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tv   Countdown  Bloomberg  August 3, 2016 1:00am-2:31am EDT

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profitsbc quarterly plummets 45%. the bank contends with slowing growth in china and a prospect of a recession in the u.k. deputy ceo tells bloomberg the french bank is feeling the brunt of the brexit. >> the risks are still very high. the brexit decision from the british population creates additional uncertainty in the alignment. anna: stock losses in asia as crude remains below $40 a barrel.
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welcome to "countdown." i am anna edwards. manus: i am manus cranny. it is a big day for the bank. hsbc profit falls 545%. we have seen the stock open portrayed in hong kong. they are planning a $2.5 billion buyback. the removed the timetable. the headline, pretax trough it $3.61 billion. last year it was $6.6 billion and the estimates were for $3.9 billion. a recession potentially in the u.k. impacting hsbc. if you want to think about it on this scale, since 2011 they slashed 87,000 jobs. that is a bank in restructuring.
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downng in hong kong, 0.75%. anna: this is from the third-largest bank. net profit for the second quarter is 1.1 6 billion euros. that is above the estimate of 994 million euros. the bank also telling us the gain they have made on the sale of euro state. that bank went -- deal went through. many banks booked a gain on that. they are all but facing headwinds from the low interest rate environment. what will be key as we go through these numbers is the bread and butter of banking. this focuses on the french sector. by what has the bread and butter part of banking been hurt by that? lower interest rates can make their life more difficult. >> it is a miss on the headline.
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net comes in at 3.2 billion. up from 3.1 billion a year earlier. it missed that the average ever smit -- estimate of 3.6 billion. they have a profitability target for 2020. they are trying to make 2.1 billion of cost cuts. they have a target on equity of 12%-14%. exclusiveve an interview at 7:15. anna: they reported numbers, the second-largest bank in asia. second-quarter net income beating estimates. the cet one ratio still stable. we have a gain on the visa sale. bear that in mind if you look at the bottom line numbers. about thering
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domestic french business and how a low interest rate environment has taken the edge off their qt. the deputy ceo told caroline conan that despite negative rates, they found a stable return on equity this past quarter in france. >> our international return and financial services, which is now in a very solid recovery, which is increased by 35% of political contribution through this quarter. in france, despite the difficult environment with negative interest rates, the return was 15%, which is a good delivery despite that. global banking investment activity. the market liked the first quarter. it has been very much under pressure but stable. terms ofregain in
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investor appetites in our projects, especially from asia, which is also good news for >> also technically benefiting for the difficulties. some of your german counterpart. >> i don't speak about the difficulties of my counterparts. i'm speaking about the strategy. some banks have decided to pick that up. the bottom guys like us to gain market share certain >> -- shares. your group >> -- earlier this year that was anxiety about your 10% target of re for this year. is this target going to be reached? >> if i may remind you that our target of 10% has been fixed to end a half years ago. in the environment we have today, it is completely different from the anticipated environment. -- in 2016, the
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conditions in terms of interest to lookut also we have at additional burdens. increase our cost production plan to do with that, you have to have that in mind. you continue to say that the mobile structure could redevelop that in the environment. manus: let's get to bloomberg first world news. paul, good day to you. paul: the u.s. military says north korea has fired to ballistic missiles. one exploded immediately after launch while the other reportedly landed in the sea 250 kilometers after the japanese city of akita. pyongyang waser
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angered by plans for the u.s. to install a missile defense system in south korea. they recommend pension holders get out of equities, just like he did. the republican presidential nominee slammed what he called artificially low rates, adding the only reason the stock market is where it is is because you get free money. he also said the market would go great if he were elected. bill gross has reiterated his warning after yields in australia touched all-time lows in the past month. is thater of the rally any reversal will be painful for investors. with sovereign bonds at record lows, they are not worth the risk. after two months, global oil prices are set for a violent reversal upward. that is what andy hall is telling his investors. a cooler winter is
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likely to drive up demand and a glut of short-sellers bidding on falling prices and only resist the tide for so long. the chinese hard landing has become a reality in a northeastern province of the country. they expect the economy to retract 1% in 2016 as factories stutteredthe hardship remains l. region data for the first six months showing economic growth in 15 of the nation's 31 provinces up from the first quarter. bitcoin has plunged after one of the largest exchanges halted training because hackers stole about $65 million of the digital currency. it slumped 30% in the last two days. it is still investigating the loss and cooperating with law enforcement authorities. global news 24 hours a day, powered by more than 2600 journalists and analysts for
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more than 120 countries. you can find more stories on bloomberg. i am paul allen. this is bloomberg. anna: paul allen with the latest news. let's check in with the markets. stock losses deepening in the asian session. a second seeing session of losses on the regional index driven by the weakness in japan. we are seeing the yen weekend. it is down .2%. stennis plan's came through yesterday. it was such a buildup and such a letdown. we have seen stocks in japan fall today. the topics and the nikkei off for the third session in a row. also in hong kong where we have only one stock higher, we are seeing significant selling
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coming through on the rest of the index. the shanghai and asia market has a little of an upside. china just coming back online along with hong kong. it is going to plan its index futures revival. this is a year after the $5 trillion crash. a little bit of relaxing of the rules in futures trading in china. we are awaiting an interest rate decision in thailand. the thailand index is up .2%. priceere, the weaker oil lang into commodity markets, like in australia, which is off by over 1%. having a look at individual stocks. earning season in swing. casio computers plunging to a two-year low after it's first quarter profit missed estimates. honda is a bright upside. u.s. auto sales in july beating their prediction.
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it's sale ofy says one of its assets is "a minor positive," but we are seeing sellers move in there. i want to show you the yield on the us trillions because it plunged when the abe -- the rba cut interest rates yesterday. that is the biggest jump we have seen in 14 months. we are seeing a little bit of money coming out of the australian 10 year bonds. manus: thank you very much. juliet sally. hsbc has reopened for trade. it has rallied 1.5%. we had the earnings. let's get back to hong kong. this is all about the buyback and the dividend. this seems to be worthy market is focused and the restructuring efforts. heidi: it is interesting because it took the markets to digest
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what is a mixed bag. we have that $2.5 billion share buyback. that will be affected by the end of the year. that was flagged in april when the last set of earnings came out. when the stock is trading at these prices, a have to consider the possibility of a buyback. profit falling to $3.6 billion, down 45%, worse than the $3.9 billion estimate of 19 analysts. private banking was the biggest drag. commercial banking was the largest profit contributor. -- they areying saying they are going to try in terms of the regressive dividend that we focus on so much when it comes to this bank. they did not move it what they did say they are going to maintain it at the current level for the fish seeable future -- for the foreseeable future.
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nothing has changed in the turbulent period and the priorities that they let out a year ago, the restructuring plans, the pulling assets to asia. a lot of changes have been put through in terms of how that direction is being taken. the: talk to us a bit about challenges the bank faces. they referenced brexit, saying that the trade talks would be complex. there is a big focus on asia for this business. haidi: that is right. the prophet still coming through from asia. on brexit, it was interesting. the economic risk is that the poweredcs get over by political volatility. cut sayingade that
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they're are going to make the high end of the target. billione hit about $172 cents 2014. they had that arrow being removed. is inside. the deadline is not feasible. the target is still feasible. there was concern over these bad loans but they see things as being stable. they did say that redeployment of roughly $150 billion of assets to asia, that has taken a hit given the economic and political uncertainties that are happening right now. manus: thank you very much. let's see whether that momentum in the stock price continues up. 0.8%. jeremy stretch joins us. has saidng what heidi was, one of our producers
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produced this. this is the price of hsbc in the blue. that is the london listing. there is the hong kong listing. if you wanted a personification of sterling down by 90 basis points, there you go. jeremy: you represented one of the reasons why the first 100 has rebounded in the post brexit world. three quarters of the earnings in the 100 are domiciled outside of the u.k.. there is that boost to buying earnings. you graphically represented here in the terms of hsbc. it also underlines there is an ongoing issue in relation to the brexit story. inre is that uncertainty terms of the growth trajectories, which will be a factor that will play into the bottom line of corporate. anna: talk to us about the growth trajectory for the u.k. economy. the japanese were talking about
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spending more money fiscally because of the brexit. i thought it is amazing that the japanese are doing this before we get a fiscal reset in the u.k. jeremy: 26. anna: in recent memory. the bank of england is wrestling with the slowdown. what are you expecting? the key question seems to be will they forecast that we are going to go into recession? jeremy: i would suggest they would not suggest a recession but a marked slowdown. if you look at the aggregate growth numbers from 2017 and 2018, they will be revised down substantially. i think you cannot rule out the possibility that we could see a technical recession where you can see a couple of consecutive quarters of negative growth, but i don't think you will see the annual numbers in starkly negative terms.
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uncertainty is the watchword and will continue to be the watchword of financial market participants and the bankers and in terms of government officials in potential u.k. research. manus: let's get a sledgehammer out for the u.k. look at the pie. this is a trade weighted value of the british pound. the market is so short. it is the shortest it has been since 1992. has stopped inum the pound? jeremy: we have seen markets moving aggressively short on sterling. if you look at the weight the stock market prices it, we are fully priced. 25 basis rate point cut. what could take us lower? there are other measures we can consider. we could see a restart of the asset purchase program, funding for lending. there are other measures beyond that. the question is the tone of the
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press briefing from mr. carney. that will be absolutely critical. there is an awful lot of activity but as we get data and that final service line this morning, which could be revised down for the, i think those negatives will create uncertainty. i don't think we have seen the bottom just yet. anna: manus pulled up the three u.k. pmi's itch does not make -- which does not make pretty reading. jeremy stretch. he stays with us. manus: let's get your day set up for you. the think of and didn't -- the bank of england, ahead of super thursday. midday it is mba mortgage applications in the united states and that is in an hour and a quarter. we get the numbers ahead of friday's payroll.
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anna: it is the eia crude oil report. oil below $50. what will that data show us? onomberg users can follow us top like go. manus: abe's arrow fails to hit the target as his latest them it to package fails impress investors. the results and the first interview of the day. anna: you will speak exclusively of the incoming ceo of axa. what is the low interest rate environment doing to their business? ♪
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looking at a live shot of
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hong kong where the hang seng is down by one point. 6:22 inust gotten to london. japanese shares has fallen for a third day. japanese toof the this package disappointed investors. . the government -- anna: the a spendingdetailed package of $2.72 billion. the plan from a and companybne -- abe and coveney, his appointment or failure to manage expectation? jeremy: a little of both. he trailed that package and the devil is in the details. he had 28 trillion and then you drill down the knot of money that is substantially lower than that. we had monetary policy announced from mr. kuroda last week.
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we had more of the same from prime minister of a -- abe we had a jewel of disappointment from the fiscal and monetary side and the third arrow of all cs, we are -- abenomi still waiting for that. aussie,he yen and the they both rallied. you had the rba drop their rates. you have the bank of japan disappoint. the yen has really taken on a new momentum on the upside, hasn't it? jeremy: we have seen markets disappointed by the lack of additional bond buying from the boj. in a sense we are seeing out of a bond tantrum starting to come through. we are also seeing one in risk aversion. in general you tend to find that investors will favor that have
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services or investors retreat to home markets. that is the worst of all scenarios for the japanese. anna: we have a chart in a moment that shows the yield bouncing back. what is driving the re-think around the bond market? it can all be brexit related. jeremy: i can't, but i think it goes back to the comments we saw from bill gross. talking about the impact of the bond market moves in the uncertainties we are seeing. to continuexpecting to be the bar of last resort, you talk at -- stop at one valuation where it is a stretch and you need to see a little of and unwind. that stops to suggest yields are higher. anna: bill gross saying low rates are not worth the risk. they are bouncing. manus: if you know what is happening in the jgb market, and this is where i wonder if we will have a car crash.
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you were talking about this looking like 2003 where yields ratcheted. they tripled in the space of three months. this could be a shock to the market. what would that do to yen? jeremy: i think that is exactly the point. it is one of those issues where you talk about bond market bubbles. if you are trying to generate profits from your investors and yields move lower, it is difficult to do that. you can trade that strategy as long as you are the first one out. in a sense, that is part of the problem. the first mover advantage is starting to move out of the market. if we see yields moving up in bunds and jgb's, it could be yen goes down and euro-dollar goes up. anna: we have donald trump saying that u.s. rates are artificially low. thank you jeremy stretch, head of fx strategy.
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manus: we will talk about the company's first half earnings. it is all about the miners. can the rally endure? ♪ [hip hop beat]
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. 'itrestn i, w c u'e e dry.ynebuss. oding uc pwiwiro fi hthatpsroui anna: a live shot of tokyo this morning. dollar-yen fairly flat. we have seen a rise in the yen in recent days. 101.04 is where wewe are lookins coming in across europe. we've had a rash of news in the banking sector. we don't seem to have the continent numbers. manus: we will get those numbers in a moment. of are looking at a revenue 10.6 billion euros. the auto is this in china and europe has grown 5% year on year. when we get those numbers we will break them.
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let's talk about daybreak. it is available on your mobile and on your bloomberg da why be go. formal one.of we discovered new functions. anna: sometimes we visually experiment. hsbc a mess. $2.5 billion buyback plan for the hong kong listed bank. as our colleague haidi was point out, the world has taken a while to digest the hsbc story. they are wondering how long it will take to flesh out a trade agreement between london and eu. manus: they are confident in the abilities of paying the dividend. there will be no further investor cost cuts needed. these are the comments coming across. china investment will be
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positive in the medium-term. more banking. ana -- williams was a bank that was under pressure to sell in 2008. they had 2 million customers and 24 billion pounds of assets. rbs. santander ceo was at already a little family history in that. oil is also featuring heavily in daybreak this morning. in particular, after taking a pounding for two months oil prices are set for a violent reversal. that is according to trader andy hall. violentlking about the reversal set to take place. little fear of further declines. the bottom could be near. yesterday we were talking
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about $57. we have a bloomberg business flash. paul allen is standing by. good day. paul: societe generale said second quarter is a percent lower on loans and a gain on its sale in europe. income climbed to 1.4 6 billion euros, beating the estimate of one point 36 -- 1.3 6 billion euros. difficult to say when the environment will be stabilize. the rate is very high. the uncertainties are still very high. the brexit decision from the british population creates additional uncertainty in the environment. been revisited at a lower level than in the past and the interest rate could last very long. agricole has posted
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a higher profit than last quarter. was 1.16 billion euros. this is a boost from its sale of its stake in visa europe. has seens seen -- axa lowers. france's biggest insurer saw a net income ride to 3.2 billion euros. missing the estimate of five analysts surveyed by bloomberg. axa's new ceoto next month. to expand itsking lead on apple with the note s7. it can display high dynamic range video.
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it is being launched at least a month before apple is expected revamped iphones. instagram is copying snapchat. users can write over images, add annotations, and post material in slideshow form. instagram is also calling it a product of stories. that is your bloomberg news flash. anna: asian stocks have extended their drops and oil sees concern over global growth. good morning. >> crude oil looking at wti, still below $40 a barrel. 5% in the previous two sessions. we have weekly data showing that u.s. crude has declined and all -- and oil has halted its slide.
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not just of uti but rent as well. -- brent as well. asian stocks still extending those declines. the asia-pacific index down for the second day. this is concerns about global growth but we have japan's fiscal stimulus package falling short of what some investors had expected. japan down for a third day. if we look at dollar-yen, we are seeing a slightly weaker yen y ity but yesterda strengthened 1.5% after the announcement of the fiscal stimulus by prime minister abe. the yen is still trading stronger than before that announcement. expecting lows rates. gold is holding your a three-week high.
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prices heading for the longest rally been more than six weeks. up four precious metals are 25% this year. i want to show you this great bloomberg bbe. this has risen to its highest level since 2013. manus: thank you very much. the bear market we have seen will be short-lived. chart ofined with a r.b.i.. we should not worry too much, is that much? >> we have spoken about how oil prices have broken through three key moving averages. you hear news about revising averages in the u.s. about gasoline demand. toh everything from iran nigeria, to canada. the key thing with this chart is if you look at what oil analysts are saying from bank of america,
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merrill lynch, all the way across to citigroup, the consensus is the bear market does not have much further to go. you can look at the options market. you can pull it up on bloomberg and you will see what investors are paying. it is the smallest premium and two months. that is to protect against the drop in oil price. you can see it narrowing in the last 60 days. what this tells us is that again, worst part of the oil over and the global surplus might be easing. said this shows us there is little chance of oil hitting $25 a barrel. arguably a very different view from the market. anna: we are going to have to change our name. very
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releasingquickly, first half earnings after the close of trade in sydney. for a look at what we can expect , jesse weinrich joins us. jeremy stretch is still with us. first financial results to be delivered by the new ceo today. any big changes expected this time around? the new ceo has only been in the job a month. all eyes will be on him today. in terms of change of strategy, i interviewed him six weeks ago and he pushed the line steady as she goes. they have been stripping out costs, spending, investing in desirable assets. there is some curiosity around how he will treat the ino
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division, criticized in some quarters for pushing these assets very hard, expanding into an already oversupplied market. there are question marks as to whether he will maintain that strategy. manus: he has got a job to do. this is one of these multi-charts. it is a frenzy of numbers. focus on the white now i've -- white line. we chatted about this last week. what do we have to do to shift the dial? there has been a lot of m and day. are they go -- m&a. are they going to be a player? jesse: they have been a victim of price weakness. they were less effective last year which explains their market performance. as we talked about, investors are going to want to see them maintain the good work. in terms of inner granite goes -- in organic growth, m&a,
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depleting proper assets, talked about it in the past. it is very attractive. there is a wide differential between expectations on sales and buys. anna: thank you very much for joining us. coming up later today at 1:20 p.m., we speak to the ceo of rio tinto. jacques.astian manus: jeremy stretch is still with us. let's get straight to commodity currencies. no stranger at your bank what goes on there. the canadian dollar started off there. things are under pressure. oil is dropping again. just when we thought there was a reprieve in the commodity market. jeremy: i think we are seeing another round of uncertainty in terms of commodity prices. it is unsurprising.
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we have seen other headwinds coming back to the global growth source that ties in what we were talking about earlier in terms of the brexit story. the demand cycle is unwinding a little bit. reboundseen two faster in the oil price in the second quarter so i am pricing a correction of that. i don't think it is part of the canadian dollar, even if we see the oil price remain subdued for the short term. it will not have the same dramatic impact on the canadian dollar that it did in the previous lowering. i think the canadian dollar still underperforms the u.s. through the second course of the year. anna: breaking in with comments coming out of japan. the deputy finance minister saying communications with the boj on a good footing. medications much better before.
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there is a reshuffle going on at the moment. we have heard various people retaining their positions and various new appointments being made. anything pertinent to the economy, we will bring those to you. manus has alluded to it. we saw the cut in the interest rate from the rba yesterday. that did not do what they wanted to the currency. a little bit weaker this morning. jeremy: they stripped it back. they are paring back those rallies. i think the rba would have gone home yesterday. we cut rates. we have done our element of the bargain. unfortunately, the market did not follow through in the way that the rba would have liked. i think it would be fascinating to see how the statement of monetary policy comes out at the end of this week in reference to the impact on the currency. the ongoing statement at the rba talks about unnecessary adjustments in income that will
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be compromised by currency strength. the fact that rba suggested or implied that they were not necessarily that keen to take rates lower from that level, that is why or at least one of the catalysts from the uptick in the aussie through a course of yesterday. manus: let's converge it back towards china. real numbers are inexorably linked to china. trade think is important. what i have for you is the cost of the position or selling the you one -- yuan as opposed to buying it. that is hitting its lowest level since symptom or 14. everyone is saying there is no more rate cuts from the cbo see, but no hard landing. that squashes the policy response. where does yuan go next if global commodities are in this bandwidth of not much movement? jeremy: i think it comes back to the question of how much of a slowdown, how much of a reality
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that will be. that is a key dynamic. the policy options to authorities are limited, but they will be sufficiently able to preclude a hard landing. i think we will cad celebration. what we have to remember and recognize that in the past, the policy agreement once to have the deceleration of growth. that past sign australian relationship -- sino-australian relationship which has been integral will be less important anyway. i don't think necessarily you get that post flow through to the aussie. anna: we have to move the aussie dollar out of our currency chat, them. jeremy: we take it out, but -- i don't think we move it out, but we have to reduce the importance of the commodity.
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anna: jeremy stretch, thank you very much. we get a confidence reading for the eurozone top economies. pmi numbers are due out later. manus: at 7:00 a.m., we will speak to the ceo of london inroleum about the collapse petroleum oil. anna: we have an exclusive interview with the incoming ceo of axa. we will talk to the ceo and low interest environment. to10:40 u.k. time, we talked bylo mussina after the bank second quarter profits drop less than expected. ♪
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it is 1:49 a.m. i love that shot.
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equities and futures. let's talk about socgen. second quarter profit rose 8% on lower provisions and a gain on the sale of a stake in europe. anna: brexit is creating uncertainty, but the bank's deputy ceo said he doesn't believe the bank will be affected. >> the macroeconomic impact is not positive. probably the impact on the british economy will be higher than for europe, for example. the long-term impact would depend on the outcome of the negotiations between europe and the u.k. that, we don'td know when it will start because of article 50.
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this adds to additional instability. in one of they unique and best positions among the banking industry in europe because we have a very as in terms of staff between paris and london. >> you are mentioning that you are ratio is about 50-50 in your investment bank in terms of tax. could this ratio change after brexit? >> it could change on the outcome of the negotiation. whatever would be the it will be for u.k.-based activity. i am convinced that london will remain a very important international place for the banking entities.
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we will keep a large number of staff in london, no matter the outcome. through that, we would have a new building, whether we have assigned a new rental contract, which starts in 2019. >> the ceo is a big advocate of making this beneficial for paris as a financial center. could some people see other banks, hsbc for example, thinking of relocating? >> it is great. we have balance in the situation. whatever the outcome is. >> you don't agree necessarily that the position is -- >> there is an opportunity for paris' financial place. yes. we have to do that. course, brexit is brexit. yes, paris can take advantage and will contribute to that
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also. manus: european composite pmi readings for july will be closely watched today. there is little evidence that britain's decision to leave the eu is affecting confidence in the euro area. anna: that is unlike the u.k.. pmi and theyash have registered material changes in july. jeremy stretch is still with us. concernsere in the around the european growth story. the eurozone growth story with brexit in mind. there was one forecast yesterday that was taking down german expectations because gdp expectations were off by 3/10 -- went 3%. jeremy: i think it might be extreme but there might be a tentpole that could be taken up the eurozone growth perfection -- ejection because of a degree of potential collateral damage. i think there are some concerns
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that glows growth will moderate. i think more relevance in the ecb will be a reduction in inflation expectations. in theh they back off post-brexit scenario, when you were talking about five-year inflation which was down below 1.25%, that is one of the issues that we will continue to be concerned about, about the inflation expectations. manus: forgive me for this, but they are permanent we focused on that. oil is going lower. slows growth since 2009 in the world. i love this phrase. the delusions of brexit. that will hurt more than. that is not the case. this is the u.k. in the white line. there is the you own -- eurozone. u.k., theum in the hard data, is getting worse. we are inextricably linked, aren't we?
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jeremy: absolutely. whichever way you cut it, the u.k. and the eurozone are closely linked. they will always be closely linked, brexit or not. we should not forget that. thecan argue that proportion of u.k. exports going into europe is diminishing over time, but that is due to the slower slowing of growth in europe. the other variable is the eurozone provides significant trading input to the u.k.. there are going to be ongoing ties. i think there is going to be a question mark about the magnitude of the eurozone growth and that will keep markets on rot -- watch. updatedwill have their growth forecast which mr. highlighted last month. anna: yields rebounding a little bit, for anyone who is been frustrated by the low rate environment, that might be a
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good thing. you don't think the ecb will be please. jeremy: particularly if you are looking at spreads versus treasury, if they do move that does suggest or risk a squeeze higher in euro-dollar. manus: this is the euro-dollar here. where can i get to in terms of momentum if there is a bund buy? jeremy: if we were to see a reasonable bund rout, we could get back to the 1.14-1.15 area. it will not be helpful for the u.k. economy because it will provide a head went to the tradable goods sector. that also impacts on the inflation environment. the ecb will have to be mindful of that. one of the legacies of the boj in action last week was the perception of the banks running out of ammunition or extending on bond buying issues.
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anna: jeremy stretch, thank you very much. manus: up next, it is all about oil. it is below $40. we have the london ceo. ♪
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mental hsbc's profits plummet amid -- manus: hsbc's profits plummet. generale beat estimates. -- alsosays bloomberg feeling the blunt -- the brunt of exit. -- brunt of brexit. creates an additional -- manus: stock losses deepen in asia. crude remains below $40 a barrel.
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♪ manus: you are welcome to "countdown." good morning. i'm manus cranny. anna: i am anna edwards. we have numbers coming through from a few corporate's. , q2 productionm numbers coming through. in terms of financials, revenues 62 $.5 million. -- the fda number looks to be ahead of the estimate as well. milliont comes in at 26 -- at 206 million. the ceo is talking about production at 63,900 barrels of oil per day.
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lundin is on track to achieve its overall target in terms of production. anna: we will get back to that story shortly. let's talk about you can't retailer, next. up 0.3%. down .3%.ale is this is a key focus for markets because it is uk's second-largest clothing retailer to report post the brexit vote. it will be crucial for getting a gauge on sentiment. going into these numbers, times might be tough for retail but we had good weather and may in july. -- whether in may in july. read the closure of bph business. all of that could be working in the favor of the next business. ofus: let's talk to the ceo lundin petroleum, alex snyder. he joins us for the first and
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the of the day on bloomberg. great to have you with us. it is a comfortable be in terms of the revenue. you talk about your production at 65,000 barrels a day. dca rebalancing in the oil market going into the second half of the year? as oil trades back into a bear market? alex: on your question, the rebalancing, definitely. i think we have seen going back to the $40, perhaps it was ahead of itself year on and i do think in the last few years you have seen significant underinvestment and this will have an impact on the production overall and even to see it the end of second half, a rebalancing by the bank. have the your claim in terms of -- you have staked your claim in terms of rebalancing of how domestic are you in terms of that? you have this protection number you have given to us, is that
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the upper end of what you think you can achieve? alex: on the production side, we -- we firmlyrket believe where going to achieve this production target. we have shown strong numbers in this second quarter in a six eriod. we are ahead of the guidance. record low operating cost for us. the balance sheets is a very exciting -- that is where we see the next generation of growth for petroleum. anna: talk about where sec growth. -- talk about where he else you see growth. what role are you going to play in the ma story -- m&a story?
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alex: we have made an interesting acquisition. one of the reasons of our great performance is the understanding -- is the outstanding performance. we are looking carefully about how the market is evolving and ,hould we have an opportunity we will be active. we will be more opportunistic. the main story will be organic growth. anna: alex -- manus: the toernment said we are keen maintain competition. you will say that you are not for sale did are you not for sale? what you get just what do you get -- what you get from a 20% holding? what is going on? alex: it was a business acquisition.
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15%ound a way of picking up and for that we give them an additional interest in the lundin petroleum. he had to see the 20% shareholders as a business to seetion -- you have the 20% shareholders as a business transaction and nothing else. going forward, we will continue to do what we have been doing -- we are one of the most active companies and that will remain so. [indiscernible] anna: you said you have done some m&a already. could m&a take you into areas, countries that you are not active in? any appetite to snap up anything of a low valuation? alex: first of all, lundin petroleum was the main focus. if m&a deal will take place for
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us -- the m&a appetite will be really driven by the opportunities and strategic positions in terms of our current positions. today, we have not seen so many m&a opportunities of high-quality so it is something we will continue to watch carefully. manus: the two big subjects for any oil deal, one is about capital expenditure. the second is about dividends. give us an update in terms of how confident you are in terms of dividend and capital expenditure people what more can you do and where can you take cost out of the business? alex: i will start with your second question. in today's environment, critical.l cost is
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it is critical to survive in difficult times. it is critical to continue to be up to grow organically. that is something we are watching carefully and we are putting a lot of emphasis. costs are going down. we've seen our major field which is operated -- the cost already gone down by 15%. wishing the rigs rate substantially lower -- we have seen the rigs rate substantially lower. we are very active to bring costs down. extreme the important this environment. -- extremely important this environment. anna: did you want to add something? alex: that is fine. anna: alexander joining us on the line. next. those numbers from they came through with other interesting commentary. they are talking about how the week after the referendum was strong.
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they see no clear evidence that the referendum affects consumers, in line with other businesses have been saying. not showing any impact from the brexit vote just yet. they do say they expect to continue to remain top for the rest of the year. as a result of that, there narrowing their four-year sales guidance in terms of share price gains. they are taking 1% of that for your sale guidance. -- 1% off that four-year sales guidance. they are bringing down there full-year pretax guidance. manus: this seems line.t seems to be in let's check in on the futures for you. lowest closeket,
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in almost a week. market,the european equity market set for slightly lower open, down just 0.6%. london's indicating slightly on changed. -- unchanged. will have a look at the risk radar surely. all that going back to the $40. you just heard from lundin petroleum. he still sees that market market having got ahead of itself. anna: brent in the bear market. let's get the bloomberg first word news with paul allen. all: -- paul: -- andy hall is telling bloomberg business. call says that oil supplies are beginning to shrink. the kralev winter is -- the glut
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of short-sellers on falling prices can only survive for so long. donald trump says interest rates are inflating the soft market. he recommends pension holders get out of equities just like he did. the republican presidential nominee planned what he called artificially low rates. that ain't the only reason the market is where it is because he gets free money could he's is the market would go great if he were elected. bond fund manager bill gross has reiterated his warning on sovereign debt after yields from the u.s. to australia tests an all-time low. rally is any the reversal will be painful for investors. he sets sovereign bonds at record lows are not worth the risk. china's planning changes. that is according to people familiar with the matter. they say any new rules would
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require approval. changes,ls -- any there would have the approval on the details of the changes here at -- details of the changes. bitcoin has plunged after one of the largest exchanges -- because hackers stole $55 million of the digital currency. it slumped to 15%. it is still investigating the loss and cooperating with law enforcement. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. you can find more stores on the bloomberg at top . i am paul allen, this is bloomberg. much.thanks very hsbc's profits fell, missing analyst estimates. the bank announced a $2.5 billion share back -- share
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buyback before the end of the year. let's welcome back philip larkin krantz joins us. how much progress has the bank made around restructuring estimates and what do we know about this buyback. >> they seem to have come fairly far away from the restructuring. it is still going on. he indicated most of the work had been done. if you look at the capital levels that reflect -- came in a 12.1% just ahead of the analysts consensuse -- analyst here in may people feel more comfortable with hsbc. -- consensus. it made people feel more comfortable with hsbc. you can read it as a way that the u.k. regulators are comfortable enough with their capital ratios right now to sign
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off on this. manus: brexit is a fact. we have been looking at it. the japanese are spending more because of brexit. how about hsbc? philip: that was a copy became up. that's that was a topic that came up. -- that was a topic that came up. they are going to wait until negotiation start to see what position the u.k. takes. quite vocal about what they might need to do in terms of reshuffling staff, etc. after brexit. they are going to take measures to address things like past porting rights. they are indicating they are in a wait and see mode for negotiations before they really decide how are what to do.
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anna: philip larkin krantz joining us. numbers moving across the bottom of the screen there it we have details from the mining business. manus: this is the underlying profit -- that comes in in -- that comes in with what the market estimated. that is down 47% year on year. of the dividend, this is where the market is going to be most focused. the dividend comes in at $.45. we have pencil been this pencil then, $.55. -- penciled in $.55. that would be below last year. a 50% drop from last year. very target range of 40 to 50% of underlying profits to this dividend number just on a very fresh reading, a little bit lower than it could have
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considered. in terms of net debt, 30.6 billion is what we have been looking at for the number. -- 13.6 billion is what we have been looking at for the number. ceo: we'll see what the new of the business has to say about the dividend and other matters. bloomberg will be speaking to the ceo of rio tinto, jean-sebastien jacques. manus: juliette saly standing by. juliette: not a great day in asia. we had australia, korea and japan all close in the red. japan down 2%. you can see a lot of disappointment with the details of a base stimulus package which came through after the closing bell in japan. we also during tuesday's session had that 1.5% surge in the yen. it has given back a little but we are seeing a lot of downward pressure coming through from japanese stocks and a number of earnings also missing the street
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with their earnings. -- hsbc'sbly so results came through every stock on the hang seng index was in the red. weakness on the shanghai, asia market. that weaker oil price like into the australian share market which is closed lower by 1.4%. weakness coming through in asian equities and also in currencies today. the yen down .2% holding at 101. anna: juliette saly with the latest. the picture coming out of the asian session. up next, axa's first half earnings. we speak exclusively to the ceo. this is bloomberg. ♪
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manus: we just had the earnings from axa, francis -- france's biggest insurance company. insurance upsetting the claims. thomas, great to see you. you take up the position month. the profit up 4%, a little less than the market anticipated. what are you going to do when you set the chair that's when you sit in the chair. - when you sit in the chair? tell us your vision. thomas: thank you very much. good morning. we are operating in a very challenging environment with low interest rate -- rates. the key issue we have to take is to focus on getting our operating results stable and moving up in a difficult environment. at the same time, transforming the business, because our
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customers are transforming. we really want to get from a pair to a partner in a very difficult environment, serving our customers better. anna: you talk about getting up that operating result in a low interest rate environment and how do you do that? environment. how do you do that? thomas: it is true that the environment is challenging. we have to do three things good one is we have to clearly manage our cost very effectively could we have to -- effectively we have to manage our markets -- our margins effectively. pnc and capital inmanage our a different way than previously. manus: a couple of targets that have been bequeathed to you. the return on equity.
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and adjusted return of 12% to 14% by 2020. is that realistic? will that slip given that we are in this lower for longer period? thomas: we have been clear about this. you have to differentiate between what is in your hands and what is not in your hands. what is in our hands is the --rational levers such is such as margins, growth, capital . we have said we will deliver 8% over the. to the period what is not in our hands is the french market. one week -- is the financial market. if you put those two effects together, we will deliver underlying earnings between 3% and 7%. anna: utep but things that are not in your hands, and the
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brexit vote falls into that can't -- you talk about things that are not in your hand in the brexit vote falls into that category. thomas: on the brexit, you have to look at two things. an immediate effect on the u.k. economy, and certainly its trading partner in europe. we will see that effect once it comes in to place in our u.k. entity and also in the respective european entity. there is a secondary effect which is larger, which is the effect on interest rates, both in europe and the u.s. and certainly an impact on market volatility that has increased significantly in the past few weeks. manus: you mentioned the interest rate world. i look at some of the assets, investment-grade in europe has had its biggest rally in four years. had a monsterve
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rally, the best since 2009. the insurance business like yours, it is getting harder to buy these assets. d.c. bubbles forming and european investment grade assets -- do you see bubbles forming in european investment grade assets? thomas: we are not short-term investors. we are long-term investors but it is clear that those short-term movements on the market also have an impact on the long-term, and it becomes difficult to invest. if you look at -- we have managed in the first half of the year to reinvest at a rate of 2% , not changing our risk appetite which i think is a very good result. anna: tell me about the m&a environment. you are not yet in the ceo seat. what kind of deal will you look to do, thomas? thomas: m&a has been the strength of axa from the
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beginning. we have grown from m&a. where in the position where we have -- we are in the position where we have mobile scale. it is focused on -- we have global scale. we see selective m&a in growth areas. such as emerging markets, commercial pnc but really selected m&a. if elected market at the moment, you have to be very selective because prices are still very high and targets are difficult to get. manus: thomas, thank you so much for joining us today. term us barbel, incoming ceo -- numeral --el -- anna: pmi we saw weaker. medical -- manus: flow and
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packed show today. anna: that is it for "countdown." on the move is on next -- on the move is up next. this is bloomberg. ♪
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manus: welcome. this is on the move in london. it is on seven thursday -- 7:30. where can down to the opening. i am manus cranny and this is caroline hyde. plummet.ofits slowing growth in china and the prospect of a recession here in the u.k. -- the global fund market rally unravels. japan's worst bond drive since


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