Welcome to countdown. Im anna edwards. 6 00 in the morning this tuesday. Lets start with the oil story. Two things to talk about we are back in a bear market once again and we will come to that chart in just a moment. Statoil is the other thing major oil is reporting numbers. Secondquarter adjusted net income is coming in at 7. 2 billion norwegian krone, ahead of the estimate. The net income bottom line number looks much better than markets were looking for. We will get further into the dividend story as we go through the morning because that could be some interesting stories. Q2 sales once again above the estimate. They are talking about how much of an impact the Maintenance Cost are having on the business in the 2015 number they talk about maintenance being 45 Million Barrels per day. It is in line with the overall 2015 trend, what they expect to see in the Third Quarter. They also say they will declare a Quarterly Dividend in u. S. Dollars from the Second Quarter. Plots to talk about on both dividends when we speak to the ceo of the business we will be talking to the ceo of statoil, first here on bloomberg, how they are doing today. That is coming up in just a little while. That brings us to our twitter question of the morning. Willy did in oil prices be the cause of more and and in the sector more m a in the sector . We have seen the bear market back for a second time will that drive another ways of m a . It is a contentious subject. Three minutes past 6 00 your london. Over to china now. After stocks saw the biggest oneday route, the Chinese Government has kept stakes in place. Juliette . Juliette good afternoon, anna. Good morning, rather. Weve had another update from the government the Chinese Government is saying that they have conditions for healthy Stock Market Development but after we have seen that big selloff yesterday and that 5 plunge, that these government controls one working. We have had a little bit of a comeback the second composite came down by 1. 5 . There is positive movement in banks, giving support to the market, and we have seen shares listed in hong kong rebound from that selloff yesterday, down 1. 3 at the moment. You can see a little bit of positive momentum. We are seeing quite the selloff we were seeing in the early session in china, but as we head into the afternoon session it is Still Holding onto weakness. A couple different calls coming through we have had hsbc saying that the route they are in is a buying opportunity. At the same time, some analysts are saying there is another 14 fall to go for china shares. Lets look at the main movers in china and on the hong kong market. Ibaidu is forecasting that Quarterly Sales will miss estimates, thats chinas biggest Search Engine but it has been weakening the domestic economy in china. Its not listed in china, but lets look at the stocks that are significant selling pressure in early trade after announcing it would Celestica Delta airlines. We at one point saw china shares in shanghai fall to the 10 daily limit. They are down 2 shares down by 4. 6 , and we still see weakness coming through in mining prices. Petra china is a stone that we have been watching closely consider this market support fund. Let me start with it, up 3. 7 a turnaround that we have seen in hong kong this afternoon. Shanghai is still weaker, down by 2. 2 . It is helping to support that route, but as we mentioned, it has been another week session following that they can drop yesterday, the biggest drop on the shanghai composite since february, 2007. This twoday fall is now the worst weve seen since before the government intervened in early july. Anna thank you very much. Juliette saly with the roundup of the market. Lets return to the theme of oil, where we started the program. Earnings from statoil at the top of the hour beating analyst estimates with an adjusted net income of 7. 2 billion norwegian krone. Here with more is javier. Great to see you. Great to look ahead in terms of what we are getting here. These numbers are coming in better than estimates is that a sign . Javier i think you are absolutely right. It was the theme of q1 when it was very conservative, seeing a big drop in oil prices during the first quarter. Analysts were expecting of a drop and they were surprised. This is already indicating that it could be to conservatives, and we see statoil beating the estimate and bp will have reports and 50 minutes in the market is looking at 1. 7 billion for adjusted income, and we could see a higher number. Anna what are investors asking management to do next . Javier i think the focus will continue there has been a huge focus on cost cutting. I think they are delivering there. They have been able to contract suppliers to get a cost resduction and that will be what investors will be asking. Anna its interesting to talk about m a with statoil. May 11, the ceo is talking about how acquiring barrels might be cheaper then exporting. We have a chart of the year to date showing weakness. This that going to drive javier youre absolutely right. The statoil ceo that he thinks buying a barrel as much cheaper today than trying to drill. The total has already passed shale properties, and i think that as we go to the end of the year, that oil price will continue to go down and it will put pressure on shale producers in the u. S. It could be one of the players to look out. Anna they have declared a dividend this morning, 1. 80 krone for the quarter. They were talking about the Capital Expenditure plans. I know one of the analysts over in norway was talking about whether they could keep up the dividend. Javier i think that is a question for the whole sector not only big Oil Companies. Can this dividend to be sustained . So far what we will hear will be very important to bp later today and shall on thursday. And shell on thursday. More importantly, the companys have received many assets. They have big infrastructures and supply lines that are appreciated, so they can put that on the market. Sticky question for the Oil Companies is if the Oil Price Remains as low as it is for the next two years, the big question for dividends will appear. Anna bp is reporting and 50 minutes what will be the key focuses for you . Javier for me, the key question is how well refining can do. Bp can be the best the first indicator of learning seasons for other companies, for how well the integrated model works in the Second Quarter. It works in the first quarter. Refining was outperforming expectations of analysts. Second quarter it will be the refinery sector that will be delivering. Another question is obviously the settlement. They will take a big hit in a nonadjusted income we will see atit. Anna great to get your thoughts this morning. As we had to break, here are a couple of offense we will be keeping our eye on today. U. K. Gdp is out at 9 30 london time. It is said to have regained some traction in the Second Quarter, according to economists. The fomc starts in washington d. C. As an Interest Rate decision is due tomorrow. Its unlikely that the fed will move but members may signal intentions about that crucial september meeting. We will talk about both of those things on the other side of the break analysis of the Global Economic seen. Coming up, how john Yanis Varoufakis planned a grexit. Anna welcome back. You are watching countdown here on bloomberg. 40 minutes past 6 00 here in london. There are the stories you need to know this morning. Another volatile trading day in china. The shanghai composite is down around 1 right now after sinking as much as 5 and gaining 1 . The index dropped more than 8 yesterday amid concerns that the governments efforts to prop up shares are unsustainable. Volkswagen has surpassed toyota to become the biggest carmaker i delivery by delivery. Car making has accelerated at the fastest pace in five years. The company is one step closer to becoming the Worlds Largest automaker. Oil declines in a bear market amid signs the global drought will continue. They closed 20 lower than its peak in may. Investors are weighing the prospect for a fed rate rise as u. S. Policymakers meet today and give us their verdicts tomorrow. Lets get more on the commodity story. We are joined by andrew, the Center Economic advisor at the npc a warm welcome. Lets start by talking about commodities. How do you look at the commodities space at the moment . Andrew we are going through a fairly weak point in the commodities cycle, and that is driven a lot by slowing growth in china, and some of the other emerging markets that were driving up Commodity Prices in the past. But im not sure we should look at it to negatively in terms of the economy. A Lower Oil Prices good for many price is good for many countries, and also the europe and the United States. Its just that it takes time for that affects to come through. I have been expecting in the second half of this year perhaps not so clear in this quarter that the effect will be more noticeable in western economies. It will be interesting to see whether we get counterbalancing good news from the west to offset the decline in the oil price. Anna that all sounds very sensible. Lots of people said that about the United States at the start of the year, didnt they . They said it was going to be good for the u. S. Because people would go out and spend more the pumps but in the end they ended up saving more than people thought they might. You just have to wait longer . Andrew and economics, we talk about uncertain lag. We saw this in the 1980s when the oil price fell. The people most directly affected tended to respond more quickly, and the consumers respond more slowly. Its a reversal in the Oil Price Goes up. I think we just need to be a little bit patient and not be looking i would say about a year from when the oil prices started falling, roundabout september last year before we see more effects. Anna this sets us up for an interesting story in the second half of the year around commodity currencies, commodity driven economies. Weve seen some weakness in some of those in canada, in australia. Do you think that will be a story that Gains Momentum . That those parts of the world will struggle because of the nature of their economy, being Oil Exporters . Andrew yes i think we are already seeing that. There are other factors with russia, they are a big oil producer. Brazil is also a big commodities producer. Canada had significant downgrades and they are expecting to go 1. 5 . We shouldnt expect to see no effects from the Oil Price Fall but we have to look at the other side of the equation as well. The big story for the next couple years is a number of factors that could be favorable for the western economies. With europe coming out of the doldrums, the United States i dont think we should expect strong rates of growth. This is the new normal 2. 5 with unemployment still coming down. Anna what is the new normal look like in europe . You have written recently about how Eastern Europe has exceeded expectations since the downturn. There have been a number of drivers that have driven europe into a stronger position in its most recent recovery. Do you see that as being sustained . Is that something we should look to . Andrew i think we need to look at the european economy as a whole at the weak parts of it like greece at france and italy not being the dominant elements. Northern europe is the dominant element. You have the six fastestgrowing Eastern European economies, including and slovakia including poland and slovakia, a 1 trillion economy. Eastern europe as blocks a bit off the radar but that part of europe has been doing well. Germany hasnt been growing spectacularly but it is expected to grow. The United Kingdom could be the leading g7 economy. There are quite a few blind spots. Anna we will talk plenty more about the u. K. Through the broadcast. Andrew stays with us. Lets turn now to africa. Barack obama toward the eastern region. Kenyans economy kenyas economy is becoming a starter begin. It is working with Corporate Partners to incubate more than 150 Tech Startups that have created over a thousand jobs. Bloomberg spoke with julianna ratiche about the scene. Julianna we are in nairobi kenya, on the fifth floor of a foreign on the fourth story of a fivestory building. What it provides is a chance for an entrepreneur someone u. S. Just finished college and is still trying to figure out how can they apply their technical skills, who can they collaborate with to make this a reality, to have that first prototype . I think brink is also a very important example of a company that spun off, and is part of this ecosystem that grew from a very small team. It is a redesign of the router for emerging markets. One of the key questions we asked ourselves why do we use Technology Made in new york or elsewhere when we live in nairobi . Here, we often have to deal with power blackouts. We have a great team here that is working towards scaling that. Its already shipped to 54 countries. It is really showing that there is a frontier around hardware and software. We have got different incubators that support startups in the logistics phase, in entertainment, and financial services, financial tack, and emerging spaces start up in the hardware industry. What is needed now is an acknowledgment of the importance of places like this. The contribution stands at 8. 4 of the kenyan economy now. I do expect that to grow. Plaintiff semple, the importance of ecosystems like this is to create startups that then create jobs, that create value, that give back to the economy and influence the gdp. Anna the Eastern Africa and startup scene. Lets get back to greece. Greece and its Creditors Meeting in athens today to hammer out reforms needed for third bailout. The talks come after another bombshell from former finance minister Yanis Varoufakis sharing his secret plan to get degrees out of the eurozone on a conference call. Yanis varoufakis i authorized them i know. Anna they are referring, of course, to the plans that he had to hack into the finance systems. Hans nichols joins us now from berlin. These tapes make for fascinating listening, dont they . Hans he was told at the beginning of the call that they would be recorded, so what we have here and this will affect negotiations in athens s between the troika and greek officials it will give everyone an indication of how close certain elements were to wanting to leave the euro having contingency plans to leave the euro. This is all about parallel liquidity. The plan was to hack into the finance ministry, his own ministries website, gather all the Tax Information to have a parallel liquidity system so if you wanted to switch to the druckman, you could do it with the flip of a switch. Here is how mr. Varoufakis described it. Yanis varoufakis we were planning to create surreptitiously, reserve accounts for every tax file number, just to have the system function under wraps. Hans the reason for hacking into his own ministry they didnt actually control the software, they didnt control the numbers. That was being controlled by the troika, by his creditors, so we had to do it surreptitiously so as not to alert them that they had been planning to have a separate contingency plan a separate currency in place. Mr. Varoufakis put out a statement saying that he excepted, acknowledged that he had the plan. He said it was authorized by mr. Tsipras, and said it would have been remiss had he not have a contingency plan. What he did is he asked a childhood friend, who then went on to be a professor at Columbia University . They led a team of 5 if it had been implemented, it would have needed a thousand workers to put it into place. There was an economist at the university of texas, a close associate of mr. Varoufakis, he was in on the plan. There is how he described it in a statement yesterday. He said the job was prickly to study the operational issues that would arise if greece were forced to issue scripts, or if it were forced out of the euro. Heres whats interesting to me mr. Varoufakis is claiming that mr. Tsipras off the rise this plan. He never greenlighted it to go into effect he authorized it, though, in december, before he was prime minister. Mr. Varoufakis does face charges of treason, which he apparently is worried about. His argument seems to be that this would authorize via ct sipras. Anna amazing story, thank you. Coming up on countdown, orange reports earnings. We will bring you an exclusive interview with the companys cfo. Anna welcome back to countdown. You are watching bloomberg tv at 6 30 in london. We just had numbers from orange a mobile phone operator concerning their for your target depreciation, they say, has come in at 3. 2 9 billion euros, against an estimate of three 3. 14 billion. The sales is also just ahead of estimates. The cfo is saying this morning that they have room to maneuver on andm a. Theres a lot to talk about in m a with this business. Talks are only just starting. There are more customers and synergies coming through from the cfo. Speaking of which, lets talk to the cfo. He joins us now on the phone great to have you on the phone this morning. To wonder if you can give us an update on Current Trading as it stands at the moment in the French Market and elsewhere how are things shaping up fo