Anna welcome to countdown. Ryan we will be talking to the ceo of this swiss drugmaker later in the day. Just missing sales the estimate on sales coming in at just over one billion swiss francs. The expectation from analysts was 1. 3 billion. Anna the swiss drugs giant considering reporting what they call a good Second Quarter. That number is for the Second Quarter and that is actually 12. 69 billion compared to 12. 7 2 billion that was the forecast. A touch shy or broadly in line with analyst estimates. A lot of focus on where this business is going and where theyre going to guide the market. Deutsche bank and ubs thought there could be room for an earnings upgrade. Core ets for the Second Quarter coming in at 1. 37. It this will we will have to wait and see whether we get anything of that ilk coming through. On that core operating income number 3. 5 9 billion in the Second Quarter, just a touch ahead of the estimate of 3. 58 billion. Ryan Deutsche Bank talking about that ahead of this but so far say nothing on that as of yet. And here we have the net sales to grow midsingle digits. By short of the expectation we had from Deutsche Bank and ubs that they could upgrade their forecast for the full year for operating profit growth, we are not seeing that, they are not doing. Anna seeing a year continued operation nets sales. A fouryear core operating income to grow ahead of sales. Lets talk about the Commodity Markets as well. That is certainly one of our headline stories. On monday, we saw the bloomberg quantity index touching a 13 year low. We are still at those kinds of levels. Just to underline the scale of what we are seeing, that means there weaker than they were around the banking crisis in 2008, weaker than the crisis in 2012. Ryan gold is the biggest component in that index, trading just north of 1100 per ounce. That is near a fiveyear low. We saw the huge drop, the biggest drop in a few years. After somebody sold three pickup trucks worth of gold on one exchange, then we had that huge selloff. If you thought that was just a oneday occurrence, gold is right near that intraday low of yesterday. We are seeing continued weakness, not just in gold but right across the board. Anna we are getting a few comments from toshiba. One of the companies was toshiba and we are hearing toshiba president and to others tell the board that they will resign according to the nhk in tokyo. The former president to resign. We will be out to asia and just a moment for an update on what is happening in the market more broadly. Gold dropping to its lowest level in five years and oil falling below 50. David very good morning. An update here on how these Commodity Prices really played out. As far as equities were concerned, we mostly brushed that off. Obviously, weak spots here and there especially in australia where you have the market exposed to the mining sector. The rest of asia, we were looking much better than monday. When we woke up here tuesday an absolute route across the board, whether you are talking Precious Metals energy, oil dipped below 50 for the First Time Since april. That is the damage over the past week. Gold is about two dollars above 1100. Keep in mind, silver is at a six year low. I mentioned energy. . 9 . 97 for ny 49. 97 for nymex. You saw fairly pronounced moves in things like wheat sugar. Soybeans, so on and so forth. We could go through the changes of these prices all day, but theres certainly a lot of strong downward pressure at this point. You have weakening the buoyant demand a weakening demand, a slowing china. The weather is cooperating. We have a bumper harvest, for example, in brazil. It is a confluence of factors. Will we then see this play into deflationary pressures as we move forward . Equity markets are doing ok at this point. We will continue to follow what happens across these Commodity Markets. Anna thank you very much, david inglis. Ryan weighing in on the commodity story on twitter. The question is, if the commodities rout continues, will the fed be continuing . Across the atlantic, amazon is in focus. Caroline the sexy world of accounting online and analyzing your supply chain. We are seeing numbers come back in line with estimates. Sales growing more than have been forecast, getting close to 5 billion euros in sales. Cloud subscription growing faster than had been anticipated. 555 million euros. This cant this company is managing to suddenly gain traction. The people who supply all of this on Software Applications remotely you and i dont need to invest huge amounts of money in service here in the office. Whether we are in the office or working at home, we can access communications. That is why they need to get onto the cloud, do it quickly. We are seeing that demand for cloud subscription dries up and beat analyst forecasts. We are getting some breaking news saying that they could do targeted job cuts in 2016. Anna lets stick with technology and move back to some things that happened in the United States yesterday. Talking of cloud keep your i on what is happening at ibm. This is a comedy that hasnt made the transition as quickly as sap has. Instead, it is sluggish and we are seeing it moving into cloud, not working as quickly as they would have hoped. This is a 103yearold company. Sales down 13 for the 13th quarter. They were hurt to a tune of 9 but this is a company in transition. Definitely trying to get these new products available. It seems as though they are not managing to compete when it comes to rivals such as amazon and microsoft. Ryan amazon under fire specifically because of this movement into the cloud. Caroline to be able to get access to put their data online, to save their data. It is a huge moneymaker for them. We see amazon strip out Amazon Web Services and start to show off how much money they are putting in and people are wildly impressed. This is a massively growing part of the company. People like it because of its diversification. Bigger than black friday. Decadesold. A new retailing day and still they managed to win out on prime day. Anna caroline, thank you very much. From old tech to new. Platforms like paypal are cashing in on a younger consumer base. The ceo of the company told bloomberg what is like to be his generations money manager. Paypal is the Worlds Largest peertopeer platform. One of our services is then low. Is venmo. It is really the way the millennial generation manages and moves money. Ryan that was paypal ceo dan shulman just minutes after the company went public to much fanfare. Anna greece has dominated Investor Sentiment for months that our next guest says he expects a few greece free weeks. More on that. Anna welcome back it is a quarter past 6 00 here in london. Ryan u. S. Oil falls below 50 a barrel in gold traded near a fiveyear low after a selloff. The bloomberg commodities index is weaker than after the 2008 banking meltdown. The u. S. Economy push the fed toward pushing and toward boosting Interest Rates for the First Time Since 2006. Anna Morgan Stanley be estimates. But ibm reported secondquarter sales decline across all of its Major Business units. At march the 13th straight. Of the 13th straight period of falling revenue. Ryan spacex ceo elon musk says an initial investigation into the explosion of the falcon nine rocket last month was probably due to the oxygen tank. They say that it was about 70 centimeters long and three centimeters wide. They say spacex may have become too complacent because it has grown in size and the majority of its current employees have only known successful launches. Anna the president of toshiba and to others are set to resign. According to forecaster the accounting scandal was caused by executives setting unrealistic accounting targets. At a Board Meeting earlier today, the vicechairman told the japanese economy minister that he intends to resign from all public posts. Ryan lets look across the atlantic. Embassies in washington dc and havana open after a diplomatic freeze that lasted more than five decades. John kerry for restoration of relations will take some time. We have begun a process of full normalization that will take time it also benefit the people in cuba and the United States. Anna the ceremonial raising of flags underscore unresolved issues like the longstanding trade embargo. Kerry alluded to a possible lifting of the sanctions. We would hope, obviously that the embargo at the appropriate time would be lifted and that a great deal more foundation can be built for this relationship. Ryan some members of u. S. Congress about to block moves to end the trade ban. Anna greece is finally looking at a potential payday. August the 17th, according to official familiar with the matter. But will rebuilding the Greek Economy be easy . I think the deal that has been cut is going to be incredibly hard to implement. That is true for a lot of reasons. Number one, because the greek government itself will get considerably weaker. Anna that was Eurasia Group founder and president ian bremmer. Ryan lets get a few view of the markets from bank of America Merrill lynch. Think you very much for being here. Just heard ian bremmer talking about how this will be a difficult deal to implement. With what we have seen over the last week since the deal was done what does what we have seen such far seen thus far tell us about how the application will go . It started on a bridge loan. The negotiations for the new program would be very difficult. I believe that expecting a final agreement by mid august is very optimistic. It would take longer. They have to agree on the reforms. They hope to capitalize the banks. This is going to be very difficult. Anna do they have to discuss debt relief . Yesterday we heard from Angela Merkel and she was saying how discussions of debt relief had started until the third phase of this new bailout. She suggested that debt relief was not going to be part of this conversation. Athanasios it will not be finalized, but the discussions have to start. The greek government is approving fiscal measures but we still dont know what the target is for this year, next year, the future years. Ryan we had the reopening of some of the banks yesterday. What do you make of that . Athanasios good news that they opened but nothing of substance has yet changed. I think it would be a huge issue how to bring the banks back to life, how to restore confidence. Greek banks had a very high amount of nonperforming loans to begin with. Anna we all are a bit exhausted by the greek stories and we are looking for other things to distract us and other things to inform us. We dont have a great deal in terms of major data releases. What is your focus going to be on this week . Athanasios actually, the last week and this week the theme in the markets was divergence of monetary policies. It started by comments by yellen and carney last week at a surprising cut by the bank of canada. We saw the minutes from the bank of england this week. The ecb may think last week was a little bit mixed. Many expected draghi to push. A suggestion will do nothing anna we are on twitter today asking if we will see the fed go ahead with what it wants to do and that is increase Interest Rates in 2015. Do you think that is likely . As you have highlighted, many of their currencies have been affected negatively by what is happening Commodity Markets. Are we really in a world that is so decoupled that the u. S. Can only be the part of the world could be only part of the world hiking rates . Athanasios they have not experienced a very strong recovery, but it is a recovery. The fact that inflation is low does not justify a halt, it justifies its starting and going very slowly. Ryan we are to get the bank of england minutes later this week. You say you expect it to be a 90 vote but theres a chance it could be 72. Why does it matter . Athanasios it will help us determine the exact timing of when they will start hiking rates. Our expectation is february. If we get some surprising vote that could start even earlier. It just matters for the shortterm given that. Ryan the market right now is pricing at 50 likelihood of the fed hiking rates in september. Is that what you think . Athanasios we have been saying that there are risks for december. We will fill even more confident following yellens testimony. Our expectation is eurodollar at parity by the end of the year. This is consistent with a fed rate hike this year. Anna is there anybody that doesnt believe in this dollar stronger story . It is kind of worrying when you hear things that everybody believes. Anna athanasios when we look at position indicators, the market is nowhere is low on dollars as it was earlier this year. Anna is that because the market is a little bit less convinced that yellen can really follow through . Athanasios what happened last week was a surprise for the market. Also, since march, eurodollar has been very difficult to trade. Ryan the pound, where you see its going . The comments coming out of the yuan coming out of the u. K. And the u. S. Athanasios we think it has more room to weekend. Given that the fed will start ahead of the bank of england. Anna thank you very much for joining us. Head of fx strategy. Ryan we get earnings from apple, yahoo , and microsoft later today. Will china deliver growth for apple . Will we hear more from yahoo on its alibaba state spin off . Anna plenty more the tech stories. Were talking about ibm a little bit earlier with caroline. We will get her back a little bit later in the program to continue our conversation around that. Commodities, very much the order of the day. We have reached those levels not seen since 2002 on the bloomberg commodities index. That means we are now lower on commodities. It is quite broad, across a wide array of commodities. Weaker during the eurozone crisis of 2012. Ryan the oldest oldest around 1100 an ounce. Anna here is a story they need to know this morning. Ryan u. S. Oil fell below 50 a barrel and gold traded at a fiveyear low. The bloomberg commodities indexes Holding Losses after dropping to its lowest level since 2002, weaker than after the 2008 meltdown in the eurozone crisis of 2012. The u. S. Economy pushes the fed towards boosting Interest Rates for the First Time Since 2006. Anna the president and toshiba and two former president s are set to resign after they are sent to reside there are set to revise their earnings. They set unrealistic profit targets. It is the biggest such adjustment in a Japanese Company account since olympus with its 1. 7 billion scandal in 2011. Ryan Morgan Stanley earnings the estimates as recorded jump in trading in brokerage fees. Ibm reported secondquarter sales decline across all units. A 13 straight quarter of falling revenue. Anna elon musk says the investigation into the explosion that destroyed one of its companys falcon nine rocket was probably due to the failure of a struct inside a rocket fuel tank. He said spacex may have become complacent because it has grown in size and the majority of current employees have only known successful launches. Were just getting numbers through from hermes the handbag and Luxury Leather Goods and perfume. Sales, 1. 1 7 billion euros 1417 billion euros. 1. 17 billion euros. They say the consolidated turnover is equal to 2. 29 million euros. The growth amounts to 9 . In terms of their growth targets, they are repeating their growth target of 8 . Ryan the u. S. , europe, and japan are helping to make up for the showdown in china. Anna they are talking about japan being up 20 . Selective distribution network. Asia, excluding japan, up 7 . They say japan is maintaining its dynamism. Those from china are not so keen to go spend in those markets as they previously were. Ryan delta earnings from Pharmaceutical Company actelion. What are you happy is about from your earnings today . I am very happy because, of course, we have very good financial results. This is because of the success of our new drug. The drug that we discovered within actelion. This drug will replace our main drug and therefore it gives us a future. This is why i am very happy. Anna that sounds like a good reason to be happy. Can you tell us a bit more about that . When are you going to be able to pass sales . I think that we believe that maybe at the end of next year or the beginning of 17 the sales. I dont have the numbers in my head. In the longterm, they have reached the peak sales, maybe even better. There is a very good future. Of course, we can test this product. We might see some very good surprises in the future. Ryan i want to go on to m a. You have another drug awaiting approval. What are your sales goals for the drug if it gets approved . I think it is very early to discuss numbers before we get the label. I think that my goal is to have a very big drug. We have to know is that this is not competing. All the sales will be coming on top of the sales of the other ones. Therefore we will improve our final performance. Anna there have been many reports that you have been approached. Can you confirm if thats the case . We dont comment on these type of rumors. Actelions goal has always been to create a company with research, with innovation and with a fullfledged commercial organization. We dont need to help with any other company for our operations and therefore, our goal, i think, is to be able to have the shareholder value increase and increase our share price. That is the best way for delivering shareholder value. Anna does that mean youre not open to the prospect of a deal . I think it is very clear what i say. I say that today, the best way to create shareholder value is to remain independent. Ryan we are going to leave it there. We would like to quiz you more about that but i guess we need to move on. Thank you very much and congratulations on your results today. Anna we had earnings from sap earlier in the hour but there is more to come from the Technology Giants with apple, yahoo , and microsoft reporting later today. Joining us is the head of rates at aviva investments. Paul, lets start with you. What can we expect from apple this quarter . Paul you talk about apples quarters over the past several years, it is all about the phone. Is the largest margin business line on the platform. Almost 50 million unit is quarter. Investors will probably want to hear about some of the early signings with the apple watch. I think there will be a growing investor interest in the watch on a category. I am not wearing the apple watch, im going oldschool. We saw sap deliver. Can we see microsoft deliver on that same front . Paul i think the cloud imputing business has some Major Players in investors are really focusing on the specifics because it is a category that is growing dramatically and it is one that is upscale. It looks to be the home of a hand skin a handful of large players. We are seeing average unit prices declining dramatically as competition heats up. You see these Companies Cut price almost every month across the board and yet the business is growing quickly in terms of scale and investors are really keen across the board. Anna can yahoo deliver Revenue Growth again . The Older Technology businesses struggling to redefine themselves. Paul for the last several years, it has really been about their investment in alibaba. Com, which has been a huge home run. One could argue that if you back out the value of alibaba and yahoo japan, that there is essentially no value being accorded to yahoos core business. At some point, Marissa Mayer is going to have to deliver Revenue Growth. Have not seen it over the last several quarters and one could argue that the pressure is really building up on her to show that the yahoo core business is worth owning. Anna thank you very much, paul sweeney. Charlie, waiting patiently. Good to see you. Im picking up on something you wrote in your notes. You say that greece has now gone from chronic to no longer acute. Is that how you are sort of putting it to one side. Charlie i suppose that robert being front and center in dominating all your thinking, it is still there and still a factor but it has moved away from a crisis point. We have seen this time and again in the european crisis. Something happens, some sort of fix and then it all disappears and they negotiate for a while. You either achieve a resolution or you dont. Then you come back to the same problem. There is a long way to go just to sort of get ourselves to the third bailout. Then there is the whole issue of debt forgiveness. Ryan commodities have replaced greece in the headlines. Charles arguably, in a way, it is almost more important to the has longterm systemic macroeconomic effects. The immediate asset class implications, the dollar for example, and there is the obvious first round fix. For example, the oil prices increasing. There have been some surprising things in the u. S. A lot of the money seem to get spent on autos. Those are the first round of facts but then there are the second round of facts. Second round ofeffects. You have these currency tensions with the chinese keeping the currency stable. Not really creating inflation. We are in this backdrop of this Inflationary Pressure from oil and commodities. It is also possible to create inflation. Anna if we continue to see this commodities wirout taking place, will the fed be able to increase rates in 2015 . Charles yes and no. Anna too early to say. Charles is the difference between should and will they. Right now, if you took away everything to do with employment , the case is not there for the fed to raise rates. Given what we are seeing in things like the commodities complex, you are not going to be there by september. If they move in september, it is because they dont want to be at zero. Someone come up with the argument that they need to do something a later stage of the need to cut again. That is how some people view it. You are in an environment where the case for moving now is more to do with the timing issue and when they can get the window of opportunity to move and normalizing markets. Ryan coming up, obama hosts the nigerian president in the white house. After the break, we will see what the Partnership Means for trade in the fight against terror. Ryan it is 6 47 here in london. Anna commodities slide to their lowest in 13 years. The bloomberg commodities index dropped to its lowest level since 2002. The outlook for commodities has soured as a strengthening u. S. Economy pushes the fed toward boosting Interest Rates for the First Time Since 2006. Ryan the president of toshiba and two former president s will resign after the company says they corrected their earnings to the tune of 1. 2 billion. A thirdparty investigation revealed. It is the biggest such adjustment in a Japanese Companys account since the 1. 7 billion olympus scandal. Anna the worlds biggest drugmaker by sales has reported secondquarter earnings. Core operating profits dropped. Ryan president barack obama promised the nigerian president american support in sending off a block sending off islamic extremism and corruption. He met him at the white house. Lets get more on what this means for relations between the United States and africa. Bloombergs emerging markets editor at large and author of frontier. What are some of the highlights between yesterdays meeting . The key highlight is the promise of cooperation. Keep in mind, nigeria was at odds with the u. S. Just a few months ago. Nigeria was complaining that there was insufficient u. S. Military aid coming in. The u. S. Was blockading helicopter gunships because of fears of human rights abuse. This is a breakthrough, a step forward. Beyond the military, the key point is that obama is looking at what will happen next with the economy, saying he looks forward to hearing about the plans for the economy. Investors just dont know really what the economic plan is because there is no finance minister, there is no government yet. Anna how does the meeting yesterday, how does that advance the Investment Case around nigeria . As you have stressed, there are reasons to you little bit concerned about investing in nigeria. Gavin the key there is demographics. Nigeria has all the factors of the bric economies. What youre seeing from the United States is potentially that big leap forward because the United States was a big importer of Nigerian Crude Oil in 2010. You had a Million Barrels of oil a day going into the u. S. Now that has come down to levels of tens of thousands of barrels. Ryan on the back of shale oil. Gavin it is a double whammy for nigeria. Ryan the fact that president obama is going to kenya and ethiopia and not going to nigeria, is that sort of a nontwo kenya sort of a nod to kenya. Gavin i think it kind of makes more sense in a way because it is one man who can meet lots of officials in washington whereas there is no government yet so obama going to nigeria will be less of an opportunity at the moment. Kenya and ethiopia are the rivals. Here, you have a lot of potential. Kenya was number one in the book that made it to the top five of the investment picks. Anna thank you for the latest on relations between the United States and africa. Lets get back to charles, head of rates at of the the investors. At aviva investors. The bloomberg commodities index goes back to 1990. The peak is astronomical really. Charles obviously, there is an element of leverage at work here and speculation. Particularly, the very strong spike and the selloff afterwards was partly leverage partly speculative movements in the oil price and then the financial crisis reversing all that. It cant be understated in terms of how important it is for a macroeconomic point of view both for certain both for first round and secondround effects. It poses a big question for policymakers. How do you stop this disinflation . Anna for big divergence between the different Central Banks and how they respond to lower Commodity Prices. Charles and into 16. Japan is a good example. Have gone all in with qqe and are looking to create inflation but if you take out the impact of the sales tax and how that spiked the inflation rate, our poor levels are back down to zero. Ryan can we talk about china for a second . There is a note out about iron ore and how the Chinese Market is oversupplied. How concerned we need to be about what is going on in china . A few weeks ago we are very concerned about the chinese stock market . Charles it depends on what you define as concern. Are the authorities in china going to be particularly worried . Only in terms of a destabilizing the whole economy. In terms of the true macroeconomic effects, not that strong really. The problem with china is that they are still involved in this reform process. They are still shifting the whole emphasis of their economy. Whilst they are doing that, that price to pay is in growth. They also have various other objectives such as renewing the asking. That means they are made renewing the basket. This whole process is one of exporting disinflationary impulses to the rest of the world but also keeping a lid on the potential pace in china. It is a big economy. Anna charlie, thank you. Tim, i see headlines like monster el nino and i dont know whether to be excited at my Holiday Plans or devastating effect of global warming. Which you ago for . Do i go for . Tim both. The hottest records on record are all occurring this year. When you go back and look at the data, the warming trend is obviously continuing and is there for everyone to see. Ryan the Pharma Industry thinks it finally has a fix for migraine. Tim it is a very interesting story actually. The Current Treatment for migraines is actually botox. Believe it or not. The story is about four different Drug Companies all racing to come up with a cure for migraines. It is actually far more widespread than i realized. Anna vintage car values are boosted by social media. Tim it is a new study that shows that people posting on instagram their cars drives demand for these. If you follow David Beckham on instagram you will find he is a huge fan of 1930s roadsters. Ryan we will be back. Charlie stays with us. Commodities crunch deepens. The index trade near it lowest level 2002. Gold trade near a fiveyear low. But ibm falls at her earning miss. After earnings missed. The drugmaker report a second decline. As wrong u. S. Dollar erodes sit a strong u. S. Dollar eu road sales. Erodes sales. Ryan it is a very busy morning. Commodities are bringing a number of threads together. Huge drop. Gold trading north of 1100 an ounce. The sudden drop was going to be shortlived. It is the with us today. Brexit has been a broadbased selloff. It has been a broadbased selloff. It is affecting what hedge fund are doing. They are the least bullish on gold going back to 2006. Brexit is dropping below the fifth two dollar a barrel level. Lets get to asia. David is in hong kong. What more can you tell us . It has in the big story today. David it certainly has. It depends how long we actually stay at these depressed levels. Basically wiping out gains. We will give you an idea of how this is playing. You look at two groups. The conversation has shifted to ari going to see right off. When do they Start Talking about if it is cyclical. You have mining stocks off. Industrial metal is down 3 10 of 1 . The other week stock in otherwise a very good day. In japan the reason we are doing so well, japan closing up shop very strongly. The dollar yen is something to watch for as well. Very slowly we are approaching a 13 year low. Interesting. We will keep an eye on that. Tell us about toshiba. Break that down for us. It is an interesting story. At any point they will be releasing this. Let me tell you the story. I guess the back story is that sometime in midmay the company basically said we found some accounting irregularities. There are two things that happen. You have a thirdparty investigation alongside of full report. According to the thirdparty investigation panel, we have a figure of how much they will have to reinstate earnings. When it comes to who is responsible, there is a lot of pressure on top executives to resign. The president and a few other top executives may be resigning today according to the nikkei newspaper. We may see headlines drop. Todays twitter question is if the commodities rally continues, will the fed stick to its 2015 rate hike guidance . Charlie made the point. Cloud computing is making or breaking. Ibm and amazon are showing how crucial cloudbased products are proving. Sales up 20 . Profit up 13 . It is clear to see it is all about cloud the descriptions more than doubling. We want software that gets to us wherever we are. We want it delivered online. It brought companies. They are set to see a quadrupling by 2020. You see once again how the cloud is making or breaking companies. That is the 13th street quarterly fall we have seen in ibm sales. This is a juggernaut of a company. It is a 103 year history. It is trying to transition into Cloud Computing technology. This is a company that used to make the big servers we have to invest in. Storage as well. 9 is how much it hurt them in their Second Quarter. We are seeing the dollar up 12 . Amazon web services is an area suddenly starting to break out. Yes, amazon is an online retailer. It is also an infrastructure seller, a seller of infrastructure for the cloud. A record high we saw in terms of overall share price. Why is the share price getting so excited . Many analysts say this is booming. Its not just about the consumer. Its about small startups. So many of them use Amazon Web Services for their web structure to put their data on the internet. We saw a backlash from consumers. Up 18 in terms of sales versus black friday. Charlie, we have talked a little bit about various parts of the world. We talked about china and possible troubles there. I interest did in china because 10 years since the peg was taken away. It went to being one with quite a narrow band. Do you consider it to be a currency ready to take its place on the world stage . You think the interventions have raised questions about that . Its an ongoing process. You need a fully open account, and you dont have that in china. They have tried to use the currency as macroeconomic at some points. We are not really there. The whole idea of seeing internationally recognized is part of the process. Should it happen . Yes, arguably. Its the second or Third Largest economy in the world. We have a chart going back to the early 80s showing it was very much tagged. Pegged. It has gains in value since they remove that. That has to do with the imf. We havent talked at all about strategy for fixed incomes. What should it need . Be . The fact that the u. S. Is doing ok, but globally there is still an issue with growth. Growth is not delivering as much as expected. That combined with this inflationary bias. It puts a challenge for the front and, but the long and, disinflation, we growth, it is a preconstructed mix on a global basis. There are something things you prefer over others. If they start raising rates, you have seen it recently. It is the list, not a bearish. Thank you very much. Coming up. Will talk about the commodity crunch and what it means for global markets. We will go to melbourne when we return. It is 7 15 in london. Here are the stories you need to know. U. S. Oil fell below 50 a barrel. Gold traded near a fiveyear low after a selloff saw commodities the lowest. The bloomberg commodities index is Holding Losses. The euro zone of 2012. The outlook for commodities has soured as the strengthening u. S. Economy pushes the fed to boosting Interest Rates for the First Time Since 2006. The company says it will correct its earnings. The thirdparty investigation revealed. It is the biggest adjustment in the Japanese Companies account since olympus. The worlds biggest drugmaker reported a second decline after the u. S. Dollar is eroded sales. Core income fell 3. 59 billion. Lets see how the annexes getting on in greece. We are joined by the adore us. Good to have you on the program. I know the greek pharmaceutical industry is one that would like to play its part, helping to boost exports. Do you think at any point the industry wanted to leave the euro because the valuing currency would be a quick route to getting more exports . I would like to point out the pharmaceutical sector is a very strong sector that will lead growth to recovery for our economy. The pharmaceutical industries are related to National Industries around the world. We strongly believe we are part of the european union, which will remain there. We dont believe any other currency would help us in the long term. The banks have free open, but the capital controls are still in place. Give us a sense of what it is like to do business in greece with the banks in the state arthey are. Its very difficult to explain. We are more likely because products and imports are excluded from capital control. This goes through a significant, strict process. We have to make an application. On the other hand, the majority of Greek Companies suffer. We believe this is very basic for the banks to be recapitalized. At the height of the crisis many commentators were asking if we were going to see some sort of humanitarian crisis whether the country was going to be able to import enough medicines. Are we passed that . Do we see a shortage of any medicines in greece at the moment . Local and multinational pharmaceutical industries cooperate. We have succeeded in minimizing shortages. I think it is important in this environment. I believe if things do not deteriorate and if we proceed with the agreement we will not see any shortages. Thank you very much. We appreciate your time. Lets turn back to the markets. Lets get a view from australia. David is in melbourne. Good to see you. How are commodities faring in the trading day from your perspex live . Perspective . David we have seen some gains so far. Energy prices remain largely in the red. If you look at the bloomberg Commodity Index, that tracks 22 materials. That is Holding Losses after yesterdays plunged to a 13 year low. It is still a pretty weak outlook. Bhp billiton and rio tinto the biggest mining companies, they were pretty much unchanged in trading here in australia ahead of the open in london. Gold hit a fiveyear low on monday. What are producers and investors saying is driving this plunge other than Dollar Strength . That is a key question. It seems to be everybody you talk to has a different answer if at all. There are those who point to china with gold purchases. That disappointed some investors who had expectations it has to have more bully and holding. There is also less demand now that greece is working out its issues in the eurozone. I spoke to evolution mining, australias third biggest gold producer. They pointed to the Federal Reserve and the comments from janet yellen, who reiterated the u. S. Rates will probably rise this year. That is not a good story for gold. They see some of the larger north american gold producers starting to sweat at these prices. That may bring more sales from the north american gold producers. Thank you very much. David is joining us with the australian perspective. Lets stick with that topic. Australia we had comments from the rba just this morning talking about early indications that the Strong Quarter of growth had not carried on into the Second Quarter. This comes back to what we were saying earlier about the challenge to policymakers. The australian economy has in a twotier has been a twotier commodity. It was doing fantastically well. The rest of the economy was barely out of recession for a number of years. The weaker side takes over. They are looking for the currency to depreciate further. You cut out further monetary easing in my opinion. The story in the First Quarter was how everyone had strong growth forecasts and we kept undershooting them. The story became how much monetary easing was still being done. If we continue with commodities as they are and the dollar continues to strengthen even if the fed is set on raising rates you could see other countries such as japan. To you think the commodities could go much further . It has been dramatic. There are obviously some geopolitical influences with the pressure that is putting on oil prices. I would argue its hard to see what somebody makes. The underlying supply and demand dynamics are pretty negative. The volume data for china in iron ore is pretty ok. The price continues to decline. This shift in how shadow banking is working in china is part of the reform process. That is creating pressure on prices. I dont know how much further it can go. What really isnt there is the argument for a strong reverse. We heard a few weeks ago that the fed should hold off on increasing Interest Rates because of the state of the rest of the world, and the commodities story is part of that. This is fairly cyclical, isnt it . This could put up alls. Of course it could. To divert the fed would take implications that are not domestic. They set Monetary Policy for their own needs. If you start to see an equity meltdown, that would give them a perfect reason to sit there and say, the economy is doing ok but there is sensitivity. We need to because she is. We will hold off for the time being. The Inflation Numbers are not going to give them room to raise rates. If you look at the Employment Data and job creation. It is a good index. It is symptomatic of a lot of the u. S. Economy. Rather than surging, the latest reading fell by over 10 points. There isnt really this strong surge going into q3. Some of the transportation data, they tend to say q3 has been disappointing. We have to leave it there. Joining us for the last hour, thank you very much. A reminder we are tweeting about that story and much more. Get excited for the 1989 world tour with exclusive behind the scenes footage all of taylor swifts music videos interviews, and more. Xfinity is the destination for all things taylor swift. Welcome back. Here are the stories this morning. U. S. Oil fell below 50 a barrel. Gold traded near a fiveyear low. A selloff of the commodities at the lowest in 13 years. It is weaker than after the 2008 banking meltdown and the eurozone crisis of 2012. The strengthening u. S. Economy pushes the fed toward boosting Interest Rates for the First Time Since 2006. The biggest drugmaker reported the secondbiggest decline in earnings after the u. S. Dollar eroded sales. Operating income fell to 3. 59. An explosion that destroyed one of the rockets last month was probably caused why the failure of a strut inside an oxygen tank. It was three centimeters wide. They may have become complacent because it has grown in size. A majority of current employees have only known successful launches. Less than half an hour until most european Equities Trading begins. Caroline hyde is here with a look at what to watch. A little bit of caution. We are just in the green if you look at futures markets signaling what we could get in the equities market. The euro stoxx 50 is basically flat. We could move a little higher. If we managed to hold onto gains today, that would be a 10 day rally to the stoxx 600. That would be the longest winning streak since december, 2006. Were looking at the bond market because we are seeing borrowing costs coming down across the board. Germany coming down by two basis points. A little bit of money going into the debt market. That is also the case for peripheral debt. There is an appetite for demand. Greece is seeing borrowing costs coming down 20 basis points. Spain will be selling shortterm debt today, as will the u. S. And switzerland. Greece managed to pay its arrears and payback the bank of greece. Still, a majority of economists we spoke to feel that greece could once again be talking about a grexit in 2016. 71 of economists we surveyed think greece will be forced out of the eurozone next year. Keep an eye on greek markets. The corporate debt market seeing a light lift underneath it. Yesterday we saw seven issuers. They are getting a bit more appetite to sell debt because demand is back on. It has been put on the back burner for now. Just getting breaking news about toshiba. The toshiba president is to resign. That is going to be affect of from tomorrow. In the face of an accounting scandal that has tainted one of the most Famous Brands in japan. They said they are going to correct their earnings by 1. 2 billion u. S. Dollars. The Profit Margins led to fraud accounting. That report was released monday. Toshiba saying Nouri Almaliki muromachi will step in. We had several earnings reports this morning. Lets bring in the head of investment. You have a great story for us about how analysts are approaching the earnings season. What are we seeing . Are they going into a bullish mood . Yes, analysts are quite a list. The euro has weakened a lot. The domestic economy has picked up as well. It is coming together. Even though investors have been focused on greece and that has dragged down sentiment quite a bit, that has not had a material fact affect. It is higher than they were expecting in april. The Analysts Expect the biggest growth in what sectors . They like exporters and carmakers in particular. They have already gone up a lot on the expectation they will do well. Even though there has been a bit of slowdown in china, european sales are picking up. They are really bullish about carmakers. They expect banks to grow very well. Happy days. Does that mean we go higher and higher on european equities . Certainly the rebound we have seen in the last eight or nine days has been pretty rapid. We are now trading at 16 times estimated earnings. Even more expensive than they were training two weeks ago. They are still cheaper than u. S. Stocks. A lot of investors are still bullish. If you see a strong earnings season that is the affirmation they need. And that means for stocks . Hopefully another leg higher. Thank you for joining us with a look ahead to the earnings season. Lets bring john. Does that ring true and upgrade picture from a number of analysts . Ask it is definitely one to hope for and to expect. There are two forces. One is the u. S. Dollar being a big help for european economies. The other is the commodities story. We have had such a large drop in commodities prices. All of that is coming together. Commodities have been watching more the top and bottom lines. They have been watching the greek situation. I think markets called it right. Essentially the greek issues have turned out to be nonsystemic. You see a eurozone that is more cohesive. There is one guy out on his own. Some tailwinds look pretty favorable. You went into cash a month ago. Based on concerns with greece and the prospect of a rate hike. Now you have gone out of cash into european equities. We have gone back into markets. I guess we all understand the risk of grexit has decreased. The rate of an Interest Rate hike has not decreased. Why are you bullish and ready to go into more risky assets . Essentially we have been positive on taking risks for a long time. We thought we would stay positive through the year. As it turns out, greeces behavior raised the possibility of more disorder than we thought was going to be the case. Because we didnt think markets were great for that level of uncertainty an opportunity to take a bit off the table in the hope we could put a bid in the market. Luckily the opportunity arose and we put the money back in the market. We have always thought disorder in the eurozone testing the systemic sustainability, the eurozone was a higher risk than the rise in the fed rates. We should be in a Strong Enough position to contemplate. That is an event that can be braced for. Markets know about Interest Rates. They dont know about the falling apart of a commodity. Although it is nine years since we saw it. Somebody is going to get it wrong. Somebody is going to make the wrong bet. There is volatility around it. For us to be able to navigate around that it is not worth it. You like european equities. Why . I think europe has become a more cohesive unit as a result of the trials and tribulations it has been put through. I think Angela Merkel is going to go down in history as the savior of the eurozone. The banks are fixed. They are ready to start lending. European companies are a little more upbeat. If you look at the peripheral economies that stayed with the program it is a lot better. Spain and portugal and italy, the subtext of europe is starting to look like it. She gets to turn the diplomatic line. That seems to work in her favor. You mentioned the European Growth story. If we start the focus away from the greek story and away from the differentials in the Interest Rate, we are talking about parity for the euro. That could be another boost. I think thats right. We are getting to the point where the fundamentals are beginning to put a different strain on the system. If you look at the eurozone as a unit, it should be a strong currency. They have an enormous amount of payments. Not a deficit. The balance in terms of budget look at a good. I dont think the fundamentals are there to push and lower. We will be right back. He is going to stay with us. We will look at one drug maker who is down on the Dollar Strength. We will talk about what is to come for the pharma sector when we return. Here are the stories you need to see. Gold traded near a low. The commodities are Holding Losses. It pushes the fed to boosting Interest Rates. The company said it will correct its earnings. It is the biggest such adjustment since the 1. 7 billion scandal in 2011. Core operating income fell. They saw the growth drop. Starting with the results. What do you make of them . This is not deterioration. It is almost the same as we saw in the First Quarter. They have done really well in the generics business. They have gone back to the bad old days. They do cataract surgeries and lenses. That is under pressure again. We have had issues before. They looked a bit weak. This quarter is negative growth. That led them to reduce guidelines for the division. We were hoping it might help them improve their targets. I know Deutsche Bank and ubs are raising the prospects of an upgrade. We saw the brazilian businesses are due strong. Those that tell us anything else . Maybe they have a positive readthrough. We will hear from them next week. Slightly different businesses. This could be positive for them. On the top line on the farm the pharmaceutical side they have done really well. There are improved margins. What we want to see is them not dragging too far. They fell. That could be a bit of a problem for a business trying to improve margins. What is the key thing we need to look out for . I think you will get a lot of questions today what are they going to do to improve it, but a lot of questions will be looking at how they are going to price this. There are various numbers on the market. Analysts go from two or 3 billion to six or 7 billion. Pricing continues to be an issue. We would like to know how they are going to price it and get people to use it. Lets get back to john. Youre listening to that conversation. Anything in the Drugs Industry that catches your attention . You talk about appetite for risk. You are not particularly overweight. It is very much an institutional business. They like buying, and we like buying on their behalf. Even when the pharmaceutical industry you couldnt give it away. It is a blockbuster driven industry. We like the pharmaceutical industry. It is done very well. They are looking for other opportunities at the margin. You stick them in your portfolio. You enjoy the ride if you can afford to keep them. A couple weeks ago we were talking about it looked like china was going to crash. I guess there is a bandaid applied. Eggs are stable now. Is it a big threat . Things are more stable now. Every time it goes up it is a worry there is a bubble. When it comes down a bit the bubble has imploded. There are 1. 3 billion people becoming part of our world. They are consuming more. They have a government that wants them to have what we have. Yes the stock market is up and down a little bit. For us it has been interesting. Overall china is going to be a positive contributor to growth. The kind of exposure might be coming through to businesses that site china for weakness. Just saying this week sales missed estimates because of china. Every thinking about cutting back in hong kong. Does it worry you about what it might do for european earnings . Max spot on for that spot on for that analysis. There are times when it is right to commit funds. What happens to the stoxx as they respond to a weakening environment is probably going to be an opportunity. You wait for an opportunity to buy burberry. We expect a weakness. That is an opportunity. We talked about european equities. U. S. Equities . It is the most wonderful capitalist economy. The problem is they are relatively fully priced. You can find pretty much anything you want on the shelves. Absolutely it is still worthwhile paying for them. These things arent available elsewhere. This line from your notes which i like. It goes down from the rest of the world. That is the way you look at it. We are going to take advantage by playing catchup from other parts of the world. Another quote from your notes. Temper tantrum to risk is not a huge threat. We are braced for that. We had a different conversation earlier. It might not be the same places that show the tantrum. There are clearly people playing a longer game. There are people in the wrong place. Its going to hurt them, but i dont think its a majority of people. Thank you very much. We are just a few minutes ahead of the European Equity open. John is here. What are you watching . The Commodity Index hitting a 2000 two low. The questions we need to ask, what does it mean for centralbank policy, and what does it mean for corporate earnings not just in the coming quarter but the rest of the year as well . Trouble in old tech. The head of toshiba steps down. Ibm revenue falls. A lot to talk about the head of a huge day for tech earnings. Grexit. You are sick of hearing about it. It could come on the agenda as soon as next year. Stay with us. We will break it down after the break. I thought we had reached peak grexit. More to come. We will be back after a couple minutes. That will do it for countdown. Gold is around 1100 for now. We will leave you with the team that brings you on the move. Have a very good day. We will see you again tomorrow. Have a very good night. Good morning, and welcome. We are moments away from the start of european trading. Lets get straight to the morning brief. The bloomberg Commodity Index trades near its lowest level since 2002. Gold trades near a fiveyear low. The toshiba president steps down amidst an accounting scandal. Ibm stock falls after revenue decline for 13th street period. There is a danger greece will be forced out of the eurozone by the end of next year. 15 seconds away. Ftse futures trading pretty flat. Dax tutors trading pretty flat. The stoxx 600 on a winning streak. What a winning streak. It is the longest winning streak since 2006 in nine years. We are basically flat. The ftse 100 incredibly flat this morning. A little bit of weight and see for the commodities market. Lower than 50. We are off by 4 10 of a percent. Oil recovering today. Lets look at the move we had over the last two days. Down we went u