In china. Stocks declined. Can the fed decision tonight we light the fire . Claimsparibas secondquarter income gains, while Credit Suisse outperforms. Tidjane every quarter has been really mixed. First quarter was. Good, Second Quarter started negatively, then we had strong growth. June was the best month in 42 months, so it was very contrasting. Anna and apple gains in late it. Ing after advancing can push u. S. Stocks to another record . Matt, good morning . Matt good morning. We are less than a half hour away from the start of european trading. Look at the offshore yuan, this is a threeday chart, we had a jump three sessions ago but had started losing some ground. This basically means that the yuan was getting stronger as it comes down because the dollar is priced in yuan. After the trade talks ended, we have gone straight back up to 6. 9. The concern is that the more pressure on china in terms of trade, the looser they will be in terms of the band around their currency, and they could let it slip up through seven. Take a look at features this morning. We had some good news. That was hoping to drive the the u. S. , helping to drive european futures as well, that is the apple news. With a better forecast than wall street had anticipated. Though, in terms of european features, have disappeared. Dax futures are down. 2 . Thanfutures down of a more 1 . Anna we have seen a fairly abrupt end to the trade talks. They restarted in china, between the u. S. And china delegation, lots of dinners and entertainment to try to lie in the mood. Then the talks ended before they managed to achieve very much, it would seem. The market is selling off as a result perhaps. Expectations were already low after President Trump tweeted about the chinese ripping off the u. S. , just at the start of the dinner. Then we got a scathing editorial in the china peoples daily which suggested that the chinese are not ripping off the u. S. Now the talks have come to an end. We saw the asian equity session already under rusher before those headlines. We will see how it moves from here. Mind, in hong kong, the afternoon session will be closed because of storm activity. Signal 8l 8 a storm issued for that region. Pushingr factor that is and pulling the market, we have negatives on trade and then the afterhours reaction from apple numbers, that was a positive, so u. S. Features are still pointing higher. We will see how they deal with the latest headlines on trade in just a moment. Lets get to the markets now. Mark ardmore, our homework markets live Marketing Manager is in singapore for us. Mark, we had low expectations, then we get a similarly quite sudden and to the talks. What do you make of it . Mark it came a little more premature than we were expecting , obviously in negative signal. It should not overall be surprising given the tweets and comments we have had from both sides in recent days. As you know, my longtime expectation for the last couple of months was that since talks broke down in may, it was very hard to reach a deal. So i dont think over all they should be a surprise, but this is always one of those situations which everyone views it from a subjective angle. We dont know what is going on exactly in trumps mind and in the chinese government. Sometimes people pass off or ignore his its because of the fact that theyre saying it is part of a negotiation, art of his bluster. Other people say, look, this is just trump tweeting, he says lots of things and you can ignore them. I think you will see equities solidly after this . Matt a little volatility due to the abrupt end of the u. S. China trade talks. Today is,uestion where a rate cut from the fed drive down volatility . What are you hearing . Mark it probably will. The news effects tonight of not necessarily the rate cut, but the guidance will expect from powell we know that there is going to be a 25 basis point rate cut, it is a question of what comes next. Will there be another cut before yearend . It is all about the guidance around that. What powell indicates he is expecting on cuts, but also the reaction function, why he might cut rates further or not. So there will be some shortterm volatility because of that. But even longerterm, the last time we had an easing policy from the fed was in 2008. Obviously, this is a regime we have not been in in a while. When we go to a fed easing cycle other Central Banks respond,. We have already seen, they will be preemptively reacting to the fed cuts rate. The rate volatility will feed into fx volatility overtime. So in the next few months, we are front of the great to see fx volatility pick up again. We will not get back to the heyday of fx volatility, but we will see high levels of fx volatility in the next few months than we have seen in the last couple of years. Anna mark, i want to ask you about apple and sort of why there are implications there. Will we be looking for any reactions on the us we will be looking for any reactions on European Tech stocks. One of your colleagues wrote that perhaps the apple share price move in session could push the s p 500 to yet another alltime high. The earnings season still managing to the liver to the upside then. Mark look, apple results are good. It was a positive. Andwe are to saw the banks the futures, that is why the futures were up in premarket trading already. I think even with other trade news, we probably would not have seen stocks go to a fresh high. The earnings were are it is the earnings were already in the futures price. The real positive was that they were very optimistic for their outlook for the rest of the year, and that goes against some of the other guidance. Over all, the picture from earnings season was that q2 has been ok. But q2 was also when we got the tariffs implemented in the middle of it. Apple is a very important exception, but most of the earnings have very much guided t toward a much more negative outlook, a negative q3 or q4. European stocks can only provide a boost. Yesterday was a horrible day for european stocks, and his seem to have gone largely under the radar. The worst day of the year for the spanish, irish, and portuguese stock markets, for belgium, it was widespread. All across europe, it was a massive down day. It just happened so steadily. A little bit of bad data, other bit of bad earnings, people did not notice what a horrible day it was for the region. So we will see if they will have a better day today. May be the trade talks will roll in that, but maybe the apple news will be a positive number for europe for it then goes soggy again . Matt alright, mark, thank you so much for joining us. Mliv managing editor. Remember, you can join the domain in give your response to matt and the team market the team. Vgo in thepe ibplust bloomberg terminal to submit your answer. For now we get the first word news with debra mao in hong kong. Debra china and the u. S. Held a new round of trade talks in shanghai following a hiatus of almost three months, amid renewed allegations from President Trump that beijing continued to rip off the u. S. Expectations for a breakthrough were low. The two sides seemed further apart than they were three months ago. Minister Boris Johnson is refusing to back down over his threats to take the you get out of the e. U. Without a deal, despite brexit concerns pushing the pound to its lowest level in more than two years. Number 10 is not hinting another round of talks with brussels might not happen at all, unless you leaders agree to tear up the current divorce agreement. Apple is projecting revenue in the Current Quarter that topped expectations, assigned of the company is optimistic about sales of the new iphone model launching in the next few months. This comes after apples best ever Second Quarter driven by wearables and the ipad. For the First Time Since 2012, less than half of apples revenue comes from iphones. Global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna and matt . Anna debra mao in hong kong them a thank you very much. We will have full coverage of the fomc decision later today followed by jay powells News Conference at 7 30 p. M. London time. , just say yes. After a thirdquarter profit slump, we speak to the cfo of this company, coming up next. This is bloomberg. Matt welcome back to the european open. We are currently about 16 minutes away from cash trading across europe and the u. K. I want to get the numbers after you first. Firstquarter net income came in billion for nomura, the estimate was five ¥. 22 billion yearoveryear. So the income on the one hand is a lot higher than had been anticipated, ¥55 billion versus five way to billion yen 5. 2 billion yen. On the other hand, that is not a lot of money, ¥52 billion is just about 500 million. Ht has told shareholders to expect a takeover offer as the leading makers thirdquarter profit slumped and missed estimates. Joining us on the phone from munich is ceo of us from, ingo bank. Tell us what analysts got wrong. What did you numbers miss the street estimates . Ingo good morning, matt and anna, thanks for having me. It was a tough quarter for us. Positive,sh flow was incoming cash flow, our Growth Perspective to was tough for us. On thet Savings Program other side picked up, and we expect to exceed of original post savings cost savings target. But the week market environment continued, in key markets, automotive and general lighting. I think it is just a difference of how you look at q3 and q4. Q3 is typically our weakest quarter, and this year was no different at all. Anna good morning to you. You have suggested that shareholders should back the carlyle big. Do you expect any bid to be coming from ams, a revised bid . Ingo the banks carlyle offer is the owner one of the table and that has been supported by us and our supervisory board. Ams rescinded its offer and there is nothing new on the table at this point in time. Matt they rescinded their offer and you dont expect them to come back with one . Ingo i think that is a question for ams management, and i dont want to speculate on that note. Anna i know that you are worried that a potential ams did good undermine your guidance to shareholders, to accept the carlyle bid. Some shareholders might not go for this . Ingo again, the offer is to our shareholders, not from management or supervisory board, it is from that carlisle, and it is to our shareholders to decide whether the 35 euros offered is attractive. Line with the tip of a premium you pay in germany for takeover offers. From that perspective, we think it is fair. It is for the shareholders to decide by Early September whether they agree with that or not. Matt then he get back to the business for you. We have seen other auto suppliers like nxp with poor results, and cutting out looks on the Auto Industry situation. What is your outlook for the on for the Auto Industry . Will we see a difficult second half as well . Firstwe had a very tough nine months, it is reflected in our numbers. What we see now is a little bit of stabilization. We dont expect a meaningful recovery. What we saw in the quarter was a little bit of sequential growth for our auto business in china an important market, but we continue to see weakness here in europe, and some sluggishness also in north america. But overall, it was ready much the same as we saw three months ago and for the rest of this fiscal year. The next three months, we dont see any signs of recovery. I dont think the First Quarter, the last calendar year quarter will be much different. Anna salt no signs of recovery in auto. Must be difficult to separate out the auto sector, the trade tensions and the various headwinds you are facing right now. Is it possible to give a sense, as we see the trade talks come to an end in china, this round, do you have any sense of what kind of impact the trade tensions are having on your business . Ingo we have a concrete impact. Higher costs because of the levees of trades between china and the u. S. , we have quite a number of imports going to the United States from china, so that is weighing on our earnings. Someve seen quite uncertainty in the market, people are reluctant to invest because they simply dont know how much will be further levied stop. Ether it will from that perspective, we think indirectly it is the uncertainty that is creating a little bit of the supply chains, because some folks are anticipating increases and others are not. So inventory levels are shifting. Volatility through the quarters also through the supply base and our distributors. That is what we are seeing now. Matt with the lack of visibility and the negative outlook on the Auto Industry, i wonder if you will pull back on your capex going into the end of the year . Ingo we already did. We pulled back by significantly compared to a year ago. This quarter, we spent very little. Overall, i expect we will send less this year, we will spend less than we typically have. We are basically looking at our factory utilization which is below what we expect. There is also no need for the for us other than typical maintenance because we also closed the big Investment Program for our auto business in the First Quarter of this fiscal year, so we are clamping down on fx this year. Anna thank you so much, ingles licht. Eo of osram we are watching the Banking Sector very much at the fore once again. Credit suisse. Is what we are watching after its main trading unit and new money eat years. We will dive into beat peers. Anna welcome back. Seven minutes or so to go until the start of the equity trading day. Lets get your stocks to watch. We have gathered together bloombergs dani berger looking at Credit Suisse, and Annmarie Hordern is covering b. N. P. Paribas. Annemarie, the Banking Sector is in focus on a number of fronts. Give us the french story. Annmarie bnp looks like it will be higher at the open, really outshining wall street in the sense that we are seeing the worst first half of the year in a decade for securities trading. The first second straight quarter, that for a second straight quarter, bnp rebounded in their fixed income business. That is beating global giants like j. P. Morgan with that number. Goldman sachs said it was a solid set of results especially p l and cet1 ratio being positive. Matt paul, what is the story with the makeup maker loreal . Paul they had secondquarter earnings late last night, very strong on the face of it. Growth, the revenue First Quarter in a year they have failed to do 7 at least on number. If you drill down, looking at the north american figure, it is worrying, a 1. 1 decline, the weakest performance in a decade. So although the earnings per share, the margins, the share buyback, all those things are fine, the markets will focus very hard on these sales numbers. With the stock up 23 so far this year, investors have some profit to take. Anna thanks very much for that update. Lets go to dani, with the Credit Suisse story. Impressive. Really some of these European Banks were able to shrug off some of the issues the wider industry has had. Credit suisse saw gains in fixed income and Global Market trading. Their wealthy clients adding. Thebillion swiss francs in quarter, that is certainly giving their earnings of boost. We will likely see shares jump today because of premarket trading, they went as high as 2. 8 , so look for that to continue. Matt annemarie, paul, dani, thank you so much for joining us. You can get the latest stock stories from our equities team. N the bloomberg mobile app coming up in the market open, features are mixed. This is bloomberg. Anna a minute until the start of cash Equities Trading. Lets look at how markets are positioned. To thee top left corner bottom right, the msci asiapacific, down. 6 . A drop in s p futures. That happened 40 minutes ago when we saw a premature end to the trade talks between the u. S. And china in china. As a result, we see reassessment. Oil prices, retreating a touch. We have seen a big move upward in recent sessions, partly to do with iran tensions and partly to do with the tightness of supply part of the narrative out of the u. S. I mentioned the trade tensions. We saw a weakening in the yuan. Perhaps the sense is the chinese will let the currency slide if talks have ended. Futuresftse 100 expected to move to the downside as the result of the paper ensure premature ending of trade talks in china. What damage will that do to the risk appetite, appetite for equity markets . The ftse 100 opening fairly flat. We dont have a big move in the pound to play with. Fairly flat after two days of losses connected with the expectation we can see a no deal brexit. We dont see a great deal of quality in fx markets. We will see if we get voluntarily volatility in markets if the fed cuts Interest Rates. Ftse 100 is down by 1 8 of a percent. The last couple of sessions, weakness in the pound had boosted the ftse. Elsewhere, waiting to see the impact from this premature end to trade talks but on top of that, the earnings season is ongoing with that in mind, we will look at france with bnp paribas, one of the big movers on the market. Lets look at what is going on on the sector picture. Weve broken it down across the european equities space. Staples, health care, Consumer Discretionary in the red. Financials are in the green and a number of financials reporting. Paribas. Isse, b. N. P. Energy stocks in the green, telecoms and the red. One of the staples, extremely red as we see a bright color coming through on that one but i dont get a since of risk on or risk off in the sector picture. Terms of stocks, 290 winners, 280 losers. The breadth is pretty split. I want to bring you gdp numbers out of spain. Coming out with a mess on the quarter over quarter figure. 0. 5 . We were looking for 0. 6 in a survey of 27 economist. Yearoveryear is 2. 3 , in line. We will get a lot of data out of the euro Economy Today and through the week. This morning, spain is a mess. Miss. On the plus side, bp. Bnp paribas, up 3. 3 after beating on the top and bottom line. Airbus, out with earnings end up 1. 6 and it got a big order from air france yesterday for 60 a220 jets. Credit suisse come up 2. 4 . You will see the banks, which as anorly yesterday industrial group, slipped into a loss for yeartodate. They are uptodate. 3 , taking the most points off the stoxx 600. Lloyds on the downside, down 3. 25 . Only one company went ex dividend today. Im not seeing it here on the top 10 losers, but we will bring that to you in a little bit when i remember who it was. Anna it was heineken. Teamwork. Martinting to see aston down 5. 8 . Could there be a need to raise money . And up on strong numbers grandvision on an and a story. M a story. Theimistic signs in u. S. China trade talks and a mixed set of corporate earnings and ahead of the widely expected rate cut. Hour,g us for the half benjamin jones, senior multiasset strategist at state street. Lets start with the trade tensions because we have seen a premature end to trade talks in china. They seem to have ended as soon as they began. There doesnt seem to be a great deal to show for it. What does this do to expectations of what we see more tariffs and where it goes from here . Benjamin it doesnt change our view too much. It seems to be a premature shock stop today but the expect tatians i dont think the expectations were great. Can downicking that the road and pushing off tariffs. We dont see new tariffs coming into play. We see continued stimulus going into the chinese economy but targeted stimulus going through. That will help some of the european export names. As the trade situation, that will take a backseat for today with the fed. Matt are you not concerned trump turns his ire to europe after dealing with china . It seems like that must be the next step in terms of trade talks. Benjamin absolutely. That is a good question and one we are frequently asked by clients at the moment. Who is the next point of target if trump does move away from china . There are certain areas of europe that were potentially at it is morer me, about areas like the agricultural goods that have sen a big focus of trump tweets just yesterday. Those are not the kind of things. Urope exports to the u. S. Food products, they do export those products to china but if you look at the chinese tariffs on food into europe, they have fallen over the last year. Even though a lot of them have increased on the american side. Im less concerned about the european export story. If aof the big losers, deal is done between the u. S. And china, and china does followthrough and import more agricultural goods, it is places like brazil, places that export soybeans and oil, products where you can move sources of imports really quickly where for europe, it is more difficult to move when you are importing cars or luxury goods or airplanes. That is a lot more difficult. Anna a different story to agriculture. The other big item for the agenda is the fed rate today and how that will support the market on a day where it could be risk off on trade tensions. Expectation is for a cut. I was interested about your rationale for cutting at the point. Some of the data doesnt justify a cut that you pointed my attention to u. S. Debt servicing costs, households and corporate and it is not as if companies and households are paying too much tomorrow at this point. What is the rationale they will give us . What is the explanation for cutting rates . Benjamin the real rationale is the markets. Markets have pushed the fed into cutting. Has never disappointed when the market priced in this much of a cut. It would be a shock to markets if the fed did not cut rates. In terms of the real economy, no. Strong,ales are consumer spending, Consumer Confidence numbers were strong again yesterday. Home sales are very strong and the chart we highlight here shows debt servicing costs are low. It is not the similar for u. S. Corporates. U. S. Households have be leveraged over the last decade. U. S. Corporates have levered up but with longerterm debt and at lower costs. Interest costs are not a big burden to the corporate size households corporate or households. Sachs basket of weaker Balance SheetCompanies Beating since the end of may. It seems corporate is doing well on that front. Were first of all, if that in battle of the charts, i would say that wins. It is an amazing chart. The u. S. Consumer looks so strong. It is fascinating. A lot of times when we go into a meeting like this where we expect to move, there is a buy on the rumor, sell on the news effect on assets. What do you expect to move today after the fed rate cut or decision and press conference . It depends on the press conference afterward. The 25 basis point we expect is in the consensus. And then athat messaging as we expect that youve got another 25 basis points perhaps in september, that will be positive for risk assets and be positive for equities in particular. I dont think you get a lot of move on the currency side because so much of that is priced in. The volatility or bigger move will come if chairman powell suggests this is a one and done. If he is going to hold off a little longer but that isnt our base case at the moment. Matt then, you will stick with us. Benjamin jones, senior multi asset strategist at state street. Next, stocks on the move including next, which has raised its Sales Guidance for the year. It is a clothing retailer. The stock, up 7 . This is bloomberg. Anna welcome back to the european open. 12 minutes into a busy trading day. Tradeheard news on the front, the fed, reporting for us. Annmarie hordern has your movers. Annmarie a lot of retail names, big moves in the retailers. Next, known as the u. K. As theyer surging up 7 raise their Sales Guidance for the year and can think there is commerce strategy keeping them ahead of other u. K. Retailers. Houma, up more than 4 . Puma up 4 . Demand was citing strong and sales in footwear. Trainers formatt, anna and the stock is up 40 year to date for puma. Loreal, down some 3 . Even though china lifted sales, the highest first half growth in more than 10 years, they fell short of sales in north america. A lot of worry the north american makeup boom is waning but also dealing with competition in america, especially when you look at glossier. They are under a bit of pressure this morning. Matt is puma cool again . About 20 years ago when i lived in london, everyone was wearing these puma driving shoes. Is that a thing again . Annmarie i dont know, i used to wear a lot of puma soccer cleats and but it is in again, look at the stock price. Matt Credit Suisse has brushed off the gloom in European Bank earnings. Clients added 5. 5 billion swiss francs in new money, about 9. 5 billion in real money. The banks main trading unit outperformed peers. The ceo spoke to bloomberg in his first interview of the day. Particularly negative Interest Rates are a challenge. We have different answers but if you look at we are pleased because transaction is a very strongly. We knew pressures were coming. I mentioned the actions we took toward the end of q1 to make sure transactions would go up in q2. 20 return on capital. Sequence of sequentially, we in income after a difficult First Quarter. We sold some real estate in switzerland, which doesnt make sense because when Interest Rates are negative, investors look for yield which drives up real asset prices and it is not a bad idea for us to dispose of some risk but that is not the learned longterm strategy. It is to work on the deposit side and we will take some measures that will be detailed in august to change our pricing on that end and protect the netting cursed net interest income. Ultimately, we hope it will be corrected. It was a good reaction to the crisis but coming out of it is politically challenging. Anna that was tidjane thiam, Credit Suisses ceo speaking to Francine Lacqua who is live in zurich. Tidjane thiam saying his business is less dependent than peers on the yield curve but this still remains a challenge, low Interest Rates. This is on the back of the threeyear turnaround and he was at pains to say the yield curve impacts everyone, negative rates arent good for anyone but because of the industry slump and negative yield curve, it also tests the Business Model he thinks is a winning one. The Quarterly Earnings beating estimates on most counts. Wealthy clients adding 9. 6 billion in the Second Quarter trading revenue. A little better than expected compared to peers and u. S. Peers. Adjane thiam seemed to be in comfortable position saying now that the Business Model he thinks works will continue to be tested, he feels confident that the cost cuts they put in place will now be put to good use. You very much. Bloombergs Francine Lacqua out of zurich covering Credit Suisse. Benjamin jones, multi asset strategist at state street is still with us. In the banking industry, we are seeing a lot of trading jobs let go, cost cuts are the main focus. Net interest margins under pressure again, even more pressure. Is there any reason for optimism . Benjamin not really. Credit suisses results today are a diamond in the rough not to sound like a broken record, if you look back over the year i have been on this show before, i have always been talking a negative story on banks. It goes back to the Net Interest Margin you mentioned and the flat yield curve. This is putting banks under pressure and that doesnt look to be going away anytime soon. In europerelative, anyway, reluctant to lend. Credite given cheap through the tltros and are leaving it with the ecb. Excess reserves exceed 1. 2 trillion in the ecb, that is a big drag on earnings. Comments from francine and Credit Suisse are all about Net Interest Margin getting pressured. That is not a story that will go away. Is theer headwind relatively low levels of volatility we have across markets. That impacts the trading side of the business and that is why we are seeing some job losses across those areas. Anna it is not the Banking Sector you like in europe were european equities broadly, but you pick out certain parts of the European Equity space paste on the earnings season luxury goods, for example. Some worry about china there . The european earnings season so far has been better than expected and the last couple of quarters. 50 7 of companies that have reported so far have beat expectations. That is above the average of the last few quarters so a little improvement there and some of the bank numbers were better. For us, it is more about gearing into external growth and gearing into the expanding chinese middle class and the chinese stimulus that is very much targeted at the chinese consumer. You listen to comments from lvmh and the loreal and where they are citing decent growth. It is from china. The lvmh ceo said unprecedented levels of growth in china. That has got to be where the growth is coming from. That is where we would put our money. The other thing on European Banks, a lot of people will site valuation reasons for buying these stocks. Not performed over the last decade and it will not. Even if it were, value is not really a reason to buy banks because they are not that shape. Anna loreal saying the asian market shows no signs of slowdown. Annmarie, theg to makeup boom in the u. S. Has slowed down a little bit. Benjamin jones, multi asset strategist at state street stays with us. More to talk about. Next, Boris Johnson pushes ahead with his no deal Brexit Threat despite the plunging pound. We will discuss the implications next. This is bloomberg. Anna welcome back to the european market. Ifminutes into a trading day European Equity markets mixed for major indices. The stoxx 600 down 1 . The london market down. 2 . The dax keeps its head above water. Boris johnson firm on his no deal threat. Caps on the pound plunged to the lowest in two years yesterday. The Prime Minister called for the irish backstop to be scrapped, saying it is up to the eu to compromise if it wants to avoid a messy divorce. Ben jones, multi asset strategist at state street stays with us. I have trade weighted sterling and it has been moving lower as you might expect. I read some Interesting Research by Bloomberg Economics that suggested this could go 9 higher on a deal, 13 lower on a no deal scenario. Your expectation . Benjamin i wouldnt disagree with those expectations at all the for us at the moment, the biases to the downside for the sort foreseeable future, the next month or so. The comments from Boris Johnson as he is sticking to this hard to deal, no deal kind of tack. The problem is there is no meeting scheduled between the u. K. And the eu at the moment. Difficult to see where any positive news or compromises going to come over the coming month or so. It is very much the bias toward sterling moving lower from here. Matt we see positive news out of the weaker pound, though. As anna points out, aston martin said a weaker pound helps their business. It helps with a lot of british exporters. Is this a reason to be optimistic for the u. K. Economy, or is it a reason to be concerned about rising inflation . Benjamin i think it is not a reason to be positive about the u. K. Economy. One of the things we have seen Aston Martins comments today over the past three years or so, we have had sterling weakness. What has happened to the u. K. Trade deficit . It has widened over that period. It is not as if u. K. Exporters are picking up extra business as a result of the weakening pound. The trade deficit is at his widest its widest. It does we are seeing weaker inflation coming through on our online measures of inflation. Please expect tomorrows Inflation Report to suggest weaker levels of inflation in the u. K. But longerterm, we could see a pickup. It is relative to the rest of the world higher levels of inflation but not good inflation. Anna how are you about fiscal spending at this point . We see Boris Johnson talking about spending on health. Is that something that will get into the markets psyche soon . The amount of checks he is writing . Benjamin i think so and fiscal spending around the world will be on the radar over the next 12 months. Will that have an impact on the economy or the market . No, i dont think so. For the u. K. Equity market, weaker sterling is a boost for overseas earnings. Matt ben jones, multi asset strategist at state street will continue the conversation on Bloomberg Radio at 9 00 a. M. U. K. Time. This is bloomberg. Matt 30 minutes into the trading day, lets get your top headline. President trump accuses china of ripping off the u. S. Stocks decline about but cant tonights fed decision light the fire . Posts a Second Quarter of fixed income gains where is Credit Suisse outperforms on new money and its main trading unit. Every quarter has been very mixed the Second Quarter started quite negatively but there was a strong june, the best month and 42 months, so it was very contrasting. Heardlife after iphone apple gains after cutting its dependence on the flagship device. Cap push u. S. Stocks to another record . Welcome to bloomberg markets. Anna . Minutes into the trading day, we are fairly evenly divided across the equity spectrum in terms of stocks going up and down. 314 to the downside. Unicorn in paris is the biggest gainer them up by 12 . We have a statement guiding the market higher. Uma also guiding higher up by 6 . And we see retail strength andng through across europe across the world, perhaps. Credit suisset and bnp paribas are reporting. Lets have a look at the downside and see where we are weaker. Is down 4 . St. Jamess had numbers, lloyd bankhead numbers, down by 5 . Loreal also weaker, they did talk about strength in asia, but that is not enough. The Federal Reserve is expected to cut rates today, meeting for the First Time Since 2008. But it is unclear how much opposition Jerome Powell will face. President trump has stepped up his attacks, demanding a large cut. Joining us now is the founder of lb macro. Anybody on theif fed board is looking for or pushing for a hike, the likes of which we heard from scott minor yesterday. Moves in that direction are out of the cards. Moves for a larger cut are expected by the market, so we are very much in the 25 point rate cut. It is a good compromise across the fomc. Expecting 25, the market expects 25, but you pivoted quite early to a rate cutting cycle. You are talking about this back in november of last year. You dont see the data is looking very gloomy, so what was it that made you think the fed would start to cut . Luigi that is a good question. At that time, it was the Global Environment and the inflation picture. These have been the two drivers for the fed moving in that direction. Picture ison definitely not what the fed would like to see. It is probably the main reason behind the. That. Said, this is why we do not expect a 50 point rate cut. The domestic side of the economy is still doing relatively well. Matt are there fears about asset bubbles . We will looking at leverage loans and private credit. U. S. Stocks are at an alltime high when you are not looking at a terribly huge amount of growth. Are there concerns assets could be blown further up . Luigi i would say no. Definitely, verizon equity prices have been part of the easing of financial conditions. A mind toght have stabilize the insurance ahead of the global slowdown. To be honest, i dont think we are yet in the condition of a bubble. It is still fairly healthy what we see now. Game is a little bit of a of chicken. Should the fed not fulfill expectations on easing and the economy is not picking up strongly, than risky assets will be a problem. How things will work. The fed was very instrumental in latest run of risky assets. Anna talks suggest this is an measure. That makes sense with the threat to the threat to growth and trade tensions. You would not cut Interest Rates because you needed insurance. Inflation is a much longer term issue, so how is the fed going to explain what it is doing . Luigi that is a very good point. What we have today is a pretty good balancing act. At the same time, they cannot be too hawkish to rule out another cut. At the same time, they cannot commit to that. So i think they will have to keep the door ajar for more easing. Without being too explicit, but to leave some room for dependency. So there is strength on the domestic side and the need to buy some insurance. At the same time, they give the sense that there is the case for inflation. But they are not forgetting about the strength of the domestic economy. People haveof talked about the risk of using up a dry powder. But i wonder about the moral hazard risk. If the fed gives the market the message that they will always do what the market wants, isnt that a dangerous move . Luigi definitely. Time, last year, the fed, if anything, was criticized for being too hawkish. For hiking rates too much, definitely from President Trump, but not only by him. I would have a say they have not done a bad job balancing these needs. To tighten, but not to overdo. Iey did it year with the less , which is probably what they are going to unwind today. I think they have done a decent job in the end of putting everything together. Anna thank you for your time, the founder of lb macro, joining us in london to look ahead to the fomc decision. We will bring you full Coverage Today followed by chairman jay powells News Conference. Lets get to our top stock stories this morning. Air france this morning, up 5 as they were able to put some of the strikes behind them. The absence, they were able to boost profits. I have say, quite the difference we are seeing with some other airlines that have been on the downtrend. This is slr exotica, buying this dutch company, valuing it at 7 billion euros. And aston martin is plunging today, down some 19 . We saw this last week as well when the Company Revised its annual sales forecast. They reported a loss on sales prices, saying they might need to financing. One thing that brought up is that they are saying a weaker pound may mean they are selling more cars. Matt likes cars, maybe its time to buy and aston martin. Laughter]ced i might be tempted, if the pound comes down a little bit more than i might. This ceo has been charged with fraud as part of an investigation into diesel cheating. Accusing there former executive of knowing about the Diesel Engine rigging and not preventing vehicle sales. For more, we have bloombergs senior auto reporter who covers the volkswagen group, which owns audi. Were looking at him for more obstruction because of tampering with a witness, in my poor laymans terms. But it looks like they are actually connecting him to the original fraud, the underlying crime. Yeah. Charges are probably not much of a surprise since his boss, the former volkswagen ceo, has been facing similar charges related to the diesel emissions scandal earlier this year. I think it was probably just a matter of time. The role to some degree is unclear. The next step would probably now be for the Munich Regional Court to decide if they open. A Court Proceeding or not. But the Financial Risks are probably somewhat limited since the contract with mr. Stadler have been terminated and audi agreed to play a 800 million euro fine to settle the allegations. Anna thank you for the update, bloombergs auto reporter joining us from think from frankfurt. Swiss earnings beats in the first half, we speak to the ceo. That conversation up next. This is bloomberg. Matt welcome back to bloomberg markets. 44 minutes into the trading day, looking at a mixed picture. Ftse is down by. 55 . 25 . U. S. 10 year yields are slumping for the fourth consecutive day as the market expects a quarterpoint cut. But lower yields have reanimated the search for income, sending investors up to the risk curve for bigger and bigger payouts. Corporates are taking advantage of the roaring appetite for bond proxies. Yields as the 10 year low as they are, we are seeing a lot of corporates coming into the yield. Place should be no surprise. No we see who can give the most competitive rates. The members have yields greater than the 10 year yields. And for the 30 year note, this is pretty remarkable, one third will. This points out some of the companies. The best there, kohls is off the list, as well as some of the reads which supply the land and the buildings that these companies lease. I have to emphasize some of the issues you have in the portfolio. So yes, you get income play. The you look at some of trends and the performances of the stocks, you can see how much they underperform. So the bottom line is a drop of 16 year to date. That is versus a 20 gain the 500. 00 for the s p so yes, you get a bigger income section for your portfolio, but there is a lot more risk. Anna thanks, bloombergs dani burger. Swiss three posted firsthalf earnings that these estimates Beat Estimates compared to the 697 million that was forecast. Joining us from munich is the three swiss re. I want to talk to about corporate solutions. I met loss much worse than the previous year. A in loss much worse than the previous year. How stand how soon can you returned to profit . You are right, we did take a series of important measures, particularly in the release we did today. We think this will come back to an underwriting profit. The markets for corporate insurance rates is actually helping us a little bit. We were able to get price increases in the first six forwardf 9 and we look to a continued ability to raise prices for the risk we are underwriting. Matt john, we are on the cusp of a fed rate cut and the ecb wants to move more negatively at their next meeting. How does the Interest Rate environment affect your business . Broadly, falling rates is not a good story. We have been able to maintain a running yield of about 2. 9 . Credit, high quality and clearly, some government bonds in the portfolio. We are largely dollar base, so our work is cut out for us. In the meantime but for the first half of the year, we were able to demonstrate a strong return on investment of 4. 2 . We will work through this, as will the rest of the industry. Anna earlier in july, you had to suspend the ipo of this u. K. Part of your business. What are the criteria you are looking for to restart the conversation . Ipo, we areof the going to take a break and let the market get its feet back under it. Resistance, partly to the relatively weak performance of some of the issues that had gone through the ipo process. Saw subsequently suspensions from people deciding it was not the moment for investors. Back dont expect to come in 2019. Areill see how markets and 2020 is a possible window for us to come back. Matt to some extent, that has to be considered a result of brexit. How much money are you spending directly, and how much do you think it is affecting business indirectly . We are wellpositioned as a swiss company. We have got a european a subsidiary headquarters in luxembourg and have for some time. So in spite of the identification, our u. K. Presence, while important, has not been the hub for the rest of europe. So we have not had to spend very much to be prepared for whatever outcome the british government, together with the eu, comes across with. Towill see our ability continue our business is unaffected. And to the degree we can be helpful to u. K. Companies or other companies that have more serious challenges, we will support them. Anna thanks very much, john. Up next, top of the class. A secondribas posts quarter of income gains come out shining rivals on both sides of the atlantic. We bring you our interview with the lenders ceo next. This is bloomberg. Matt welcome back to bloomberg markets. You are looking at live pictures of Turkeys Central Bank presentation. The governor is doing that presentation on a quarterly Inflation Report. Year end inflation is estimated at 13. 9 nurses 13. 6 , previously. Every little helps. Bnp paribas has outshone its rivals in fixed income trading. They posted gains for a second straight quarter, putting them ahead of wall street and european peers. Bloomberg spoke with the ceo about the revamp. If you look at the evolution, we accelerated our civ transformation plan. Cib transformation plan. It is on that that we started to see the benefits. On fixed income, we saw a pickup and a strong contribution to First Quarter which was confirmed. When we look at equities, it remains a bit lackluster. And we had come on top of that, a strong quarter. So yes, we feel comfortable that the acceleration that the plan is bearing fruit. Do believe the lackluster environment will remain in the second half . It is difficult for me to foresee, but when you see in this kind of activity and with low Interest Rates, you would assume there will be a pickup in activity. But we will have to see and talk again in the third quarter. Bnp paribas entered a preliminary agreement with Deutsche Bank to resume control of the electronic Equities Trading and prime services for hedge funds. Could you give us an update on how you are planning to integrate those businesses. It is a preliminary agreement. Bnp paribas will be the bank of referral to onboard the clients. This is to be checked and validated by many things. But if we look at how that is going, the interaction between the banks and bnp paribas is going very well. Moreover, the speed is faster than expected. So from that point of view, we are very pleased. When would you like to complete a deal . It will be clients coming over. That phasing typically takes time. So one would assume that the transfer of clients will be done within a years time. 2020, that is the horizon when i would expect the transfer to be finalized. Anna that was the cfo speaking in paris. Thats it for the european open. Stoxx 600 down by. 1 . The weakness today is coming from real estate. Hammerson and you develop follow lower. El follow it unib lower. This is bloomberg. Francine a large cut, that is what President Trump wants from the cut today. But with a 25 point cut priced in, what can the chair do . A swiss lender defies expectations, telling us june was the best month and 3. 5 years. And life after the iphone, apple gains after cutting dependence on the device. Can the share price push stocks to another record