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 little bit . I mentioned earlier citi saying if we get a two 10,000 two 20,000 readings on the payroll, thats the green light for a rate hike. The reference to the energy price stabilization. Oil is down 10 since the june meeting. Very interesting here. You read into this how you will. Thats dovish. Is it . The markets didnt really react too much. I think its how you read into it. As always something for the doves and the hawks. We like those. Yes. Okay. Still to come on the show were live from near the channel tunnel entrance, bringing you the latest on the migrant crisis. Well be back in two. Shares in Deutsche Bank rally amid expectations that ceo john krein will slash costs as the banks legal bills pile up. Rbs meanwhile surprising with a profit in the Second Quarter. Oil and gas stocks power European Markets higher shell leading the charge as it slashes jobs and spending to cope with the Lower Oil Price. But it maintains its dividend. Renault shares in reverse after the french carmaker disappoints with guidance despite a stellar Earnings Report. China, meanwhile, puts a den the in audis forecast sending shares in parent volkswagen lower. Theres a new word around town, the fed lowering the bar, saying some improvement in the labor mark set required for rates to go up. Lets take a quick look at the European Markets this morning, just tilting to the downside here for the dax and the italian ftse relatively unchanged, digesting the mountain of earnings weve had out. Positive results from the likes of Deutsche Bank rbs, santander. It seems relatively unchanged for the markets this morning. Lets take a check on the fs markets. The euro dollar losing 1 cent since that statement yesterday. Were back below the 1. 10 handle. The dollar yen is higher at 110. 13. The British Defense join the warned Earnings Guidance was dependent on aircraft orders and a review of its shipyard facility. They posted a 22 jump in profits this as the aerospace and Defense Group enjoyed a Strong Performance in its civil jet engine services. Were joined live by the cfa of safran. Youve raised outlook for operating income. Why are you more optimistic than many of your rivals . Because safran has very good fundamentals. Our base still increasing and our civil market is good. Do you find it tough to keep up with the demand from the big planemakers . Well, we have commitmented for our customers and the first challenge for safran is to meet the commitments. Thats what were going to do. Thats our challenge. Its one of the steepest rampup rampups ever in history, already meeting our commitments is a challenge. Then well see if we can go further. If you look at your results as well youre also significantly helped by a currency impact by the stronger dollar versus the euro. Where do you see that going . Do you expect to see a further Dollar Strength versus the euro as we push out through the rest of the year . We dont make any bets or assumptions on the euro dollar ef lulgs. Our hedging policy is table. Today for our operating income is isolated from volatility. Our hedge rate is 1. 25. The weaker euro that we experience today will benefit from that in 2018 and thats good news for safran results in the future. Look i mean you seem to be doing pretty well in the aero aerospace business. Im also curious how youre performing in the defense business. Its no secret were seeing a big slash in spending in the uk and the European Markets but a rampup in the west, china and many emerging markets. Are you well positioned in these markets . It represents 10 of safran. We have chosen a technical niche where we are strong and enjoy a leadership. Of course, we are dependent on government budgetary decisions. For example, it explains why our growth in defense in this first half has been less than last year. But were pretty confident that we can catch up in h2 even if we are still in a fiscal environment thats not helping but thanks to our technological leadership, well catch up. Thank you very much for your time. The cfo of safran. Lets get back to facebook. The companys Second Quarter profit fell 9 partly on a surge for r d and hiring new talent. Revenue rose and topped 4 billion for the first time. Mobile ads account for 75 of total revenue as users spend more time browsing facebook on their smartphones. The real story is the core mobile business on facebook. Thats whats driving the growth. Mobile has been a Phenomenal Growth driver for us. We have 844 Million People using facebook daily on mobile. Thats up 29 yearoveryear. We didnt have a mobile business three years ago. Thats now threequarters of our ads revenue. Thats growing 74 yearoveryear. We think we have the most mobile ad product out there. Here in the studio nick thomas Digital Media analyst. These numbers topped estimates across the board but they tend to always top estimates so they have to do even more to please investors. Yes indeed. Whats impress sieve two things particularly, are the user stats, really in terms of the growth in their user base. There have been some reports and analysis saying facebooks losing its appeal with certain demographics. Its growing into a whole new area regionally in emerging market, which for the longer term future will be interesting. The pivot has been really strong, the pivot towards mobile. The revenue being generated by mobile there are limitations to that arent there . When your activity shifts tracking individual users and shaping the ad revenues to shows individual users is difficult. Absolutely. Its a big challenge for the whole industry in terms of when we go on our mobile devices were more or less anonymous to advertisers as opposed to online users thats a real challenge for the whole industry. Facebook is at the front of that leading the way. The growth in the mobile ad revenues will be good news for the advertising industry. It shows theyre translating, managing to do that somehow. Absolutely. In most cases we see very high traffic. Most are legacy or tv or online budgets. Theyve been able to revenue traffic on to the revenue split, which is interesting. There have been so many comments about the rising cost the positive head count. That is positive because the company is growing, right, and the company has the money to spend. I believe at the end of june they sat on 14 billion in cash. But at the same time dont they run the risk of just throwing money at everything where they see any value because they can. And thats new business may not actually create value. Do they want to be everything to everyone . Is that the problem . It is a problem. Obviously theyve made interesting acquisitions like instagram and whassup. Theres a massive use of video and content on facebook. A lot of it isnt the premium content. Theyre starting to do deals with premium publishers. Those things will cost money. They need to invest to raise the value of their ad inventory. On a global scale, how big is facebook, really . They have to go into content to be a playmedia player in the content world. Theyre right up there, one of the global giants a handful of Global Companies we think about. Its a harsh comparison. If you compare them to apple, apple results were just under 50 billion revenue. Facebook is still a fraction of that. It doesnt have hardware sales, that ecosystem that apple is able to exploit. Its harsh but lagging. We think of those two more or less equals. In terms of revenue, theyre clearly not. What is the video aspect going to be . They didnt give us clarity on that. Does that concern you . Or at this early stage, does that make sense, give us time to work on it . 4 billion video views a day on facebook. Its hugely popular. Its huge. Theyre not yet getting the revenue, its not the premium content that advertisers really want. That will require investment. Is facebook still cool or not for teens . I think if you focus probably on teens in western europe north america, they may be looking elsewhere, doing other things or going to messenger, bits of facebook that advertisers cant reach. The whole new markets that facebook is going into where its still cool. Instagram. Theyve snapped that up. Absolutely. They know what theyre doing dont they . The cool stuff they just buy. Im excited about this stat. The company gets month are than one out of every five minutes spend on smartphones in the u. S. Thats really impressive isnt it . That is. Does it get onefifth of the revenue . Bingo. Very good point. Nick, well have to leave it here even though i know julia wants to continue that discussion. Im sure. She does. Nick thomas Digital Media analyst at ovum. French authorities are examining a piece of plane debris that washed up on reunion island in the frenchindian ocean to determine whether there is a link to the missing flight mh370. They believe the debris is part of a wing from a boeing 777, the type of aircraft that the missing Malaysian Airlines flight. Chinese Authorities Say they are soaking to quote, confirm the situation with the relevant countries involved. Mh370 disappeared with 239 people on board in march 2014 on a flight from kuala lumpur to beijing. Russia vetoed a draft resolution for a tribunal. Vladimir putin said a tribunal would be premature and counterproductive. Hundreds had of migrants descended upon the freight terminal as they attempted to reach britain. This is the third night in a row in which French Police were forced to deal with a largescale attempt to storm the tunnel. Reporter they call it operation stack, over 5,000 container trucks lining one of britains major motorways, all caught up in a massive security got bottleneck that british Authorities Say shows no sign of letting up. Its the latest fallout from the countrys migrant crisis as Asylum Seekers from libya, sudan, iraq and afghanistan try to find a better life. Over 4,000 migrants are currently camped out and more than 100 arrive every day, all of them hoping to hitch a ride to the uk just 21 miles away. All of that adding up to a security and logistics nightmare for british and french authorities thats now putting a major strain on british business. Pless say theyve spent around 1 Million Pounds on the chunnel crisis and the government says theyll be shelling out an additional 7 Million Pounds to tackle the problem. Weve invested money in the fencing around cale. Were putting fencing around the tunnel. Were doing everything we can. Reporter all that cash wont be enough to solve things short term. Authorities expect operation stack to continue through the weekend and government officials admit the longterm solution for Asylum Seekers will have to begin back at home. Cnbc news london. Hadley joins us near the entrance to the channel tunnel. It looks like gridlock behind you. Its absolutely been gridlock out here this morning. Were 17 miles from the opening of the euro tunnel. Were here at ashfords m20. They are backed up heading toward london as well. They have come through all of that massive security already that theyre enforcing or at least trying to enforce from the port of cale. We heard from Prime Minister David Cameron earlier, he was saying the uk will not become a safe haven for migrants. Thats whats happening over the last several months. Theyre coming from syria, afghanistan, all parts of africa ethiopia eritrea, Serious Problems people are escaping from but unfortunately these economies in europe certainly in france and the uk are not ready to take these guys on. I think this is a problem, isnt it . You were talking about the spending that the uk government is doing to try and tackle the symptoms here. Thats a broader issue we see across europe as you mentioned. Were not actually tackling the cause of it. Reporter exactly. But at the same point what are they really going to do and manage to achieve at least in the short term in places like syria and iraq. The social fabric is completely disintegrating. What we know if youre a transport Company Operating in the uk youre losing 750,000 pounds a day. For the uk economy as a whole, theyre losing 250 Million Pounds a day. Serious issues. All right. Hadley, thank you so much for that. And still to come on the show cheaper fuel sees lufthansas profits take off. The Company Warns of headwinds in sight. Stay tuned as we speak to the ceo of the company. Thats coming up on worldwide exchange. 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. Lufthansa posted better than expected Second Quarter earnings thanks to lower fuel costs. The German Airline confirmed its fullyear guidance but warned the second half could see greater pressure prices from a lowcost rival. Were joined by simone menne, ceo of deutsch lufthansa. How challenging will the second half of the year be . There doesnt seem to be indication that the pricing pressure is easing. Youre absolutely right. We see the pricing pressure is there and well continue to stay as the local carriers are entering into our home markets. On the other hand, we are well prepared because we have our new platform euro wings with a different cost base than the premium platform. We feel were well prepared but there will be pressure. Youre also doing a number of new tariffs, ticket price system for economic and business class, ie pay what you use. Youre looking at charging a fee for third parties or those that book through third parties. Thats around 70 of your ticket sales. Is that quite a risky strategy to be employing at this stage . Are you sure this is going to translate to greater profitability . We are pretty sure that our new fare structure is fitting into the market and the needs of our customers and to the individualized possibility to buy what you need helps our passengers and the transparency makes everybody see that we are very competitive in our pricing. So i dont think that this is a risky strategy. What about oil as well . Obviously we know thats a fundamental driver impact on your business. Theres been a 10 drop over the last quarter. Just how has that impacted your numbers and the outlook for oil as we push forward throughout the rest of the year . The oil is definitely helping us. In the first half year that was really a huge tailwind and also for the rest of the year we see that the oil prices will stay low and at least on the short term does help. We have reduced our prognosis for the oil to 6 billion from 6. 2 billion. Simone unfortunately ill have to talk about germanwings. Youve said in the past there has been an impact on advanced bookings. I just wonder if you see an even bigger impact for earnings for the full year and what your visibility is in terms of bookings . Yes, of course it was very very tragic case but regarding the figures we dont see any impact at the moment. Actually germanwings is performing very well with high volumes during summer and also the outlook looks good. So i dont see a Financial Impact. Germanwings will be break even this year. If you see no Financial Impact then and your earnings have bounced back so dramatically in the Second Quarter, why are you not willing to pay more in terms of compensation to the families of the lost ones . Well to be honest we dont want to negotiate or talk in the media about the compensation. I think there are clear rules, and we talked to the relatives in all respect directly and not in the media. Simone i appreciate your time. Simone menne, cfo of deutsch lufthansa. Interlink reports suggest overall m a activity in the uk is lagging behind europe at least for this year. Joining us is the Vice President of strategy and Product Marketing at intralinks. When were talking about early stage m a, are we talking Due Diligence stage . Absolutely. Thats what were talking about. Intralinks typically we will host deals an average of six months before it is publicly announce. Typically in the preparation stage, the Due Diligence stage of m a deals. You look on the year and its actually up 4 . We suggested it was suggesting lacking europe. Yes. Take it back for me over the last two, three, four years. Yes. Is it that the uk is lagging or europe is now catching up . I think we have seen the uk lagging behind emea. Weve siene seen a huge amount of m a activity in germany. Germany has been attractive for companies that are leading worldwide. It is definitely not growing quite as fast as europe. Spain, italy and france, were seeing a huge amount of increase in m a. Why is that . Why are the companies in the periphery growing much faster in terms of their m a than germany . Is their nature more disciplined about it . A lot of the markets, italy and spain had quite severe con tracks in their activity and afterglobal financial crisis. People talk about that. Were not seeing that at all in m amendments a. Those countries i mentioned, italy, france and spain, have three times as much growth. How much is currency a driver here . Weve seen so much crossborder m a. We are seeing European Countries with the weaker euro buying u. S. Companies. Maybe its not that big a motivation after all. People talk about currency having the impact on m a. The reason is if youre buying an asset in a foreign country, the earnings and revenues are in that foreign currency, you can usually barrow debt in the currency of the company youre requiring. You can hedge those exposeures as well. For companies doing global m a, currency doesnt play a big part. Weve talked about regions. What about sectors, consumers, the financials the real estate these are the ones to watch. Yes. The sectors were seeing increase in activity are the ones you mentioned, Consumer Products and services, real estate, technology as well. Media entertainment. The one were seeing a decrease not surprisingly is metals and mining within the miners oil and gas and power due to the fact that the Commodity Prices have come off so much in the last 18 months. When youre talking to some of the m a dealmakers what do they see as the potential risks that could throw off this type of activity over the next 6, 12 months. Theres a little bit of caution about valuations in the market. Valuations in the rus, pretty much a lot of other countries are at record highs. The fact weve seen such a big increase in 50 mega deals this year. If you think of the structure of m a, were seeing a 10 increase in volume of transactions. To look at the health of the market, look at the number of deals, not the deal values. So you look at the numbers of transactions. Use that as a gauge to sort of think about how healthy is the market. A number is more important than value, yes. If you say valuations are looking toppy, what could tip the scale here . Is the Interest Rate increase that were expecting from the u. S. And uk, that could calm en the market . Is it something thats happening in china . The Interest Rate increase could have an effect depending on how its handled. I think central bankers and, you know politicians, i think theyll be cautious about raising rates. If rates do come up when they eventually do stabilize, theyll be way below historic longtime levels. To be able to raise, feel they can raise. It should be. It should be phillip. Great to chat with you. Read how one company is attempting to cash in on the m a boom on our website. Head to cnbc. Com to check out the tinder m a. Still to come on the show greece is no longer the word. How should investors navigate headwinds from china . We have goldman sachs, best plays after this break. Welcome to worldwide exchange. Im julia chatterley. And carolyn roth. The fed lowering the bar for liftoff, saying only some improvement in the labor mark set needed before rates go up. Banking on new boss. 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