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. and earnings in focus.

lufthansa cuts profits, unilever breaks. we hear from the ceo in just a few minutes. is not in the office in berlin. she's outside the ecb in frankfurt. what are going to be the highlights today? the highlights are going to be the questioning, the barrage of questioning. it's damp in frankfurt and in terms of policy changes; it's expected that the ecb will hold fire, wait until september, wait until it can read the tea leaves of the way the economy has been potentially hit by brexit. there will be questions about the impact of brexit, the slow down on the eurozone, the questions on the 80 billion euros of bond buying. yields far below the deposit rate. what can they actually get their hands on at the moment? and of course, there will be questions about his hometown, italy, and the banking crisis there.

the light of brexit shining on the italian banking concerns. guy: yeah. another tough press conference for mario draghi. if he thought he would get a nice, relaxing one, turns out brexit and a whole lot of other things, probably turning out not to be true. we will bring you the policy decision at 12:45 u.k. time. can't wait for that. a highlight every month. look atg users can also tliv. it's always center to the coverage. less than half an hour from european open; let's take you through where the markets are going to open. i'll show you the fair value. 2/10 of 1% higher, opening stronger. lufthansa stocks called higher, but the ftse down by 2/10 of 1%. a quick look at the assets, some

of the currencies. let's bring it up. euro-dollarpicture, in advance of the ecb press conference. turkish lira has bounced a little bit, but nevertheless, you need to take a look at the chart. it touched an all-time low. and watch what's happening with the yen, which has recovered a little bit, but is having a negative session overall. more stimulus coming out of the boj. let's get you the bloomberg first word news with juliette saly. juliette: thanks. turkey has imposed a three-month as thef emergency government pursues those responsible for a failed military coup. speaking in ingres, the president -- in all current, the president -- coup,the attempted thousands have been detained by the authorities. unilever reports second-quarter

sales growth slightly beating estimates. underlying revenue rose 4.7% as the maker of ben & jerry's ice sales rose. we will bring human interview with the ceo. hsbc's global head a foreign-exchange cash trading in london has been released on bail after being arrested yesterday as he prepared to fly out of kennedy airport. u.s. authorities allege he was involved in a frontrunning scheme involving a $3.5 billion courtesy transaction. his lawyer said they wouldn't be commenting at this stage. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. this is bloomberg. guy: juliette, thank you. amidwiss drugmaker rises demand for cancer medication. core earnings were higher. the company also said it plans

to raise its dividend. for more, we are joined by the ceo, the joins us on the phone. good morning; congratulations on the numbers. what's your big question? how worried are you about the political backdrop for your business? >> good morning. well, first of all, we're very happy about the development we have seen in the first half, and in spite of the political turmoil you see in parts of the world, i remain confident. i remain confident as we go forward. it cycles in the industry with political turmoil, and this is particularly true for our patrol, where we have very specialized, innovative medicines. no better how the oh -- no matter how the overall economy

is going, the demand for a specialized treatment like cancer is typically less impacted by such cycles. guy: one thing that has become clear from the politics, and we saw it in brexit and in the united states with what is happening with mr. trump, is that there is a serious concern about inequality the drugs you talk about are top and. -- top end. they are also extremely expensive. is there going to be a read across from the quality to pay into drug pricing? proud, in terms of the improvements for new medicines that we have made over the last year. it is true that we have very specialized medicines which are expensive, but at the same time, we have succeeded in making these medicines available,

typically too broad parts of the population. in the u.s., we have programs h the support of patients if they can't afford the medicine, if they are underinsured or not insured. and that is even more important in emerging countries. we have emerging economies that have made good progress in working together with different stakeholders to make medicines available, and we have seen good improvement. and actually, if you look at it from a business point of view, this improved penetration with our innovative medicine, particularly in emerging markets, is also reflected in the good growth we have seen at 5% in the first half, very much driven by emerging economies like china. guy: the work you are doing with old and new drugs, compound therapies, it seems to be

pleasing at the moment, but it is really the immunotherapy work you are doing that is really catching everybody's i. -- everybody's eye. the oncology product you have has been received very well. can you give us a sense of what further approvals look like with that product, what the rollout looks like, and where the science takes you? the science is just stunning. >> it is, indeed. and there is a new door opening here in the treatment for cancer that will make a huge difference for cancer patients. term.ly in the longer we are seeing the first results already now. we are off to a good start with immunotherapy.r but this is only the beginning. we are developing a number of indications, and even more

importantly, we have another nine new medicines in clinical development. fieldk the future in this will be combination therapies, with a number of other medicines in our clinical development. we have now over 50 study programs ongoing, and this will literally revolutionized the way we can trade cancer in the future. guy: as you say, a revolution. congratulations on the numbers. congratulations on the science you are producing at the moment. thank you very much for taking the time. roche ceo, joining us on the phone. here's what's coming up. the turkish president declares a state of emergency. then we will hear from the unilever ceo, sales growth beating estimates. then it's the market open. all the moves on a busy day.

keep an eye on lufthansa. we will talk about it later. this is bloomberg. ♪

caroline: welcome back to "on the move." i'm here outside the ecb in anticipation of the right decision and press conference later today. breaking news. yields creeping higher, back at 0%, the highest we have seen since july 15.

maybe a little bit of reprieve and easing from mario draghi, desperately trying to find more german debt to buy. now, let's get out to the business flash with juliette saly. juliette: thank you. roche has reported a rise in first-half profits that beat analyst estimates. the drugmaker's core earnings, which include immunotherapy items, climbed from a year earlier. it was spurred by demand for medicines that treat cancers. lufthansa has cut its 2015 profits after terrorist attacks and economic uncertainty hit demand for european travel. the german airline lowered the outlook below a previous year despite a strong performance in the first half. it also said that unit revenue in the passenger airline group will be significantly weaker in the third quarter. singapore has vowed to take action against for banks and 80

money-laundering controls. regulators say $170 million usd in assets from 1mdb. the monetary authority of singapore said preliminary findings uncovered "instances of control failings" in ubs and standard chartered and dbs, as well as substantial breaches at private banks. officials didn't immediately respond to queries. an that is your bloomberg business flashd. guy: thank you very much. military coup in turkey sends shockwaves around the world, everywhere. president erdoga taking further action overnight. >> the members of the national security council came together, did intensive and comprehensive assessments, and we decided to recommend to the government that a state of emergency be declared , as per article 120 of our

constitution. business in order for us to be able to speedily and swiftly deal with all the elements of the terrorist organization. he offered reassurances, then, that rights and freedoms will not be infringed upon, but that is the great fear, this as thousands have been jailed across the military, courts, and academia. the lira has hit its lowest level on record against the dollar. what is the state of emergency actually mean? >> well, we don't have all the details, but i'm pretty sure what it means is that the government can act by decree. they can pass laws right away. it also means that they can detain suspects more easily. again, we don't know all the details, and this is generally what it meant. it won't enable them to speed up the processes and they will have to pass everyone in front of a

judge before they can detain someone or remove them from their post. guy: we hardly had significant reaction from the united states and europe. what do you think the reaction is likely to be, now that we have the state of emergency in place, now that we can see further erosion of people's rights under the constitution? >> well, they insisted won't be erosion of the rights. you'll have to see. the protest that has come from the european american leaders have to do with the massive purges that have taken place within the judiciary, academia. and that is really unaffected. it might be easier for the government to continue with that process. i'm not really sure we are going to see a huge increase in opposition from foreign governments. turkey has already been put under warning about the eros ion of rights. last night probably doesn't

raise the bar that much. guy: interesting stuff. thanks very much. joining us from istanbul. minutes away from the open; eyes on unilever. we will bring you the ceo very shortly. ♪

guy: let's talk about where we think the markets will open. we think is going to be a broadly positive start, but london will underperform, according to the fair value.

it is pointing to a nice start, the dax up by 4/10 of 1%. the main story today be the ecb, but there's a whole slew of corporate earnings coming out. unilever reporting results; less t's listen. >> the inmf has lowered the forecast, globally and regionally. you saw the same for the u.k. the tendency is more to the downwards. said itgo i would have can't get much worse, but we are able to pilot up still. admitted enormous challenges, we are coming together. ehe political challenges, th population at large is starting to react to things. then you have the issues of climate change affecting the economy, all of that coming together doesn't make it easy.

>> one of the things you mentioned was the politics, talking about brexit. do you see any evidence that this is having an impact on the u.k. consumer yet? >> for the consumer it might be a little early. -- ifsly when you go, it you look at the economic data, you see solid investment, less job openings, you see reduced estimate for the u.k. economy, and a high level of uncertainty. investments stay away. >> and how about your business? you talked about how this would fundamentally change the way you run the company. you have r&d here, other facilities. what changes are foot for unilever? company,an anglo dutch so we are totally intertwined. that heavily depends on foreigners working here, as well

as british nationals. we have to assess what the transition is going to look like, what currently has happened is people have fought to move away from something, but the alternative hasn't been well presented to them, and for business, we have to see what the alternatives -- >> will you be less anglo, or is it too early to say? >> too early. we'dll say when we see -- like to be around for another hundred years. this probably within irresponsible political we will probably have a better part of the continuity that society needs. >> will prices have to change in the u.k. market as a result? >> if you have a devaluation in the u.k. of your currency up to 15%, significant weakening of the pound, you have an economy

that is increasingly integrated in a global world. you are going to import inflation, and i think that is why mark carney took the decision he took last week. anna: what about prices at unilever? >> i've mentioned that before brexit, and i don't have to up eating at. we'll have to import products because you cannot make everything at scale in the u.k. anna: let's talk about m&a. you told me last time that you don't do vanity m&a; it's all well thought through. when you look at the future of big business, how much is it going to be about food and how much is it going to be about personal care? >> i think it's a wonderful addition to the unilever family. is a $30 billion market out there. unilever, if you exclude shaving, is by far the number one in the market. this is a subscription model that is interesting with more and more of the shopping channels.

we think that this acquisition is very strategic, and for that reason we saw the market react positively yesterday. portfolio, ital is very important that we keep our current brands. we have divested what we needed. we keep acquiring where we think we can create competitive advantages. anna: did you think twice about the price? fivepeople suggesting times projected 2016 revenues might be punchy. >> it depends. we don't talk about the price, because it's about future potential. we've had great acquisitions over the last seven or eight years, and by and large they have done very well for shareholders. with transforming your portfolio and running your business, we are able to put in over the last six months more resources,

topline growth. all of our categories are growing, and profitability is up by 50 basis points. you can't probably do better than this. guy: paul taubman, talking about the latest m&a, challenging gillette with the deal and the politics affecting his business. i want to talk about the stocks we are focusing. the airline sector will be front and center. lufthansa is called down sharply. i want to read you a quote. vanced booking has declined significantly, in part due to repeated terrorist attacks and greater political uncertainty." we also have easyjet being hit not only by strike action but also by the terror story, significantly impacting that business is the uncertainty around their business model. a little later on, we will be talking to southwest airlines, its ceo coming up. i wonder if there is a read

across into the wider economy. we will get into the financial sector shortly. chief financial officer will be joining us as well. futures are mixed. the open is next. this is bloomberg. ♪

guy: good morning. you are watching "on the move." we are here in london. caroline hyde is outside the ecb. she has your morning brief. caroline: draghi's bond drought . will the ecb signal for the stimulus? turkey imposes a three-month state of emergency as the president purges schools, court, and the military. the lira touches all-time lows. andedes profits weaken

unilever braces for tougher conditions. we take you through all of the numbers. guy: we certainly will. easyjet said this is the most typical environment to operate in in 10 years. we think london is going to be softer. there are so many corporate earnings to digest as well. london, making up its mind. the market makers have so much to deal with this morning. it is a market of stocks today, rather than a stock market. but what is interesting is that london is going down. paris is looking like it will have a more positive session. the differences are emerging between the different forces here in europe. london is down by .2% and manus cranny has many more details. manus: in many ways, this is about stimulus. the potential for stimulus is overly priced in to these

markets. today, it is, how dovish will the ecb sign? a mixed complexion at the moment on the imap. when it comes to the individual names, a little bit more green coming through. material come up .3%. let's have a look at some of the individual stock names. spend $10,000 on a hermes bag? that is the question you need to ask yourself. their sales broke the trend, up 1.85%. increase production. so, you don't have to wait a year to get your special hermes products. they took advantage of gores come of their fx hedging. -- they took advantage of course, of their fx hedging.

sales, $1.2 billion, down from last year. 54.1.u are looking at the gilt market of course, is going to perhaps be the most interesting. go to wbix and you can see some of the impact there. bank hasark's biggest had profit slip 1% in the second quarter, missing analyst estimates. most of the business stagnated. shares are unchanged at the moment, but we will see how they open in a few minutes time. that is after we talked to the bank's chief financial officer. is it more difficult to make money now than it was one year ago? >> you can make that conclusion when you look at the numbers. we actually think we have had a

very satisfactory first half of 2016. it has been difficult market conditions. we have been facing a negative interest rate and subdued customer demand, as well as some volatile markets, but we have actually come up with a powerful income. last year we were strong on a number of accounts due to the market. so, overall, we think it is a tough market, but we also see the strength of a diversified business model. i am actually still quite encouraged. caroline: i am still outside the ecb in frankfurt. buying has been the policy of choice, driving down those yields into negative territory. how much is that painful for the bank you run? and how much is quantitive easing the policy you want to see that continues? >> there is no doubt the

interest rates, the very low interest rates and the continued downward pressure on interest rates is a massive theme for banks like us. i'm sure you've looked at it, but we are guiding our net interest income slightly up today. so, we are seeing an easing off in terms of the pressure on lending margins. we are starting to see that pressure easing. obviously,erally, as a bank, we would prefer a higher yield curve over time, but for now, we think we managed to cope with it. is: i'm sure sergio watching. what is client activity like in wealth management right now? jacob: client activity was subdued in the first half. that is one of the reasons we are adjusting our free guidance for the first year.

we have seen less activity in the first half. from our perspective, we see it as a result of the uncertainty in volatility. climate hasxit been more reticent. we have received an impact by assets under management being hit by lower asset values. so, there is a management free from the lower assets, and then there is a general reluctance to invest at the moment. guy: you think that will become a story around the industry, that fees will decrease? will this become part of the competitive landscape? investors, i have heard, have been paralyzed with fear. dramatic use less language, but there is no doubt that there has been less activity than expected.

we obviously, when interest rates are at the levels they are, net interest income is less of a concern for banks. therefore, the clear answer is to focus more on the fee side. danske has been facing negative rates for the longe.r so, we have been trying to change our net interest driven model. you can say we have been on the forefront there. so, i do think fees will be a massive theme for the industry. and we obviously must get the balance right. guy: thank you for taking so much of your time this morning. jacob aarup-andersen, the danske bank ceo. the chief strategist joins us now in london. luca, good morning. what do you think about the fee structure? the industry is going through

fairly big changes right now. >> i think the banking sector is under a lot of stress. i think the policy of the ecb will help. caroline: give us a sense of what policy should be enacted by central banks at the moment. we have seen quantitive easing perhaps be extended to the end of the year by the ecb. meanwhile, the bank of england perhaps will be pushing for stimulus. it looks like there will be no end to pressure on yields. when we start is the banks being able to turn over a revenue once again? and how do you face this challenging scenario? >> what is clear to us is negative rates will not help the banks. the banks need a steep yield curve, they need growth and i think the key issue is growth. what is clear to us is if you just cut rates, it is not going to help. you need fiscal policy and the support of central banks, but i

really believe we need to use fiscal policy more than monetary policy if you want to help the things recover. guy: let's talk a little bit about what is happening here in europe. shares are getting absolutely smashed around because they are saying that terrorism, economic uncertainty. we're hearing this from easyjet as well. these are big corporate that deal of tourism, but also business people popping around the world, across the north atlantic. it is just economic activity. how do we get economic activity going? >> first of all, look at the numbers in spain and italy. i think there will be some kind of company specific issues as well. even consumer confidence is not that bad. even in the u.s., we see relatively decent growth in consumer spending. i think we have to accept the

fact that growth is going to be weaker. we have to accept the fact that we should not react to a couple of numbers because growth is weak, but not absent. what do need to do about -- and i just want to find this chart and put it up on the screen. what do we need to do about this? this is lending growth in europe. and it is just not picking up. this idea that you can throw credit at the market and you can use it just doesn't seem to be working. >> well, you need to have demand. if you have demand, you have to have confidence. confidence is about political stability, the job market, and many things. i have seen improvement in lending. the question is, is it enough? i think it confidence and political stability, but you need to feel confident about your job prospect and on this front, only some countries, like ere it is good enough.

paolini will be staying with us for the next 30 minutes. up next, we take you to the latest on the prime minister's visit. easyjet, firmly set. we will speak with the ecb as well. caroline is live in frankfurt. she will tell us what we need to know. all of that, coming up on "on the move." this is bloomberg. ♪

caroline: welcome back to "on the move." outside the ecb in frankfurt, where the dax is trading flat before the all-important monetary announcement, or lack thereof. in the all-important press conference, guy. it is free flat there on the german market, though. guy: i think everybody is waiting for the ecb, but there are many corporate numbers out as well. the dax is the only market in positive territory this morning, but only just. it is still more than 10,000. the ftse is down by .2%. the cac also under pressure, down by .2%. on average, we are absolutely flat here in europe. we have not had a great 2016 for the airline sector. easyjet isl from

talking about the fact that she is facing the most difficult operating environment in two years. 4.3%.ance is down by that --pite the fact well, yeah. these businesses are struggling at this point in time. one factor that is certainly in the next is politics. the brexit story is front and center. theresa may made her first foreign trip, a courtesy call to angela merkel, reassuring the brexit negotiations will not be starting anytime soon. >> i want to work with chancellor merkel and mike y colleagues to make this a sensible and orderly departure. the united kingdom will not invoke article 50 and till our objectives are clear.

that is what i have said already, this, happen until the end of this year. guy: a tete a tete with francois hollande, who might be less likely to stick with the pleasantries. wo members of the security council and i expect security will be a big part of that conversation as well, falling what happened -- following what happened in nice. patrick, let's deal with yesterday. the two most powerful european female leaders, some would argue the two most powerful european leaders. they have religious backgrounds and a lot in common. how did they get on? patrick: the meeting was cordial, from my vantage point. it was difficult to see really how they got along. it was the first meeting, so they were interested in at least feeling each other out to see how they can negotiate in what will be some very difficult negotiations. from a we could hear from angela

merkel, she is willing to give the new british prime minister time to sort out here negotiating positions to invoke article 50. but also from what we hear from the chancellor, the chancellor has no interest in having any sort of hostile relationship with the new british premier. guy: i wonder what the relationship looks like today in paris. caroline, what are we going to hear today? saying? hollande been and what does he want to hear from the british prime minister? caroline: we are expecting francois hollande to be a little more pressing than angela merkel for the exit to happen quickly. during his tv interview last took office.may he was very pressing. he even linked to the brexit to

taxes, saying he will only be able to lower french taxes next year if the frederick weston has been solved -- if the brexit question has been solved and has not had too much of an impact on the french economy. so, this would limit the economic damage and would also limit the political contagion of brexit. a smooth process will help hollande with some arguments against the national front, who was been calling for a frexit, a french referendum to leave the eu. both.hank you let's get our guest's take on this. what are investors telling you? we talked about the fact that investors are nervous at the moment, worried about what they see in front of them.

>> i think if you look at the market's action, we are pretty much at the level before brexit. i think many market investors are not too much worried about that. they are worried about global growth and potential policy mistakes. i don't think the brexit right now is the key issue for investors. guy: why do you think that is? is it because theresa may has made it very clear the way she wants to leave the eu. there are many questions surrounding how exactly that will happen. but you think she has done a good job of slowing the political process down, allowing for people to think this one through, but making it very clear the direction of travel. >> this is one reason, but we also have the elections in spain, they were not as bad as what we expected. i think there is a feeling that this would be a wake-up call for european party makers to be more

flexible and the italian bank situation would be part of this. so, i think investors are not worried right now about brexit, but something else. caroline: that something else, we will dig into in a moment. give us a sense of where central-bank policy goes from here. everybody is waiting to see if the ecb will laden more stimulus. what happens to sterling and the euro? do they rally? luca: i think the ecb is waiting, like the bank of england. i think it is pretty positive that the bank of japan will move in the next few months. it is very difficult now to grasp because we still have to wait on the economic data to see what the impact is on brexit. so, i think draghi will say they are pretty much ready to ease again.

they will announce anything big today, but i think the direction is pretty clear. there is more easing ahead for the u.k., the ecb, and the bank of japan. guy: the next meeting for the ecb will be in september, a few days before the italian referendum. luca: we also have the election. it is very difficult because if you base the position on calamity, it will be difficult to make a positio dec. this is why the ecb will probably wait. guy: stay with us, plenty more to discuss with you. luca paolini, staying with us. will it be another disappointing earnings season out of europe? lufthansaok at david:

airlines this morning. this is bloomberg. ♪

guy: welcome back. you are watching "on the move." focus.s are in deathly lufthansa down by 7%. easyjet in the u.k., trading down by 6.21%. air france, down by 3.43%. the travel sector is having

another tough day. joins us now. into i am reading too much this, but is that something i should worry about? these are the people that oil the wheels of commerce. lufthansa talking about long haul routes being affected by the terrorism story and by what is happening in europe. is this a worry? luca: in a way. we have gone through a number of shocks. morenk it is probably likely to draw a conclusion that consumer spending will be weaker. what we know is that the global economy remains very weak, but i would not read much into this. inyou have a big collapse consumer confidence, then you should worry. we have not seen that in the euro, or in the u.s. guy: reporter: the global

economy is fragile and s&p, all-time highs. luca: it is an incredible situation. we have seen it just five times in the last 100 years. it is a combination of qe, but yes, it is a very volatile and very difficult environment, but we still expect this to move a little higher. guy: is this because the possibility of capital appreciation? luca: we don't like the u.s. we like europe, japan, and emerging markets. buy fort really valuation. you buy for the lack of alternatives. guy: "nothing else to buy" i think is the phrase that knocks around the market. bonds have done what they've

done and you don't want to pick up the negative. is it as simple as there is nothing else to buy other than equities? >> you have to be very selective and tactical. we expect some kind of a surprise in terms of economic growth. guy: what you think corporate earnings will pick up -- why do you think corporate earnings will pick up in europe? the numbers that were posted today are not delivering what analysts for expecting. luca: we are in a recession. we can't say anything different. the point is, when you look at the drivers, it is mainly nominal growth. and nominal growth, if inflation is picking up a little bit, growth is picking up in the u.s.. we feel we are pretty much close to the inflation point. and obviously, the commodity price is moving higher, which helps energy companies. we see that the worst is behind us. guy: i love living it on a

positive note. luca paolini, chief strategist for pictet asset-management. up next, of course, it is ecb day. caroline hyde is in frankfurt. this is bloomberg. ♪

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you are watching "on the move." the day is quite interesting in terms of some of the corporate action we can see. we can see the rest of the european space is looking a little bit positive, but not by much. the mercedes numbers did not look right this time around. so, daimler is trading up, 1.55% lufthansa is being hit, down by 6.26%. the governing is morning about what is happening on the north atlantic long haul. i can't tell whether he was

optimistic, fortis very optimistic. whether he was optimistic, or just very optimistic. it is the back half of the year issue that analysts are still scratching their heads over. the corporate news is interesting, but the ecb could be more interesting later today. draghi will announce the decision on rates, and then we get to the all-important press conference. let's find out what the anticipation is like in frankfurt. caroline is there today. over to you. caroline: let's get another economist's perspective this morning. thank you very much for joining us this morning. we are not expecting any changes to policy today, but september, what are you looking for from the ecb? won't draghi be forced to say, we will add to stimulus in the next meeting? >> in september, the ecb will

have a couple of indicators over the summer that will give a clearer guide as to where we are going with the economy. endless september, with a new forecast, with the better basis to decide on what we built it with the qe program past march of 2017. caroline: so, potentially more stimulus with bond purchases after march of 2017. give me a sense of what we can see in terms of data already. the bank lending survey from the ecb seems to show no particular shock. >> i think that is what we see right now. we are getting some different signals. the bank lending survey, which included a big part of the post-referendum period, actually looked up. and i think the ecb will take comfort from that. but it also shows this is a big uncertainty shock and the mpi 's tomorrow and in august will be a

better guide. the ecb does not have much to rely on. sure,ne: mario draghi i'm will respond in his usual manner of batting th eem off. but give us a sense of the bond buying issues. you are saying that quantitive easing can be extended. at the moment, yields are driven further into negative territory and they are unable to buy 65% of german sovereign debt. >> i think what will happen over the next six months, you are likely to run out of german bonds to buy. tothey make the decision prolong the program, they would need to say how they tweak the rules that they set themselves. and i think they have quite a number of options they can take. the question is whether they will decide that today, or whether they will give a broad message, "don't worry, we will find a way to purchase the bonds." if you change the rules today,

you might as well say today how long the qe program will go. maybe, the best case would be for them to give a broad message, "don't worry, we will follow through." guy: talking of changing the rules, felix, you think draghi will be in favor of changing the rules when it comes to italian banks? what do you think his solution to that problem is. referring to the bank lending survey, which showed actually that at least running before the referendum credit and demandeasing was picking up and expectations were not for a big change afterwards. so, i think he will be asked about this issue. my sense is that he does not come up with a big solution here. i mean, he has the stability

aspect to it. it has the growth aspect to it, as well as the political aspect. so, i think he will probably be quite of a severe and refer to the bank lending survey and the general uncertainty moving forward. guy: you talk about the bank lending survey being ok, and it is by historical standards. nevertheless, if you were to ask draghi a question about how he sees demand for credit, you think he would be entirely satisfied with what he sees in front of him? >> no. they don't over interpret the bank lending survey. they say it is not a clear picture. mabye banks will take a while to assess the implications. so, i think they will take some comfort from it. but what they would say today, the downside risks to growth have clearly increased. i would not be surprised if you don't see any impact on that. but i think it is fair to say

that it is a big uncertainty shock. we view the uncertainty in the main heat. the big thing about uncertainty is he don't know how much it plays out, and that is where the fresh pmi's come in tomorrow, and in agust. -- and in august. a t ubs, we present a more significant downside scenario. from that approach, you can see that handling this uncertainty is quite difficult and we need to wait for more data to get a clearer picture. caroline: how much is this quantitive easing working, and how much is the dividing the ecb? the germans to not like the fact that we are seeing such great ways of bonds being bought. is quantitive easing actually going to provide the growth that the eurozone so desperately wants to see? >> the big question would be, what would happen if we don't have qe? i think one aspect that you see

right now is that governments have spent more. qe, in part, has driven down government financing costs. growth, but the longer it continues, the more questions that will come up. a big question here is what happens with inflation going forward, and specifically german inflation. for the moment, you could say german inflation is still relatively low compared to the rest of the euro area. isrefore, q important for the german economy. caroline: felix huefner, senior economist at ubs. we surveyed at bloomberg are not expecting any policy changes today here, but there will be some hot questions after draghi speaks. guy: caroline, gray coverage coming out of frankfurt today. we will bring you the ecb policy decision at 12:45 u.k. time.

that is followed three hours later by mario draghi's news conference. follow you can't watch it, it on top live. up next, we will talk about the auto sector. daimler's and mercedes's profit margins are dropping. also, cruz is booed at the rnc. he fails to endorse donald trump. sin theecb needs imeet shadow of the brexit. this is bloomberg. ♪

guy: welcome back. you are watching "on the move." let's figure bloomberg business flash. reporter: guy, thanks. a rise in first half profits that the estimates. the core earnings climbed 7% from one year earlier. it is said the rise was spurred by advancements. lufthansa has received the 2016 terroristecasts after attacks head the demand for european travel. this lowered the outlook for adjusted earnings, despite a strong performance in the first half. it also said that unit revenue in the passenger airline group will be significantly weaker in the third quarter. singapore has vouched to take

action against four banks over failures in anti-money-laundering controls. $177 million in u.s. assets were stolen. the monetary authority of singapore says parliamentary findings uncovered instances of control failings in ubs and standard chartered's local units, as well as substantial brieeaches at falcon private bank. uber's big investors may have had enough. according to people familiar with the matter, they are trying to sign a partnership agreement. if that investors had discussed a potential deal, but uber's executive would need to negotiate. and that is your bloomberg business flash. guy: so, daimler is trading higher after the company reported that the estimates will

reach the 2016 forecasts. we are now joined by our reporter out of berlin. what is going on with the margins of mercedes? >> the margins, they fell quite a bit. but, that was really based on one off effects, like the cost to recall cars with the faulty takata airbags. the margin was actually pretty decent, 10%, compared to 10.5% one year ago. so, it is a little bit weaker, but analysts are still considering that to be fairly positive because mercedes is going to a product renewable. the new e-call is just coming on line. the s-class, the flagship. sedan has reducing sales because they are going through a facelift pretty soon. but car has been on the market for three years now.

so, demand is weakening a bit there. those are two of the big profit drivers. so, we still have the 10% level and that is pretty good. that is probably what bmw and audi will report. guy: can i ask you a quick question, chris, about what is happening in the truck market? i am confused about what came out of the conference call. it is talking about saying significant growth in 2016. u.s. big transporters, but it does see that it sees 2016 unit sales falling significantly. what is happening in that space? inis: well, broadly speaking north america, the truck market is pretty challenged at the moment. what they could be talking with transporters is the van market. they see some potential there. but the overall truck market is down.

we saw that the other day with volvo reducing its outlook for the north american truck market. daimler reduced its outlook on the truck market a few weeks ago. so, it is still a difficult market, just to see where the truck market is going right now. guy: let's stay with the idea. elon musk has got designs on that space as well. he is talking about building trucks that have autonomous driving, as well as mass transit. he is a lying this with -- he is aligning this with the solar business. how does this fit into the wider picture, what elon is saying? chris: it is kind of what you expect out of elon musk, you know, thinking big. i think one of the interesting things he says in the statement, the tesla semi is at an early stage of development. and then he says it will be ready to be shown next year,

which is a very aggressive plan to role that out. typically, a truck takes quite a long time to develop. so, it is kind of interesting, if he really can pull that off. it is obviously, what is pulling telsa. out of he have got designs with electrifying anything from buses to trucks. um, you know, it remains to be seen right now. the truck market is very different than the car market. the people who purchase trucks, they are investors. they are not i enthusiasts or anything. so, they'll take a hard look at anything on the market. cost, it has their some potential, but it is a very different market. guy: it will be interesting to see how that affects the wage story in the truck market. the half life of product

development, i suspect, for elon musk is very different than for everybody else. up next, we go to cleveland to get the latest on the republican national convention. ted cruz, booed when he refused to endorse donald trump. that story, next. this is bloomberg. ♪

guy: welcome back. you are watching "on the move." we get the rate decision from the ecb. we also following events in

cleveland, where presidential hopeful donald trump will make an acceptance speech at the republican national convention. the bloomberg team is across all of these stories. caroline hyde is in frankfurt. and a little bit later on, we are hoping to be joined by richard jones. but in the meantime, we are joined from cleveland. let's talk about the rnc. over they shouting -- what were they shouting at ted cruz last night? reporter: well, "boos" where the overwhelming sound as he left the stage. there was a rising kershaw endo throughout -- there was a rising cruz'sdo during ted speech when people realized he was not endorsing donald trump directly. it was a really remarkable sight. we don't usually see a speaker at a national party convention

find his crowded turn against him. guy: interesting time for the republicans. the vp, mike pence, the potential vice presidential candidate, what is the message he was pushing out there? reporter: it was the opposite of the cruz message. he has spent a lot of time in congress. he has emphasized the ways in which is background is very different from trump's. he is a small-town christian conservative with a farme more conservative family structure, of thetold the story mainstream political leader. they tried to show their take it as something republicans should rally behind. we have seen a couple of days of convention days

with the delegates trying to make this about hillary. guy: great coverage, thank you very much indeed. turning a set of cleveland. now, draghi, the big event later on here. brexit and the lack of bonds are likely to dominate. and then we have the banking crisis in italy. caroline is there and will be covering the event throughout the day. lamont get a big announcement, but we will get hints, and the hints are always fun. caroline: exactly. 12:45 u.k. time is when we get the announcement. we are not going to get much policy action, but they will be a barrage of questions about brexit. we get this pmi data out tomorrow, but what is the ecb already saying in terms of these lowdown with the eurozone growth?

we have just seen german yields creep up 20% for the first time since death yields creep up to 0% for the first time since july, guy. they can't bonds negative yields below -.15%. you mentioned that the italian bank crisis will be key on the agenda. i think it will be about hints of stimulus. what will they do in terms of quantity of easing? will it happen in september? four actually, will it happen a little bit later? let come in the december month perhaps, where the market is expecting it. guy: caroline, just in terms of what he is going to say about italy. we were hearing earlier on that maybe he was going to dodge the question on the italian banks, but i suspect many people will be asking about it. caroline: precisely.

what is the ecb's view? do they want the european commission to actually just admit defeat? as the have heard from some of our other guests, we might actually see a backing down from germany. they might not be so pushy, sticking by the so-called banking rules. maybe it is time for a recapitalization and for the taxpayers to pay, rather than it being a pay in by the junior bondholders. he will be questioned about the severity, what he feels the politics role must play. that is really what we are going to hear from draghi. it is time for politicians to stand up with fiscal policy. he can't do it alone with monetary policy anymore, guy. guy: caroline, i am really looking forward to what is coming later on.

we have the policy decision at 12:45. then, we will be looking forward to the press conference. it is always amazing to watch. we will certainly be getting the conversation at that sort of -- as we build toward the conversation, will be really interesting to look at top live on your bloomberg. it will give you the build up to that and then all of the blocking and everything that will be surrounding the commentary about that press conference. let's talk a little bit about the airline sector right now. we have seen some big hits to some big airline stocks this morning. lufthansa really, one of the big ones, but easyjet is not far behind either. lufthansa is trading down sharply, down by nearly 8% this morning. this sector has had a very tough time of late. easyjet is time to figure out where they base this business going forward. it is the toughest operating

environment easyjet has faced in 10 years. the only does this business have to contend with strike action, but it must deal with the terrorist story and the brexit story. air france is down by over 4% as well. later on, we will continue the conversation surrounding the airline sector. we have all of the angles covered from both sides of the atlantic. we will get gary kelly's take him what is happening with the u.s. economy. let's give you a quick look at the european markets. the london market is leading a slower and the dax is in negative territory as well. we are down by just a fraction in frankfurt, but the ftse is down by .3%. we also see quite interesting moves on the back end of the japanese curve as well. that is a story we will be covering in light of what is happening with the ecb.

equities are a little bit weaker and the transport sector is once again in focus. caroline hyde in frankfurt all day for us. but "the pulse" is up next and jon ferro is on the radio. ♪

manus: will draghi delay? first postts for the brexit decision. will the governor hold off on action for now? the turkish premier imposes a three-month emergency rule as he continues to the ranks of army, courts, and the lira enters record glows. lufthansa stock drops. easyjet tumbles on reports of lower quarterly revenue.