♪ anna: a political purge. turkey imposes a three-month state of emergency with thousands in jail, and sliding to a record low after the s&p downgrades the credit. coming up at 6:45 u.k. time. mario draghi will face questions over risks facing europe's economic recovery following the ecb's latest decision today. and the latest fund meltdown. singapore has an anti-money-laundering control theures, and leaving troubled foreign investment

firm. ♪ welcome to countdown, everybody. i am anna edwards. manus: i am manus cranny. they warned us, saying the problems would be tough, dropping around 50% less. let us bring you the first news. first have sales coming in at 3.7 2 billion, that is down 11.4%, a little bit less than will the market was perhaps expecting. 353he operating profit, million swiss francs, that is down 53.6% annually. they expect the results close or equivalent to last year's, with that kind of pressure, this was last week, the stop dropping 14% on the day. the drop in profit they expected it to be twice what the analysts had expected. it is all about switzerland. anna: let's stick with the corporate thing.

first-half sales rising by 5%, and roche confirming the forecast of interest, analysts say first half sales will be 20.5 billion swiss francs, a touch above the estimate of 24.8 billion swiss franc. and at 7.7 swiss franc's versus the estimate of 7.64. a look ahead of estimates. looking in particular for bladder cancer drug that recently got u.s. approval.that has the ability to shift expectation around the guidance, elso drugs that are key wher this was company, verily reliant, where they go next. the ceo will be joining the bloomberg team later this morning. he will be speaking to on the move at 7.35 u.k. time. manus: let's talk about the lura. i'm looking down at the price,

making a new record low, banking from it. what i have here for you and an yonna, you have turkish lira declining. but is the price away to focus on. is forward price in lira suggesting there is another potentially 8% lower to go, in terms of dollar-lira. you couldn chase sent see a fire sale of $9 million worth of bonds, credit default swaps on turkey are above russia and brazil. the market is already implying moody's. they have actually gone, sorry, s&p i should say, cutting the rating to double b. two steps below investment grade. how low can she go? 21.85, all about the forwards and the implied price. anna: we could just mentioned some breaking news we have coming through. manufacturing and disturbing

pharmaceuticals, and offers related services, m&a involving to buy $32 a share, thy doing the company, a little bit around the farm. let us get that breaking news for you. let us get the risk radar. where we have been on the various asset classes. manus has taken us through the lira story front and center. we have a lot of currency in here for you. we have the euro up today. but the yen and using the dollar down. and all of the currencies gradually undercut the last couple of weeks or so by stimulus. all hitting multi-week lows against the dollar. the contrast with the u.s., and their interest rate expectations around the u.s., back on the agenda. absolutely. now back at 47% in december, we will translate that into normal in this later in the program. percentp by 4/10 of a

for the price of a barrel of crude. extending gains really is story around the oil, in between the u.s. drops. manus: inventories on the drawdown. that is the market, risk radar. let us figure bloomberg first word news. rosalind chin is with us. rosalind: the day, ministry turkey has imposed a three-day state of emergency responsible for the military coup. ankara, he a says will be no caps on economic reforms. attempt collapse on saturday. they have been detained by authorities. turkey's lira has fallen it to all-time low after the s&p downgraded the debt after increased political risk. bonds tumbled after the rating was cut to bbb, two steps below investment grade. we'll be speaking to the credit analyst about turkey's ground

downgrade. uk prime minister teresa mae travels to paris today to speak with president hollande, after speaking with germany's chancellor. angela merkel said brexit must not begin formally or informally before the u.k. invokes article 50. theresa may says that when i happens on exterior>> i want to work with chancellor merkel and my place in the european council in a constructive way, to make this a sensible and orderly departure. all of those need time to prepare for these negotiations, and the united kingdom will not invoke article 50 until our objectives are clear. that is why i have said already this will not happen before the end of the year. rosalind: three of wall street's largest investment banks have slashed first haf compensationl. goldman sachs, morgan stanley, jpmorgan reduced employee pay by 70% to help shore up profits. goldman sachs made the ggest

got, by almost 30%. and hsbc's global head of foreign exchange of and released on bail after being arrested today, trying to fly out of new york's kennedy airport. the authorities allege johnson was involved in a scheme involving a $3.5 billion currenc transaction. his lawyers will not be commenting at the state. and senator ted cruz has been booed off the stage at the rnc after he failed to directly endorse donald trump. he congratulated the party's nominee in his primetime speech, but only mention his name once. ignoring calls for the delegates to exquisitely back him. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more on the bloomberg at top . anna and manus> anna: thank you very much. let us stick with the market action coming through from asia.

juliette saly has details. moving a little highly. juliette: moving a little higher, anna. and importantly, we do have original index now at 2016 highs, surpassing that april 3-month high they had been holding onto. all of this as we see the ball back in hong kong. a key gauge of hong kong stocks, msci index, hit the mark. today it is the hang seng, up 20% from january. we are seeing solid buying coming through. a lot of the work is coming through property stocks. this is basically because interest rates and hong kong track like those in the u.s. and we are not going to see a rate hike anytime soon from the fed, certainly seeing investors in hong kong buying into a number of the property development stocks. elsewhere in the region, we are seeing a little bit of weakness from a southeast asian markets, particularly asia down for 10th of 1%.

and also korea off by 131%. but is a solid session in japan, and the us trillion market is higher, you feel and also getting a boost. and that is our expectation that anna was mentioning earlier that we could see a rate cut coming through next month. so looking pretty good in terms of the region.industrial and financials leading the way. now, a story from manus, still continuing on this pokemon effect. nintendo coming off yesterday, falling 13%, and mcdonald's has had a bit of weakness, too. this is another stock rally significantly, on plans that mcdonald's and nintendo will tie up when pokemon go is finally launched in japan. certainly it has been a big boost, this overall story to the topic index. is looking at the region, stimulus bets coming throughout japan, beating the yen, down by 1/10 of 1%. 1-6.97. manus: thank you very much.

great roundup from juliette saly. the ecb will announce a policy decision today followed by a press conference with mario draghi where he will receive questions regarding the effect of brexit, not to mention the banking concerns in his home country of italy. anna: caroline hyde joins us from frankfurt. good to see you. no fireworks in terms of policy changes expected today. all bets are coming later in the year, are they? caroline: exactly right, anna. it does look that way in frankfurt, in terms of any announcement today coming from mario draghi in terms of the deposit rate or quantitative easing. but the bets are building. market is pricing in probability of quantitative easing, reducing the cut in december. but economists even more bullish, sing stiglitz is going to come from the ecb as soon as the next meeting in september. that is when the next meeting, the forecast about economic

growth, about where inflation is heading. and they expect 33 out of 34 economists we spoke to, seeing the quantitative easing expanded from the 1.7 trillion that is already in the markets. and in a sense, extended past march 2017, which is the current end date for when we stop seeing bond buying to the tune of 18 billion euros per month. anna and manus? manus: and how much of a headache is brexit for mario draghi? i mean, a number people have said the contagion, the contagion as far in the markets has been limited. yet how you are right actually. if you look at the bank lending survey, it did not show any great shocks the banking system. certainly what came from the ecb earlier in the week. and noticeably, it does nothing to be too much of a hit to grow. but will slow growth slightly in the eurozone, what we are anticipating from mario draghi.

showing a light on areas of weakness already within the eurozone. his home country of italy, the italian banking crisis really to the fireled because of brexit. and the chief concerns emanating, two he had asked coming for mario draghi in the ecb. one, how do they get lending rates up to a more healthy level, despite the fact they have done so much targeted lending without ltr, the second point? how will they spur growth and lending, inflation, just at 1%. the second key headache of course, how do they buy bonds anymore. they are trying to spend 80 billion euros per month, but so much of sovereign debt is now below the deposit rate, that they therefore cannot buy them. minus 2.4% from anything lower than that and you are not allowed to purchase, 65% of german debt. value lower than the ecb deposit rate. this is a key concern. how do they get their hands on

the bonds? to stimulate growth anna: caroline hyde in frankfurt for us. we will bring you the ecb policy decision at 12:45 e u.k. time. bloomberg users can also follow all of the day's events on top like go. manus: let's bring in our guest host for the next 30 minutes. athanasios:. . will mario draghi hit the pause button and a stupid to rhetoric? athanasios: it is too early to introduce any new policies. we know they eventually have to extend beyond march of 2017, even though that is well below projections. that what we spec today is perhaps a dovish tone to prepare markets for more action, most likely september, anna: the latest in december. what is giving them the biggest headache?

we talked about the implications of the brexit vote, and also the state of the italian banking sector. actually, as manus was ejecting, market fall of has been limited by some of the actions of the central banks. the italian banking center, seems to worry him. athanasios: definitely interest extending qe. without changing the kind of programming, means we run out of bonds to buy, particularly in germany. one big thing is a change the parameters, be able to buy more. and they are no easy options. they have to buy below the rate or get rid of the capital options, both very difficult. they should have a treasury that is challenging in italy, and the referendum on the constitutional reform coming in october, even if they do not call this a political rises in italy, it is making the ecb policies ineffective because the italians --

manus: for anybody who wants to have a look at where we are, and the challenge, this is germany. green is the german market.and that is a real challenge . because that family of bonds, a great deal of it trading at 4/10 of 1%. euro is dipping. do you expect to go lower? athanasios: it will all depend on medication. however, the main driver of the euro right now is the fed, markets practicing earlier than the height. and the risk sentiment. euro-dollar is inspected to become very sensitive again to global risk appetite. anna: you mentioned the changes that might happen to bring about to buy more, different types of government debt, either changing the t. the minutes they are allowed to go to. jpmorgan did some analysis talking about the issue government debt in the eurozone,

saying it is running at 2016 net issuance less than the ecb monthly appetite. they are talking about the ecb wanting to do more into next year perhaps. does that depend on government issuing more debt?or if they can change the p is that enough. ,athanasios: that is why you change the parameters of the program. will not do anything, buying long-term at historically low levels. if they replaced the capital key with weight based on market capitalization, in this case they would be buying more from italy and france, less from germany. and it is the right policy, because it would target monetary policies to the regions that need it the most. and we can say that brexit perhaps has made it easier for mario draghi to move in this direction. manus: what about the corporate bonds, a lovely story on the terminal, no storm left

unturned. do you expect them to beef up? athanasios: not aggressively. but they introduce this exactly to the constraints of the sovereign kety. the program so far is working. i think anymore time, in order to see the results. i think most likely, in the fall when they happen to extend, they will focus on sovereign bonds. anna: thank you very much. amvakidis stays with us. manus: we're just about -- discussing the ecb policy decision since the u.k. brexit vote. at 12:45 u.k. time, followed by mario draghi's news conference. we will bring you that. plus bloomberg news. anna: theresa may holds a press conference with her french counterpart, president hollande. more than just brexit on the agenda it seems. and later tonight, donald trump is due to deliver his acceptance speech. manus: coming up, picturing a

perpetual bond. boj person former criticize rates? and we speak to s&p's trevor cullinan on the turkey downgrade. and a 7:15, anna is off to have a big conversation, ub nibail-rodamnco has a conversation with us. this is bloomberg. ♪

anna: welcome back to countdown. a beautiful day in hong kong. 1:31 in the afternoon. hang seng up 7/10 of a percent. let us in the bloomberg business flash. here is rosalind chin. rosalind: singapore has vowed to take action against four banks over failures and anti-money-laundering controls, that is as regular sees $177 million link to alleged fraud at

the malaysian state investment company. authorityry o says they uncovered instances of control failing in ubs and standard chartered's local units, as well as substantial breaches at a private bank. officials of the bank did not immediately respond to inquiry. the big investors may have had enough in china. according to people familiar with the matter, there are management pushing to find agreement with the market leader. uberdiscussed deals with executive. toillionaire says his goal grow the family business is still on track, while india is grappling with a grow old slowdown, it looks like it will be get for business. reform, oneery good of the most important reforms

ever for india. it will add about two percentage points to gdp growth rate. difficult, wants gsp is in place. cost of production will come down. cost of logistics will come down. products will get more affordable for consumers. more affordable for us will mean larger consumption, and larger consumption will mean production, employment, and overall it will be excellent for the indian economy. rosalind: and intel fell in extended trading after reporting the business well below 10% targets. the world's biggest semiconductor maker also says growth has slowed in the chip division. falling 51% after it took a $1.4 billion charge after cutting 12,000 jobs. seestold bloomberg that he a data center and cloud business powering the rest of the year's performance. >> the larger picture is the

driver of what is going on in the cloud and data center. and i think we are poised for a strong second half. we have insight into what some of the big cloud customers are looking to purchase, and we have new products coming in, based on the technology we think that will allow them to buy a richer mix. rosalind: and that is your bloomberg business flash. anna, manus? manus: thank you very much. arkey has imposed three-month state of emergency as the government pursues the responsible for the failed military coup. the president said there would be no backsliding from democracy, and no pause and economic reforms. and a collapsed on saturday, thousands have been detained by authorities. anna: european head at bank of america merrill lynch is still with us, let's talk about emerging markets and turkey. what is key as to where the lira

goes next. his about the ratings agency? the extensive power grab we see erdogan? athanasios: the questions about the future about turkey within anymore?sn't there the agreements, the relationship with the u.s., there are many risks at this stage. and what is interesting is that the turkish lira is weakening at the time the rest of the emerging markets are booming. manus: yes, they are. a little bit of a reprieve this morning. this is a we started with. you are sitting down at was doing this at that start of the show. do you think that is overstretching? athanasios: well, based on past experience, the effects tend to overshoot when there are these kinds of crises. and particularly, the turkish lira is a very high trade. the risk at this point, even

with this involved, i would say to the downside. anna: talked to was about the emerging side of this trade. everything on emerging markets, coming back to the dollar. we see markets moving quite quickly, as we get better data from the u.s., reassessing the likelihood of an interest rate hike in the u.s., the work functions as 47% chance of an increase in interest rates in the u.s. by december. athanasios: actually, it has been one of the successful traits this year. partly, having to do with position, starting the year with the markets being short, and particularly against the u.s. dollar. and partly just to do with the risk sentiment, particularly after brexit, that we had it benefit. the central group is back, and this is good for emerging markets. what it remains attractive, we have to member this is a high trade, and it will be vulnerable to any volatility spikes. ofa: athanasios, head

merrill lynch bank of america. manus: we are live with the publicis chairman. that is maurice levy. this is bloomberg. [hip hop beat]

♪olympics 2016, let me get you on my level. ♪ so you never miss a moment, ♪ ♪miss a minute, miss a medal. ♪ ♪ why settle when you can have it all? ♪ ♪soccer to wrestling. track and field to basketball. ♪ fencing to cycling. diving to balance beam. ♪ ♪all you have to sa♪ ♪ is, "show me," and boom it's on the screen♪

♪ from the bottom of the mat, ♪ ♪ to the couch where you at? ♪ ♪ show me the latest medal count♪ ♪xfinity's where it's at. ♪ welcome to it all. comcast nbcuniversal is proud to bring you coverage of the rio olympic games. ♪ manus: welcome back. beautiful shot of the imperial palace in tokyo. dollar yen is 107.04. dollar rising, more talk on stimulus to come. in the japanese story, 107.04. let me give you some of the breaking news we have across the bloomberg. ublicis this is a major global advertising company, coming out with the first half income of 381 million euros. the ceo saying we are starting to reap the benefits of transformation, the program has been something that maurice levy

and limited last year. quite substantial cost associated with that. it ist comes to revenue, being bolstered by growth in the european advertising market. they lost some major accounts in 2013, $30 billion worth of ad spending taking directions in 2015. they lose accounts in the third quarter, moving away from last year, that is going to hit the numbers according to maurice levy. they are saying they have to lose accounts in 2015, but it will hit sales. the choice of a new ceo by the board will probably be between december and february of next year. so this is a press briefing. we are going to have an exclusive conversation with maurice very shortly. caroline is getting set up. 4.7 5 billion, market looking billion.

washing down the second quarter, bang in line with what the market wants. the next company that we have breaking across the bloomberg is the bankers, knowing how to win a negative rate environment. that a switch to the second quarter, total capital rates of 21%, relative to the peers in europe. court equity fell, when it comes 4 billion.ding, 2.1 when it comes to income, 3.3 5 billion. slightly below the market estimate. net interest income, this is a critical number. 5.5 billion, that is above the market estimate of 5.3 billion. maintaining the outlook despite the challenging conditions that they are facing. that is danske and the publicis. that is daybreak, on your phone

and mobile, click on it. let me take you through what we have on daybreak. the front of daybreak this morning, this is out on bail. that is a story we are tracking here on bloomberg. is out on a $1 million bail. this is mark johnson, hsbc had of foreign exchange. he does trading in london. he appeared in court and monday, held overnight in a brooklyn jail. charges of minute be leading the pound, to take advantage of inside information, $8 million for the bank. the arrest is for an allegedly front running scheme, involving $3.5 billion in currency transaction. that is the big legal case. take it down, we have been tracking the story for quite some time. yesterday, the u.s. department of justice looking to seize more than a billion dollars worth of assets looking towards

singapore. they found anomalies -- excuse me failures in the anti-laundering controls in the group.trol summit to bear in mind here they say the lapses for specific processes, and mas did say this does not seem to be pervasive control weaknesses. misconduct. the third and most important an imposingy is erdog a state of emergency. you are seeing the lira bounce back from a record low. with that in mind, let me get straight to dubai. i have my colleague, yousef gamal el-din being. he will take us through this chart of the hour, in terms of what is going on in turkey. very good day to you. yousef: good day, manus. the reality is yes, we look at butlira and equities,

another gauge in terms of how risk sentiment is evolving in august is a closer look at the cost of this five-year credit default swap for turkish government debt. take a look here. we put this on a chart for you. this showed you what has been happening. you can see that spiked, the line in the yellow, the last three trading days. passed junkrkey has rated russia and brazil. this is below investment grade. the implied credit score, one lower than before the turmoil began. an essentially, we are of course waiting for moody's to come out with a decision. that is the critical decision that will determine a, whether turkey will lose the critical two investment-grade ratings it needs, some investment funds required to buy turkish debt. that $9ourse, whether billion firesale in turkish bonds will materialize. a lot at stake here. this chart that newly worth

pulling up on your bloomberg. manus: yousef, think you very much. we should just say that the lira against the dollar trading at 3.06 31. a little bit of a more move on those record low. yousef, we will talk you later. thank you very much. yousef gamal el-din, in dubai. off ted cruz has been booed the stage at the republican convention for failing to directly endorse his rival. instead of backing trump, the texas senator said to think of the constitution with a cast ballots let's get straight to our. bloomberg politics reporter, sasha is , this is fascinating. cruz did not endorse. then, what happened? the crowd got really -- sasha: something we have not seen on the convention floor a while. the speaker given a high profile

slot, basically booed off the stage by the base of his own party. you know, cruz, the sort of defining life in a speech, the recommendation of attendees that they vote their conscience. and you know, that is seen at the convention as seeing they have a path not to vote for donald trump in the fall. and that was seen very much as a slight. and it happened just as trump was entering the arena. so, there was this moment, the type of problem we don't get in these very much anymore. manus: the whole concept was unity, wasn't it? what the republicans wanted to garner from this, they wanted the party to unite. vices turn to trump's presidential pick, pence. what was the push for him? ence talk about the ways you trump are quite different. pence is a conservative

christian, from small-town midwest. he talked about his far more sort of traditional family arrangement than donald trump, on his third wife. but then, told a story about donald trump as a fairly conventional conservative and republican leader. this was something again that we have not heard a lot during this campaign, a republican politician using their standing, in his case as a current governor and former member of congress, the donald trump, despite all of his differences from the party's political class, a good steward of conservative values and sort of a reliable champion of the republican cause t. manus: ok, c would last 24 hours brings up. sasha is our reporter on the ground in cleveland. we are live in paris, now that we have the chairman and ceo maurice levy, the french advertising company has delivered numbers. beautiful morning in paris.

stay tuned for that conversation. this is bloomberg. ♪

♪ is 1:41 a.m. in new york. ex: 40 1 a.m. in london. 7:41 in paris. unchanged in the futures. with that in mind, let us get straight to paris. we will talk publicis, caroline as a special guest. good morning. caroline: a very special guest, indeed. i am joined by the president and chairman and ceo maurice levy. maurice: onshore. >> was the second quarter cited more challenging? maurice: the four-year is very challenging, but the second quarter is very good, much better than the expectation. not only our own expectation,

but also those of the market. so, we are extremely pleased with the numbers we have posted. %, wheregrowth is at 2.7 we were expecting less than 1.5%. all ourave improved financial indicators. we see extremely good second quarter. caroline: it was especially tough, going down to 20%, essentially because of brazil. do you expect recovery soon? the reduction, or the slowing down of latin currency.s due to when you look at latin america per se, in terms of organic growth, we are weathering the situation extremely well. we have some very good news, it is going up. brazil is slightly down, but

improving compared to the previous quarter. so, the situation in latin america is not as bad as it looks at first sight. it is mainly the currency exchange rate, which is putting our numbers down. caroline: do you expect the third quarter, and a fourth quarter to be tougher than the first half? and why? maurice: yes, we are expecting the third quarter to be the lowest for the year, simply because it is in this quarter oft we will feel the impact the losses of last year. extremelyss, we seem comfortable with the situation. our transformation is working extremely well, very, very well-received. the clients, we are growing, with many of our clients. and the major impact of the

organic growth coming from existing clients, who are believing that the solution that we are offering is much broader, much better, and helping them to face the future. so, we are quite optimistic about the full-year. considering that in 2016 we will improve all of our indicators, and we will post much better numbers than last year. caroline: we are in the month after the brexit, past the emotions. what do you expect? gauge the brexit impact? maurice: as far as we know, nothing has seriously happened, in any of the economic terms. obviously, the decision has shocked the european union

citizens. we are all still under the impression that the answer given to the referendum was not the answer to the question, but the answer to some other worries. anyway, brexit is going to happen. and we are going into unknown territory, because as far as we understand, no one has been prepared with a very strong plan about what will be post-brexit. we believe the new prime agent thats still an is wide open, and does not know exactly how to deal with the exit. the european union is quite in a hurry to see the decision happening. we know that we move to something after the consolidation of the eu, as it is today. new primewe have a

minister coming to paris today to meet with french president hollande. we had this feeling that france wanted brexit to happen quickly, quicker actually than what angela merkel wants, for example. what you think is the solution? maurice: i think businesses hate uncertainty. and as long as we are in the negotiation process, and we are in this kind of limbo, where we do not know what the decision is, when the famous article 50 will be triggered, etc., this is not something that is positive for the business. business likes situations that we can predict, that we can work on. clearly, what we are expecting is that the decisions are made quickly, in order we can move forward, build some very strong relationship with the u.k., which we remain a great partner with in the eu.

and that the eu can have a new roadmap, and a new concept, building on the issues that we had for something more positive and more encouraging for the people. caroline: we're just a week after the terrible terrorists attack in nice. do you think this geopolitical environment and terrorist threat will have an impact on investments? maurice: clearly, the terrorist attack in nice has been a shock. we see this new wave has provoked a different reaction. anger,uch more about that emotion. and we see that the people do not understand that they have not done what they could have taken to avoid such an attack.

believe that this is going to happen again. and we have to be prepared for the future, to lead with the idea that we will have more terrorists attacks. and we have to do like the israelis, and some other countries, who live with the fact that they are from time to time in terrorism. and i believe that europe is very strong, france is very strong, the population is very strong. life is mucheve stronger than the threat. quickly, you are expected to retire by make way 17. do you already have someone in mind? maurice: i have plenty of ideas in mind. the rightake decision. i am fully confident. caroline: thank you very much.

maurice levy, chairman of publicis in paris. manus: i have to say caroline, you get the most beautiful locations relative to the ones i get the middle of winter. great conversation with mr. levy. turkey has imposed a three -month's state of emergency. the president said there would be no backsliding from democracy, at his government will pursue those responsible. bloomberg's executive producer simin joins us from istanbul. saidhas president erdogan about the state of emergency? simin: that is right. the state of emergency came into effect hours ago. now, what the president is saying is that this measure is by no means against democracy, laws, or freedom. instead, is a fight to backers.

he blamed the u.s.-based cleric for being behind friday's failed coup attempt. and for the past few days, he has been detaining thousands of people, who they say are linked to the movement. now these people are within the army, police, education, civil service as well. the president's in a clear message that this is not against democracy. manus: simin, thank you very much. executive producer in istanbul. simin, thank you. low, aftert a record s&p global ratings cut the country to bb. that was from bb+, put on a negative watch. let us get more now with trevor cullinan, the director of sovereign ratings at s&p. he joins us now from our dubai bureau. thank you much for joining us, trevor. you have a bb rating, two stuff

below investment. you have an negative outlook. what are you most concerned about the negative outlook, what would drive the next ratings review? driver i guess the main of the potential for further downgrade would be a government policy. so, it is really a deterioration in the government fiscal position, for example, if they were to significantly increase spending. for thetential independence of some of the institutions, for example, the central bank, for government to interfere with monetary policy decisions. generalt the economic growth story. as you know, turkey is a consumer-driven economy. this leeads to extensive

import which need to be funded by debt. we lower the rating to bb, a significant amount of external and we arey exists, concerned that investor sentiment will change. that the instability that currently exists will make it much more difficult for turkey to re-sign external debt and for the economy to grow at current rate. manus: trevor, i must ask you, your banking change came before the state of emergency was announced. does that make the situation worse? trevor: not necessarily. i think what we are pointing to is general instability and uncertainty. i think the state of emergency possibly just highlights the concerns that we have. but i wouldn't necessarily say that it makes it better or worse. it is just going to be very interesting, i think, to see over the coming months and quarters to see how investment t sentiment react to

turkey. clearly there is a period of significant instability, over and above what we have previously expected. manus: how concerned are you about the lira making record lows this morning, one the worst performing market currencies. how concerned are you about a new record lows we're seeing on the lira? trevor: yeah, it is an issue. and it is a symptom of the type of concerns we were pointing to. i mean, the volatility in the lira could be an indication, could well be an indication that the capital flows into turkey to finance the current account deficit and to roll over the external debt is less secure than previously. i mean, investors will not be too encouraged by this uncertainty, and also the fall in the value of the lira. on top of that, there are concerns in growth, because this means investment in the growth,

it will be weaker. and on top of that, inflation to be higher. as i said, consumers drive largely the turkish economy. the disposable income will be reduced, if deflation increases. justn all, it is really slightly the issue we have already raised. manus: capital controls, some people are saying there is a possibility the administration -- they have no plans to introduce capital controls. how retrograde step would capital controls be? does turkey need capital controls? turkey were to introduce capital controls, it would potentially be negative for our overall assessment of the ratings. we would leave it to the central bank to decide their own policy. they have been quite explicit that they will not introduce capital controls. that is our best case. manus: one of your. moody's, said it is

moderate. are you concerned? how concerned are you about the debt level currently? trevor: we are less concerned with regard to the government's overall debt level. but we are looking at the macro, position, of the country. when we are looking at that we are looking at the ability of the economy to refinance external debt, to keep funding its growth. turkey's growth is to was in the to a significant extent funded by the global sector. the banks are largely hedgd ed against liability. the financial sector has a large open position in foreign exchange, so that is one of our concerns. it is not really about the government debt. although that is increasingly an issue.

but it is more about the corporate and private sector. manus: trevor, thank you so much for joining us today. trevor cullinan, director of sovereign ratings at s&p. brexit casts a long shadow over the ecb. we discuss. this is bloomberg. ♪

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manus: a political purge. turkey imposes a three-month state of emergency, the lira hig her after hitting a record low. banks and brexit. mario draghi faces questions over the risks. recoveryeconomic following the ecb's latest decision. and malaysian fund meltdown. singapore says it's found anti-money laundering control failures at ubs and standard chartered, this in connection with the troubled sovereign investment firm, 1mdb.

good morning, it's "countdown." at least of breaking news. unilever -- if you don't have one of their deodorants, you certainly have one of their cleaning products. 4.7%. these are the breaking news revenues. the topline number for the first half. you know ever revenue 26.3 billion. first-half profit before tax, 3.6 4 billion. digging into the second quarter, sales rose by 4.7%, a beat on estimates. we were looking for 4.7% in terms of the headline. if you were a shareholder, 32.01 euro cents for the second quarter dividend.

that is pretty much in line with what i have from the bloomberg dividend estimate. we have a beat in terms of underlying sales growth, the core earnings per share bang in line. that's you kno unilever. the next debate we will have a look at is eay. this is one of europe's biggest discount airliners, saying that third-quarter revenue fell by 1.19 billion. have had 20y million pounds and disruption costs, and if you think of the quarter, they have had terror to deal with as well in terms of their quarterly performance. third-quarter revenue fell. er, just factor is bett a little bit better.

it's 92% versus 91.7%. they carried a 2 million passengers in the third quarter. that's up. easyjet warned us that they are concerned about the impact of brexit in terms of the impact of the traveling public. you also have the most recent attacks in nice, which will be a challenge for the whole industry. let me take you straight to the luxury goods numbers. operating profitability one point up versus the first half of 2015. this is a red headline across the bloomberg terminal. hermes,uarter sales for they beat first-half profit year on year. levee break it down in terms of second half total sales, which rose by 8.1%. the market was looking for a rise of 5%.

first-half operating profit should be higher by around one point compared to the first half of last year. maybe things aren't just as doom and gloom at the upper end of the global luxury market. futures -- dollar-lira, lows at 3.0654. stay there? these are your futures. lower, asianated stocks made their highs, london down by 2/10 of 1%, terrace down, dax down. the stimulus will be back on the top of the radar. four out of five s&p 500 companies have reported results that beat. let's have a look at the bond board as well. equity set for lower opening, things aren't so bad. the japanese government bonds are at -.23%.

will they deliver more stimulus? the critics of the bank of japan are on the tape talking about the need for that. yen has relinquished all his post brexit gains. you are seeing moves right across the yen spectrum. let's get your bloomberg first word news with rosalind chin. rosalind: good day. turkey has imposed a three-month state of emergency as the government searches for those responsible for a failed military coup. gan said thereherdo would be no economic reform. since the coup, thousands have been detained by the authorities. lira is strengthening

now after dropping to an all-time low, once it was downgraded due to increased political risk. bonds crumbled after it was cut to bb. the uk prime minister, theresa may, traveled to paris to meet france will hold on after talking -- to francois hoo llande. mustaid u.k. brexit talks not begin formally or informally until next year. >> i want to work with chancellor merkel and my colleagues around europe in a constructive spirit to make this a sensible and orderly departure. all of us will need time to prepare to these negotiations, and the united kingdom will not invoke it until our objectives are clear, and as i have said already, it will not happen before the end of this year. rosalind: three of wall street's largest investment banks have plunged by the most in at least four years. goldman sachs, j.p. morgan chase, and morgan stanley reduced money to employee pay by

17%, to $19 billion to shore a profit. goldman sachs made the biggest cut, by almost 30%. hsbc global head of foreign exchange in london, mark johnson, has been released on bail after being arrested yesterday as he prepared to fly out of kennedy airport. authorities alleged he was involved in a frontrunning scheme involving a $3.5 billion currency transaction in 2011. his lawyer says they will not be commenting at this stage. has been booed off the stage at the republican national convention after he failed to directly endorse donald trump. he congratulated the nominee in his primetime speech, but only mentioned his name once, ignoring calls from delegates to explicitly back him. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top .

i'm rosalind chin; this is bloomberg. manus: thank you very much. let's get into the markets now. some of these asian markets are making multi-month high. juliet sally is standing by. juliette: we have the regional index at 2016 highs, the highest level since november last year. certainly we have seen this risk on rally continue across asia in the last couple sessions. the nikkei is closing higher by a tenths of 1%, and that is the yen touching a six-week low on stimulus coming out of japan, talks that they are considering $187 billion in stimulus. australia is also closing higher, and new zealand closed higher by 6/10 of 1%. but it's here in hong kong that we have seen a lot of the action. this is the hang seng index your to date. -- year to date.

it's up more than 20% from the lows it saw a earlier in the year, which means we are now officially in bull market territory, and that is basically on the back of the fact that we have seen development stocks rise on bets that the fed will hold off on a rate rise this year. we really do think the hong kong interest rate correlated very closely with those in the u.s. having a look at currencies today, the yen is weakening down by 2/10 of 1%, 107.13, breaking through. the chinese renminbi, the pboc weakening this on stimulus bets as well, up at the moment by 1/10 of 1%. manus: juliette, thank you. a month after the u.k. voted to create the european union, they are set to announce their policy decision.

mario draghi's press conference this afternoon will answer questions about the potential impact of brexit and the concerns of italy's bank. caroline hyde is tracking it . but that's have shifted to september. caroline: exactly. it's pretty dreary in frankfurt, and pretty dreary in policy action today, but we could hear plenty of talk and questioning coming in from the press conference at happens after the announcement, and surely mario draghi might be hinting to further stimulus to come. the economists are pretty bullish that stimulus will come as soon as september; 33 out of 34 see more quantitive easing, more bond buying, to stimulate the economy. the market traders are less convinced, batting only until december when we see any more stimulus. but notably, they have to read the tea leaves that ecb; like

the bank of england, they will watch more dates for the ramifications of brexit, because throughout the bank lending survey, it showed no credit shock in particular, no key concern from the bank, and in germany it showed that business has been knocked. they are going to want to wait until perhaps july 29, when we get the pmi data coming through from the eurozone to see how much of an affected has had on the economy. manus: everyone has put a quantum around exit. how much of a headache has it been? from the contagion point of view, it has not been huge, has it, thus far? caroline: you're right. we haven't seen that much of a shock wave going through the asset classes, largely because the ecb has been buying bonds, keeping yields lower. i think that is one key heading, that the unknown consequences from brexit have pushed yields

further into negative territory. the problem is the ecb is trying to buy bonds to stimulate the economy; they have to get their hands on 80 billion euros worth per month. but now 65% of german sovereign below the deposit floor of the ecb. that bars the ecb from buying them. do key issue is how on earth they keep getting their hands on 80 billion euros worth of debt, when a lot of it is ineligible? will we tweak that? will we hear mario draghi talking about expanding eligibility? a second key headache, this is a knock to eurozone growth. we know many have had to ring back their growth forecast for the rest of the eurozone; italy shining a light on the banking crisis, and we are seeing lending not picking up at the full extent that would have been wanted, and inflation so far off the 2% target.

-- key headaches from brexit how to get the growth going and how to get their hands on 80 billion euros worth of bonds. manus: no stone left unturned. caroline hyde, have a great day in frankfurt. joining me is karen olney. let's kick it off with global perspectives. highs,tocks rise to 2016 $5 trillion back on the agenda. take a look at this. this is the msci all world index. we are getting used to dealing with a lot of big issues. the brussels bombing, trump becoming the presumptive nominee, brexit, the turkish coup. the market is fairly resilience -- do you concur? >> i get this question all the time -- why are markets behaving so nicely? the dispersion in the market is

interesting. if you look at the european valuation gap, we're at crisis s.ans, worse than crisis loww if you go back to 2015, january 29 or 22 -- manus: let me take it back. it's january, 2015. >> pretty depressed, especially for europe. then you have a massive bounce into april. i feel like the mood on many european assets today were worse than january, 2015 when we first announced qe. manus: you just came home from the state. what are the investors saying to you? are they buy in europe, relatively speaking? from where i look, everything is trading at a very rich valuation. what are they doing? >> u.s. is the bond proxy. it has always gone up while the prices have been burning. a few of the hedge fund said, do

we need to touch europe over the next year? we don't understand the applications of brexit; do we need to invest in europe? manus: you just tied at two things together. we don't understand the impact of brexit, do we touch europe? are they leaving the u.k. and europe alone or -- >> the ftse 100 is near its highs, the highest since the tech bubble. and you have the valuation gap e stocks 50 and ftse 100 worse than at any point in the crisis, eating it is very cheap at the moment. the americans are saying we like those large, defensive internationals. the currency is falling. no pain on the back of brexit. e stocks 50, aren't there some italian banks and their? -- in there?

the valuation gap is worse than at any point in the crisis. manus: you bring in one of the big elephants in the room; italian banks. rocky is doing his press briefing today. when you get together -- that's the conversation across the east coast -- >> three things. italian banks, political risk, and europe hasn't turned down a positive profit in 10 years; why should we invest in that region? manus: you drew the analogy and said 1989. this happened in japan in 1989. throw it all together; i want to try to back to dollar-yen. it has not given back all its -- that was the rush into yen post brexit. here we are, back on stimulus, given up all about value. do you like japan? tell me the story? what do i need to learn from 1989, and how do i compare that to europe? >> [laughter] that goes way back.

point i was starting to make earlier is that japan had of booms.alf all profits peaked, and then they collapsed, and they had all kinds of issues. 15 years later, japan got its profits back. now let's compare that to europe. profits peaked early 2007. 10 years on, profits are still 30% below peak. if we did japan in a profit sense, we should get back to peaked 15 years. 3%, 4%, 5% growth, that would be a great outcome, but it hasn't delivered profit growth and 10 years. manus: do you believe it will? >> yes. manus: hurrah. >> [laughter] manus: i'll go on that. thank you. karen olney from ubs. the company behind no

fewer than 72 shopping centers across europe. we will talk commercial real estate. this is bloomberg. ♪

manus:; 21 here in london, 2:21 in hong kong. juliette saly is with me. juliette: singapore has vowed to take action against for banks due to anti-money-laundering controls, after it sites 177 million u.s. dollars in assets at 1mdb. the monetary authority of singapore says preliminary findings uncovered incidences of control failing in ubs and standard chartered's local units, as well as substantial breaches at private banks. officials didn't immediately respond to queries.

unilever reported second-quarter sales growth that slightly beat estimates, underlying revenue raising 4.7%. they delivered gains in sales of the odorant and hair care products. we will bring you our interview with the ceo at 7:50 u.k. time. lufthansa has cut its 2016 profit forecast after terrorist attacks and economic uncertainty hit demand for european travel. the german airline lowered the earningsfor adjusted despite a strong performance in the first half. they also said unit revenue will be significantly weaker in the third quarter. and that is your bloomberg business flash. manus: juliette, thank you very much. estatehe commercial real company behind no fewer than 72 shopping centers across europe. yesterday, they reported first-half numbers, and a

forecast at the top end of the previous guide. i'm pleased to welcome the company chairman, who jointly now. you have upgraded your guidance. what's driving the upgrade? >> strong tenant sales, good leasing, and the delivery of large, new shopping centers. we are getting a full your effect of those. in scandinavia, stockholm, we have 9.6 million visits, which means almost the entire population will visit. that's one of those small driving performance. manus: you say in spite of the impact of terrorism attacks in paris, the subdued economic environment, retail has proven resilient. can i continue, given the most recent events? >> sure. our strategy has been to focus on these large, regional shopping centers. the impact you see of terrorism in major capital cities will therefore disproportionately impact us for a period of time.

who knows exactly where it is, you can never predict. but you cannot love just as the country -- we're not a proxy for macro. manus: talk to me about paris. the view is we have a real period of instability with brexit in terms of renegotiation. how does brexit hit demand in paris? >> like everybody else who is at this point, looking at brexit, everybody has speculation on what will happen. nobody quite knows, not even the u.k. government. the europeans don't know. i think there's a tremendous amount of uncertainty. retailers will need to continue to shore growth, and they have to discount effectively incremental risks, which will drive whether they decide to put expansion plans on hold or continue. manus: we have seen softbank gone after arm. a number of deals.

dealmaking make m&a, much higher on your agenda? are you going to buy any acquisitions in the u.k.? >> i think the key challenge of those valuations, the discount risk is an important element. nobody can tell me what this country should be doing. i think the u.k. is fairly, fully valued. the currency has gotten cheaper, but revenues have gotten cheaper as well. in the u.k., you have a very backward looking approach to valuation. they haven't been touched by brexit, so if there is any interest at all, it will not be just yet. manus: some people are talking about commercial property in this country declining by 17%. how much do you see commercial property dropping in the united kingdom? what would make it appealing to you to come in and play? >> i'm not going to comment on that one.

those people are extrapolating. we always look at every country in europe -- manus: you must have a gut feeling. sterling is down by 10%, 12%. the market dropped by 30%, 40%. let me rephrase -- could it be as extreme as 2007? >> much less leverage, so i don't think so. manus: in terms of their ability to expand, you have nothing in italy or portugal. tell me about ireland. you mentioned you thought it was overvalued. very low interest rates drive investors to make calculations relative to treasuries. if you see treasurers yielding less than 1%, if you pay 3% or 4%, you think you are getting think about the concept of what do i pay my equity holders, it's too expensive. manus: the chairman of unibail, thank you very much.

no need to worry about the economy, says turkey, markets are investments. emergency state, the purpose is to clean the coup. this is bloomberg. ♪

guy: welcome to "on the move." 7:30 in london, meaning it is 8:30 in frankfurt. i'm guy johnson, alongside caroline hyde outside the ecb. this is what we are watching. draghi's bond rout. will ecb signal further stimulus, and if so, will it find enough bonds to buy? erdogan tightens his grip; a three-month state of emergency as they purge.