Manus welcome to i am manus cranny. Welcome to the pulse. I am manus cranny. The story of day from the asia. The president of toshiba along with two other executives, their resignation and their formal News Conference and this was a 1. 2 billion scandal restating their earnings over the past six years, unrealistic led to what is a systemic flawed accounting process, challenging the culture within japan. Probably one of the single most important issues that will be addressed here which is so much power for people as of the top and no way for anybody to really challenge the toshiba accounting methods. Everything from Nuclear Reactors and ships. A is now falling on hisao tanaka the president. If we have any headlines, we will bring them to you. Our top story and that is commodities. Bloomberg commodities index dropped to a 13 year low yesterday. Right . Ryan you have to go back to 2002 to see Commodity Prices where they are now. A fiveyear low. 2012 when we had the darkest days of the euro crisis and commodity levels were higher then than now. 2008, the darkest days of the financial crisis and yet Commodity Prices are lower than they were then. Gold is the biggest component in bloombergs Commodity Index. We talked about gold yesterday and had the 4. 2 drop the biggest in two years. Heading to a fiveyear low and a bit of a recovery. Today, its a slumped. 1100 bucks per ounce for a gold where it is trading and north of yesterdays intraday low. Gold suffering. Part of that is Dollar Strength. That does not of the only issue in the commodities market. Iron or not part of this but the commodity everybody is watching. Goldman sachs has a note out and 2 analysts in iron ore will suffer. Earlier this month, down at a six year low. The reason for that is not just the price of the dollar and Dollar Strength but we do this on the demand side and oversupply to china. Goldman warning fell big suppliers, rio hp supplies china in will overwhelm the weakening demand picture. And extraordinary day for commodities. Manus your favor subject which is oil. 50 on the nod with the wti. Is it a big new way to the downside . Ryan you said under 50 for wti and is an important level. 56 for brent. A story where fundamentals, to the picture and people saying iranian will continue to the glut. They are saying we will talk oil and supplied to Global Markets as soon as we can and the sanctions are lifted because we want to take back market share. Iranians talking to their counterparts. Not just Dollar Strength story. That is how it is painted. A lot the fundamental issues. You see that with iran an existing glut. Also iron ore they might keep on playing out over the next few weeks. Manus lets see where it goes to the next. If it will ever get to 100. Ryan chilcote. Our question of the day. Will the fed stick to the 2015 rate hike guidance . Join us on twitter in terms of what you think the response might be. For more now, joined by fidelity Worldwide Investment global economist anna. Great to have you with us. Commodities, which way do you look at it . Oil as it were dropping and a 13 year low on commodities. A boost to economies . Guest it depends. We are now back to the differentiation we have been talking about. That is usually Energy Commodities benefiting from lower Commodity Prices and many markets will face this head went and most will benefit in terms of consumption. The biggest question mark is what is inflation . Many centralbank want to boost inflation and come back to the target especially the fed and want to hike. It will make it more problematic for them. Manus core inflation in the u. K. , not wages rising sorry the fastest in five years. But not embedded yet. Not something which is embedded into the numbers. How real a prospect do you think the central bankers will think it is . Anna stupnytska really, a combination. In at the u. K. , it looks like we are at full capacity. We will have reached the equity and of course, though falling Commodity Prices is kept low. In the u. S. , probably not at full capacity yet. Still no pressure from the economy. And none from Commodity Prices. I really think it will take a few more months to start picking back up. We need to see progress in the labor market. Manus a you have a strong dollar. No big question for most people, are you entering a new super cycle and the dollar on the upside . On the converse side is the commodities on the downside. As jenny yellen looks at these issues, 70 of our survey is say we will get a rate hike in december. Is there anything that can blow it off course . Anna stupnytska greece and china and the question is, why are commodities falling so fast . Oil has fallen mainly around the supply side reasons and maybe Something Else going on in china we do not know about. Growth at 7 are you how real is the number . Maybe they are heading towards. A reason the fed will take. Many reasons why they will hike in december. Manus you sound skeptical on china. Anna stupnytska the story itself is good. If are trying to rebalance and reform. I think the equity markets is not going to have any major implications for consumption. It is a big head went for everybody else and deflationary for the rest of the world. The story in china is ok and probably more sustainable, but a head went for global economist head went for global head wind for global economist. Mens thank you. You will stay with us. Ibm shares fell after secondquarter sales declined across Major Business units. The 13th straight period a fall in. Investors are losing patience as they rebranded themselves. J. P. Morgan chase is short by as much as 12. 5 billion in meeting new capital rules which were approved by the fed yesterday. Extra Capital Requirements or surcharges arrange from 1 4 . As of the biggest bank, jpmorgan. Spacex boss elon musk said the fire that destroyed one of his rockets probably was because of a weak strut as that the Company Might be complacent because they have a time to the staff since their last launch. Grexit on the agenda according to a new Bloomberg Survey. We will break it down. Manus welcome back to the pulse. greeces creditors are said to be aiming for august 6 deadline to wrap up terms of the new bail out and disperse the first aid. A Bloomberg Survey shows 71 think theres a danger of greece will be forced the eurozone by the end of 2016. The thoughts from globe economist Anna Stupnytska she is still with me. Anna, it does not go away. Our poll is saying 70 saying they will be forced out and 50 say 86 billion euros is not enough. Anna stupnytska it is up to the greek government to make steps to push structural reform and get the economy going. Get some kind of recovery going and that will make it easier to pay debt and easier for the european creditors to have debt relief. It is all about incentive structure. They do not want to give them a huge bail out package because it will reduce incentives. And they do not want this to repeat again. People are just skeptical to push through this very tough reform. Manus even this morning, part of the story at bloomberg is a they have to water down the seconds that set up water down the second set of proposals with some of the taxes. That brings an alarm bell immediately. A government dependent on opposition living in a minority. Thats the critical risk, isnt it . Anna stupnytska yes, another round of elections this year and next year. As long as syriza is in power, i do not think we will see anything very different. That is the biggest problem. The political will in place to keep greece in the euro area. The Bigger Picture here is about the geopolitical risk is greek leaves then that might mean russia might expand its influence into europe and the balkans because it is very manus that has not been part of the foreground discussion that has gone on. Anna stupnytska it is the Bigger Picture. What a merkel had in mind. Manus overreaching again in terms of land and power . Anna stupnytska i think so. They have already stretch into the balkans. When he level phil stayed in europe and access to the mediterranean when you have a failed state in europe and access to the mediterranean. Manus sounds like your, i did not europe, i did not think i was say that is recovering. And growth is returning. How strong a growth story could we get for the back half of this year in 2016 . Anna stupnytska quite remarkable. Intact despite greek dominance, sentiment has not been disappointed. The headwinds and low Energy Prices and critically, we have much more support across europe these days. Everywhere except for greece. It is working to boost recovery. It will continue through the year. Once we get to the next year much more complicated. You might have the fed hiking and tightening financial conditions that was ill over into europe. The ecb could do more as well. Manus you perhaps qe to go on for longer or bigger in size . Anna stupnytska it depends if we have the greece issue, it might increase the size. Otherwise, it could extend beyond september 2016 if inflation is not picking up or recovery is stalling. Manus give me indication of the consequences of that for the currency. Currency critically important piece of this discussion. Anna stupnytska yeah, in terms of the euro, the wickedness against the dollar weakness against the dollar, help export us and boost inflation to recover. Ultimately the commodity price growing and so we might actually see more in terms of qe. Manus as european jobs, remind me in terms of that and propensity to export. We are talking about a rebirth within the eurozone and a lot of people saying the euro is going lower. As an export a group, where do export stand . Anna stupnytska some countries like germany and france and that is the important part of the growth. Some countries not as being exporters. You have competition from japan given weakness manus can it rise again . Anna stupnytska boosting growth but ultimately monetary policy. The ecb cannot help put on a sustainable path one structural reform after the politician. Manus the last, i heard one of the politicians say show no mercy for greece. Anna stupnytska thank you from fidelity Worldwide Investments. Toshiba under pressure. One of the most Favorite Brands injure in japan and uncertain future after an accounting scandal and hisao tanakas resignation. We have the full story. Manus welcome back to the pulse. streaming on your tablet and phone and bloomberg. Com. The toshiba president , hisao tanaka and two other executives quit taking responsibility for a 1. 6 billion accounting scandal. The News Conference. There is flash photography, i should warn you a pretty strong flash photography. Hisao tanaka resigning but cause of an accounting scandal. What will happen next is what we want to discuss. How did it happen and the consequences . Caroline hyde, caroline, the News Conference on going. Caroline it comes flooding back. In 2011, another scandal. This is a phenomenal amount of money. This is 140 euro company that makes everything from televisions to chips to Nuclear Reactors. It is huge. 1. 2 billion, so much how far the scandal is racking up. Three times what was originally thought first announced in may. Today, heads rolled. Hisao tanaka president has quit along with two other executives. Including norio sasaki who was in charge for most of the six years. They are taking responsibility. They said it comes down to them. On Third Party Committee has been involved trying to piece of the puzzle together. Manus is it here article is it hierarchical . Caroline this external views saying it wasnt the president who thought to delay was the president who thought to delay and the workers he told to do this and cannot talk back and had to follow this party line. It is to stem it what are they called it. Systemic is what they called in. The biggest since olympus. That was back in 2011. Back into the 90s, bank of japan sent shivers. Manus i remember when that was like 4 billion sprint i am not putting get in the smaller basket. Right now about 1. 6 billion. What happens next with this brand . It is across a broad broadspectrum. Caroline we understand it was in regularity, percentage of completion estimates of infrastructure. Your project and nuclear, that is what it is related to. They are expanding the probe the looking at pc parts and computer parts. First of all, a new management team. People resigning today have to be replaced. That will be announced in mid august. We heard the new board may have majority of outside directors. This what people are worried about in japan breaking in outsiders and made sure managers do not have too much control. As revealing of fiscal year 2014. We will go to those numbers in the end of 2014 and will need the numbers from the beginning of this year. There could be asset sales not reported in july. Already, the size of this company is shrinking. 3. 6 billion wiped out in terms of market capitalization. Still have to see what the charges could be put forward to the executives. So far, none. Manus a real situation in terms of accounting and structure. Caroline hyde, thank you on the toshiba story. Commodities crunch, why everything from gold is on the slide and indications of the Global Economy pretty you do not want to miss that. Lets check on the markets. A good run. 98 in a row. A little bit lower. Stoxx 600 down. Crude, still below 50 bucks. A little bit of pressure. Old is managing a little bit. Commodities discussion after the break. And is managing a little bit. Manus welcome back to the pulse. i am manus cranny. Up to speed with our top headlines. The president of toshiba is resigning after a 1. 2 billion accounting scandal. According to a thirdparty investigation, it was caused by executives setting unrealistic targets skillfully hidden from outside. Spacex boss mosque said the explosion that destroyed one of his falcon nine was probably caused by the failure of a strut. He admits the company may have become complacent because it has eight times more staff than when it last experienced of failure. U. S. Oil has fallen below 60 a barrel. And gold and a fiveyear low. Commodities at a 13 year low. Bloomberg commodities index dropped to its lowest since 2002. Weaker than we saw in 2008 than the crisis. The other commodities have strengthened the u. S. Economy pushing the fed towards boosting Interest Rates for the First Time Since 2006. Speaking of the u. S. , a look at the results of from Morgan Stanley and ibm. A bit of a shocker. They may the headlines. Su keenan has the headlines. Su keenan ibm shares tumbling into the mondays session at the computer giant reports 13 straight quarter of revenue declines and saw declines in almost every Major Business category. Beat estimates and the revenue but looking at profit items, that beat the three dollar estimate of analysts. It had to reduce by almost 5 in the past three months. After hours trading saw it dropped 5 from 173 share close. The ceo has been trying to shift the tech company away from Traditional Foundation toward more viable Cloud Computing and data analytics. Analysts are saying it has been slow and this quarter proves that. The fallout from the traditional businesses at ibm dwarfed the companys ability to capture new revenue. Likely translating into some of the trading we will see in the tuesday morgan. Morgan stanley reported a very different story not only Beat Estimates but saw the biggest jump in a brokerage fees and trading of the six major banks here in the u. S. To quote one analyst, it is still the pulse. The prophet was . 79 a share in Beat Estimates by five cents. The ceo has use growth to avoid revenue declines that has been plaguing his rivals. In new york, su keenan. Manus lets check in with some of the big themes in europe. European stocks just off our record highs it down by 2 . Stoxx 600 down by 0. 8 . Crude below 50 a barrel pretty is the new super cycle on the downside what you will see . Is there any possibility of iran flooding the market . Gold has been righted in many sessions. You saw gold from the losses. Stronger dollar. 1107 on the dollar. Morgan stanley talk about selling uks stocks in evaluation as being too high in deteriorating earnings. A couple of stocks to watch. Lets check in. One of the Industry Groups driving european stocks lower is health care driven primarily by novartis. Novartis cut sales on the performance over the year to date. This morning, the stock is down 2. 3 . Down the most since the 29th of april this year. You are looking at wiped off of the market. The Dollar Strength is really hitting the numbers in novartis this morning along with that, competition within the lens business. 1. 27 and that was below the estimates. Its takes us to a touch of luxury. Hermes. The value still there. Trading over 16 on hermes. With that in mind, we will talk about hermes and what is driving it was not what is happening in hong kong and australia. Andrew, good day to you. Talk me through the numbers first of all and give me a glimmer of hope. Not all bad news, is it . Andrew hermes is bucking the trend it is quarter. If we look at burberry, they reported decelerating sales and a quarter but hermes acceleration. The reason is predominantly japan and it Beat Estimates by 10 Percentage Points and a record 27 there. And i think what it shows is two things. Firstly, we have hermes Business Mod