Outperforms european rivals with earnings that beat estimates. We speak to the ceo, bob dudley, in just a moment. Back to the table, chinese trade negotiators hope the u. S. Hosts the u. S. Trade team as huawei reports earnings. Mexicos president says he wants lower rates to boost. The economy is not growing as we would want it to grow. On the other hand, there are no risks of recession. Matt less than a halfhour away from trading across europe and in the u. K. Im looking at a fiveyear chart of the pound. We are getting back down to the 2017, asit in 2016 and the likelihood of a hard brexit seemingly increases. That is not affecting equity Index Futures in a negative way. Take a look at equity Index Futures across europe after the gains that we saw in asia. We still see gains in ftse futures, as well as cac futures. However, dax futures are still down this morning, although just marginally. Euro stocks, ftse futures indicating a flat open. What are you seeing on the gmm screen . Anna lets talk to you about the markets. It reflects a mixed picture in asia overall. The asian equity session up by 0. 4 . In the fx markets, interesting to look at what is moving around. Top to movers, the colombian peso and the british pound. Anybody who is looking for a venue in which compromises could be made, from some in seemingly entrenched positions, will not be excited to see Boris Johnson made a prconditione to eu leaders. That seems to be weighing on the pound right now. The big moves on the pound dominating things. The earnings season continues aplenty. We will pick up on earnings stories when we get to the start of equity trading in around 17 minutes. Lets get to the earnings story. In fact, with a fantastic conversation, bp has bucked the trend set by other european Oil Companies. The cash flow from operations reached 8. 2 billion in the second quarter, the highest since late 2017. Joining us now on set in london, bob dudley, the ceo of bp. Good to see what to get on the program. Better than estimated numbers at the net profit level. Better than the highest estimates. What is going right at bp at the moment . Bob had a good quarter, strong operating results. 93 90 5 of operating operating 95 of facilities. It was a big milestone for us to get through and the business is working well across the board. Anna he reiterated the view you have for the full year. What is the risk to that number . Is there risk to the upside were downside on that number . Will would make you change that . Bob we are right in range for that. We are running a little bit light on that, but i think by the end of the year, we will be near the middle of that range that we set. We set that in 2017 all the way out through 2021 and we are on track for that. Anna let me talk to but the price of oil. Brent is at 64 per barrel. Iea is predicting a big oversupply next year. Are you concerned with Global Growth issues . Are you concerned about oversupply in the market . Bob i think there is a lot of uncertainty in the market. We are planning bp around the 55 per barrel. We are above the planning range. You have the downside issues in venezuela, iran. Lots of uncertainty. Crude coming on in supply. Chinese demand. Right now, first half of the year, a little bit of softness and demand, but it is coming back up. Hard to predict, but we will be fine. Anna what clues do you have in terms of the Global Growth story . You sell your products globally, very into an the Global Growth story right now. Where do your nerves focus . Bob Energy Demand generally tracks gdp growth. We are seeing growth of still over one Million Barrels per day, 1. 1 Million Barrels per day for this year. Right now, we dont see softness and products. If you market welcome, you can overcome simple demand growth. Right now, we feel pretty comfortable going into 2020. Anna on the supply side, there were concerns around the straits of hormuz recently. How safe do you feel it is sending ships full of crude through that waterway . Bob we need to be extremely careful. We have had ships move in and out. We have had some concerning incidents. Right now, we are not sending british ships and crews into the persian gulf. But it is quite a chokepoint. 20 of the worlds oil passes through it. One out of every three tankers passes through that small area. That is why it is getting a lot of attention. Anna there are talks of putting convoys together and allowing shipping to be protected that way. What kind of cost impact is this geopolitical tension having on your business . Or is it too early . Bob it is too early to say. The royal navy is now escorting british ships in and out of the straits. Having good open maritime trade is important, whether it is oil or any kind of trade. It is concerning, but the straits are open now and the oil is moving in and out of it. Not the first time in history we have had tension there. Anna you can protect your business from that . Bob yes, there are ways to do that. Anna let me ask about another region over in the u. S. And the permian slowdown. People talking about the rate of growth in the permian coming down. Bob the number of rigs is coming down, but production is still going up. It says something about the dynamics of the fields and some of the strategies of the smaller independents. However, it is also bottlenecked. Infrastructure will be built, some of it will get through through the end of the year. Production should rise, as well as natural Gas Production. Is a good news story for the u. S. It puts pressure on world supplies and the Opec Plus Group has adjusted for it. All of those things with the geopolitical tensions, it is really, really an uncertain period. We just have to plan for a world of uncertainty at a lower oil price. Anna what impact does this have on your unit in the region . Big bpx, we made the transaction with bhp focusing on three basins we put the permian third in the queue. Two actually get it, bringing up the time the infrastructure is coming on, it is the most economic thing. Anna in terms of the bhp asset you took on, may be still some of our colleagues have been writing about how that asset vents just over 15 of the gas they produce. It cannot be used in any other way at this point. Are you looking to bring that percentage down . Bob absolutely. Absolutely. Reducing emissions as we go through that portfolio. Lots ofness itself, synergies coming through much faster. We will get to 350 million of synergies as we move through 2021. Over 90ready well million right now. That is what we are going to do. Routine flaring. Absolutely. Put all of our technology on methane detection, stopping leaks. Anna when you bring down the flaring rate, does that slow your growth . Bob no. And being able to use it as a fuel to run the election around your facilities is just good goingss having flaring and use it as a fuel to run electricity around your facilities is just good business. Anna stories seem to be coming around a little more frequently than they were tell me about your conversations with investors and how they are evolving. Bob you have a full spread of investors. Very good returns on the business side or Energy Companies when you have a 6 dividend rate, which is hard to get anywhere. Very much underpinned. People want to see us move to a sustainable future. We absolutely agree with that. , we are Building Business models to create lower carbon businesses, but it is a transition. I believe natural gas is so vital to bring down emissions in the world, combined that with Renewable Energy and that will be a great part of the future. But the world is going to need all forms of energy. It cannot just be a race to renewables. It has to be a race to reduce emissions and everything we do. Anna you talk about initiatives you are doing, solar, other renewable initiatives, but at the same time your oil and Gas Production are up 4 year on year. Is that a mixed message to investors . Bob no. To enter into these new businesses in transition, we need to generate the cash. This will be a long transition. You said initiatives these are significant investments. Like source bp, now in 10 countries around the world. Developing solar projects. Last week, we merged our businesses with a Brazilian Company to create a new company. It is the secondlargest Bioenergy Company in brazil. This is your renewable businesses. This is energy made from photosynthesis, really. These are big initiatives. Today, we have 5000 people who get up every day working in renewables. Then this new Brazilian Company has 10,000 alone. This is serious. These are big investments. Anna what balance do you see between investors who say we are not going near this business right now and others who want to stay and engage an be with you on thatd transition journey you talked about . I imagine you have conversations with both types. Bob right. There is a whole spectrum of investors. Some would like us to go into renewables tomorrow, 100 . Probably is not going to create the returns our other investors would like. So, we just show them longerterm, this is a transition we want to get on with. But people know that there are really high returns in the other parts of the business, the conventional parts. People dont want us to get out of that and remain investors. Anna let me ask you finally about brexit. We sit here with the pound under pressure a second day in a row. Down 0. 6 . What kind of impact would a no deal brexit have on your business . Granted, it is a global footprint for bp very much, but to me about the brexit experience and exposure. Bob we are seeing it is a grand negotiation right now. The front minister has been in place less than a week and he is negotiating hard. We will have to give him a chance to see what he can do. For bp, less of an impact because revenues are in dollars and we pay dividends in dollars. Is a company in london, we are probably less impacted by brexit outcomes. Sendsthe weak pound investors into ftse 100 stocks to get exposure to businesses such as yours. Bob we do see that. We do see that there is a drift into us given that we are in pounds, but the devens dividends are in dollars. Anna thanks so much. Bob dudley, the ceo of bp. , rally or bubble . The s p 500 is rising to highs. Can the fed sustain the socalled everything rally . This is bloomberg. Matt welcome back to Bloomberg Markets this is the european open. Right now, we are looking at pictures out of tokyo. Live press conference from the head of the boj. Saying that the boj will take action to prevent risks from materializing. He needed to clarify, he thought, the bojs readiness to act. We did see a little bit of yen strength against the dollar. We continue to see it strengthening against the dollar. Right now, you can only buy 108. 6 yen for your u. S. Dollar. Kuroda also saying that oversees risks are high. Similar to what we heard from mario draghi and olaf schulz. Also, changing the variables he has to deal with and that he needs to be more mindful of risks to price momentum. With that, lets get to markets. Mark, what do you think of the s sort of failure to move i dont know if failure is the right word, but they did not move today, just like the ecb did not move last week and the fed is expected to move tomorrow what is that going to do to the fx trade . I think what the boj does does not really matter at all. They did not move today and markets did not move to react. The boj is largely in nonevent. They have failed to hit their inflation target for so long, they have pump so much liquidity into the market the 2 inflation target was an when economicst was based around populations growing around the world. It is not for a time when japans demographics has changed. They are not going to get the new birth 2 inflation target. No one cares of boj is directly on the margin. Yen has been strengthening recently because there is a little bit more of a deteriorating outlook for the global economy. Matt are you going to be saying the same thing in the next months and years about the ecb and europe . Mark it is a very good question. Im not sure. I think there is a worry we get there. I will say the same thing that i think generally the whole framework of a 2 arbitrary inflation target needs to be completely revised. Not only because demographics are in changing and the structural disinflationary influence of technology, not only because of the amazon effect, overall we have structural disinflationary pressures and qe has completely changed the game. The mindset of Central Banks needs to be overhauled. That is what i will say about the ecb and it applies to most of the major Central Banks around the world. However, the eurozone still has a growing population at the moment. There are less of those constraints there. The boj and ecb are pretty much identical Balance Sheet sizes. 5. 3 trillion. Versus 3. 8 trillion for the fed. The euro zone an economy twice as large as japan. Japan is the one who has way too much liquidity in the system. Europe is theoretically not pushed to the end of the strain yet. In years ahead, it might go that way, but not quite yet. Anna let me ask you about what is going on in the pound. What is the lens you are looking at this through right now . Seems that we are getting further away from any venue, any Meeting Point, physical Meeting Point of european leaders. Without Something Like that on the radar, the pound just keeps dropping. Mark yes, i hate to kind of repeat my views, but it is what i have been saying the past few weeks or months. Even a sterling continues to weaken, it feels like there should be a release value, the fundamentals keep getting worse and worse. Thell say that more of market is starting to realize that the bank of england meeting must be a negative. On one part, you have this currency weakness stimulating upside inflation pressures, risk to Inflation Expectations. But how can they be hawkish when the recent set of pmis said the country is heading toward recession likely . That is never mind the brexit risk. The bank of england must be dovish instead. That dovish feeds more currency weakness, which boosts Inflation Expectations, which puts them out of whack with what they need. We have seen this dynamic before. We do see it in emerging markets all the time. At some point in emerging markets, the Central Bank Must hike aggressively even though there is an economic slowdown to stop a currency crisis. Given that the u. K. Is a large and growing current account deficit, it may be forced to that measure itself. At some point in the next couple of months, we may realize we should trade the pound like an emerging market currency. Anna fighting talk, mark. Thanks very much. Mark cudmore joining us with the latest on the market. You can join in the debate on todays market moves. Tv is the function to use. ,f you want to get involved give us your thoughts if the fed can sustain the everything rally. That is being thrown around on the mliv blog this morning. We will take a look at your stocks to watch. This is bloomberg. Matt just over five minutes from the open. Lets get your stocks to watch from around the newsroom. Annmarie is focusing on bayer. Joe is covering Reckitt Benckiser. Annmarie. T with you, what is with the ambitious forecast . Annmarie that is what everyone is going to be focused on. Sales missed estimates. The 2019 outlook looking increasingly ambitious. A bit worrisome coming in there. We are seeing calls down 2 3 . Anna what is the story with Reckitt Benckiser . They cut their sales guidance. As you mentioned earlier, it is mainly the baby milk formula in china. There is also a white label ar also a lot ofe white label alternatives coming on the market. The shares were boosted by the weaker pound. Made 2am holdings only million swiss francs in the last quarter. Thats right. Shares still called higher by 1. 25 . They have hired a new ceo, hoping to put the scandal behind them. Anna thanks very much. The European Market open is up next. Anna a minutes until the start of cash trading this tuesday morning. Lets look at markets and see how we are positioned for the start of tuesdays equity session in europe. Msci asiapacific, modest gains. Treading water, waiting for the news around trade, Steven Mnuchin and Robert Lighthizer on the ground in china where they are set to have meetings and be entertained. The pound is down. 6 after the falls of yesterday. Boris johnson, doubling down on the hard brexit. Focus with a Little Movement in dollaryen this morning. Much in termsoing of big change. They are hoping for some change in other Central Banks and waiting for the fed to do a little work in terms of cutting Interest Rates. This is the futures picture for europe, expected higher on ftse futures and cac futures. Dax could be a laggard as suggested by futures. Here we see the currency market moves i mentioned, euro fairly flat and dollars fairly flat but the yen is seeing movement to the upside. Strengthening and the dollar and a big move in the pound, down. 6 . The ftse 100, going higher once again. The negative correlation between the pound and the ftse 100 seems to be to the fore. The ftse 100, making outsized gains of. 5 this morning. Cac up. 2 this morning. Some moves to the upside as we wait for news around trade and factoring the earnings stories. From a sector perspective, weve got financials looking broadly positive. Other side,to the looking negative with a little positive. Maybe a little risk on in appetite for financials versus health care right now. Energy stocks, bright green this morning and perhaps a bp effect in their. Utilities, looking green, telecoms to the downside. Consumer discretionary goes higher and industrials mixed. Front and center for you when you look at individual movers this morning