The Federal Reserve comes out with its Monetary Policy tomorrow. What about september . We are still focusing on the selloff when it comes across the board to commodities. A little bit of a rebound in copper. Worries about supply. U. S. Still going up the ante. They have pushed rent into a bear market. What does it mean for the oil majors . It means bp profits are down. Lets have a look at how the stock is performing. The third Biggest Oil Producer profit tumbling. Weaker than expected production. This really shocked the analysts. On the upside, they are raising the forecast for profits. Analysts calling this an excellent set of numbers. Advertising growth in line. It is going to do even better in the third quarter. Itv driving higher. M a is taking over today. We have so Many Companies to keep an eye on. This is interesting. It is generic once again. Today it is a smaller price tag. It is a Jordanian Company looking to buy the u. S. Asset. 2. 65 billion. Keep an eye on these stocks. Zurich insurance is buying this stock. This could drive higher by up to 15 , as could melrose. It is all about gas, water, electricity. Point 3 billion pounds. Stocks in the green. The ftse 100 is up. A rebound in frankfurt and germany. Erasing some of the losses from yesterday. Lets head to china. Lets go to hong kong for an update. Stocks shattering a threeweek rally. We have the latest. We break down the scale of the damage for china as well. It hasnt been boring in europe. We are coming to the close of another while day of trade in china. Looking like the shanghai composite is going to close down by 1. 7 . A rebound coming through after it has been dropped yesterday. The hang seng looking like it is going to close down 1 . There have been reports china and checked it capital to try and shore up the rally. The government also saying the economy is stabilizing and improving, laying the foundation for the development. He says the Chinese Market has another 14 to fall. Certainly it is nothing like we saw in the early trade. Thank you very much. Richard, the government came out with all kinds of firepower. They seem willing to stabilize the situation. Give me a sense of how much damage yesterday and todays declines due to investor confidence. Do to investor confidence. The government has committed to stabilizing the market. That seems to have worked. The sense of calm has settled for at least a couple weeks. It was the second latest drop since 1996. The sense was where is the government and what is the government doing. The big uncertainty is is the government trying to allow the market to find its feet or is the market trying to hold up the market that it couldnt do . Neither of which give much confidence to investors. It gives concern where prices are dominated by a government that does not communicate its outside. We know the story. What are investors doing among all of this . There was a bit of buying of shanghai stocks from hong kong. In general there have been sellers for 13 of the previous 16 days. There was a slight recovery in hong kong. You look at mainland shares in hong kong, the worst performers over the past month down 12 . It comes down to what the earnings will do. Without knowing what the government is going to do, it makes it hard to ascertain what a fair value is. For investors have been looking elsewhere. Free markets are hard to find. Lets get the latest. Amid all this mess in china, a disorderly market route and an orderly economic slowdown. When does one start to look like the other, and which one is it . I would not want to bet on the orderly slowdown being anything less than orderly. It has less impact on the economy. It is rebalancing. The others have seen their stock markets go down. I think that will continue. Jonathan jonathan when you look at what they have done taking a leaf out of the 1929 playbook. Through they step back and look to their International Reputation or do they lean inwards . Is it a choice between the two right now . This is an administration that wants to be in control so they probably will get control. Im not sure i would take them on. They are running in the face of margin pressure and forced selling. It is hard to control. Betting man, they will get control in some form. The main focus is to be in control of having Financial Markets that operate on their terms. Jonathan we see this blanket risk aversion that took place yesterday. Chinese sentiment ok. A weaker swiss franc against all that. What is going on . There was nothing much going on in Foreign Exchange market. They were doing badly. The Foreign Exchange market thinks its late july. There is a decision to get the currency weaker. They are helped by the fact that now we have a deal in greece it gives the Swiss National bank more potential to massage the currency back in the direction they like. Jonathan we are going to talk about commodities after the break. We did have this massive move lower. Lets talk about the hard numbers. Its the commodities story. We had a huge drop in demand that is fading. Then we had a massive increase of spending. You and i can talk about where is the production price, but the people who have invested in that capacity are busy cutting back and their profits are feeling it , and share prices are feeling it. Maybe that is not that surprising. The ftse 100 feeling it as well. We are going to talk about commodities. We go live to the Trading Floor as shares open lower by 8 10 of 1 . Then we look ahead to u. K. Gdp. Will we see a bounce back, and then a week gives us a window into varoufakiss secret plan. Does it have real consequences . That and much more on the hour. Good morning. Jonathan good morning, and welcome. We are live from the city of london. Equity markets in the green here. We are higher by 22 points. The opa bp is missing. The ftse 100 in the red after yesterdays losses. The shanghai composite coming off the back of its worst day since 2007. We will check out fx quickly. Debt flat on the day. An hour 15 minutes away from Second Quarter gdp numbers. Brent crude back in a bear market. 52 a barrel. Lets get the top stories here at bloomberg. Greece begins talks about the third bailout. In athens they discuss policies greece must implement. Talks come a day after yanis for focus varoufakis was caught on tape revealing the details of the plan. Folks like an overtook toyota in the first half of volkswagen overtook toyota in the first half of the year. Statoil Second Quarter profit beat estimates. Suggested net income came in at 7. 2 billion norwegian kroner. A plunge in crude prices. That plunge is nothing like the plunge in bp profit. Second quarter profit tumbling 64 . Adjusted profit came in at 1. 3 billion from a year earlier. Our analysts joins me. What stood out for a lot of people was refining. It didnt happen in the way many people anticipated. Was that a big miss for you this morning . Actually it was right in line with what we were looking for. It was the upstream that had a big miss. That did include 600 million of charges we would not have been forecasting. They actually came in 7 above what we were looking for. You have been above the consensus on the street for a while now. When i look at the target price versus the price of where we are now, there is considerable upside. When i look at that charred chart, what is the asset price . It is going to be adjusting the cost structure to the existing environment. We are starting to see good results. They have put out 1. 7 billion this year relative to the first half of last year. They can continue to put through savings that keep investors confident of the sustainability of the dividend. How much space will they cut costs if they need to . I think we are only beginning to see the effects of restructuring. It is something that if you analyze it and take into account the 2 billion that will come in lower on the Capital Expenditure line, that is almost enough to cover the dividend. Jonathan as we look ahead, a lot of people are expecting another ugly quarter. As we look at downstream they are lower having lower refining margins. When i look at the outlook, is that what you are seeing . Absolutely. The Second Quarter was very strong. I would expect we see some contraction going into the third quarter. We began to see refining margins start to roll over. As you get through the peak driving season which is basically going to occur over the next three or four weeks that is where we expect some real breakdown in the margin. The consolidation we have talked about. We got a little bit. Where is the rest of it . What is the big headwind to preventing that from happening . The headwind has been many of the Smaller Companies being able to recapitalize. That has put the bid pretty wide. I think the lack of confidence on Commodity Prices in the near term could be more difficult moving forward. And the type of rent environment we are in right now, we could start seeing much more consolidation later this year and early 2016. Jonathan when i speak to the executives of the Big Oil Majors they say, we are not in the forecasting business. We are in oil management. Looking ahead, what are the basic assumptions of some of the Big Oil Majors . They are pretty well locked in to what they can do this year. I think they are looking at higher than 50 over the next couple years. I think looking at 80 by 2017 is probably the consensus expectation. In the near term they have to begin the budget on something in the mid to low 50s or at least have a plan on how they get through this until we see 80 again. Jonathan thank you very much for joining us. Kit, when you look at the earnings, you expect downstream to have bigger refining margins. A lot of people expected and even better quarter. When i look at the oil majors you look at these markets and you look at crude are they getting battered . The big concern listening to those remarks is what we have got at the moment is an attempt to keep the price down by the lowest cost producers to take capacity out of the market without them losing market share. Interest rates are low. The sense i get is we are not taking much capacity out. We need supply to fall or demand to take off. The guys who produce it, my sense is they are not cutting their production anytime soon. We are going to extend the low prices. Whether it is months or years longer to play out than people expect, that has got to be the risk we have. That is what the market is beginning to get prices of. Taking supplies out is going to happen because of prices lower. When we talk about the super cycle, we were talking about the demand side. On the supply side it is still continuing. The reason they have a super cycle as opposed to other industries is the leadin time is huge. Commodities have gone into the ground after a huge demand in places far away. Cutting back that capacity is expensive and slow. You overshoot. Most will tell me we have now overshot. The other question is how far are we overshooting. People borrowed against commodity assets, so that accelerates. It is called a super cycle for a reason. Picking the bottom is difficult. I want to wrap up the market moves over the last couple days. And my seeing a fundamental consolidation in european equities . Not much is happening in the world. What is the view right now . We are seeing consolidation in some of them. The commodities story is a big story. The rebalancing of growth from emerging markets towards developing margins i think that is going to stay with us for a long time. We are also moving towards rate rises in the united states. We are reasonably on track for that to happen. How much equity market gains have been due to zero Interest Rates . The countries that might raise Interest Rates, we have currencies that have gone up and equity markets that are flat or down. It is not going to stop. He is going to stay with us. I mentioned the u. K. And the strong pound. A busy week for oil earnings. Coming up, reports tomorrow. It is gdp day here in the u. K. We will be back to discuss that. Jonathan morning and welcome back to on the move. I am jonathan ferro, live from bloombergs european headquarters. This is how things are shaping up. The ftse 100 is up. 1 . The dax up a third of 1 . The biggest drop since 2007. We drop by another 1. 68 at the close. As such of the boards. The pound buying at one dollar. 50 552. Brent back in the bear market 52 a barrel. Lets get the stocks and moves with caroline hyde. Caroline this is what is driving these stocks higher. All to do with m a. Speculation and reality. Melrose Industries Trading up at 13 . This is the biggest move since august 2008. It is selling one of its key assets. Gas, water, electricity selling it to honeywell. Checking my boiler. This is what they want to grow into even more. Finance overall, we can see me. 3 billion pounds going to melrose. We can see 3. 3 billion pounds going to melrose. They have regular hurdles to jump. Rsa insurance at almost 11 . He has been turning around rsa insurance and selling assets to stock sales. His company had many a woe, a including a scandal in ireland. Now it is being eyed up by a rival. We do not know exact pricing yet. Zurich has cash 3 billion and a pipeline. Rsa Insurance Trading higher. As is Hikma Pharmaceuticals plc. Heather looking at an asset all to do with generic drugs. While we have that, it is not the exact price as teva. 2. 6 5 billion. Listed here in the united kingdom, getting its hands on boxing labs. It is all about rising scale. Jonathan caroline hyde, thank you very much. Lets talk the u. K. Shall we . And Economic Growth is set for rebound after a week start to 2015. 7 growth on the quarter. Share more from rob hudson. Bob whats interesting rob what instinct is where you are moving toward the bank of england deciding to raise rates. That is going to come this year. The question is do these numbers move that fort . Move that forward . Are things slowing echo there are a lot of economic headwinds. Jonathan thank you for joining us. Kit juckes lets bring you in. I look at the forecast of 0. 7 . The bank of england may well be looking at that as well. A bit backwards looking. Kit the u. K. Economy is putting a lot. You average the quarters end. Thats where we are. We are in a Economic Cycle that is mature. The Unemployment Rate is low. Just in the last six months, you see the clear signs of a pickup and wage growth. Construction leading the way. You look at the window at the cranes, and you get a sense. The economy there is enough shortages that there is wage growth. Nominative nominal growth a bit faster. Thinking about a few monetary rises out of the way. Jonathan that conversation havent they missed that window . What is the opportunity . Kit it is an old conversation. We should perhaps raise rates a little bit more. Does an economy with this growth rate need the extra help of such low Interest Rates . Absolutely not. You should not regulate just as much you should not wrigley as much from here. What you should watch is from comments from mr. Carney. Jonathan heres a question wages up of the test wages of gdp, fine. You and i had a conversation why are rates where they are . Never mind for the next 10 months. His Market Pricing correct, in the sense that this is what the bank of england will do . But incorrect in the sense that this is what the bank of england should do . Kit i think they will go in february. They might go a little bit before. The markets will not too far in the future. The world cup last year, mr. Carney said in 2014. He we are, try to work out but he pushed us in that direction. I collect wages. Wage growth has started to pick up. I came in this morning to a Radio Program telling me all about shortages of nurses and foreign hiring campaigns from hospitals to get enough nurses. At this stage, i think you need to be stabilizing. Jonathan your the fx man. That is your world. When you look at the pound, one dollar 55 1. 55. Jonathan kit i think it to get a little bit stronger against the euro. Our trade weighted index has gone up. You see that in the equity market. You see it in some of the press comments after the numbers yesterday, where they blamed weakness on the strength of the currency. I think that the pound has further to go against the euro. People may be able to enjoy that later. And more attractive rate. Jonathan Credit Suisse now saying only 20 of profits come from the u. K. We look at the gilt market, that is when things get more complex. It hit the fan in europe. Is that still not distort . Kit there is going to be a big backstop for the long end. If you take 50 year yields high older people who have less hair like myself as a move on and prepare for retirement, were going to want to lock in some heels on any selloff on something that looks safe. On the front end, we need the market depression. Jonathan hair and dates, i have no hair and im pretty young. Kit juckes is going to stay with us. The leaked tape reveals the former finance ministers plan for a grexit. [indiscernible] they will not tell it. I know. Even if they do i will deny it. Jonathan what do you say to that . Well have more on that story. Jonathan good morning and welcome back to bloomberg tv. I am jonathan ferro. This is on the move. Let us get you up to speed on bloombergs top story. China closed down. Chana with the shanghai composite seeking as much as 5 . Concerned that the government is unsustainable. I cant get my words out today. Oil extended the clients and the bear market. Brent and london closed yesterday, more than 20 lower than its peak reached in may. Gold, prospectors waive the u. S. Policymakers again a today today. Bp dropped 624 . Dropped 64 . Ceo splashing spending. Reviewing projects and selling assets. Zero Insurance Group is evaluating the potential of zero upset in may it is looking to lets talk greece. The country and its creditors meet today to hammer out reforms needed for a third bailout. These talks come after a bombshell from former finance minster, yanis varoufakis. He shared his plan to sneak greece out of the euro and a carsten on july 16. Hans nichols in a Conference Call on july 16. Hans go they could affect ponce they could affect negotiations hans what did mr. Tsipras authorized mr. Their focus to do . s mr. Varoufakis to do . Here is how mr. Varoufakis described it. We were planning to create surreptitiously accounts. A tax to every text file number. A function under wraps. Hans the way theyre going to do this is hack in to the finance ministry. They need to hack in, because the secretary held all the details was actually controlled by creditors. Be sure to visit to be surreptitious, they need to go when without anyone knowing. Mr. Varoufakis suggested that his opponents would use this to try him for treason. There could be additional calls for him to explain just what he knew and what he knew and when you know it. And when he knew it. It is clear that some elements had a plan to take their country out of the euro. In some ways, they are like mr. Schaeuble. Jonathan hans nichols in berlin. Kit juckes still with us to weighin on the greek saga. Kit, we have all listened to the tape. Did anything standout that was a surprise . Kit not in the sense the surprise is not that there was a contingency plan. Who thought they werent close to it . Jonathan you need a plan. Kit when you think about it the plan involved subterfuge. You dont tell your creditors that you going to leave, because theyre your creditors and you are going to default to them. Jonathan we could have a debate. Significant medical and experience thats significant political inexperience significant political inexperience. He would admit to it and then say i am opening i am open to transparency here it when you look at that political experience, that is right through the current greek government. How long does that government last if these type of things keep spelling out . Kit i think you have lots of young populist movements around europe, where you have an experienced leaders with massive support. They can last as long as they have support. What think mr. Tsipras is damaging his support by making compromises. Possibly. It is possible that great need some sort of unity before it is done. If the Greek Economy does not recover, if this is a remission of the crisis and economic weakness comes back, do i rule not mr. Tsipras and mr. Varoufakis still maintaining the Popular Support that comes from being radical people that have an alternative vision . No, not at all. Jonathan the morning that mr. Varoufakis step down, you on the show. On the break, you said to me it would not surprise me if this man were the next Prime Minister of greece. D still think he could be . Kit the next one is now harder, because from where we are now, it looks more likely. His audience of the greek voters , and what he is continuing to offer them is a willingness to stand up to the creditors and come up with radical alternative plans which he is selling quite well. I am not sure that bit has changed. Jonathan a lot of noise here. There are talks going on for a third bailout. Kit i think it is smooth sailing for now. Mr. Tsipras mention them again this morning. When we come back and start having meaningful talks about reducing debt. We can use all the liquids in the world, but there is a problem with the structure of the euro. How do you let governments have this much fiscal economy if youre going to write off that . Significant maturity extensions. However you term it, that is where the negotiation gets really difficult. We havent come any closer over the last couple of months. Jonathan gnosis thing as a smooth sailing in europe. Stay with us. Where looking at the polls after the rape. The other man we are looking at the polls after the break. The other man on the tape. Find out what they are planning to ask after the break. Jonathan good morning and welcome back to bloomberg tv. I am jonathan ferro. This is on the move. Call on the move. We have results from the countrys biggest search engine. Caroline hyde has the breakdown. Caroline google phenomenal tests in china. 24 of the market. Sales underwhelming. Secondquarter sales up 38 . Phenomenal. That is double the amount of twitter. They have that many logging on every single month. The profit up 3 . Disappointed. Basically, the same as this quarter. People want to see perpetual growth. People are questioning, is it the slowdown in the economy . Could be weighing on the stocks . Also is it the companys own doing . This is a country that is trying to diversify. At no longer wants to be a search engine. It no longer wants to be a search engine. Google is trying to attract advertisers. Adding mobile. We are seeing digital wallets being created. Video streaming. This is a company that is splashing the cash. Other tech titans that are coming on. Well take a look at twitter. This is a company that is coming out after the bills later today. Shares down 34 . We got that morning that they were not going to live up to expectations in terms of sales and profitability. What happened to the stock . We see jack towards coming back to the helm. We are expecting 54 growth. Positive possibility positive profitability. This is a company that has never made a profit. This year could be the change. We are expecting for the first time, a profit. Its not much but it is equivalent to what amazon brought in in the last quarter. What are they doing about is jack dorsey here to stay . Are they still looking outside for a new ceo. We see we will see how twitter fares. Many feel they should meet those. Jonathan a busy day for twitter. What is coming up on the pulse after the break. Manus cranny, are you excited . Manus the other man on the Conference Call, a great deal has been made of it. The finance Ministers Bank to hack into the system. The creditors have complete control of the finance ministry. Where i come from, i call that street move. If you cant go through, go around. However what do you make of this . It is going to be an instinct conversation is going to be an interesting conversation. One of the questions that francine and i will be putting to him. We havent interview we have an interview. When did you get your sunglasses . Whether its oakley, ray ban anyway, weve got a deal mobile con. They are reorganizing bits and pieces of the company. The question is has johnny but sunglasses johnny bought sunglasses. The intrepid man from opec. He has been there for 25 years. He is want to talk about oil. Jonathan i am not engaging with you. Manus cranny thank you very much. That is it for manus cranny. Luckily youve got Francine Lacqua as well. Manus, think you very much. Equities in the green this morning. We will bring you the numbers live on bloomberg tv. If you want to talk about these markets, i am on twitter. Best of luck. Francine the slump hits bp. Output rises. Manus a secret recording of merges as jan is varoufakis reveals details of his secret exit plan. Francine u. K. Growth figures are set to show the economy bounce back after a week start to the year. We get the q2 gdp data. Francine welcome to the pulse