♪ manus: you are welcome. it is "on the move." 7:30 in london. 8:30 in berlin. we are counting down the market open. manus cranny. caroline hyde is in berlin. what have we had for you today? it is a bad start as bp kicks off the earnings season. .5% fall in profits net income dropped by a third and the tier one ratio is eroded by risks. democrats descend on philadelphia while the fomc convenes in d.c.

saunders calls for -- sanders calls for solidarity amid a splintered party. the question for investors, how will politics affect policy? we are less than half an hour from the european open across the board. let's check in on the futures. we have such a great lineup with bp to keep an eye on. not to mention sab miller. keep an eye on that deal being rethought. 45 pounds a share, the a b offer ab offered for sab miller. it on some of the other assets and what we're looking at today. it is federal reserve week. it is bank of japan week. the nikkei off by 1.4%. concerns about the amount of stimulus. brent crude up .2%.

money moving into the yen. that is a concern for japanese stocks. keep an eye on this asset. david: bernie sanders has told the democratic convention that hillary clinton must become the next u.s. president. it came after his supporters -- his pleas to supporters to avoid protest were ignored. >> what i admire most about hillary is that she never buckles under pressure. she never takes the easy way out. and hillary clinton has never quit on anything in her life. >> any objective observer will conclude that, based on her ideas and her leadership, hillary clinton must become the next president of the united states.

david: a man armed with a knife has killed at least 19 people and injured several others near tokyo. that is according to the kyoto newsagency. meanwhile, public broadcaster nhk saying a 26-year-old man is under arrest. no motive for the attack has been established, but police told nhk that the man used to work there. federal reserve policymakers begin their two-day meeting in washington today. they continue to assess the impact of britain's position to leave the european union. a chance for a rate hike this december is back at the levels they were before the referendum on the brexit. global news 2400 -- 24 hours a day. you can find more stories on top . i am david ingles. manus: thank you very much.

missednd quarter results expectations. the earnings fell by 45%. lower crude prices continued to erode income. ryan chilcote joins us to break down the numbers. our guest for the next hour is the head of macro strategy at state street global markets. run us through the numbers. ryan: not great. $720 million. that is shy of what the street was looking for. the problem is not just the oil price, but refining margins. wasaying the last quarter the worst since 2010. the downstream business was down 19%. normally, that saves their bacon in a bad quarter. not so much now. if you want to give them a consolation prize, it was the best quarter in three. that is worth something, but does not live up to expectations. caroline: give us a sense about

the rising debt load for bp. numbers are not living up to expectations. is there worry about the credit side of the equation? not anhere is overwhelming amount of concern about that. they did take on $900 billion more in debt. -- $900 million more in debt. the big concern is the oil price. this is a company that says they need between $50 and $55 per barrel to balance their books. we are nowhere near that now. the other two concerns would be production. they say it is going to go down in the third quarter versus the second quarter. and finally, and this is something that is going to haunt all those companies that would not be surprised if their share prices all decline, bp is saying that refining margins, which they said were the worst since 2010 in the last quarter, will remain under pressure in the

third quarter. that is not good for the big oil and gas companies. manus: let's welcome our guest into the conversation. does not paint a very rosy picture. is this as good as it gets? do you like big oil? would you buy them? >> it has been a simple story. the energy sector has been underground and undervalued. at the beginning of the year, everyone was pessimistic. it was a contrary and trade -- contrary and -- contrarian trade. we have had a couple of issues that create doubt. the supply issues have not gone away. russia is back online. now we have more earnings news. say, theying i would

are trying to stimulate demand. you have fiscal, monetary, and currency stimulus hitting china at the same time. i do not think the demand side is as negative as it was, but the supply-side has crept that can to be an issue. caroline: what about the dividend side of the equation? these are companies that are resolutely sticking to rewarding the investor base. should we hold big oil despite the imbalances we see from a fundamental point of view? michael: i think one of the clearest signs we have seen in the post brexit world is that the demand for yield wherever you look for it has been very solid. that does not just impact oil. it impacts emerging-market assets. i think the demand for yield,

and i'm talking about the rest of the show, we will be talking about low yields everywhere else. grade, high yield. michael: one interesting thing, we talk about the credit. a couple of differences are appearing in markets right now. prices have been falling back again, high-yield credit in the states has shown no signs of dislocation yet read the link that we spent a lot of time looking at between energy prices and credit appears to be broken down. in part, that is because of the demand for yields is there. so important for investors. manus: one other thing in terms of the headlines that are dropping. if he has said that capital 17.nditure will be below it is a pervasive stored throughout the industry group. this is what they have to hold onto. previously, they said it would that.ut

ryan: they were spending at a slower pace. it is a good way for a ceo to set himself up for success. you cannot control the oil price. you can spend less than you are telling investors you are going to. there is not a lot they can control. the tricky part is not just a cut expenditure, but to cut it in a way where you continue to grow your oil production portfolio down the road. that is going to be the test. we will not know the results of that for a few years. within all of this, give us a sense about which part of big oil we should be holding. dividend yields about 6% for bp at the moment. what about the credit side? talking about high yields and expenditure coming down for the people protecting the overall ability to repay debt. what do you want to be holding? ,ichael: right at the beginning

the equity side was very clear. investors were very underweight the energy sector as a whole. case is a slow valuation for the energy sector. that, on a more macro scale, there are smaller risks now to invest in high-yield equities than in high-yielding bonds. 115 in japan in terms of the bond markets. church ofk at the energy, you have bp, exxon, shell. would it be that bp is the harbinger in this story or is it a high alpha risk trade? or arer in good times there better choices? michael: i think diversification

across the sector. have thedon't concentration risk of some kind of policy mistake. manus: 61 point $6 billion and counting. that is bp's total expected costs from deepwater horizon. michael, stay with me. ryan, great job on the story, as always. let's talk about the rest of today's show. it is said decision as july's policy meeting kicks off. then it is off to the market open. we will be watching bp and commerzbank. we gave you the numbers in the headline. then we are off to philadelphia for the democratic national convention. this is bloomberg. ♪

manus: it has just gone 7:44 in london. time for a business flash. david ingles is with us. david. says a keyerzbank measure of financial strength reflects operational risk. income fells net about 32% from a year earlier but did not specify how each division performed. now to the beer merger. ab inbev raising its bid for sab miller following the brexit vote.

shareholders will be entitled to receive a pound more per share higher than the previous offer. a federal judge has criticized actions by former executives at bear stearns in the final days of the investment bank. we are talking u.s. district judge roberts we. he is now allowing a shareholder lawsuit. that is your bloomberg business flash. very muchthank you indeed. the federal reserve begins a two-day meeting today. while no policy changes are anticipated, the expectations for a rate hike this year have rebounded significantly since the brexit vote in the u.k. the uncertainty was not enough to cloud over the fed's outlook. the central bank has an election at home to consider. the democratic national convention began in philadelphia with bernie sanders endorsing hillary clinton to unify a fractured party. peoplederstand that many

here, in this convention hall, and around the country are disappointed about the final results of the nominating process. i think it is fair to say that no one is more disappointed than i am. caroline: joining us in london is michael metcalfe. give us a sense of your outlook on the united states. we have seen an uptick in where we think rate hikes might come in, where the anticipation builds. have a look at my screen. i want to bring over what we have been looking at. the overall world of ability. some 48%een seeing chance overall that we will see a hike at the end of december. we are seeing a buildup and expectations.

are you in line with that? michael: absolutely. the one thing i would say is that you have to remember that the fed was trying to talk up great expectations in april and brexit,began to dial-up saying it was going to be a systemic shock. so far, the contagion has been very limited. we are back to where the fed was in april and may. even though the rate expectations have risen. it is likely that the chances are higher than that. i would expect the fed to begin to signal that this week. the fed has to be more data dependent than they have been because global conditions are quite benign.

we are back to looking at the data again. yields.et's talk about this is where i am fascinated. . number of different people it would be hard to work out which is which. there is the real view there. are we at the beginning? are we at the beginning of a backlash in terms of yield? michael: you said that was the real yield at one point. manus: ok, hang on. core cpi is 1.8. that is tricky. michael: that is the main point. .rowth has been a bit volatile the u.s. economy is at full employment. inflation is above the 10-year yields. that highlights that the fed has

so little room to play with. any strength in the data would suggest that they need to get the hiking cycle back on track. i am not sure that, further out in the curve, fixed income markets are ready for that. in part, it is because of the volatility in the fed communication. yes, they are very transparent. in april and may, they were saying the market was underpriced. all of a sudden, they were saying they were going to move to i think markets need to adjust to the idea that rates are going to go up in incremental phases. one or two hikes this year and will continue in 2017. manus: the diversions is already there if you look at some of the shorter-term yields. we will get into that after the break. michael stays with us. we are minutes away from the start of the european trading day. we are going to take a look at the potential corporate movers,

including the numbers from bp. sab miller got a cheeky upbid from ab inbev. and commerzbank. this is bloomberg. ♪

caroline: welcome to "on the move." moments to the open. a beautiful morning here in berlin. the open and one key german stock i want you to

keep an eye on his commerzbank. this could fall to the tune of 3%-5%. i am getting those calls at the moment because they pre-released the numbers. not looking pretty. profit coming down below where it had been expected. it is germany's second-biggest lender. a key measure of financial 11.5%.h also declined to having to factor in pension liabilities and further regulation, they also have to factor in the credit costs of italian debt at the moment. there is a read across to deutsche bank. deutsche bank might fall at the open as well. one to focusl be on. not as much of a drop as your commerzbank story, but 1% lower in the market. this stock, if you go to top live, you can follow everything. jumping in with their views on

the upstream, the downstream, the numbers. the stock was one of the biggest losers yesterday on the ftse 100. santander has cut the outlook to bp for neutral over the last 12 months. net income comes in at $720 million. that is a miss. the market was looking for $820 million. production will be lower than the second quarter. that is what is causing a little bit of pressure. refining margins remain under pressure. i love top live go. there is a lot in there if you want to be on top of what is happening. caroline? caroline: good pitch, manus. keep an eye on another key u.k. trade for stocks, ab inbev o and sab miller rising about 2%. why? because ab inbev will be offering more. 45 pounds is the new price. for sab millered

. they are offering that from 400 pence. factor.a brexit this is the pound slumping. they are having to offer more cash to be investor-based. it is pretty interesting. about 2% uptick in the price point. the pound has lost a lot more than that. manus: indeed. that is the power of institutional investors. i want to get a quick take. beer and banks, i do not know what is more tragic. a banking stress test coming up. michael: just how financial conditions in the u.s. are fine. clearly, they are not in europe. the index is at its highest level in three or four years now. much more to get to with michael metcalfe. coming up, we are going to see how these markets open.

5% calls lower on commerzbank. 1% calls lower on bp. it is a beautiful summer's day. it actually happened in london. you have evidence, the photographs are right there. withwith "countdown" caroline and myself. ♪

manus: welcome to "on the move." we're taking you to the open of european trade. london is eking out a gain. that is one of the stories we are focusing on. caroline has the morning brief. caroline: i do, indeed. we're welcoming you to "on the move," where we will be getting into top headlines. a bad start for big oil. ep kicks off the 45% fall in profit. banking blues. commerzbank drops by a third, the tier one ratio eroded by risk. and democrats descend on

philadelphia while the fomc convenes in d.c.. sanders call for solidarity amidst a splintered party. the question before investors -- how will politics affect policy for the fed? if we are going to be digging into some of the futures markets at the moment, we are looking for an eking out of the green. the stoxx 50 currently trading up. let's have a look at how the weei function is looking. we're up 1/10 of 1% at the ftse. how will bp play into that? how will sab miller play into it? we're seeing the cac 40 open pretty flat. we are waiting for the dax to open. all eyes are on commerzbank, on deutsche bank, after those prerelease numbers. manus: yeah. that is certainly going to be the driver. london is one of the few markets eking out a win.

the monetary policy committee say, luck, i have seen enough numbers, ready to do more stimulus. this is the state of play in terms of the markets. you're seeing some pretty interesting moves. we had seen the rest of europe set for a slightly, slightly lower opening, london eking out a gain. 's look at the individual names. bp will be the real focus for the oil market, down 2.34%. the downstream business so profitability drop by 19%, despite the average price of tode rising in this quarter $47 versus the first quarter of $35.01. we're waiting for an opening in ab inbev.

45 pounds is the new bid. inbev for sab ab miller. as theyank is waiting, saw the prerelease numbers. caroline has been telling us they came under a little bit of pressure in terms of the tier one capital ratios they have. caroline: you are right. if you are looking at a read across, deutsche bank is trading down to present. let's get more on this story with nicholas comfort in frankfurt. nick, commerzbank pre-releasing -- what is the drop behind the capital ratio? it came down to 11.5% -- how much of a blow is that? >> what's behind it is the operational risk. that's what the term regulators use for the risk from possible rogue traders or litigation costs plaguing the industry.

banks have to set aside more capital to counter the risks. alreadyerzbank, they fulfilled their current regulatory minimums, so it's not so much a short-term concern, but it really is a race of the top for capital at the moment. any step back is not going to be pleasant. they have been enduring a bumpy ride, but i think the .5 percentage point of a drop is more than people estimated. people assumed it will be flat. it is still a blow, if not a fatal one. caroline: of low being taken out on the stock right now. deutsche off by 2%. talk to us about the blow that the bottom line took, a 32% decline in second quarter profit. >> yeah. we don't have much granularity on that yet. people have been widely expecting that it would take a

hit on it annual basis. it is pretty similar to what happened in the first quarter; commerzbank is one of the most exposed banks in terms of lending income, and that has been pressured by the record low interest policy at bcb, by the negative rates on deposit, that is really hurting their top line and bottom-line. that's the environment they are struggling in. caroline: always great to get your viewpoint. nicholas comfort in a very sunny frankfurt, digging into the numbers from commerzbank. manus, we have to dig into the banking facts more. manus: yeah. let's bring michael metcalf back into the conversation. before we went to the break, you said you need to think of u.s. banks and european banks and the benchmarks of stress tests. you said it's critically important that we think about the differences in are stress

tests versus those in america. expand on that for me. >> both the fed and the ecb released measures of systemic risk, looking at credit spreads and banking stocks and a whole array of financial gauges, and it has been fascinating that since brexit, the two gauges have diverged quite significantly, and there have been lower signs of systemic risk in the united states that suggest that the u.s. banking system is fine and that the fed shouldn't be concerned. but in europe, we know that isn't the case, and the ecb's on measures of risk has been rising significantly. we are back to this old divergence within the sector, and it's in the banks. manus: that to heightened area of concerns -- commerzbank, deutsche bank, about to deliver something robust the italian banking situation. credit or longnk

bank stock? with there be any you would touch or play banks in a european perspective? >> one of the things -- there has been plenty of risk on play after brexit. inflows into european banks is not something we have seen yet. i think this week is a big watershed week, for us to get through the stress test, and see what the policy response will be. for instance, in italy, will they find a way that will work with the rules, that will provide reference? news like this morning is not helping confidence, and that is confidence and capital together that is key. manus: absolutely. caroline: michael, is there a call for consolidation? could we be playing out the equity market in german banks, in italian banks, by anticipating m&a? >> i mean, it's possible.

we have been through this story a number of times in europe already, and certainly there is consolidation that was something that was a clear theme. i think right now, as nicholas said before, it really is all about capital, getting through the stress test in finding a way to restore confidence. in part, one of the issues is bail in rule hasl en not helped confidence in the banks, and in particular with the italian government does next is crucial. manus: last round, 44 pounds, up from 43. ab inbev's bid for sab miller. first of all, what do you make of this consolidation in the beer industry? is m&a something we will see much more often?

ab inbev was in play long before brexit, but globally, i have seen a couple extensions drop. >> i think the first thing i would say relative to the u.k. is that we will start to see pieces talking about the u.k.'s current-account deficit and whether it is sustainable. there are two paths to that. portfolio closures have so far been fantastic. if you hedge the currency it looks great, but the other part thereect investment, and have been a lot of questions about whether the uncertainty trade by brexit would stop inflows on the foreign direct investment accounts. so far, these deals are in play beforehand but they are still going ahead, and they are adjusting them to go ahead. i think for the really bearish story about what brexit mentor u.k. plc, it's two data points

so far, and it's a relatively positive story. ae money coming in is positive thing. more globally, globalization is ongoing. i know brexit was against globalization, but there's no reason to think global m&a is all of a sudden going to collapse. manus: and that is certainly the message that, for example, the -- brexit hasrgin happened, get on with it, stop talking it down. that's michael metcalfe, our guest from state street. caroline: manus, michael, great conversation. coming up, we will talk more about germany. we will be hearing from patrick thomas. then, it has been the best quarter for oil in seven years. they doesn't feel it, with bp numbers as good as it gets.

plus, we are at a splintered democratic national convention in philadelphia. this is bloomberg. ♪

manus: welcome back. it is "on the move." let's get to the first word news with david ingles. david: thanks. let's talk about this news in japan, where a man armed with a knife has killed at least 19

people and injured several others. it was at home for disabled people near tokyo. is saying that the 26-year-old man is under arrest after turning himself in. the attack's motive has yet to be established. federal reserve policymakers begin their today meeting in washington. officials are projected to hold the line on interest rates, continuing to assess the impact of britain's position to leave the european union. seem tos futures indicate the chance of a rate hike in december on the day of the referendum vote. and britain needs a new financial watchdog in order to win public confidence, according to the u.k. treasury committee. should getew body

credentials for the regulation authority and financial conduct authority to help prevent a repeat of the "inadequate response" to the near collapse of the british economy. 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 david ingles. caroline? caroline: david, thank you very much indeed. let's turn our attention to corporate news. professovestro beat estimates ts morning; it also raised its outlook for the rest of the year, forecasting growth in volumes. let's get to the chief executive, who joins us. thank you very much for joining us, sir, and give us a sense of your numbers. shares trading at a record high since october, 2015. share price rallying on the back of the improved outlook.does july look as rosie y?

iswell, i think where we are we have seen the second quarter with very good core volume growth, and core volume growth for us is what drives earnings. overall, 7.7% globally. the particular high spots in asia and china, we have seen double-digit growth. even in germany, we saw some acceleration after 3% growth, giving us a total growth in europe of about 6%. in america, 5% growth. , andtty strong picture that seems to be continuing into july. a wonderful nugget is that brazil, for the first time in 10 quarters, actually showed positive growth for us. the world is looking remarkably strong at the moment, and as i say, core volume growth is what drives our bottom line. that's very important for us. we have increased our outlook for the year. another good piece of news,

which links to our business, a good illustration of what we do, we were delighted to see that because weabu dhabi, are the main materials partner for solar impulse. it's like a flying laboratory for us. the insulation that protects the pilot is exactly the same insulation you will find in the latest, state-of-the-art refrigerators on sale in europe right now. caroline: talking china growth, you are talking brazil growth. is this because there is some sort of fundamental driver related to our change to solar energy? we are seeing economic growth not quite at the headwinds the rest of the world is observing. >> yeah. i think we see growth above gdp because we are substituting other materials. if you look at the automotive sector, we're substituting glass

and metal with other much, much lighter weight materials. we see very strong growth in the automotive sector, around about 6% growth for us, and that is of course substitutional growth rather than basic economic growth. the area which is growing the fastest of all is a relatively small subsegment in china at the moment for e-vehicles, fully electric vehicles, growing at around 125% per annum. butously, off a small base, in those types of vehicles are vehicles are particularly important, because the use of metal is a real problem in electric vehicles. you really need to go for much later body parts and components. manus: good morning. manus in london. a very bullish story on the world, and on your business, which very naturally brings me to -- when will we see the next

divestment, freeing you up even more to make more of your own independent decisions? when can we expect the next move? well, i think you have to ask them. under the german stock trade rules, we are not allowed to talk to our parents anymore. it's up to them to make the decision as to when they fell. if you take a hint from some of the news flow, they have obviously given to their analysts, the pharmaceutical investor in me also read the analyst reports. most of them show business day consolidated from the end of last year. that the analyst's view taken from outside the company, but i have no insight whatsoever. patrick, we are trying to divine what brexit means for individual businesses in terms of reality of orders, what their customers are saying. what is your perspective on brexit, nearly a month on from a

for your business? is the biggest threat more to europe than domestically in the u.k.? >> i think it's probably a mixed view, and nobody has a firm picture yet. we will have to wait and see have a negotiations pan out. for to give you some ideas for covestro, the u.k. is 2% of the market. all sales into the u.k. are in euro denomination. we don't have any exposure to the u.k. pound. that makes a slightly unusual. and i think the important things industry thinks about -- automotive. if you look at automotive, 90% of the vehicles sold in the u.k. are coming from outside. about 80% of that 90% is coming from europe. about 30% is coming from germany. we are watching a carefully to see how it develops.

but that is probably the industry's most effective. secondly, the construction industry will be an important one, particularly on office building and commercial building. i think that is the area where we see perhaps some potential in the u.k., but this may well be offset by growth in the rest of europe. i'm looking at a fairly balanced picture overall. andline: a resolutely boy patrick thomas. thank you very much for being on. brexit mean the u.k. needs immediate stimulus? one voice at the boe reportedly think so. we discussed that,.next . this is bloomberg. ♪

caroline: welcome back to "on the move." let's have a look at how the dax is performing; a beautiful day in berlin, currently seeing trading pushing higher across the board on the stoxx 600, geeking out slight growth. we have got to keep an eye on but we have to, keep an eye on central banks as well in the united kingdom, and certain participators and policymakers within them. manus: yes. the name is martin wiggs. he said that while brexit has rattled the economy more than expected, he said that he now

favors immediate stimulus. let's bring in michael metcalfe from state street global markets. it sounds like he has capitulated. what policy response are you expecting? you said the bank of england must not become the bank of japan and the ecb; they must not make those policy mistakes. >> i think one of the important things -- manus: not policy mistakes, but the perception. >> the first move is somewhat obvious, in that they will cut rates by 25 basis points or maybe a little more. the question then is what comes next? we haven't be that had any financial conflation, but we are beginning to get surveys of real economic activity, and it has been quite week. if we are about to roll over into recession, they need to promise further easing beyond what comes next. manus: you probably want to see

some quantitive easing in some form, yes? >> i would say corporate bond buying. manus: corporate bond buying, not yet into dts or stocks? >> not yet. manus: caroline, joined the conversation. caroline: give us some policy anticipation for the boj as well. buying --raded fund will that be enough to drive down the yen and see injections of growth? >> the thing i awarded about in japan, and we have seen a hint of this in action overnight, is that expectations around the boj meeting have become very high. helicopter money comment was made in june, not quite sure what they were meant to be, but it's almost now that unless they deliver very strong fiscal stimulus that the boj is going to buy. unless we get something like

that, i fear the market will be disappointed. there's a lot of hope built into policymakers right now. manus: is abe going his own way now at this stage in terms of policy response? is almost ignoring the advisors. >> i think they have a very, very simple issue this week, which is that inflation expectations are back into negative territory, current inflation is back into negative territory. if they really believe that commitment to defeat deflation, they have to do something spectacular. manus: we are going to see what that is. inflation expectations are under incredible pressure. michael metcalfe, head of macro strategy at state street markets. many thanks. going to talk about oil. we'll take a short break. ♪

caroline: welcome back to "on the move." 30 minutes into your trading day, let's look at how the stoxx 600 is shaping up, currently trading on the downside. these are industry groups on the rise. on the downside are the banks and oil and gas companies. flat, cac 40dax up. manus: thank you very much. let's look at some of the top stocks that are moving this morning. a little bit of an inflection. yesterday,, late there tier one ratio fell. net income dropped 32%.

that's their second-quarter earnings under pressure. -- we the other hand have been waiting them to hear what they need to do, and the u.k. regulator asks them to give their rivals more access to the network, that it should create a separate, broadband structure. perhaps not as bad as a hold a vestigture. bprallying some 2.88%, profita tumbles by 45%. down 1.44%. we'll stay with oil, it is one of the major stories. let's get to dubai. yousef, good day. -- what cut your eye is the chart of the hour for

you? at is: what i am looking the wti; we put this up for you and you can easily pull it up on your bloomberg. it has broke through the 100 day moving average. the last time this happened was back in april, and we circled it again for you. what's playing into this equation, two sides to the story. one is demand-side concern, which could be on the cusp of falling as a result of what usually happens, the usual places in the u.s. when it comes to consumption as vacationers return home. we are looking at 1.2 million barrels per day, in decline in terms of demand, between july and october. that is one source of pressure. and the other, the supply picture, would be additional rigs being added. it's the fourth increase in the

biggest one since december,. 2015. some of the downside signals seem to be confirmed. caroline: great to have you. great charts, to build up are seeing from the baker hughes numbers. let's dig into this with our next guest. thank you for joining us. give us a sense of what you are seeing, the fundamentals of oil. is there a key concern, that we are seeing this buildup in rigs coming online, more efficient than the previous? >> absolutely, they are more efficient. even if you don't need the same number of rigs coming back online that you used to have six months ago or even a year ago, what we are seeing is a return price, based on the

typically that we had in the first half of the year, which definitely is not helping on the supply side, because they are definitely going to add lag in terms of production, offsetting the decline. on the demand side, however, i think that agencies -- global agencies have become too bullish, revising enough in their previous months because they are seeing strong demand growth. if you look at the indian market, there was 80% growth. u.s. numbers started to get better. but as we are moving into july and august, typically the isving season, the demand starting to slow down. one of the reasons behind that is the higher basis from last year, particularly for the united states, especially as we move into the seasonal

maintenance for refineries who otherwise were enjoying fabulous margin. that call leads to the backing up of crude. manus: that changes the bandwidth. that changes the narrative on oil. does that change the narrative on what you might see has a policy response from opec? >> well, to be honest, i think opec initially should have and whatd its policy, it ended up doing -- they didn't want to further disrupt the market. production,ing they let this price rally, because automatically people were believing the market is unbalancing, however they were not balanced. could still bely gained predominately from the going long andt a large part of the positions

were supported by this massive, unplanned outage worldwide, and a large part of them were temporary. manus: we are finding a new, lower bandwidth for the moment. guest -- we could see retesting, $20, the historical analytic. $20, $16, we need to see oil much lower to clear out some of the real supply, because the rigor comes in at this price anyway. >> absolutely. i don't know whether oil needs to be a $20 or $30, and i don't want to get into the technicals. if you ask for operational cost, they are still below $20, so you are right. it needs to go to the $20 retese historical analytic. level.

$20 could be the number. but i don't think we have to worry -- what we will see is a lot of new production coming back online, particularly from the united states. remember, the production hasn't come back up yet. that incentive has to be taken away, and that incentive was given to the market in the first half of the year with a very quick rally and a very steep rally, so what we wanted, what we should have seen, is prices remaining lower, around $40, and we probably would have seen a slice clearing out of the market. we have high oil price scenarios for two to four years, and it will take more than six years to pay it out. caroline: a great chart showing how loyal and the dollar index moved -- give us a sense of the correlation that we see between dollar and oil. is that breaking down? is that going to come back

together as we start to see more beds of a rate hike? >> absolutely. we have definitely seen some of the highest negative monthly correlations between the oil in the dollar, and that is one of the key factors driving oil, especially pre-brexit and post brexit. close to 70%g at negative correlation with --xit, but as we go toward if the u.s. decides to change rates, we doubt that will happen. then of course we would see further pressure on oil. correlations will be sent back, and that is not good news for oil.

caroline: i think what's fascinating is that we have had such a stupendous move in terms of oil prices in the previous second quarter. producersart that are made in terms of how significant the rally has been. we can see a 25% uptick. have a look at what's going on, on the bloomberg. 25% of the second quarter, the best quarter we have seen all the way back to 2009. in one word, is this as good as it gets? to be stable of $50 now? >> i think we will likely stay below $50 or around that level. we will see a lot of volatility for the next 12 months, but any over $50 will only delay the process of balancing the market. we do need to see this oil below $50 to clear out. we willo above $50,

only keep pushing the can down the road. it will become a problem and it will continue for longer. manus: thank you very much. oil market analyst, thank you for your time. as a major oil exporter, abu dhabi remains heavily on commodities, but it is also diversifying, looking at cleaner technologies and investing in renewable energy. solar impulse ii made history today when it landed in the city this morning, becoming the first aircraft to circumnavigate the globe using only the power of the sun. bloombergspoke to about what the achievement means for the business in the future. >> we still need oil. we cannot reduce oil immediately. but if you go into new technologies that will be more energy efficient, to save energy, to produce energy in a clean way, that it is profitable

investment, then you create jobs. at the same time it protects the environment. manus: let's get to our reporter on the ground, does the humphrey in abu dhabi. you were there when the aircraft landed. good to see you. what was it like? we saw some of the pictures -- the campaign for clean energy is clearly key. >> it definitely is. that's the key message. but as far as what it was like, it was pretty quiet. for all the excitement, the aircraft doesn't make any news. gliding in and stopping on a dime. it went 40,000 kilometers around the world without one drop of fossil fuels, and that is what the pilots set out to achieve. they wanted to achieve a benchmark of what can be done. they are all about creating this new technology, and using the

impulse as a laboratory to create new technologies that can go forward and be adapted, not just an aeronautics or aviation, but in car production, in homes. one of the incidents that caused the delay was that the batteries overheated because the thermal insulation they had worked too well. they want to apply that technology in homes in use that in the future. aboutll about technology, a global expedition to translate that into the everyday, to change the way we think about using fossil fuels. manus: great job. a very early start for you. deadly humphrey. up next, where are we going to go? caroline: we are going to go back to beer. offerev sweetened the for sab miller after the post brexit slump. will it sink?

this is bloomberg. ♪

caroline: welcome back to "on the move." let's get out to the bloomberg business flash with david ingles. david: thanks. as itgs at bp fell 45% continues to erode. second quarter coming in at $720 million, about $100 million less

than what analysts expected. they still managed to declare dividend. bank,y's second-largest commerzbank, says a key measure of financial strength fell in the second quarter due to accounting adjustment. the firm says net income in second quarter fell about 32% from a year back, but it did not specify how each group performed. in the u.s., a federal judge has sharply criticized statements made by bear stearns in the final days of the company. the judge says important information was withheld from and he is allowing a shareholder lawsuit to move forward. and that your bloomberg business flash. manus: thank you very much. ab inbev raises its bid for sab miller after the pound slumped.

sab miller shareholders will receive one pound more per share in the previous offer. for more, we are joined by the bloomberg intelligence. is this the last hurdle in the ab inbev of saga? the shareholders pushed -- is this the last call? >> it certainly should be. i think that's what they said in her statement today. theya we have seen so far, are considering the offer. say,nows what they will but they did propose the last offer at 44 pounds per share back in november. vonniecaroline: did they have to this? it doesn't seem to encroach on the pound that much. do they have to do it? >> well, i think it shows how

much they really want to get this deal done quickly. it has been, what, nine months since they started approaching sab? they want to get the assets and do what they feel they can with it. they didn't have to do anything. the deal was agreed back in november. i think it's just a repeat into the share price, which have nothing to do it ab inbev. a he's offering is being considered by sab miller. they previously likes 44 pounds. can we expect them to be doing any deep reconsiderations in the new term? >> well, if you look at the results from both companies, it has not been an easy time with emerging markets struggling, currencies very volatile. the underlying assets are probably worth what they were then. standpoint, it's

really just currency that has moved, and obviously the stock sab's point of view, they have to go back and see if they could get more. but remember, there was a $3 billion break clause. in a sense, they have basically given that to the shareholders. i think that is the way you should play it. manus: money to the shareholders. thank you very much. this is the last term for duncan fox. up next, senator bernie sanders steals the show on the first night of the democratic national convention. we will be live in philadelphia. bp,ourse, the big news is missing headline earnings. bt forced to do a full severance.

commerzbank numbers for the second quarter -- it is stunning, it is official, there is a hint of summer in the air. 6722. trading next from the bank of japan? we will be waiting for that news as it draws closer. it will all be down to the federal reserve. bloomberg. ♪

caroline: welcome back to "on the move." let's have a check in on the day ahead. kicks offl reserve take its two-day policy meeting. no change expected, but investors will be closely watching the statement for any clues on the impact of brexit and on the thinking of the central bank going forward. this afternoon, we get the u.s. july pmi data. plus, we get earnings from apple, twitter, mcdonald's, verizon, so many more. there's a glut of earnings. manus: there are indeed. the politics potentially trump everything else in the united states. bernie has backed hillary clinton in her candidacy for u.s. president at the democratic national convention in philadelphia.

speaking on the first night of what is a four-day event, sanders addressed a divided delegation that the choice between clinton and the trump is clear. >> we have got to defeat donald trump. >> [cheers and applause] >> and we have got to elect hillary clinton and tim kaine. more, let's get to our bloomberg politics reporter, on the ground in philadelphia. good to see you. bernie sanders was the headline act. did hillary get the speech she needed from sanders? >> well, that they began, of course, amid the fallout of debbie wasserman schultz being part of astep down as leaked e-mail scandal from the dnc. that, of course, made some

supporters of senator bernie sanders furious. they feel that the primary process against hillary clinton was rigged, and they are also disappointed with hillary clinton's selection of tim kaine as her running mate. they feel he is not progressive enough. but last night, we saw speeches from michelle obama as well as senator elizabeth warren, and of course senator sanders, himself, all of whom sought to unify the democratic party. let's take a listen to senator sanders and what he attempted to do to unify democrats. >> i have happy to tell you that at the democratic platform committee, there was a significant coming together between the two campaigns, and we produced by far the most progressive platform in the history of the democratic party. sandersearly, senator is trying to urge his supporters that his candidacy, though

failed, did move the democratic party to the left, but there is still more work to be done tonight as democrats continue to unify. caroline: fantastic reporting. thank you very much. we will be anticipating what is to come on day two of the convention. stay with bloomberg television. up next, it is "the pulse," where we will be speaking to the finance minister of luxembourg, once again asserting the impact of brexit and how that is implicating the rest of the eu, the rest of the zone, and how we see a coming together of the key players of the union. manus: yep. we will be all eyes there. the fed will top our agenda over the next 48 hours, followed by the bank of japan. itnks,, oil and gas take t down. that is where the pressure is. the likes of commerzbank and

deutsche bank lower. u.s. dollar 104.04. 1.5%, missing on headline numbers. this is bloomberg. ♪

francine: big oil, small profits. bp feels a 40% drop in profits. bridget winners and losers as ab inbev increases its software -- to make for sterling slump could we speak to a finance minister. headsn's -- the currency for its biggest gain in a month as traders scale back expectations. pathetic kicks off its today housing meeting today -- the fed kicks off its two day policy meeting. ♪ francine: welcome to "the pu"