Francine welcome to the pulse. Live from bloombergs European Headquarters. And francine lacqua. Manus and i am manus cranny. We are joined by ubs senior economic adviser, George Magnus. Francine frances secondbiggest bank has posted its second its second its biggest profit since 2007. Manus she spoke exclusively to the banks ceo. This performance driven by trading. The capital is building as well. Investors like the story of the decision this morning. The shares are opening 9 . They like they say it they like the story of cost saving. Nextillion euros for the two years. Of capitalhe raising targets. Their ratio came out for the second quarter. From 10. 1 last quarter. They are planning to raise this target to 11 by the end of 2016. I sat down exclusively with the ceo and asked 10 how he could explain his performance in the second quarter. We actually have a strong set of results across the board. Close to 9 organically. We also have lower cost of risk. Underlying profitability of 10. 3 . France and europe, would you say the recovery is still fragile . I would say it is more progressive. Europe [indiscernible] a low euro versus the dollar. Low Interest Rates. I think it is freezing the economy aggressively. I think it is speeding the economy progressively. E are at 1 gdp 1. 5 next year. Not a miracle, but it is going in the right direction. Inmost europe p. M. Most european countries. Russia may be a difficult market. You were telling us your seeing the normalization even though it you have a loss of 45 Million Euros. This situation is going to improve. The economy will probably go down by 3. 5 . The risk can remain high, so we cannot change our governess for the year. Fundamentally, we see a progress. We expect a slight increase of gdp in 2016. Affecting effect we are affecting our business model. I think we are doing a good job. Business is independently funded which was one of the goals. No more money from the parent company. So evenven in russia which couldve been a he even expects an increase in gdp in russia in 2016. Finally, regarding the costsaving plan, i asked him whether that plan will involve he told me it was premature of if we would have course, jobs will have to change in order to a debt to new regulation. Back to you. Francine sterling conan there in paris. Manus the dollar has risen to a high. Is close tobank raising rates next month for the First Time Since 2006. Carolyn i has morecaroline hyde has more. Up inne we have a surge the dollar at six clock p. M. Yesterday. To change his opinion on a rate hike it would have to significantly deteriorate in the economy. This is when we started to see a sudden surge up went. Upwind. Dollar down in the earlier in the trading day. He is saying look, we would have to see the economy deteriorate for me to think we should hold out past september. A bets think it is about that we will see a rate rise in september. The first time we will see a rate rise since 2006. Dennis lockhart thinks we should go now unless you start to see the adp number that comes out later today. Initial jobs claims come out tomorrow. Only if they significant discipline, they say they will go for a rate rise in september. Im to see on my screen, the dollar over the course of the year, the best performer if youre looking at the bloomberg correlation index. Back to you. Francine staying with the fed in india, we spoke to Raghuram Rajan about a rate hike. It is best if the fed starts normalizing. Prepared,everyone is but you can never rule out the possibility. Guest is the ubs senior economic adviser, george manus. Gettinga Voting Member ready for september. The market is flipping the coin, 5050. George i think it is going to be in september. There is only a possibility there is always a possibility of a getting hijacked by a rogue number over the summer. Is they will start to do it in september. Francine there is no danger if theys if they hike in september. Look at china, we do not know what is going on in the market. Been chapter has theres been chatter about the short shrift given to china and the fallout in the equity market. I think the shenanigans in china at least we will have significant defect in the United States. I think they want to do this. When they do it, i think theyre going to do with their hands like this. I think there is a nervousness. That the basis points are going to cripple the economy, but how the market aligns itself. Manus i love how you said, not looking. The dollar, looking at it against it is only been trumped by the swiss franc. Are we in a new super cycle higher for the dollar . Is the fed covering their eyes . What do you make of the dollar . George it is a bit early to be honest. This is we are in the foothills of the third bull market in the u. S. Dollar since the collapse. We had one that coincided with the regime. That coincided with the. Com crash. ,t has done what it has done even without Interest Rates going up. The issue will be is this a normal tightening cycle . How far will Market Expectations move in terms of where the expectations of Interest Rates to be over the next year or two. Three to five year Interest Rates. Nonfinancial companies, critically emerging markets. Particularly emerging markets. That is going to have repercussions. Or 2017. 2016 but we will have to see. Francine senior economic adviser at ubs will stay with us. We would talk about china. Manus lets take a look at the imf. The fund made a decision on changing the spr. Welcomedtries have chinas push for the u. N. To join the dollar for the yuan to join the dollar. The fed wanted to keep moving. Francine shire has made a bid for drug maker. Box elder which specialized baxalta has rejected the advance. Named michael has evans as president. Leaving him in charge of global expansion. The coveney says he will work the company says he will work bringing shoppers bringing Chinese Shoppers from around the world. His goal is to get half of alibabas revenue from china. Disneys thirdQuarter Sales missed. Disney is a top for is a topperforming stock. It is exactly one year until the 2016 games start in rio. Said dyingnt has concerns about pollution. It comes after the world governing body said they want Virus Testing carried on after a report on Water Quality. Francine the cost of oil has bounce. The crude stock has declined. Lowestrading at the price and five much. The crash has had a major effect on the industry. Posted its results for the second quarter. Its revenue down on estimates. Manus the companys cfo joins us on the phone in a bloomberg exclusive. A warm welcome to the show, sir. These numbers, what i want to mess . S coming is it a you have been bolstered by the margins in your refining business. What i want to know, are you sticking to your time . Is that really achievable . Jyriki what we have been seeing is the global product is very strong. For this year, it is more than doubled. We have been benefiting. Strong, so the finals are doing well. We are very confident about the content work. Operating profit will appear better than last year. Very confident about that. Manus i am confident to hear youre confident. As we look at the european refining industry, you got about 2. 2 Million Pounds a day that youre responsible for. Libya andtially from iran coming on board, are you going to have to cut back in terms of capacity . Is there a necessity to make cuts . Ki we are seeing that kind of scenario. We are not seeing that kind of scenario. The point here is the refineries are running today in europe compared to 75 last year. For 2006 in, it is very strong, [indiscernible] crude oil is cheap. Higher than it has been for many many years. Looks very possible for this year and 2016. Manus that is going to be good news for some of the oil copies, including yourself. Ou mentioned the benchmark i want to get a sense of russia and the sanctions. Are you experiencing a blot from russian oil . Position asee that we are going for it . we are following all the sanction issues. Buying from russia. We have been doing that for the last 50 years. Issues. Ot seeing any were following very closely we are following very closely. In the have a business st. Petersburg area. We are not seeing any issues. We have to be very careful going forward. Manus that is the billion dollar question. Thank you for joining us this morning. Cfo at mystic oil. Francine we had breaking news from standard chartered, in terms of dividend. It was cut by 50 . Will get to that in just a second. More on oil prices. Ubs senior economic adviser, george made this, we joins us. ,hen you look at the commodity it is linked to the fed, especially for some of the qualities. How worried are you about the volatility that we have seen on the market . It, we havet of seen a lot of decline in intodity prices agricultural commodities. We have had precipitous decline in energy. Agriculture has come down to. Much less so. I think it is better protected over the mediumterm. Take aht consider fiveyear view, if you think about india and china and energy consumption. Per capita it is still very low by comparison with western companies western countries. Consumption is going to be ok. What is happening now is china is going through a difficult transition. The commodity intensity of its growth has dissipated, gone away. I think as much as we were bullish about commodities, as chinas share at will went fromn of copper negligible amounts to 6 . 260 . Going to spell over it . , it is have it has had a huge impact. In the United States, the numbers are good. We are good to move on in a moment, on that we have seen year,nors, in the past are we at that supply constraint that is are we at the end of that supply constraint . Are we at the end of that supply constraint . George i dont think so. When we have a logbook. In which prices have been rising , it encourages producers to produce more. The producers at this level. George, lets leave it there. George magnus, our Senior Adviser from ubs. Theline, printing give us headline on the dividend. Caroline they are willing to raise capital is needed. Standard chartered shares will they have to raise to boost. Heir overall credit qualities they had a credit ratio of 10. 7 . Target 11 percent to 12 . There been vigilant in addressing past issues. The is impacting overall return on equity. Im to show you the share price. This is what suddenly happen. They were up 2 . Dropped. Price when does the news chief executive it was up a quarter of a percent. The chart does paint the overall picture for you. I want to bring you into my screen as to what happened. Weve got those numbers. Sink some 2 . Id there clear moves of concern about the option we might see more shares sold. That does weigh on the share price at standard chartered. We see capital raising. They did not take that decision lightly. They cut the dividend by 50 . You see revenues coming in below expectation. Profitability falling by about a quarter. Manus caroline, thank you very much. Lets bring in George Magnus again. On the subject of the banks, a lot of management change. Weve done a lot of preparation in the european bank. Rates are set to rise in the u k and u. S. The best ever . Y george if you think about, first of l, we ve not done a full repair job on the financial crisis. We know that. We will know that over the mediumterm of the next two years. Banks will still be required to boost their capital ratios. There is a lot of discussion going on with other bigotry agencies other regulatory agencies. The banks become stronger than a hybrid version. Thats not going to stop. To put pressure on banks is going to continue. That said, in the United States, the economy is looking better. In europe, there are exceptions, and greece, the money supply is still contracting in a horrible way. Four euro, m3 is up 5 . Something is going right in terms of what the banks see out there and how they perceive their lending opportunity. There is good news. Its not a full repair job. Francine at the same time, if the fed raises Interest Rates, as line as it doesnt go hardly wrong. George were back to the fed looking like this. Feds approach will be quite gingerly. I think we might be surprised this Time Next Year about im not producing massive rate hikes i think it will be a bit of a shock to the system. ,anus are the bond markets they are fully price than for a rate hike, arent they . Rge they are priced in they are not fully priced for things that Market Participants do not know about. Francine george, thank you. Some big stories with alibaba. Naming a former Goldman Sachs partner as president here it investors as president. Theres a host of medium earnings. The Top Performing stock on the dow jones. Rounding up with all the news, is caroline hyde. Caroline Michael Evans being named the new president of alibaba. The twitter posting that the alibabaf wall street getting in on the act. Michael evans for 20 years was a partner over at Goldman Sachs. He was vice chairman. He was head of Global Growth market. He understands how china attracts with the world. And how the world interacts with china. That is why he is now helming at alibaba. Fascinating statement coming out of from coming up from alibaba yesterday. We will report to the chief executive. He is already an independent director. How willunced the drive brands in europe, asia and the americas . How will he drive brands in europe, asia and the americas . Is the 200 day moving average. For the First Time Since september 2013, we saw the share price is below that. By george, they sold. Was. Cale of the selloff we are now seeing apple at the lowest in six months. We are in correction territory. Shares traded hands yesterday. Earnings disappointments have been weighing on investors. People are losing money the stock market best people are losing money on the stock market. People are losing money on the stock market. Back to you. Francine up next, the first rate rise looming in the u. S. Were talking u. S. Rates next. Keep it right here on the pulse. Francine welcome back to the pulse live from bloombergs european had runners in london. Manus we had the july pmi for the u. K. Caroline has the numbers. It looks like weve missed on the surface. Break them down for us. Juliette 57. 4, that is more than one worse of the previous month. We had expected at least 58. Anything above 50 shows expansion in u. K. Services. The number we get is 57. 4. It is well below the previous month of june when we had 58. 5. By 1. 1. Ff if you are looking at the composite pmi, we are also missing forecast. A miss of acrosstheboard. Lets break it down. Againstd up 0. 2 still the dollar at the moment. Not much of a Market Reaction when it comes to the pound versus the dollar. As we say, this is still expansion but it does seem to be below where we forecast overall. We will look as to where exactly within the Services Sector it missed. This is the part that fuels the u. K. Economy, the biggest area of the u. K. Economy. Francine caroline, thank you. Caroline with the latest. The bank of england is changing the way it releases data. Starting tomorrow, it will simultaneously published policy decisions, minutes, and forecasts for the u. K. Economy. Jonathan ferro explains what to expect on super thursday. Jonathan the bank of england is about to unleash a flood of data. Month, thew, every decision and minutes fell two weeks apart. Every three months, the inflation be part was somewhere in between. That is all about to change. Starting on august 6, it will simultaneously published its policy decision, minutes, and any new forecasts covering any facet of the u. K. Economy. This means investors will have all of the information in hand within seconds to wade through all that once. It is an unprecedented move for a central bank. Heres how it will go down. Officials will gather on august 5 to be briefed by staff and then vote. The decision will be announced the following day at noon, giving 45 minutes to digest all the details before governor mark carney begins his press conference. Traders, investors, economists of the city of london, brace yourselves. Super thursday, we have been looking at that fall in oil and the prices. It has been affecting inflation. Francine thats an indicator on when the boe will raise Interest Rates. A chief economist at bloomberg televisions here. Also, George Magness rejoins us. Thank you for sticking around. What are we expecting in terms of changing forecasts . We are expecting a downward revision in the shortterm but probably not much in the mediumterm. That reflects the fact that oil prices are lower than they were. The Exchange Rate is a little bit stronger. Temporary dropouts of the inflation measure in a year or two. That shouldnt affect the banking decision. It might give some investors cold feet over the next few months. Manus this is still super thursday, george. Is this a constructive move by the bank of england, giving us a onestop shop . We get to absorb a great deal. Is it a good move . It simplifies things. Youve got a much bigger package of information that you can digest. It will stop some of the interim speculation about did they, didnt they and so forth. I know a lot of people take this seriously. For me, it is noise. You get the information one way or the other. People make their judgments the way they do. I think it actually helps the transparency, which is a good thing. It is part of mark carneys new broom, cleaning up and refreshing the way in which the bank of england functions, makes decisions. It is a good thing. Francine speaking of dissent, are we expecting anyone to dissent tomorrow . We are. Probably an 81 split. They signaled that in a speech earlier. We dont think mccafferty will. He pays attention to the cbi surveys. We dont think david mars will either. Manus i was reading a bnp paribas note and they were saying they are going 63. They actually see that the ster