>> the fed takes the step toward the second rate hike but stops short of committing to september. it credit suisse surprised. the bank beats and expected return to profit. it is tidjane thiam's plan working? will bring you an interview with the chief executive. eurosr reports a 72% drop in profit as it faces a challenge is -- faces a challenge. ♪ to "the pulse."

i am mark barton. francine lacqua is in zurich where she spoke to credit suisse's tidjane thiam and we are live for more on that interview. here in the studio today, great lineup. today fory joins us the entire hour. let's check in on the markets today. european stocks holding on to gains come up for the fourth considered a day. we have not had such a winning run since july 12. we are track on the third consecutive weekly advance. that hasn't happened for two months. is ofllar yen rate@x"çñ[ particular interest, post fed and pre-boj. the boj kicks off its today deliberation today. the dollar falling against the -- jumping yesterday and slumping two days ago. it has been a volatile week for

dollar yen. the yield fell by seven basis points after the fed upgraded its assessment to the economy yesterday. it did not signal a move could come in september. the yield on the 30, 2 .2%. brent crude to its lowest level in three months, $40 and $.43 -- $43.43. let's get the bloomberg first word news with caroline hyde. youline: mark barton, thank . barack obama says america must reject the message of fear and division. elect hillary clinton are to speaking at the convention in philadelphia, the president says clinton has the vision to move the u.s. forward. >> even in the midst of crisis, she listens to people and she keeps her cool. she treats everybody with respect. odds,ter how daunting the

she never ever quits. angela merkel is breaking off for vacation to defend herself against her criticism against -- her refugee policy. this is following attacks in germany. she remained out of the view during the summer break will answer questions this afternoon. three of the attacks were committed by asylum-seekers. earningsent decline in and profits fell to $1 billion from nearly $4 billion earlier. the lower crude prices are continuing to hurt the company's income. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. you can find more stores on the bloomberg at top i am caroline hyde. this is bloomberg. mark: credit suisse shares rising today and the bank beat

estimates posting second-quarter profits after analysts forecast a loss. it is the first positive since -- he spoke with francine lacqua about capital gains and the federal reserve. >> we have been very consistent in saying that we do not need to raise capital could we have been very clear. we raised 6 billion. 11.8%. we show that we can prove many levels. we said we could -- [indiscernible] -- we haveever want been in a reasonable range of outcomes. we are in a perfectly -- when a perfectly adequate position. francine: according to plan in the second half of 2017?

-- >> we said 2017 markets permitting. it is a deep strategic move. we love -- we think it is a crown jewel. we think it is an asset. is to get theo do market to fully recognize the value of our assets which is a very good bank and the wealthiest economy in the world. is a powerful ipo which we believe will -- it is a powerful ipo which we believe will drive value forward. on the fed, janet yellen, if she raises rates sooner than the market expected, the news? >> overall, yes. thiamthat was tidjane speaking to francine lacqua who joins us now from zurich.

francine, a surprise profit. does that mean his strategy is working? delicately. put it he says this is the first step but it is a clear first step in a right direction. the analysts called just wrapped up and he was cautious saying these were good results, better than the markets were expecting, however they are in a very unsupportive market environment. if you think about it, he has been in charge 13 months, three months into the job, that was last november. he announced a genetic overhaul. time, shareholders were complex in terms of execution. six month ago, yet to come down with some write-downs. concerns about how he would go forward and put the plant in place. this was the first time he can say you see it is working. it is a step in the right direction. probably good news that he had been waiting for a long time and

that he needed. mark: he was adamant in the interview that he will not need to sell fresh shares to boost capital. francine: this is a wider concern for european banks and if you look at some of the analysts, this was a concern. if you execute on your plan, if you delivered to shareholders, this is something you will need to do. when i asked him about that, he said yes, we have been very clear. he says he cannot lay down all rumors but the strategy has not changed. they did a huge capital raising exercise back in november and they need to do -- they won't do anymore. the thing that surprised me come when i asked him what surprise in the most, i was thinking he would talk but the capital seemed plowede about -- proud of of the cet one levels and he says there were concerns from onlookers about

whether he could raise it to 13% . a very ambitious level. what we see today is we are on track to deliver that target. the: lettuces view of market in the macro environment? -- what is his view of the market in the macro environment? francine: he is cautious. it was clear i asked him about whether he was expecting the ipo or the partial ipo of the swiss bank to go to plan, he said yes, in 2017 markets permitting. he says things are looking better in terms of restructuring execution within the bank. there is still a lot of uncertainty out there, but what he wants to do is put a bank in place that is more streamlined, more lean so they can focus on growth. so they can try and withstand whatever the macroeconomy throws at them. mark: we will speak to you later, francine lacqua.

another story making headlines is the fed. it is a slow crawl to hike number two. it may have begun. policymakers took a step toward raising rates later this year, stopping short of signaling the move could come as soon as september. the fmo see upgraded its assessment of the economy and yesterday's statement saying new term risks to the outlook have diminished, despite a more just remained below 50%. this is our world interest rate probability. you can see the probability of a hike in september 6 -- september, 26%. november, 28%. december, 45.2%. our next guest says we should not expect a rate hike at all this year. let's welcome janet henry who joins us for the rest of the show.

is september live were not for the fed? janet: the fed news to tell us it is live. we need to remember that in june, after the profile of the members, a lot of them were still saying they expected to raise rates in september and december. -- i thinknew set global developments. them from doing so. for the moment, it is live. mark: something that the jackson hole meeting in wyoming, some suggest on that day or that event, janet yellen might pave the way for a rate hike sooner, rather than later. isn't that a good forum to do such a thing -- is that such a good forum to do such a thing? janet: will have a few more weeks of data.

we'll have another key meetings globally. we will have had another set of the payrolls. yes, that gives her the foreground on how she is thinking on the policy people need to bear in mind what you heard last night. the new term risks have diminished and this injury confident on the labor market. they are not confident on inflation and worried about how we can investments -- like slide arco pc call -- investments -- mark: some inflation expectation moving in the wrong expect -- wrong direction. what is your assessment of the current is environment? janet: very little in the way of pricing it would you have seen in the u.s. economy is some -- labor costs have been picking up which leads to stronger innovation.

anytime there is an expert tatian of higher rates, the dollar tends to strengthen and inflation except nations come down again in the u.s.. it is difficult for the us economy to decouple from what is happening -- for the u.s. economy to decouple from what is happening in the rest of the world. nextnciled in one for the year. mark: stay with the pulse. shares -- shells double-double -- down free risks. it is five weeks since the u.k. voted to leave the eu and what has been the impact on european companies? will talk brexit -- we will talk brexit. how much is the election playing into the central bank outlook? where live in new york and philadelphia. this is bloomberg. ♪

mark: let's get the bf with caroline hyde. caroline: b.n.p. paribas posted results that were little changed. net income came in at 2.5 6 billion euros, up from a year earlier. lloyds will eliminate an additional 3000 jobs and a further 400 million pounds in annual expenses as the uk's largest mortgage lender attempts to 4.1 6off -- it felt

billion pounds. avoided second quarter profits that beat theyst estimates, thanks to galaxy s seven smartphone. the biggest beneficiary of sluggish iphone 6 sales. mark: shares -- shell's shares slumping. bloomberg's ryan chilcote is here to break it down for us. ryan: oil profits have fallen prices.falling off oil there was no surprise it was decline. the problem that she'll was their production fell as well. they produced 120,000 barrels less than the market anticipated . that doesn't sound like a lot when you're producing a few million barrels. at $50 a barrel, that adds up to

$6 million a day, over a 90 day period. that explains have to loss. they do not produce the oil. arco the focus is on downstream and bp reports. what is the downstream take away? ryan: the very same problem bp had appears to be happening at shell. refining margins were not going to be great. they came in worse than expected at bp. they came in worse than expected at shell. and in addition to that, another big business at shell, the world's largest lng producers and that underperformed. mark: good news, total beat estimates. what is the reason? costs and are cutting that is one thing investors love, particularly if you can cut operating costs. it will erode your future growth .

they had returned of 2.4 billion dollars of cost cuts and they say they are going to beat that target. ryan chilcote on shell and total. the swing in the currency could be a prologue to a very volatile friday. trade awaits the boj decision p it we look ahead to what is next. this is bloomberg. ♪

mark: japanese stocks falling. the yen strengthening before

tomorrow's decision by the boj. it is $260 billion economic stimulus package, about a quarter of the total an actual government spending. janet henry is here. 20 trillion, it is a month to figure but how much is actual spending? apparentat will come that's that will become apparent in the coming months. i would not rush into revising your japan gdp forecast. maybe half of it is fiscal spending some of that may involve loan guarantees which are at zero. not a great boost. our economists in asia think the general and new money is about 6 billion to 8 billion but you don't know how much will be spent in the next year or the next two to three years.

mark: we will find out. janet: it will help in terms of expectations a demand coming through helping to support confidence, but real money in the real economy not anything before the end of the year. mark: the yen is rising today, it fell yesterday. it moved two days ago. real swings in the fx market overnight implied volatility surging to a post financial crisis high on the dollar yen crawled that tells us the expectation that are built -- dollar yen crawled. that tells us the expectations that are built. kim kuroda begin to meet expectations -- can kuroda begin to meet expectations? janet: this year has been huge expectations. in january they surprised by cutting rates to 0%. they were saying they were against negative rates. in april, they must of been

surprised but not doing nothing at all. now, everyone knows to expect something. mark: what is your ex? is -- we'reix exciting an increase in the monetary base target. most of that come through in terms of etf purchases. some of the qe being shifted ones.ly to be the philip hopefully that will feed through to the real economy. mark: will that be enough to stop the yen surge? the yen has arisen after every meeting. can that trend and after tomorrow? dashcam that trend and after endrrow -- can that trend

after tomorrow? janet: our forecast on the yen is that it won't abate. we are looking forward to remain .table after the volatility mark: does that mean intervention by the boj whether alone or with other central banks? janet: i think it is premature at the moment. japan is a g-20 country. the only justification you can have for currency intervention is extremely under overvalued or there's extreme volatility could maybe they could use the bullet silty point p a lot of -- you could use the volatility point at the moment. they will find it difficult to get everyone else on board with corrugated intervention. anything they do unilaterally is likely to be futile. mark: japan and its target. discuss.

should it change it? janet: i don't think there is much to be achieved by changing it. if we go back in time, this -- the mistake when they first made abenomics was preceded with raising the consumption packs. it was some sign of the economy gaining momentum. it was sign of underlying inflation measures edging up. they immediately started to tighten fiscal policy to aggressively. what will see in japan is monetary and fiscal policy working together. that will help expectation. that should support the economy but are they going to meet their inflation target? no. we will be wondering and six months time what is next from the bank of japan? mark: will we see more monetary and fiscal working together globally? will that be a global thing and not just in japan? janet: i think there is evidence of it already.

thatd the shanghai meeting there was a need for a bigger fiscal stimulus and they did not come out with a statement that we have seen quite a lot more. we have seen it in the eurozone. we're going to get some of it in japan. even in the u.s., fiscal policy has been tightening on the economy and it is starting to add to growth in some of the emerging economies. korea, some in thailand, china. they are not coming up with a coronary package but already it is happening. fiscal and monetary policy is are starting. mark: helicopter money in japan, feasible? yes? no? --et: increasingly like a increasingly likely. mark: up next, it is five weeks since the u.k. voted to leave the eu. what impact has it been on the

europe economy? this is bloomberg. ♪

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'it'ha tstn jui, wif c odintrg ucin pwifiwiro, fi hthatpsyow usur bs.ines u 'doe t eth dvery.nebusiss. ascomcbu.ss t builbufor sssine mark: welcome to "the pulse." live from bloomberg's european headquarters pit of francine is thiam.ch where she spok we're going to go live to switzerland later. here's caroline. .aroline: mark, thank you barack obama says america must reject the message of fear they delivered -- being delivered by donald trump and elect hillary clinton. speaking in philadelphia, the president says clinton has the vision and discipline to move the u.s. forward.

>> even in the midst of crisis, she listens to people and she keeps her cold and she treats everybody with respect. no matter how daunting the odds, no matter how much people try to knock her down, she never ever quits. caroline: fed officials have upgraded their assessment of the u.s. economy and taken a step toward raising interest rates later this year. the members declared outlook has diminished and labor utilization has showed some increase and acknowledge that inflation remains too low and stopped short of signaling a rate hike could come as soon as september. ®bxh[ng up a criticism of her refugee policies phone your rash of violent attacks in germany. the german chancellor had planned to remain out of public view during the summer break will answer questions this afternoon, the first time since

what you assaults left 13 dead this month. read were committed by asylum-seekers -- three were committed by asylum-seekers. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. you'll find more stories on the bloomberg at top . i am caroline hyde. this is bloomberg. mark: a check in on markets to see how they are doing. the stoxx 600 gaining. the longest winning run since the 12th of this month. feds a small game post after it upgraded its assessment of the economy. it did not figure a move would come in september. janet henry is sitting here. she says no rate hike this year. showingar yen rate is downward move for the dollar. the boj meeting today, will get the combination of the meeting tomorrow at all eyes on the boj. more stimulus expected.

brent down to its lowest level since april good unexpected rise in the oil industry data yesterday. .et's talk brexit chief executives have been weighing in on the possible impact of the uk's exit on their businesses. here's a case of some of the interviews we have featured in the last couple of days. >> it is entirely committed to the united kingdom, employees and customers, we do manufacture in the u.k. all of that will stay, no change. >> if there was good news relating to brexit, it is definitely investors are back in the market trying to understand what to do. >> we don't see any post-brexit affecting our business. we see continuing trends, a trend being the u.s. softening in growth. >> we wondered if we would see a slowdown post-brexit and so far we have not seen that. really interestingly, the thing we have seen is -- completing

the levels more quickly. mark: let's get the thoughts of janet henry. brexit slowdown, paint the picture. we heard the for the evidence. we will get the hard data until mid-august. what is the survey evidence telling us? janet: the survey evidence is depressing for the u.k. economy than the financial markets are. the pmi, the service sector pmi which the bank of england does pay a lot of attention to -- the harder data, the real economy data will start to come out next month. already, it looks like we have got enough information to know there has been a massive slowdown in growth. mark: a technical recession this year, 34th quarter? -- third or fourth quarter?

janet: we're moving into a period of stagnation. mark: kristin forbes expecting -- i need to see hard evidence. survey data is not hard evidence, is it? it seems will see some sort of action next week. is it too early to bring out the big bazooka next week? janet: i don't know if we will get the big bazooka but i think we have enough information from the pmi surveys and martin weale's and said he is not seen enough. even he has signaled he is willing to cut rates. the regional agents, that was very early after brexit. that wasn't particularly downbeat. enough fomc members have signaled they are willing to to cut rates. they also know that monetary policy takes a while to speed through to the real economy.

you know that things -- there are some degree of marked slowdown, just stagnation, that they need to start moving. we get a rate cut and possibly something else. mark: world interest rate probability function. not every day you see a 100% probability of a rate cut. he will say 25 basis points it five in august and maybe some kind of credit easing skiing -- easing skiing. what they want to do is reassure people that rates are coming down and they are going to continue to ensure a supply of credit to the real economy. a package means more than one thing. something on the -- mark: qe or wait until november? janet: i think they can wait as far as qe is concerned. they will keep the door opened. they certainly will not close it to qe. if they did -- if they need to do more, they will do it.

i think we'll need to wait until november. mark: sterling and its impact on inflation. discuss. your forecasting -- you are forecasting 4% cpi. that is for a couple of months. we saw that two or three years ago. does the bank overlook such high inflation? janet: they don't. remember, their next set of forecasts. what we are going to have to get his of them incorporating the impact of the brexit vote into their forecast for rates and inflation. also they are going to have to upgrade because we just had .esterday's gdp data on inflation, suspect they will not be as high as our forecast. our forecast for inflation is that inflation will average over 3% next year for a couple of months. i know that sounds unbelievable at this stage, but we were just looking at charts.

2011, it had more thanr mark: they love to keep inflation close to 2%. janet: it will come back down. they will look through it. a weaker sterling from where it is currently. our currency forecast is 120 by the end of the year. it is imported inflation but it is a one-off effect, very little . inflation comes back down. the bank of england say this is a temporary impact. mark: janet henry, stay there. stay with bloomberg and plenty coming up. first, german jobless numbers decline as companies struggle. is europe on the road to recovery? barack obama passes the baton to hillary clinton. we will go live to the democratic national convention in philadelphia. fed reserve policymakers take a step toward raising rates. are they committed to a hike this year? will discuss coming up -- we

will discuss coming up. this is bloomberg. ♪

mark: let's get to bloomberg business flash with caroline. caroline: royal dutch shell reported a 72% decline in second-quarter earnings and profits fell to $1 billion from nearly $4 billion a year ago. r continuing to hurt the company's income. lloyds will eliminate an additional 3000 jobs and a

further 400 million pounds an annual expenses. the largest mortgage lender attempts to stave off a brexit induced slump. the underlying profit beat analyst estimates and fell to 4.1 6 billion pounds from 4.7 2 billion a year ago. credit suisse beat estimates unexpectedly hosting a second quarter profit. net income fell to 172 million analysts expected a loss. >> [indiscernible] also cost control. the first time we see our actual cost going down, 403 million in the second quarter from the year before. that is through a big transformation. caroline: that was the bloomberg business flash, mark. mark: let's stick around with

european banks. e&p para bob -- a surgeon bond trading upset by profit equities and low interest rate. for more, caroline connan joins us. mark.ne: good morning, b.n.p. paribas done better than some peers. it was at 256 billion euros it that is estimates. it has done a lot of their restructuring, they have been closing branches and cutting costs by 12%. becausenues are up 1.4% as you were mentioning, bond trading somehow managed to upset the drop in equities and finally, a gain of 300 million euros from the sale of their stake in these are europe.

the cfo told me the french bank is able to better counter the headwinds because of diversification. ask you see you saw the -- >> you see, you can never be protected from uncertainty. uncertainty can stem from any angle. they can be political, it can be many thanks. one can rebound on these activities. that's why a bank like b.n.p. paribas which is so diversified between civ, retail, international retail. we feel confident in the overall evolution that the bank will deliver on its overall trajectory. mark: how do they think brexit will impact the company? caroline: b.n.p. paribas has a presence in the u.k. they have more than 7000

employees in the u.k. big civ investment bank activities there. likeld me -- some banks hsbc are planning to relocate some people out of london to the continent, even though the bnp has -- he is not running to relocate any of the activities quite yet. that's he is not planning to relocate any of the activities quite yet -- he is not planning to relocate any of the activities quite yet. mark: let's take a look at the overall european economy. it is shrugging off the brexit risk. janet henry is here. how is europe going to whether brexit? stronger growth -- that is not something that is happened often. to some degree we have it, not being materially affected from it. we have not seen the financial

contagion that i think a lot of us -- in the initial weight of the brexit vote. let's not forget the u.k. is partnere major trading for all of the euro area countries. what they will see in the coming months is a weaker export performance. -- we are be some seeing a mixed impact in different countries regarding the impact on confidence. a bit like with the u.s. and globally, investment spending is still set to be relatively weak. we've got a slowdown in the second half but we have a euro area economy growing on the back of consumer spending. mark: political risk in the eurozone, w still waiting for results. big elections next year, germany, france. the effect of the brexit. how does that impact both physical and economic matters now -- matters?

>> it is a long question. in some ways that is the big challenge for europe. we are in a world that eurozone is muddling through and the ecb is doing a lot of qe for the foreseeable future. there will continue to -- is set to remain very low. difficult -- the difficulty for the big players, germany and france, they both have big elections for next year. they need to continue the negotiations with the u.k. on brexit. to try and come up with a cohesive response to the eurozone and indeed the broader eu and discussions will become through over the course of the next months led by donald tusk. not give away so much that it their chances domestically starts to diminish.

politically complicated. mark: very well answered. i question -- a question that need a five-minute answer got a one minute answer. the ecb? how much more? the ecbit is which unissued its currency inflation projections, especially with oil prices at these levels. in september, they will have to lower some of its or cast. it will have to lower their inflation outlook for the fourth of the next year and signaled their own to extend qe another six months and to be credible, expand the pool of assets. probably at the moment, that will be lowering and allowing yourself to buy the low -- by below the level, potentially up the limits as well. mark: janet henry stay there.

up next, the fed begins its crawl toward a hike. the white house race picks up speed. is the election one of the risk on the central bank outlook? we're live in philadelphia. this is bloomberg. ♪

mark: fed policymakers take you step toward raising rates stopping short of signaling in the move could come as soon as september. let's get over to michael mckee in new york. what is the bottom line?

michael: mark asked -- people asked me why are the markets acting as they did? the fed did not want to be more specific good brexit and the poor may jobs and the report -- specific. brexit and the poor may jobs report -- from where we were really this year, the fed or cast for a couple of rate rises if the economy continues to produce some inflation and a lower unemployment rate. the key word is if good the fed is not missing anything there watching the data. as the data comes in, we'll see the odds shift in the markets toward the possibility of a rate increase. there is one wildcard and that is the election. donald trump has suggested that if he is elected, he might fire janet yellen and make more life -- make life more difficult for the federal reserve. they have to ask themselves in september if they want to win to

that. they are not going to move in november, because that is a couple of days before the election. mark: let's focus on one of the factors within the fed's political risk thinking. the democrats meeting this week. president obama making a stronger case for hillary clinton and against dollar trump giving the closing address on the third night of the convention in philadelphia. the president gave a ringing endorsement. >> this year in this election, i am asking you to join me to reject cynicism and fear and to summon what is best in us to elect hillary clinton as the next resident of the net -- the next president of the united states. kevin --re joined by we are joined by kevin. what are the big takeaways? kevin: president obama delivering a full-fledged endorsement for her former secretary state and rival, hillary clinton.

he said that she is more than qualified to be commander-in-chief. he also start to unify the democratic party. he made reference to senator bernie sanders, many of whose supporters are feeling a bit upset with hillary clinton's choice of tim kaine as her running mate. they don't feel he is progressive enough. they take issue with -- on the transpacific partnership. bernie sanders is against it as his donald trump. hillary clinton in the obama administration are bit more supportive. the bottom line is this, barack obama really laying political lines against donald trump saying this is not the election that this country needs. obama ran on a hope and change election in 2008, very different . tonight, hillary clinton will deliver her convention speech to the nation and really have to

make the argument for a nation that is very much candidly not really wanting to vote for either. donald trump or hillary clinton, the for her to win over independents and moderates in philadelphia. mark: take you kevin. let's get some 5 -- thank you kevin. let's get some final thoughts from janet henry. janet: i think it is one of those unforgettable once. i think we are working on the assumption of some kind of status quote arrangement. and for the world that feels the most favorable one in terms of ongoing muddle through ongoing economy. still -- fed, i think the real risks is there -- if there was to be a more populous administration would react on mark: what is.

the risk for hsbc right now? , iet: the number one risk think, the number one risk is still ongoing global growth disappointment. we see it in the u.k. first. potentially that whittles out. policymakers are back to scratching their heads about what else can do. it is not like there's anything perfect. maybe it is something that forces a larger degree of global policy cooperation. that is not an environment where you can really look for global policy cooperation. mark: janet, great to see you. thank you for joining us. bloomberg. "surveillance" is up next. i will be speaking to george magnus later.

--mer finnish prime minister european stocks were holding onto gains for the fourth consecutive day. you're watching bloomberg television. this is bloomberg. ♪

>> diminishing risks. the fed takes a step towards a second rate hike but stopped short of committing to september. credit suisse, and unexpected return to profit. and double trouble for shell.