anna: good morning from london, this is "bloomberg daybreak: europe." these are today's top stories. a cautious beat, societe generale trading revenue tops estimates for the second quarter as the ceo tells bloomberg exclusively that the bank is playing it safe. could trigger some correction. decision day, markets are pricing in a hike from the bank of england for only second time in a decade after the fed stays put. we'll bring you our interview with mark carney at 4:00 p.m.

u.k. time. and the trump effect, asian markets fall on the threat of increased tariffs from the united states. and washington imposes sanctions on turkish officials. ♪ good morning, everybody. this is "bloomberg daybreak: europe." will go to germany first because we have a slew of earnings to get through. profituarter industrial in thebillion euros, ballpark of the 2.20 7 billion, slightly below perhaps. the concern on the forecast for industrial profit harkin --

profit margin. in line with the 20.8 billion .ou would say interesting to watch for any kind of strategy update you get from vision 2020, something the business has been talking about and something we've been anticipating for a while. some years into his tenure, we will speak with the ceo, joe kaeser, joining us in a few minutes time. ing, second quarter pretax offit against an estimate 1.80 4 billion. ahead of estimates ahead of second-quarter numbers for this business. feee watching for the income because there's a lot of interest from analyst and investors from this particular

business. also watching what they say about the trade disputes globally of the potential for trade war. this is a business that is geared to aighly trade war. once again a good ratio when compared to some in the market. we will speak a little later on , also coming ing up this hour. let's get some numbers on the insurance sector over in france. axa,rs coming through from the ceo getting a boost as the insurer reports strong profitability. against 3.27 year ago, so it's weaker than a year ago.

essentially this is the ceo who has been under fire for some time because of some changes in strategy the market is trying to get its head around. there's a lot of earnings coming through this morning. radar andto the risk show you where we are on the asian equity session and what we have to work into our markets in europe. a very busy thursday in terms of the earnings story. , plentya-pacific down to talk about in terms of the risk off move were seeing in asian equities and there doesn't seem to be an enormous amount of new headlines on trade. what we heard about the potential for higher tariffs seems to be something that has captured the market imagination and we see stocks going lower and emerging markets fx going lower.

all the decimal places matter these days. the highest since february 2017. market still trying to get a handle on the new range for trading in the japanese government after we heard from the boj earlier this week. the boj offers to buy ¥400 billion in bonds. this is a new headline in the last few minutes that ties into what we've been hearing from the boj. we'll try to get to the bottom of what all of that means. , bututures a little weaker we've had some good neighbors coming through from tesla. will wait to see if the trade tensions are picked up in the united states. as get to the banking story. we brought you a headline around societe generale and will get more details. second-quarter net income rose

9% from year earlier, beating analyst estimates. the french bank weathered a challenging year in europe. --can bring you are excusing oudea.iew with frederic >> where in a strange environment. the outlook remains pretty strong. you look at the u.s. and eurozone, even with the slowdown for gentoo think that the next 12 and 18 months should remain relatively strong, and at the same time there are elements of risk which are not so easy to get it right. it seemsd of the day, agreements are effectively implemented, but you can think about also the brexit, for example. we know they are risks, and

that's why we might not be that far from the industry cycle, but that's why we remain conservative in our risk taking in rates reflected that are lower across the board. >> was the number one risk for the second half? frederic: i think market risk could be triggered by different elements. the confidence issue in one country. inflation, who knows, will inflation go back? there are elements that would trigger some correction on the market. wedamentally, that's why remain very disciplined. france, making revenues are still slightly down in the second quarter, down 2%. you are expecting between 1% and 2% for 2018.

when can we expect a real turnaround of societe generale? mid 2019?, or frederic: we see good credit , andes with new clients overall economic activity is good. remain verytime we low rates, no increase of rates. they're still a decrease of net interest margin. commissionpickup which grew at 2.5%. much --want to have so stability,maintain

and it will pick up with normalization of the monetary fund. >> it seems like we now have better guidance from mario draghi and the ecb, and women could see a potential rate hike. how much of a risk will this be for your business? it is an additional revenue with no cost. beyond that element, which is important, and the growth its fundamental to success in terms of our business model. we are investing today because we know the way people are already changing. there are investments in i.t., digital technology, 1.5 million clients. we will probably

meet a 2 million target one year in advance. very positive in the transformation of the business model going forward, a better rate environment. announcing you are selling one unit and you just agreed to sell your belgian private banking business to abn amro. how much does this represent? frederic: as we have said, we are competing on the activities where we think we have effectively the critical size to compete in the long-term. the level of seniority with the rest of the keeping thejustify business, and as you mentioned, we've announced three proposals

in central and eastern europe and the private banking business in belgium. at the same time we've also announced the acquisition of the equity market and commodity market to enhance our civ business. the impact of the disposal represents 15 additional basis points. he spoke exclusively to bloomberg's caroline connan in paris. itssuspending redemption in unconstrained come absolute return fund. these gaps coming through this morning on the bloomberg. theywing the suspension, experience a high level of redemption requests, which was said in a statement coming through this morning. it would lead to a

disproportional shift in their portfolio composition. what has driven these redemption requests, it slumped the most in .ine years someone who was on the program a number of times warmed -- warned it could lead to outflows, so those have been seen. that's get the first word news update with juliette saly in singapore. u.s., the fedhe decision to leave interest rates unchanged raise the odds for a hike in september. the fomc statement said economic activity is rising at a strong rate and that unemployment remains low. it repeated language from june about further gradual rate increases consistent with a strong labor market and with inflation near its 2% target. the turkish lira has plunged to a record low as the u.s. imposed

sanctions on president erdogan ministers over detention of an american cleric. u.s. treasury department said interior ministers played leading roles in the rest and detention of pastor andrew brunson. erdogan has said he will not bow an evangelistls and sign his mentality in the u.s.. the trump administration has confirmed that it has decided to whether to increase tariffs on chinese goods. asked thetrump has trade representative to consider hiking the duties which could be implemented as early as next month. the move to more than doubled a proposed tariffs may inflame already heightened tensions between the world's two largest economies. global news, 24 hours a day, on-air and at 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 . a lot happening here in asian

markets. we been tracking the big selloff in the chinese and hong kong markets on the back of these trade war spirit the csi 300 down 3% in late afternoon trade. the index of small caps looking like it's going to close at its lowest since 2015. also watching what's happening in the bond space. we heard moments ago that the bank of japan has offered to buy ¥400 billion of five having tenure bonds. the yields on the tenure had been spiking quite significantly and they are now erasing those gains on the five and tenure, were starting to see a little bit of reversal in those yield movements. let's look at some of the stocks we have been watching. quite a lot of movement on the nasdaq but here in asia the tech route continues. tencent down by another 3.5% in hong kong today. loweren macau tracking

after cancer we disappoint numbers. goldman sachs saying second-quarter results were below market expectations and rio tinto nearing that in the london listed shares as well, down 4.5% in sydney, falling short of expectations. much,thank you very juliette saly. a note on what is to come, we will bring an interview with it bank of england governor, mark carney at 4:00 p.m. u.k. time. we'll hear from them around interest rates. what will they say about the neutral rate? let's get back to the earnings story. lehman just reported its numbers. a bid to boost profitability and navigate large-scale technology disruption at many of its big industries. joeing us from munich is

kaeser who has appeared many times on her program. we can start with the restructuring which is of great interest. want to ask you about the performance in the business in the last quarter. how happy are you with the performance of the business? has it underperformed in some areas? i think we have a little problem with getting to joe. it was fleeting that we will try to get that back for you and return to that conversation with him. in the meantime the federal served as left interest rates unchanged. officials stuck with a plan to lift barring cost amid strong growth. let's pull a few threads, good morning. i'm bad you can hear me.

we've got the news around the fed and expected no change there but there is changing in some of the wording. put it all together, what is the big picture at the moment simon: the fed is a straightforward story. there is history over the last 20 years of the fed being hawkish going into the summer months and coming out dovish, so let's wait to see what happens over the next. fascinating. now where it all right coming out of the asian session, it is exciting. if we think about what the boj did a couple of days ago, they expanded the rate at which the yields could move in both directions. that is an important point to

make, they can go down as well. one could argue it was that hawkish. i think the interesting bit here is what is happening in japan, what's happening with equities, and the big story about trade. i have a chart that shows investors, you say could go up or down. we have a chart that shows that very nicely. you see this morning that the japanese teen year yield raises its gain after the boj offers to buy bonds. we've seen the boj buying bonds this morning. there was a headline earlier on this morning that suggested that's what they were doing. the market is testing whether that's where the new limits of tolerance are. >> the boj has made it crystal

clear by going in at this point that it doesn't want to see a high-yield. why would it not want to see a high-yield right now? -- we are want to see in an environment where trade war is taking place and one of the big bets that people can china -- people like china can get -- anna: so this is a currency war? joe: yes. anna: stay with us, simon derrick. let's return to our conversation about siemens, reporting numbers and confirming its full-year forecast and making some big changes to the company. good to have you on the program once again. tell me how happy are you with the results just posted and then we will talk about the restructuring. it will be determined by

the market when it opens is boring and we will see what the expectations have been. as the ceo of the company, i'm really proud of my team because if you look at topline growth on bookings, bookings have been up 21% year over year on a comparable base. that's definitely a landmark number in these days. i'm happy with what i see on the bookings. we deliver to expectations on margins and industrial based on what we've seen on expectations. a good quarter, and uneventful quarter. i believe it was a perfect in developingrt our entrepreneurial concept. just one more question on the numbers you just reported, they show a deep slump in the

division that makes gas turbines. as more action required in that part of the business? are you looking to get out of that part of the business? the revenue numbers are one level below and you can see that basically every division in the industrial space, including health care, is growing. in most cases, if not outperforming our competitors. slump in a 16% revenues on the power generation it's as, and obviously structural challenge going forward. looking at the way to build a trustful and fruitful relationship with our customers. anna: human out some big plans,

streamlining the operations at your company, just three units. when you took over, there were 18 divisions and now there will be just three. what will be the key measure of success for this restructuring as the weather it has proved worthwhile? the recent goal we set out in 2014 was really consolidating our effort. it's completely different now, it's about growing the company further and improving our profitability by 200 basis massivehich is quite a promise to the markets and to shareholders. value and thetrue real intent which we've been having when we laid it out was

-- to create optionality going forward. we believe optionality and flexibility in focus of our business to the customers in market is the play of the decade , and that's exactly what we did. is as important that our business is as astute as our competitors. anna: can i ask about the potential for trade wars? do see nervousness having an impact on your customers and is it having an impact on your business? far as our business is concerned right now, we do not see any slowdown that would be attributed to what you have been referring to as a trade war. those debates about tariffs back and forth are increasing the power even further.

that's to create uncertainty in the markets where in, so were based on our customers who put a lot into their pockets, and that needs confidence. if their confidence level goes sudden --ould have subsequent negative impact going forward. at the end of the day, reasonable people will prevail in continuing in making the world a better place. it's a scenario and playing field where the best team is winning because of productivity, innovation, and customer value. anna: thank you very much for your time this morning, joe, we appreciate it. unveiling a restructuring program that takes the business to three in its. ing just reported second-quarter

earnings. amsterdam is kos timmermans. tell us about what has driven performance in the second quarter. overallmorning, i think what is driven performance is increase in the amount of customers. we have 400,000 increase in primary customers, so that brings our total to 12 million, where we have a target of 40 million two years from now. the total amount of customers is now 38 million and we've seen ,rowth across the board germany, australia, poland, spain, and overall those clients did more business with us, so we have $14 billion worth more of loans.

at approximately the same margin. in a relatively credit benign environment if you keep your cost low, that brings us the profit number you just mentioned , which is a return on our equity of around 10.4%. overall i think good results and more or less based on your client business. about nettalk interest margin being stable. what would it take to drive markets higher? is it just a rise in policy rates that you need to enable that to happen? i think overall if you would see short-term rates move from more negative territory to positive, then certainly that is something which would help. on the other hand, what you do lending, now, customer

i don't see margins deteriorating on that side. if we would get a bit more benefit of higher rates for our savings money, we can invest in a bit more profitably. anna: tell me a bit about what you expect to see on cost income. is it higher than you want it to be in what explains that number? overall, what we see is a cost income is a bit choppy, but that's because regulatory cost are basically paid in q4 and q1. we want to see it on the rolling average before the whole year and that something we will accomplish. please realize we do have an investment year. we are investing in a , and thatp with axa

is to make sure we can sell more insurance. what we did was fully integrate our record bank, a belgian bank into ing belgium, and the next step will be the whole belgian bank run on the dutch platform. so we are still making quite a lot of investment. it will start to pay off and we expect our cost income in 2019 in 20 to move more south. anna: there's a lot of investment going on and you built up a decent capital base. what is your strategy for returning cash to shareholders? some were disappointed by the dividend payout ratio last time around. i think overall are capital position looks good, 14.1%. we are accumulating our dividends over the first three

and we are accumulating basically the same amount as what we paid last year and in the fourth quarter, we'll see if we can pay something extra. we have to be careful on that because we still have basel forthcoming, so you need to save something for that over time, and also see that we are growing as the bank. return,aking a decent so the balance between returning it to the shareholder but also keeping in of ammunition for growth as well as making sure that we keep the regulation at basel 4. keep a steadily growing dividend and don't do something excessive. anna: and finally, about trade tension, i was speaking to the boss of siemens and getting

perspective on this. some describe your client base is relatively exposed to global trade. are you seeing any impact as yet? are you fearful that trade tensions will impact your business? koos: if you look at the impact right now, you realize that if you take the e.u. 28 where we have most of our client base, where exporting roughly 6% to the u.s. a few look at the netherlands, another large client base, it is also around 6%. if there are sanctions on particular goods, is not that you immediately notice it. so you look to the client base and see who are the exporters and local transporters. it's difficult to find something immediately and say here is a concern. right now we are far more looking at secondary effects of it in the secondary effect is if

everybody is talking about it, it dilutes confidence and it will dilute investment appetite and that might have an impact on your long growth. that is at the moment more a part of our thinking. anna: really good to get your thoughts this morning. that's get to some breaking news from the telecom sacked -- telecom sector. the dutch-based telecom media company gives us their numbers this morning. ,econd-quarter adjusted ebitda 1.30 2 billion. i just see the early signs of some numbers coming through from bmw as well. so we will get to that also. the munich-based car company reaffirming the outlook, were

just waiting for those numbers to come through. second-quarter sales, well ahead -- we will ignore that number. that number does not look all that reliable. we will get more details and come back to you on that one. let's get the latest on the markets. >> a sea of red across asia. 500 lower, and china down 3.15% and hong kong down more than 2%. trade worries are back in the spotlight, taking center stage. tariffs looking increasingly likely. to raise thatg key rate by 25 basis points.

this is really the story of the day, in the bond market especially. pushing higher and at the top of the hour we saw the bank of forn with a surprise offer five and 10 year bonds. it looks like the boj doesn't want that you'll to hit the 2% just yet. investors may not buy just yet. they are waiting for that .2% as a buying opportunity. moving on, let's check out what's going on in the currency market. for the the key level first time ever, due to the latest treasure of the united states imposing sanctions on to -- on two turkish ministers. the volatility has been spiking.

more support weather comes from central bank or bilateral meetings with the united states, but something needs to bring it off the edge of the left. -- jen edge of the cliff. confirming the outlook, it beat estimates of 2.60 8 billion from the many-based car company. how much are chinese buyers delaying purchases ahead of a tariff cut? reset east citing that is one of the reasons for their performance yesterday, or just citing thatmercedes as one of the reasons for their performance yesterday. that's get to the technology sector. dialog semiconductor reporting

numbers this morning. they succeed -- exceed their third quarter revenue, giving us a range there. they see growth margins broadly in line with the second quarter of 2018. apple in the second quarter received a reduced share of volume forecast from apple. a lot of people talk about the apple results and the evolution of apple. it is increasingly a software producer. let's get the bloomberg business flash from juliette saly in singapore. juliette: societe generale has said second-quarter net income -- net income rose from year earlier. the investment bank is showing signs of emerging from the doldrums. income from financing deals unexpectedly climbed and trading topped estimates. it was a challenging environment

in europe. >> we see a relatively similar trend, something pretty dynamic in the u.s. across the board. in europe, something a little bit better. a contrast environment still. tesla -- tesla with plans to find a new plant in shanghai, his first outside the u.s. at the same time the company burned through less cash in the second quarter than wall street feared, sending shares higher in extended trading. ceo elon musk apologized for his outburst our previous call with analysts. great so like to apologize for

-- there is no excuse for bad manners. there were reasons for it, and .'ve got no sleep [indiscernible] ferrari shares plunge the most in two years in late trade yesterday after the new ceo call the profit target aspirational. the ceo of volkswagen hailed his legacy. >> i knew him as one of the characters of the industry. he made a difference. he was very unconventional. he had a new approach a new focus on the industry. we will miss him. juliette: that is your bloomberg business flash. anna: bank of england is

expected to raise its key rate by 25 basis points later today -- officials will offer new growth and inflation outlook and may update their thinking on the neutral rate of interest. the decision will be announced midday u.k. time. back to you, simon. let's talk about what is going on in the u.k. with inflation. inflation has been above target, but the direction looks to be downward for inflation, doesn't it? explain all about it. simon: the question is, why would you hike rates right now? if you are is sending, you might argue that any central bank, if there's a possibility of trouble

you can raised by 25 , if they fear they may need some ammunition again in the face of brexit uncertainty, now is as good a time as any. anna: some sensible people say to me, you don't hike rates just to cut them. others say you have to hike rates a you have some room to cut if you need to. that's exactly right. if you keep rates low all caps on, where you go if you need to start cutting again? fairness, given the uncertainty we have coming into how the brexit

negotiations and the voting parliament will take place, that will be the key element of this. that huge level of uncertainty gives rise to have a little bit of ammunition to cut rates. 2016 when the bank of england made the move. the one thing that helps in that time was what the bank of england was doing and what mark carney was saying. he is giving himself that flexibility. 131 against the dollar, where do we go? simon: obviously that's going to be dependent on policy. whether they can get that deal through. i think there is a reasonable chance at we could see parliament vote down whatever deal comes through and would vote against anything that looked like a hard brexit. that provides you with the

possibility of a second referendum. if you take it as being more negative, i would point out that he has a history of making 10% plus moves to the downside. second election or so you couldndum, see it around 120. if you're going for a second election, you don't know how that result on the election front. that we things and to don't know what to do, stem to stern. anna: we might get our first assessment of the bank of england. we will be there for that goldilocks moment later on today. simon stays with us on the program. we will bring your interview

with mark carney at 4:00 p.m. u.k. time. that's when we will put it on our channel. omz reporting is second-quarter net income. seele, nicer to speak to you this morning. can you tell me if you are happy with the numbers? i'm looking at what you reported and how that compares to estimates. how happy are you with the past quarter? rainer: if i look at the second quarter especially, i have a mixed picture. on the one hand side we had increased the operating results 1.5 billion euros. so the high tax rate is working hard on our net profit numbers. a positive message for

the first half of the second quarter, then i would like to summarize that cash is king within omv. we could increase our operating , the cash flow% was sufficient to finance the investment program of 1.1 billion euros for the first half ofr and also the acquisition 1.2 billion euros in abu dhabi. although we've done the acquisition with 20%, i would say yes, we have a very strong cash position and we have shown in the first half that we have fast-track execution of our growth strategy. additional production from new dobby -- abu dhabi , and 18,000 barrels is waiting.

the outlook for the second half of 2018 is really optimistic. anna: what are you factoring into that outlook for oil prices? is it stalled around 67? what are you factoring in? opec has done a great job to balance the markets. opec prepares to compensate for the missing production in it is leila and a little bit for libya. i think we have to wait until november for the potential of further reduction of production from iran. see these $70o per barrel for 2018. some attention from

president trump recently, strong words against them. some u.s. politicians now threatening sanctions against companies involved. what can you do to deescalate the situation? rainer: first of all, we have to wait and see if they will really come up with any type of sanctions. most of the job is already done. the project is well underway. we has started construction of the pipeline. we have reason to wait and see what is going to be the impact. i think we have to explain the reasons behind our initiative to finance the pipeline because it is in the interest of europe. i think the investors haven't done anything wrong. so i hope in do see that european politics will react, if

european companies are being sanctioned by financing the very important infrastructure which will increase the security of supply of all european markets. what about supplies from iran, is that also necessary? what are your spending plans in iran in light of the reimposed sanctions from the united states? rainer: i think europe is not depending on oil imports from iran. .t's a global market we have put our projects in iran on hold. we need to have a better, clearer picture what kind of sanctions will be applied against iran, and honestly speaking, from my point of view, the risk comes the sanctioned risk that is still heavily with

the european companies, we don't see such a big protection from european politics. would you like european politicians to do more on that front? absolutely, i'm working on that part. volkswagen jumping 13% for seventh straight month of growth. carmaker needse a titanic effort to meet global delivery targets this year amid trade tensions. carmaker>> unhappy about the lt sickness -- the last negotiation we are receiving. we would suffer a lot because are normallyts

over 40 years to set up cart blanche. and to adapt to new trade policies, to a new manufacturing footprint for us is usually costly. so i would really be very happy if trade and tariffs could remain at the same level. and thankful that both negotiating parties are really looking for a solution. >> there are other countries in which trade is a huge barrier, china, for example. are you thinking about moving production to local areas, for example? porsche oree making audi in the u.s. as well? >> having huge market success, there will be a second model being launched shortly.

we are considering more investment to go into ramping up our chattanooga facility. and wemostly localized have huge production facilities in latin america and china. all over the planet. we are considering increasing our production capacity in the united states. >> could you see some of those superpremium ban -- brands being produced? joe: there is a step in time when it just makes sense to produce all the cars in america. simon derrick is still

with us. we will get further analysis on the car sector just a moment ago. you are telling me about how you think we are in a currency deficit. is there any strength in the euro coming through? is everybody just racing to the bottom here? >> if you look at movements in europe, most have been politics related. i don't see the currency war stories there. the yuan has done over the course of the last three months. mid june we started to get additional stories coming out on further sanctions of the u.s.

move that is the largest since the early 1990's. policy up benign neglect to this point is an easy one to follow. us, simon isth with us for the warning. we had hoped to have earnings from bmw today. chad, good to have you with us. ?hat stood out to you >> revenues are down, earnings more interesting, taxes down and the margin much lower in the automotive segment. that's something analyst investors will be looking at closely today. however, bmw did stick with their full-year outlook, so that will be a bit of good news.

daimler coming out with their profit warning a few weeks ago, talking about these effects from the potential trade wars and currency and so forth. not a lot in the release we had out a couple of minutes ago on the issue of trade wars. in w said something they generally try to stay away from. to whatlisten closely executives have to say when they have their earnings calls a little bit later this morning. >> sticking with the auto theme, we heard from tesla overnight. a bit of a turning point, perhaps, in terms of the tone adopted by the ceo and the cash story. >> it was really interesting who is you had elon musk

super outspoken, actually apologizing to do analyst on the earnings call that he'd criticized on the call. also with the issue of cash flow , it was much less than what analysts had expected. sharess sent at the considerably in aftermarket trading. that we will keep an i on when bloomberg markets open up. let's talk about it because this is something that has attracted our attention overnight. the u.s. treasury department announced restrictions on president erdogan's justice for playing leading roles in the arrest and detention of the pastor.

--nwhile, turkey says staying away from the politics that very much interested in where the currencies move on the back of this. let's talk about the turkish lira. are they seeing another reason to be cautious? >> absolutely. perspective,n debt turkey continues to be under pressure. bank was trying to claim there was political pressure being brought to bear on them. of course there is the continued pivot away. the only thing going well for them is the prices are little weaker. from that perspective, will

there be any -- the only interest is there has not been a lot of spillover elsewhere. it is a very localized thing. >> we were talking earlier about the chinese currency and you talked about benign neglect. this is one of the baskets which showed the weakening of the chinese currency. neglect, is that just admiring others more of a role? >> background -- allowed progressively increasing yields

to take the dollar slightly lower. they shrugged their shoulders and use lots of rhetoric to make sure the public understood that's what they are doing, and they just walked away. the bit that's interesting the moment, it's what everybody else does. anna: particularly in asia. >> absolutely. over the last 10-15 years, one of the key stories has been what those currencies were doing against the dollar. over the last 12 months or so, it has not been about dollar-yen. is going to really impact those guys.

anna: thank you for joining us this morning. simon continues the conversation on bloomberg on the radio this morning. this is bloomberg. ♪ retail.

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anna: good morning from bloomberg's european headquarters in london. i'm am an edwards. these are today's top stories. societe generale's trading revenue tops estimates for the second quarter as the ceo tells bloomberg exclusively the bank is playing it safe. that coulde elements trigger some correction of the market. that is why we remain [indiscernible] on thesian markets fall threat of increased levies and the siemens ceo warns of the effects on european companies. tariffs debates about

back and forth and increasing the bar further has created uncertainty. decision day. markets are pricing a hike from the bank of england for only the second time in a decade after the fed [inaudible] we will bring you our interview with mark carney at four clock p.m. u.k. time. good morning, everybody. this is "bloomberg daybreak: europe." welcome back to some of the bigger u.k. corporate center moment. we are getting numbers, this is a telecom company, cell phones, where list -- wireless networks. beating the highest estimates. ¥110 peryear dividend share, the estimate was 108.

beating estimates in terms of their full-year operating income . in terms of their operating income. for the first quarter. they still see their full-year operating income at 990. the estimate was for ¥1 trillion. that was 990 billion. we will see how that is going down with investors. that is the story out of ntt docomo as we get that from japan. let's get to the insurance sector in london. first half operating profit at 1.4 4 billion pounds. rendered 76 million. operating profit 1.4 4 billion pounds. is 26.8. eps some of these headline numbers coming through from aviva. insurance business run by mark wilson. is he going to be with these -- how happy will he be with these numbers and where's the growth and what about m&a opportunities

question about how has the scandal impacted and what about investors, they have been recruiting for that part of the business of we will talk about how that is going and talk to aviva's ceo mark wilson joining us in a few minutes. we're getting numbers to me through from barclays, the u.k. transatlantic banking giant, the first-half pretax profit at 1.6 6 billion pounds. the ratio is 13%, declaring a dividend of 2.5 pence per share, they are giving us information on their crv market is this. the income 1.3 4 billion versus 1.2 one billion a year ago. they increase their income from b and the revenue in the second quarter 2.5 8 billion. 2.5 6 billion. that has increased versus last year. will dig further and see how

they compare against the u.s. competition and some of the estimates for how they have done in fixed income. we will talk to jes staley, the ceo of barclays in a few minutes' time. let's get to the broader picture on the markets, this is what we see in the asian equity session. the trade story, trade tariffs and fears of higher tariffs at the u.s., that is having an effect on markets in a bigger way than yesterday. that was part of the asian equity session. we see asian equities in the red , broadly speaking, down by 1.2 c -- 1.5% on the msci asia. all of those in deeply negative territory and the ftse 100 is expected to be the big laggard, down by .6 of 1%. let's show you where we are on the story fromad the treasury around issuance and we have a no change in interest

rates, that was the decision from the fed and we have a bit of movement and what has been going on at the boj. we sell yields on 10 year j tb's going down. let's get a bloomberg first word news update. juliette: thank you. in the u.s. the fed's decision to leave interest rates raise thehas rates -- odds for a hike in september. the statement said economic andvity is rising unemployment remains low. a repeated language from june about further edge will rate increases consistent with the strong labor market and with inflation near its 2% target. the turkish lira has plunged to a record low as the u.s. imposed sanctions on two of president erdogan's ministers over the detention of an american cleric. the u.s. treasury department said turkey's justice and interior ministers have played leading roles in the arrest and

detention of an american. the trump administration has confirmed that it is deciding whether to increase tariffs on 200 billion dollars of chinese goods. president donald trump has asked trade representative robert lighthizer to consider hiking the duties which could be implemented as soon as next month. tariffs doubles the heightening tensions between the two largest economies. global news 24 hours a day on air and at 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 . coming through in asia, the trade was really weighing into market sentiment reticular lee in china. have a look at the csi 300 heading into into it -- heading into its last hour of trade. by 2% andoff

small-cap stocks in china looking like they will close at their lowest level in two years, australia off by around .5 of 1%. but have a look at what is going -- happening in jen -- jgb. [inaudible] you cannfield said expect more invention from the boj, they seem to be getting to that point, the 2% ceiling is not something that will happen quickly now that the yield is 1.45 it had touched earlier. wynn resorts was lower after it's disappointing numbers and rio tinto following that downward pressure you saw in london this did shares yesterday and in the adrs, first-half profit and dividend disappointing to the market. anna: thank you. a competence of wrapper for you

need to know in the equity session. reporting first-half numbers of operating profit 1.4 billion pounds. the company also says it is still on track to achieve its financial target. joining us now is aviva's ceo mark wilson. good to have you with us. give us the highlights from the first half set of earnings and why you have the confidence to pay out this dividend this morning. >> we have had trump tweets with trade wars and concerns every day, and i think aspite that aviva has been pillar of stability in those choppy seas. we have seen eps up 4%, that is a clear beat, about 7% ahead of analyst expectations, that is

looking pretty good. that gave us confidence in the dividend, that is up 10% and the last interim, dividend is up by double digits each time and what all of that has allowed us to do is we have reconfirmed our expectations this year that we are improving eps by greater than 5%. a respectable solid performance against the pretty uncertain backdrop. been busy with a lot of restructuring which we talked about. now your many years into that program -- you are many years into that program and where is the growth going to come from? mark: all of these markets and takeesses, you can segments of growth but we are seeing growth across the board. we have eight core markets and

seven of those age core markets got between seven and 14% growth. that is from the -- on the back of strong growth last year so we are not finding growth that hard. you have to know where to look. look in the pensions market in the u k, look at the general insurance market, it has been strong for us. we are seeing it across the board. you mentioned general insurance, some analysts point to the capital-intensive nature of the business and you said you want to allocate capital toward the-- businesses with strongest return. the growth you will get out of general assurance -- insurance justify best justifies the capital, does it? the products we are choosing helps you lower intensity. we have quite a significant capital offer, balance sheets in a good place and we have built it over a long time. we are in the place of deploying capital.

we were played -- paid down quite a bit of debt and we will pay down more in the second half. we are halfway through our buyback of 600 million pounds of shares and at these sort of valuations, we can buy back shares all day long. ask you about investors, you have been recruiting heavily, what are your expectations for that division? it had a slower first half, the market is -- has been slower in the first half. what we are seeing is i will growth earnings. we have been putting quite a bit of cash into building our equities franchise and we expect that to continue. we have seen the end in the second half increasing from the first half. i will say the debt is solid rather than spectacular performance. anna: the preference shares issue, is that something you

learned from as a business, have you moved on, have you convinced shareholders you have learned the lessons you needed to? mark: we got a tension over that and we listened and we gave clarity to the market in a few days. that is giving us some pretty good feedback. the issue is still there. the fact is this is an industry individual companies cannot fix it and it is up to the regulators to at, to provide some clarity. we are asking them to do that and we certainly are listening and waiting. anna: thank you very much for your time this morning. aviva ceo mark wilson joining us on the report results to the market. buying back shares all day long. also what has been happening in the asian sex -- equity session,

spreading to japan as well. the asian equity session has been weaker. we checked in on the u.s. futures and they were weaker. msci asia-pacific down 1.1%, the hang seng down more than 2% and the shanghai composite more than -- down more than 2% and the k ospi weaker. jes staley joins us next. this is bloomberg. ♪ ♪

>> if we implement this war all bets are off. will slow down and we will have even more uncertainty about the world. anna: good morning, this is "bloomberg daybreak: europe." 7:16 a.m. in london. 44 minutes away from the start of the european cash equity trading -- market trading day. the federal reserve decided to leave u.s. interest rates unchanged and officials are

inting borrowing costs september. we get the bank of england deciding on interest rates, they are expected to raise the rate by 25 basis points. the decision will be announced midday u.k. time. joining us now from berlin is bloomberg mliv strategist. can we expect the fed to actually raise rates this year and next, how are your expectations being shaped by what we heard yesterday? is very much the base case. i think the messaging we heard last night from the fed is consistent with what they have been saying for a very long time. i think september it looks like it is going to be definitely the next rate rise. december is in play. i think that once we get into next year, there is a couple maybe three more rate rises.

that is consistent what with -- with what we have been and nothing all that new from the fed. the market reaction has been muted from what we heard from the fed last night. anna: bank of england is the theme for today. what will we expect from the boe, 7-2, 8-1, what are you expecting us to mark >> the base case is that whatever the vote breakdown is, we will get 25 basis points from the bank of england. the base case is also that we get similar language to what we have heard from previous -- the fedly, which like is gradualist. slow and steady rate rises over the forecast horizon. if we get any deviation on that guidance is likely where we are getting a surprise from the bank of england. i think the base case is that we get the 25 base -- basis points, that is broadly priced and consistent from what we have heard recently from the bank of england. jonesthank you, richard

joining us live from berlin with a few thoughts on central bank news. we will ring you our interview with mark carney, at 4:00 p.m. london time. barclays has reported earnings this morning, joining us is the ceo, jes staley. i will start with some positive, the equity market number is described as blowout this morning, up i 32%. how happy are you with that side of the business? we feel very good about how the bank performed overall. it is one of the best quarters we have had in many years to generate a 12.3% return on equity's, a great result. over 1.4 billion pounds of after-tax earnings, it is across the board. the business did quite well, our international car business did well and the corporate as well, particularly the markets and

investment banking side. anna: there's always a lot of attention on the fixed income side. i want to ask you about fixed revenue, they look to be in line with estimates, weaker than some of the growth reported by wall street peers. does that hurt or is that not what you are worried about this morning? the overall market's revenue for the investment bank on dollar terms was up 15%. that would be one of the best performances of an investment bank whether it be europe or the u.s. so we feel very good about that as you said. led by our equities group which was up 37%. our fixed revenues were up 1%. which we think was pretty good given the nature of the quarter. overall, we are getting market share for the third quarter in a row. importantly as we point out, the return on equity in the markets business with this sort of performance is double digits, it is above the cost of capital and

that is important given our strategy as a bank. when the currency matters you are describing these numbers. can i ask you whether this is a business running free, you spoke to what my colleagues and said that was the future for the bank, that is what the rest of this year would have in store, you would be free from the legacy issues and we could see what the business can deliver running free. is this barclays running free already or do we have to wait? jes: this is barclays running free. you bring up a good point. this is one of the first quarters where we are clear of the legacy issues, there is no more restructuring, no more costs to achieve, no more magic -- major legacy issues hanging over the bank. the bank is running free, we delivered 1.4 billion pounds earnings, ar-tax strong double-digit return, it feels good. and now we have this diversified consumer and wholesale bank, we have the strength of that diversification, over 40% of our

business comes out of the u.s. and we have a terrific consumer and corporate footprint. it is delivering the profitability. other banks are taking provisions from ppi, is that something that is gone for barclays, have you dealt with that or could it come back? -- we think we are well reserved. what we have seen gives us comfort that we have the right reserve levels. never say never until the ppi ross this is done sometime next year. we are well reserved and think we are in a good place. anna: it is the gift that keeps on giving, i am sure. we talked about what you're -- your shareholders are looking for. there is the appearance of head word -- richard branson. update us on your talks you have had with him, i know you are -- you met him previously, have you

heard from him directly? with surei have met boy -- them once. we have not got what strategy he might suggest that we can consider but the very cordial conversation with them, we hope to talk to him like i will -- all of our major shareholders that we announced today but we will stay engaged with all of our shareholders and can -- continue to execute this strategy we laid out in march of 2016. anna: do have any shareholders questioning the investment banking part of your business or is it something we like to talk about in the media? the shareholders are supportive of a strategy as we -- we articulated including the investment bank. the bank has had in the first half of this year, it was a record six months in terms of

leading debt underwriting and where we are ranking globally. remember, we were the third largest underwriter of debt globally in the first six months of this year. it was a record six months for us in terms of our m&a feed. the investment bank is functioning but so is our credit card business, so is the private bank. we like how the bank is performing overall and we like the strategy and the shareholders have been very supportive of management. all we need to do is get the uncertainty of brexit behind us and hoping people look more favorably toward british banks. anna: i will talk to you about brexit in a moment. how happy are shareholders about the level of return of cash to shareholders, you have not had a buy back in 20 years, we talked about that in the past. jes: yeah. we have more than doubled our dividend this year versus last year. we announced at the interim the reaffirmedayment and

6.5 pence for 2017. we are in our in-state capital level, that is where we want to be in going forward as we generate returns like we have generated today, that will be excess capital and we look forward to returning excess capital to our shareholders either through dividends or stock ibex. that is what awaits us in the future of this bank. barclays,ou plan at are you planning for a no deal brexit, is that real in the boardroom at barclays? jes: we have to plan for what people call a hard brexit. we are doing that. our subsidiaryth banks in ireland and dublin, what we are doing in terms of relicensing our branches across europe to be branches of our irish banks, what we will be doing in terms of putting capital into that irish bank,

doing all that so we can continue to engage with our european customers and clients tomorrow the way we do today. irrespective of what happens with the brexit negotiations. theyone would like uncertainty of the discussions to be resolved as soon as we can . i do think it is weighing on the ..k. economy to a degree as a bank, we have to prepare for whatever eventuality is going to come our way from the negotiations with the eu the biggests downside risk for your business in the second half of the year, as it brexit or something else? jes: the biggest downside risk the major us is central banks are beginning to move out of the quantitative easing and accommodative monetary policy they have had since the financial crisis. leaving is a necessity but as a bank, as the central banks do that, how the economy will

recover is a challenge for all of us. anna: great to have you with us, thank you for your time, jes staley joining us. that is it for the program. the european is next. this is bloomberg. ♪

morning, welcome to bloomberg markets, this is the european open. we are live from our headquarters in london. i am alongside matt miller who is back in berlin. matt: asian markets tanking after trump renews sanctions and tariff talks, talking about boosting tariffs on china. or 4% onropped to 3% those indexes. the cash trade is less than 30 minutes away. guy: