whiccould save you hundreds of dollars a year. plus, get $150 dollars when you bring in your own phone. its a new kind of network designed to save you money. click, call or visit a store today. anna: good morning from bloomberg's european headquarters in the city of london. i am anna edwards. this is "bloomberg daybreak: europe." power play, the white house is doubling planning -- its tariffs on chinese goods. three we arerst also -- first. we are also living by two very american andes, by higher americans. banks or treasury

borrowing? a market breaks a policy decision from the r.b.i. and federal reserve today. our bond traders more focused on the debt plan -- are bonded traders more focused on the debt plan? ♪ anna: good morning, everybody. this is "bloomberg daybreak: europe." we will dive straight into the earnings news. we're getting numbers coming in. looks to be ahead of estimates. the outlook statement uses the word encouraging as well from this steelmaker. they see current favorable market conditions continuing. the outlook for the second half of the year is encouraging to see. the ceo says the alec is encouraging. positive outlook statement -- for drama playing

apart and markets. we have seen strong steel prices. expect favorable conditions to continue. let's get to the risk radar until you where we are on the asian equity session. pretty mixed in asian equity markets. that has been a picture overnight. despite the headline coming through, yesterday we were talking about more positive signs. talking about more positive mood music around the trade story. there has been talk about the two sides trying to restart talks. today looks a little different. the latest reporting is around how we could see not 10% tariffs, but 25%. despite that, we are seeing a mixed picture. turning more positive as we get into the afternoon session in asia. watch out for any movement in tech stocks.

we have the nasdaq futures running underneath the screen for you. that is expected to go higher. s&p features looking more muted. we have heard from the boj a little bit more room for markets to determine interest rates, is the message from the boj. let's get back to the corporate story. we have numbers coming through. second-quarter net profits, $3.92 billion. that seems to be ahead of estimates in terms of that overall second-quarter number. fixed income, commodities and currencies, revenue there falling 17%. equities trading, revenue rising. down on fic and up on equities. that is some of the headline grabbing stories we are seeing at first glance on these bnp numbers. 2020,l talk about outlook the french economy, italian

exposure and brexit. lots of to talk to the ceo of bnp about. we will also have interviews with the cfo from an airline. trade and tariffs very much at the center of things there. let's go to juliette saly with first word news. u.s. federal reserve is due to issue a statement on the american economy and its interest rate decision later. the target rates for overnight bank lending is projected to remain and a range of 1.75%-2%. the u.s. treasury is set to unveil its latest borrowing plan. it may increase the two and three options by $1 billion a month and implement a one time increase of $1 billion for floating rates.

u.k. prime minister theresa may the french meet president to discuss brexit on friday. she is on holiday in italy but will leave a day early and plan to travel to the south of france for discussions on withdrawal from the european union. the u.k. is engaged in an intense bout of diplomacy as they attempt to persuade other eu governments to look over the blueprint for brexit. ieves have made off with crown jewels. ns from anto crow ancient cathedral around lunchtime yesterday. two men were seen jumping into a motorboat. police quickly mobo -- mobilized. global news 24 hours a day on air and at tictoc on twitter,

powered by more than 2700 journalists in 120 countries. this is bloomberg. much, juliettery saly there with the latest news update. bnp just reported second-quarter profits, beating estimates. joining us now from paris, the cfo of bnp. a real pleasure to have you with us. thank you very much for joining us. let's talk a little bit about the performance of the bank over the last quarter. are you disappointed with the performance in the fixed income side of the business? lars: good morning, anna. bnpe take a generic look, posted solid results. this in the context of a generic pickup, economically across europe, which can be also seen and creditness outstanding going up by 3.7% year on year. this also delivering the bank or

allowing the bank to deliver equity of 11.2%. this growth in europe is best seen in our specialized businesses, for example, international financial services, which are really picking up well. our domestic market is also picking up, even if faced with persistence of low interest rates. when it comes to the point that you mentioned, you have to take into account a negative effect. compared to a year ago, the economic context is less favorable for cap, particularly on fic. nevertheless, the bank keeps continuing its transformation plan, and to continue its sustainable finance as well. anna: on the equity side of things, you delivered something better, does that continue? what can you tell us about fic and equities and how much of the

trends in the last quarter will be carried through for the rest of the year? lars: if you look at it, it is crude at fixed income. secondu look at the quarter, the market is more subdued. in europe, there is a bit of a pickup in asia-pacific. there is a pickup in the u.s. as well. in europe, that pickup is somewhat stated by the equities. they have a reasonable quarter, this time partially compensating what we have seen in fic. we will have to look at how these things evolve for the rest of the quarter. anna: can i ask about the french economy? how is the impact to the business? we have seen some measures of economic performance cooling just a little bit. do you see that? lars: let's not forget, we are a pan-european bank. we serve our domestic customers in each of these areas. the loans outstanding in france, but also in belgium.

they are up 5%. this is an evolution which basically illustrates the robustness of what we have seen across europe. basically, we continue to serve clients of their individual needs. this is what we have seen in the second quarter as well. anna: what is the biggest outside risk to your business in the second half of the year? overall, we are operating in europe in this low interest rate environment. that is a point we have to be careful of. it is a point that we compensate by offering overvalue services. our digitalization plan is also reducing the cost. low interest rate environment also generates lower cost of risk. anna: can i ask about trade? our trade tensions something that worry you with regard to

your customers? is it coming up in conversations with customers? lars: to be fair, we are a pan-european bank. ving ourer customers for their domestic needs, and also international needs. we have seen a robust in the second quarter on this topic. anna: are you not too concerned about that? are you concerned about italian exposure? you are big in italy. debt market turmoil in italy was a feature of the last quarter. is that something that worries you? lars: there is two things. if you look in italy, we have somewhat a shy of 5% market share. we are also focusing on the environment.he we're focusing on the larger corporations. we are focusing on the individuals with their advanced solution needs. we have repositioned ourselves

in italy in the last couple of years on these segments, and that is how we continue to seek forth the entire and economy. economy.n anna: what are your plans in terms of movement and staff? lars: there is a lot of how certainabout elements of brexit will materialize. forget, we areot a pan-european bank. we are serving our customers in their domestic markets, helping them on their international servicing needs as well. that is what we will continue to do. we are well positioned with our positions into the u.k., but also into the continent. for us, we will be focused on continuing to serve our clients this way. anna: so you will continue to focus on serving the clients, but does that mean moving any

staff away from london into paris, for example? lars: we basically focus on serving our customers in their domestic markets. true with theften domestic presence we have. in the u.k., we have to growth. that is what we continue to do. anna: in closing, one quick question on your 2020 target. anything that you have we thought around the 2020 targets? are you on course to meet all of those? look at 2020, what we are really doing is changing the customer journeys. we are digital lysing. by doing all of that, we are also reducing the cost. as you see, we are 18 months down the road of a 14 month plan. we have invested half a billion euros so far this year. we are changing the interaction with our customers. we are doing aggregation of

services, but we are also doing new services. in france, nickel, which has been adding 950,000 customers. this is what we continue to do, and we are well on track on the. anna: thanks very much for joining us. we are also talking about financial corporations reporting numbers. i should tell you one ceo will be joining us for an exquisite interview. look out for that one. lots more to talk about with regard to a tie and financial services. let's move to the world of tech. apple shares jumped 4% in extended trading after the company reported better revenue and sales projections. it wasn't all rosy. with bloomberg's asia tech reporter in hong kong. what draws the strong results?

we see strength in the apple numbers. shelly: apple was pretty successful this quarter. it wasn't necessarily that they it waslling more phones, that they were charging higher prices for those funds. the services business also did well. things like the smart watches and home products also did well. but the real differentiating factor, what really drove the quarter was these higher prices for these devices. anna: the pricing was part of the story then? tim cook was asked about tray concerns. he says he is not worried about the first wave of tariffs. he is going to be doing some work on it and telling the government what he thinks. extensive, supply chain are you surprised he is not more surprised about the tariff story? shelly: i think people are

really waiting to see what tim cook was going to say. he had already spoken out against tariffs. that was not a surprise for anybody. i think people are still waiting to see tangibly how it will affect business. tim cook said today it didn't really affect the business yet. they are keeping an eye on it. that is because china represents a 20% of apple's business. they have 50 retail stores in the country. they are a huge supply chain out of factories in china. it is hard to believe that if escalatede tensions further that it will not have some sort of impact on apple's business. anna: thank you very much. shelly joining us from hong kong with the latest on apple. competitors of apple in other markets as well. some breaking news coming in from air france klm. announcing a four-year fuel bill rising. this is part of the cost story

over there. to september.t in terms of the numbers they have actually reported, second-quarter operating 345 man dollars -- $345 million. some of those estimates have no doubt been coming down because of the strike activity, that is something that has been hurting this business. we saw 12 days of strike action wiping out passenger growth . better than estimates, but worse than last year. strike action in france very much evident. we are going to be speaking to the cfo of air france klm joining us for an exquisite interview at 9:00 a.m. u.k. time. we wait to hear if we get any further news on the new ceo over at air france flm, because he

was a victim of that strike as well. i should also tell you that we just had numbers through from the investment banking business over in italy. their fourth-quarter quarter net income came in at 182 million. of the 136ahead million they gave us last year. ratio, 14.1%,e building on what they reported the previous year. this is a business that has been adding very much more into wealth management. has given them more of a footprint in wealth management. up on the program, the chet upina tensions rat as the trump administration plans on doubling its tariffs on chinese imports. this is bloomberg.

♪

anna: good morning, everybody. this is "bloomberg daybreak: europe." let's go to elliott sally in our studios in singapore. -- juliette saly and our studios in singapore. liette: facebook has said it has identified a coordinated campaign to interfere in the midterm elections. the social network has been working with the fbi to investigate the activity, and it says it does not yet know who is behind the activity, but pointed to similarities to russian accounts. >> ip addresses are easy to spoof. the ira accounts we disabled last year sometimes use russian ip addresses. we haven't seen those here. we do not have enough technical

evidence to state definitively who is behind this, but we can say that these accounts engaged in some similar activity, and have connected with known ira accounts. tte: china is placing its hong kong ipo at the low end of a marketed range to raise about $6.9 billion. it is considering the offering of 4.1 billion shares at around one hong kong dollar 26 each. a representative for the company said they could not immediately comment. that is your bloomberg business flash. anna: thank you very much. now, a standoff between the united states and china may be heating up again. sources tell bloomberg the trump administration will propose more than doubling its plan to tariffs on $200 billion of chinese terrorists -- tariffs. that comes as steve mnuchin and

the chinese vice premier are set to be discussing ways to reengage in the negotiations. just as you sat down, we were debating how close you want to get to these trade conversations. that seems unimportant question because the mood music seems to change hourly and weekly. how concerned are you? the kind of downside risk does oppose? short-term noise may not be the biggest risk. it is a landing point. this is an administration that says it is willing to stake more risk on issues like trade than previously. if that risk takes short-term noise, we can live with that. but if the long-term destination is really putting sand in the gears of global trade, that is a really big problem for us as investors. the companies we have heard from so far, are you

hearing a lot of alarm bells around trade? are they more sanguine than expected? if they are blaming trade, do you buy it? is it too early to be blaming trade tariffs? rick: most of them don't have much to stand up a case in their own business. looking forward, they have provided the usual warning signals. they are a little hard to pin down. businesses actually affected now, it is very clear. in general, what is going to happen next, they don't like it. they are putting out cautious statements, but they are not very specific. anna: up to the macro then when you gather all your thoughts, how strong is go going to be given the strength we have seen in the united states of late? what does that mean for the global picture? rick: globally, there is a lot of momentum. we have a little bit of cooling in the u.s., but overall strong momentum. 3.9% growth will be our estimate for the year.

the yield curve will be telling you we are going to face a recession or something close to a recession in the u.s. within the next couple of years. europe, which is still expanding and has a lot of spare capacity, i think you have to say that the global picture is moderately ok from a growth perspective next couple of years. anna: how late stage are we? rick: in the u.s., we are very late stage. works, they can extend the cycle a little bit further. obviously, europe is in a different picture entirely, but we are gambling at the late stage. anna: that capex and promise of increased productivity, do you see that delivering in the united states? or is the earnings season tell you they are going to see mark corporate expenditure? rick: it needs to work in terms of shareholders and the economy as a whole. i think we will see more evidence of that as we go into the end of 2018. i think we are confident will do

something, but it doesn't cancel entirely. anna: in terms of the howging-market story, positive or negative are you on e.m., given how far we have fallen? rick: i think we are much less concerned than many investors on e.m. if the dollar is strong, that causes trouble. i think our perspective on e.m. is to a certain extent by china, we don't think china is going to have a hard landing. china is a real motor of growth for emerging markets, both in the commodities trade and elsewhere. the twins of china and america, growing rapidly are going to be good for em anna: thanks so much for your thoughts. rick stays with us here on daybreak europe. up next, oil slams losses as the trump administration considers

higher import tariffs on chinese goods. we will also bring you our of aview with the ceo steelmaker. this is bloomberg. ♪

anna: good morning, everybody. this is "bloomberg daybreak: europe." 6:30 here in london. 2:30 in the afternoon over in tokyo. on thereut bond yields for you because we have heard from the boj over the last couple of years. trying to get a little more market determination of interest rates in japan, rather than yield control by the central bank. let's get to the earnings season once again. this is the chipmaker in germany. third-quarter adjusted eps, comes in at 0.24 euros per share.

that is exactly in line with estimates. the revenue number looks to be broadly in line, 1.9 4 billion euros. what will be the sector impact of it remaining independent? apple results affecting this sector as a whole. in the car industry, something that infineon supplies. analysts say a special focus will be on infineon's automotive business. nejra: we are seeing some gains on the asia-pacific index following gains in the s&p 500 and nasdaq yesterday. if we take a look across asia, we are seeing some strength in japan and south korea as well. a little bit of drifting elsewhere. some weakness in chinese equities. in the fx space, seeing some

weakness in the south korean w yuan. in the offshore yuan. japan,e year yield in you can see up for basis points. seeing some weakness come through in the commodity spectrum as well. weighing over all this perhaps increase concerns around the u.s.-china trade war. jgb has dominated the markets today. yesterday, we saw the 10 year jgb yield dropped 10 basis points. today, it is rising some six basis points. japanese bond yields have been trading in their widest ailey ranges of 2016 over the past 24 hours. to rise in the yield today, we do wonder if the market is testing the boj's patients after

they said they would give more flexibility around the tenure target. dollar-yen not reacting in the same way in the sense that you are not seeing yen strength. dollar in today's session is fairly unchanged. we are edging toward that 112. yesterday, the dollar broke above that monthly trend line. is this a bullish signal? some momentum indicators suggest there is momentum for the dollar against the yen going from here. anna: thank you. let's go to bloomberg first word news update with juliette saly. juliette: the trump administration will propose more than doubling its planned tariffs on chinese imports. the president had threatened an additional $200 billion in goods with levees at 10%, according to a bloomberg source. that may be raised to 25% in the coming days. the u.s. imposed when he 5% on

$30 billion of chinese tariffs in early july. the review period on another $16 billion and today. theresa may will fly to meet the french president at his holiday retreat to discuss brexit on friday. may is currently on holiday in italy with her husband, but will leave a day early as planned to travel to the south of france for discussions on britain's withdrawal from the european union. the u.k. is engaged in an intense about of diplomacy as they attempt to persuade other eu governments. in mexico, at least 85 people have been injured after a plane crashed on takeoff during a heavy hailstorm in the north of the country. the aeromexico plane crashed in durango with 97 passengers and four crew members on board. dozens of passengers were seen leaving the plane, which was engulfed in smoke.

global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in 120 countries. this is bloomberg. anna: thank you very much. the world's biggest steelmaker benefits from president trump's tariffs. annemarie is here with the details. it all seems to pull together in terms of the big picture mood music around trade. these numbers also telling us the micro-story. and murray; -- and murray -- $3emarie: they came in above billion. a strong positive for arecelm ormittal. exposed., they are europe, brazil and kazakhstan. taken extent to lose.

the ceo was saying that the outlook for the second quarter is encouraging. they seem to be optimistic about all of this. anna: especially separating the winners and losers within these sectors. , rioer mining company tinto. annemarie: all units being profitable, this comes in a recovery of copper and aluminum prices, at least for the first half of the year. that is one of the things people will be looking for. any sort of commentary regarding tariffs or the u.s. spat with china, the ceo told me last week that any impact on trade is a negative. really, that is what people are looking for. copper.o has offloaded and pull assets this year investors looking for any sort of return. , prices falling.

rio is very much exposed to iron ore. any sort of outlook on iron prices. anna: very much in the process -- outlook for rio. ceo will be joining the bloomberg team at 1:30 p.m. u.k. time. that is a decent segue into this breaking news item. one share buyback is saying that it is part of their capital reduction plan to receive what is new in that announcement when they get the shares opening up and an hour and a half's time. to of the world's largest banks are set to be making policy changes this week. today, we will hear from jerome powell, and tomorrow the bank of report.proposes its

us. is still with we're talking about these central-bank decisions. the fed is not likely to do anything because there is no meeting call at this time. that is something jerome powell is trying to get away from. he is trying to get in more meetings so that the market stops guessing when hikes are going to come based on their calendar. rick: he was to give himself a bit more optionality. he needs to do it in a way that is paradoxically a little bit signaled. giving himself flexible the makes sense, that no move today for the time being. we are seeing developments pretty strong in the u.s., but there are still some canaries in the coal mine. i think we have to be careful about that trajectory being unchanged into 2019. anna: have a chart that shows the fed and what expectations the market has. the fed sees 3-2019, but the market is pricing in 1.5. rick: there looking at the shape

of the yield curve. they are anxious that we are right at the end of the cycle, and that the rate hikes we have already had have not really fed through. a lot of dangers. we have a stronger dollar that could be affecting things. fixed income investors are going to be continually cautious in terms of rate hikes relative to the fed. anna: we are going to get jobs report at the end of the week. you talked about that has been a lot of capacity sitting on the sidelines of the labor market, is that continue to be the story? jerome powell seems open to that as an explanation. rick: eventually, labor does run out. you are running a very tight immigration process, that is going to start showing strains, especially in less skilled jobs. i think this train is going to start showing toward the end of 2018. anna: does that pushes forward into inflation territory? rick: we say the phillips curve is not dead, sleeping.

eventually, there is a correlation. it happens sector by sector at the moment. anna: let's talk about japan. i put this chart up that said japanese bond yields are trading in their whitest daily ranges and 2016. this is the boj. they have had this control policy, or yield control policy for some time. they are allowing a little more movement around the targets. what is the message they are trying to give us at the boj in the context of global central banks moving tighter? rick: one is don't get complacent. give theo is flexibility so that when you need to make a change, markets are little more condition for it. there is still a stark difference between japanese policy and policy of central banks around the world. i think they have had a very tightly controlled policy

relative to others. investors are expecting low volatility in markets. in the end, there will be more volatility coming through in bond markets. , you may want to think about under waiting it -- underweighitting it. possibly multi-decade lows. history tells you that these things is not back. i don't think that is the story in japan, but it is a reminder that things can change pretty quickly. anna: what are you position for around the bank of england story? we are getting an update from mark and his team on things other than just their interest rate decision, but what are you position for? airing towards tightening probably makes sense for the bank of england. the currency is still very cheap, but there is a fair amount of pressure building. i think they want a little bit of armory in case things are

problematic from a brexit perspective. getting ahead of that with a little bit of tightening might make sense. anna: you think that would stand up in the face? rick: it has been bullied by sterling being week for a long time. that has been helpful. is flaggingfidence a little bit, but it is still pretty strong. i think we are helped by the fact the global economy is doing very well. anna: thanks for your time this morning. users canbloomberg interact with all of the charts we have been using during the program. b is the place to go. coming up on the program, the iphone is still king for apple, but is it enough to counter chinese competitors. we discussed next. this is bloomberg -- we discuss next. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." it is a 645 in london. we have the nasdaq futures at the bottom of your screen underlying the strength we have seen in the apple numbers after hours, and how that is lifting expectations for with the tech heavy nasdaq can do. s&p registering its fourth monthly gain in yesterday's session. the talk around trade a little bit different yesterday. let's move on to some corporate reporting we have seen in europe. we heard it just yesterday they have appointed a new cfo of the french unit. first half, net income 1.3 billion. written premiums look to be in line with estimates. the combined also looks to be

very much in line at 92%. let's go to bloomberg business flash with juliette saly. bnp has become the latest european banking giant to post debt trading results the locked behind the largest wall street firm. revenue fell 16% in the second corner from a year earlier. that trails the combined 6.7% increase at the five largest u.s. firms. at the results, you have to take into account a negative forex affect. the context is less favorable for cib, in particularly on fic and europe. nevertheless, the bank keeps continuing its transportation

plan ramping up for 2020. facebook says it has identified a coordinated campaign to influence november's u.s. midterm elections. it has labeled those behind a drive as bad actors and says it escalated at least 32 pages and accounts from facebook that instagram. the social network has been working with the fbi to investigate the activity, and says it does not yet know who is behind the activity, that pointed to similarities in russian accounts. repricing its ipo at the low end of the market range to raise about $9.6 billion. bloomberg understand it is considering offering 3.1 billion shares at around one hong kong dollar 26 each. an external representative for the company said she wouldn't immediately comment. china tower is expected to set its final offer eating -- operating price later today. anderson group has named a soul

ceo, ending its unusual dual leadership structure. the company will book a $12 million severance charge in connection with the department -- departure of one of the ceos before the merger. nagal joins us for an exclusive interview reader. -- later. coatse fund manager says were far worse than they could have imagined, but he has not valueaith in investing. the year to date loss is more than 18%. in a separate later, the firm later told clients it's main decline in july brought its loss to around 19%. that is your bloomberg business flash.

anna: thank you very much. consumers still want iphones. apple shares jumped 4% after the company reported better-than-expected revenue and sales projections. more than a decade after its king and is still analysts were mostly please with the results. >> i think the numbers were just fine. this serves as a result in other products which suggest that wearables are doing well, really suggests that the platform is broadening out any have multiple growth drivers. >> where apple needs to be strong to continue on this pace, they are showing growth in the right places. >> it looks like we are on full penetration of what the total potential sales of each of the cycles are. taking a look at the top of this cycle, when we expect new iphone models out, we are seeing something like $76 million.

last year, it was $77 million. i think we are at full penetration for the top of the cycle. >> the big surprise is the average selling price has shot up to $700 plus. the strong sales of the top line, which many analysts had said it was too expensive, but it seems to be picking up in steam. >> the lesson for apple, with the iphone x, is if you have a smart phone with more than $1000 selling price, you can sell a lot fewer units and still bear the financial fruit during -- fruit. >> when you grow, especially in this market, that is the story line. anna: a host of voices there on those apple numbers. joining us here is greg and alex. good morning to you both. on these apple numbers, it seems

that if you look back and forward at what they set about the backward looking quarter and their expectations for the future, there was something to cheer. alex: absolutely. beat expectations on every level . as it's pointed out, the expectation was for the average sales price to hit $699. it hit $724. is thing which is under memory. you may pay an extra $150 in order to get a high memory option. $20.chip costs apple maybe that is something they have been very good at pushing. it seems the new growth pillar remains considerably smaller than of the iphone, but it is growing at a far faster pace. there were a lot of talks about future plans for that. anna: in terms of the selling price, that is where they have managed to cap to the fact that they are not sold as many

iphones as maybe some had expected. where does that leave them in the pecking order? alex: they have been taken over by the chinese player. with the impact of tariffs will be, there is still concern about maybe it has just broken the $1000 mark in terms of maybe the top line sales cost of an iphone. is there still more headroom there? if there are terrorists coming in, this is a tax on the consumer. that cost gets passed on to the consumer. that means even more expensive iphones. anna: that raises the question, they don't seem too worried. your thoughts on apple in the tech sector. do you like apple or do go for enterprise, cloud and ai? grace: i think the results are pretty clean across the board.

what i think is particularly encouraging is the border technology season we have seen. you also have quite high profile mrs.. it gives investors confidence that those misses are more idiosyncratic in their nature. we have been big fans of technology for a number of years now, and we still have it is a very high conviction sector for the end of this year and into next year. that is because of the level of sales growth that you get out of tech. so far, that thesis has been confirmed. cloud and ai on the enterprise side or certainly seeing results in terms of demand. anna: if you had allowed yourself to be distracted from the underlying data, but by the headlines, there has been a sense that tech has been troubled this quarter. the headline writing has been quite dramatic on the negative side. you are reminding us about the strength we have seen from some parts. grace: for most of technology, actually.

technology is one of the sectors that has delivered the most topline and bottom-line growth. we expect that to continue because of the mix of cyclical and structural drivers. anna: there has been a lot of negative headlines because of some very high profile companies that have fallen foul this quarter. is that distracting us with underlying back-and-forth? alex: they are all performing very well. think, it seems to me that there is an increasing recognition that lumping them all together is not necessary. apple is a hardware company. google is a software company. facebook is an ads company. slightly different things at play. anna: these business models are very different. different investment cycles, different inputs into what is driving the investment cycle. in the u.s., some sector composition changes as well.

anna: where do you pick with in it? do you go with enterprise businesses, microsoft doing well in cloud, or do you go with the social media site and not worry about regulators? grace: we have actually been concerned about regulation for almost a year now. we have been slightly diversifying portfolios away from some of the internet names. there are various subsectors you can invest in. you are also seeing digital payments doing well, e-commerce is still doing pretty well. there is still pretty good pickings across the board. anna: when he put the payment side of things in there, completely different beast. grace stays with us. bloomberg, thank you very much for your thoughts this morning. on the program, a cfo joins us. net cord are products from that

business were released this morning. how the company is navigating the trade wars. this is bloomberg. ♪

anna: good morning from bloomberg's european headquarters. these are today's top stories. the white house is said to be preparing to more than double its planned tariffs on $200 billion of chinese imports. president trump plays the protectionist card again. >> america first. america first. we are living by two important rules. buy american and higher american. . apple climbs after hours as the iphone maker projects sales that the analyst estimates. all treasury

borrowing. policy decisions from the r.b.i. and federal reserve. good morning everybody. we are getting corporate's at noon reporting. a number of companies reporting their numbers to the market. let's get to bae systems in be aerospace division -- the aerospace division. 8.8 2 billion pounds first quarter sales, broadly in line with the 8.8 3 billion expected in terms of the sales line. 19.3 pence per share was the estimate. if you look at the ebit, the , 874ngs before interest

million, that is ahead of estimates. eating estimates. but the number of contract wins -- this business, vehicle military vehicles to the u.s. the qatarier jets to air force, a number of high-profile wins. that seems to be doing well for bae. let's get to the other corporate reporting. we are getting numbers from lloyds banking group. this is a big u.k. mortgage company. to what extent is the drama around ppi over is one of the big questions. of that is something that caused the number of banks to continue to pay out fines. across a red headline the bloomberg. second quarter statutory pretax of 1.4head of estimate billion. we're also getting estimates for the second quarter underlying profit.

2.3 3 billion. just to underline the importance of the ppi story. we are watching at for any further impact. second quarter ppi charge of 460 million euro. i have seen a range of estimates and that seems to be at the high end. was 285 up to 410 million pounds in terms of the estimates for ppi payments. i think that takes their entire bill to over 19 billion pounds. they will have paid out more than 19 billion pounds as of the end of this last quarter. this is the picture on asian equity markets. an hour away from the start of european trading day -- not the asian session, the futures picture. the asian session has been towards the positive. that is setting us up for something flat across the european equity market space.

we have corporate's to factor in, but the u.k. futures looking weak down by around 0.25%. next futures flat. -- dax futures flat. we have got a few moving parts here. u.s. bond futures for you, because you have the treasury .uction in focus today we have also at the federal reserve interest rate decision and the 10 year jgb's as well. we have seen a great deal of movement of crime jgb yields because of course of what we heard from the boj allowing a little bit more market movement in those yields. less yield control and more market setting perhaps. we have a host of great interviews coming during programming. we're going to start with the cfo of a company. how much impact on their business? we will have a host of interviews, with the interim ceo .f air france

we are to hear the future of the strike activity and the future ceo. who will they appoint? let's get the bloomberg first word news update with juliette saly in singapore. juliette: the u.s. and mexico are in the final stages of negotiating nafta. the two sides have exchanged new proposals for the auto industry and mexico's economy minister is scheduled to travel to mexico tomorrow -- to washington tomorrow. his second visit in as many weeks. the issue has been one of the biggest sticking points in efforts to overhaul the north american free trade agreement. theresa may will fly to meet emmanuel macron and his holiday retreat to discuss brexit on friday. may is on holiday with her husband, but will leave a day earlier than planned to travel to the south of france for

discussions on britain's withdrawal from the european union. the uk's engaged in an intense bout of shuttle diplomacy as they attempt to persuade other governments to support its blueprint for brexit. made off, thieves have with crown jewels in a daring heist. the raiders took two crowns and the royal orb from the cathedral in strega west of stockholm. two men were seen jumping into a motorboat a low the cathedral. police pursued the thieves by see, by land, in helicopters and planes. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . looking pretty positive across most of the markets in asia. selling coming through in late chinese trade. it has been a whipsaw action.

chinese policymakers talking about how they are going to counteract new proposed tariffs from the trump administration. good buying in japan's australia closing lower and a bit of a switch out of indian stocks, which has been on that record run. in terms of stocks we are watching, a lot of focus on tech. sony at a decade high after it came through with numbers. playstation driving its forecast higher. sharp also doing well in tokyo. . it intends to buy back preferred shares from mitsubishi according to a japanese newspaper report. rio awaiting numbers from tinto. anna, i believe you have those. >> i have a few lines coming through. thank you. we have these numbers crossing, talking about having completed their remaining coal assets sale in queensland and given production guidance around

thermal coal. awaiting a further set of numbers from this business. the balance sheet being bolstered by these asset sales. a $.5 billion worth. -- $8.5 billion worth. many investors are waiting to see what kind of return of cash to shareholders we get. the interim dividends this time last year was $1.10. we will see what we get this time around. joining the be bloomberg team at 1:30 p.m. u.k. time. ,taying on the earnings a story third-quarter profits earlier this morning from an auto-parts maker. revenue and profit met analyst estimates. it also confirmed its estimate -- its forecast. joining us now, the ceo to discuss quarterly earnings numbers. we have had a series of profit warnings, but not today.

are you convinced the bad news is behind you? >> good morning and thank you for having me. we just posted our numbers. slightly ahead of consensus, i would argue. it was still a challenging quarter. good for our automotive business, but weaker in general lighting and industry mobile devices business. the stronger euro compared to last year is still taking its toll on our numbers. a negative impact of 50 million in revenue, and 25 million in adjusted ebt a. took a decision to dispose .ur luminaires business yesterday we announced we are putting the unit up for sale. anna: earlier this year i

referenced the profit warnings. we saw something in april and changing guidance in june. why did that happen? are you convinced the negatives that drove that -- >> indeed, we had to do that. if you look at june, we saw three things happening. there were uncertainties for a lot of the automakers. we saw profit warning starting here in germany. we saw announcements from carmakers to shorten their -- or reduce their production outputs, also relating to tariffs discussion, but also to the new emission standard. given the fact we have a fairly big auto-parts business, we had to review the numbers. adjusted on top of that, we had postponements of bigger projects in our general lighting.

horticulture is another thing. these aspects together had us to review the numbers and change the outlook. all these things have been factored into the new guidance. i think we came out a little better in the third quarter. we turn to that guidance. what are you factoring in in terms of the trade conversation? it's not so easy to do, as you can imagine. we are a tear to supplier to the auto industry. we are not directly close. what we saw happening was coming off a period of allocation, the auto intake became uneven from our customers. we saw a few customers were pushing out orders, not canceling them, but pushing out orders into the future.

that's what we figure out was a sign that there's a bit more uncertainty in the market. there may be delays here and there with the introduction of new cars. sense from the relationships we know between our customers and their and customers that some of the discussion in europe had also been reflected in the way our audiobook has been moving. moving.book has been anna: it sounds as if you have a number of things to watch for. the strength of the euro, the fate of the auto sector. operating in alighting business undergoing transformation. in 2018, what is your biggest concern for the second half? >> we just finished our third quarter. we have good visibility on our fourth quarter. we are in the process of looking

into our next fiscal year with a normal planning. we are very carefully monitoring especially the situation around general lighting. especially for the auto markets as well as for the dynamics we see here and there on the automotive side, also given the recent profit warnings. it is very short-term, things we are watching. we do not think it is a longer-term issue. it is a midterm thing. so i chains are being corrected. -- supply chains are being corrected. anna: your stock is down because of profit warnings. some 50% or so this year. why can you tell investors to comfort them about the rest of the year? >> we have taken additional measures on the cost side. anhave just finalized agreement to adjust our cost

structure both in some of our plants as well as the overhead areas. we have also made a portfolio decision to sell our luminaire business. we are taking steps to further profitability and counter headwinds as we are continuing to streamline our portfolio. that should be reassuring of the future. anna: thank you for your time, the ceo -- the cfo of osram licht. will be speaking to the ceo of volkswagen later today to talk to bloomberg about that sector. let's talk more about the rio tinto sector -- story. dividend, interim $1.27 per share. that is ahead of the $1.10 we got last year.

the return of cash to shareholders, part of the story here. they are adding a share buyback of $1 billion in rio pfc. shares . number,rlying profit 4.4 2 billion u.s. dollars. the headline certainly around dividends and around the share buyback also giving us guidance of production and capex. previously it had been 6 billion, so spending more money on capex. how will that go down with the investment community that has been waiting for money to be returned? let's get a bloomberg business flash. bnp paribas has become the latest european banking debt trading results behind the largest wall street firms. fixed income revenue fell 17% from a year earlier. that combined with the increase

of the five largest u.s. firms. the bank blamed a lackluster market in europe for its fifth straight quarterly decline in revenue from buying and selling bonds and commodities. >> if you look at the results, you have to take into account a negative affect and also the fact that compared to a year ago , the economic context is less favorable. .articularly in europe the bank keeps continuing its transformation plan, ramping up to 2020, and to continue its sustainable finance as well. apple shares jumped 4% in extended training -- trading after the company released sales suggesting consumers are continuing to snap up iphones. the technology giant expects fourth-quarter revenue between 50 and $52 billion.

third quarter results also beat expectations, sending the shares climbing to $198. a record of the increase hold through today's session. weighing its ipo to raise $6.9 billion. it is considering pricing the offer of 43.1 billion shares at about one hong kong dollar 26 each worried a representative said -- each. china tower is expected to set its final price later today. that is your bloomberg business flash. , the still with us european equities strategist at j.p. morgan private bank. we talked a little bit about technology stocks. let's broaden things to talk about the overall earnings season. the eps surprise, let's bring it back to basics in the face of concern around trade tariffs. it is easy to lose sight of what

we're hearing from these companies. what had been the key messages you have taken away? >> the key messages depend on what region you are in. in the u.s., probably the best earnings season in 10 years. you have seen topline growth of about 8%. that is equating with high operational leverage thanks to the tax reform. about 23% earnings growth. .eally strong results in europe, the picture is more mixed. we have seen a recovery in topline growth because of the euro strength, the yuan, yen slightly better. the operatingen average on the level of earnings . we would hope it is still early days, but it does look like potentially tension building in europe which would be concerning anna:. anna:you talked about dispersion for the performance businesses around earnings reports has buried.

you see that as a healthy thing. >> it is a healthy thing. to do not want leadership have a couple sectors leading the way. sectors, you are seeing dispersion, which is a healthy process that indicates -- particularly for active managers creates opportunities. anna: a couple of weeks ago we were talking about whether the trade war was going to turn into a currency war. did you see this as a concern heading into the second half of the year? dollar strength is one of them. what we see in the euro is giving a headache. osram licht was highlighting the euro, putting a price on it, saying the strong euro hurt revenue by 50 million euros.

>> they are strong things and i think the interview highlighted another fact, which is the indirect impact of trade, which is incredibly hard to quantify. delayed orders, sentiment turning negative, how to businesses plan for that? we have tried to quantify the direct impact of trade. we do not think that material took global growth in a large way. that direct impact is very hard to qualify -- quantified. that coupled with currencies does mean the outlook is difficult to predict. anna: that was a company exposed to the auto sector talking about company pushing out some of their autos. the european pharmaceutical sector, is that somewhere you see a positive earnings a story despite -- many were worried about pricing pressure. the solidcare we know long-term trends. we know the penetration of insurance products and the rise in chronic disease.

over the past 18 months we have seen pricing pressure from pipeline disappointment. it is really encouraging in this reporting season in europe you have seen a high level of -- a beat across a range of companies in pharma, med tech as well. that is one of the standout sectors. anna: thanks for your thoughts this morning. the european equity strategist at j.p. morgan private bank. we will be continuing the conversation on bloomberg radio. back to the earnings story. first-half numbers, revenue rose by 5% for one company. seen full-year avid da -- ebit a. the cfo ofnow, smurfit capita group. you say business conditions >> thestrong very

strength is across most of our markets. we are seeing some of the speculative strands, e-commerce packaging, which is the move away from plastic-based packaging toward paper-based packaging, helping us grow, also the economic scenario is decent. there are patches that are not as strong as others versus last year. in general i would say our business is doing well across most of our markets, in europe and the americas. anna: you have seen our international paper. last time we spoke to you was the height of that bid activity. are you concerned or business might now be seen in play? are there other bidders waiting in the wood works? >> i do not know, but i don't think so. kappa hasurfit cap --

an independent future in our business is in very good shape. we see prospects for developing business is going forward. if you're in the stock market you are always potentially for sale. that is something any board would have to take into account. our business is in very good shape. we have a plan for the future, we continue to develop it and make sure the plan is delivering. these numbers show we are on the right track. shareholdersd your have been supportive of you knocking back international paper. do they remain so? what are they demanding? >> they demand as any shareholder does continuing good performance from the business, continuing implementation of the planes we have in place. we have been doing that and have done that. we have had nine consecutive years of record profits. this year we are going to have a material lean -- materially that

are your than last year. the shareholders can always vote with their feet. we have seen share price grow continually. that has been designed the company is well appreciated by shareholders. anna: the share price does seem to have held up since the deal went away. when youou make -- look back at that bid activity, was it a distraction? >> i think the results proof we --e continued myself and my cfo obviously had to spend a lot of time in this together. that has now gone away.

focus 100% on developing and delivering these results. we talked previously about the international trading environment and the threat of tariffs. you said you hoped the adults would take over. what is your assessment of the threat right now? >> we would like to see a few more adults. it is a little bit more risky than when we last talked. the heat has certainly -- is certainly rising in the kitchen. it is a worry for ourselves and everyone in the world involved in business and relies on free trade. so far, not much has happened. we have not seen major interruptions in any markets with any of our goods and services. that is a threat out there, not just for us, but for everyone. we still hope the adults arrive. anna: that he is being turned up.

where with the canary in the coal mine being? if you were going to see the trade story starting to worry you more? >> i think the brexit issue is obviously something we keep a close eye on. we have a substantial business in the u.k. and we would be concerned along with other industrialists if something happened with regard to the free movement of goods and services across europe. it is important for england, it is important for europe, and for me, that would be the first canary in the coal mine. >> thank you for your time. talking trade and the results. a ceo joins us at 1:30 p.m. after the company reported numbers returning cash to shareholders. let's talk about china. this is the picture across the equity market. the broad picture is positive. we are up 0.3% on the msci asia-pacific.

see a more than doubling of tariffs of 20% on $200 billion of chinese imports. that is it for daybreak europe.

>> wednesday morning, welcome to bloomberg markets. this is "the european open. miller,ngside matt matt? the world'sg for largest automaker to report earnings. am going to interview the new ceo of volkswagen. the cash trade is less than 30 minutes away.