>> good morning from bloomberg's european headquarters. i'm anna edwards, this is daybreak europe. got steam gone, credit suisse replaces its ceo after reporting the third straight quarterly loss. microsoft jumps after hours after an upbeat sales forecast, spurring a rally in nasdaq 100 teachers. alphabet also gains and we have went up next. the markets could see another 75 basis point hike today but the question what comes next looms even larger. the dollar dips. welcome to the program, everybody. this is bloomberg daybreak: europe. let's start with a quick recap of what we have heard from credit suisse, a huge net loss. seven times the loss that was

expected, not all of that attributable to litigation costs. outflows they are talking about, the market environment resulting in an adverse effect on clients. as a result, the ceo is out once again and they will do a comprehensive strategic review. we will once again talk about what is next for credit suisse after crisis after crisis in recent years did and they find any kind of line in the sand? we will talk further about what the ceo might bring to the business shortly. we are getting numbers from deutsche bank as well and they are raising their cost income ratio target on cost rushers. trading revenue and fixed income was ahead of the estimate. we will hear a little more on the business later on but interesting to see what is happening with the cost-income ratio, worsening in their expectation around cost.

to what extent are those under control is a question the markets will be asking. that is what we see at deutsche bank. unicredit is of interest this morning. second-quarter net income 2.0 one billion euros, the estimate was 1.0 2 billion. a lot better than had been anticipated. unicredit this morning in italy. in terms of guidance, they are raising their 2022 guidance on the interest rate outlook. despite the headwinds some banks are facing, what is the interest rate outlook, what is the higher interest rate doing to the way the business performs? let's get onto the auto sector. this is the first reports out of the german auto space, this is mercedes. they are lifting their full year cars adjusted role up to 12-14%. they see demand remaining higher

than supply. some of these supply chain issues lingering but they are raising their outlook despite inflation and go supply chain issues, and see healthy man in all core markets in the second half. that is some of the data we have got this morning, or some of the breaking news i should say. let's take a quick snapshot of where the markets are. msci asia pacific down by .4%. it is bad day, let us not forget. -- fed day, let us not forget we are expecting 75 basis points of hikes. we will talk more about microsoft resilience as well. teacher -- futures have played well for the ftse in recent days. the dax was the underperformer because of gas. it was really weighed down by

that gas story. ongoing expectations that things get tough in europe through the winter. the dollar euro ounce just a fraction but not recouping the losses of yesterday a lot of earnings and the fed to think about. we have a number of great interviews today including the deutsche bank cfo, he will be joining us. we will talk to ecuador's -- equinor's management, a credit suisse chairman and we will hear from mercedes-benz. and also from the mining center, rio tinto's jakob stausholm. we look ahead to the big fed decision and big market moves in asia. matthew blocked sam will take us through the big tech earnings, and lyubov is covering the

european gas crisis. that has been developing over the last 24 hours. the fed has picked up a two day meeting that will almost certainly conclude with a 75 basis point hike, but the trajectory after that is a little unclear. there is a lot of money riding on the notion that jay powell will have to preserve maximum flexibility. to dive deeper into the market reaction, let's bring in david. >> good afternoon from the asia-pacific. i was just writing on our markets live blog. asia-pacific is coming off of lowe's, we are just coming out of the lunch break in china. this story to pivot a little bit is about property stocks raising some money, that is one problem. the other is alibaba, that is pulling this one down. the kospi index is down to what you are seeing in consumer

confidence and in the u.s. with an absolute collapse from june to july. cpi was still high, 21 your high, it missed estimates and the markets are adjusting expectations of what the rba might do next week. they are taking that 75 basis point hike off the table for now. yields are lower and a weaker currency on the aussie dollar. let me end on this, the big one is the fed, a change from two months back. when the u.s. inflation print came out, that monster print, there were four meetings. 200 basis points. markets have adjusted ever so slightly, that is about 25, a full rate hike. still aggressive but not as aggressive as two weeks ago. i will leave it there. anna: things have evolved in the last two weeks and we have seen

what happens to risk assets as a result. let's turn to big tech earnings. alphabet and microsoft posting double-digit quarterly revenue growth and expressing optimism about the coming months. that may have reassured investors who work fretting that the industry was poised for a downward second half. what are the key takeaways from these results we have had overnight? >> as you said just then, it is reassuring that tech can potentially weather the coming economic storm in relatively good shape. is this going to be universal how these companies weather that. what we heard microsoft is that corporate's may turn even more to cloud software than they have been doing to manage their technology spend gets more expensive. so that was reassuring. on the alphabet side, more

advertisers are turning to their search platforms as things get tougher, so reassuring there. there were some chinks in the armor, youtube growth at google was slower than thought. that cloud is not growing, people want to see better profit performance from google going forward. both of them said they will slow hiring. they are recognizing that things will get tougher. anna: lots to discuss. matt will be back later in the hour. nasdaq futures up by 1.5% as we look to work in what we have heard from these big tech businesses. more from matt shortly. european energy prices have soared on some light beers with -- supply fears with the kremlin likely to keep flows at low levels. the eu has reached a deal to cut gas flows to 15% as the prospect

of a full cut up grows. -- cutoff grows. lyubova is in brussels and can give us details. how easy was it to get that kind of nifty -- unity, and how unified will be blocked remain on this -- bloc remain on this? >> indeed it was advertised as a show of unity and solidarity in the face of the energy blackmail . this unity came at a price. hungary opted out. as for the other member states, there were quite a lot of carveouts in response to their concerns and everybody's particular situation and

different starting points. this really is a question how it will pan out in the future. but so far, it is voluntary but could become mandatory, if russia cuts off gas supply completely. we can go into detail of what the carveouts are. anna: yes. do tell me about the exemptions that have been provided. and whether the exemptions mean that what has been achieved here will be enough to cope with the winter? >> for example, there are automatic exemptions for island nations like ireland, malta and cyprus that are not directly connected with the eu gas system. there is an exemption for baltic states which are really dependent and interconnected

with russian electricity systems. and also, nations that feed a lot of gas into their industry, because obviously europe does not want to undermine its industry sector. all of these decisions come up with all of these carveouts, if all these exemption are used in full, europe can still achieve a demand reduction that will help it through an average winter. that is what the eu energy commissioner said yesterday. anna: ok. thanks for that. apologies for jumping in, we thank lyubov for her contribution. let's get into key things we are watching out for on the markets today.

at 1:30 p.m. u.k. time we will have u.s. wholesale inventories and durable goods orders. at 3:30 p.m., the latest eia crude oil inventory report, $104 the handle on brent going into that. at 7:00, the latest decision on the fomc from the fed. we will see a slew of u.s. earnings reporting including meta, bristol-myers squibb, and also bowing. there will be plenty more to come throughout the day. global growth headwinds as the imf cuts the outlook for the global economy once again. deutsche bank scraps its cost target as inflation headwinds build. don't miss our interview with the copresident and cfo. we will bring you that at 6:30 a.m. london time. this is bloomberg. ♪

>> what we're seeing is a very narrow path for the u.s. economy to avoid recession. a small shock or downside risk could be enough to knock it off. anna: the imf's chief economist speaking to bloomberg as the fund cut its global growth outlook for the third time this year and warned that the global economy may be on the cusp of an outright recession. joining us in london is sunaina haldea, global head of private capital equity at raymond james. today is fed day, and the imf is downgrading global growth, is this just the imf catching up to everybody else? how close are we to global recession? sunaina: not far at all, unfortunately. we have a central system that has been late to the rate hikes

to control inflation. that rush to bring inflation down will choke off demand growth and growth itself. we are looking at a couple of quarters of pain at minimum. anna: a couple of quarters of pain. does that mean a couple of quarters of rate hikes as well? sunaina: yes indeed. if you look at the breakeven on the inflation rate in the u.s., it has come down to 2.6%. markets consistently underpriced inflation risk and are hoping that rate hikes will bring it down enough but choke growth off enough to see rate cuts next year. it is optimistic, we have to say that as a collective, but the growth slowdown is occurring. can see that in demand adjustments. many companies talking about topline guidance coming down on a forward basis. we know that growth is slowing, it is just a question of when do we bought amount? anna: what are we expecting to

hear from the fed today? is it 75 and anything else would be a shout? sunaina: the market is expecting 75, it would be hugely shocking for them to do anything other than that. they are late to the story. that is what landed this in that spot, they can't afford to not be aggressive. anna: our colleague was talking about this, for a short period after the mustang --the most recent inflation print, the market toyed with 100 basis points. do think that is sensible? sunaina: the fed has lost control on the narrative. ben bernanke had a wonderful quote back in the day that he wanted the markets to do half of his job for him. at this point, you have a little bit of a divergence between what the markets want the fed to do and what the fed once the markets today.

the fed has no choice but to surprise the market with aggressive inflation calls. they will not go to 100, i think they will stick to the guidance of 75 and think about another hike in the next quarter. anna: 75 and then one of the big questions is, what is the guidance look like? sunaina: i think it will be the 50 to 75 basis point range. we have got to watch the language closely. they have to get out ahead of this and say we will do whatever it takes. anything other than that will be a trigger for markets to go bearish again. anna: we were celebrating just yesterday 10 years since those words from a different central banker, from mario draghi. how much should we rely on the guidance from the fed, given there is a long period between this fed meeting and september.

we have all the tension building around energy markets. sunaina: everyone is watching the leading indicators of inflation. the last couple months have been interesting because you see some flattening, it is too early to tell where it is going. if you look at supply chain indicators, shipping costs, that is all flattening or easing out. anna: across the pacific, coming down a bit. sunaina: the same with energy and food prices, but have come come down some. forward inflation remains the concern. leading indicators will be important but also the demand story. consumer confidence numbers are flashing yellow and coming in below expectations. a lot can change between now and september, but the question is do we see a peak inflation print this summer? we won't to be aware of that until the fall. anna: do you think the fed will be happy with weakening data in the u.s.? from the housing market and

certain consumer measures we are seeing weakening, but to some degree that is what they want. sunaina: they want to weaken the demand growth. they will try not to choke off demand per se. that is the soft landing versus hard landing. most folks are now expecting we are going to start bumping, it is going to be harder than many thought. the hope is that growth has choked off on the demand side, but not growth on an absolute basis. if you look at the leading indicators of demand, many consumers are downgrading their choices, so they are able to be more cost-effective on their side. that paints a picture of a recessionary scenario. it is funny to have the fed go on and nation -- on inflation hike today. that is the big dichotomy. anna: then we enter a debate as to whether this is a real recession with the labor market is tight is this is -- as tight

as it is. sunaina: i think the shortcut to the answer is that the labor shortage issue is going to be the persistent problem that will be the metric folks will look at. at the moment, you have income in can security -- income insecurity because of the inflation side, that causes this downward spiral. the short answer is we will see a hit to broader, weakening recessionary members. anna: let me ask you about strategy here. are you steering clear of increasing exposure to europe given the threats from energy prices? sunaina: no question. i think europe looks week on a relative and absolute basis. the european central like to the party on the inflation side of the story. you have demand issues on growth, but also on the energy

side, germany and many other countries are in a recessionary spiral now. are all those reasons, europe does not look like a good hold. i would not advise going wrong at this stage. anna: we saw one hedge fund with an 80 sent euro call -- $.80 euro call. sunaina: you have a dollar in the fact that is going faster and hotter which is what pushed the dollar versus the euro. anna: really good to speak you, thanks for joining us on that day. the global head of private capital advisory at raymond james. microsoft posted double-digit quarterly revenue growth, spurring the sector. we will look at the tech index

next. this is bloomberg. ♪

anna: welcome back to bloomberg daybreak: europe, i'm anna edwards live in london. alphabet and microsoft posting double-digit quarterly revenue growth and expressing optimism. that may have reassured investors who had been fretting that the technology industry was poised for a terrible second half. we are joined by matt bloxham from bloomberg intelligence. we had quite a gel market -- f ragile expectations for ad revenue. >> outcomes were in line for those companies.

people aren't quite sure what to expect. people typically might expect to see less spending on advertising. i think that has helped ad revenue going toward the google platform. i think we will see meta or facebook may suffer a bit more for it. the ad tracking from apple has played into google's hands, too. you have tiktok and amazon as rivals. anna: the rivalry with tiktok is an interesting one that may have weighed on youtube, is that the issue? sunaina: to a degree. >> to a degree. we heard kim kardashian pushing back on some of the changes instagram are making to be more tiktok-like. a lot of issues going on there. i think brands still seem to be

spending on brand advertising which played into google's hands but will not be so good for facebook. anna: it raises questions about who is in charge of big tech when you upset the kardashians. after snap, that was an area many were worried about, but then we have got big advertising houses in the u.s. that did not suffer so much. people are asking questions about where exactly is the weakness in advertising? sunaina: snap is really >> snap is really getting hit by tiktok with perhaps a direct rivalry there. i am current economic situation with prices rising, brands are having to do more to convince customers to pay. they are spending more on this brand-style advertising rather than the quick go and buy my product kind of advertising. that is shifting some of these spending around.

ad spending is still holding up better than -- we started seeing in june, and july and august, that spends will dip quite a bit. anna: what do you make of the argument fromicro that seemed to convince investors, that they will still invest in the cloud? >> they did. they are talking to what they are hearing from their corporate customers, they did leave the quarter with a strong order book. one of the things about the cloud is that it is a much more variable spend. so you are not having to commit billions to a technology upgrade from the get go. you can buy variable capacity which allows clients to manage their spending flexibly, given that the outlook is more uncertain, that plays into cost management. anna: and what about meta? >> google group revenues by

about 12-13%, facebook will be flat year on year. josie the mix of add spending is -- that shows you the mix of ad spending is changing among platforms. anna: matt, thank you very much for the briefing. let's get a recap of what we heard from deutsche bank before we bring you our interview with the cfo. there was a lot to say about what the fixed income part of the business would do. we had strong performance on fixed income trading but they did downgrade performance of well they can do on costs. i spoke to the cfo, and i started by asking him how happy he was with trading. >> in that, you had extremely strong macro performance.

fx, rates and also emerging markets in our case. you needed to navigate a difficult environment, so risk management was a key feature of the performance. credit financing was solid as well, credit was weaker but we are still very pleased with that performance. anna: is it sustainable? >> there is no reason to think the trends from the first half won't repeat in the second. that said, the market needs a direction, and that has not been is present in the late june -early july period as the rest of the year. the markets are awaiting central bank actions including today from the fed, and we will see how the tone develops. anna: your gardens -- guidance around targets has evolved. you say it is going to be more challenging to deliver on some

targets, how would you like the market to receive that message? >> that the environment remains difficult. we see challenges in the second half and have reflected that in our outlook. we are going into this from a position of strength. our cost-income ratio has changed dramatically from a few years ago. but we have had some setbacks in the first half of the year that are out of our control, and we see pressure in the second half on expenses. the company is delivering on its strategic plans that we laid out three years ago. anna: that movement on the cost-income ratio, removing the previous target and replacing it with another one, should that leave the market with the impression that costs are out of control? >> not at all. we are looking at every euro we are spending. the message is one of continued investment where it is needed.

i.t. investments and control investments. our decision has been to sustain those investments, we think they are important for the future. our path to 70% at the beginning of that year was quite clear. some of the setbacks out of our control have shifted that. our outlook going into the second half of the year is tougher but i wouldn't say costs are out of control, quite to the contrary. anna: you see no signs of recession in germany, no signs that your clients are preparing for a session, james? sunaina: the environment is worsening, hence our outlook for the firm. we see a softening of economic conditions in the second half of the year and potentially a recession, at this point a modest one in germany, and a slowdown in europe. that is something we are preparing for an hour clients as well. anna: that is that deutsche bank cfo speaking to me earlier on about the german lender's

business and the risks to the german economy. let's get another look at the headlines. gottstein gone. credit suisse replaces it ceo as the lender and barks on another turnaround after reporting a third straight quarterly loss. microsoft bounces after sales beat forecasts. meta up with earnings next. markets see another 75 basis point hike today. treasuries tread water while the dollar dips. let's get an up-to-date picture of the asian session. it is 6:33 in london. asia is down by .3% as we work our way towards the fed, let's not lose sight of the fact. nasdaq futures rallying on the back of those tech numbers.

we had positive numbers in terms of the microsoft outlook. resilience in advertising when other competitors had been anything but. so expect that rally in tech. ftse futures are moving higher. we will look for what dax futures are telling us and the euro is up .3%, but that is a small bounce in context of the substantial losses we saw yesterday on the back of news around gas. let's get to some further breaking news, french corporate's, this time danon. we saw positive responses to the unilever front yesterday. full-year guidance is increased at danone 25-6%, when it had been 3%. they are giving us various other

details. it seems that consumers are taking price increases. that is the message coming through from the maker of acti via yogurts and evian bottled water. the fed is expected to hike 75 basis points. the imf says the world may soon be teetering on the edge of a recession. let's bring in our chief north asia correspondent. what warning did the imf have for the fed? >> a pretty negative backdrop heading into it, anna. there was a sharp downgrade to u.s. growth forecasts, down from 1.4%. they set the u.s. might avoid recession but it is a fairly narrow path.

the imf also downgraded its global growth forecast. a bit of a stern warning to a central bank about to hike by 75 basis points. there was some weak u.s. data, overnight there were signs of softness in housing and consumer confidence. there is no shortage of analysts who say the economy is in pretty good order and you only have to look at the labor market to see strength. if the fed does go by 75 this thursday as the market expects, it is bound to bring up more debate over whether the u.s. is headed into recession? anna: some peoples wednesday and other people's thursday, what do we expect from the fed then? >> it does seem as though we are locked down for that. i think if we went by more than 75 that really would be a shock. the thing to look out for is what language will they use?

are they on track for more of these so-called jumbo-sized rate hikes heading into the back half of the year, or will jerome powell say we have done a lot of work here now. we are willing to slow the pace of those rate hikes and wait and see how things go. one talking point going into the fed meeting is a lot of people are saying there is a lag effect with rate hikes. it takes time for them to start hitting the economy. it will be interesting whether jerome powell signals that maybe they need to pull back and see how these will hit the economy. if he comes out of the hawkish viewpoint, all systems go for jumbo size rate hikes, that will certainly unnerving investors and add to the view that the economy is heading for a steep slowdown headed by the u.s. anna: enda curran with your set up for the fed.

>> bloomberg has learned that president biden will speak with the chinese leader tomorrow. the call comes amid fresh tensions over taiwan and the fresh possibility of a visit by house speaker pelosi in early august. beijing has warned it will take strong measures against any visit. a district on the outskirts of who had -- of wuhan has been locked down affecting more than a million people. authorities gave the order after four asymptomatic cases were found in the area. coca-cola has matched estimates or -- smashed estimates for second quarter sales, a 6% increase in organic revenue growth, twice as much as forecast. mcdonald's also reported second quarter sales topping estimates as consumers continued eating

out. its app and delivery services now account for almost a third of revenue. global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. anna? anna: thanks very much, juliette saly in singapore with the first word news. we will come back to the earnings story and energy markets in europe. ecuador is raising shareholder payouts after its profits met estimates. we will speak to the cfo shortly. this is bloomberg. ♪

anna: welcome back to bloomberg daybreak: europe. i'm anna edwards live in london. on two energy markets, norway's

biggest oil and natural gas producer raised payouts. joining us now is ulrica fearn, the chief financial officer of equinor. very nice to have you with us today. are you expressing confidence with this buyback announcements and dividend increase? ulrica: thank you for having me this morning, and i. we did post strong results this morning, over $17 billion up adjusted earnings, and $5 -- in a month which is normally slower. markets were able to increase our share of the distribution. this is an expression of continued strong markets but also continued strong operations when that world -- when the

world needs energy. anna: your business is now the largest single gas supplier to europe given what we have seen from gazprom and the way it has pulled back at supply. what is your view of the gas market, and the prices we will see in europe? ulrica: it is a very tight situation. russia's invasion of ukraine came on top of an already tight fundamental market. there are many factors impacting this now. the macroeconomic environment, the demand picture, but also the plans around reducing demand and reliance on russia. how that plays out with the weather. it creates off complex -- it creates a complex picture which is hard to predict. we see volatility and tight markets going forward. anna: but you have to plan, what

kind of scenarios do you plan around? ulrica: we need to plan to be resilient and to take the volatility. it is almost a place where you end up planning quarter by quarter. we need to plan for this scenario where it continues for a while, and also stress test where it doesn't. the world economy is quite uncertain and the demand picture on the back of that is also quite uncertain. anna: if we think about supply and what you are able to supply to the market, are there any strategies where the company is able to increase supplies further within the next 12 months? ulrica: what we've been doing is what we will continue to do, working with governments and industry to improve our throughput. or do more exports, rather than gas injection.

we have our rmd plant running. that is contributing. we have increase production on the continental shelf by 18%. that result of all these measures to produce as much gas as we can when europe needs it the most. anna: that is a situation that continues? russia will never be the long-term supplier it has been to europe? ulrica: we have to plan from the worst-case scenario from a security point of view, and that is what europe is doing. we want to play our part should that become a reality. anna: let me ask about taxation. part of your business in the u.k. is facing windfall taxes that were recently passed, how is that affecting your operations? ulrica: most of our earnings are on the norwegian continental

shelf, where the tax situation is quite different from the continent. our tax rate is already higher than the windfall taxes in the u.k. a lot of the earnings are already returning back to government reallocation. anna: and does that disincentivize investment further into u.k. fields, or not? ulrica: we have a very wide portfolio. our priority now is to make sure of security of supply. and a long-term stable environment. right now we have a wide portfolio we continue to invest in. anna: do you see a risk to other countries following this path? we have seen other nations talking about introducing windfall taxes? ulrica: not sure. there is so many messages to be

taken. what will make the energy supply more secure, that is what governments are working through. that is part of the mix to how we balance the situation out, so we will see. anna: thanks for joining us, ulrica fearn, chief financial officer at equinor. gottstein gone, credit suisse replaces the lender reports a third straight quarterly loss. that conversation is at 7:00 a.m. u.k. time. this is bloomberg. ♪

anna: welcome back to bloomberg

daybreak: europe. i'm anna edwards live in london. lvmh sales jumped in the second quarter as louis vuitton and dom perignon continue to thrive. >> the economy is at a turning point. if inflation continues strongly, will central banks be able to slow it without creating a recession? i am optimistic, so my answer will be yes. anna: that was the lvmh ceo speaking to my colleague about a month ago, talking about his expectations around a recession. let's bring in caroline connant now. a really impressive set of

results for a company that does still rely on china. >> that's right. and despite the pressure on margins with the strong inflationary environment, we are seeing another strong set of earnings for lvmh. it is a bellwether for the luxury industry. plus 19% in organic revenues for the fashion and leathers division, it includes louis vuitton marc jobs, and fendi. the wine and spirits division is outperforming because people continue to indulge in hennessy nd champagne. visual rate division which includes tiffany which they bought a couple of years ago. despite the role of materials and price increases, it seems

there is still a strong appetite for luxury goods. lvmh still has very strong pricing power. of course, a few challenges ahead as you were mentioning. even though europe and the u.s. have been driving this growth, asia has been severing due to the lockdowns in china we saw during the second quarter. and some analysts including goldman are saying the traffic to chinese stores remains difficult. and that online is not compensating enough in china for lvmh. also, lvmh has to deal with the exchange rates environment, the yen and the euro are very low against the dollar. it is cheaper for americans to buy luxury goods and lvmh products in europe. that is creating a gray market.

that is something luxury brands really do not like. so lvmh will have to deal with this geographical distortions. finally, the longer-term recession risks, you heard bernard arnault telling me last month that he remains optimistic. but last night in the statement they said they have to remain very vigilant about the second half. anna: we are just looking at images of some of the lvmh boos, given that boos and bags have done so well. the wines and spirits part of the business are 30%, the estimate was for an increase of just 8%. at 1:30 p.m. u.k. time we will have some data from the united states including homesale

inventories and durable goods, followed by the latest eia crude oil in the orate report. -- inventory report. then at 7 p.m., we will have the latest rate decision from the fomc. we are expecting 75 basis points. that is where the market expectation since right now. it would be quite a surprise if we got anything other than that. we will also see a slew of u.s. earnings reports including from meta, qualcomm, t-mobile and boeing. we were just hearing about the way that tech has performed overnight. nasdaq futures are very strong, up i more than one point -- by more than 1.4%. also dollar strength is an issue for large u.s. corporate that do a lot of business overseas.

we are joined by our reporter from bloomberg intelligence from singapore. with more than a quarter of the european market having reported, what is your scorecard look like? >> i have to say it is one of the most unusual earnings seasons if you look broadly at the numbers, that we have seen in ages. on the top line, we are seeing beats for over 60% of companies. about 30% are missing. if you click that and look at earnings, it is almost exactly the opposite. something like 35% that have beat, and more than 50% that have missed. this split between trends is driving revenue growth up on trend, but earnings growth is disappointing. anna: that leads us to conclude there is a problem on cost, and

that would not be a great surprise. talk to us about that split, and how concerned does it make you about the outlook for the second half? >> i think this is the crux of the issue. we have been concerned all year long about inflated margin expectations going into next year. and we hadn't seen a crack in that of any note until now. and we are now starting to see that paid. -- that fade. it is part cost as you have recognized worried we have raised costs across so many companies, the discretionary's, etc., that we are starting to impact demand. it is those two starting to create negative operating leverage risk that we think will bring margins down in the second half. anna: so not just costs what higher prices are also doing to demand.

the dollar is also being cited by certain u.s. businesses. >> it is an interesting thing there. the challenge for the u.s. with a strong dollar and you are translating back into a weaker foreign currency. but from a european perspective, it is a great thing. that is part of the reason why the revenue beat has been as much as it has been. you have a 7% or so trade wind in the euro, that roughly represents 3.5% positive from the top line simply from this currency translation. anna: thanks so much for joining us, tam with your everything on the earnings season so far. back to one of the focuses today, the troubled lender credit suisse posted a much greater loss than expected. the bank is conducting a comprehensive review and has named the asset management head as the new ceo to replace thomas

gottstein. we are joined from 05 manus cranny. run us through your thoughts this morning. is it a big shock? we have talked to gottstein many times, is this a big shock that he has been replaced? manus: something clearly changed between i have a clear mandate in dabo's to the past 48 hours. we were due to speak with him today and we caught up with the chairman instead. there is this inevitability in banking that if you do not deliver, and you cannot turn the tanker around, and you lose credibility, then there is an inevitability that the institutions or the board run out of patience with you. the stock down 60%. six profit warnings out of seven

quarters, third quarter in a row of losses, and a $1.6 billion loss. anna: seven times bigger than had been anticipated. do the numbers matter today? you would think they do but such change elsewhere in the business. manus: absolutely, the numbers do matter. $860 million of a loss at the investment bank. this is about a crisis of confidence and that translated into a cathartic change at the top. anna: manus sat down with the credit suisse chairman. he started by asking whether the departure of gottstein wasn't solely his decision or whether there had been pressure from other institutions. let's listen. we are speeding up our

transformation