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tv   Bloomberg Markets European Open  Bloomberg  July 28, 2017 2:30am-4:00am EDT

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♪ anna: welcome, where we bring you the first trade of the day. alongside matt miller in is uric -- zurich. europe banks open their books for the second quarter. repeal rejected. the yuan at -- the u.s. senate voted against the obamacare repeal. can the republican fight the resuscitated -- the
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resuscitated -- be resuscitated? 30 minutes to go on till the start of the european equity trading. what we are seeing as far as futures indications are red arrows across the board. despite the fact that banks have beaten expectations, the tech selloff in the u.s. yesterday continues through asia and seems to be hitting european equity index futures. we are looking at a downdraft as far as futures are concerned. good morning to you. he stands in the rain because he just came from his interview. more about that later. let's focus on the market there. revealing the weakness in the asian equity session. that is example five by the south korean, australia down by 1.4%. the health-care bill late into
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the night, early morning u.s. time. that did not really weaken the market all that much. they are weaker already on sentiment around tech stocks because of what amazon told us last night. let's bring you up-to-date with what we are hearing on that health-care story. saying threemp is republicans and 48 democrats let the americans down. let obamacare and float then the deal. a fascinating tone in this given what we heard from the senators on the senate floor overnight. we actually got some comments that seem as if they wanted to reach across the aisle or at least leave it for a moment and return to it. we will monitor what is happening with health care. let's get an update with juliette starley. the senate has rejected the so-called skinny repeal of lawncare despite assurances from paul ryan that
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his chamber would not pass the measure. mitch mcconnell describe the outcome of the vote as a disappointing moments. earlier, the senate gave the final approval to legislation strengthening sessions -- sanctions on russia. giving, with the power to block donald trump from lifting them. the white house has given mixed messages about whether the president will sign legislation. white house medications director anthony scaramucci has assailed reince priebus and steve bannon. it asucci used an expert he described him as a paranoid schizophrenic. in a response, he tweeted i made a mistake in trusting a reporter. it will not happen again. japan's price gauge was unchanged helped by rising power costs. consumer prices which exclude food down from one year earlier. far below the tank -- the bank
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of japan's target. household spending rose 2.3% from one year ago. the first gain in a more than one year area a venezuelan opposition will defy a government ban on protests ahead of a constitutional assembly. at least two people were killed at the start of a strike called by the opposition. president nicolas called the vote which is opponents say is a power grab. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. anna? matt? matt: thank you very much. i'm here to help report on a raft of bank earnings. ubs was one of the biggest what managers in the world. reported earnings this morning were better than the analyst estimates. actually 1.2 billion francs.
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we were looking for only 800 million. 50% better than analyst estimates. i spoke with the ceo and asked him about the inflows they saw globally which contrast with outflows in the u.s.. listen to what he had to say. strong for the first half of the year. usually in the u.s. we see some outflows. are paying taxes and there is a big component of that. if i look across the board among we had growth in our international businesses of 6.6% on a very high base. in construct with the fact that we have been reducing advisory council. with a quality.
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we are focusing on quality. we can perform in different market conditions. track. cuts are on at 1.8 billion francs for next crossed savings already. the 2.1 billion looks easily achievable. do you think you can overshoot that? marathon. a the last few miles of the most difficult. i think we are confident we can achieve our target. it is not an easy journey because we have -- we're talking at cost savings. we are absorbing a huge amounts coming in from unexpected regulatory changes. technology investments. what you need to do to keep up competitive positions. in order to offset all about you need to work very hard on your
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actual. i am confident we can get there by the end of the year. >> where do you see the for the 300 million? a matterk it is not across the board. optimizingon infrastructure and enhancing productivity. it is a mix. when you get to the last 10% mark every single dollar counts and we are refocusing. as i said before we are also making a lot of investments. not somethings you can do forever. you cut costs in order to create the capacity to invest in the future. anna: the last few miles of that
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are the hardest. another swiss bank reporting this morning. credit suisse reported a 78% increase. business tog the emphasize on wealth management. francine spoke to the ceo this morning and she joins us now from zurich. halfway through a three-year overhaul of credit suisse, has the -- is the ceo pleased? >> today is a funny day because it is a battle of the banks. the first time ever that ubs and credit suisse, the biggest rivals in european banking, report on the same day. they did seem pretty pleased so far. not crying victory yes. very clear that they have a quite a long way to go. crosscutting is under control. if you look at things he wanted to achieve, crosscutting, capital ratios, everything is on track .
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it just needs to be pushed further. >> long-term i am optimistic. medium-term is difficult because .here is so much uncertainty central banks are extremely hard to forecast. increasing wealth, wealth creation in the emerging markets is there to say and is driving the numbers you see. of course credit suisse start of his overall much later but they are becoming more like a wealth management unit. it just depends on what happens to the global markets unit. as we are stronger in wealth management, as we have more customers in wealth management, that will automatically rebalance become position of the bank. matt: how did the global markets
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units do? do too badly. when you look at activity, something that we heard from is thatset managers actually because of the lack of volatility on the markets mainly because of the cheap money out there by central banks, some clients do not have much of an appetites to invest. lot byffered quite a volatility. i asked the ceo whether he did see signs it was picking up and he was not sure. >> we have been challenged and you can see the numbers with volatility. is unimaginable, unprecedented. it has the impact that you see.
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that is expected. reporter: a a little bit of a two-pronged attack. on one hand it is starting to pay off, also growing the wealth management unit. wealth management is really on track and they hope this will continue. shiftthat was the big francine that you have been tracking all of these years. backing that wealth management move. no doubt pleased with what they managed to achieve. on the low volatility environment, i know that matt spoke about this. i guess it is just a waiting game for many of these banks. they want to see more volatility in markets so they can make more money for their business. >> i guess that would be the game changer. a lot of these guys are waiting for normalization in central
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banks because volatility means there is more trade which means their clients have more to get in there. onause they are working capital ratios, you have cost cuts that needs to be reined in. you have growth of wealth management. if you have a lifted volatility that will be almost in easy win. anna: joining us from zurich. if you are a bloomberg customer you can watch the show using tv . you get access to all the charts, the functions. running commentary down the right-hand side of your screen. don't tell anyone. the bloomberg function help to get in touch with the show. questions directly to the producers. cfo at 8:30 a.m. u.k. time. more to come, this is bloomberg. ♪
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♪ matt: welcome back, i am matt miller here on a rainy morning in zurich. quite sunny if you're an investment -- investor. beating analyst expectations with earnings. i want to get to the business flash. we go to the hong kong and juliet starley. banktte: shining deutsche
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and much of wall street for another quarter. profit was 2.4 billion euros, surpassing estimates. amid theumped 26% derivative products. >> if you look at today, there is a positive momentum which is continuing. that environment, you should probably let it cater longer and not step in with changes. >> getting stronger in the core business of lending outside the market. spain's second-largest bank said it interest income rose to 4.4 8 billion euros. that's helped profit of 1.1 billion euros. we will bring you an exclusive interview with the cfo at 8:30 u.k. time.
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amazon tumbled in extended trading after a big jump in costs offering it is ending profit outlook. 28% to more than $37 billion. 40%, much lower than the one dollar 42 expected by analysts. the outgoing ceo of ge is on a narrowing list of candidates to take over the head of uber. meanwhile, hewlett-packard enterprises ceo has talk of her taking the top job. she said normally i do not comment on rumors but speculation about my future has become a distraction. that is your business flash. matt: i want to quickly bring you headlines we are getting in france. the july eu, in line with estimates. up .8% year-over-year. the estimate was 4.8%.
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exactly what the economists we surveyed were looking for. on the other hand, the month over month for july came in better than estimates. we have got a drop of .3%. they were looking for a drop of .4%. maybe the french cpi picture shaping up quickly -- better. shortly disappointing if you're a central banker. -- inflationasion not what they hope for. that came in line at .5%. better estimates for the year on year number. we see the french economy, that means the french economy contributes 0.1 percentage points, a rise in output for the euro area. let's turn our attention to the u.k.. the consumer confidence index for july has declined to eight level last seen around the time
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of the brexit vote. british stocks are being swept along. joining us all to make sense of it. this data will hit u.k. equities. the slump we're seeing with the consumer confidence, what does this tell us? two tied into global business and even that is not a good read for the u.k. economy? buthe ftse 100 will do ok it is probably vulnerable. what we are seeing in the u.k. is the private sector trying to get squeezed. even though the broader data has been looking ok, the consumer starting to get squeezed is bad news for the broader index and bad news for the pound. you're going to see the bloomberg at the top end of the range. this is a reverting index. the likely trend from here is
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going to be downward. it is going to be for economic data to disappoints. they are not likely now to raise rates. there are bets in the market that they might be slightly more hawkish. overall, very little reaction to this confidence data overnight. i expect the pound to sever next week -- suffer next week. matt: what did you make of japan's data dump and how did that affect the market? of the main takeaways is the emphasis of a global theme that we are seeing in quite a few of the major economies. the labor market is strong in most countries. the consumer is doing well. we have no sign of inflation. i think this is a theme we have seen for many years. we have been improving labor sector and is not leading
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through. i think at some point policymakers around the world needs to accept that technology and demographics have a greater influence than a lots of the short-term monetary policy measures they make. that means we need to reanalyze the framework. like we've seen in the last few years is just inviting financial assets and not helping consumer inflation which is much more affected by technological changes. the ongoing effect of the effectiveness. thank you so much. in size.ollow market -- online. of shining deutsche bank and the march of wall street. we will tell you why next. this is bloomberg. ♪
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♪ matt: we are minutes away from the open of european equities trade. let's get you stocks to watch. morning, itdas this has one that just had the price target raised by analysts because adidas crushed earnings numbers and raised the full gear revenue growth target to plus 17-plus 19%. doing quite well, saying it can earn more money than it had
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expected earlier this year. let's focus on other stocks to watch. bmp setting the standard for the banks today. ,rime services revenue jumping surging demand for derivative products. that is the upside. they did see the thick revenue falling by 16%. that reported revenue down by two point 3% because of the equities derivative performance. this is one of the few banks that is really got big ambitions with regards to investment banking growth. at a time when others might be shrinking in the area. we are looking at british airways posting a 45 percent jump in quarterly earnings. downplaying impact they might see from increased time between arrivals of the sky came reince. -- sky team of alliance.
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pretty strong calls for where they can get to that at the start of the trading day. the market opening is coming up next. this is bloomberg. ♪
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anna: welcome back everyone. this is "bloomberg markets: european open." just 30 seconds to go. the last trading day of the week. that is talk about what we might expect to see. we expect to be weaker at the start of the day. amazon was disappointing and that started the tone of the asian session. south korea quite considerably weaker. even the dollar holding the rebound from the previous session. matt, what are you watching? i am watching banks. i was just over at ubs talking to its ceo.
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and they just posted a net profit. werenalysts we surveyed only looking for 800 million. beating the street expectations. banks are really beating across the board today. one sectorstocks are we are watching as well as aviation. for frk afterand they did that extensive deal with delta and other airlines. the banking sector is very much in focus. as well as the tech sector. amazon has shaken the market. we touched an all-time high in u.s. trading. european equity markets getting into their trading day for friday. things looking weaker. let us get the details. >> let us start with the gilt
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market. the 10 year treasury yield is moving ever so slightly lower. we are moving lower on the 10 year gilt yield down by 1.2%. here at the open. tracking what is happening in the european bond space. looking at european stocks. we are seeing broad-based losses on the stoxx 600. across the wheel. and in asia, tech stocks were underperforming. we are seeing that dribble through to europe as well. as well as in telecom and materials are underperforming as well. 0.5%ll, we are down about on european equity benchmark. i want to show you this function. i know i will get brownie points from hillary clark for doing
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this. earning analysis. you can drill down into a benchmark. i have the stoxx 600 here for example. you can look at the sales by earning at each sector. you can also look at the growth tab. i am looking for that to populate. you can see earnings growth for the current quarter, 20% for the banks. look at oil and gas. function. something to keep your eye on as the earnings season continues. i also have a chart showing european and u.s. valuations, close to a five-year low. this is showing the 12 month foreword pe. this is interesting. they are close to a five-year low that we have seen it pick up a little bit in the last half of this month.
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anna: let us have a look at some of the other market movers we have to show you on the bloomberg. reno is a stand out mover to the downside. ae carmaker reporting numbers little earlier this morning. on the upside, a mixed tag of things. mostlyking sector looks negative though there are some movers to the upside including credit suisse, up by just over 1%. weaker by 1.2% this morning. stink -- sticking with the -- second-quarter revenue came in at 5.1 million pounds, below estimates. ceo toe to the barclays
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talk about how the investment bank is performing. andur advisory business debt underwriting and equity underwriting, we had a great quarter. the first half of this year was one of the best results the bank of our in that part business. in credit trading, we did quite well. in rates and currency, we are still not happy where we are. we were down in the second quarter. we have made some important hires there. we will get that corrected but overall, i think the investment bank had a pretty good quarter. anna: you are still happy with the extent to which you have backed the business at barclays. you have taken enough action to turn that around? >> we still have room for improvement. we are clearly very pleased with the strategy we set out in terms of the trend -- transatlantic
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and investment banking. we have a strong position in new york. we are the number one investment bank in the u.k. we like the business. it is important to the overall strategy of being a transatlantic bank. anna: can you give us an update on the status of various investigations? doj lookingthe us into rms issues. are they proving to be a distraction when you talk to investors about the company? >> we definitely want to put qatari and the rmes investigations behind us. anna: those are ongoing.
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700talked about another million in charges for ppi. is this all you are going to take on ppi or could there be more? >> our hope is that this ends at the reserves for ppi. the bank has taken close to 900 million pounds regarding the ppi issues. the government has put an end date to those claims so we hope the recent 700 million pound reserves will bring this issue to a close. joining us now is chris wheeler, a bank analyst at atlantic equities. --t do you think the results what do you think about the results out of barclays? >> i think it is good progress. the ppi hit was very
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disappointing. bank,e look at the u.k. the investment bank is interesting. i just put together the numbers. the europeans have lost market share again this quarter. , year on yearnce compared to the u.s. banks. barclays really was challenging the big five u.s. banks three or four years ago and now it is going down a different route. one they hope is more profitable. driven by returns. make of theo you performance in the fx rates? disappointed. that was the story in the first quarter. they have more excuse for poor performance in those areas because a lot of other banks have been performing badly in that area. >> looking at those final numbers this morning with ubs,
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credit suisse and barclays. the performance of all of them was somewhat worse than their u.s. peers. the europeans were worse. is the u.k. banking sector disadvantaged by brexit or is it just as nimble and able to move operations to frankfurt or paris if they want to deal with european client trading? >> i think there is absolutely no doubt that the u.k. banks are disadvantaged by brexit. anyone that thinks otherwise art -- is being foolish. -- all of theues banks have issues to deal with but the u.k. banks have a lot of other things to look at including trade. business isf their
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u.k. banking. anna: a lot of attention was focused on the bank of england when it talked about consumer credit in the u and that lenders are dicing with a spiral of complacency. when i spoke with jeff bailey about that they were concerned with all aspects about that. >> this is perhaps not surprising. we are in a bizarre situation. look at the capital ratios of the european banks. are at 11 and 12 and giving back a lot of capital. been forceds have to increase the amount of capital, certainly the u.k. banks have. it is a delicate situation right now regarding the different geographies around capital. it is all about the consumer credit market. much, chrisyou so
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wheeler will stay with us and we will talk more about the european banking earnings season. have heard a lot about european banks of all varieties today. i just wanted to take a look at adidas. and raising the price target after the sports good maker raised its full-year sports -- sales forecast. shares are trading higher in the market right now. looking at an all-time high right now for adidas shares on your bloomberg. up next, we will continue the conversation on european banks' earnings. there are a lot out today including one in switzerland, one in france, and one over in france. -- and one over in spain. chris wheeler will stay with us. this is bloomberg. ♪
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♪ welcome back to the "bloomberg markets: european ." i am matt miller helping to report on the barrage of bank earnings we had. ubs beat expectations with their stock trading down. trading up.e is european stocks in general are down with the cac doing worse
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than the dax or the ftse. red air rose across the board. read arnot look like -- rows across the board. anna: the overall sentiment seems set up to be week. the overall -- seems set up to be weak. let us talk about the bank sector. the u.s. and european ranks -- the comparison is stark. the book value is much higher for u.s. banks. is there an opportunity in the sector and what have you learned today about what we should pay? chris wheeler is still with us. this chart shows the european bank discount. does this provide an opportunity? do we know enough about the strengths and the growth to calm for european banks? >> it is interesting.
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i switch a cross from barclays to credit suisse. 5% in the first half. in 2009, this bank was seen as a winner coming out of the crisis and now it is going backwards. i know a lot of work is eating done there. -- iong will it -- a lo know a lot of work is being done there. how long bill will it take to get to 10%? all of the big banks have more capital. they are getting above that if you want that benchmark at 12% or 13%. there is still a lot of opportunity and it is about how long it will take the european banks to raise up. anna: despite the underlying improvement. matt: i wonder if there are any
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standouts in terms of european banks that you are impressed by or value plays in terms of investors valuing some european banks too cheaply. >> lloyds bank is a good example. you have a bank that has achieved what it set out to do after the crisis. and yet yesterday, we get ppi,er hit, not just for but for mortgage issues. it is difficult for investors to think they are out of the woods and then to get hit again with these one off charges. that goingng bank through a lot at the moment. including santander.
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you have to say, it continues on its path of building up a business on the back of acquisitions. an off a lot of noise around the european sector right now. anna: the spanish economy is another story. .et us talk about credit suisse i know this is a business you sometimes follow. the wealth management side is the part they have been boosting. they areeems like proving this is the right strategy. it has taken a wild to get here. rightwas always the strategy. they are second in the world behind ubs. at how they have set this up, they have their swiss business in their asian business. and then he has his international wealth on the side.
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think that the wealth management business is not being allowed to shine through in the numbers. that is what i am concerned about. sure their wealth management numbers were shining through. earning at at is 14% return in tangibles. i am a bit puzzled by the drop in ubs shares. they blew away the estimates. at least, the estimates that we could collect. and their wealth management division seems to be raising revenue while cutting costs. it seems to be firing on all cylinders. what am i getting wrong here? >> there is an interesting slide that looks at the margin they
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are making in each of the geographies of wealth management. they are making a 19 basis point margin on the back of asset management. russia is 37. the problem is it is being pulled down. the oldu.s. business, painewebber business is at about 11. table are concerned about that. and the investment thinking numbers were a little disappointing compared to their u.s. counterparts. anna: painewebber, a name from the past. chris weber, thank you so much for your time. 8:19 a.m. in london. up next, we get a roundup of the market movers this morning and the stories driving that movement. this is bloomberg. ♪
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♪ welcome back, everyone to the european open. credit suisse has reported a 78% increase in second-quarter profits. boosted by earnings at its to private banking units. that is better than analysts anticipated. quiteg-term, i am always
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optimistic. short-term, it is difficult to anticipate because of the geopolitical events. banks are extremely hard to forecast. wealth creation in the air american markets is here to stay. bnp paribas has outshone deutsche bank and much of wall street for another quarter. second quicker profit was 2.4 billion euros, surpassing the estimates of analysts. amid surging demand for derivative products. there is a positive momentum which is continuing. that environment -- we should probably let that cater a little longer. bbva is getting
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stronger in its core business of lending, especially outside of its spanish market. income rose 6.6%. helping the lender post a quarterly profit of 1.1 one billion euros. we will bring you an exclusive interview with the bbva cfo. amazon tumbled in quarterly trade after offering a disappointing outlook as expenses rose. atnings per share came in $.40. much lower than the $1.42 expected by analysts. santander has reported a 30% increase. profit rose. that is as spain's largest bank is beginning to increase
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popularity. that is your bloomberg business flash. let us cross over to nejra to get your market movers. nejra: let us start with at leisure. its profiteased forecast. it hopes to increase its income at 24%. it is really benefiting from the booming demand for retro sneakers and a steady stream of new models taking it a hot commodity in the u.s., regaining ground against nike. it also sold its hockey unit streamlining that disposal and helping the shares have a lift. is one of the best performers on the stoxx
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600. 1% a littleing earlier posting a 45% jump in quarterly earnings, beating estimates. this is europe's second biggest airline group. also benefited from stronger demand in latin america and asia. on the downside, looking at renault. it climbed 18% on strength in europe but the operating number was a little bit of a mess. the market is really focusing on the negative because it did confirm its 2017 financial targets. that there is more focus on the miss. sinceat its lowest december 2015. anna: we are keeping our eyes on comments coming through on the ecg and the european migration.
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late-night senate meeting and we will bring you the details on that. that is coming up next. ♪ these days families want to be connected 24/7.
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♪ matt: bank bonanza. bnp shines. we have interviews with ubs, credit suisse, barclays and bbva coming out. repeal rejected. the skinny obamacare is rejected. can they fight the resuscitated. amazon falls short of expectations. good morning and welcome to "bloomberg markets: european ." i am matt miller here in zurich alongside anna.
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minutes into the trading day. european equity markets in negative form. the stoxx 600 is down 0.9%. the french market in particular is weaker. the overall mood, set by the amazon move and the tech sector, are spilling -- is spilling into the u.s. market. with a host of earnings news to break as well. i just wanted to quickly bring you swedish gdp. preliminary, second-quarter figure. expanding 1.7% quarter over quarter. beating estimates of 0.9%. blowing estimates away. if you're are tracking swedish
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gdp, there you go. anna: we can see the impact on the euro against the krone. we have a movement of about 0.5%. let us get an update on the bloomberg first word news. juliette: japan's key price gauge was unchanged in june health by rising power costs. costs increased in june. that is still far below the 2% target. household spending rose 2.3% from a year ago. the first gain in more than a year. a venezuelan opposition coalition says it will he five a ahead ofe government sunday's vote for a constitutional assembly. at least two people were killed on wednesday at the start of a national strike. the president called it a plan to rewrite the constitution which his opponents say is a power grab.
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earlier, the u.s. senate gave its final approval to legislation strengthening sanctions on russia. it also gives power to congress to block president trump. are mixed messages about whether the president will sign that. assailedcaramucci has previous and steve bannon -- abandon.nd -- and bannon. those it reports come a scaramucci said he made a mistake trusting a reporter and the accident would not happen again. global news 24 hours a day powered by our 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you. much. the obamacare repeal effort has failed in the senate after a long night in washington, d.c.
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john mccain, susan collins, and lisa murkowski were all no bills, defeating it. mitch mcconnell spoke soon after the failure of the bill. >> this is a disappointment. a disappointment, indeed. our friends over in the house, we thank them as well. i regret that our efforts were simply not enough. mitch mcconnell expressing his disappointment. for more, kathleen hunter joins us on the phone. it was a late night in washington. dramatic night on the senate floor. breakdown what happened for us. heads all coming to a around 1:30 a.m., washington time. >> it was a dramatic night in the session. one of the most notable things as a reporter is that this is
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fun because so much in congress is scripted. votes whenave these they are deciding live, the outcome is unknown making for good political theater. mccain,e down to john key was one of three republicans that voted against the proposal in the end. susan collins, and lisa murkowski, were pretty clear on their position before. it came down to john mccain and how he would vote. he had a lengthy discussion with mitch mcconnell on the floor and in the end, voted against the proposal. to republicans were unable advance. this is a huge setback for the president and the republicans in congress. matt: i am a little confused about what is going on with john mccain. he gave a blustery speech about how it is seemingly wrong to
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prepare legislation behind closed doors and spring it on everyone because it is so partisan. and then he ended up voting or the legislation and now he has voted against the skinny repeal. what is going on? >> part of it is the way the senate works which is arcane. once acain's position full and open debate on health care. his office said after the vote the other day to support an earlier version of the legislation, that was more of a procedural vote. they viewed it as a way to open debate on the legislation and to get to the point where we were tonight where you had a substantive vote on an actual proposal. in their minds it is consistent but seemingly, on its face, you are voting yes on one thing and no on another and it becomes confusing. anna: where does this go next?
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the president took to twitter and used very combative language. and mitch mcconnell saying that it was time to move on. and senator schumer talking about working with the gop. where does this go now? is there more conflict or can they park this? >> mitch mcconnell's comments were significant in that it was time to move on. he certainly made it sound like they were in abandoning this effort at this point. it is worth noting that in the past, we have seen the republicans in congress get to a point where it seems like they were ready to move on, abandon their efforts to repeal obamacare, only to have their efforts revive and they take another path at it. i would not put a pin in it just yet. has this republican
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president, with the republican majority in congress, managed to get any legislation through, as of yet? >> nothing significant. it is quite interesting to look back at a comparison to the early days of the obama administration. february, in the first year of his term, they the economic stimulus measure. quite a large, $700 billion, stimulus measure that was passed within two months of his taking over. nothing even approaching that level of significance has been able to get through. the republican congress with a republican in the white house. anna: fascinating times on capitol hill. fromeen hunter joining us
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our politics team with the late-night developments from the senate. we continue our conversation around european banking stories. a lot of different stories being told and some of the market reaction to that. contrast toubs in the credit suisse. and barclays in the mix. that is up next. this is bloomberg. ♪
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♪ to "bloombergback markets: european open." while all of the banks are reporting earnings, they are not able to lift the equity index. credit suisse gains but ubs is down. let us dig in a little deeper with these financials. 2.6%t suisse gaining, up reporting a 78 increase in second-quarter profit. that was a beach. the wealth management profit increased as well as client management. halfwaythe question, three-yearthe restructuring plan, whether credit suisse is looking more like a wealth manager. he did say to a challenge with low volatility. we also heard from ubs.
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ubs did beat to with second-quarter profits, and also both wealth management units delivered higher results, low interest rates squeezing margins. but why is the stock down? it is because of the ratio. we saw it at 13.5% in the second quarter. down from 14.1% in march. that is what is causing the shares to drop the most since january. and looking at amundi. second-quarter profit. its first net fund outflow since 2015's listing. anna: that us talk banks further. bbva boosting its lending. with us for an exclusive
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interview is the cfo. thank you for joining us on the program. and congratulations on the numbers. you seem to be doing very nicely in these emerging markets. are you seeing a pickup in the credit demand in the spanish market? >> thank you for having me. the quarter shows the first increase in lending in the spanish system. thanks to a pretty strong recovery that is taking place in the spanish economy. our research team has very recently upgraded the growth estimates for the country. they are expecting spain to grow at over 3.3%. unemployment figures came in extremely strong this week. this is clearly a very good backdrop for the spanish economy and for the spanish thinking profits to continue to perform. the strength, the recovery
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in the spanish economy. but interest rates remain very low back at home. what can you do to mitigate the low interest rates? >> we are defending margins. the customer spreads are flat in the quarter. that has been the case for the last three quarters. we believe we can continue to do so in the corridors ahead. clearly, we need to be more efficient. where we arerea showing clearly additional strengths. by almost 5%,down year on year. we believe this trend will continue in the future. as in a mentioned, emerging markets were very strong for bbva. your strongest, 13.5%. growth in turkey. bigger growth in the u.s.
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are there currency risks that concern you in those markets? are you able to hedge them well? behave fairly well during the first half of the year. latin american currencies are performing better than what we were expecting at the beginning of the year. mexico, during the last three or four months, has recovered everything it has lost after the election in the u.s. and probably the only currency, although it was stable in the last quarter that has lost some value year on year is the turkish lira. the emerging-market economies in general are behaving well. restly, outperforming the including turkey.
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it showed very positive numbers in the first quarter and that has led us to also raise the gdp growth estimates for the country to 5%. 20 which is pretty impressive figures. expect -- youl are not concerned about geopolitical issues when we talk about turkey and mexico? witho you see the concerns donald trump, going forward? months,nk the last few all of the discussions around being a lot more cautious. i think they are all looking for situations that are good for canada and mexico. that is what we are expecting. it will not be an easy negotiation or a short
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negotiation but we do believe that there are incentives for everyone to do a good deal. on the turkish side, i think that since the election, they are focusing very much on running their economy. this has been one of his traditional strengths. and i think it has been reflected in the last changes that he did to his government. also been reflected in the gdp numbers. although there are uncertainties, that is always the case with emerging markets, we do believe that we have good quarters ahead. anna: you are optimistic on the e.m. story. talking about spain. we have seen the deal team
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santander and -- we have seen the deal between santander and banco popular. will you look at other banks? >> we take a look at every transaction that takes place in every single one of our markets. winot -- we don't always nor do we always win big. that is our responsibility. increasese think it shareholder value, we try to close them. the transaction that you mentioned, those are positive transactions for the spanish system as a whole. it will allow the banking system in the country to improve and be more efficient. that is good for everybody. said, if any transaction comes into the market, we will definitely take a look at it. cet ratio stood at
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11.1%. that is lower than the court european banks are aiming for. ubs, 13.5%. deutsche bank, 14% and change. where'd do you want to see that ratio go? --where do you want to see that ratio go? >> we are very comfortable with our ratio. our target is a 11%, a little lower. have leverage ratio which is almost 6.8%, one of the highest among the european banks. and we have an asset density of around 53%. also, a very high number. the quality of our capital is very strong. we have been able to generate organic capital, quarter on quarter in a consistent fashion.
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we are focused on profitable growth. i feel very comfortable with the level that we have and with the organic capacity that the franchise has shown. so much for your time. great to have you on the program today. please come back and speak with us again. up next on the program, we bring you our exclusive interview of the cfo of klm. this is bloomberg. ♪
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♪ welcome back, everybody. this is "bloomberg markets: european open." let us talk about aviation. a figure came off the news that delta and eastern airlines will each purchase 10% in the group. earlier, i spoke exclusively to the company's fccfo. >> creating a stronger link between air france, and delta. entering into a link with virgin. i think clearly, it is a step to the conservative in that interesting. the airline industry is fragmented.
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because of the legislation and the rules for the traffic rights. operation,at type of we have the making of a positive step. the industry needs to be consolidated. the links we create with the partners are extremely positive. we are all excited with the deal. we are close to virgin. anna: do you need full consolidation to really fight effectively against the gold carriers? have the results that are a bit negative. the situation for the gold carriers is not always easy. we tell the partners that we are just looking for fair competition.
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we want to apply the same rules that have been accepted in the u.s. and the uk. the klm-airas france cfo. spoke withich, we the credit suisse. and it ubs. these are separate stories as far as the stock reaction today. credit suisse, doing well because of its wealth management. ubs also did well in its wealth management unit but the stock is down. some are saying that it is because the ratio is down to 13.5% from 14%. there were also increases in other ratios. you would think that their
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impressive beat would encourage shareholders but it has not as of yet. anna: that will do it for this program. "surveillance" is up next. ♪
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mark: some of europe's biggest lender's report. we hear from the bosses of ubs, credit suisse, barclays, and more. european tech stocks follow asia and america lower after amazon result raise concerns about earnings in the sector. and the

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