Client sentiment was much more constructive in the Second Quarter. Santander shrugs off a weak performance in britain to surpass expectations in the Second Quarter. A profit warning as an auto partsmaker predicts a drop in Vehicle Production but shares drive higher as the companys results remain in line with forecasts. Ams soars taking the Company Higher issuing an upbeat outlook. All right. A very warm welcome to street signs this morning. Lets look at european markets some interesting moves were seeing in the equity space the stoxx 600 is currently more than a third of a percentage point higher we are off to a strong start in the early minutes with nearly all regions in the green the auto sector in particular showing some strength this morning. We had a few different reports come ut. We heard there in the headlines that profit warnings for continentale, but this is not causing investors more cautiousness but driving shares higher across the board. Autos in focus, chipmakers in focus, banks in focus. A number of corporate stories taking investors attentions this morning, stepping away from the macro where we expect the uk to deliver the results of the conservative Party Leadership contest with Boris Johnson expected to take that position later this morning, just after 11 00 a. M. The corporate earnings is driving moves this morning lets look at european markets and see what the individual moves look like. The dax is u shares higher for the german index. Ftse 100 about a half percentage point higher as well as the ftse mib and the cac behind those lets look at the sectors and check out the breakdown. Autos up about 2. 9 . We had seen that index higher earlier on speaking to some investors in the auto space, the view seems to be, yes, we had another profit warning for the sector, but the market was widely expecting profit warnings. We already heard from daimler and gille. Technology up, just over 1 with the chipmakers boosting that overall space. Well get into detail on whats driving that sector in a bit banks rounding out the top sectors this morning, up about 0. 7 lets get into one of the top stories in the bank space, thats ubs they posted a surprise beat in Second Quarter earnings with net profit rising marginally to 1 14 billion. Thats as gains in the swiss banks corporate and advisory units offset losses in banking joumanna joins us from zurich. You have been poring over the numbers and you had a chance to speak to the ceo of ubs. Were the headlines as strong as suggested or were there patches of weakness in there you and i, julianna, like to knit pick the numbers the top line and bottom line much higher than expectations there. And well, hopefully well get back out to goo mjoumanna in a and hear what the ceo of ubs had to say i would say the sentiment is very volatile. Its difficult to call a trend you see the dynamics on a week by week basis which are difficult to predict Investor Sentiment is muted. If you look at what happened during the quarter, the fact that the cash balances went up 1 , despite the fact that invested assets went up. The more dividend they cash in and Interest Rates income are staying on shortterm or cash. From a banks perspective, now we have an ecb meeting coming up. Theres speculation that the ecb may look to cut rates. If they introduce a tiering mechanism similar to what they have in switzerland, would that be a positive step in your view . I think its im not so sure that going deeper into negative territory or using the qe is the way to get out of the problems i think cutting rates to infinity has not proven to be the solution of the issues i think we need more structural answers. So i believe the ecb is trying to help to try to get out of this problem its more for the politicians to resolve the structural issues. Perhaps Central Banks need to be more mindful of the Banking System before cutting rates more negative i think at the end of the day i always say if the Collateral Damage of the banking of negative rates would be only the Banking System, one could probably try to live with that concept. As you can see, the psychological effect on consumers and the side effects on savings and on the social system is very high. So i think that there has to be a broader consideration than just the banking industry. That is Joumanna Bercetche speaking to the ceo of ubs joumanna, hopefully you have some sound now im curious if you had a chance to speak to mr. The ceo about pl for the Investment Bank, and if you had more insight as to what their plans are strategically for that unit. It all ties into the same thing. And similar to how our line got cut earlier, were also talking about Central Banks cutting in the context of the Banking System it was interesting what mr. Urmotti had to say there i think he was very clear about rate cuts, he said if you keep pushing rates into negative territory, its not really yielding that much of an impact. Doesnt seem to be the solution to the problems that the eurozone is facing its up to the politicians to do something at a more structural level. That was very, very interesting. Why this matters for a bank like ubs, the lions share of their earnings these days comes from their Global WealthManagement Division that division was down 12 yearonyear in the Second Quarter. Even in the First Quarter it was down 26 yearonyear. The headwind theres are coming from what . Low Interest Rates this is not just in europe obviously, but in the u. S. We have the fed looking to cut Interest Rates as well thats putting pressure on the yield curve. The flattening on the yield curve and the Market Pricing in lower Interest Rate expectations, thats hitting net interest net margins, that came up in earnings, not just for europe its important we make note for that ubs are setting the tone for other european banks when it comes to net interest margins. It will also be interesting to see whether in the future theyll have to revise their targets. Investment banking is also very important for ubs. The First Quarter was a torrid quarter for their Investment Bank their last earnings were down 56 . This quarter down 20 , 23 but there was one bright spot, that was in the advisory business that business was up 18 compared to a significant decline in the First Quarter m so he talked about normalization in the quarter and people are getting more involved in the markets, but they talked about the Downside Risk still remaining due to political uncertainties and geopolitical tensions he said were not completely out of the woods yet if you drill down to the details, equities are down 9 yearonyear fixed Interest Rates are down. So putting that altogether, you have headwinds from low Interest Rates and from subdued business activity, and the picture and the outlook for the second half of the year is questionable. You know, as an investor you dont have a lot of clarity about how thing also proceed the one overriding positive is the teier one ratio came in at 13. 1 , higher than the estimate, they have a lot of capital they certainly have the capital to absorb any potential hits in the future there are a few positives to pick up on thank you very much for that detail glad we could get back out to you. Moving on, another bank in focus, santander Second Quarter net profit has fallen 18 but still topped estimates. They were hit by restructuring costs of 706 millioneuros. The lender kroited ecited a weak performance in britain the lender also cited a weak performance in britain but the cfo said the uk outlook remains unchanged and is based on an or orderly brexit for the uk, we have a strong competition in the Mortgage Market which is our main market. We anticipated this. We started a Cost Cutting Program in the uk. Lets move on to the auto space. Shares are trading higher in continental. The german car parts producer blamed a warning on a fall in global Vehicle Production and unanticipated change in customer demand very interesting moves in the auto space on the back of this warning. You can see there the four auto partsmakers trading sharply higher this morning. Up 7. 9 is faurecia. I want to get out to annette and this market. What does it say about expectations that a company can come out with a warning for the 2019 year and they surge expectations may be nearly as low as they can get, annette certainly thats the case if you look at continental shares, they hit a sixyear low earlier this month now if you look at the profit warning, it is actually its a warning, but not as bad as people had expected. Now sales are expected to come in between 44 billion and 45 billion euros. Before it was 45 billion to 47 billion euros. It is a warning but not a gigantic downward revision of what they expected what theyre saying is auto production will be 5 lower in the estimates for the second half of this year. B which also is not great, but its not the end of the world. Probably a worse scenario was priced in those shares to be fair, that was the same with daimler it was worse, but that was also because they have a lot of homemade problems. As such, continental is well positioned to benefit from the new trends like interconnectivity and autonomous driving for the car industry so the business is not in bad shape, but they suffer from lower auto production in europe, north america and china. Thats what theyre saying as we were pointing out, probably the expectations or the mood is so gloomy thats why we see that positive reaction thats a key point, you make about how continental is positioned for the future. Clearly this is an important factor in investor positioning in the auto space, if the companies are prepared to adapt to the new demands of the auto sector, perhaps investors can look past the weakness theyre seeing in auto production. Thank you very much for bringing us the details on continental. Coming up, one of apples key european suppliers strikes an update tone get the details on the Quarterly Earnings from ams next fun fact 1 in 4 of us millennials have debt we might die with. And most of that debt is actually from credit cards. Its just not right. But with sofi, you can get your credit cards right by consolidating your Credit Card Debt into one monthly payment. You can get your Interest Rate right by locking in a fixed low rate today. And you can get your money right. With sofi. Check your rate in 2 minutes or less. Get a nofee personal loan up to 100k. Your but as you get older,hing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. 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They backed their fullyear outlook for sales growth ams swung to a profit in the Second Quarter posting ebit of over 4 415 million the sensor producer and one of apples key suppliers predicts a strong Third Quarter thanks to rising demand in its consumer markets. Lets look at the chipmakers in europe more broadly. There you can see fairly strong moves higher for not only ams but also stmicro, up nearly 3 asml up 2. 2 d dialog semiup a bit as well. Lets bring in elizabeth schulze. What did investors find so reassures that were seeing this boost . The key line is the strong consumer demand going forward. We have seen a general sluggishness in demand for smartphones, ams singled out Strong Demand in smartphone units in the next quarter. It provides essential 3d sensor for apple, but ams saying they see Strong Demand in the Android Market this is a positive sign for the chip market because they have been subject to this volatility between the u. S. And china trade talks. Its a sector thats very dependent on the Global Supply chain. If one supplier gives these chip technologies says they see better outlook going forward, that shows up in the share price today. Its not the only story in the chip making space that is providing a boost. We heard from the wall street journal, they reported that apple is potentially looking at buying intels cellular modem unit how does this tie in andwhat i apples rationale for buying this unit . We heard this before, but it went on hold when apple reached that Licensing Agreement with qualcomm earlier what apple would be looking to do is bring the 5g modem production inhouse and take over that business that intel could not successfully do itself they is a trend we have seen with samsung and huawei. They make their own 5g chips inhouse we have not seen a 5g phone from apple, it is clear thats the direction the market is heading. It looks like apple could be considering a big deal, much bigger than weve seen from apple in recent years in order to keep up with other players in the market so this would be to reduce their reliance on qualcomm effectively . They want to do it themselves so they dont depend on an outside provider, particularly given the trade environment and the uncertainty there. Weve seen so much talk about how it helps the companies to be less reliant on anyone qualcomm shares are trading lower in extended hours because of that, because apple may not need them as much as they thought. Ultimately these supply chains are so integrated. Its not like the end of a partnership here it would be one step for apple and it gives us a slight indication of the cycle with these 5g phones. We need to see these devices release. We need to see how much demand there is from the consumer side for these new phones some of that ties into if the networks are up and running yet. We have yet to see how much the 5g devices can spur demand an interesting dynamic we discussed before how quick can the uptick be when the infrastructure is not there yet. One thing i want to ask you about lastly, President Trump has been busy over the last 4 hours at the white house meeting with a number of tech executives in the semiconductor and Software Space tell us about how that fits into this conversation as well. It certainly does we know that the Trump Administration has this blacklist on huawei and that prevents u. S. Companies, they must apply for specific licenses in order to sell to huawei ultimately what we saw with these companies at the white house yesterday by the way, it wasnt chips, we also saw google there, they want to make sure its easy to get these licenses approved. We know how global these agreements are we know these companies have come out and said we need do this business with huawei. It seems like trump it appeasing them so far, but a lot of questions still about how this huawei ban will play out still more questions than answers. Thank you for weighing in. Thank you very much. Lets shift gears to the metals and Mining Sector where hed hedro missed expectations. The company blamed lower Aluminum Prices and the effects of a cyberattack pleased to be joined by the cfo of the company for this updated. Thank you very much for joining us can i start on your outlook for aluminum i see earnings were down significantly from the same quarter last year in large part due to lower prices. I see in todays results you have taken down your demand forecast for the year ahead. In what Market Segments are you seeing particular weakness that has led to you downgrade your expectations here . I think the particular weakness we see is first and foremost within the european markets. Partly out of germany where we also see low pmi figures we see Building Construction being low and in general theres a concern around demand and production that impacted the aluminum demand. Thank you for that clarity. Perhaps we can look at brazil. This has been a huge part of your story over the last year or so 80 to 85 capacity utilization, this is the upper end of the range you had targeted the end of june. What is your outlook for this brazilian operation . Were happy to see production wrapping up so quickly and faster than we expected. We are around 85 if you look at june in isolation. Then we expect a nathen we exupe company for september. What is your take on chinese demand, and given how much environmental focus chin