Japan Autos Surge on US Trade Deal; Reports PM Ishiba to Step Down | Daybreak Europe 7/23/2025

Japan Autos Surge on US Trade Deal; Reports PM Ishiba to Step Down | Daybreak Europe 7/23/2025

TOM:
GOOD MORNING THIS IS BLOOMBERG DAYBREAK:
EUROPE I’M TOM MACKENZIE IN LONDON THESE OF THE STORIES
THAT SET YOUR AGENDA. EXIT ISHIBA, JAPAN’S PRIME
MINISTER RESIGNS JUST HOURS AFTER CUTTING U.S.
TARIFFS AND STOCKS AND ASIA GAINED THE MOST IN ONE MONTH.
U.S. TREASURY SECRETARY SAYS TRADE
TALKS WITH CHINA WILL RESUME IN STOCKHOLM AND WE WILL SPEAK TO
SCOTT BESSENT AT 12 P.M. TODAY. UNICREDIT DROPS ITS BID FOR
BPM, BLAMING LACK OF GOVERNMENT SUPPORT.
WE WILL BRING YOU THE EARNINGS IN THE NEXT COUPLE OF SECONDS. LET’S GET TO THE EARNINGS,
UNICREDIT STOCK IS UP, NET INCOME IS A SOLID BEAT.
SECOND QUARTER NET INCOME COMING IN AT 3.34 BILLION EUROS
ABOVE THE ESTIMATES OF TWO AND A HALF BILLION, BIG BEAT. REVENUES ARE SOFTER SECOND
QUARTER FOR UNICREDIT. JUST MARGINALLY BELOW 6.1% —
6.1 BILLION. IN TERMS OF FEES ALSO IN LINE
AT TWO POINT 12 BILLIONS, NET INTEREST, WE KNOW THEY WERE
SCRUTINIZING THIS IN THE SECOND QUARTER, NET INCOME 3.4 6
BILLION EUROS IN LINE WITH ESTIMATES IN TERMS OF 2025
PROJECTIONS UNICREDIT IS RAY SAYING THE NET DISTRIBUTION GUIDANCE AND THE 27 NET TO 11
BILLION EUROS, UP FROM ABOUT 10 BILLION SO A KEY LINE THERE IN
TERMS OF NET DISTRIBUTION GUIDANCE. FULL YEAR OF DISTRIBUTION OF
9.5 BILLION EUROS THIS YEAR AND RACING IN IN 27 AS WELL.
IT’S A BEAT FOR UNICREDIT. HE STOPPED TO WATCH, UP MORE
THAN 50%. EARNINGS IS PART OF IT BUT IT’S
ABOUT TRADE DEALS FROM JAPAN ADDING FUEL TO THE FIRE IN ASIA
AND EUROPEAN STOCKS. RALLYING 1.3% ON THE BACK OF
THE NEWS AND FTSE FUTURES ADDING 51 POINTS, S&P AT RECORD
LEVELS. NASDAQ ADDING 22 POINTS AS WE
COUNT DOWN TO THE EARNINGS FROM ALPHABET AND TESLA WITH MEGA
CAP TECH REPORTING. THERE WAS A WEAK BOND AUCTION
OUT OF JAPAN BUT YIELDS ARE UP ON THE 10 YEAR. EURO-DOLLAR IS 117, STRONGER
USD AND EURO DOWN. SPOT GOLD IS DOWN 2/10 OF ONE
PERSON WITH A FOCUS ON AUTOMAKERS.
AVRIL HONG IS IN SINGAPORE FOR A CHECK OF ASIA. ADMIRAL:
ABSOLUTELY, NOMINAL MOVES IN JAPAN. THERE IS A TRADE DEAL AND COULD
BE 15% TARIFFS ON AUTOMAKERS VERSUS THE 25 PERCENT THAT WAS
A KEY STICKING POINT IN NEGOTIATIONS. THE RALLY IS PRONOUNCED AND
TOYOTA CLIMBED THE MOST SINCE 1987 AND THE YEN WEAKENED AS WE
GOT WORD THE PRIME MINISTER MIGHT ANNOUNCE RESIGNATION.
NOW LET’S FLIP THE BOARD AND LOOK AT THE STOCK MOVES AND THE
CLIMB ON TRANSPORTS. ON TRACK TO ERASE DECLINES FOR
THE YEAR AND LIFT THE TOPIX TO HIGHEST CLOSE SINCE JULY LAST
YEAR PRIOR TO THE YEN CARRY TRADE UNWIND. WORTH NOTING HERE WHEN IT COMES
TO TARIFF ON AUTOS, STILL HIGHER AT 15% AND INVESTORS
KEEPING CLOSE WATCH ON THE OUTLOOK. FLIP THE BOARD. WE HAD THE 40 YEAR OPTION
SHOWING US INVESTORS ARE NOT EXCITED. WE KISSED DEMAND SINCE 2011 AND
SHARP MOVES ON THE TWO YEARS. BEHAVING LIKE THE BOJ MEETING
WILL BE A LIVE ONE. SAUCE TRADERS PRICING THAT IN.
TOM: WATCHING THE GLOBAL BOND
MARKETS WITH POLITICS AND FOCUS. AVRIL, THANK YOU. ISHIBA IS SET YO — TO RESIGN AFTER JAPAN SIGNED THE TRADE
DEAL WITH THE U.S. WHICH TRUMP CALLED THE LARGEST
DEAL IN HISTORY. >> IT’S A GREAT DEAL, A LOT
DIFFERENT FROM THE PAST, I CAN TELL YOU. TOM: LET’S BRING IN KAZUNORI. THE TRADE DEAL ACROSS THE LINE,
NOW ISHIBA IS READY TO STEP DOWN? >> YES, AFTER THE LOSS, ISHIBA SAID HE WOULD STAY AS PM UNTIL
THE TRADE DEALS WERE SORTED FOR JAPAN AND NOW THAT HAS ENDED, SO LOCAL MEDIA SAYS HE IS
LOOKING TO RESIGN AS EARLY AS THIS MONTH AND OTHERS SAY HE
WILL MAKE UP HIS MIND ON WHETHER TO STAY BY THE END OF AUGUST, SO THERE IS UNCERTAINTY BUT IT IS HARD TO
PREDICT WHAT WILL HAPPEN AND WE DON’T HAVE A CLEAR CONTENDER IN
THE LDP TO TAKE OVER. SOME REPORTS FLOATED PERHAPS
THE FORMER PRIME MINISTER MAY BE INTERESTED AND A FEW OTHERS
HAVE RAISED THEIR HANDS FOR THE LDP PRESIDENCY IN THE PAST. KEEP IN MIND THE LDP DOESN’T
HAVE MAJORITY, SO WHOEVER TAKES OVER WILL HAVE A BIG CHALLENGE
TO GET THE PM THROUGH PARLIAMENT AND NEEDS TO SEEK
THE HELP OF OTHER PARTIES. SO MULTIPLE SCENARIOS HAVE BEEN
PREDICTED, BUT IT’S HARD TO TELL. TOM: ON TRADE FRONT A LITTLE LESS
UNCERTAIN, WHAT ARE THE DETAILS? >> THE 550 BILLION PACKAGE
WHICH ISHIBA SAID WOULD COME IN THE FORM OF LOANS, BASED ON
INFO FROM WASHINGTON, THIS COULD INCLUDE JOINT LNG IN
ALASKA, BUT FAIR BIT OF UNCERTAINTY ON THE TIMING,
WHERE AND WHEN IT WOULD BE SPENT.
OTHER THINGS FROM THAT IS THE AUTO SECTOR, THE 15% TARIFFS ON AUTOS WITH JAPAN BUYING 100
BOEING AIRCRAFT AND JAPAN EXPANDING THE LVELS — LEVELS
OF IMPORTS. TOM: BLOOMBERG’S MANAGING EDITOR
FOR JAPAN ON THE TRADE DEAL IN THE REPORTS AROUND THE PRIME
MINISTER OF JAPAN LOOKING TO STEP DOWN POSSIBLY IN AUGUST.
THANK YOU. SCOTT BESSENT AND HOWARD
LUTNICK WILL JOIN BLOOMBERG SURVEILLANCE LATER THIS
MORNING, SO STAY TUNED FOR THOSE. LET’S LOOK WITH VALERIE TYTEL
AT HOW MARKETS ARE REACTING. IT UPLIFT FOR GLOBAL EQUITIES?
VALERIE: POSITIVTY — POSITIVTY OVER A
POSSIBLE U.S. AND EU TRADE DEAL COMING. EU FUTURES HAVE LIFTED OFF OF
THE BACK OF THE NIKKEI, BUT DO WE SEE A BOOST TO EU AUTOMAKERS
AFTER TOYOTA SOARED. DO WE SEE THE POSITIVITY LEAD
INTO MERCEDES AND BMW? LET’S LOOK AT THE FX MARKET — ODD TO SEE THEY YEN IS
WEAKENING AND WE ARE NOT SEEING POSITIVITY ON THE EURO, SO
INTERESTING PRICE ACTION. ON FIXED INCOME, YIELDS MOVING
HIGHER IS AFFECTING U.S. YIELDS AND JGBS ARE SETTING THE TONE, SO IF WE SEE INSTABILITY,
WATCH OUT FOR YIELDS AS WELL. IN THE U.S. MEME STONK MANIA IS RETURNING WITH KOHL’S AS THE NEW MEME
STONK. TOM: INDEED! LET’S GET BACK TO EARNINGS WITH
UNICREDIT WITH TOM METCALF. TALK US THROUGH THE NUMBERS,
TOM? TOM: THE BIGGEST THING IS GUIDANCE. THEY WERE LOOKING AT 27 BILLION AND NOW THEY ARE LOOKING AT 30
BILLION, DROPPING THEIR BID FOR BANCO BPM. THE RESULTS ARE UNICREDIT
MOVING ON AND LOOKING FOR DEALS. TOM: OKAY AND THE SHARES HAVE STORMED UP MORE THAN 50%, WHAT
CAN KEEP IT GOING? TOM: THE BIG DEALS ARE A WAY TO KEEP
THE MOMENTUM GOING. THE SHAREHOLDERS ARE DOUBLING DOWN ON BUYBACKS AND WITHIN THE
RESULTS LOAN LOSS PROVISIONS WERE UP AND THE ECONOMY HAS WEAKENED BUT SHAREHOLDERS ARE
QUITE PLEASED. TOM: BPM ARE DROPPING THE DEAL, SO
MUCH FOR CONSOLIDATION, IT’S NOT HAPPENING.
IS THIS — IS THIS JUST ON ICE OR THEY WALKED AWAY FROM BPM?
TOM: THEY ARE STILL INTERESTED SO IF ROME CHANGES CONDITIONS IT
COULD BECOME A DEAL THEY HAVE TO DO. TOM: INDEED! BREAKING DOWN THE MERGERS GOING
FORWARD. TALKING OF EARNINGS, TESLA
STOCK IS DOWN 19%. EARNINGS DROP LATER TODAY AND
ALPHABET AND IBM AS WELL WITH ALPHABET SHARES FLAT.
WHEN IT COMES TO THE CLOUD BUSINESS AND FENDING OFF
COMPETITION IN SEARCH AND THEN AFTER THE MARKETS MONTCLAIR
EARNINGS IN THE LUXURY RETAIL SPACE.
LEADERS OF FRANCE AND GERMANY MEET IN BERLIN AS A RIFT GROWS
OVER WILL LEAD A FIGHTER JET PROGRAM. DETAILS NEXT, THIS IS
BLOOMBERG. ♪ ♪ TOM: WECOME — WELCOME BACK. TESLA WILL PROVIDE UPDATES THIS
AFTERNOON AND INVESTORS WILL HEAR ABOUT AUTO-DRIVING. DANNY JOINS US WITH A PREVIEW. MUSK WAS WITH TRUMP AND THAT
ENDED BADLY, BUT WILL IT SHOW UP IN EARNINGS AS SALES FALL?
DANNY: IT’S BEEN A TALE OF TWO
QUARTERS WITH TRUMP ENCOURAGING PEOPLE TO BUY EVS, THEN THE
RELATIONSHIP DISINTEGRATED, FALLING SALES, MISSING EPS AND
REVENUE, FALLING 14% IN THIS QUARTER WITH A LIKELY FURTHER SLIDE, GIVEN MUSK HAS LEFT THE
ADMINISTRATION. I DON’T THINK THAT’S ENOUGH FOR
CONSUMERS TO BUY TESLA, BUT IN CALIFORNIA WHERE THEY BUY EVS,
TESLA SALES ARE FALLING 25%. SO THERE IS WEAKNESS IN CORE
MARKETS AND ACROSS THE GLOBE FROM CHINA TO EUROPE. TOM:
WOW, A 21% DROP. WHAT WILL THE TEAM BE LOOKING
FOR IN THESE NUMBERS? DANNY: MUSK HAS TAKEN CONROL OF — CONTROL OF SALES SO WHAT IS THE
TURNAROUND PICTURE? MANY ARE LOOKING FOR A REVIVAL OF THE TESLA GROWTH STROY AND
THE ROBOTAXI ROLLOUT IN AUSTIN HAS BEEN PUT OUT IN PUBLIC, BUT
WILL THAT MAKE MONEY SOON? THE TOP LINE AROUND GROWTH, HOW
WILL TESLA EVOLVE IN THE COMING MONTHS AND YEARS, SO THIS IS
ONE TO WATCH. TOM: GREAT PREVIEW, DANNY LEE. SPACEX TOLD AN ELON MUSK COULD
RETURN TO POLITICS, MAKING THE ADMISSION IN PAPERWORK, DISCUSSING ITS LATEST OFFER,
VALUING THEM AT 400 BILLION U.S. DOLLARS MAKING IT THE MOST
VALUABLE PRIVATE COMPANY IN THE WORLD. A FIGHTER JET DISPUTE
OVERSHADOWS A MEETING. THE DETAILS COMING UP.
THIS IS BLOOMBERG. ♪ ♪ >> THE GERMAN CHANCELLOR AND FRENCH PRESIDENT WILL MEET IN
BERLIN TO ADDRESS TENSIONS OVER FUTURE COMBAT AIR SYSTEM JET
PROGRAM DISPUTE IN LEADERSHIP TUSSLE WITH FRANCE’S AVIATION
AND AIRBUS. BENEDIKT KAMMEL LEADS OUR
COVERAGE SO WHAT IS THE DISPUTE ABOUT? BENEDICT: IT’S BETWEEN AIRBUS ON THE GERMAN SIDE AND THE FRENCH
SIDE, THE QUESTION IS WHO WILL LEAD THE PROGRAM? THEY WANTED IT BROADLY EQUAL
WITH A THIRD COMPANY IN SPAIN SO LET’S HAVE EQUAL SHARE OF
THE PROGRAM BUT THEN THE FRENCH ONE SAID WE WOULD LIKE A
LEADERSHIP ROLE WITH THE REASON BEING THEY KNOW A THING OR TWO
ABOUT BUILDING AND THEY CANNOT BE A HAPPY SOCIALIST UNION, WE
NEED ONE PARTY CAN CONTROL AND THAT IS US.
ALL OF THIS BROKE INTO THE OPEN AT THE PARIS AIR SHOW WITH
AIRBUS SAYING WE THOUGHT WE HAD AN AGREEMENT, THIS IS TIRING.
THEN ON THE OTHER SIDE THEY SAID THIS IS THE WAY IT SHOULD
BE, TAKE IT OUR WAY OR WE WILL WALK AWAY SO WE ARE BRINGING IN
POLITICAL LEADERSHIP AND SAYING WE NEED TO SORT THIS, EUROPE IS
AT STAKE WITH THE KEY PROGRAMS AT STAKE AND HOPEFULLY THEY
WILL FIND AGREEMENT IN THE NEXT COUPLE OF WEEKS. TOM:
DO WE EXPECT LEADERS TO GET TO A CLOSE AND MOVE ON? BENEDICT: THAT’S THE BIG QUESTION,
WHETHER THEY WILL SAY PLEASE GET YOUR ACT TOGETHER AND
WHETHER THEY WILL GO ALONG BUT WE HEARD FROM THE CEO ERIC
SAYING HE STILL WANTS A LEADERSHIP ROLE, DENYING THAT
HE WANTED 80% SO THAT IS NOT THE CASE BUT HE WANTS A
LEADERSHIP ROLE. TOM: OK, BENEDIKT KAMMEL, MANAGING
EDITOR, OF COURSE WATCHING THE MEETING AND RESOLUTION IF THERE
IS ONE. COMING UP, SECOND QUARTER
PROFIT FALLS WITH A PROLONGED G OUTAGE. WE SPEAK TO THE CFO.
THAT IS NEXT, THIS IS BLOOMBERG. ♪ TOM:
GOOD MORNING THIS IS BLOOMBERG DAYBREAK:
EUROPE, I’M TOM MACKENZIE IN LONDON, THESE ARE THE STORIES
THAT SET YOUR AGENDA. JAPAN PLANS TO RESIGN ACCORDING
TO LOCAL MEDIA HOURS AFTER AGREEING TO A DEAL TO CUT U.S.
TARIFFS TO 15%. STOCKS IN ASIA GAINED THE MOST
IN A MONTH. ROUND THREE, SCOTT BESSENT SAID
TRADE TALKS WITH CHINA WILL RESUME IN STOCKHOLM NEXT WEEK. PLUS, S.A.P.
REPORTS CLOWN AND’S — CLOUD ON SOFTWARE REVENUE SHORT. EUROPE’S MOST VALUABLE COMPANY
IS COMING UP SHORTLY. LET’S GET TO THESE MARKETS
BECAUSE THE DEAL BETWEEN JAPAN AND THE U.S.
IS BOOSTING GLOBAL EQUITIES ALREADY AT OR NEAR RECORD HIGHS.
PLANING HIGHER BY 1.2%. THE ASIAN SESSION IS — AND WE
WILL BREAK DOWN JAPAN. S&P FUTURE STATE SIDE AFTER
REMAINING AT RECORD HIGHS BY THE CLOSE YESTERDAY. >> — BEYOND THE EXUBERANCE IN THE EQUITY MARKET
BOND OPTION IN JAPAN WEAKER THAN SOME WOULD EXPECT IN
YIELDS ARE UP IN JAPANESE SOVEREIGN DEBT.
REFLECTED IN U.S. JEOPARDY WITH YIELDS UP TO
BASIS POINTS TENURE AT 436. EURO DOWN .2% OF 117.
JAPANESE YEN ALWAYS DOWN. TRADE OPTIMISM LIFTING OIL
PRICES. GO A LITTLE SOFTER WITH THE
OPPOSITE TO THAT DYNAMIC. RISK HAVEN IS SOFTER DOWN BY
.3%. GIVE US A RUNDOWN OF THE TRADE
DEAL BETWEEN JAPAN AND THE U.S. AND WHAT MARKETS WERE EXPECTING
THE SIGNIFICANCE OF 15% FOR THE AUTO SECTOR. >> IT HAS BEEN AN EXCITING DAY IN THE DAY IS NOT OVER THE NEWS
THIS MORNING THAT WE HAVE 15% TARIFFS ON JAPAN THAT SLOWER
THAN MOST MARKET PLAYERS WERE EXPECTING.
THE PREVIOUS THREAT WAS 25% AT SOME POINT TRUMP HAD THREATENED
A SIZE 35 PERCENT ON JAPANESE IMPORTS. THEY HAD ALREADY FACTORED IN
20% TARIFFS. WE’VE SEEN THE TOPICS UP AT A
RECORD HIGH. AS BIGGEST INTRADAY RISE.
YOU CAN REALLY SEE THAT POSITIVITY BEING REFLECTED IN
EXPORTERS. I THINK THIS REALLY EXCEEDED A
LOT OF PEOPLE’S EXPECTATIONS. TOM:
IT’S REMARKABLE YOU HAVE TO GO BACK TO 1987 TO SEE THESE MOVES.
IS THIS A SIGNIFICANT REPRICING AROUND THE LION TRADE SCENARIO? >> THE TOPICS IN JAPANESE DECKS
HAD THAT LIBERATION DAY DOWN. IT’S EXACTLY WITH THE TERMS ARE
OF THIS TRUCE. WE ALREADY KNOW THE TRUMP SAID
THAT JAPAN HAS AGREED TO INVEST $550 BILLION INTO THE U.S.
THAT COULD BE A LOT OF CAPITAL FROM HERE.
THAT COULD ALSO WEIGH ON THE END.
THAT COULD POTENTIALLY BRING SOME ISSUES FOR THE ECONOMY OUT
LONGER-TERM. I THINK INVESTORS WILL BE
LOOKING TOWARDS LONGER-TERM IMPLICATIONS OF THIS AFTER THE
DYNAMISM OF TODAY DIES DOWN. IN THE SHORT TERM I THINK THE
GENERAL MOOD HERE TODAY IS THAT THIS IS A BIG TAILWIND FOR THE
STOCK MARKET. TOM: JEW — BLOOMBERG JAPAN STOCK
REPORTER, THANK YOU FOR AN UPDATE IN TERMS OF HOW THE
JAPANESE MARKETS ARE RESPONDING TO THIS TRADE DEAL.
JAPANESE TRADE DEAL SET TO STEP DOWN.
BACK TO THE EUROPEAN EARNINGS STORY.
WE FOCUS ON THE DROP IN SECOND QUARTER PROFIT MISSING
ESTIMATES. IT WAS HIT BY A SOFTER OIL
PRICES AND A PROLONGED OUTAGE AND ITS LIQUEFIED NATURAL GAS
FACILITY IN THAN NORWAY. WE ARE JOINED BY THEIR CHIEF
FINANCIAL OFFICER. THANK YOU FOR TAKING THE TIME.
HOW DID THEY SET YOU UP FOR THE QUARTERS AHEAD? IT’S OPERATIONAL AND PRODUCTION
RULES. AND ON NEW OIL DEVELOPMENT.
IT’S PRODUCING $220,000 PER DAY. UNDERLYING RESULTS ARE VERY
STRONG. THEY ASKED US PROMISE, WE HAVE
PRODUCTION GROWTH. THEY ARE ABLE TO NEUTRALIZE
INFLATION AND WE GENERATE A LOT OF SURPLUS CASH AND WE PROVIDE
CAPITAL DISTRIBUTION OF $9 BILLION THIS YEAR. SO THIS IS GOING AS WE HAVE
PROMISED IN DELIVERING AND DELIVERING, AND DELIVERING WHAT
WE HAVE SET. TOM: WHAT ASSUMPTIONS ARE YOU MAKING.
SOFTER OIL PRICES WOULD A BIT — WAS A BIT OF A DRAGON TERMS
OF Q2 FOR THE BUSINESS. WHAT ASSUMPTIONS ARE YOU MAKING
ABOUT OIL AND GAS PRICES AS WE PUSH INTO THE SECOND HALF OF
THE YEAR AS THESE TRADE DEALS START TO BUILD?
BIKES IN THE MARKET IT’S A TAX SITUATION. SO, WE HAVE ASSUMED OIL AND GAS
PRICES FOR THE YEAR. WE HAVE PRODUCTION WITH 50-50
BETWEEN OIL AND GAS AND OIL HAS COME DOWN BY 20% SINCE LAST
YEAR BUT GAS PRICES ARE UP. SO IN EUROPE, GAS PRICES ARE UP
20% SINCE LAST YEAR AND IN THE U.S., 80%. SO AS WE PRODUCE INTO THIS
ENVIRONMENT, IT BENEFITS FROM THE STRONG GAS MARKET. IN THE OIL MARKET, WE DO SEE A
TIGHT SITUATION BUT MANY COMMENTATORS SEE THIS WELL
SUPPLIED MARKET GOING INTO THE AUTUMN.
THE CUT FROM OPEC AS LONG, BUT IT’S A FRAGILE SITUATION AS WE
HAVE LEARNED. TOM: WHAT ARE YOU SEEING IN TERMS OF
GAS DEMAND THIS WINTER? ARE YOU BULLISH ON GAS DEMAND
THIS WINTER? >> IT IS A TIGHT SITUATION.
THIS YEAR IN GAS STORAGE IS OUR 20% LOWER THAN THEY WERE LAST
YEAR, AND ALSO BELOW THE FIVE-YEAR AVERAGE. IT IS DRIVEN BY A HEAT WAVE IN
EUROPE. BUT ALSO THE FEELINGS OF STORAGE IN ASIA.
QUITE A LOT OF ENERGY IS MOVING TO ASIA AND THERE’S ACTUALLY A
DROP OF IT COMING TO EUROPE. SO IT IS A TIGHT SITUATION.
IT IS A VULNERABLE SITUATION. THERE ARE LNG CAPACITIES COMING
INTO THE MARKET BUT I THINK WE ALL NEED TO WATCH OUT THAT IT IS A TIGHT MARKET THAT CAN BE
VOLATILE AND PRICES CAN BE SIGNIFICANTLY HIGHER.
I THINK IT’S IMPORTANT TO REMEMBER OF THE $12 MARKET AND
ITS TWO DOLLAR INTO THIS MARKET. WE ARE WELL-POSITIONED TO BE
THE LARGEST SUPPLIER OF ENERGY AND WE ARE VERY COMMITTED TO
DELIVER. TOM: YOU TOOK AN IMPAIRMENT CHARGE
OF CLOSE TO ONE BILLION U.S. DOLLARS, 155 MILLION U.S.
DOLLARS LINK TO THE EMPIRE PROJECT JUST OFF OF NEW YORK.
THE TRUMP ADMINISTRATION BLOCKED IT, THEY’VE UNBLOCKED
IT. WHAT DOES THE REVIEW STAN, WHAT
IS THE DELAY AROUND GETTING PHASE I OFF THE GROUND, HOW
CONFIDENT ARE YOU ABOUT PHASE TWO OF THAT PROJECT? >> FIRST OF ALL, WE ARE VERY
SATISFIED TO REVERSE THE ORDER. VERY HAPPY TO SEE THAT AND IT’S
GOING WELL. WHEN IT COMES TO THE IMPAIRMENT
— IMPAIRMENT, THAT IS DISAPPOINTING TO REPORT BUT IT IS THE RESULT OF CHANGING
REGULATIONS SO THERE IS A PROBABILITY FOR MORE OVER THE
FORESEEABLE FUTURE. AND THAT IS IMPACTING A PROJECT
THAT WE HAVE RELATED TO STAGING FACILITIES.
SO THAT’S WHAT’S REALLY DRIVING IT.
BUT IT IS DRIVEN BY REGULATORY CHANGES AND SUCH. IT IS UNLIKELY TO BE PROGRESS.
WE WILL HAVE TO PUSH IT BUT HAVE ALL THE FOCUS
ON THE CONTRACT AND WILL DELIVER INTO THE MARKET BY NEXT
YEAR. SIGNIFICANT CONTRIBUTION TO
POWER INTO THE STATE OF NEW YORK AND I’M VERY HAPPY TO
REPORT THAT. TOM: CFO ON THE BACK OF THOSE
EARNINGS. THANK YOU VERY MUCH FOR YOUR
TIME. LET’S STAY ON THE ENERGY SPACE
WITH A FOCUS ON ELECTRICITY AND SOLAR AND WIND OVER IN SPAIN
STARTING A 5 BILLION EUROS SHARE CAPITAL INCREASE AFTER
THE COMPANY REPORTED SECOND QUARTER EARNINGS THAT BEAT
ESTIMATES. AGAIN, THEY ARE LAUNCHING A 5
BILLION EUROS SHARE CAPITAL INCREASE.
A START TO WATCH AT THE OPEN, 8:00 A.M. U.K. TIME.
EUROPE’S MOST VALUABLE COMPANY WARNS OF PRECIOUS CAUSED BY A
WEAKER DOLLAR AS SECOND-QUARTER EARNINGS FELL JUST SHORT OF
ESTIMATES. I WILL BE SPEAKING WITH THE CEO
OF S.A.P., THAT IS NEXT. THIS IS BLOOMBERG. ♪ TOM: WELCOME BACK TO BLOOMBERG
DAYBREAK: EUROPE. S.A.P. HAS REPORTED CLOUD ON SOFTWARE
REVENUE GROWTH OF 11%, JUST SHORT OF ESTIMATES AMID
CONCERNS OVER U.S. TARIFFS. IT’S A VALUABLE COMPANY THAT
SAYS IT EXPECTS CURRENCY FLUCTUATIONS TO HURT FOR YOUR
GROWTH BY POTENTIALLY 3.5 PERCENTAGE POINTS.
THE CEO, CHRISTIAN KLEIN JOINS US NOW.
THANK YOU FOR TAKING THE TIME. JUST READING THROUGH SOME
ANALYSTS REACTIONS IN THE WORDS CAUTIOUS AND CAUTION ARE COMING
THROUGH IN TERMS OF THE ANALYSTS RESPONSE TO THESE
EARNINGS. WHAT IS BEHIND THAT CAUTION?
THE CAUTIOUS COMMENTARY COMING THROUGH FROM UNITY.
QUICK THANK YOU FOR HAVING ME, GOOD MORNING, TOM.
WE NEED TAKE THE MACRO AND CERTAINTY OUT, LOOK AT THE
UNDERLYING PERFORMANCE OF THE S.A.P..
THE CLOUD REVENUE, WHICH IS GROWING BY 20%, THIS IS AN
ACCELERATION COMPARED TO Q1 BY TWO PERCENTAGE POINTS.
THE BACKLOG IS NOW UP TO 18 BILLION EUROS SHOWING THE
RESILIENCY OF S.A.P.. EVEN MORE IMPORTANT WHEN YOU
LOOK AT INNOVATION AND AI, OVER HALF OF THE DEALS EMBEDDED AI
SHOWING THE STRONG DEMAND OF CUSTOMERS FOR BUSINESS AI.
YES, OF COURSE WE SEE THE MACRO AND CERTAINTY OUT THERE.
WE SEE THE CURRENCY HEADWINDS, BUT WHAT WE CONTROL AS OUR OWN
PERFORMANCE AND THAT WAS REALLY GOOD THIS QUARTER. TOM:
SO YOUR OWN PERFORMANCE WAS STRONG.
WHAT IS THE EXTENT OF THAT CAUTION AMONGST YOUR CUSTOMERS
WHEN IT COMES TO THE TARIFF UNCERTAINTY, WHAT ARE YOU
HEARING FROM YOUR CLIENTS AND TO WHAT EXTENT ARE THEY
BRINGING DOWN SOME OF THEIR ORDERS? >> WHAT WE HAVE SEEN IN VERY
FEW INDUSTRIES, TAKE THE U.S. PUBLIC SECTOR, MANUFACTURING,
THERE ARE CUSTOMERS WHO GOT HIT HARD BY TARIFFS.
OBVIOUSLY WE SEE SOME ELONGATED SALES CYCLES. THEY ALREADY FEEL THE PRESSURE
OUT OF THE TARIFFS. THESE ARE THE MOMENTS WHERE WE
HAVE TO CONVINCE EVEN MORE WITH STRONG BUSINESS CASES.
WHEN YOU LOOK AT OUR HALF YEAR TO PIPELINE, THAT IS WHERE WE
ARE STRONG AT THE CUSTOMERS SEE OUR SOFTWARE ALLY AIS A
SOLUTION TO OVERCOME THOSE CHALLENGES AND WE STILL NEED TO
WORK MORE DILIGENTLY FOR SOME OF THE CUSTOMERS WHO ALREADY
GOT HIT HARD BY TARIFFS. TOM: EUROPEAN STOCK FUTURES ARE UP
THIS MORNING ON EXPECTATIONS THAT MAY BE EUROPE COULD
EMULATE JAPAN AND GET A DEAL WITH THE U.S.
IF EUROPE DOES NOT GET A DEAL WITH THE U.S., WHAT WILL THE
IMPACT BE ON S.A.P., DO YOU THINK? >> WHEN YOU LOOK AT S.A.P., WE
ARE DOING BUSINESS IN OVER 100 COUNTRIES IN THE WORLD.
WE HAVE THE RESILIENCY. WE ARE ALSO CARRYING 25
INDUSTRIES. STILL, WHAT IS FOR US VERY
IMPORTANT IS PREDICTABLE TRADE. SO WE ARE ALSO LOOKING FORWARD
THAT IT COULD REALLY CUT A DEAL WITH THE U.S. BECAUSE WE NEEDED.
WHEN THE ECONOMY IS GOING DOWN, NO ONE IS IMMUNE AGAINST THAT.
THAT’S WHY I’M STILL HOPING THAT WE CAN FOLLOW JAPAN AND
ARE ALSO AGREEING TO A DEAL WITH THE UNITED STATES. TOM: YOU’RE THE MOST VALUABLE
COMPANY IN EUROPE, WHAT SIGNALS ARE YOU GETTING FROM THE GERMAN
GOVERNMENT AROUND THE LIKELIHOOD OF A DEAL BETWEEN
EUROPE AND THE U.S.? >> FROM WHAT I KNOW, THERE ARE
ONGOING NEGOTIATIONS AND THEY ARE NEGOTIATING IN GOOD FAITH.
THEY REALLY WANT TO COME TOGETHER.
TALKING TO EACH OTHER’S THE FIRST STEP.
THE SECOND STEP IS THAT BOTH SIDES ARE WILLING TO COMPROMISE
TO FIND A DEAL, SO I’M STAYING OPTIMISTIC THAT THEY WILL FIND
A DEAL IN Q3 THAT WOULD BE IMPORTANT.
I WOULD SAY THERE COULD BE WINNERS ON BOTH SIDES OF THE
OCEAN IF THEY COULD FIND A DEAL. WITH THAT SPIRIT, THE
GOVERNMENT IS NEEDING IT. TOM: 30 PERCENT, 30% OF YOUR SALES
COMING FROM THE U.S. IS THE BIGGEST SINGLE MARKET
FOR S.A.P.. YOU TALKED ABOUT THE CURRENCY
PRESSURES, THE WEAKER DOLLAR. DO WE EXPECT IT TO SHOW UP NEXT
YEAR AND THE RESULTS? >> IT DEPENDS ON HOW THE
CURRENCY IN OUR WORLD DEVELOPS. IF IT STAYS LIKE THAT, WE WILL
SEE FURTHER CURRENCY IMPACT, BUT WE ALWAYS GUIDE CONSTANT
CURRENCY. THIS IS WHAT WE CAN CONTROL.
AND WE EXPECT AN ONGOING STRONG BUSINESS. THE CURRENCY IS HOW TO
INFLUENCE. IF IT STAYS LIKE THAT OBVIOUSLY
THERE WILL BE FURTHER IMPACT, BUT AGAIN, CURRENCY FLUCTUATES
OVER THE LAST FIVE YEARS A LOT. AND ONCE FOR US IMPORTANT IS
THE S.A.P. SAYING STRONG. TOM: IS THERE MORE YOU CAN DO TO
MITIGATE THE EFFECTS? >> YES.
WE ARE HEDGING, AND WE ARE ALSO DOING THIS AND CLOSING
CONTRACTS IN ALL PARTS OF THE WORLD.
WE HAVE HUGE MULTINATIONALS. WE CAN ALSO HAVE CERTAIN
CONTRACTS IN LOCAL COUNTRIES. THERE ARE THINGS WE CAN DO.
FOR US IT’S REALLY IMPORTANT, THE PIPELINE IS STRONG.
WE ACTUALLY SEE STRONG EXECUTION SO FAR IN THE YEAR
AND THAT IS OUR MAIN FOCUS. AND THEN THE CURRENCY, THERE
ARE CERTAIN THINGS THAT WE CAN MECHANICALLY DO, AND WE ARE
GOING TO DO THAT. TOM: WHAT IS THE AI DEMAND?
HOW MUCH OF A CATALYST OR DRIVER WILL THAT DEMAND FOR AI
SERVICES FROM S.A.P. BE IN 2026? >> GIVEN THAT WE ALREADY
DELIVERED 40 AI AGENTS, NO MATTER IF IT’S ABOUT FINANCIAL
CLOSE, BETTER GROWTH, BETTER PRICING, BETTER CONSUMER TRENDS
OR ABOUT SUPPLY CHAIN RESILIENCY, THE CUSTOMERS SAID
50% OF THE DEALS ARE ALREADY INCLUDING AI.
THE ADOPTION IS GOING UP IN THE CUSTOMER IS VERY IMPORTANT.
PLEASE SEE THE PRODUCTIVITY INCREASES.
AFTER A BLIND SAP BUSINESS AI, AND NOW THAT WE ARE DELIVERING
MORE AND MORE ON TOP OF OUR AI FOUNDATION AND TOGETHER WITH
OUR NEW DATA OF THE NEW BUSINESS DATA CLOUD, I EXPECT
THAT WE SEE A FURTHER SURGE IN BUSINESS AI IN 2026. TOM: A FURTHER SURGEON BUSINESS AI
IN 2026. BEFORE WE LET YOU GO THE
BACKLOG OF 18 BILLION EUROS, SUPPORT COMING THROUGH, WHAT IS
THAT BACKLOG OF ORDERS LOOK LIKE BY 2025?
QUAKES THAT REALLY DEPENDS ON THE SECOND HALF OF THE YEAR.
WE SAID THE PIPELINE IS STRONG, WE HAVE A REALLY GOOD PIPELINE
COVERAGE. ON THE OTHER SIDE THERE IS THIS
MACRO AND CERTAINTY. IT WILL ALL DEPEND ON CAN WE
REALLY EXECUTE ON ALL OF THE PIPELINE, SO THE BACKLOG WILL
FURTHER GROW. TO WHAT EXTENT REALLY DEPENDS
ON MACRO AND CERTAINTY. AND IF EXECUTION STAY STRONG,
WE CONFIRMED OUR OUTLOOK SO WE STAY POSITIVE FOR THE YEAR. TOM: S.A.P.
CEO KRISTIAN KLEIN ON THE BACK OF THOSE EARNINGS.
A START FOR YOU TO WATCH AT THE OPEN.
NOW UP TO THE STORIES MAKING THE NEWS.
NOKIA HAS CUT ITS GUIDANCE FOR THE YEAR CITING A WEAKER U.S.
DOLLAR AND TARIFFS. THE TELECOM EQUIPMENT MAKER
EXPECTS IT TO BE BETWEEN 1.6 AND 2.1 BILLION EUROS.
DOWN FROM ITS EARLIER GUIDANCE OF HIS MUCH IS 2.4 BILLION.
NOKIA SAYS THE BOTTOM LINE WILL BE BETWEEN 50 AND 80 MILLION
EUROS. SOME INTERNATIONAL SECOND QUARTER ORDERS HAVE FALLEN,
MISSING EXPECTATIONS. THE KINGS OF THE CHIPMAKING
MACHINE IS FLAGGED AS THE SEMICONDUCTOR BUSINESS OR SOME
OF ITS CUSTOMERS INCLUDING INTEL AND SAMSUNG SEE
LEADERSHIP IN THE AI RACE. THE DUTCH COMPANY SAID THE
DECLINE WAS MAINLY DUE TO LOWER TO ADVANCE AND FOUNDRY BOOKINGS
WHILE SALES OF ITS LEADING EDGE MACHINES WERE ROBUST. CHIPMAKER
TEXAS INSTRUMENTS ARE KEY SUPPLIER FOR CARS AND FACTORY
EQUIPMENT TUMBLED IN LATE TRADING AFTER STOKING FEARS
THAT TARA FUELED SURGEON TO MAN WILL BE SHORT-LIVED.
THE COMPANY ISSUED A THIRD QUARTER FORECAST THAT BEAT MOST
ESTIMATES. THE OUTLOOK WAS MORE GUIDE —
GUARDED THAN SOME INVESTORS HAD ANTICIPATED.
PRIME MINISTER NARENDRA MODI IS DUE TO ARRIVE IN THE U.K.
FOR A TWO DAY VISIT WHERE HE’S EXPECTED TO SIGN A TRADE DEER
— DEAL WITH PRIME MINISTER KEIR STARMER.
IT WAS AGREED IN MAY AND CUTS TARGETS ON COSMETICS, VEHICLES,
ALCOHOL AND OTHER GOODS. IT’S BRITAIN’S BIGGEST TRADE
DEAL SINCE BREXIT IN INDIA’S FIRST WITH THE EUROPEAN ECONOMY.
OZZY OSBOURNE, THE GLOBAL ROCKSTAR AND SO-CALLED PRINCE
OF DARKNESS HAS DIED, AGED 76. THE SINGER FOR A HEAVY METAL
GROUP BLACK SABBATH GAVE A FAREWELL CONCERT TO 40,000 FANS
LESS THAN THREE WEEKS AGO. AFTER LEAVING THE GROUP HE WENT
TO A SOLO CAREER AND STARRED IN HIS OWN HIT REALITY TV SHOW.
PLENTY MORE COMING UP. THIS IS BLOOMBERG. ♪ TOM: WELCOME BACK TO BLOOMBERG
DAYBREAK: EUROPE. JAPAN STRIKES A DEAL WITH THE
U.S. ON THE TRAITS THEORY. THE PRIME MINISTER EXPECTED TO
STEP DOWN ACCORDING TO REPORTING FROM LOCAL MEDIA, BUT
ALSO A WEAK 40 YEAR OPTION AND YOU SEE THE RIPPLE EFFECT IN
TERMS OF YIELDS UP ON THE BENCHMARK 10 YEAR OVER IN JAPAN.
TO THE HIGHEST LEVEL SINCE 2008. THE SELLOFF IN THE SOVEREIGN
DEBT OF JAPAN IS HAVING A GLOBAL RIPPLE EFFECT.
SEED IN TREASURIES WITH YIELDS UP ACROSS THE CURVE.
JUST ONE TO REMEMBER AS WE THINK ABOUT THE POLITICAL
VOLATILITY AND CERTAINTY IN JAPAN WITH EXPECTATIONS
POTENTIALLY OF MORE FISCAL SPEND ADDING TO PRESSURE IN THE
BOND MARKETS. LET’S HAVE A LOOK AT THE
PREVIEW ON THE EARNINGS FRONT. COMING UP TODAY, TESLA EARNINGS
HAVE SEEN SALES SLUMPING NOT JUST IN EUROPE, NOT JUST IN
FRANCE AND GERMANY, BUT IN THE U.S., PARTICULARLY IN
CALIFORNIA. YOU’VE SEEN A DROP OF ALMOST
20%. WHEN IT COMES TO TESLA, YOU HAVE TO THINK ABOUT WHAT HAS TO
BE SAID FROM ELON MUSK AROUND ROBOTAXIS, CHEAPER MODELS.
EXPECTING REVENUE. THESE ARE THE ESTIMATES 22
BILLION, 22 .8 BILLION U.S. DOLLARS IS THE ESTIMATES.
THE COMMENTARY ON THE ROBOTAXIS ON THE COMMENTARY ON AUTONOMOUS
VEHICLES AND CHEAPER MODELS AND FOCUS.
ALPHABET EARNINGS ALSO COMING UP LATER TODAY.
THE STOCK IS FLAT YEAR TODAY. THE CLOUD BUSINESS IS SEEN AS
THE BIGGEST PROFIT GOING FORWARD.
THERE WILL BE SCRUTINY OF THAT. ANYTHING THEY HAVE TO SAY ABOUT
ENSURING GOOGLE SEARCH IS PROTECTED FROM THAT COMPETITION
FROM THE LIKES OF PERPLEXITY AI AND OTHERS WHETHER THEY COULD
BUILD A MOAT AROUND THAT. GEMINI, ANY UPDATES WILL BE
SCRUTINIZED. ALPHABET IS COMING UP.
THE OPENING TRADE IS UP NEXT. THIS IS BLOOMBERG. ♪

Bloomberg Daybreak Europe is your essential morning viewing to stay ahead. Live from London, we set the agenda for your day, catching you up with overnight markets news from the US and Asia. And we’ll tell you what matters for investors in Europe, giving you insight before trading begins.

On today’s show, Toyota & Subaru are among the Japanese carmakers surging after the US President announced a trade deal with Japan. Under the deal, the tariff on autos and car parts will be lowered from 25% to 15%. Meanwhile Japanese media report that Prime Minister Shigeru Ishiba will announce his intention to step down as soon as this month, after losing his Upper House majority at the weekend.

Also on the programme, UniCredit raises its full-year profit outlook, after dropping its bid for rival Banco BPM; Norway’s Equinor reports a 19% drop in quarterly profit on softer oil prices and we speak to the CEO of SAP, Europe’s most valuable company, as its quarterly cloud and software sales fall short.

Today’s guests: Torgrim Reitan, Equinor, CFO and Christian Klein, SAP, CEO.

Chapters:
00:00:00 – Daybreak Europe
00:01:05 – UniCredit 2Q Earnings
00:04:06 – Japan’s Topix Index Trades Above Record-High Closing Level
00:05:40 – Japan 40-Year Auction Sees Weak Demand
00:06:14 – Japan’s Ishiba To Resign By August-End: Mainichi
00:11:12 – Stocks Jump On Tariff Deals
00:13:04 – Kohl’s Becomes Traders’ Latest Meme Darling
00:13:35 – UniCredit Lifts Outlook as Orcel Moves On From Banco BPM Bid
00:17:03 – Tesla to Report as Investors Eye Robotaxi, Outlook
00:20:09 – SpaceX Warns Musk Could Return To Politics
00:21:03 – Macron-Merz Meeting In Berlin on Defense Spat
00:26:23 – Trump Says Japan Trade Deal Reached
00:29:31 – Torgrim Reitan, Equinor CFO
00:35:50 – Christian Klein, SAP CEO
00:42:52 – Nokia Cuts Profit Forecast
00:43:17 – ASM 2Q Order Misses Estimates
00:43:44 – Texas Instruments Plunges On Forecast
00:44:06 – Indian PM Modi To Make Two-Day UK Visit
00:44:27 – Ozzy Osbourne Dies At 76
00:45:10 – Japanese Assets In Focus
——–
More on Bloomberg Television and Markets

Like this video? Subscribe and turn on notifications so you don’t miss any videos from Bloomberg Markets & Finance: https://tinyurl.com/ysu5b8a9
Visit http://www.bloomberg.com for business news & analysis, up-to-the-minute market data, features, profiles and more.

Connect with Bloomberg Television on:
X: https://twitter.com/BloombergTV
Facebook: https://www.facebook.com/BloombergTelevision
Instagram: https://www.instagram.com/bloombergtv/

Connect with Bloomberg Business on:
X: https://twitter.com/business
Facebook: https://www.facebook.com/bloombergbusiness
Instagram: https://www.instagram.com/bloombergbusiness/
TikTok: https://www.tiktok.com/@bloombergbusiness?lang=en
Reddit: https://www.reddit.com/r/bloomberg/
LinkedIn: https://www.linkedin.com/company/bloomberg-news/

More from Bloomberg:
Bloomberg Radio: https://twitter.com/BloombergRadio

Bloomberg Surveillance: https://twitter.com/bsurveillance
Bloomberg Politics: https://twitter.com/bpolitics
Bloomberg Originals: https://twitter.com/bbgoriginals

Watch more on YouTube:
Bloomberg Technology: https://www.youtube.com/@BloombergTechnology
Bloomberg Originals: https://www.youtube.com/@business
Bloomberg Quicktake: https://www.youtube.com/@BloombergQuicktake
Bloomberg Espanol: https://www.youtube.com/@bloomberg_espanol
Bloomberg Podcasts: https://www.youtube.com/@BloombergPodcasts