>> litigation clouds linger. banke's second-biggest grapples with legal costs. >> what we decided to do is to add it to our provisioning. there's no significant development. we still have to put behind us well-known litigation. are on track to open at a record. resilient demand for the iphone. tech stocks jump in asia. caroline: the white house confirms donald trump weighed in on a statement that he -- that

his son released. meeting government officials as they try to quell growing government anger over emissions. oh ♪ caroline: welcome to "bloomberg daybreak: europe." from here in the city of london, on anna edwards. with got commerzbank reporting a second-quarter net loss, 630 537ion euros, a loss of million. that lost a bit wider than what we expected. they are giving us guidance in 2017, saying they see it slightly positive net result. this is germany's second-largest

listed bank. that antly found out company disclosed owning 5%, making his business the second largest shareholder after the german government, which bailed out commerzbank. byy plan to cut 6000 jobs 2020, to free up cash in other areas. sticking with the banking theme, we have numbers out of societe generale. profits down 28%. litigation clouds lingering over this international dealings. the products business helping the trading to outperform some of their rivals. they are also grappling with litigation. that is, to some extent, overshadowing the underlying performance. this is france's third-largest banking business. on the trading side, interesting

to note that they slightly trailed expectations. quite the opposite of what we saw with b.n.p. paribas. manus: in 50 minutes time, we will have a little bit more from the societe generale ceo. he caught up with caroline last night. lenders,biggest dutch delivered their numbers. profits, 3.7 billion. beat.a nice in terms of guidance, they are on track to hit their strategic milestone. ing, joiningcfo of us for his first interview. it is a beat on the underlying profit. you are on track to hit those strategic milestones. what were the standouts for you in this quarter?

>> good morning. we had a good quarter. i think what stands out is we actually welcome 36 million clients in total. comparedhis quarter as to the last quarter. our primaryat customers, the ones who do their daily banking, in total, we have 10.1 million right now. a year-over-year increase of 10%. those clients did more business with us so we have 6.4 billion more loans. they entrusted us with more deposits. that part is good. if i look at the client side, you can see that, in more than half of the countries, we are number one in terms of appreciation of service. they bought more products from us. in our commission income and all

of this that led to a result of war than 1.3 billion -- of more than 1.3 billion for the quarter. quarter, isd a good how you would characterize it. what do you see for the european economy at the moment? the strength of the recovery, how strong does the eurozone look right now? koos: if you look at the eurozone, we are in a beneficial period. -- frenchctions in elections, good outcome, most likely good outcome in german elections. the atmosphere in europe is quite positive. we have a bit of momentum and that results in consumer confidence as well as investor confidence. what you see there, actually, is an economy growing. we have a 2% growth in the economy at the moment. at 1.3%, whichon

is kind of ok. ,t could be a little bit higher but it doesn't look that bad at the moment. manus: confidence is high. levelsack at precrisis all the way around europe. that is a big tick in the right hand side of the column. let's talk about loan-loss provisions. -- wouldwould dictate you update us in terms of the level of loan-loss provisioning? these are sort of abnormal times in terms of the low point that we are at. overall, andu see probably our bank is not unique in that, that the overall amount of loan-loss provisions is still way below the long-term average. nevertheless, it starts to pick up a little bit and that is not so much because we get new inflow of loans, it is more because we have worked our way through the old loans through

the previous crisis where, in general, if you work them out, you get releases. see that you have less loan-loss releases right now and you have a normal inflow. overall, you start to see a gradual pickup. i wouldn't say that is because an economy is turning bad, it is more because of the oil prices depleting. brexitan i ask you about preparations that your business? see theteresting to news that ing was planning to move trading to london quite soon after the brexit vote to place. do you still plan to do that? have you done all of that already? do you think the dutch government should be doing more to attract banking business and financial services business? overall, what we did on the trading side was, we were

having overlaps between three dealing rooms pretty close to each other in the netherlands, belgium, london. we said let's move some jobs more to london. that was not a real big operation but we still felt the talent pool is there, the people are there. nevertheless, if you look overall at ing, we are headquartered in mainland europe. we have a branch operation in the u.k. we are serving global clients from there. what we would like to do is continue that operation and serve as a normal branch. then, we would continue to follow our clients. in terms of a legal setup, i would say that we are flexible to follow our clients in terms of our business. netherlands,t the yes, european countries are, right now moving in to moving

some operations from london banks onto the mainland. there is some success of that in london as well. manus: one of the statements that you make this morning is about hitting your strategic goals. obviously, part of that is cutting 7000 positions and 9 million euros in savings targets. can you update us in terms of those strategic targets and how close you are to achieving them and any adjustments for the market? the: we just announced strategic initiatives last quarter, 2016. why are we doing this? we are basically saying that there will be convergence of platform products so you can start to serve your clients with simpler products and from one platform rather than a number of platforms. that is what we are preparing for. that is a four-year operation to

do that. last year, we outlined what we do. we are taking the first steps right now. we will continue to work on this and we will start more and more to report on this separately over the next quarter because these programs are taking place. in the first quarter, we had the announcement on what would happen with the jobs over time. we are in the process of executing that right now. manus: one final question, margin is a critical thing for a bank like yours. rates, we'veising seen quite a dramatic move in five-year, 10 year, benchmark. what are you expecting from the ecb? how are you looking at the spreads as we go into the second half of this year? koos: overall, what i see is a yield curve in europe steepening. there is quite a lot of anticipation for interest rates

to go up. what you see right now is even euro ratesation in to go up then the u.s.. there is quite a lot of interest rate expectation expected in the market, in that sense. i would say may be market is getting a bit at head of itself. overall, it's a big change in sentiment. thank you very much for your time this morning. koos timmrament's -- i -- thehe ceo of executive vice president of ing bank in group. manus: at 7:00 a.m., lundin petroleum. there's an interview. juliette: u.s. president job

trump was involved -- donald was involved in crafting a statement from his son about involvement in a meeting with a russian lawyer. he said he waited as any father would based on the limited information he had. it conflicts with assertions made by the president's own lawyer two weeks ago. the u.s. senate has confirmed christopher wray as the new director of the fbi. it was confirmed 92-5. president donald trump fired his predecessor, james comey, over the criminal probe into russian meddling in the 2016 election. apple shares are on course to open at a record high in new york. a revenue forecast highlighted resilient demand for the iphone. the technology giant said to $62 would be 49 billion.

a new model later this year. deutsche bank's most likely scenario has been shifting about 4000 jobs to continental europe over four years. they said no plans have been finalized and the actual jobs transferred could be higher or lower depending on the outcome .f the negotiations with the eu a deutsche bank official declined to comment. global news, 24 hours a day, powered by journalists and analysts. you can find more stories on the bloomberg at top . apple suppliers in asia rallying today. holding at its highest level since the year 2000. in taiwan, about 6/10 of 1%. in hong kong, up 6/10 of 1%.

you have seen a switch out of these raw materials that has been holding the msci asia-pacific index up. commodity markets like australia are weaker today. they are watching, of course, these apple suppliers. a technology company in hong kong is a quite sharply in the hong kong session. up by 6.3%. many coming under pressure. after the bill yesterday. it came through with that strong first-quarter numbers. the forecasts have been seen as quite conservative. in after theing bell in sydney. the market expecting very strong dividends and underlying profit of about $4 billion. watch any signs of a strong payout. --manus: coming up, more

exclusive conversations. bank'she ceo about the second-quarter earnings. ♪

manus: it's just to go 6:18 a.m. in london. breaking news is our theme. france's third-largest bank is still grappling with litigation costs overshadowed by a jump in demand for structured products and games and consumer banking. it has increased its provisions to 300 million euros. we had an exclusive conversation with the ceo, frederic oudea. first of all, we posted in the first quarter, the impact on the net profits. what we had to do in the second quarter is to account in detail

that we have no impact on the net profits. second, what we decided to do to theadd provisioning general litigation provisioning. there is no significant development of litigation. we still have to put behind us on well-known litigations potentially libor, and potentially on the lia in the u.s.. we tried to put that behind us. >> we saw investment banking difficult for some of the rivals in europe and the u.s. what makes societe generale more able to upset the difficult market environments? frederic: we saw the second quarter, for example, less activities on the slow business.

investors were more in the wait and see mode. we benefited from activities. it was pretty diversified, which i think is well-suited for the new framework. we are able to make progress with our clients, to make progress, hopefully in terms of profitability. we have costs that are down thanks to all the efforts we made. all in all, our return on equity, despite the environment being less favorable. >> do you want to wait and see if the attitude is going to continue in the second half and what can make the investment banking revenues increase more in the second half? frederic: the economies are better. i think we could see activity on the corporate side. investments, acquisitions, whatever. on the markets, we have had very

low volatility, also because people were waiting for some elections. when the clarity would be even think on elections, i things could potentially improve with more flows and more volumes. >> we have new political risk that seems to be behind us in france for now. what impact have you seen on your french retail? have you seen a pickup in activity toward the end of the second quarter? frederic: i think there is a better mood in france. for example, we saw in the second quarter, an increase in our long-term investment loan, and increase by 10%. we saw also, as you know, gdp growth figures pretty solid for france as well as for europe. we had a growth rate of around 2%. i think it definitely reflects

the confidence level improvements and i'm free positive for the -- i'm pretty positive for the output provided there are reforms and there are new steps toward building eurozone. i think continental europe can do pretty well. anna: that was frederic oudea giving us the latest on societe generale. giving us his global market strategist at jpmorgan. great to have you in town with us. let's talk a little bit about the banking story in europe and what we see in europe more generally. european banks, have they lived up to expectations? are they living up to rising expectations? they have been behind the u.s. to some extent. >> that may be a product of the yield curves in the u.s., some potential deregulation, trading revenues. we started to see, in the first six months of the year, european banks starting to close the gap

a little bit. for the second half of the year, we are starting to favor european banks of the u.s. banks , mainly because we're looking at a steeper yield curve in europe that helps interest margins. we're also starting to see some potential and how far they have come in regulatory terms. we have seen reform in terms of regulation for european banks and now we are going to see some of the dividends pay off. we don't think structural changes need to happen going forward. gen had more provisions today. we just caught up with the cfo of ing and he suggests that the market is fairly priced. alex: it is not something i would personally agree with. the european bond markets, one third of government bonds in the eurozone, trade with negative yields. in a time when we think the ecb

will be stepping away from the market, that means there is a lot of pricing that needs to happen in the next six to 12 months. we believe the ecb rather than the fed is the bank to be watching in the second half of this year. few moretart seeing a clues, we could see some volatility. anna: are we beginning to expect too much, too quickly from the ecb? i ask this because inflation in the u.s. and the u.k. -- the inflation number in the u.s. is not up to where the fed wants it to be. we have seen some tightening but the federal reserve, it's been hard to generate that inflation. even harder, i guess, in the eurozone, where the recovery is behind the curve. i think there has been a ramping up of pressure on the ecb to do something, mainly because there are members of the eurozone who don't believe in the policy.

rather than shifting into full on tightening comedy ecb you're mode,from -- tightening the ecb are going from easing -- they are maybe discussing bringing interest rates backup, at a minimum. manus: the basis would be a bullishness on european equities. we had a little weaker data in the u.s. yesterday. this is european economic surprises first -- surprises versus the u.s. economic surprises. i ask everybody this. you are bothered by a high euro? alex: i'm not. when the euro was falling and people were talking about the benefits, it never really showed up in the data. we never saw a massive change in trade balances. i'm not seen the benefits from it. anna: currency wars don't work? alex: exactly.

this is why, on the flipside of that, a high euro is not going the dollar.y derail anna: the pace, not the dollar. manus: the velocity. anna: european equities more generally, which bits? i'm not that as concerned about what the euro does to the overall european economic recovery, i would still be pivoting away from the international companies in europe and focusing more on the domestic cyclical companies. we like industrials, we like the consumer and financials. they are the areas we are seeing is having the most room to run considering the virtuous cycle of growth we are starting to see pick up. anna: thank you. global market strategist at jpmorgan, he stays with us on the program. manus: this is one of the board

members saying that the board discusses policy adjustments as they need them. policy can change at every boj meeting. anna: plenty of big business names talking to bloomberg. ♪ is this a phone?

or a little internet machine? [ phone ringing ] hi mom. it makes you wonder... shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. see how much you can save. choose by the gig or unlimited. call or go to xfinitymobile.com introducing xfinity mobile. a new kind of network designed to save you money.

--s is koos timmermans "bloomberg debris europe." waiting for a few numbers to break this morning. manus: let's kick it off with lufthansa, and they have delivered their numbers, net income of 740 million euros area they must continue to cut costs and margins according to the cfo, they have reaffirmed their full-year forecast for the ebit to rise. ebit would be above the previous year, they said.

they delivered slightly below. slightly low was the guidance. there was a warning about capacity and the sustainability of demand going forward. wing has costso that are slightly ahead of the likes of ryanair. ofo wing had every prospect making evening. pensione the negotiations and wage negotiations with staff. we are off the nine-year highs in the stock. can you and your in terms of the ?osts and the revenue o anna: can you enjoy the capacity with oil prices as low as they are? and income 1.2 2 billion euros, and we estimate of 1.16. jeff green profit number 2.5 9 billion, ahead of the estimate.

it will continue to optimize international footprints by disposal of operations. and policies that are less rate sensitive. they have been cutting costs to counter that low interest-rate environment and they reference that in the statement. they have been targeting one billion euros of euros from disposal and trying to lower costs in their mature market by 2018. we will look for any details on the combined ratio as well. that measure of cost is a measure of nonlife premium looking out for those numbers. ahead of estimates is one way to describe the numbers. manus: let's talk about the company,il and gas full-year cash operating costs are going to fall back 60 from $4.90. at 330 million.

full-year action 80 to 85,000 barrels and second group action 89,500.ive, they're talking about some of their progress, it is progressing according to plan. and they see reserves increased by the end of the year. the oil for me on track by the end of 2019. we will catch up with the lundin ceo. schneiter coming after 7:00 a.m. anna: they are revising down there operation costs, they brought that down to 490 but -- .n enviable position more on that shortly. let's get back to the banking scene. we have the numbers from the texas -- natixis.

.oining us is laurent mignon the ceo. great to have you on the program. let's start with how well you performed in the bond trading business. my colleague is noting your one of the few investment banks that bond trading revenue in the second quarter. how have you managed to achieve that? laurent: it has been a good quarter for natixis. in the bond trading in the fixed income area we had rising revenues in the second quarter. the market where most of the company had decreased revenues. of a changingon business model, we moved from the traditional house in this business to a solution oriented,

client focused house and we have been able to develop a relationship with their clients all of the world from the asian client base to the u.s. and it has been very successful for orders on quarters and this is another illustration of that success. manus: the other side is the investment banking side is doing well, good morning to you. up 20% in terms of net income. european banking landscape is in fundamental dislocation, commerzbank my deutsche bank, everybody is in change mode. are you winning market share on the i.b. side and the trading site from the dislocation? laurent: yes, we are gaining market share because our growth has been higher than our peers for the last four years and i think it is because we have been organizing ourselves in a very clear move. we have a strategic plan that is

arriving to attend by this year and we are on track on all our jeff -- objectives. the fact that we are growing faster is an illustration of the fact we're taking market share with a clear view of our strategy and that is applied strategy very solution oriented and that is the key of our success. businesssee and your any impact already from the new, relatively new presidency of emmanuel macron in terms of may be reduced vertical risk, maybe clients are talking about that or it got been inflows, what impact can you attribute to the new president? the size of the fuel french business is not that big that it has an influence immediately but what is certain is the view of the french improvedutside has drastically over the course of the last month since macron has been elected.

the confidence in the french economy has improved. this is a very good news for the perspective, the growth perspective and for the eurozone part also. for gives good perspective the development of our business and confidence is a big driver of business to build meant altogether and we will and if it. french banking association is pledging to win 1000 jobs from london to paris, are you participating in that movement? we caught up with hsbc, they put a figure on the cost of moving their employees as $300 million. what can you tell us in terms of movement of human capital and the costs, are you making provisioning for that? update us. no.ent: in reality, london is a small center for us, most of our business is located already in paris or around the world. people altogether

in the investment solution and see i be part. cib part. it will be minor relocation so it does not need any very significant move and does not need significant provision because it will be done within time and given the evolution of our client base. globally we are not going to drastically change. anna: how do you assess the unwinding of the extraordinary amount of stimulus we have had from central inks of late? we saw the ceo of jpmorgan saying it was going to be more disruptive than people think, the unwinding of the bond buying program by central banks globally. would you agree with him, how

are you prepared for that? laurent: this is a great question because a big part of the market today is sustained by the fact that there is still -- they are a significant part of the bond which is bought by central and can this demand will decrease. in the wayis linked this will go forward. will see somewe pressure on prices, we have seen some in the u.s., we will see some in europe when the ecb will move also the same way. i do not think that if this is well anticipated by the market this will create major difficulties. still, it is something where we need to be careful and we need to advise well our clients on when the need to go to the market and take benefits of the current situation. manus: we just caught up with

the cfo of ing and asked him this question, we are seeing a repricing and european bond markets, a repricing and rates on the presumption that the ecb will join the readjustment program in terms of quantitative easing my easing back, what does that mean for your business, how optimistic are you that we are ining to a normalized time interest rates, give me your perspective on the ecb and are we fully priced for the move? that for theink time being, markets anticipate it will be a move that will spread over time and i do believe it is what will happen. i think we are pretty ready for that and our clients have been ready for that. will -- there will be some time of uncertainty and probably we will see and we start to see

more i would say selection over the right credit and people start to be more selective in what they're going to buy as in bonds. and with good names and names which will be less easy to sell on the market. that is something that will happen and start to happen already. i think it is again what i have said for the u.s. is the same. i do not think there is an anticipated distribution on the market. bank withare a french a substantial exposure to the u.s., what is the impact on your business from plans for deregulation in the u.s. and are you concerned about a different and on the regulatory agenda across the atlantic? think we do not, we are not doing any trading where we have our own

trading, we are trading on the back of our clients. the change in regulation is not going to affect us very much. it is a good time for all regular readers to step by a little bit and we have done a lot the few years to step back and save let's look at the impact of what has been done which has been very important. the factood timing and that the u.s. are taking this position is also a reason for their european to have the same which is not to deregulate but to make a stop to the regulation, have a look to what impact it has on the global economy and the global banking system before doing any further changes. i think this is a good thing because global banking sector needs a little bit of stability. our u.s. business is developing well but as i mentioned, it is

more developing on the back of our client business rather than any own trading position. we also have a very significant asset management activity in the u.s. which is developing well and taking benefit from significant flows this quarter. manus: thank you so much for laurent mignondh -- for joining us. toa: at 1:30 p.m. we stay lloyd blankfein. set toapple shares are open at a record high after the company gave a revenue forecast that highlighted demand for the iphone ahead of the launch of its new models. revenue will be $49 billion to $52 billion beating analyst forecasts. hong chan joins us on

kong. apple signaling a strong quarter, there have been concerns about what the looming iphone would do to current demand, doesn't bode well for the upcoming iphone? edwin: i think yes. the market seems to like the forecast. concernss some of the period andded lull that is why receiver shares [inaudible] have an extended trading. manus: is there anything that you find disconcerting and anyway? we are back at $30 billion of cash, they really have gone all-out to reassure the market that things are on track. anything disconcerting you? edwin: a couple things. cannot discount completely the effect of the delay and everything that was worrying was the chinese set of numbers which were again a very

weak and you remember this is off a comparatively weak quarter a year ago. we are talking about chinese sales down 10% which i think a lot of analysts are explaining away as the low ahead of the launch of the iphone 8. it is indicative of the fact that apple still has not found an answer for its second-largest market. the other thing is the iphone 8 is supposed to support -- sport a new cutting-edge led screen. it remains to be seen whether apple can secure a steady supply of this new technology. anna: some of the headlines around private networks getting some pick up as well. thank you for your time. bloomberg's asia tech editor. manus: juliette saly has your

bloomberg business flash. juliette: commerzbank has reported its weakest quarterly revenue since 2014. revenue at germany's second-largest listed bank fell to 2.07 billionaires -- euros. the plan to focus on the retail and corporate business. grapplingnerale is with the burdens of litigation for past misconduct which overshadowed a jump in demand for structured products. it increased its legal provisions by 300 million euros but it did not specify that 28%ed push net income down to 1.06 billion euros matching analyst estimates. >> definitely there is a better mood in france, better level of confidence and we saw in the second quarter an increase of long-term investment loans

increasing by 10%. we saw also as you know gdp nowth figures pretty solid for france as well as for europe. we have a growth rate around 2%. i think it definitely reflects the new confidence level improvements and i am pretty positive for the outlook for the next 12 to 18 months. provided there are new steps toward building eurozone, continental europe can do pretty well. apple shares are on course to open at a record high in new york after jumping in after-hours trade on a revenue forecast that highlighted resilience for the iphone. the technology giant said revenue will be 49 billion dollars to $52 billion ahead of the launch of apple's new model later this year. triplings considering

the u.s. investment budget to $30 billion according to donald trump who made the claim while outlining off record remarks from the billionaire founder of apple's biggest manufacturing partner. last week the assembler of the iphone unveiled plans to build a 10 ilion dollars display plant in wisconsin hiring as many as 30,000 people. that is your bloomberg business flash. anna: oil is extending its decline below 49 barrels -- 49 $49 a barrel. the u.s. data leading the oil story. at one point it was down 3%, this spoof the idea, suggesting a build in inventories by one point seven 8 million barrels last week. the bloomberg survey is forecasting a drawdown which

would go in line with the case an area of the global rebalancing scenario working but it's but the market and you had the issue of -- on the opec survey when it comes to what they are producing. new data out indicating at 210,000 barrel per day increase in how much opec is producing. how does this deal actually work question mark we put it on the chart for you to get some context. jump into the bloomberg with me. out theto point increase from opec to 32.8 7 million barrels per day and the blue line is the drawdown in u.s. inventories which if that comes through will be the fifth straight week at the market is saying we need a clear confirmation from those inventories to get a better idea of whether this deal is working out. increase is coming from libya. the wildcard, it has always been the wildcard. is 85% of thet

increase in opec. thistake a closer look at column, he has a different take on whether this is working out. on the oil story. are going toives berlin to meet with officials, discussing cleaning up diesel cars and avoiding bands in the city. been followed by continuous bad news and increasing public anger around diesel and the sector generally. matt miller joins us from berlin. what can we expect from the so-called diesel summit, it is being seen as a last chance saloon in terms of saving the technology. matt: right.

and saving the 800,000 jobs that rely on the outer making industry in this country. what you have got is the coming together of government officials on the one hand who need to be tough on the auto industry, they have not really done anything since the dieselgate scandal broke out in 2015. on the other hand, the industry provides so many jobs that one investor told us it is more important to the german economy than greece. that sets it up for you. the automakers have to somehow give enough diesel technology cleanup spending that the government can come away looking good. and also avoid fanning these cars from the cities. if you get a tan, a diesel been in munich and stuttgart and that spreads, there is concerns in the u k and france, you could hit these automakers hard and

they count on diesel technology for 46% of their total revenue. manus: thank you. is frome what the news the automakers. alex tried and is from j.p. morgan asset management and he has been listening patiently. matt set up the german discussion, the european discussion but if you look at the u.s. side, you have been living there for three months, the canary inis the u.s. coal mine, what do you make of slowing u.s. auto sales? -- leftover demand has been building up since the financial crisis, we have been eating into that pent-up demand. we are getting back to a more steady state of auto sales. i do not think it is the canary in the coal mine, we think the u.s. consumer continues to look fairly fit and healthy.

therefore we are continuing to keep a favorable outlook on the u.s. economy. a sector you like or do you prefer to stay away from the brand names and go to the part suppliers? more we are looking for strength in europe over the u.s., the main reason being that for a long time, the european economy has been a little bit sluggish. there is pent-up demand in terms of consumer demand for autos. we think that will unwind in europe rather than in the u.s.. necessarilynot european carmakers, the diesel scandal and this last-ditch attempt to save the technology and maybe save some jobs in the sector, is that something that you are staying away from, going for electric cars? is a lot of disruption in the sector, if you

are looking for where we are going it is toward the electric car base. there will be some future in that area rather than the old school diesel. that is something that will play out over a long-term time horizon. that is not the second half tactical play. manus: the conversation we had with cfos and ceos about the potential dislocation from their balance sheet adjustment, what is the talk in your shop? is it something that will take over in the background or will it be a form of dislocation, y impact theeriall bond market? that is a good problem to have. alex: the fed is going [inaudible] which is going to push up the long end of the curve. we do not believe the market is yet positioned for a third balance sheet. this is something that has never been done before, there is no scenario in history i can point to where i can say this is how it plays out.

set for a relatively challenging fourth quarter as the market starts to wrap its head around the fed beginning to reduce the size of its balance sheet. anna: jamie dimon pointing out on the balance sheet, we know the final destination and we when it can estimate will start but we do not know how long it will take. is that going to be the thing that the fed watches and assesses the impact on the market than tweaks accordingly? alex: it is a question we have the -- for the fed in september. we know how long -- how they are going to navigate the production in the us reduction in the balance sheet and start off slowly and wrapping it up accordingly but we do not know where the terminal target is and that is a big question which makes it difficult for the markets to wrap their heads around. manus: 77% of the companies reporting in the s&p 500 have beaten their earnings per share according to jpmorgan so it has

been a good quarter so far. do you believe, are you going to buy the baseball cap? you upping your target, are you joining this momentum to the upside in terms of readjusting your targets? keeping our targets fairly set. this is a good quarter but it was not his if you -- as if you saw ceos saying this quarter is good, the next will be better. guidance has come down trying to moderate expectations. for us, we are going to see how it plays out, we can still see strength in the u.s. equity market from an earnings point of view but we are not trying to get ahead of ourselves. anna: thank you. futures set for a higher opening. apple has had good numbers, we have more conversations to have.

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socgen falls by 28% as france's third-biggest bank grapples with mounting legal costs. this is to add to our provisioning [inaudible] there is no significant development. anna: apple shares are on track to open at a record as earnings signal resilience demand for the iphone. tech stocks jump in asia. manus: the weight -- white house confirms donald trump weighed in on his sons meeting, conflicting president -- comments from the

president's own attorney. cleaning upscussing diesel cars as they try to quell over -- public anger over emissions. manus: you're very welcome. it is "bloomberg daybreak: europe." anna: it has gone 7:00 in london. ae systemst b reporting numbers. in terms of the numbers they reported the adjusted eps for 19.8 tenthslf is above the estimate of 19.1. the sales amber ahead of the estimate -- number ahead of the estimate.

interesting the company recently surviving an attempt in the courts to block exports of arms to saudi arabia. the argument is what they were being used for in relation to what is happening in yemen. the judge is examining documents provided by the ministry of defense. that was one thing we were watching during this quarter. the was thrown out by court. interesting to see whether they stick to the guidance. first half performance consistent with forecasts and guidance for the year, previously they said the earnings-per-share will rise i 5% to 10%. seemingly sticking with that right now. manus: just a couple of lines from them, this is for july so we are coming into this week travel season. passengers 26 million. two lines coming from ryanair up

in both of those metrics for the closedaffic growth, it with 11.6 million passengers. that is something to watch for, getting some lines out of , listing their operating profit outlook two 565 billion yen. lifting their performance at the operating profit level. manus: futures are up, we are strong open. nice we have had a couple of other numbers come through this morning but it is momentum from the apple stock rising 6% last night, the suppliers are rising, tech stocks are rising. all the suppliers are in there. european equities set for a firmer open and london up by an

eighth of 1%. we are waiting on the rio tinto numbers wrapping at 7:15 a.m., we will bring you those numbers first and fast as they drop. the dax is up by 0.8%. anna: let's bring up the risk radar and to show you where we are on the asian equity session, where we are looking ahead to the u.s. equity session, asian stocks pretty flat during the trading day. u.s. futures put in instead. and some are lifted by the apple story. suggesting .9 percent higher. sign in dollar-yen. for youthe weaker yen this morning. manus: u.s. treasuries at 2.2 6%. the market does not believe that

the fed are going to be able to execute everything they anticipate to do in terms of rate hikes. lackluster auto sales, we saw treasuries jump. they are not spending what the federal reserve had hoped to do. buttonsve a look at the and the o.a.t.'s. and theetting started ing cfo said the markets had priced again, getting a slight -- getting slightly ahead of themselves. anna: here's juliette saly. juliette: u.s. president donald trump was involved in crafting a statement released by his son about a meeting he had with a russian lawyer. a white house spokeswoman sarah huckabee sanders said trump weighed in as any father would based on the limited information he had. it provides an account of the events that conflicts with the assertions made by the president's own lawyer to weeks ago.

u.s. and has confirmed christopher wray as the new director of the fbi. the nomination was approved on a bipartisan vote of 92-5. he has vowed to defend the organization's independence after president trump fired his predecessor james comey after the criminal probe into russian meddling into the 2016 election. urged peacefulas pressure. america's goal is not to topple kim jong on or find an excuse to send our military north. he said it just time to get the regime to become redder to enter talks although a condition of those negotiations would be north korea giving of its -- giving up its nuclear weight ends capability. shifting 4000ank jobs to continental europe over several years. according to people briefed on the planning they will transfer most of their positions to frankfurt and berlin.

no plans have been finalized in the actual job transfer could be higher or lower depending on the outcome of the uk's negotiations with the eu. a deutsche bank official declined to comment. >> i am ready to come back in september to try to achieve an ofeement before the meeting the head of state on september 27. we are open to cooperation and we are willing to reach a good clear, stable, a very solid agreement between france and italy. juliette: global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . that rally in apple after hours has sent text players here in asia very strong, hong kong up

.7 of 1%, the cost be up by .2 of 1% and take up the taiex where you see a lot of the suppliers up .8 of 1%. switch out of from which aerial producers and that is weighing on the asx 200 which is closing lower and in japan they are closing by .51% above the 20,000 point level. we have been watching apple suppliers in focus, aac technologies leading gains among these key suppliers, it is a stock listed in hong kong up 6.6%. sony came through with a strong first-quarter operating profit. analysts say the forecasts look current -- conservative. we are waiting for rio tinto's profit. a lot of investors are waiting for a strong dividend announcement. you have rio in sydney closing down right .2 of 1%. in terms of the apple story, have a look at this chart.

sales have increased in the last quarter but in china, they are going backwards down by 9.5% in the last quarter. this is because the iphone is no longer seen as a status symbol in china. there are a lot of other chinese manufacturers like huawei coming through with phones that consumers want to get their hands on. and some comment from our that's ary. comment it gets lately -- less popular each time. china.est iphone in manus: thank you. beating analyst estimates, production was at the upper end of the guidance, we are joined b y alex schneiter.

this is again -- a good set of benchmarks my the second time you have revised your guidance for production this year. gets,s as good as it 80,000 to 85,000? alex: i am pleased with the results and as you mentioned, we revised our guidance for the second time and that is on the and of two major assets, operated assets which have performed well. we increase the capacity which allow us to increase the revised guidance. anna: good morning to you. your cashvising operating forecast, it was for 90 four quarter. how low can that cost guidance get, is there more to come on that front?

at thee got it in beginning of the year, over five dollars and we are getting 4.6. there is room to go down, we are at a record low and that is in relation to the very young assets and good assets which are very efficient and provide this low operating cost. we have the major discovery which will [inaudible] and that will give more scope to our operating costs. about one oftalk the projects you share with statoil. some of the analysts say this could be a 10 billion barrel scenario. what do you make of those estimates, 10 billion barrels in terms of the berendt see and delivery and that project?

alex: that is a key area in petroleum growth, we already made two discoveries. structure, it is in comparison, almost four times the size of the multibillion barrel field. and iturther to the east -- we have to understand the reservoirs and the content. obviously a very exciting well that is coming in soon to start. anna: exciting and the upside could be huge but what about the downside here? give us some idea of the timing. is this year going to be make or break forth that berendt see and the opportunities that exist in your industry? sea is big andt in the last year, four

significant discoveries have been made and we are just scratching the surface. there will be more to come. there will be some exciting drilling for sure this year. but there would be a lot more to come and for the year, next 10 years there will be a lot of drilling activity in this part of the world we are just in the beginning of our intensive and exciting exploration in the southern barent sea. manus: one thing we see peeking is the is concert over these old, the rise of electric. i spoke with the ceo at shell and he said peak oil was coming. when do you think take oil is coming because that is a risk to your business. 2030, 2040, would you agree? alex: it is a difficult question. i would tend to agree. hydrocarbons are

here to stay and the world needs energy, needs a lot of energy. we're going to go to a transition. nick and have all the electrical cars in the world, that will reduce the construction by 1.5 million barrels of oil. be a strongt will demand, many coming from countries such as india and china. there will be the need to find more oil and produce it efficiently. so yeah. anna: when do you see oil prices heading higher? we talked about this in the past. do you see what opec is doing as being effective board do we have to wait for the underinvestment in the sector? do we have to wait for that to take hold? alex: we had in era of oversupply, we saw four years of high oil prices that created a supply situation and that has exasperated by the u.s.

it has an impact for sure. we see a strong demand, we have seen demand in excess of 1.5 million barrels of oil for the coming years which is stronger than average. we are stating to see inventories coming down. my view is that this last three years the industry has underinvested and you will see the impact of that. there will be a more balanced supply and demand which will lead to our higher oil price. thans taken perhaps longer what the industry has expected to recover. manus: some people have to deal activist low and investors. are they going to remain the -- rolling owner of london lundin petroleum and? -- we are are

creating a lot of value for shareholders and we are in a country which is producing barrels in an efficient way when you think about the environment and the emission of gas. the family is there for the long-term but eventually that is a question to ask them. anna: thank you so much for your lundin petroleum cl alex schneiter. the estimate that was for four point two $6 billion, that is less than the market had anticipated. the cash flow from operations, $6.3 billion coming in terms of the cash flow generation. and there you go. if i speak slowly and long enough we get there. they have increased the share

buyback by $1 billion in rio tinto. by the end of 2017, anglo-american returning to the is upnd process, copper 11%, iron ore is back at $70 per ton and goldman sachs questioned the strength and momentum in market share buybacks. you are seeing a miss on the underlying, anna: we will be joined by the rio tinto ceo. analysis, will kennedy joins us. us andyden speaking with sticking around. good morning to you. what do you make of the early numbers here, looking at the underlying profit number is attached below estimates but the share i back at $1 billion in rio tinto shares. quite wellhas been

trailed and it is what investors have been looking for. it has been an amazing turnaround in the mining industry. throwing up a lot of cash so the question for management is a coming what do we do with it? they spent it unwisely in the -- they seem at the moment let's give it back to investors, whether they can stick to that will be interesting. more: this is progressive, share buybacks from the mining sector and they have taken a lot of costs and production. when you look at global miners, when you look at the dividend, the story, the rehabilitation, where does it say it? it is a continuation of stable commodity markets which will play out in the second half of this year. that does not mean we are bullish on commodity, mainly because we have seen adjustment and supply but struggling on the

demand side to see how to push prices higher. that is the challenge and it would make sense for many of these companies to start getting share buybacks rather than putting it into long-term projects when you are not certain about what the first -- future is. anna: rio said they met their cost reduction target six months early. that is still the name of the game. >> across mining and oil, it has been the story of the last two years and a lot of companies have been successful. is clearly going to stay in the doldrums. the question for the miners is can the businesses keep a lid on it? manus: i love the piece we wrote the other day where we recorded iron ore's jekyll and hyde moment.

goldman is bullish but iron ore is a jekyll and hyde market. these commodities had a vicious recovery. alex: that is true. at almost any iron ore price unlike oil where you see production become unprofitable. they can survive another downturn and at these prices, it becomes a cash machine. anna: we have been talking about, we have talked to lundin. quites falling precipitously. they are able to do more for lower cost. that is where the money can be made in the oil sector at the moment. if you watch the cost production falling in the u.s. alex: that is great for them and

we have seen some challenges going forward for oil more broadly. we can see oil finishing the year at $50 a barrel similar to where we are today. 2018, we are still not seeing much of an ended -- of an inventory drawdown. us to 60see what gets or 80 barrels or dollar. 60 dollars or 80 dollars a barrel. put,: the other question i does he -- we covered shares and either another electric car or the next car will be electric. peak oile, they saw around 2030 or 20 48. do these oil companies become big gas companies and renewables, is that the next stage? well: oil is not going to go away.

diesel demand will remain. --ctric trucks petrochemicals will still require millions of barrels of you -- oily a year. it will have to look elsewhere if they continue to be companies that want to grow. gas is one definitely and for shell they have been clear for years that is the direction they are going and that is why they .ought e.g. -- bg most of the oil makers will reduce asset and -- more gas than oil. anna: thank you. alex is sticking with us. i want to get your thoughts on the u.k.. we talked to a couple of banking businesses about movement around the banking sector but more broadly the u.k. story for you at the moment. watching from new york must be

fascinating trying to explain to american clients what is going on back at home in terms of politics. are we learning anything new from the summit on brexit? alex: i have not seen a huge amount of information. i am surprised i how little detail we have. early days with these negotiations, we still have a long way to go and a lot of ground to be covered. the focus is on the bank of england and what they do off the back of this. we have, there has been some growing expectation over rate cuts toward the end of this year. inflation is starting to move higher above the bank of england's 2% inflation target. we do not think the ink of england should be raising interest rates. they are meant to be targeting inflation, not employment. that is the thing they keep stating is the unemployment rate is lower. for us you need to see some wage pressure.

manus: it is interesting you take that side, morgan stanley says by sterling, the swiss must be relieved that by sterling and the first u.k. rate increase will come in a decade. very split down the middle in terms of getting off the emergency setting and setting a rate hike movement. we are short sterling, lt.g guilt -- gi the pound will we can from here. i do not see how the bank of england can be raising rates without an increase in wage pressure. anna: we need to get through this sticking the areas that have been tabled.

we get onto the trade conversation. what expectations do we have, before we can work out what the relationship will look like? alex: i do not think any deal has been done yet. i think you could get a trade deal. the europeans have been getting clear about trying to do this in a structured manner, let's get the details sorted and we will talk about the trade deals. i have not lost faith that we are -- it will be a hard brexit. it is the case of weight in see at this stage. manus: you think sterling is gilt, where are you in the ftse, how much exposure do you want to take or do you shave that back question mark -- back? alex: if you think about the things that drive the ftse 100,

the pound, the international growth environment, and commodities. commodities we are not super constructive on but we think they will be stable. the international growth environment is heating up, great for an internationally exposed index such as the ftse 100. the earnings that seem to be accelerating will be translated into a more favorable exchange rate toward the end of the year in our view. anna: thank you. manus: checking on the futures, and parisondon is -- and frankfurt open. you have strong rio numbers coming through from them, stocks set to open a little bit higher. anna: rio tinto is one of those stocks, keeping and i and the

european banks, commerce banks, natixis.enerale, ing, that is it for daybreak europe. this is bloomberg. ♪ ♪

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to bloombergcome markets. i am guy johnson. matt miller in berlin. what are we watching, we are staying in germany and salvage. last-ditchan -- a play. get back undery control? apple earnings helped