Welcome to countdown. I am anna edwards. Manus i am manus cranny. It is a big day for the bank. Hsbc profit falls 545 . We have seen the stock open portrayed in hong kong. They are planning a 2. 5 billion buyback. The removed the timetable. The headline, pretax trough it 3. 61 billion. Last year it was 6. 6 billion and the estimates were for 3. 9 billion. A recession potentially in the u. K. Impacting hsbc. If you want to think about it on this scale, since 2011 they slashed 87,000 jobs. That is a bank in restructuring. Downng in hong kong, 0. 75 . Anna this is from the thirdlargest bank. Net profit for the Second Quarter is 1. 1 6 billion euros. That is above the estimate of 994 million euros. The bank also telling us the gain they have made on the sale of euro state. That bank went deal went through. Many banks booked a gain on that. They are all but facing headwinds from the low Interest Rate environment. What will be key as we go through these numbers is the bread and butter of banking. This focuses on the french sector. By what has the bread and butter part of banking been hurt by that . Lower Interest Rates can make their life more difficult. It is a miss on the headline. Net comes in at 3. 2 billion. Up from 3. 1 billion a year earlier. It missed that the average ever smit estimate of 3. 6 billion. They have a profitability target for 2020. They are trying to make 2. 1 billion of cost cuts. They have a target on equity of 12 14 . Exclusiveve an interview at 7 15. Anna they reported numbers, the secondlargest bank in asia. Secondquarter net income beating estimates. The cet one ratio still stable. We have a gain on the visa sale. Bear that in mind if you look at the bottom line numbers. About thering domestic French Business and how a low Interest Rate environment has taken the edge off their qt. The deputy ceo told Caroline Conan that despite negative rates, they found a stable return on equity this past quarter in france. Our International Return and financial services, which is now in a very solid recovery, which is increased by 35 of political contribution through this quarter. In france, despite the difficult environment with negative Interest Rates, the return was 15 , which is a good delivery despite that. Global banking investment activity. The market liked the First Quarter. It has been very much under pressure but stable. Terms ofregain in investor appetites in our projects, especially from asia, which is also good news for also technically benefiting for the difficulties. Some of your german counterpart. I dont speak about the difficulties of my counterparts. Im speaking about the strategy. Some banks have decided to pick that up. The bottom guys like us to gain market share certain shares. Your Group Earlier this year that was anxiety about your 10 target of re for this year. Is this target going to be reached . If i may remind you that our target of 10 has been fixed to end a half years ago. In the environment we have today, it is completely different from the anticipated environment. In 2016, the conditions in terms of interest to lookut also we have at additional burdens. Increase our cost production plan to do with that, you have to have that in mind. You continue to say that the mobile structure could redevelop that in the environment. Manus lets get to bloomberg first world news. Paul, good day to you. Paul the u. S. Military says north korea has fired to ballistic missiles. One exploded immediately after launch while the other reportedly landed in the sea 250 kilometers after the japanese city of akita. Pyongyang waser angered by plans for the u. S. To install a Missile Defense system in south korea. They recommend pension holders get out of equities, just like he did. The republican president ial nominee slammed what he called artificially low rates, adding the only reason the stock market is where it is is because you get free money. He also said the market would go great if he were elected. Bill gross has reiterated his warning after yields in australia touched alltime lows in the past month. Is thater of the rally any reversal will be painful for investors. With sovereign bonds at record lows, they are not worth the risk. After two months, Global Oil Prices are set for a violent reversal upward. That is what andy hall is telling his investors. A cooler winter is likely to drive up demand and a glut of shortsellers bidding on falling prices and only resist the tide for so long. The chinese hard landing has become a reality in a Northeastern Province of the country. They expect the economy to retract 1 in 2016 as factories stutteredthe hardship remains l. Region data for the First Six Months showing Economic Growth in 15 of the nations 31 provinces up from the First Quarter. Bitcoin has plunged after one of the largest exchanges halted training because hackers stole about 65 million of the digital currency. It slumped 30 in the last two days. It is still investigating the loss and cooperating with Law Enforcement authorities. Global news 24 hours a day, powered by more than 2600 journalists and analysts for more than 120 countries. You can find more stories on bloomberg. I am paul allen. This is bloomberg. Anna paul allen with the latest news. Lets check in with the markets. Stock losses deepening in the asian session. A second seeing session of losses on the regional index driven by the weakness in japan. We are seeing the yen weekend. It is down. 2 . Stennis plans came through yesterday. It was such a buildup and such a letdown. We have seen stocks in japan fall today. The topics and the nikkei off for the Third Session in a row. Also in hong kong where we have only one stock higher, we are seeing significant selling coming through on the rest of the index. The shanghai and asia market has a little of an upside. China just coming back online along with hong kong. It is going to plan its Index Futures revival. This is a year after the 5 trillion crash. A little bit of relaxing of the rules in futures trading in china. We are awaiting an Interest Rate decision in thailand. The thailand index is up. 2 . Priceere, the weaker oil lang into commodity markets, like in australia, which is off by over 1 . Having a look at individual stocks. Earning season in swing. Casio computers plunging to a twoyear low after its First Quarter profit missed estimates. Honda is a bright upside. U. S. Auto sales in july beating their prediction. Its sale ofy says one of its assets is a minor positive, but we are seeing sellers move in there. I want to show you the yield on the us trillions because it plunged when the abe the rba cut Interest Rates yesterday. That is the biggest jump we have seen in 14 months. We are seeing a little bit of money coming out of the australian 10 year bonds. Manus thank you very much. Juliet sally. Hsbc has reopened for trade. It has rallied 1. 5 . We had the earnings. Lets get back to hong kong. This is all about the buyback and the dividend. This seems to be worthy market is focused and the restructuring efforts. Heidi it is interesting because it took the markets to digest what is a mixed bag. We have that 2. 5 billion Share Buyback. That will be affected by the end of the year. That was flagged in april when the last set of earnings came out. When the stock is trading at these prices, a have to consider the possibility of a buyback. Profit falling to 3. 6 billion, down 45 , worse than the 3. 9 billion estimate of 19 analysts. Private banking was the biggest drag. Commercial banking was the largest profit contributor. They areying saying they are going to try in terms of the regressive dividend that we focus on so much when it comes to this bank. They did not move it what they did say they are going to maintain it at the current level for the fish seeable future for the foreseeable future. Nothing has changed in the turbulent period and the priorities that they let out a year ago, the restructuring plans, the pulling assets to asia. A lot of changes have been put through in terms of how that direction is being taken. The talk to us a bit about challenges the bank faces. They referenced brexit, saying that the trade talks would be complex. There is a big focus on asia for this business. Haidi that is right. The prophet still coming through from asia. On brexit, it was interesting. The economic risk is that the poweredcs get over by political volatility. Cut sayingade that theyre are going to make the high end of the target. Billione hit about 172 cents 2014. They had that arrow being removed. Is inside. The deadline is not feasible. The target is still feasible. There was concern over these bad loans but they see things as being stable. They did say that redeployment of roughly 150 billion of assets to asia, that has taken a hit given the economic and political uncertainties that are happening right now. Manus thank you very much. Lets see whether that momentum in the stock price continues up. 0. 8 . Jeremy stretch joins us. Has saidng what heidi was, one of our producers produced this. This is the price of hsbc in the blue. That is the london listing. There is the hong kong listing. If you wanted a personification of sterling down by 90 basis points, there you go. Jeremy you represented one of the reasons why the first 100 has rebounded in the post brexit world. Three quarters of the earnings in the 100 are domiciled outside of the u. K. There is that boost to buying earnings. You graphically represented here in the terms of hsbc. It also underlines there is an ongoing issue in relation to the brexit story. Inre is that uncertainty terms of the growth trajectories, which will be a factor that will play into the bottom line of corporate. Anna talk to us about the growth trajectory for the u. K. Economy. The japanese were talking about spending more money fiscally because of the brexit. I thought it is amazing that the japanese are doing this before we get a fiscal reset in the u. K. Jeremy 26. Anna in recent memory. The bank of england is wrestling with the slowdown. What are you expecting . The key question seems to be will they forecast that we are going to go into recession . Jeremy i would suggest they would not suggest a recession but a marked slowdown. If you look at the aggregate Growth Numbers from 2017 and 2018, they will be revised down substantially. I think you cannot rule out the possibility that we could see a technical recession where you can see a couple of consecutive quarters of negative growth, but i dont think you will see the annual numbers in starkly negative terms. Uncertainty is the watchword and will continue to be the watchword of Financial Market participants and the bankers and in terms of government officials in potential u. K. Research. Manus lets get a sledgehammer out for the u. K. Look at the pie. This is a trade weighted value of the british pound. The market is so short. It is the shortest it has been since 1992. Has stopped inum the pound . Jeremy we have seen markets moving aggressively short on sterling. If you look at the weight the stock market prices it, we are fully priced. 25 basis rate point cut. What could take us lower . There are other measures we can consider. We could see a restart of the asset purchase program, funding for lending. There are other measures beyond that. The question is the tone of the press briefing from mr. Carney. That will be absolutely critical. There is an awful lot of activity but as we get data and that final service line this morning, which could be revised down for the, i think those negatives will create uncertainty. I dont think we have seen the bottom just yet. Anna manus pulled up the three u. K. Pmis itch does not make which does not make pretty reading. Jeremy stretch. He stays with us. Manus lets get your day set up for you. The think of and didnt the bank of england, ahead of super thursday. Midday it is mba Mortgage Applications in the United States and that is in an hour and a quarter. We get the numbers ahead of fridays payroll. Anna it is the eia crude oil report. Oil below 50. What will that data show us . Onomberg users can follow us top like go. Manus abes arrow fails to hit the target as his latest them it to package fails impress investors. The results and the first interview of the day. Anna you will speak exclusively of the incoming ceo of axa. What is the low Interest Rate environment doing to their business . Looking at a live shot of hong kong where the hang seng is down by one point. 6 22 inust gotten to london. Japanese shares has fallen for a third day. Japanese toof the this package disappointed investors. The government anna the a spendingdetailed package of 2. 72 billion. The plan from a and companybne abe and coveney, his appointment or failure to manage expectation . Jeremy a little of both. He trailed that package and the devil is in the details. He had 28 trillion and then you drill down the knot of money that is substantially lower than that. We had Monetary Policy announced from mr. Kuroda last week. We had more of the same from Prime Minister of a abe we had a jewel of disappointment from the fiscal and monetary side and the third arrow of all cs, we are abenomi still waiting for that. Aussie,he yen and the they both rallied. You had the rba drop their rates. You have the bank of japan disappoint. The yen has really taken on a new momentum on the upside, hasnt it . Jeremy we have seen markets disappointed by the lack of additional bond buying from the boj. In a sense we are seeing out of a bond tantrum starting to come through. We are also seeing one in risk aversion. In general you tend to find that investors will favor that have services or investors retreat to home markets. That is the worst of all scenarios for the japanese. Anna we have a chart in a moment that shows the yield bouncing back. What is driving the rethink around the bond market . It can all be brexit related. Jeremy i cant, but i think it goes back to the comments we saw from bill gross. Talking about the impact of the bond market moves in the uncertainties we are seeing. To continuexpecting to be the bar of last resort, you talk at stop at one valuation where it is a stretch and you need to see a little of and unwind. That stops to suggest yields are higher. Anna bill gross saying low rates are not worth the risk. They are bouncing. Manus if you know what is happening in the jgb market, and this is where i wonder if we will have a car crash. You were talking about this looking like 2003 where yields ratcheted. They tripled in the space of three months. This could be a shock to the market. What would that do to yen . Jeremy i think that is exactly the point. It is one of those issues where you talk about bond market bubbles. If you are trying to generate profits from your investors and yields move lower, it is difficult to do that. You can trade that strategy as long as you are the first one out. In a sense, that is part of the problem. The first mover advantage is starting to move out of the market. If we see yields moving up in bunds and jgbs, it could be yen goes down and eurodollar goes up. Anna we have donald trump saying that u. S. Rates are artificially low. Thank you jeremy stretch, head of fx strategy. Manus we will talk about the companys first half earnings. It is all about the miners. Can the rally endure . [hip hop beat] olympics 2016, let me get you on my level. So you never miss a moment, miss a minute, miss a medal. Why settle when you can have it all . Soccer to wrestling. Track and field to basketball. Fencing to cycling. Diving to balance beam. All you have to sa is, show me, and boom its on the screen from the bottom of the mat, to the couch where you at . Show me the latest medal count xfinitys where its at. Welcome to it all. Comcast nbcuniversal is proud to bring you coverage of the rio olympic games. Hohes woiithongestc . Estc. Thlais hotas hke hyson at ey llg ca hke cwistomin biness rn fid , p cth bou e. Juais hotas hke hyson at ey ddstus azetomimeag y wiourofiay llg ca hke heesev. Or upde. itrestn i, w c ue e dry. Ynebuss. Oding uc pwiwiro fi hthatpsroui anna a live shot of tokyo this morning. Dollaryen fairly flat. We have seen a rise in the yen in recent days. 101. 04 is where wewe are lookins coming in across europe. Weve had a rash of news in the banking sector. We dont seem to have the continent numbers. Manus we will get those numbers in a moment. Of are looking at a revenue 10. 6 billion euros. The auto is this in china and europe has grown 5 year on year. When we get those numbers we will break them. Lets talk about daybreak. It is available on your mobile and on your bloomberg da why be go. Formal one. Of we discovered new functions. Anna sometimes we visually experiment. Hsbc a mess. 2. 5 billion buyback plan for the Hong Kong Listed bank. As our colleague haidi was point out, the world has taken a while to digest the hsbc story. They are wondering how long it will take to flesh out a trade agreement between london and eu. Manus they are confident in the abilities of paying the dividend. There will be no further investor cost cuts needed. These are the comments coming across. China investment will be positive in the mediumterm. More banking. Ana williams was a bank that was under pressure to sell in 2008. They had 2 million customers and 24 billion pounds of assets. Rbs. Santander ceo was at already a Little Family history in that. Oil is also featuring heavily in daybreak this morning. In particular, after taking a pounding for two months oil prices are set for a violent reversal. That is according to trader andy hall. Violentlking about the reversal set to take place. Little fear of further declines. The bottom could be near. Yesterday we were talking about 57. We have a Bloomberg Business flash. Paul allen is standing by. Good day. Paul Societe Generale said Second Quarter is a percent lower on loans and a gain on its