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tv   Bloomberg Markets European Open  Bloomberg  July 31, 2018 2:30am-4:00am EDT

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guy: good morning, welcome to bloomberg markets. this is the european open. we are live in london. i am guy johnson alongside matt miller in berlin. but: asian stocks are mixed more to the downside, the yen unchanged as treasuries gained, jgbthe real move comes in 's. the cash trade is less than 30 minutes away. guy: after all that buildup, the
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boj fails to deliver. anything more than a few tweaks to monetary policy. the press conference -- conference just beginning. we will get you the latest headlines as the press conference develops area tech tanks again. morgan stanley says the selling is just beginning and the market is heading for much eager correction. credit suisse shines, this was bank reported best pretax profit in three years. the ceo tells bloomberg that he is very happy with levels of growth. >> the core of our performance is driven by wealth measurement which is much more stable and much more predictable and growing very nicely and we can absorb the [indiscernible] of global markets. three more great interviews coming up for you on bloomberg television. we will speak to bps ceo bob dudley about his earnings.
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after it :00 a.m. u.k. time, we have an exclusive interview with the cfo of sanofi. they put out earnings after 9:30 a.m. we have another exclusive interview with the financial officer of standard chartered. stay tuned for those or set your dvr. where less than half an hour to the european open. taking a look at futures, they are down here in europe. we are looking at red numbers 50 numbersurostoxx are unchanged and ftse and dax futures, these might as well all be unchanged. i will be more interesting to look at the 10 year yield or the chart looks interesting. i have a three-day chart of p are as per usual. -- chart appear as per usual. a fairly dramatic downside move. we are looking at 2.94%.
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this only looks dramatic in the context of the incredibly tight range that we have been trading in. and reality, it is not a very big move and i suspect when you look at on your gmm, you will only see one black box and that is due to the movement in jgb's. jgb's are moving, and real terms it is not a big move, relative to history it is a decent sized move. the yen is down by .2 of 3%. you have to extrapolate office, the boj will struggle to exit its policy, inflation is not moving in that direction it was and you have to think about what is happening with the ecb. that was the big story coming out of the u.s. and the nasdaq under pressure, take a look at your netflix stock, down 5%. morgan stanley says there is more to come. the dax is a little bit lower and as matt indicated, we will not bounce off that level. the renminbi weakens and the
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real weekend again. let's show you what is happening in the fixed income trade and commodities trade, we are about to talk to bp. that is the japanese 10 year. the commodity index down by .2 of 1%. brent is trading at 74.59. matt: i want to recap what we learned today from the doj because that is going to be not only the top story but also what we are going to be hearing about very soon. should beuroda starting his live press conference right now. policy to stayoj the course for the long haul, he has become a marathon runner as some commentators in tokyo have put it and that is because he cannot get inflation to budge. he did not change his rates, but the boj is going to apply
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negative interest rates on fewer bank reserves to cushion the impact on lenders. they said in the past they will continue to say for the 10 year bond deal, the question is how much flexibility? they want to hold jgb's around zero, they are about their right now. in terms of purchases in the stock market to minimize distortion, he is going to buy more etf's on the topix rather than focus on the nikkei 225. you can watch this press conference on life go. right now on your bloomberg. type in live go if you want to watch kuroda live. you can follow it with the tliv that is constantly updated with news and information. let's get to the berg's first word news, we got to singapore and juliette saly.
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said, the banku of japan has left its key interest rates unchanged while announcing policy tweaks including a shift in purchases of exchange traded funds. in bondibility operations. the central bank said it will reduce the amount of bank reserves subject to its negative interest rate. it said it intends to maintain the extremely low levels of short and long-term interest rates so an extended time. u.s. president donald trump has said he is willing to make his iranian counterpart -- meet his iranian counterpart with no preconditions. that comes as tensions climb following trump's decision to withdraw from the 2015 nuclear deal. hours later, the white house appeared to walk back those comments with an official saying the administration does not expect to ran to take a meeting. >> it is good for them, good
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for us, and good for the world. no preconditions. if they want to meet, i will meet. juliette: the rest treasury department said government borrowing in the second half will jump to the most since the 2008 financial crisis, that is as america's fiscal health worsens despite a strengthening economy. the treasury expects to issue $329 billion in net pocketable jet -- debt, the fourth-largest total on record. china's official factory gauge weekend in july as tighter .redit conditions developed the manufacturing purchases managing index fell to 51 .2 in july from 51.5 in june and was lower than forecast why economists. the nonmanufacturing pmi covering services and construction stood at 54 compared with 55 in the previous month.
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the mood among british businesses and consumers remains subdued in july as the bank of england prepares to raise interest rates and brexit looms on the horizon. a lloyds bank report said conference was unchanged at the lowell -- lowest level. consumer index fell to the lowest since february and rates are widely expected to rise by a quarter point this week while concerns grow over the impact of a no deal exit from the european union. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. kurodacoming out of the press conference, the range of 10 year moves is doubling from 1%. when you're dealing with the size and scale of the jgb market that is not to be ignored.
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let's turn back to the corporate news as we count our way down to the market open. ep churning out more profit in offeringd quarter reassurance to investors about its financial strength after announcing its biggest deal in almost two decades with bhp. joining us now, bob dudley, bps ceo and also our correspondent. as you sat down you said it, great deals followed by great numbers, gearing down the debt, all this is a message to investors. bob: it shows more confidence that we have had in a long time, we delivered results and exceeded it, our gearing is coming down, amos that confidence to raise the dividend in 15 quarters. we have momentum and people are pleased. we keep advancing. weple were concerned that were off to the races and we were going to break our financial framework and the
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number one message is we will stay in the $15 billion to 17 billion dollars of capital framework and continue to invest assets to offset part of this deal and we will continue to increase distributions for shareholders, discipline is the main word and we were are -- we are planning in the [indiscernible] rather than these higher prices. guidingre also investors to expect that your spending will be at the bottom of the range. it seems you are setting the same, how do you see [indiscernible] bob: it depends on the oil price. it feels firmer rather than softer. there is a lot of uncertainty in the market. we are not planning for these higher oil prices but this deal will be effective as of july 1 and closes in october. the first part of the deal is likely to be at higher prices. the company is working well
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operationally. we brought on three new projects and three more to do before the end of the year. things are on track. heavier: why are you looking -- what are you looking at at the moment? political,d to be geopolitical uncertainty was not clear and it was not priced in. you look at the uncertainty in sanctions, of venezuela is a human tragedy unfolding and that will affect markets. you have outages in libya and nigeria from time to time and you have tensions coming out of the persian gulf. on the other side demand is keeping up, production is keeping up. u.s. production will rise, it is bottlenecked in the permian basin. there are offsetting factors but it feels like it is firmer rather than softer for the rest of the year. guy: the second half of the air when you look at the balance sheet, you are the second half of the year looks glass
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half-full? that is the vibe you're getting? bob: on this transaction with a hp, half of it in cash, half an equity to be started to be paid over six months from october onwards, that gives us the chance of issuing equity or the cash so we have options out there. we are making sure we are within framework, thehe vesting assets to offset the dilution effect. we have options here. guy: capex is at the bottom of the range. because there-- is deflation at the bottom of the supply chain? is it because the deals that are being done were done at the bottom and therefore the supplies that you were dealing with were giving you a good price? : we are seeing around the world not really oilfield inflation. there is lots of rigs in the in korea thatds were so filled are looking for business. where still seeing some deflation and the oil and gas
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industry with the exception of certain services and they are moving up in north america because it is a heated activity but broadly, we are able to do 40% more per dollar of activity than we did for five years ago, $100 oil. structures have come down. we are able to commit to the same range through 2021. javier: the only black spot on your numbers -- it is rare to see bp losing money and trading. bob: we have a great trading organization but once in a while, it does not always comment on the plus side so a very small loss. i am not worried about it, it is a great team. the gas side made money. wti was [inaudible] bob: a lot of people got caught up in the bottleneck, in the
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permian, we had some of that. not to be repeated. guy: when you are looking forward and trying to figure out what is going on, do you worry and you slightly answered this , are we in a situation where we are under investing? you could do more with less but is there a risk of under investing? exxon is pushing hard but no one else is at the moment. bob: to keep within this frame, we have more activity going on now than we ever have, seven ledger projects last year, six this year, more next year, we can do it in that frame. we are bringing in lots of activity. for us, i feel pretty comfortable with the levels of investment we have. the industry worries about not spending enough, it repeats those figures. there is some truth in that broadly in the industry but what people are not saying is you can
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do more with the dollar today that you could have before. it is not quite as dramatic. the pluses on the result, you have a big investment in russia, taking care of that relationship. how is the business going on in russia? is a professional oil company. you should look at the materials presented. hass a company that restructured itself, it has more to do, and is highly leveraged, you can see it coming through in the results. i am optimistic about the teacher of rosneft to. future of rosneft. it is getting better. numberss is a set of the market is likely to react strongly to. you are talking about things getting that are at the gearing is coming down. how many more boxes will bob dudley tick?
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bob: we are getting back to the way we should be at the company. we say the company is firing on all cylinders, all those things are operating at levels that they should be. we turned around and retooled the company over seven years so it would be good to get back to being efficient. mountain to climb at the beginning, you are at the peak now. i assume this may be not the peak but close. things are as you say back on an even keel. it has been a tough mountain to climb. do you stick around and enjoy take theor do you cable car down? bob: i love what i do, i survey the pleasure of the board and we have a fantastic team, a real team of people. every once in a while you work with a high performing and this has been high-performing for
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years now, it is a joy to work with them. javier: you continue traveling and you are talking to peers. how do you see the global economy doing especially with trade wars, we have real trade wars question mark -- wars? we -- our projections, 3.1 this year, 2.9 next year, global demand for oil and gas still rising. aside of all these tensions, we do not see it in the near term affecting our business in the energy markets. guy: thanks for coming to see us. bob dudley, the ceo of bp. let's get a bloomberg business flash area -- flash. juliette: credit suisse is giving investors reason to stay with the bank through the end of its three-year restructuring.
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revenue beat analyst estimates with this with universal rank doing better than expected on revenue and adjusted pretax profit. international wealth management had a profit of 461 million francs which was above expectations. standard chartered's ceo bill winters is getting close to meeting his targets for the bank. beating estimates and profit 2.5 billionp to dollars. return on equity climbed to 6.7% and the bank said it was confident of reaching its 8% target in the medium-term. cfo andychartered helfer joins us for an exclusive interview at 9:30 a.m. u.k. time . that is your bloomberg business flash. matt: thanks very much. the markets leaders have gone missing this earnings season. from morgan stanley, that is a
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worrying sign that the stock rally may have exhausted itself. here to tell us more is dani burger. morgan stanley says we are in the middle of the coming correction that will be worse than february for u.s. stocks. the me take you and show you what is going on. the market leaders have gone missing even though more than 85% of u.s. stocks have eaten their earnings estimates. i want you to concentrate on this blue line. this is momentum. show me --owing saying show me the best winning stocks. though stocks you can see on the blue line have fallen the most since 2006. these are what have been leading the markets, they are gone. what could take over? when we think of good earnings, stocks, of cheap lifting the markets because you need earnings for cheap things to do well. yesterday they went up. so unless this action, the white
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line continues upward, we are not going to have any market leaders and morgan stanley says this is the reason where about to enter a correction. -- we are about to enter a correction. matt: thanks for joining us. bloomberg's markets and -- reporter. asian stocks were mixed while the yen fluctuated, it did not change. japan government wants jumped after the hike of japan [inaudible] but got back to the level that the bank wants to see the map. joining us now is mark cranfield, bloomberg mliv strategist. like muchalmost to me ado about nothing. we did not really see any assets move around much with the and they onlygb's move in context of the intended -- incredibly tight range they are trading in. what do you make of the fallout from the huge a decision so far?
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mark: the range is going to get bigger. the most important thing that has come out so far from mr. kuroda is press conference is that he sees the range on the 10 year yields doubling. in the context of other markets like treasuries and bunds, these are relatively small numbers. but for someone like me who is old enough to remember the jgb markets used to be the most fun to trade, that is great news. we need some more in jgb's and mr. kuroda has given us that by saying that range can get wider in the 10 year yield sector. it is not going to be as exciting as treasuries, but at least they will move around and the boj is going to be led by the market to some extent as to where the high point in the 10 year yield could be. it sounds like it will be something like 0.2% rather than 0.1% so that you are. -- there you are. guy: is in this confirmation
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that the boj will get -- struggle to get inflation where wants to be? when you think about where the ecb is an to wonder whether or not it is going to be able to deliver on its inflation expectations and you go a step further and think about the fed area this is confirmation that exiting from qe is going to be phenomenally cold. of course. the bank of japan has to can send with a country -- contend with a country that is notorious for saving more than it needs too. getting people out to increase spending is difficult at the best of times and when they are cautious it is hard. and the government is still talking about increasing sales tax. it looks like that will help in -- happen as well. it might shock the country into some action but the boj job is
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the most difficult. they really are working against an ingrained nature. who knows, we could be talking about this for a couple of years that inflation still is not hitting the target. i want to point out also that we talk about this like it is a nightmarish disaster but if i think of myself as personally living and the kind of environment with no inflation and no deflation, that is not a horrible thing. is life in japan really as scary as it looks for central bank watchers? the difficult thing for japan is you have an aging population where they have a lot of savings. if they had ever turn on those savings, if the people with all that cash could get a positive return, they would go out and spend it. even if it was just going to restaurants and going to buy simple things in the shops.
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but because they're not getting any return at all on their money, it is reducing the activity that they do in the wider economy. this is why it is so difficult. the population is shrinking as well. these factors are working against it. it is an interesting case study. there is no easy answer to it right now. guy: thank you. the return on their savings has got to be higher than inflation, right? so at least the things they are buying are not getting more expensive or have i got that wrong? mark: there is demand in certain sectors. cpi isforget the outdated. even for somewhere like
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tokyo you would see that there is inflation in certain areas, where you have demand. for the products they want there is some inflation, yes. absolutely not. thanks very much. coverage continues. just go to our equities team. covering credit suisse. talk me through it. what have you got for credit suisse? quarter net revenue, what a beat it was, estimates were for 5.30 5 billion. their key international wealth management unit as well as the international bank posted higher-than-expected earnings. he was saying it was the best quarterly profit in three years.
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results were in line and must divisions or they beat except for the global markets trading division. guy: the market open is next. this is bloomberg. ♪ two, down and back up.
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the big picture story coming out of the boj. turkey will be the focus of the next half hour as well. the nikkei closing flat. jgb is certainly on the move. oil looking positive the second half the year. s&p down .6%. looks like tech is going to continue to sell off today. start,ait for the netflix got hammered yesterday. picture we find it
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at the moment as we go to the open. not a lot happening in index level. --a stock, plenty area plenty. let's find out what the indexes look like as we go into the open here in europe. this is how we are opening. ftse 100 77 on the nose. i don't think they will move us very far. slightly positive so far. so the cause i'm seeing indicate flat and some indicate a positive start. ibex tax and smi all expected to open. the ftse struggling to get away from that 77 line. honest, not much to see on index level. let's sure you with a heat map looks like.
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it's the imap function on your bloomberg. energy looks pretty well bid at the moment. material looking a little on offer. let's see how credit lease is trading. get us an idea of what going on with that kind and shall. goodnal households in trading stronger. health care is where we are see our log that seeing the losses. seeing, well we are seeing the stoxx 600 to the downside but we are seeing more gainers than losers so it's slightly positive. unit hundred 65 winners, two or 55 losers. the market is dragging on -- this is dragging the stock hundred. i don't think any companies are
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only one, ramy contrail, has gone next dividend. otherwise you don't see any ex dividend losers. year seen this one helping to billy the stocks hundred. a couple of big movers on openings is morning. up by 4/10 ofning 1%. spanish economy grew .6% in the fourth order the us it was .7%. let's talk about your with the european markets and europe were we go next. we have a ftse 100 that is positive this morning. ibex that is positive. the dax that is not open yet. and smi that is mildly negative. you can't take much away from an
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index level story this morning. yesterday was all about tech. story ofcertainly the the u.s.. socgen.s us now from did we just get us in a little bit of a tizzy, anticipating the boj would deliver more than it was ever going to do? kit: -- do? we never got any indication they would do anything official at this meeting. the bond market got excited and we pushed yields up 10 basis points in the not much happened. it will be like this every time. to startgoing to have moving towards normalization
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overtime. in our lifetime? kit: i think so. you can't just keep wondering doing the same thing and saying i have to go on doing it because not working. we know there are unintended consequences. there are side effects from these policies. they need to normalize rather than just stay ad infinitum while we still have no inflation. idea toell be a better get us used to having a currency that ulcerative fair value, to have a yield curve positively sloped, to have people earning money on deposit. weaning ourselves off the addiction to these politics that we've got is i'm not sure it's helping at the. here you see live pictures
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of corona who is still speaking. he is saying that he believes raising the range is beneficial and so he's going to let 10 year 2/10 twofrom plus -210. still, i think, by any measure any really tight range. closer tolp them get his inflation target? how does it help them control the curve? how will it be beneficial? kit: he needs to get himself the market at the moment we don't have a free market, we don't have a proper market in japanese hans. the first thing the bank of japan needs to do is wean us off our diction to them. but the market find its own level. then we will see where we go from there. in a sense you could say, the current policy is it working are
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helping. -- working or helping. the economy is doing ok and wages are doing a day but this is about now saying, whatever else happens, we need to get ourselves out of the market without causing chaos because we are not helping. -- guy: it sounds really easy to do when you put it like that. they own massive amounts of etf. they control the jgb market. i agree entirely. moving to a slightly wider range on your program might be the first babies that's and is a good step to take. fivelicymakers are after of 10 year yields going over 3% in the u.s. or equity markets falling for an second or emerging markets leaving us
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addicted 10 years after the crisis to all of these exceptional policy, we're still going to be here in 10 years time. we have to start somewhere even steps you take are pathetically small. enough area -- enough. matt: we have a great chart that hillary and i put together like i've years ago. central bank balance sheet as a is and is of the country's gdp and it's shocking how deep in it the bank of japan has got itself. the white line here is the u.s. at 20%. the blue line is ecb. the yellow line is the bank of japan looking at almost its entire gdp being held for the same size by the bank of japan. detrimental to a country's economy? or have we just learned that it's no big deal? they are kind
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of printing of this my themselves? we know there are unintended side effect we're not come to with but perhaps it's ok to have the alan sheet big. but can we stop growing it? slowlyfinding out very about how this effect other bits of the economy. there's all sorts of this coming through from these policies that have taken years to sweep through to our consciousness. i think it may be dangerous and it certainly dangerous to keep it going ever upward as a first step. stabilizing would be a sensible plan. to day they inclined addiction to almost anything is bad in some way.
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he's going to stick around and we will stay addicted to him for a while. no, i have another 32nd. what is the ripple effect coming off this? what is the effect into other -- asset classes? you say to small move into a huge way. -- huge way. kit: small enough they might get away with it. japan are the holder of the biggest investment position overseas. they own tons of foreign assets that they may sell, they may add to, they may hedge. that's where the ripple happen. guy: doesn't get bigger? kit: it can. between -0.2% and
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positive 0.2%. firstlook at it as the death of a step is coming soon, it will have an effect. the bank of japan just have to get on with it at him state as quickly as they know how. we will keep you with because there's more to talk about. kit juckes is going to stay with us. we will bring you our exclusive interview with the finance chief of thef the -- chief drug giant. this is bloomberg. ♪
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guy: welcome back. the "europeang open." sanofi has predicted a return to growth. drug company biggest medicine is an aging diabetes medicine. it's the sanofi cso. thank you for taking some time to join us this morning. there was a bit of surprise earlier in the year that you weren't raising guidance and that was creating a few concerns
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that maybe there were some worries out there that you guys weren't really indicating to the market. you have raised guidance now. what is your sense of what the second half is going to look like? what you think the rest of the year looks like or the business? we thought the first half was clearly challenging because of andgetting pressure exclusive it's a. consequence,, as a we posted flat part of it -- flat profit or slightly increased rocket. eight few things are going to drive growth. we are going to see more growth from the launch of our new products. we are also going to see our
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back seen business getting back to growth after a bit of a challenging first half. ,f i put all that together vaccine ended up more representative in the second half because we are selling more flu vaccine and is will provide growth. and you will have the full effect of a recent acquisition. altogether, this is what is going to drive growth in which will allow us to get to 3.5%. it means that the eps will grow faster in the second half by about -- than the 1.5% in the second half. -- in the first half. matt: let me talk to about the
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products in the market is this thing. drugmakersher big have said that in a hold off on pricing rhesus in the u.s.. that was your statement of the beginning of the year. please stick with this policy? inflation?t medical jerome: the -- inflation? jerome: the answer is yes. i have been hearing and seeing what is happening in the u.s. and the concern about price and the availability of drugs for patients. the trump administration and the parliament are trying to discuss the blueprint and ways to transmit this reasonable control of pricing for drugs towards the patients. it's not a smooth endeavor
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knowing how complex the u.s. market is that we, as our as we are concerned, are somewhat proud to be a bit ahead of the number of our competitors. weh this right strategy that showed two years ago. we would stick to that and not increased rises on drugs the on medical inflation and priced drugs based on the scale of the second -- economy. in must've been a little bit concerning, right? is that policy weighing on your bottom line and mark are you having trouble increasing rockets or are you able to offset and stay with new drugs in the market? jerome: that's a good question. i think it was a bit of an easy life in this industry to just increase prices to make your profits.
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now, and this has been around and not just the u.s.. and other countries are more used to that. the way to beat it is to have more drugs and more medications being provided to product -- to patients and the diversity of your portfolio. a geographic standpoint as well. create cost savings and reduce the cost of bringing a drug to market. marketing and commercial efficiency area in short, it's normal cost of business and it's true that you cannot expect to grow your top line price increases so you have to have other option. including new drugs in brought to patient.
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it fits well with what we are doing. [crosstalk] the delay is slightly confusing is here. you have a new head of r&d. they are listening to what you are saying on cost-efficient the and the need to keep the purse strings under control. when a regard to find out how much money that new head of our and he is owing to be a which is than the? what does it look like to you? the inflation rate is high. what message are you communicating to the r&d department about how much they've got? the new head of r&d just name a few weeks ago so it's a
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little early to tell how he will refocus on the efforts around spending. he has a budget which goes somewhere between 5.82 6 billion euros. it's not a small budget. the way we're going to work together is to europe how to be more productive and make trials more efficient. spend less time on one phase to another and being a better organization with more effective. we started that five or six years ago but he will do a great job to bring a new step into this endeavor to improve our efficient. it will refocus a bit more on these pending around really differentiated capabilities.
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accelerating the time for new drugs to come to market and the notmal way to do that using only trial processes but also evidence, and more of the digital capabilities. matt: you have been using ai, you have been using big it's a in order to try and improve the efficiency of your liv-ex name. i know you're looking in that ends. in what other ways are you using ai and big data in your business? how long until we know of the efficacy of using artificial intelligence? it's a good question and probably longer than two minutes. one is around r&d and using data
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available to continue to track real life efficacy and safety. and the productivity you can get there just tremendous. the second is around access and marketing. we are getting into more digital marketing, very different accesses to physicians. when it comes to prescribing new drugs. it's also an area where we are starting to resubmit productivity. but it matters on what drug you are working with. the third area is more around manufacturing. monitoringing to plants of the future. basis, much more of a
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remote manufacturing and better efficiency on the cost of production. these are the areas of improvement. i would say in two or three ideasto calm, he was see create productivity area -- productivity. guy: great speaking with you this morning. the sanofi ceo. the share price has bounced back privateow flat area banking in the swiss unit compensated for little bit of trading week is. join us now from zero is francine lacqua area -- from is francineich
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lacqua. >> i think he is relieved that he said this is basically now a trend. he said after the initial skepticism is starting to show results. this was pretty straightforward. if you look at most of the analyst expectations, what we got was better. he focused a lot on net new assets. i asked him if there was a market correction and how would impact and he said it's difficult to know what he was trying to explain to me the hedge. even if there's a big downturn in the markets in the outflows happened quite significantly, they could find revenue and other parts of the business. a try to press them on was global markets and a lot of investors think they are below par compared to their competitors but he was telling me global markets are just
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different. they don't look at it as a unified self use it to support the wealth management and their wealthy clients in asia. this is what he had to say about global markets. >> are global market strategy is not to maximize global market revenue but to use global markets to power the other divisions. we could change revenue and for more capital into that activity and you would see results were similar to others but we have decided to use the global market to serve our clients and i feel is working very well. explaining that they are not chasing revenue in global markets but that still one of the big questions that investors have for him. we are 10 quarters into a 12 or to restructuring program. people now want to see what he would deliver in 2019 which is
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shareholder return for how do you grow the business once you're at the end of the restructuring. matt: thanks very much. francine lacqua in switzerland. thanks for joining us. for you, more of another bank which has reported this morning, standard charter's profits rose 34% in the first half, topping estimates. confidentaid it was he would meet its 8% target return on equity in the medium-term, a goal viewed as critical. joins us later on this morning around nine: 30 a.m. u.k. time. another one we're looking forward to. i want to talk about another asset manager out of switzerland. shop thatwn really sharply, down 10% area is a
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bunch -- 10%. a bunch of reasons behind this. warning of redemptions. the stock is taking it on the chin this morning. this is bloomberg. ♪
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matt: welcome back. your top headlines off the terminal. after all of that old up, the boj's few tweaks failed to really move the market. corona is still speaking so there is still time. tech tanks and again. it's been a bad month but morgan stanley says the selling is just beginning and the market is heading for a much bigger correction. others are jumping on board including credit is. the bank shines with earnings and reports its best pretax profit in three years.
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good morning and welcome. i'm matt miller here in berlin alongside guy johnson at the headquarters in london. guy:
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you are getting a significant rate if you are not. mixture we are not priced for one of. the banks have shown us a couple of master classes in how to achieve that this morning. chart of the the lira versus the dollar here. it seems you cannot go wrong betting against the turkish currency. liramost no time, has the really gone through a significant period of strength. is that ever going to change? your nominal exchange rate will depreciate.
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look overay to have a which periods of time reduce short of the turkish lira and it cost you a lot of money, almost everything. there have been all years during that -- whole years during that bide picking off the higher on the turkish lira has make you money. -- made you money. country where we have a hyperinflation then perhaps other -- higher inflation then perhaps other countries in europe. you can say the same thing here. now, we haveht lost our bearings temporarily in terms of how far this could go. periods when going short of something that has that is long way, where
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going to be the wrong thing. >> there has been talk of currency controls. thatu start picking about act five, north of five? what would it take? >> you need currency controls when the problem is money leaving the country. when money starts flowing out. if turkey runs a large current account deficit, money needs to flowing on an ongoing basis. if too much money flows out, you are in a crisis. the cost of slapping down currency controls is not encouraging. yields or need higher to do something to finance.
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a freey controls are not pass for countries with a big deficit. but at the point where you have capital outflows, you cannot avoid it. matt: thank you very much. kit will be joining us on bloomberg radio. he will carry on the conversation. correct me if i am wrong. a pallet was off $5 in the 30's. people talk more about that. -- we will talk more about that. then you could buy a lot more with your pound. it's become weaker and weaker against the dollar. let's go to our top stock stories. thanedit suisse up more
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1%. very bullish on the result because the best quarterly profit in about three years. come in about 5.6 aliens was francs. global markets trading is where there's eating pressure. live vuitton's up over 5%. strikes heard earnings but they are predicting they will reach full-year targets among the best performers in the industry. this is a positive note. vivendi up more than 4%. they said they will sell up to half of universal music group, musicg in on the surge of spending.
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guy: it's worth noting that people are reading forward into the presentation and assuming that the governors going to have a massive revision upwards in inflation expectations may be to where the market is in terms of expectations for inflation at the back end of this year. what do we have coming up? andy how for it will join us. that is coming up at 9:30 a.m. u.k. time. this is bloomberg.
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♪ welcome back. we are about 44 minutes into the trading day. let's talk about crypto, something we haven't discussed in a while. nearly one third of european say they would never invest in virtual current is. that's a survey from ing. it seems to be gaining a more traction in markets as of late, especially in places like turkey which has seen a currency rout in recent months. ,oining us now is jessica exto : a beh a behav --luca paolin -- jessica exton. see interest in
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bitcoin and the like in places with runaway inflation? thatstrike me as places bitcoin has become big. jessica: we look at places in europe when we do these surveys, turkey included. we don't see any particular trends with inflation. in some cases yes, turkey did enthusiasm when it comes to cryptocurrencies in terms of ownership and expect it ownership. end acrosscessarily multiple questions and wasn't something particularly looked at. you talk to, do they know what the coin is? jessica: really good question. thought people had a more general understanding of what the coin is. a digital form of money that
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isn't regulated by any central body, it coin be one of the key examples but we keep the definition as that so we can incorporate lots of different understanding. guy: hearing about another setting the reality is two different things. bitcoin, most people know what does it differ, is there an understanding of the difference in certain aspects? up to coin with blockchain? withx up bitcoin blockchain? jessica: we ask people whether they had heard of it. that doesn't mean they understand a lot about it but they are aware of it. there are factors like attention in the media and familiarity
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with technology. is one of theit general outcomes we wanted to understand. i can't imagine that anyone would on this dan it coin -- would deeply understand bitcoin. i find it shocking that one in 10 all in europe's they they own a cryptocurrency and more than one third of people in europe think it's the futures ending online. don't those numbers seem big? personally i anticipate they might be lower. particularly like -- when we asked if it coin was the futures ending online, the we have seen it increase over time.
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over the time we've seen it increase around 7%. turn --ks to the longer longer-term trends. this is compared to the short-term volatility we might rochus on when trying to get a good understanding of whether or not to invest or use script occurrence. guy: how many are proceeding this as i'm going to trade this and this is going to be something i'm going to trade. there are many chat rooms where the latest movements are discussed. thinking of it as something they can never cease pending? -- see spending? we wanted to ask people
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from a broad range of areas and not just the people interest. we saw people agree that cryptocurrency is the future of they -- anding and almost the same number of people agreed it's the future of investing. almost the same portion agreed the value will increase in the neck 12 month. we see there is some general enthusiasm towards the future and the use of cryptocurrency. questions about would you use bitcoin to buy a cup of coffee? how would you use it? you're cup of coffee will increase or decrease? guy: you lived on cryptocurrency for a week. matt: actually for two weeks.
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when i did, it was much easier to use. i use bitcoin to buy a beer on the lower east side. that would be next to impossible now in less i felt like waiting 75 minutes to get my ear. we don't have time to continue but i find this a fascinating subject. jessica exton talking to us about a highly debated issue. let's get to the stock of the hour. have you chosen? out in thembers came theyny revealed this fund are having problems with. they had to suspend one of their fund managers. they are not questioning his honesty but they are warning there could the changes in the results based on the bookkeeping of the funds he manages. they are confident that people will keep their funds but the stock has been smashed pretty
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hard. trading down 13.5%. pretty close to a 52-week low. there were only two cells on this stock and it feels like a short-term idiosyncratic issue but the market is taking it very badly. stock,nteresting interesting story. let's talk about another financial company, a little bit bigger. has givensse investors reason to stay with the bank for its restructuring. that's after second quarter gains in private ranking compensated for trading weakness. a representative spoke with francine lacqua this morning. >> this was a very good quarter. net assetsitive which is important for us.
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23.5 billion. billion and that's a medium-sized bank. much focused on altra high net worth. more than 60% of our inflows come from altra high net worth. services toice and our clients. cm and global markets work very closely to provide services to our clients. we are up 17%. it's a really bright spot for us. francine: if there is a strong market downturn, what happens to that you assets? >> you can have up flows. what happens is, our revenue
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shift. you're going to see us make much more money from derivatives. compared to what you see today, it's a little bit in global markets. a lot of it is structured products. it's the nature of what we do. we may earn a little less in net income but more recurring fees, recurring income, and transaction income. francine: how much do you worry about the markets? the beauty of the strategy we have adopted, when we started three years ago, markets trading were 59% of our office. now it's 19%. moving from a to b was absolutely because now we look at markets and trading as a
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bonus. the key is wealth management. it's more stable and grows very nicely. team isell our markets that good to be at credit suisse because we can grow. i.t. as has grown 17% and that's good. -- its hashas grown grown 17%. that's good. we had 40 billion of leverage and now we are at 10 of iw eight and 49 of leverage. there done with restructuring.
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we have hit a point where we are going to stop weighing on our reserve. we need to think after. people compare us to others. we don't think that's right because our global market strategy is not to maximize the standalone global market revenue. the use global markets to power the other division. global markets is down 8% but that's because we keep them under a strict cap. we could replace revenue and poor much more capital and you would see results more similar to our peers. markets to serve our clients. i feel it is working very well.
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matt: the credit suisse ceo speaking with france in the lock. don't miss our great exclusive interview with standard charter's cfo. anyhow for it will be joining us at 9:30 a.m.. that's going to be a key interview for the financial trading of the. turkey central actually boosting its inflation forecast area guy: most people after what we had a few days ago probably still have their expectations higher than where the turkish central bank is right now. it's raising its expectations because it kind of had to. we are 13.4% versus eight point or last time. 9.3 versus 6.5. numbers going higher but the market is already above that. you wonder what's going to happen. lastdidn't raise rates
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week because they want to see the impact of past rate increases. how much patience does the market have? we will continue the conversation. surveillance is up next. ♪
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francine: tweaking targets. the bank of japan cuts its inflation or cast and says it will allow movement in jgb for the yen and 10-year gilts. credit squeeze shines. they posted their best profit in three years. me theef executive tells group is almost done with the restructuring plan. the selloff continues in the tech sector. down nearly 300 billion cents earnings last week. what are investors looking for today? this i


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