Disappoints with guidance despite a stellar Earnings Report china meanwhile puts a dent in audis forecast sending shares in parent vw lower. Theres a new word around town, the fed saying only some improvement in the labor market is now required for rates to go up. Good morning to everyone. We have so much to talk about today. Lets kick things off with earnings. European markets are rallying across the board amid a raft of corporate earnings. Lets kick things off with the bank shares of Deutsche Bank generalnys largest lender plagued by litigation costs. Investors are optimistic that john krein can set the bank on a different path. Rbs soars to the top of the ftse after the Company Posted surprise profit the statebacked lender speeding up its restructuring plans and booking a 1. 1 billion pound charge in the process. A sharp rise in Second Quarter profit. Weaker performance in the homes market is offset by better results in the uk and United States for santander. Deutsche bank everyone has been focusing on that one because we have a new ceo. Obviously not the only bank with a new ceo. Barclays will have a new one, hopefully soon. Credit suisse has one. Deutsche bank, so much has been lost because of the capital kerns and weak numbers. Thats a shock, wasnt it . Its a month since he left effectively. Numbers pretty much in line. Theyre pretty much in line with expectations. Everyone wants to look at the strategy Going Forward. Yes. We wont hear that today. Because today john krein is in new york meeting with the Supervisory Board and according to reuters hes going to outline parts of that new strategy which should be a continuation of what anshu jain has laid out. I think it will be a less is more approach. We want to be everything for everyone and that simply doesnt work anymore, hes said. Hes been incredibly blunt. He said challenges are evident in the heavy burden of litigation charges, a Balance Sheet that must be more efficient and poor overall returns to shareholders. 1. 2 billion euros litigation costs in the quarter. If this continues at the same pace, were not going to reach our 2020 targets. I think theyre always cautious and have to couch their comments and outlook. As i said, john krein is incredibly clear with his language. Hes very direct very candid. I think this is something that investors will appreciate. If its a trust exercise then hes at this stage, at least, hes laying down the gauntlet. The ground work. But hes got to deliver. I wand to talk about santander. Its a spanish bank a lot of corporations elsewhere in the world. The uk and u. S. Were supporting their earnings. Huge profit driving for them is brazil. Depreciation of the currency in latin america a problem. The net interest up 12 from a year ago. Theyre under pressure and lending to small businesses. So admittedly it is a global bank but, again, spain for all the recovery were talking about, still a problem as far as lending is concerned. I mean restructuring is on track. Thats very reassuring. Again, another story of restructuring. Good progress being made on that. But, again, we cant get away from litigation. Putting aside another 459 Million Pounds to cover litigation compared with net profit, 293 million standing in the quarter. Okay. Shall we talk about other earnings . Lets do it. Shell powers higher despite a steep drop in profit. They announced 605 job cuts. Shell, however, keeping its shareholders happy by sticking with dividend plans for this year and next. With shell, the big news a couple months ago was the acquisition of bg group, 70 billion deal the biggest deal in the oil and energy space in about a decade. Back then a lot of people said this is really a huge bet on the oil industry. You could argue it really wasnt because without theyre going to gain exposeure to brazil and the l g market. Its tough to say what shell is expecting in terms of the oil outlook. Question is as you quite rightly say, youre betting on an oil price recovery. This now is more in line than what weve seen a bit of retrenchment. Capital spending cut by 20 , 4 billion operating cost cuts too and job cuts. The recognition here Lower Oil Prices are here to stay. At the same time, did you see the outlook . The company sees the potential for the oil price to return to 90 a barrel. Im not quite sure what theyre expecting. Theyre couching themselves. Who knows what the oil price will do. Shell doesnt have the crystal ball, do they . I think you have to when youve made a 70 billion acquisition. Also maintaining the dividend. Thats the focus right now. Bp did that too. Thats whats reassuring a lot of investors at this point. Are they going to have to leverage themselves up to pay that dividend in the future . That might be a concern Going Forward but for now, thats good news. Now, edf confirmed plans to buy majority stake in arevas reactor business. Edf and areva both in the green. All right. We are getting some news from the ecb. Let me bring those up. We have got the ecb saying just bear with me for a moment the ecb saying inflation is expected to remain lower in the months ahead and rise towards the end of the year. Inflation seen picking up in 2016 and 2017 on the back of the economic recovery in the eurozone. The decline in oil prices exerting downward appreciate your on underlying inflation. Theyve said over and over again that they expect the job and oil prices to be a temporary drag on inflation. They say the policy measures that are providing support for improvement and barring conditions for firms and their working loan dynamics have improved further but remain weak. In particular, for loans to nonfinancial firms. Julia, how are the markets looking . Were taking a look at individual stocks here as far as earnings performance. Ill take you through some of these. Siemens at the top of the dax after it confirmed its fouryear outlook as Third Quarter profits beat forecasts. Health care and Industrial Software businesses have also very much a focus for this business offsetting the slowdown in the oil and gas services. Now, moving in the other direction is infineon. The semiconductormaker downgrading its fouryear targets. Interesting, actually. Investors not real concerned about that right now. Volkswagen, though under pressure, down 1. 3 its audi subsidiary lowering sales outlooks on weak demand from china. Chinese sales decline for the first time in over two years in may. Lets move on to renault, down 7. 7 . Ouch. Reporting, in fact, a strong set of first half earnings. The french carmaker trailing at the bottom of the cac 40 after striking a more pessimistic tone on the outlook for the european car market. This is the real focus now. Lets get out to stephan. Pricing pressures still an issue. For the first harlf of the year directed by stronger recovery in the european car sector. Net profits surged by 86 . It was broadly in line with expectations, revenue is up by 12 , part of it being due to Favorable Exchange rates, however, these factors were partly upset by some negative effects, a pricing effect indeed to lower the average price in europe offering significant discount in order to sell older models such as the compact and a mini van. They confirmed their fullyear targets. The first half put the group in a favorable position to reach Revenue Growth and operating margin targets for this year. They believe the European Market will grow by 5 this year while the global car demand will expand by 1 due to a slow downdown in emerging countries. He believes they will remain volatile for the second half of the year and thats the main reason why the stock is trading lower. That is a significant difference between renault and its main competitors yesterday, its rival say that the European Market will expand about 6 this year and also believe that china will grow by 3 . So renault is more bearish than the competition and that explains why the stock is trading lower on the cac currently. Julia, back to you. Thank you so much stephan. Lets take a look at the European Markets this morning. Been open for over an hour or so. A 50 50 split in terms of the red and greens. The stoxx europe 600, higher by just over 0. 1 . A a lot of earnings to digest this morning. Investors taking time to understand that. Lets take a look at the individual performers. Weve had a lot from the bank the likes of Deutsche Bank santander, all managing to lift off today. Ftse higher by 0. 2 . Shell lifting that index, the xetra dax, the cac current, all similar, higher by 0. 1 . What we did see in the u. S. Yesterday was gains, very little reaction to the yesterday statement, upgrade on the language as far as the labor mark set concern, now the key focus is watching or at least trying to understand what some improvement in the labor market looks like. Well be talking about this later on in the show. A real focus on payrolls. Citi coming out and saying 210,000 to 225,000 job gains in the payrolls will be a green light for a fed liftoff in september. Interesting to hear the ecb saying oil prices a drag on inflation, supporting growth. No mention of that stabilization of oil prices in the fed statement. No one is focused on that. Were fixed on the september reading. What happened yesterday, of course, a gain for all majors in the u. S. We saw a further rally for wti and brent. Its following on. Unlike what we saw earlier this week managing to uphold gains. Lets take a look at the Foreign Exchange rates. Dollar strength was the message from last night. It continues today. We have the euro dollar down below that 1. 10 figure. 109. 70 the level there. The dollar yen 124. 18. Opens up to 125. 85 on the topside, similar gains for relatively unchanged for sterling and aussie. Thats it for the European Market session. What about asia . We continue to focus on whats going on in china. We managed to hold on to some gains. Sri. Not quite. It was that way over the course of the morning session. I said there would still be volatility in this market in mainland china, equities lower behole. We got a late session bout of volatility, china stocks down by 2. 2 at the closure. It seemed to be on the state media reporting that some of the big chinese banks are giving a once over to their expose yaur for margin debt and the broader stock market as well. That spooked investors. So expect more volatility in the near term. I dont think thats going away. Its not going to go away if we have the leverage we still have. In terms of the spillover effect, we did see the impact on the kospi, hang seng was weaker as well. This was interesting. The tiex was up by 1 . Elsewhere, you have the fed effect backstopping a lot of stock markets as well. They seem to be relatively upbeat over the trajectory of the economy is taking. The nikkei 225 snapping four sessions of losses, up by more than 1 . Youre absolutely right about next week. I think payrolls will be absolutely critical. A lot of people that weve been talking to in Capital Connection have been saying if we do see a blowaway number next week possibly around 300k plus on the paylepayrolls report that could seal the deal for a september rate hike. We have so much coming up on the show, louvreufthansa profits, speaking to the ceo, thats coming up on the show. How authorities are addressing the ongoing migrant crisis. And uber drives people to anger on the streets of mexico. The whole story later in the show. Well be back in two. Need to hire fast . Go to ziprecruiter. Com and post your job to over one hundred of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. And now you can use zip recruiter for free. Go to ziprecruiter. Com. Welcome back. Samsung has warned demand for its smartphones is likely to be weaker in the second half of the year. This as it attempts to recover from supply issues related to its s6 curve edge phone. Shares from the south korean join the fell after it confirmed a 4 fall in operating profit in the Second Quarter. It did, however, double its dividend. The Japanese Firm has reported a 270 rise in net profit due to strong sales of Playstation Video games and smartphones camera sensors. Shares in sony are up 100 in the last 12 months. A few earnings in the telecom space. Nokia beat expectations. The finnish join the which is in the process of buying alcatellucent is well positioned to deliver on fullyear targets. Alcatellucent says its ceo will step down ahead of the deal with nokia. Lets have a quick look at telefonica. The company has raised its revenue forecast on the back of recent deals in brazil and spain. The Telecom Group posting a 7 rise in core profit. Take a lock at shares in bt. Theyre off 2. 57 . Shares are trading lower. Katherine, why . Carolyn, i think what has surprised the market here is theres a slightly softer than expected revenues. Its surprising theyre off quite so much. The company did give a bit of a positive surprise on profits. As you said reaffirmed its overall forecast. Along with that slight softness in the numbers and theres potentially maybe some concerns over the longer term over these shares which have had a great run. Lets not forget theyre up athe levels not seen since 2001. Theres slight concerns bt may be forced to sell off some of its divisions or even that it might have to spin off open rates. Those are both a matter for regulators. Flat revenue on this quarter, though, they are facing pressures. Just how important is this a part of the business to bt at this stage . Its extremely, extremely important. I think a lot of people would be extremely concerned at bt. There is increasing pressure from the other mobile operators who are saying its difficult for them as a result of bt having control of this kind of infrastructure sort of a legacy issue from its days of course, as a national operator. It seems to be something that other companies are protesting against. Of course its with the regulators to decide. Great to have you on. Lets talk about more earnings. Capgemini has raised fullyear guidance after reporting a 21 rise in profits. The beat was thanks to widening geographic makes and concentration on highvalue add segment of the market. Were joined by the cfo of that business ayman ezza. Were concerned about the growth and china markets. How is that reflected in what you saw in the Second Quarter in your businesses . Thats pretty much what we saw, a strong growth in our north american operation because we achieved an organic growth in the first half. Were quite bullish about what weve been achieving in that region. We have good underlying growth in the uk, if you exclude one impact we have from a passthrough. Ericia ia asiapacific is still booming. Were not that good in china. Germany, scandinavian countries and Southern Europe with italy and spain are recovering. Where we did see sluggishness is in france for the moment. In the u. S. Youve recently made an acquisition. You bought igate. Im wonder to what extent organic growth will continue to feature as part of your growth plan Going Forward . Weve done a lot of acquisition in our history in the last 50 years or so. Its always a way to be able to acquire additional capability and potentially additional clients. We do not intend in the short term to making a large acquisition after igate. As it gets more industrialized well see more on the organic growth on the capgemini side in the future. How concern are you about the economic backdrop in brazil and the impact thats beginning to have on some of your numbers . I know youre quite optimistic about asiapacific too. A lot of concern about the situation in china at the moment in particular and how that will impact the rest of the year. What are your thoughts there . Sure. So brazil is definitely a concern, a concern for everybody. A concern for us. We have been performing quite well in brazil in the last two or three years in spite of the weak market. We clearly are taking market share there, profitability is not up where wed like it to be for the moment. Growth has been there. We have been cautious and we overperform what we will do. We remain cautious about the second half. Definitely we see complexity in the brazilian market and slowdown expected in the second half. We are not bullish on brazil from that perspective. On asiapacific our Indian Business is doing well. We see good growth potentially still in australia. Our Southeast Asia our Japanese Business are growing. So the big concern is in china. We have limited exposure to china so far. At least for the second half we are not too concerned about the chinese impact on the rest of asia but for next year it could definitely be a concern. Aiman ezzat, cfo at capgemini. Thank you. The Worlds Largest brewer which makes budweiser struggling to maintain momentum after the world cup last year void sales in brazil and europe. Diageo the largest maker of spirits also missing earnings expectations with sales flat for the year. The company cited currency fluctuations and pricing pressures on vodka as catalysts for the miss. Speaking earlier on cnbc diageos ceo outlined his views for next year. Fiscal 16 will be stronger than fiscal 15. As we get into fiscal 17, this business has the runway to deliver midsingle digit growth good margin expansion, good cash conversion. Lets get back to our other top story, the fed. They appear to be on track for a september rate hike. The statement following this weeks fomc meeting didnt provide a timetable but the central bank is signaling it wants to see further economic gains and a rise in inflation before it pulls the trigger. The fed knows the job market housing and Consumer Spend having all improved and the statement made only slight changes from the previous one in june suggesting a healthier u. S. Economy. The word were now looking for is some. Previously it was considerable time, patient, now its some. What the definition of some is basically. Is it a little bit, more than a