chartered shares will they have to raise -- to boost .heir overall credit qualities they had a credit ratio of 10.7%. target 11 percent to 12%. there been vigilant in addressing past issues.

the is impacting overall return on equity. i'm to show you the share price. this is what suddenly happen. they were up 2%. dropped. price when does the news chief executive -- it was up a quarter of a percent. the chart does paint the overall picture for you. i want to bring you into my screen as to what happened. we've got those numbers. sink some 2%.id there clear moves of concern about the option we might see more shares sold. that does weigh on the share price at standard chartered. we see capital raising. they did not take that decision lightly. they cut the dividend by 50%. you see revenues coming in below

expectation. profitability falling by about a quarter. manus: caroline, thank you very much. let's bring in george magnus again. on the subject of the banks, a lot of management change. we've done a lot of preparation in the european bank. rates are set to rise in the u k and u.s.. the best ever?y george: if you think about, first of l, we ve not done a full repair job on the financial crisis. we know that. we will know that over the medium-term of the next two years. banks will still be required to boost their capital ratios. there is a lot of discussion going on with other bigotry agencies -- other regulatory agencies. the banks become stronger than a hybrid version.

that's not going to stop. to put pressure on banks is going to continue. that said, in the united states, the economy is looking better. in europe, there are exceptions, and greece, the money supply is still contracting in a horrible way. four euro, m3 is up 5%. something is going right in terms of what the banks see out there and how they perceive their lending opportunity. there is good news. it's not a full repair job. francine: at the same time, if the fed raises interest rates, as line as it doesn't go hardly wrong.

george: we're back to the fed looking like this. feds approach will be quite gingerly. i think we might be surprised this time next year about -- i'm not producing massive rate hikes -- i think it will be a bit of a shock to the system. ,anus: are the bond markets they are fully price than for a rate hike, aren't they? --rge: they are priced in they are not fully priced for things that market participants do not know about. francine: george, thank you. some big stories with alibaba. naming a former goldman sachs partner as president here it investors -- as president. there's a host of medium earnings. the top performing stock on the

dow jones. rounding up with all the news, is caroline hyde. caroline: michael evans being named the new president of alibaba. the twitter posting that the alibabaf wall street -- getting in on the act. michael evans for 20 years was a partner over at goldman sachs. he was vice chairman. he was head of global growth market. he understands how china attracts with the world. and how the world interacts with china. that is why he is now helming at alibaba. fascinating statement coming out of from -- coming up from alibaba yesterday. we will report to the chief executive. he is already an independent director. -- how willunced

the drive brands in europe, asia and the americas? -- how will he drive brands in europe, asia and the americas? is the 200 day moving average. for the first time since september 2013, we saw the share price is below that. by george, they sold. was.cale of the selloff we are now seeing apple at the lowest in six months. we are in correction territory. shares traded hands yesterday. earnings disappointments have been weighing on investors. people are losing money the stock market best people are losing money on the stock market. -- people are losing money on

the stock market. back to you. francine: up next, the first rate rise looming in the u.s.. we're talking u.s. rates next. keep it right here on the pulse. ♪

francine: welcome back to "the pulse" live from bloomberg's european had runners in london. manus: we had the july pmi for the u.k. caroline has the numbers. it looks like we've missed on the surface. break them down for us. juliette: -- 57.4, that is more than one worse of the previous month. we had expected at least 58. anything above 50 shows expansion in u.k. services.

the number we get is 57.4. it is well below the previous month of june when we had 58.5. by 1.1.ff if you are looking at the composite pmi, we are also missing forecast. a miss of across-the-board. let's break it down. againstd up 0.2% still the dollar at the moment. not much of a market reaction when it comes to the pound versus the dollar. as we say, this is still expansion but it does seem to be below where we forecast overall. we will look as to where exactly within the services sector it missed. this is the part that fuels the u.k. economy, the biggest area of the u.k. economy. francine: caroline, thank you. caroline with the latest. the bank of england is changing

the way it releases data. starting tomorrow, it will simultaneously published policy decisions, minutes, and forecasts for the u.k. economy. jonathan ferro explains what to expect on super thursday. jonathan: the bank of england is about to unleash a flood of data. month, thew, every decision and minutes fell two weeks apart. every three months, the inflation be part was somewhere in between. that is all about to change. starting on august 6, it will simultaneously published its policy decision, minutes, and any new forecasts covering any facet of the u.k. economy. this means investors will have all of the information in hand within seconds to wade through all that once. it is an unprecedented move for a central bank. here's how it will go down. officials will gather on august

5 to be briefed by staff and then vote. the decision will be announced the following day at noon, giving 45 minutes to digest all the details before governor mark carney begins his press conference. traders, investors, economists of the city of london, brace yourselves. super thursday, we have been looking at that fall in oil and the prices. it has been affecting inflation. francine: that's an indicator on when the boe will raise interest rates. a chief economist at bloomberg television's here. also, george magness rejoins us. thank you for sticking around. what are we expecting in terms of changing forecasts? >> we are expecting a downward revision in the short-term but probably not much in the medium-term.

that reflects the fact that oil prices are lower than they were. the exchange rate is a little bit stronger. temporary dropouts of the inflation measure in a year or two. that shouldn't affect the banking decision. it might give some investors cold feet over the next few months. manus: this is still super thursday, george. is this a constructive move by the bank of england, giving us a one-stop shop? we get to absorb a great deal. is it a good move? >> it simplifies things. you've got a much bigger package of information that you can digest. it will stop some of the interim speculation about did they, didn't they and so forth. i know a lot of people take this seriously. for me, it is noise.

you get the information one way or the other. people make their judgments the way they do. i think it actually helps the transparency, which is a good thing. it is part of mark carney's new broom, cleaning up and refreshing the way in which the bank of england functions, makes decisions. it is a good thing. francine: speaking of dissent, are we expecting anyone to dissent tomorrow? >> we are. probably an 8-1 split. they signaled that in a speech earlier. we don't think mccafferty will. he pays attention to the cbi surveys. we don't think david mars will either. manus: i was reading a bnp paribas note and they were saying they are going 6-3. they actually see that the sterling market has underpriced the level of dissent that there might be.

where do you stand on this dissent? we just had services numbers. they missed a little bit. sometimes it is noise, isn't it? >> yes. up until today, i thought the cumulative impact of the economic news we've had out of the u.k., abstracting from the high-frequency, the cumulative impact of that news actually was tipping the scales a little bit. it is quite possible that 8-1 will be correct. i do think there is a sort of -- something is afoot there, which i think is going to change probably within the next two or three months. my hunch is that that vote is going to shift towards a rate hike maybe by november. francine: november, and jamie, your call? >> we've got february sort of penciled in. we think the wage data will be a

bit stronger. manus: gentlemen, thank you very much. jamie merry and george magnus. thank you very much. francine: up next, as greek bank stocks take a battering, we speak to an analyst that thinks they could mean up to 19.5 billion euros of new capital. ♪

francine: welcome back to "the

pulse." manus: the athens stock exchange has lost more than 17% since it reopened on monday. this as the country's government aims to reach an agreement on the new bailout within the next two weeks. that will let it make a 3.2 billion euro payment to the ecb. hans nichols has been covering the story. it has two weeks. another crucial date in the greek calendar. hans: and yet it seems like everyone is pretty confident and positive that they are heading in the right direction. creditors and the government in athens say they will have an agreement, then a vote in parliament august 12, 14. most of them are in their summer holiday. a couple sticking points, one, this mess in a position fund. some of the numbers don't add up. how quickly can you get cash

from that and how quickly can you draw it down? the other question is, what do you do about nonperforming loans? you look at what is happening on the exchange right now, all the bank stocks down more than 20%. most of them are hovering close to -30%. that would be the third day of 30% drops if that is the way it continues to go. francine: hans, thank you so much. our next guest says that greece's real economy is a long way from normalization. alberto, great to have you on the program. when you look at banks, you are one of the few out there that is so strongly saying that something needs to happen. >> it needs to happen soon. the longer you wait, with capital controls in place, the worst the loans are getting. we have data as of the end of last year that says there was around 830% nonperforming loan

ratio. then capital controlsleere not w cash. there was total uncertainty. we hear that payments have stopped. people have stopped paying mortgage interest. the rate of bad loans has probably gone up. that means the deal to recapitalize the banks is now higher. we know there's 25 billion available from european stability mechanisms. we estimate that after bailing in equity and subordinated bondholders, after the shareholders take a loss, there should be around 20 billion of recapitalization needed. the tollit longer than will get higher. it will get more expensive. so far, we have a stress test and a date for the stress test of october, november, then the recapitalization should be done by year end. it could be very late.

you need confidence. you need to do it very quickly. manus: alberto, the discussion, hans just mentioned the need for a bad bank in greece. how high is that need? do you think that is achievable and days that a cornerstone? >> you can do the recapitalization in a variety of ways. for sure, there's going to be bailing of equities. that's why equities are trading so low. there's been discussion of losses in other of bonds or deposit. you can consolidate the banks or you can make the weaker banks merge with the stronger two. there are various combinations. a bad bank would be a solution that's already been tested in spain. in ireland it has worked as well. manus: is that a cleaner model? >> it separates the bad assets.

the problem is, if you wait too long, the bad assets could harm the whole system. francine: but this is at the crux of what the european union is. there's always been a time lapse. we knew that five years ago greece could have been dealt with quicker had the eu disbursed money. the recapitalization problem will be much more expensive. do you see or hear any noise that it could happen before six months? >> today, the timeline is stress test of the banks in october, november, and recapitalization afterwards. i hope that timeline sticks. if it is next year, another six months of uncertainty would make the costco higher. the eurozone needs mechanisms to deal with debt overhangs. otherwise, the situation we are in is a spiral of debt where we

never solve our problems, never restructure. the default hurts investors but gives you a fresh start. there's been losses. everyone knows that the greek public debt is unsustainable and the banks are undercapitalized. the later you do it, the more expensive it is. manus: "the telegraph" had an article this morning. asphyxiating the greek economy. they talk about the need for 100 billion euros worth of debt forgiveness and the alternative is an extension to 30 years to pay your debts. what is the reality in those things, from the research? >> we actually crunched some numbers and came up with similar estimates just around a few days before. greek debt is not sustainable. the austerity measures in the

third bailout agreement will likely make gdp fall even more. there are some quasi-automatic spending cuts in the agreement. if the economy falls, you have to cut more spending and it falls further. there is some more austerity spiral in there. 190% by thegoes to end of the year, it would be clear that it is not a sustainable situation. you either need a 30 plus year extension of public debt or a mix of haircuts and an extension , or like we have suggested earlier, a conversion of the bonds in bonds that are linked to growth. you pay more interest only if the country is growing. that aligns the intentions of investors, creditors, and the country itself. manus: so varoufakis' idea wasn't so off the wall. >> it was also proposed by the imf. it has been discussed a long

time. the problem is, the government wanted debt relief immediately. there's been a very harsh negotiation. there's been time that's been lost in the economy. francine: alberto, are you worried that there will be more time lost? in the last three weeks, one thing is clear. the markets don't care that much about what happens to greece. because the markets have been placating any crisis, is it going to push back what we need to do? >> august 20 is the deadline for the third bailout agreement. even if it is missed, the bridge loan will probably be extended. markets are right not to worry now. i am worried later in the year that the grexit risk will come back. if there's new elections in greece during the negotiation, i think the third bailout negotiation goes beyond august. i've been very much for no grexit, for greece in the

eurozone. so far, we've been right. but this is a key timeline now. if we don't get a serious discussion on debt relief and on the banks by year end, the grexit risk will come back. manus: alberto, thank you very much. francine: here are some more of bloomberg's top headlines. the british government has opened a consultation on plans to allow stores in england and wales to stay open longer on sunday. under the current law, large shops can only open for six hours on sunday. manus: netflix is letting employees take as much vacation as they want. they are now offering up to one year of paid time off for new mothers and fathers. the policy sets the company far apart from the vast majority of u.s. employers, even in the technology industry. yearine: it is exactly one until the 2016 olympic games

start in rio. the president of the olympic committee has faced concerns about pollution after the governing body for sailing and boating said they want virus testing carried out after a report of water quality. now to a completely different sort of story. video games. it is an industry worth billions of dollars. it is bigger than the movies, and kids can even join universities on gaming scholarships. biggest: as europe's videogame trade show kicks off today, here's everything you should know about the industry. >> once the domain of the teenager in their bedroom, gaming is a totally different beast today. the average age of the game are is 37. shows like e3 c thousands upon

thousands coming together. but behind the screen is an industry that involves more than 1.2 billion people worldwide. the sheer numbers helped by an aging demographic mean the market is expected to grow by $100 billion by 2017. games sold more than music or video in 2015. multiplayer videogame competitions played in front of live audiences. esports is a $612 million global market with an audience of 134 million people. american express, coca-cola, and nissan all sponsor these competitions. they plan on making $100 million a year, more than some goldman sachs analysts or professional golfers. but the industry is changing. mobile is becoming the fastest

growing segment, expected to overtake console gaming by the end of this year. and don't forget virtual reality. it looks set to light up the industry. francine: everything you wanted to know about gaming. up next, back to the future with a real-life hover board. ♪

manus: welcome back to "the

pulse." francine: fans of "back to the future" are in for a treat today. lexus is showing off the world's first fully functional hover board. manus: if you are hoping to buy one, you are in for a long wait. david ingles reports. david: move over, marty mcfly. this is a pro skater demonstrating a real-life working hoverboards developed by luxury carmaker lexus and a german engineering company. the board features similar technology to the kind used to power trains, magnets reacting with superconductors inside the board to keep the rider in the air. >> when you see the board going across water, you feel like you are looking at magic. people are going to be calling lexus and saying, please build one. david: for lexus, this is the

culmination of 18 months of work, but don't expect to see it in a store anytime soon. lexus has no plans for commercial development. >> i hope when they see it, they think, i want to ride one. i hope they look at lexus and say, we understand something different about lexus right now. we really do like design. we like innovation. david: in an age where tech companies are cozying up to carmakers, it is interesting to see a carmaker dabble in tech, even if it is just a one-off. david ingles, bloomberg, hong kong. francine: very cool stuff. that brings us to today's twitter question. we don't know how much it will cost or if it will be produced for mass markets, but will magnetic levitation change our everyday lives? manus: #cover board. hoverboard.

i like the little jets of steam that come out the side. francine: i would buy it. for our viewers, a second hour of "the pulse" is coming up. manus: a bloomberg exclusive. we are going to hear from the chief executive of socgen. it posted one of the highest profits since the financial crisis. francine: encouraging news for the london stock exchange. we will get reaction from the chief executive officer after it beat estimates. we will be talking about the fed, interest rate hikes, the u.k., and the u.s. manus: absolutely. simon kennedy on the fed. stay tuned for that. wonder if you would let your kids on this hoverboards when they grow up. francine: only if they are above 30. just a reminder, you can follow us on twitter. i don't know, i would like to

try one. manus: iwatch you. francine: my cheerleader. follow us on twitter. ♪ .

manus: socgen posts its highest profit since 2007. the c.e.o. tells us exclusively that cuts costs is the way french's second biggest bank. francine: the central bank is close to raising rates next month. manus: losing its magic. disney shares fall after hours because the company misses revenue estimates.

good morning to our viewers in europe. good evening to those in asia and welcome to those of you waking up in the united statesor america. i'm manus cranny. francine: i'm francine lacqua. this is "the pulse" live from bloomberg's european headquarters in london. retail sales in terms of the figure there. i think they were a little bit better than expected. the increase is 1.2% from the year before. manus: it declined -- francine: it is the sales. n certain countries. keep an eye on that number. i don't know if we have a euro/dollar check. f it has any impact on the ro/dollar currently at 108.60. manus: an eighth lower on the day. francine: france's second ggest bank, has posted a

profit beating analyst estimates. manus: we spoke to their c.e.o. good morning to you. socgen, they have got a cost savings plan. 850 million euros. that is probably top of the agenda, isn't it? >> absolutely. most of these -- will be the rull of -- enticing some businesses. if you look at the investment bank, great performance in equity trading. plus 61%. sales actually fell 16%. socgen has already implemented a cost saving plan for about three years. they are accelerating this plan for the next two years. another 850 million euros. i asked the c.e.o. in an

exclusive interview where exactly he is planning to cut costs and whether that would only apply on the investment bank and whether that would mean any job cuts. >> i think if you -- i think the banking industry is like any industry and on top of that, it is facing the challenge of adopting the new technology. and we have to change our business model. behaviors are changing. they expect different services at a cheaper cost. we need to meet our clients' expectations. that is why like in every industry, every year we have to gain, to review our processes, to gain efficiency. we have successfully implemented the first wave of cost savings and efficiency gains. we are launching a second one.

with the ambition to save an additional 850 million euros at the end of 2017. >> the investment bank? >> you remember, we were a very strong -- we are very strong in financing activities and equity businesses. these are the ones that are the less impacted. we all know that there is -- there is a change, but it precisely the businesses that have change a lot. we are again, very consistent. i'm very positive on the outlook. francine: as part of this -- do you rule out job cuts? > cost savings plans, it means some people have to change their jobs.

again, jobs are changing. it would be foolish to think with the new technology, we would do the business in exactly the same way, but we have been able to manage it in a very smooth way by moving people around. i'm anticipating we are able to adapt in a social, responsible manner. >> job cuts? >> again, it is premature. like any business, it is our i would prefer now than waiting in five, 10 years time and facing a complex social environment. >> he is telling me it may be premature to talk about job cuts but some people may have to change jobs in order to adapt to new technology. at the same time, they are also increasing the capital targets.

they are aiming at 11% by the end of 2016. investors are liking it so far. the shares are up nearly 8% at the moment. manus: great interview. thank you very much. francine: the dollar has risen to a four-month high after the federal reserve bank president told the wall street journal that the central bank is close to raising rates next month. caroline, let's look at the dollar. >> we have to go in and show you this chart. the minute we heard that come out from the wall street journal, look what it does to the dollar. the move that we saw from dennis lack hort, he is a voting member on the -- lockhart, he is a voting member on the federal reserve. at the moment everyone feels the economy is going pretty

smooth. we're expecting a.d.p. employment changes. the nonfarm payrolls. up 225,000 is what we're expecting. a third straight month of in excess of 200,000 jobs added in the united states. if the economy is going well, that means dennis lockhart thinks september is the month that we go, the first rate hike since 2006 in the united states. of course that is having an impact on the dollar. the dollar trading higher. on the flip side, gold weakening on the back of that. you're starting to see people want manager yield believing that interest rates may be driven higher. manus: lovely, caroline. thank you very much. the 10-year yields touching the

200-day moving average. we spoke with the r.b.i. governor in india about the prospect of a u.s. rate hike. >> if the fed starts normalizing, again, it is one of the most widely anticipated events. hopefully everyone is prepared. but you can never rule out to possibility of volatility. francine: let's get more on the fed with bloomberg's chief international crorpt, simon. great to have you on the program. this would be the first rate hike since 2006 for the fed. is it now a given? > you look at the markets. markets typically underestimate just how far or when the fed will go. perhaps we're seeing a bit of that, waiting for janet yellen to put out a real headline that says september is the date.

you're starting to see that build-up from dennis lockhart. of s not a hawkish member the fed. manus: we had george magnus here a little bit earlier from u.b.s. he said the fed are going to act a little bit like this and what is going the happen? i thought that was amusing. they don't know the impact themselves, do they? >> no, they probably don't. you can have the models and the history and it will tell you something and then something else will happen. one of the lessons of the crisis is the next problem is somewhere else. emerging markets are taking a tumble of late and that is the continuation of a trend we have seen over the last few years about the fed and what it means. janet yellen has been pushing. it is not when they go, but it is what they do afterwards. she is trying to send the message that it is going to be slow and steady. francine: if you're janet

yellen, how much do you look at the impact that this will it will have on central banks? >> you pay attention to it. she has talked about the importance of central banks and economies elsewhere. they want the fed to better communicate. but at the end of the day, she runs the u.s. economy. that's what she has to deliver on. it s: the dollar, how impacts how the fed thinks. there is a view -- magnus says we're in the foothill of a next big wave. the dollar is something they referred to this the minutes on a number of occasions, but there is an argument that the dollar, the strength of the dollar is not necessarily going to stop them. >> no, it may have stopped them earlier this year. but people were talking about a rate hike in june and the dollar was part of that. greece, the fact that the u.s.

economy didn't perform as expected led to that rate hike being delayed. the dollar plays a part in it. i remember last year, bill dudley was the first to raise the dollar as a potential issue. perhaps the dollar is running higher because the fed will raise it. the dollar goes higher, it stops the fed. i think the dollar is -- not the brake on the fed this time. francine: thank you so much for that. you can toll him on twitter. manus: what else is on our radar on "the pulse" this wednesday morning? the i.m.f. says there is still significant work to be done. may delay a decision on september next year.

some welcome the yuan to join the euro and dollar. francine: a $30 billion for drug maker that was created just last month. it specializes in orphan drugs of h treat conditions 200,000 people. manus: the company cut its forecast for cable tv profits. disney is the top performing stock in the dow jones this year but is facing challenges including fewer cable subscribers and a strong dollar. francine: and it is exactly one year until the 2016 olympic games start in euro but the president to have international olympic committee has played down concerns about pollution there. they said they want virus

testing carried out. manus: coming up on "the pulse," we're going to check out the state of the commodity market. that is question. day two of a bounce for oil prices. we're going to check it all out on "the pulse." ♪

francine: welcome to "the pulse" live from bloomberg's european headquarters here in london. lower oil prices and some falling commodities might be pounding economies around the ia is but independence taking advantage. >> to country is an aisle. we are all sorts of connected. typically the connections come up in ways that you didn't think of before because, you know, we don't see the connections. , at said, we do benefit especially from the fall in oil prices and the fall in some of the other commodity prices. we get hurt in the fall in rice because we're the world's second largest exporter in rice, but some of the commodities we benefit. on net, i would say certainly

the weakness in global demand hurts us, but there are offsetting benefits such as commodity prices. given the possibility of -- especially as the fed starts normalizing, again, it is one of the most widely anticipated events. hopefully jemp prepared but you can never rule out the possibility of volatility. in such a situation, i think india is one of the better prepared economies, partly because we have focused on macro stability bringing the fiscal deficit, inflationings all of these things down. and partly because we have tried to keep up the short-term flows and partly because we have larger reserves than in the previous instance. that said, it will help if we could get more clarity on some

of the reform measures that are taking place because that would send a strong signal to the outside. action on important bills would be very useful. manus: let's continue the commodities conversation. oil is trading higher but still near its lowest price in over five months. let's bring in our energy and commodities reporter. just listening to rajan. very interesting and forth right. everybody should be prepared for this rate hike. they have got the boost from lower oil prices but the commodities, it is a big huge issue for these emerging markets. >> absolutely. and where oil and commodity prices lowered is bad news for some commodity markets like brazil, for some emerging markets, they are in general short of commodities, so they need to import it. like india. bringing in -- c.p.i. inflation is coming down.

india is one of the beneficiaries. other countries benefit from the drop in commodity prices. it is also affecting the copper sector. what is the impact on big oil and the mining company. but if you look at manufacturers, think about continental. these companies are doing very well now because precisely their inputs are coming down. francine: what do you think is behind the commodity slump, especially in oil? we see volatility. is it all a supply and demand issue? >> mostly a supply and demand issue. the dollar is playing a role, obviously on speculation the is going to be hiking. the china economy is slowing down. the supply remains -- the supply is nearly a million and

a half above what it was in november. they ery well when -- are coming up and shale in the united states is more resilient. it is starting to come down. chevron, the big american oil company on the last conference , they announced that they lowered the long-term oil price for two factors. one on the demand, china. and the chinese economy growth is going to be weaker. they are surprised how resilient it has been in the united states. manus: we're going to get some of the ratios as well. fran mentioned this as well. in the u.s., continental. capex cuts to see

from shale? >> equity and the capital -- the capital market has been supportive of shale producers until now. but we are beginning to see -- to asia and the capital market is not willing to continue carrying this company for the first six months of the year. companies need to review their credit lines. some are going to come under pressure. it is going emanate. francine: thank you very much. manus: up next, trouble in the magic kingdom. disney, well, they missed on their revenue estimates. we're going to break down the numbers straight after the break. ♪

francine: welcome back to "the pulse" live on bloomberg tv, streaming on the ipad and bloomberg.com. manus: some of the biggest goldman , alibaba, sachs. francine: investors continue to fall in and out of love with apple as shares hit a six-month low. caroline undup with yde.

>> the e-commerce giant in china. starting to lure away some of the big hitters in wall street. we have seen twitter do it and air bnb do it. now alibaba getting in on the game. they have managed to woo mike evans to become president. he was already an independent director of the company since its i.p.o. in september of last year. now he will be taking the helm and focus on the international growth strategy. a man who was a partner for 20 years at goldman sachs. he was chairman of asia, head of global growth markets and knows the interrelation between china and the rest of the world. that is what he has got to. fascinating statements coming out from alibaba. globalization is the most strategy to alibaba at the moment. remember they already have 2 billion consumers. 10 million global businesses. they want to expand and woo in the big brands in asia and the americas and europe. they want to swiftly and efficiently connect large china consumer markets with the rest of the world. that's alibaba for you.

what about apple? what about this chart? i want to show you what happens the first time since 2013. this 200-day moving average. the share price fell below it. that is saying sell. my goodness, they sold. check out how many shares changed hands yesterday. 120 million. if we look at some of the details, it is already in correction territory, apple. 10% below, 2015 high. earnings a dispoim. china's selloff, all of this weighing on investors' minds. will we see the same thing happen today? lastly, disney. not a pretty picture there either . we saw shares sell off after hours. down by 6.5% at one point. third quarter sales missed analyst estimates. we're seeing a cut in the forecast to the cable tv mark. back to you.

francine: thank you. up next, we'll be looking at shire's $30 billion offer and what it means for the pharmacy market. ♪

francine: welcome back to "the pulse" live from bloomberg's european headquarters here in london. i'm francine lacqua. manus: and i'm manus cranny. socgen posted its highest profit since the financial crisis. surged 61% since the same period last year. they said they will cut costs by 850 million euros by 2017. francine: shire has made an for batalta.

manus: netflix is now offering as much as one year of paid time off to new mothers and fathers. the policy sets the company far apart from the vast jeart of u.s. employers. even in the technology -- juvenile court of u.s. employer - juvenile court of u.s. employers. >> there are three things that will pick up. we'll tell you why it is the miners gaining this morning. the commodity routes stabilizes for another tay. a weak r euro. i'll get to the fx market later. it is helping the dax travel higher by one full percentage point. the cac 40 in paris up a full

percentage point. the biggest gainer on that index, on the stoxx 600 throughout the morning, i'll lift the lid on the cac 40. it is socgen. france's second biggest bank up 8%. a profit beat and the best profit since twen and since the financial crisis. it is the earnings in paris that are helping take it higher and draw out substantial gains. the fx market. i talked about that weaker euro. it is more about the stronger dollar. a four-month high for d.x.y. the dollar index. dennis lockhart lighting a fuse under that one yesterday here in europe. he was speaking to the wall street journal. according to him, he would need to see significant deterioration in the economic data to get him to say they won't move. question is how many friends does dennis lockhart have on the fomc when they go to vote

in september? what you'll notice, though, is that the euro got hit against the dollar. sterling not so much. when i bring up euro/sterling, weaker again down by a quarter of 1%. we have our own rate hike debate in this country, here in the city of london. a bank of england decision. forecast, minutes. governor mark carney speaking as well. what will he say that could equally light the fuse turned pound as we go into that meeting. it is not just the u.s. that might have a strong currency problem. back to you. francine: jon, thanks so much. jonathan ferro with the latest on the markets. manus: tom keene joins us now from europe. you want to talk about the dollar. we had george magnuson here from u.b.s. the dollar is in the foothill

turnovers next big move. -- of the next big move. tom: i loved jon ferro's data check. i just brought up euro/sterling. ou wonder if the strength gets back to 2000 levels. it is not just a dollar story. it is the complexity of all the different currency pairs. the real question here is after a good 50% dollar move, do we see another new leg of dollar strengths? soros of to martin w.p.p. we'll talk to dan suzuki of merrill lifrpbl. a special guest this morning, david goldman will join us. for years at bank of america. david goldman is adamant, manus that this is just as much about

weakness that has to come. it is not just a dollar story. manus: of course the i.m.f. will have something to say about that and whether it gets into that special -- have a great show. sounds like it is action f-packed. tom keene with "surveillance." manus: let's get more on shire's $30 million bid. first of all, talk to us a little bit about what baxalta is. they make drugs that they can charge a people are mum for. >> shire brings a much bigger scale. not just from the perspective of cost selling but better selling. they get better pen operation and more countries they can work in and of course cost savings. baxalta has just become public although it has been around for

many years. it does fit. anus: you got -- $45.23. are they going to have to pay more? >> they have to. apparently, baxalta management will not engage. apparently they had tried to engage with baxter before although they didn't quite say that but i read it in news articles here and there before the company went public. they didn't manage to get a deal done. could they pay more? we have just done a little analysis looking at the fact that shire would bring the earnings of before axalta into its lower tax jurisdiction. the fact that you could easily historically speaking cut 10% of operating expense s of a combined group and that would be $500, $600 million dollars.

it can still be a break even deal for them, even if they we want to $50 a share. the moment you add cash, you immediately start increasing the -- per share basis. francine: what are the strategies? we have seen it in the past where companies have enrolled white knights. could it be a similar situation? >> they have an exasting white knight. baxter doesn't wan to pay -- this is the company that knows baxalta best. if they start making sounds as to no, we're not going to sell. other sellers might they baxter knows something. they are financially incentivized in this as anybody else. anus: thank you very much.

now let's switch gears a little bit. the stock exchange. the greek stock exchange lost 7%. it reopened the bank on monday. let's get to hans nichols. hans, they have got to do a deal. greece has to get a deal the table by august the 19? hans: august 20 is the payment deadline. a lot of deadlines were coming out of athens. the important thing about the negotiation story is it is occurring in a positive environment. everyone says they are making progress. they are heading towards a deal. that deal still needs to be approved by national parliament. you need to recall parliament to do that. story of the stock exchange

is two stories. one is we're getting more aggregate pricing now. that was concern when i was in athens the last couple of days. re the restrictions on greek buyers distorting the market. the other story is the banking stocks. they are still getting killed. still down, almost all of them, close to that 30% level when tay stopped trading. outflows or rather the inflows into greek banks is about a billion euros in the month of july. once this political stability came back. it looks like some money is returning to the banking sector but they are still being hit pretty hard in the market. guys? francine: thank you, hans, thank you so much. hans nichols with the latest on greece. manus: coming up on "the pulse." the london stock exchange. we'll have the first half results. francine: we will be speaking to the c.e.o. and ask him what he expects for the rest of the

year. ♪

francine: welcome back to "the pulse" live from london on bloomberg tv. manus: the british government has opened a consultation, a plan to allow stores to stay open longer on sunday. turned cusht laws they are only open for six hours on sunday.

francine: nationors the gulf cooperation council have accepted the deal despite deep seeded mistrust of iran. manus: it is exactly one year until the 2016 olympic games start in rio but the president of the olympic committee has played town concerns there is pollution there. they said they want virus testing carried out after errors comparing water quality at some olympic venues with raw sewage. francine: video games, an industry worth billions of dollars. bigger than movies and kids can join universities on gaming scholarships. the trade show kicks off today. here is everything you should now. >> the spotty teenager holed up

in their bedroom, gaming is a totally different beast today. the average age of the gamer is 37. they see thousands upon thousands coming together but behind the screen is an industry that involves 1.2 billion people worldwide. the numbers involved helped by an aging demographic means the market is expected to grow by over $100 billion by 2017. it is so big, games sold more than music or video in 2014. one reason for growth, video game competitions played in front of live audiences. it is a 612 million dollar global market with an audience of 134 million people. ford, american express, coca-cola all sponsors. the best players making up to $1 million a year.

more than some goldman sachs analysts or professional golfers. but the industry is changing. mobile is becoming the fastest growing segment expected to overtake consul gaming by the end of this year. it is set to light up the industry. manus: from electronic gaming to another form of gaming of sorts is the exchange business. the london stock exchange put out its half year results this morning, beating estimates. for more now, we're joined by the c.e.o. great to have you with us this morning, xavier. >> thanks for having me. manus: not at all. it is a pleasure. when you read these numbers, they are stunning. pretax profit up 20%. rever knew up 90%. you have the world in a state of flux. can you sustain this kind of business from the first half?

>> well, the foundation that we laid is that of a globally diversified business. when you talk about the eurozone, the headwinds, the euro collapsing, losing more than 10% in the last few months, this is offset by the presence we have established the last few years in united states. it is all a game effectively to quote your earlier words of balancing some of these risks, but at the core we focused on three things. the capital formation, which is raising money for the real economy so that companies can basically create jobs. intellectual property, to help benchmark the risks. t has integrity. it is trarpte. balance sheet products. very high demand for the three products. the first one of course, the economies are being recalibrated from the old patterns of depending on debt and excessive leverage towards

equity and entrepreneurs and tech and innovation. in the u.k., it has already established a leadership position in that area. the second position and product is intellectual property and industries. establishing as a second largest index company in the world has paid off handsomely and i think our -- manus: i just want to hone in on that a little bit in terms of the russell and the ftse business. what i see here from what you said this morning, your next move with the c.m.e. the futures contract. you're in discussion for an options contract as well. it really is building out the breadth of that product. i get that. what i want to know for shareholders is what what is that going to mean in terms of rever knew and income? for l.s.e.? it is about balancing that portfolio, isn't it? >> very much. my answer to t of

your earlier question is we are fairly you can in infrastructure and the exchange industry. we are what is called an open access company. we are very happy to supply others, provide clearing services, access to our index franchise, to our primary and secondary capital raising, our regulatory reporting, our sentiment platforms to competitors who may not have a particular expert's in the space. for example, in the united states, with the c.m.e. that struck partnership where they will be distributing and in some cases they already are, some of our branded global intellectual property to their domestic client base. that connectivity, that willingness to offer our rvices on a nonbunded, nonsiloed basis makes us a national fit. can help the , it

-- to distribute our product. it is highly compatible with a modern internet connected economy. manus: it is a great model. the question is trying to break down those old barriers and those old objections to that open architecture. i want to get your opinion. you run of the major stock exchanges in the world. when you see what's happening in china with the interference in the market, how do you perceive that? is that a real threat to you doing business? i know you have some listings from china. you do some real interchina-u.k. business that works. how do you look at the current interference at the exchange level and how do you assess this as an opportunity or a threat for your business? >> we don't see this as a threat. again, we're open access. we're very willing. i think we have shown in the last five or six years that we

were very willing and happy to connect with exchanges around the world. whether it is in africa and latin america, north america, the middle east. we offer our services in a whole range of connections. it can be technology. similarly we have a lot of very deep connections in china which will continue to develop, of course, on the back of the very warm relationship between the united kingdom and china, particularly in the area of financial services. if you look at china for a minute, it is a huge market. it is a growing market. approximately 80% retail market. what i think the authorities are doing there with the stake holders is giving china greater depth. there is a lot of emphasis that is put on financial stability. a lot of emphasis on stand ability, the growth of industry particularly, the fight against corruption. china is maturing as an economy and i think we should encourage

them and work more closely with them because we're in fact extremely fortunate that china has chosen the capital markets-based economy as its core model of development. i think we should continue to encourage them and deepen our relationship with chinese financial stake holders. manus: let's see what happens and good luck with russell's investment. the c.e.o. of the london stock exchange. francine: up next, the lexus takes us back to the future with the real life hover board. we're quite excited. will you be? we'll show you how it works next. ♪

manus: welcome back to "the pulse" live on bloomberg television, streaming on your ipad and bloomberg.com. francine: fan s of "back to the future" are in for a treat today. lexus is showing off the hover board. >> move over marty mcfly. this is pro skateboarder demonstrating that it is a real life working hover board developed by lexus. the board features similar technology to the kind used to

ower trains. magnets react with super conductors to keep the rider in .he air >> when you see the board going across water and then just standing there, you feel like you're looking at a magic abblingt. people are going to be calling lexus saying how much is it going to cost? we want to have one. years is culmination of of work. >> i hope when they see it, they think that is so cool. i want to ride one. i hope they look at lexus and say we understand something different about lexes now. they understand that we like design and innovation. and like to show people things that they thought were not possible. >> it is interesting to see a car maker dabble in tech, even if it is just a why not.

manus: i can't wait until that actually comes out. i think that will be pretty useful. francine: dangerous. magically levitating. that brings us to today's twitter question. will levitation change our everyday lives? you're going to fall off. you can tweet us at manus cranny and flacqua. manus: let's cross over to hans nichols. e has what to watch. what do you think to have hover board? hans: clearly i would need a license to ride one. you need a license for everything in germany. even for jay walking. we'll be looking at the a.d.p. number. that has not been a great predictor of where the jobs are going to be. it will be a great incorporated indication how healthy the labor market is. it is not exactly a predictor but it is a point of data. manus? francine: a point of data.

hans, thank you so much. hans nichols. that's it for "the pulse". keep it here on bloomberg tv. stay tuned for "surveillance." that team is coming up next, live from new york. manus: join us on twitter. ♪

announcer: this is "bloomberg surveillance." tom: this morning the dollar finds renewed strength. dollar nextnger janet yellen and mark carney's world more public located. he goes in search of the next --

the trump style -- get rid of the tax. and martin sorrell on the speed of the change in his media world. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. i'm tom keene. me, brendan greeley. olivia sterns pulled the short straw. olivia: they called me. tom: now we will take a look at our top headlines. olivia: president obama is taking his bid for the iran nuclear deal to the american people today. in a speech at american university in washington. jewish leaders are still afraid that iran can build atomic weapons, but the president how speech is unlikely to change benjamin