earnings come in slightly above estimates but here's the kicker. analysts slashing expectations over the last few weeks. is mr. dudley delivering for investors? german carmakers set to be closing on a deal that would provide hardware fixes for diesel cars. this could add as much as 5 million euros to the cost surrounding the scandal. willis be enough for politicians and the public? we are not done with car news, are we? matt: no speaking of german carmakers and french, british and american carmakers, general motors has completed its sale, closed its sale of opel and vauxhall. the french group that controls -- so general motors closing the sale of german brand and british .rand of its cars here very interesting headline coming across tsa, opel vauxhall, operating free cash flow by 2020 and targeting an operating margin of only 2% by 2020, only 6% by 2026. far asot so bad as european carmakers are concerned. not luxury carmakers, i in used to the u.s. margins of 10%, but that is with the giant trucks. maybe 6% not so bad. targeting operating margins of 6% by 2026 with opel and vauxhall. quickly, where our futures trading less than half an hour from the open of the cash trade here? futures up across the board after a week session -- weak session. the ftse gained on the close yesterday but the cac was down almost 1%. the dax was down as well. looks like he could get a little bounce this morning. take a look at the bund trade. i've got the german bunds here. we still see yields climbing higher. this is a one-day look. let me zooming, coming back down to little changed. openafter a bounce at the of the bund trading about half an hour ago, we see that subsiding a little. keep in mind chairman greenspan's comments. comments from him overnight saying he thinks bonds are in a bubble. talking more about treasuries and the bund, but doesn't think rates are high enough 0.55%, this is a picture of rates that are five. irrational exuberance springs to mind. interesting comment around the fed model. to the gmm.ound the all the stories interesting. chinese data overnight has surprised to the upside. the aussie market responding, up .9%. down andthe cac around percent. the other thing, it is not on this so we will wipe not what we have seen, a little euro weakness. we will talk a lot about what is happening with dollar. changelly's decision to the dynamic in the white house, start the point is towards tech reform -- tax reform. euro down .2%. let's catch up with what we need to know with the bloomberg first word news update with juliette saly. thank you. in the u.s., anthony scaramucci has been removed from his new job as white house on johnations director kelly's first day us chief of staff. the move comes 10 days after the financier joined president donald trump's team. sarah sanders said scaramucci left by mutual agreement and walk return to a previous job at the export-import bank. said equityan has bears hunting for excess in the stock market might be better off for you about bond prices. the former chairman warned this is where the bubble's and when it pops it will be bad for everyone. in an interview with bloomberg, he said "the real problem is that when the bond market bubble collapses, long-term interest rates will rise." the u.s. has said it will combat the distortions to the world economy created by china's economic system, especially in markets of steel and aluminum. in a report, the u.s. trade representative's office said its primary goal is to defend the government's ability to impose duties on china, for dumping goods at low prices or subsidizing chinese firms. the report comes days after trade talks in washington. reportedly dictated a statement later shown to be misleading in which his son said the meeting he had with russian lawyer was not related to his father's presidential campaign. according to "the washington agreed that it truthful account of the episode "couldn't be repudiated later" after full details emerged. the president change the plan and dictated to statement that said the discussion folks -- focused on the adoption of russian children. has saidancellor briggs it will struggle ahead in march 2019 in spite of disagreements within government. overrate transition period to help deal with a split. fill in -- philip hammond is in brazil to promote trade, said the debate among cap -- ministers is about adjusting to a new relationship with the eu, not about question of staying longer in the block. australia's central bank has kept interest rates unchanged while warning that are rising currencies expect to subdue inflation and weigh on the outlook for growth and employment. the governor and his board held the cash rate at 1.5% as expected by markets and economies. they last met, the economy recorded its biggest gain in full-time jobs in almost 30 years. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. juliette, thanks for that. turmoil in washington, looking unlikely to end soon. investors scrambling to calculate political risk premiums. the bloomberg dollar index in decline by about 10% from its postelection high. according to the mliv blog, that doesn't look excessive went through the lens of the eurocrisis. joining us is mark cudmore, bloomberg's mliv macro strategist. why would you want to compare this to the eurocrisis and how does it look? mark: the reason we compare it to the eurocrisis is it is the only comparable situation in the last 20 years. it isn't exactly the same. the narrative 10 years ago was that the euro was rising as a credible challenger to the dollar as the world's reserve currency. that was pre-crisis. and we got the eurocrisis at self. in the first eight month, slump of about 8%. the u.s. also is a debt problem. not only with large government debt, but also state that and leverage sumer. not a different example, but not perfect. another reason this wasn't excessive is the dollar is still expensive compared to major currencies of all of its major trade targets, whether the canadian dollar, the mexican peso, the chinese yuan, the euro , all of them, but dollars more expensive on purchasing power metrics according to the imf. guy: is the bond trading down because of instability in the white house in washington? able tof john kelly is steady the ship, point the white house and the direction of tax reform, rather than health care reform, how would the market react? part of thek that dollar decline has been about the political turmoil in the white house. it is hard to quantify what amount. we have seen the legs down in the last couple of weeks, seeming to be driven by the headlines out of the administration or how to washington. if there is stability and it looks like suddenly tax reform will get through, yes. absolutely, a technical bounce to the dollar that would last a couple percent. i don't think it changed structural backdrop, but it would be a surprise and a time when investors have little hope for fiscal stimulus in the u.s. ask about the to greenspan story. it is leaping to the top of our most red list on the bloomberg and former federal reserve chairman saying not only is he worried about a bond market bubble, but that it is not discounted in the marketplace. a couple of people have been saying this, but does it hold more weight when the maestro comes out with these kind of statements? ,ark: i'm not sure respectfully, he doesn't have a great record of identifying bubbles in advance. i would say implies -- sympathize that bond markets on historical metrics, it is where the real bubble is. we are away on stocks as he suggested. this is something we talked about on the mliv log. our view is that neither are in bubble territory. and you consider the liquidity in the system. if you account historical metrics, both look in bubble territory. but historic metrics don't take into account the massive acceleration in central bank balance sheets that we have seen over the last decade and that has changed everything. on top of that, equities are hard to judge because everyone looks against historical ratios. a fail to take into account that discount rates are below are since interest rates are lower given the pressures we have got to technology and demographics. all these historical measures are important to look at, but not something to trade off instantly. we believe it there. plenty to read about on the bloomberg terminal. our cudmore joining us, macro strategist on the mliv team. smart analysis through the day. if you want to look at some of the individual stories we are focused on, tliv, topline running on the bp numbers come a we will focus in on very shortly on this program. if you are a bloomberg customer, the functionality continues. tv is a function i would urge you to use. not only do you get to watch the video stream, you can click on an interactive tv. this is fascinating. go to the most-watched videos, one and three, it is fascinating. most-watched story, tesla one and three. and blackrock talking about what is happening in the economic story in the states. one in three, fascinating. interesting new model from tesla. matt: still, that is the second day running that story has been the most-watched. recommend viewers going to watch on tv. next, we will drill down into bp earnings after a beat, but it beat at a lower bar and a concern about debt. this is bloomberg. ♪ ♪ 7:44 in london. how will bp open this morning? second-quarter numbers beat the estimates. but analysts have been sharply reducing expectations for the company over the last couple of weeks. it is a lower bar. meanwhile, bp debt continues to build is cash flow is unable to cover cap ex-dividends and payments linked to the u.s.-gulf of mexico oil spill. joining us now, will kennedy. good morning. is that a fair characterization? yes, they are a beat, but they have been managing expect nations. -- expectations. >> it is good news, they are them a condosh but payments continue to be a drag for bp and it is starting to differentiate them. we had a fairly up each .tatement from shell and total it is hard to get excited about these numbers. debt continues to rise because of the payments. during is up almost 29%, just shy of the limit. they have added $10 million of net debt in the past 12 months. it will probably be ok, there are reasons to think they can cap that, but it leaves them vulnerable to another slump in oil prices. with the gulflem of mexico oil spill from 2010 and you mentioned net that going up almost $40 billion from $30 billion a year ago. where does the chief executive want to see that? where do investors want to see that and how quickly? will: there is a lot of unloading in this year's numbers. spent $4they already billion out of 5.5 of their year. that is reason to think we will see a stronger cash flow picture in the second half of the year and they may be able to cap net want tot people will see progress start. they will want to see the end of these quarters where debt continues creeping up because that is what happened at competitors and bp will want to avoid a situation where there capital structure comes out of whack with the rest of the industry. that may lead to a real mismatch of valuations. guy: if someone else was in the same seat, would they do something different? will: you are not hearing much personal criticism of him, most investors think he is making the right moves. bearing down on costs, trying to dispose of assets to keep on top of the balance sheet issues, albeit with this drug. it is hard to see what another version would do differently. he is seven years into the job, i think people -- the verdict is he is making the best of the debt -- bad hand. guy: final question, this is bp's dividend yields. that is a pretty punchy number. if you are an income investor, that is a fantastic, ember but it is -- fantastic number, but is it right? , al: we saw shell last week good quarter. beating expectations, still a shell, a company without the issues that bp has with their bill, 7% yields. its got to give one way or the other, right? clearly there may be some value there. the picture is that the investment community has been very bearish on energy for some time and hasn't yet changed its mind. it may be that that is coming or that they think this is a industry -- electric cars in the future. the next six months will show. from we did here recently shell ceo that his next car is going to be one that is not run on gasoline. interesting stuff. will kennedy, bloomberg's managing editor for energy and commodities. this is a story will will talk about throughout the day. b.p. beating earnings expectations, we will watch shares at the open in 11 minutes. qatar has launched an official complaint with the wto over the countries blocking it. tracy alloway, is there any indication this complaint is going to get anywhere on the wto? will it make a difference in a situation that appeared to be getting better and has come back to square one? tracy: sure, at this moment in time it seems unlikely and that is because there is a little in called article 21. article 21 is a provision for wto members that you don't really hear about often. because it is not cited that , but it gives members the ability to enact trade measures they deem necessary for their essential security interests. given that saudi arabia and its gulf allies have accused qatar of supporting terrorism in various ways, it seems unlikely they will reach for that provision in justifying what they have done to cap are in terms of embargo or blockade, whatever you want to call it. that really limits the effect of this of the qatari move, but says something about relations. this isn't really a good and for qatar's relationships with the gulf. guy: in terms of the impact we are seeing, what kind of disruption are we now experiencing in qatar? what is it like? what kind of trade disruption are we seeing? let me just say, there is a reason article 21 doesn't tend to get cited often and that is because of a fear of tit-for-tat retaliation. you cite trade measures, eyesight security interest and similar measures, that is not an issue for qatar and the reason it doesn't apply to this particular situation is because qatar imports so many of its goods, including the vast majority of its food supply. we have seen qatar very much struggling in the face of this, even though it has brought in some additional goods from its allies iran and turkey, it has also rerouted shipments. nonetheless, you have seen on the ground impact. going up, that could feed into inflation and the rest of the economy. numbers we saw last week show that imports to qatar fortune actually dropped by a pretty compared to the same month in 2016. we're certainly seeing an impact. great stuff. thank you. tracy alloway out of abu dhabi. minutes from the market open. some of the stock movers in today's trading. rolls-royce had a big day yesterday. out with first-half profits, numbers beat. he will look at bp, as well. on.ty of stocks to focus the open is now seven minutes away. this is bloomberg. ♪ ♪ matt: we're a few minutes from the start of european trading. it stocks to watch. we were talking with will kennedy about british petroleum, bp, and the debt issue aside, earningsny did beat expectations on the street, whether it lowered the borrower not, that is the name of the game. income, $184 million, the estimate was for 508 team million dollars. watch for bp to rise at the open. guy: its talk about rolls-royce. yesterday, the stock down lower that today'sations numbers would show a downward revision when it comes to the outlook. that has not happened. number seven beaten estimates. anyway, the market open is next. this is bloomberg. ♪ ♪ happy swiss national day. the feature story in europe points to a positive open this morning. the ftse 100 looks like it may outperform by .5%. elsewhere, not exactly the most exciting start to the day. we have to see what drives ftse 100 higher. you if you bought -- do got? matt: i found a chart from back in march. it is number 7147. the question we were asking, is there more to go as far as losses in the u.s. dollar? the trump boosted the greenback. it has come down 10%. very interesting to look at where we have gone in the dollar. guy: absolutely critical in office. there you go. .hat ftse 100 openings higher probably more to go around 5%. the market makers can drive that one of a little bit. the ada is on form as well. we are up by .3%. u.k.can, watch bsm, the house bill. plenty to focus on. watch rolls-royce as well. that could be an interesting story as well. manus cranny come over to you. manus: asia is at a 10 year high. europe is starting the month of august and the green. the ceo was saying clients were able to get access to finance, housing prices have not dropped. concern in the market for him even after the election. he agreed around the european equity markets that manufacturing coming in ahead through 2017. indexes,e commodity copper, aluminum charted at the 2014 high. financials are stronger this morning. bp is going to be the key issue for us. there is the metals index at the bottom of the screen. global equities at all-time highs. if you dive deeper into the u.k., where are they getting the money to spend you -- spend? the ticker on this is 53.91. that is total consumer credit at the bank of england. where are they going? 200 billion pounds, up 15%. the high street is barring what we are seeing. not necessarily the big blockbuster name, hsbc, we are going to other financial and divisions. we had a look at with the competition saying, expected that the gilt treasury spread continue to widen. as you wait for the bank of england, this is thursday. guy: matt mentioned what is happening with bp. direct line insurance beating expectations. beating estimates. 4.78 this morning. bsm up by 4.2%. rolls-royce holdings, lower on concern surrounding its outlook. numbers of by 4%. bp is also rising. they have now just dropped out of my list. it is somewhere -- initially it was higher. there you go. 1.63% on the back of its numbers as well. -- at of individual stocks bunch of individual stocks this morning. matt: anthony scaramucci was removed from his job as white house medications director on john kelly's first day as chief of staff. it comes 10 days after he joined donald trump's team. the timing of the departure signals to the rest of the administration that kelly has a broad authority to impose discipline. the turmoil spurned the dollar to further decline, pleading the fifth monthly drop area we have been talking about that as well. joining us now is the chief currency strategist. simon, how much do you think of the dollars drop has to do with the turmoil in the white house and the lack of any legislative progress from the trump administration in this current ?ongress >> one of the key parts is the inability to get through what people see as progress legislation. i think you have got to go back to where we were with those promises of those policies. sharp steeping made the astonishing value. as we go through this year and it is becoming increasingly difficult to push through, we lay and the market is clearly taking yields back down and the dollar has come with it. i'm not certain that this is to do with turmoil more generally. i surely don't think there is any hard evidence that that is the case. if you look at the dollar overnight, that was taking place the end of the european day. the headline started to bring about changes. i think you have got to be cautious about jumping to those conclusions. could it become about that? yes potentially. i think it has to be a lot more than what we are currently seeing. matt: to repeat a question earlier, if we see general kelly really turn things around, focus this white house, help president trump to focus congress and get important legislation through like tax reform, like deregulation that a lot of people want to see, will we see more growth in the greenback? is this a buying opportunity for the dollar? >> you have got to remember civil things. we will be quite a long way into this market. quite a long way for the economy. we still get relatively modern -- modest numbers. if we were to see something coming through that suggests that maybe progrowth policies were more likely to come through and you started to see yields rise again, there is no reason why yields should write some negative. let us assume is about progress. that could help support the dollar but we seem a long way from that. i think investors at the moment are looking elsewhere and seeing it more likely to do so. what is interesting about this is obviously there is a number of different dynamics taking place. what is really fascinating to me is that this decline in the dollar that we have seen over the last two years, very similar to the dynamic you see back in 2002. that was at the end of the second rally. here we are in a very similar dynamic now. it feels like we may see the end to the third great dollar rally. guy: is the dollar overvalued? you have basically got it looking pretty overvalued against a bunch of the majors. if it is overvalued, that is the big mac index but you can switch this etc.. overvalued and if the end of this rally is coming, how much further credits go? -- could it go? >> there are a few simple things. the europeans always used to say that 120 with the right place. -- price. the other bit is how far things can move in the early stages of a turnaround. if you go back to the 2000 to move it in the first several months, 20% to the euro-dollar. it is similar in pace to that so it could be 1.20, 1.25. guy: if it does that, draghi is not going to be a heavy timber. camper. >> it is about where the dollar goes, how it helps with the foreign-exchange reserve my. to somehow diversify those reserves. small markets, open economies,, those for stress -- forces drive them a lot higher. story showinga the weaker dollar, stronger euro is really starting to hurt european company earnings outlooks. where else do you see the weaker dollar in other markets? >> the most obvious ways is japan. if you look over the course of the last 50, 60 years, the correlation between the performance of the nikkei and the yen has been almost perfectly opposite. the dollar weakness is going to be the very last thing that shinzo abe wants to hear at this time of political unrest for him. i think there in particular you could see something, dollar weakness start to kick through. inis going to make itself the end and probably going to make it up differently -- beverly trying to manage them and keep them at a competitive level. the astonishing amount of dollars that were are just might various managers between 2002, 2014. reserves took control trillion over that time. do those guys really wants to go through the same thing again you just to let their currencies go rather than get caught up with again in the currency war dynamic. you were mentioning in terms of the yield spread, the differentials and how that is using -- moving. is thete line here treasury versus the spread. euro-dollarnd the and and president. that is looking pretty wide. >> one of the things you have seen over the course of the last two or three years is the search for yields have had people to the yield curve. if you look at the 10 year spread you start to get to that picture. at the moment, investors and people a long way. >> plenty more still to come. up next, finding $50 billion. details from the new york court that report that says they could need fresh capital after breakfast. more fresh capital. this is bloomberg. -- brexit. matt: welcome back. matt miller alongside guy johnson. let's take a look at how the equity indexes are trading 14 minutes into the session. up .2%. the stoxx 600, the ftse of performing here. we are seeing the gains in london, about 15%. -- cac and the cap changed as we see a euro weakness. that the ftseng really -- it is always trading separate from the other continental indexes. the oilnk the fact that stocks have had a very good at july. i think that is going to be interesting to work its way through this morning. has rallyhat iron ore pretty hard has had a material impact on the sector. will still go ahead in march 2019 in spite of cabinet disagreements over a transition. banks mayays that need to find 30-50,000,000,000 dollars of additional capital in the aftermath of brexit. a requirement to carry extra couple surrounding the credit story in the u.k.. the chief currency strategist joins us now. let's go over the politics. a lot of noise over the last few days and weeks in the u.k.. i am trying hard to wait a my way through it. it does feel like noise. when do we start to get a return to clarity in the u.k.? >> september 5 when the parliament comes back from recess. that is the reality. if you get that last year and you have a look at the summer months, when parliament went to recess, the leadership was resolved. nothing happened until september. even the bank of england rate cut it little to disturb sterling. your chief stability, you also saw volatility declines come a risk reversals. it has on all the way through months. my only point is typically during this summer recess you see these come back. as soon as we hit back to the negotiations in brussels and the conservative party conference, then you see sterling really be impacted by political advantage. guy: why is sterling reacting and the dollar isn't? >> the political the elements here have a material impact in the long-term about how the economy performs area this is the biggest thing that has happened since we joined the eu. that is what it is about. because that overwhelms any short-term issues with regard to monetary policy. i think isainty going to continue to play a picture for people. andt now summer is here only given the sterling over the course of the last few months, maybe things he's up a little bit. only a little bit. where do you see -- i will ask you to take off your currency strategist hat -- where do you see everybody going? is frank for the clearly -- frank for the clear leader? >> that as well beside my field i'm afraid. i think they are clearly to hear the stories out there. different places people have talked about. amsterdam, people talk about dublin. clearly people are thinking about where they are going to move to how far we will see. really outside of my field. mass: london is the currency trading capital of the world you do you still feel like you're at the epicenter of trading money? >> you are right. have alwaysyork swapped those honors. for the moment, that remains the case. last 30 course of the years the dynamic does change. one of the fascinating bits over the course of the last decade, a resurgence of growth. one of the parts of that was the growth of fx reserves earlier. he have interest in all those markets. it is ultimately about where the money is going through that determines where the market will naturally thetion itself to matt: people matter as well. which is why i want your take on this. the chief currency strategist at the alawite. -- strategist. australia's biggest export, iron ore, is trading below the 2017 highs. could it be aussie dollar have further to run? we will discuss that next. this is bloomberg. ♪ guy: -- matt: 22 minutes into the trade we are seeing slight gains on the continent. bigger gains in london. we go to sebastian. >> competitors show they have adjusted to $50 per barrel oil. the third-biggest oil company terminates $.9 billion in cash for operations, up from one year earlier. more than 21% in new york after scrapping plans to redeem debt. the carpenter said late friday it could not meet all the conditions to redeem its notes. stocks willlysts, fall to nine dollars. power objectslear under construction in the u.s. has been scrapped after one of the cone owners says halting work will save customers over $4 billion. the decision to stop the expansion comes four months after westinghouse filed for bankruptcy. that is your bloomberg business flash. the aussie dollar's initial slide overnight, focused on wording. here's the kicker -- with china and mobile growth, they are when the rba really has control. one of the great metrics is iron or which has been on a charge over the last few weeks and traditionally, they fairly well correlated. you can see on this chart. 6136. we have got to break down the back end of last year. they are record lifting now. they're both rising pretty sharply. the current strategist at the bank of new york does the rba have control over its currency are gone against currency strength. hosthas largely become 2010 and it has come as communities look for alternative currencies. the imf numbers look for huge increase. against those forces is history said they would be able to do, history says no. they struggle to fight against it. we have consistently weak dollar and money flowing out, what the rba does. you're going to end up stronger. they are going to hate it. matt: i want to know about frontier markets. opportunistic funds has actually written 90% of its peers so far this year. overrontier markets plain-vanilla? >> i'm not particularly an think one of the defining parts of this has been the resumption of a search for yield. it is fascinating that markets this year have really been out of favors starting to come back so strongly. the evidence more generally for emerging markets is over growth and the resumption of interest. i keep coming back to the simple point that it is about the flow of money and. if you look at the growth in reserves, $184 billion. that is an astonishingly large. point: 2013. it is about the search for yield. maybe equally in a world of growth where the rally is already becoming. this global rally, maybe people are trying to look at the frontier markets and say that is where the little bits of extra actually are. >> we need to talk about what is happening with the euro. i is swiss national day and bring you exhibit a. this is the euros swiss. that is the way to celebrate swiss national day. particularly if you are the swiss national bank ♪ track your pack. set a curfew, or two. make dinner-time device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. introducing xfinity xfi. amazing speed, coverage and control. change the way you wifi. xfinity. the future of awesome. matt: scaramucci ousted after 10 days on the job. the committee kaisha and director departs as john kelly tries to steady the ship. if this dollar positive or dollar negative? bp earnings come in above estimates after analyst have/expectations --/ -- slashed expecations. shares are trading higher. german carmakers are said to be closing in on a deal to provide hardware is for diesel cars that could add up to as much as 5 billion euros. will it be enough for politicians and the public? welcome, i am matt miller in berlin alongside guy johnson at the low left -- at the headquarters in london. let's take a look at how equities are shaping up this morning. we do have an outperformance from the ftse 100. doing pretty well this morning. there are housing stocks that are doing well. always worth -- rolls-royce up as well. direct line is trading strongly as well. stocks specific stories surrounding what is happening with the ftse 100. 74.05 is where we are trading. the dax is a little bit weaker mass: after told trumps trade advisor said that the euro is grossly undervalued, the single currency remains 14% below the fair value against the dollar. the euro is the cheapest among its peers despite a gain of more than 10% against the greenback this year. still with us is the chief currency strategist at bny mellon. just generally, what do you think about the imf price purchase parity valuations. do these really pay where he currency should be? >> it is not something that the foreign exchange market spent a great deal of time worrying about you to me i always think that in the long run -- in the long run currencies tends to move around that. i don't think we're looking at moving at -- averages. that gives you a level for the right prices to you have to say it is between 1.2 and 1.3. i don't think that would be one million miles out. below we are a little bit where the fair value is is probably about correct. i think that most of us probably stick our figure in the air and make a rough guess. what we are really saying is it still has great -- space to appreciate even to get back to fair value and the answer is yes absolutely. byther that has been driven conscious policy decisions or is just about dynamics, because no question. draghi going to be able to taper down on stimulus and 1.2? rates into the ecbreally does make incredible process. take a step back and think about what was said in the last press conference. he was as reasonably dovish in his comments as he could be. even though he did not say he was worried, he actually did say that the euro did factor into their thinking. you have to believe that if we continue to see this strength it will push out -- put back when we start to move and normalize the underlying policy rates to i appreciate the ecb does not like the word tapering. purchases will continue, will start to pick up the pace over the course of the month. policy normalization is going to be difficult. it is going to present a real problem further out there is always a downside. central banks need to have a little bit of leeway to be able to react to those. belowhe policy rate still zero, that presents the ecb with spacious issues. what would they do next you guy: let's talk about the other side of these. swiss national day in the morning. this move here, the biggest move has been against the yen. the move against the ftse has been quite significant. we take it back out of a big chunk of that move in 2015. the dumping of the currency. we continue to strengthen the euro. sitting and trying to figure out what you do next in terms of policy, you're not doing anything here. do you worry that you don't have control? if you are sitting at the s&p, ?hat would you take away >> you probably have mixed you finally get a little bit of normalization but if you step back a little bit you come to the darker conclusion that there is relatively little you can do against those broad dynamics. the same issue. small currency. relatively liquid compared to howmajors and think about negative a have been to be. it is only now as you start to get the demand building up, you're getting the ships. -- shifts. we're talking about a sustained move higher. next 10 years you're going to be asking yourself is that all we can do about currency strength. the answer probably comes back not really. it has been the big story around the euro move. this big chart highlights what we have seen. have blown through a bunch of moving averages and we are kind of around 200 now. do you think this has gone far enough? if it does go any further, but it really take a long way? -- could it take a long way? is they ared thing a risk on environment. even if the move is higher and the markets are becoming increasingly neutral, putting the risk on environment is always going to be under pressure. those two things with the japanese will do whatever it takes. i think we would be going back to the high from 2, 3 years ago. thank you very much for joining us here. he is going to join matt and i on the digital radio. there you go. us fromrrick joining the bank of europe. matt: we are getting headlines right now that a lot -- olaf, the eu anti-fraud office is finished a bw probe and is recommending fraud charges to german prosecutors. this could be one more wrinkle in the german car story ahead of tomorrow's summit that we are going to see. is also-fraud agency making a recommendation to other european agencies and volkswagen says that all funds received from the eu were used as intended. this may be part of the program as well. what we do know is that the anti-fraud agency is going to send the case to the german prosecutors and recommend fraud charges you very interesting stuff. we're going to continue to follow this breaking developing story ahead of tomorrow's summit here in berlin when the carmakers and politicians will circle of wagons and see how they can defend themselves against these new charges. to $40 billion, we will talk oil and rick down earnings -- breakdown earnings. the debt of $10 billion in one year. how, why, what it means for shareholders. this is bloomberg. ♪ ♪ matt: welcome back to the european market open on bloomberg. markets gaining across the board with the exception of the dax in germany and frankfurt which has now dropped to a loss of .1%. i want to get the first word news. we go to sebastian in london. >> anthony scaramucci has been removed from his job as white house medication directors -- director on john kelly's first day of chief of staff to 10 days after he joined donald trump steam. sarah sanders says he left by mutual agreement and will not return for jobs at the bank. equity hunting for excess might be better off worrying about bond prices. this is where the bubble is and when it pops it will be bad for anyone. the real problem is that when the bond market bubble collapses , interest rates will rise. the trump administration has sanctioned venezuela's president, accusing him and his government of undermining democracy. move, directors of the head of state and the treasury department factored after a vote on sunday -- acted after a vote on sunday to rewrite the cost efficient. it prevents anyone in the u.s. from dealing with him. global news -- global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. guy? matt? guy: bp shares trading higher as the company moves to concerns after debt rose to the highest level ever. bp says oil spill payments for the rest of the year and funds from asset sales the first -- burden. ease the the burden. bps numbers -- the market is taking ap higher this morning. not by much. expectations of the last few weeks have been significantly lower. we will come back and talk about that in a moment. through how walk us good, bad, indifferent these numbers really are. >> it is interesting because it is a needs. better than expected. managedly because bp expectations significantly. july theginning of market was expecting $1.3 billion. millione down to $500 when they finished guiding the market down. we see the reaction today, it is better but only that are because expectations were much lower. you highlighted a record high. you see most of the other oil companies, they are paying down that credit card debt. bp is still increasing the debt. that means the most vulnerable arehe big oil companies -- the oil companies if oil prices were to drop again. about doingple talk things differently? a bad set of has cards because he has to downsize the company to pay the amount of payments. is lowering.eo cappex.ving to lower he has a really bad set of parts. i was talking earlier today on blog and he for our would demand that bp resolve the problem. resolved problem is and the abilities have clear. the settlement has been rigid. he is the right man to take the company forward move into a phase of reconstruction. the company has downsized definitely. now they are trying to rebuild the company. matt: the condo obviously is a -- he's specific issue. talking about the broader industry as far as integrated oil producers are concerned, how are they coping with $30 a less for oil? can they get it cheaper than that? is it starting to hurt the industry? >> if we look across the industry clearly they have had a recent results. a big part of that is because they are spending less on. -- cappex. they're existing productions at these levels, but only by not putting money into developing a future project. if you look to the end of the decade, 2019, 2020, that is where that becomes a worry. they are of course still spending u.s. shale production. that seems to be cash flow negative.rea -- lowerer negative -- conventional production and demand for the next 5, 10 years. matt: what is the demand side of the equation? we always talk about supply. obviously we're focused on opec. we're focused on the shale play. in light of the new tesla that is out, in light of the diesel same -- diesel scandal, what is the idea on the demand side? is it still study? -- stead? -- stead? -- steady? >> asia is doing well. in may, june, we saw a really strong global demand growth. i think that will continue into the second half of the year. one of the side effects of prices not moving much higher despite opec and non-opec production cuts is consumers are still benefiting from those low prices. story economic growth except that is translating into another year of demand numbers. there are all these uncertainties about the uptick of electric vehicles, bans on gasoline and vehicles, that is why oil companies are wary about these investments. even if you take aggressive assumptions and all the conventional manufacturers catching up, there is still a lot of other places that will goes where there are no obvious to -- substitutes. perhaps the market can get to focused on the downside risk and confuse the timelines. also the extent to which they will impact the whole of the barrel of oil demand. guy: we are getting comments now. the cfo is on the phone talking about the numbers. the tax rate, 40% for the full year. that is a tough number. the dividend is still well underpinned given the tax position. i guess put in another chart here. yields bps dividend around the 7% level. 7% level, the right number. > they would like to see the number much lower> because that means a higher price. investors mostly about one thing. what is the oil price looking like in 2018, what they're going to do next. now on the phone, he is expecting oil prices to go down to $50 by the end the year. he is seeing oil prices 45-50 five dollars. -- 45-$55. the dividend will be saved and you will think maybe 7% is too high. actually it is around 4%. the european companies have the same program that like to see a great price and investors are not doing them the benefit of the doubt because of the big concern of prices. richard nelson from energy aspects. thank you for joining us. our very own hobby air -- javier. you --to quickly show break some news. also show you a great function on the bloomberg. you hear me talking it about it a lot. wcco. -- weco. you can see the national data. atncis manufacturing pmi out 4.9. -- 55.4.ooking for 55 actually a little bit off the expectations. a fairly strong reading it to the 4.9. not in line with what we have seen previously. we will continue to follow this on your bloomberg, you can followership -- follow it very easily yourself and dialing to the countries by flag or name. clean up your act as diesel falls out of favor. what german carmakers are planning ahead of this week's summit in berlin. visit politicians first islamic dust carmakers -- is it politicians versus carmakers? this is bloomberg. ♪ ♪ matt: welcome back on bloomberg markets. we are getting the more economic data. we will get it throughout the day but right now we are getting german pmi's. -- french pmi's are lighter than the estimates from the economist. the same is true for german manufacturing pmi you 58.1 is still incredibly strong compared to the estimate of 58.3. pretty much in line. unemployment figures out of germany around 9000. low oflready at a record unemployment figures for the german economy. it continues to go strong. how long can that last with german carmakers in serious trouble? they are closing in on a agreement to provide hardware for diesel cars amid a public uproar over diesel emissions. i want to ask you how much the politicians are involved in this how much are they going to be able to separate the altar the automakers -- themselves from automakers? >> there a cozy relationship that has existed between the government and the automobile industry. it is not surprising. the german automobile industry is crippled to the economy here . they employ hundreds of thousands. cap auditions on the boards of volkswagen because the lower tax and he owns a big stake in the company. that is a risk that exists here that is not surprising. unfortunately that is all we have time for. we will get more from you throughout the year shortly. that is it for us. stay tuned for surveillance. we check our phones 85 times a day. so it only made sense to create a network that keeps up. introducing xfinity mobile. it combines america's largest, most reliable 4g lte with the most wifi hotspots nationwide. saving you money wherever you check your phone. yeah, even there. see how much you can save when you choose by the gig or unlimited. call, or go to xfinitymobile.com. xfinity mobile. it's a new kind of network designed to save you money. francine: gone in 10 days. anthony scaramucci is ousted. meanwhile, the administration focuses on tax reform. the oil major beats expectations. shares are up, but has bob dudley delivered? the u.s. greases the venezuelan president's assets. the message from former fed chair.

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