♪ trouble, china's stabilization falters, factory output, retail sales, investment all slow. england stimulus leaves u.k. stocks more irresistible than ever. taking trump to task, hillary clinton rips her rivals economic plan, saying it would pull the u.s. back into recession. ♪ >> welcome to "countdown".
i am maus cranny. back to the future. this is the state of play in terms of the s&p 500, nasdaq, hitting records simultaneously. crude trading up 1.4%. reported. it could not be better. let me bring you the risk radar. talking up the possibility of doing some kind the next round of discussions, rallying 4% yesterday. 50 is the new target. index upging market
for the fifth week in a row, the longest winning streak on emerging stocks in two years. vietnam, turkey, china, hong kong, all racing away. vietnam at a 13 week i appeared and gold, what to do about gold? in the meantime, standing by to close out the week. >> thank you. anywhere close to being a fully convertible currency. every ofhe view of economists, strategist, an analyst reviewed by bloomberg. a true flea float is as far away as a decade. j.p. morgan produced a still to do list, including easing capital controls and cut back on intervention. hasralia's treasurer
identified protectionism that blocked a bid by chinese bidders. the part sale of the ausgrid network could have raised a billion dollars. hillary clinton rips into donald trump's economic plan, saying it benefits the wealthiest and increases burdens on the middle class. clinton did not lay out new policies, instead trying to undermine donald trump's claim that his business experience gives him the edge on jobs and wages. >> when it comes to creating jobs. i would not argue it is close. even experts say donald trump's pu our economy back into recession. hong kong's richest man has warm the fallout fo from brexit
will last years. it will bring considerable challenge for the u.k. and europe did he has much riding on britain, the biggest profit generator of the beginners empire. economy stuck and a no must impossible position, and those betting on recovery will be disappointed. overseeing $30 billion at magellan financial group says he is steering clear of companies with large exposure to the world's third-biggest economy. he says there is little evidence that stimulus measures are working and the country needs to make changes to its labor market and welcome migrants to offset the effects of an aging population. michael phelps has become the most successful olympian ever, surpassing a 2000 year old record. his victory in the 200 meter
medley earned him a 13th solo gold medal. of thet him one ahead late great. ,e won gold and 152 bc including shield carrying. global news 24 hours a day powered by more than 2600 journalists and analysts in 120 countries around the world. this is bloomberg news. manus: it was the shield caring that made you smile. you can hear the of flexion in your voice. voice.inflection in your america might be partying like whether asia is joining into the festive spirit. the after party is always better than the party, although that has not turned out that way in terms of this asian session, but we have seen good gains, and we could not dreamt of a better
handover, so this is what we are seeing. strong gains from hong kong. the pastperformer over three months, hang seng gaining 15% over that quarter. the nikkei 225 coming back up. the fresh air did them some good, because we have gains of 1%, slightly weaker yen underpinning sentiment. elsewhere, some reaction and pullback from the chinese data missed expectations. sydney stocks higher close to 1%, now flat. kiwi stocks hit an all-time record high earlier, but pulled back as well. elsewhere, some weakness from southeast asia, but chinese stocks are holding up quite well, up by a 25%. it is these gains from the , crude, driving risk appetite and the energy stocks, which on the msci index when it comes to these energy
players, we are seeing them gain three times as much and potentially the most since april. these are some of the movers. hai reporting a net income decline on account of lower demand for iphones. 20% after hon hai said the chinese commerce ministry gave a green light for a cash injection paving for -- the way for a takeover. shinkoko, paving the way for the the post-booker shema plan. manus: china's stabilization faltered in july according to a multiyear slowdown. factory output, retail sales, investment, all slowed.
in china's head of market economy. ofriptych of numbers, all them missed. how worried are you? >> three mrs. is never good, but let's put this into broader perspective. we are going back to levels in april, may. we are not on new, fresh ground. these numbers are weaker than we thought. however, they raise some questions over the second half growth profile. let's run through the numbers. up 6%, industrial output looking for 6.2%. up 10.2%,nding looking for 10.5%. 8.9%,ment, looking for
got 8.1% growth. manus: this boils down to what stimulus? will we get stimulus? what are we think the chinese responses going to be? and quiteications are clear indications, quite a bit of a contrast, but the signaling is that the stimulus is coming through and will be on the fiscal front grade authorities have been reluctant to add to their benchmark interest rate reduction. sinceave been on hold october. they may have learned that relentless rate cutting does not the pboc hasso flagged it is reluctant to add stimulus, but it is making sure liquidity is flush, the fiscal support is really what will underpin demand, more and more investment spending. one of the breakdowns on the that headlineber,
number masks a real deterioration and private investment. the government is stepping in. it is up 20% year on year, so that is where we are getting stimulus through in china at the moment. manus: thank you very much. breaking down all the numbers for us. let's bring in my guest host. a triptych of mrs., private investment lowest on record, concerning? >> absolutely. we have been talking about the slow down in china for years. i do think we will continue lower. i think they will struggle to hit 6.5% unless they do something on the fiscal side. it does not look like they will do that much more on the monetary side. here is the interesting thing. months ago, we were worried what the china impact would be. manus: that was the devaluation. that huge have
selloff as the bubble burst in the stock market. 12 months later, china has pulled back from its local market. and allowstepped away the currency move lower, weakening, certainly against the dollar and yen. the market is not concerned. all the fears we have had about china have dissipated, very curious. manus: you would maintain there is something else going on in buyingf gold, the pboc gold, the russians buying gold, tie that together for me. of the real curiosities. it is not just central banks. it has been japanese retail. retail investors have been y good at picking the highs and lows and gold. ks, nowcentral-ban
you have japanese retailers looking at the local situation, looking at negative yields and , thank you very much, no thanks. we are seeing china and russia suddenly increasing reserves. not of that may be simply more than a push towards increased diversification of existing reserves. that makes perfect sense. that particular makes perfect is $13 trillion worth of sovereign debt with negative yield. could also simply be this idea that maybe they want to be able to diversify away from the u.s. given the rising geopolitical tensions. manus: i put this chart up. i think this tells me an interesting story.
these are china's crude imports from saudi arabia in white, russia and blue. they have peaked. there are a number of issues, but this is telling me something more disconcerting about the growth story in china given the triptych of mrs.. isses. this of hits at all time highs in u.s. equity markets. it'sorld is partying like 1999, yeah, but beneath the surface. china is the second largest economy in the world, or wherever we are today, and they are still faltering, so we have a big issue, in particular how that bleeds through into commodity prices, the oil side. ,anus: this is where we started
so much better than me, trifecta, we did not get that this morning. there you go. shins, forgive me in my naïveté, but they are rather toppy. >> it depends on how you look at it. if you look at it in terms of dividend yield in terms of treasuries. don't get me wrong, i am with you. i think it is a bubble, but a bubble driven by $13 trillion worth of negative yields and sovereign bonds. where else are people going to put their money? 2015, go back and look at it was extremely similar to 1998 and how it played out, a crisis in the middle of summer, a fed that becomes more cautious, and
that remains with it through the next 12 months. a fed reluctant to move and other central banks increasingly cautious. ina result, a bubble equity markets. thatok until december 2004 bubble to burst. manus: cheerful thoughts for a friday morning. stay with me. let's get our audience set up for the day ahead, a slew of gdp data out of europe starting with germany in less than an hour. then, the u.k. construction numbers. 1:30 p.m. u.k. time, u.s. retail sales. u.k. stocks are more attractive than ever. this as the boe crushes yields. we look at the equity markets post-brexit.
alibaba results, beat estimates, we will hear from the cofounder. 25 minutes later, gdp numbers from germany. stay tuned, we have a new political briefing. 9:30 a.m. u.k. time. we bring you all the news, the analysis, the conversation around the u.k. vote to leave the eu, every fighting -- friday. we speak to the former attain prime minister and a labour mp, this is bloomberg. ♪
-- 1:19 p.m. in hong kong. japan has taken another step to reestablishing its nuclear industry, switching on the fifth reactor under new safety roles. it is expecting power to flow from its facility in three days. leading gains today among asian utilities. group shares have fallen in singapore after it reported a net loss of $55 million in the second quarter. the commodity trader is now boosting cash flow as a priority. noble group has lost its blue-chip status and investment grade rating amid flattening commodity pricing. jack ma's decision to diversify à la bobby -- alibaba is starting to pay off. revenue increased 59% in the first quarter, driven by streaming and cloud computing services.
net income and sales also beat expectations. deutsche bank has hired rich joyce to lead its u.s. investment grade credit sales team. joyce started this week with germany's largest bank, and will report to the head of credit sales in north america. that is your bloomberg business flash. manus: thank you very much. post-brexit stimulus crushing government bond yields. have a look at this. ftse relativehe to the gilt. three and a quarter percent over your government bond yields. in a relative sense, the highest level in 10 years. from ap's benefiting
series of hot money coming into this market. mid-cap companies have jumped to the highest level in a year, and small caps are headed there as well. i was looking at this chart and pound, 0%his is hot rates globally, a yield differential. overe key thing is that the course of my lifetime, the u.k. authorities have always been prepared to take the strain to support local markets. 1992, 1960 8, 1931, every single time, sterling takes the strain. that is the right thing to do. if you look at the support for sterling from interest rate differentials, it is at its
worst if you look at two-year yield differentials, 10 year is the worst sense -- manus: deposits, u.s. dollar deposit rate -- >> the gap between one year u.s. and one year sterling is 90 basis points. there is no yield support. we know we have a currency account deficit. we know whilst of the bank of england is talking sterling down, and mr. carney made some comments that he would be worried if inflation came through. he has been clear that he has to see the direction travel lower. ,o my mind, here we are post-brexit environment. we know there will be a shift. they will make this as competitive as possible. sterling is the easiest way to do it. manus: i'm going to take you back, 1984.
you wrote a beautiful piece on the day we cut rates. in talked about nixon 1971. what caught my eye was in your notes, 1984. we vacillated between 130-134, and then we dropped. there has been three great sterling collapses over the course of the last , 1980 4, 1992,81 and 2008. each one of those was between 25% and 30%, and it took place over six months. if you take the move developing since june and compare it to those previous moves in percentage terms, it is so similar. -- 105 isquestion is
perhaps extreme, but is that width opened up?> >> yes. historically, that has happened three times. with they get concerned if we were getting down to those levels? of course they would. i moved to any big number on currency will elicit headlines in the papers, which is politically unacceptable. so i'm certain you would see some kind of opposition. could you see a move that takes is down another 15% from where we are right now? manus: volatility in the euro and the bunds, a 15 month low. the last we saw of volatility d, theike this in the bun
markets spiked and turned up by 1%. i put the proposition to you that we are facing down the barrel of a spike in volatility. >> i agree with you. let me bring you back to sterling. if you think where we were two months ago, sterling went through the roof in terms of volatility. also in terms of the risk reversals. right now, the six month and 12 month risk reversals are some of the more modest levels we have seen in the last 10 years. given what we know about how isrling can move, that astonishingly easy.
, 6:30 in london. good evening. daybreak is available on bloomberg and mobile function. let's take a look at the top stories making this addition. this is putting the troops near the border with crimea on high alert. vladimir putin is seeking to .eignite the conflict we had that story on the front -- daybreak.hree
global presence. a string of bomb attacks in the crucial terrorism industry. global terror is pervasive. it is literally throughout the world. the final story today focuses on china stabilization or lack thereof. the trifecta. my word of the day. investment, all this on the estimate. that is your daybreak diy.
so let's talk that hillary clinton. she has ripped into donald trump 's economic plan saying it would only benefit the wealthiest. clinton didn't lay out any new policies in her speech, trying to undermine trumps claim in his business experience gives him the edge on boosting jobs and wages. >> when it comes to creating jobs i would argue it is not close. even conservative experts say trumps agenda will pull our economy back into recession. chief strategist, it is sling errors -- slingers delight. they are very protectionist.
mean for protectionism the dollar? typically itd say is dollar negative. what they are really saying is to keep them artificially weak, it goes back to bill clinton, china and japan manipulating currencies. being explicit in his attacks. hillary has said roughly the same thing. the irony is over the course of the last nine months there is little evidence they are. it has been where they have spin .tronger it doesn't matter.
politics is all. you're going to want to do something to protect jobs. if you're talking about jobs and the auto industry there going to look at china and japan. manus: this is where she specifically went after recapping what it is she said. , trump is going to talk about looking after the little guy and putting it to the rich. she is warning this is not necessarily what trump is all about. be tax revenue plan will $1.1 trillion. that is according to the tax policy in washington. reducing investment. primarily by the highest income tax earners. >> it is interesting to contrast
that with donald trump. his tax plans look more like a standard republican plan. on the one hand when he was saying sounded more like let's try and cut taxes for the wealthy are but in terms of where he was he was trying to send a message to blue-collar workers. why would you be in detroit if you didn't want to send that message? >> retail sales are due out later on. this is the overall trend. consumer isn't too bad. they continue to drive quarter. this quarter will be the strongest sense 2014.
the consumer in the united you said therica, fed is going to be on hold for a long time, forced to pull back. >> i think if they hike it would be december. that is my personal view. i struggle to see how they can get the consensus about 50% between now and the september a majorwithout causing dollar rally. we remember what happened in 2013 when the feds had a strong dollar. do they really want that to happen? probably not. fed -- i sad -- eight don't think they want this to
happen. i don't think they want that to happen ahead of the election. i think right now nothing through december at best. what really matters is the fact that other central banks are headed in the opposite direction. even if they do nothing, you have yields improving in their favor. >> incredibly quirky market. this is the whole function of this incredible search. simple as that. it is the black hole effect. going to gets exactly the same director -- direction. alibaba closed at the
highest level in 15 months, revenue was up 59%, streaming entertainment bolstered the economy. >> alibaba shares of 5% on the back of the stronger-than-expected earnings report. the company continues to remain optimistic about the future of the chinese economy. this is the anniversary of the devaluation. take a listen to what he had to say. >> you look at the chinese households.
this is because they have had real wage increases. is all going to provide the foundation for strong growth of consumption. by aofits were way down recent acquisition. earnings.y reported out their revenue into four different and new categories. the investigation and relationship with the fcc is going. >> a lot of companies get letters from the fcc. but we have decided to do is
voluntarily disclose it to the market. the only that we have this conversation with the fcc but the specific issues involved. we've made clear disclosures. in a regular kind of exchange with a regulator. >> i asked if they had spoken to yahoo! about what they plan to stake. its massive decision,! makes that bloomberg san francisco. >> have a look at this. this is the performance. the green line is getting back
where youk to you were on brexit day. europe is trucking along. it needed seven weeks to recover relative to the s&p 500. stocks lagged. we have some good numbers. volume is 13% below the years average. we're going to get italy later on. what you make of that? guest: it affects the currency perfectly. italy andk at europe,
spain, those places can't devalue the currencies. looking back on the day of brexit, it was down 3-4%. they have that straitjacket of a single turn that doesn't allow the points in the local economies. manus: back to your on prison -- prism. >> i will be moderately bullish. don't like the euro. i wish it would go down. i'm not going to stop betting on it. manus: incredible insight as
>> japan has taken another step to reestablishing its reactor. shares have fallen in singapore after a reported a net loss of 55 million u.s. dollars. the commodity traders says the priority is boosting cash flow. sliding commodity prices and attacks on its accounting. revenue increased 59% in the first quarter driven by streaming and cloud computing
let's get the views of somebody who knows a eager to. let's have a look at this. this is twenty-year oil. there we go. this is $29. >> i don't think we are going to get there. cost of production is a lot higher. you are not going to play already game with me. guest: i'm not. manus: they reckon the market will rebalance itself despite the middle east production. production is at record
highs. we are joining everywhere. by over 20 million barrels of the last couple of months. be a slow process but it is definitely happening. s,emand n terms of the what do you make of the demand side of the equation? telling us are growth is at the lowest rate since 2009 read something is not correct here in analytics. economic growth being very weak oil demand has done ok. it is mainly because it is so cheap. particularly in the u.s.. that has been the offsetting
factor. we also expect demand this year and next year as well. manus: there is a new man in town. the year low, this is when meeting happen. we are back in a bear market. they are wedding their lips at the height of the summer sun and re-add. what is the reality of a freeze? have the last three meetings gone off with anything? i think the suspense will be there for another few weeks. i wouldn't put too much money on this one. >> they are not going to give up market share. them they are supplying
the market with whatever the demand is. the demand will be there. we -- apple time have encroached again on the .50, we are bobbing along 50 every time we see that we see drillers come back in. rigorous need $60 to really affect a change in terms of supply. technologyhange with or is at the state of play for time? think we need $60. we have seen costs come down but the costs have come down at the expense of service companies completely in the red. this is not sustainable. we definitely need $60. manus: we are going to get gdp
data out of germany. we get the gdp for the whole of the eurozone. depression economy shrank the least in the second quarter since the contraction began. thehas put on the cost of longest recession in two decades. in the inextricable link between oil and russia, growth and fiscal position, here we are almost out of a recession again in terms of russia. that is quite a stunning performance. guest: that is. what has happened has been visible on the oil demand side. it has moved back home. we have seen this in agriculture and heavy industries.
that has helped the economy received a boost. guest: this is the relationship between china and russia. i am lending to both of your strengths. this is the import levels. peaking in russia. you can see this acceleration. this is a core part of the preparation for russia. guest: china has put in so much money, they expect the oil to flow. this is going to continue. russia will remain the top not one of china, if the top three for the next few years. guest: the other big thing is this trifecta of rallies in the united states of america. the dow and the nasdaq. equities are on a roll. if you about the oil component
it looks better. how trusting of this rally are you? thelinked is it to regaining of the $50 bandwidth? guest: given how much money there is out there i am not surprised with the equity rally. the money has to go somewhere. it is decoupled. i think the key for oil -- one things -- manus: but they are not. i understood inventories were up. guest: visible inventories are very high. the stuff that has been coming down, they will take time. it might take a few months to get there. then the equity oil relationship comes back and you will see some
correlation on a daily basis. manus: you have the demand side and the supply side. undeniably the dollar plays into this trade. give me your view on that relative to oil. guest: on an annual basis come historically when i have tracked this, never more than 5%. at the moment oil is doing its own thing. it needs to find its own footing in many ways. where everybody is happy in the short-term. supplies are falling very fast. >> for what level and what time span? >> i still think it is a likelihood of the 60's next year. manus: a few people would take that. thank you for being with me.
manus: triple trouble. china stabilization falters as investment and factory output slow and miss estimates. iang warns of years of brexit pain. our u.k. stocks more irresistible than ever? task. trumped the hillary clinton rips her rivals plan, saying it would put the u.s. in recession. party like it's 1999. s&p, dow, and nasdaq markets hit record highs amid a surprising earnings season.
welcome to "countdown." i am manus cranny. let's get into the breaking data. germanynumbers for coming in for this quarter at 0.4%, double the estimate. the estimate was for 0.2%. we had seen a barnstorming's first set of numbers in germany that were way above anybody's estimate. -.7%.were plus the majority of this was pre-brexit. you're looking at jobless levels at the lowest since reunification. 95% of germans do not see any risk to their jobs. yes, it slows. it slows to 4/10 of 1%.
that is double the analysts estimate of 2/10 of 1%. that is certainly going to be a relief to germany and a relief to the yesterday -- the rest of europe. that will bolster the overall growth story around europe. that is your growth story in terms of germany. i want to talk about mirsky. they have delivered their second-quarter sales numbers. they missed on estimates. they came in at $8.86 billion. the estimate was for $9.1 billion. excuse me. at the dow, $1.78 billion. -- ebitda, $1.78 billion.
they see the oil full-year result as being positive. previously, they saw the full-year as being a breakeven result. we've moved to a positive on will from breakeven, to significantly below profit for a full year at marist line -- line. on a headline level, second quarter, $656 million. the estimate was for $551 million on the second quarter. that is the state of play with the breaking news on maersk. good old germany, saving europe in terms of growth. equities -- europe is opening down by a third in terms of the stocks 500. london is up by a pit. paris is up by 4/10 of 1%.
trifecta of markets, the nasdaq, the dow, the s&p 500, all roaring ahead as if it was 1999, all three markets making records. the fed may be less on hold. by the way, europe has managed to regain its original level that it was 50 days ago. this is the stoxx 600. europe has finally caught up. i mentioned oil, also mentioning the msci. there are different markets moving. 1% psci is up one third of that is the fifth week in a row we have had a rally, the winning streak in two years. china, allurkey, and up -- vietnam, turkey, and china, all up. next year, you could see a $60 handle.
$43, up over 1%. this is the biggest weekly vance since april of this year. the saudi minister for oil, intimating that there may be a deal to be done. gold is trying to make up its mind in terms of what it does for the rest of the trading day. $1339, virtually unchanged. take a look at the bond markets. my next guest is going to question the validity of what bond markets are telling us in terms of the u.k.. we hit record lows. those are the yields in the u.s.. 10-year government bonds in germany, down 0.9%. equities are definitely skewing to the downside. you are seeing yields drop in the bond markets. on prices are rising ever so slightly. let's get our bloomberg business flash with juliette sally. the yuan isn't
anywhere close to being a fully convertible currency, even as it prepares to enter the imf's rivers back -- reserve basket in october. that is the view of every economist, strategist, and analyst interviewed by bloomberg. haswhile, j.p. morgan chase produced its still to do list, which includes the need to ease capital controls and cut back on intervention. australia's treasurer has rejected claims that xenophobia and protectionism drove his decision to block the sale of the state owned power grid to chinese bidders. scott morrison says national security was the sole reason for rejecting the bid. the sale could have raised almost 8 billion u.s. dollars. perry clinton has ripped into donald trump's economic plan, saying it will only benefit the wealthiest while increasing the burden on the middle class.
>> when it comes to creating jobs, i would argue it's not even close. even conservative experts say trumps agenda will pull our economy back into recession. hong kong's haslinda: richest man, one of the biggest investors in the u.k., has warned that the fallout from britain's decision to leave the eu will last for years. leica chang says the move will bring with a considerable challenge for the u.k. and for europe. he's been writing on britain, which is the biggest profit generator of the billionaire's business empire. japan's a sluggish economy is stuck in an almost impossible position, and those betting on a recovery anytime soon will be disappointed, according to australia's best performing global share fund manager.
he thinks there's little evidence that prime minister's shinzo -- prime minister shinzo stimulus efforts are working. swimmer michael phelps has become the most successful olympian ever, surpassing a 2000-year-old record. his victory in the 200-meter overall medal he earned him a 16th solo metal, his 22nd overall. that put someone ahead of the great li na are's of rome. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. find more stories on the bloomberg at+++
this is bloomberg. manus: thank you very much, juliette sally there. let's catch up with haidi lun. she is standing by. as i said to you earlier, the u.s. is parking like 1999. -- partying like it's 1999. haidi: not quite the after party we were expecting given that handover, that trifecta of record closes in the u.s.. this is where we are sitting. we tied to the tokyo close a few minutes ago. the nikkei 225, 1 of the strongest gainers, up by 1%. we had that rally being supported by the weaker yen. that gave some rest fight when it comes to japanese exporters. the kospi, racing the earlier gains and ending the day flat. regionally, we are looking pretty good. we're on track for the strongest weekly gain in about a month. this is being driven by that energy story, that bump up in oil prices really driving energy
.ompanies in hong kong the state owned giant, up by over 3%. china, also doing very well, as the chinese consumer story continues to play out. that is disappointment -- despite the disappointment in chinese data we have had. sessiona, we closed off lows, certainly off session highs, as well, the aussie dollar declining about 3/10 of 1% after the chinese numbers came out earlier this morning. in terms of hong kong, we are looking at a very strong gain. was talking about, a world-beating rally, the most we have seen since april for the energy stocks. areick look at how we sitting in terms of the currency front. the aussie dollar, trading at 76 cents, some disappointment over the chinese numbers.
manus: there is going to be a lot of debate about what that really means. have a great weekend. great job for us in hong kong. breaking news. it looks like they've recommended a cash offer for pound land. steinhoff says the scheme document for the offer has been whenshed, and this comes steinhoff raise their bid for the u.k. discount -- discount chain. a lot of this has to do with the activist investor, elliott capital. they threatened to scuttle the deal, really questioning the south african suitor in terms of upping their bid. they upped their bid by five pence, 227 pence, so you're looking at the 620 pound -- 620 million pound deal. bids 13 million pounds, that is what an activist investor can do for your value. let's reflect back on one of the
big global economic stories. china, the recent stabilization faltered in july. factory output, retail sales and investments all slowed last year they missed the estimates. let's stick to our bloomberg head of china economy. worried or just accepting that this is a natural evolution of a rebalancing of an economy? >> three strikes is never good, and that is what we had today. i will quickly go through the numbers. we were looking for 6.2% year on year growth. we were looking for 10.5% growth on the resales front, and we got 10.2%. on the investment front, we were looking for 8.9%. we are back up to where we were in april or may. we are not panicking. it's not the end of the world, but growth, the mid-year growth pickup we were anticipating, it
has faltered at its come back a little bit in july. there were some floods that may have affected the factory level, but the real story is may be hidden by these headline numbers. continued reluctance to invest on behalf of china's corporate. corporate investment, very slow growth. the government is having to step in. growth of investment is where the fiscal support is coming through, and its underpinning growth. manus: you are quite right. everything goes in the context what thehina does, world can dream of. policy stimulus on the way? >> probably on the fiscal front, but authorities on the monetary front have been reticent to signal any further interest rate cuts. that is not stopping many private economists who say they do expect at least one more cut to come at
some stage in the second half. the signals we have been hearing from the pboc, somewhat more explicit by its standards, that they are holding off on big stimulus. they are keeping liquidity flush. trying to deal leverage economy. that is the big long-term worry, too much debt. it seems the jury is out. this adds to the case for stimulus, although we may have expected more on the fiscal front of the monetary front. manus: that seems to be the word of 2016, fiscal, fiscal fiscal. welcome, thanks for breaking the numbers down. peter, thank you very much for coming in. how disconcerting is it for you to have a trifecta of disappointing numbers e? >> listening to your
correspondent, hearing him talk in chineseeluctance corporate's to invest, i'm not sure i agree. you've still got 8% growth. that's not a reluctance to invest. it just means there is slightly less enthusiasm to invest. manus: private investment is at a record low. private investment is at 2%. >> it is still growing. that is my point. what would be worrying is if we start to see a fall in investment. we don't have that. china is in this phase where it is slowing. not cyclically, but structurally. three or sohis decades where it has frontloaded huge amounts of investment. the amount of investment was off the scale, and it's completely natural that we are seeing a slowdown now, whether that is in investment or industrial production. i don't think it is anything to worry about. what would be worrying is if we start to see it falling.
that would be worrying is if we start to see things like the services industry start to slow. it's not. you see the services industry is growing quite quickly. we want to see this transition from primary and dairy industries to tertiary industries. that is what is happening. manus: let's try to pull it together. we've got the hang seng on the white line. a 14% surge over the past three months. msci allelative to the country world index. the ppi was a-- nice lift in the early part of that kind ofoes momentum, in terms of china and exposure to asia, what level of exposure would you be prepared to take given the store you just conveyed to me e? suppose asia has always been an interesting region to invest in, but it's not so much
of the macro picture. it is not so much because of the higher economic growth. it is highe time, economic growth that gets companies into trouble. they see growth around them, and they feel this urge to invest. oftentimes, that money is good money being thrown after bad. that return on investment doesn't actually come through. the more interesting companies are the ones that are careful about spending money, and those can often be the ones that produce the much better stock market returns. asia remains an interesting place to invest because of that. it's not because of the economy. it's because of these very safe, careful, disciplined companies that will do well over time. manus: the policy response -- this is where everybody begins to rasp and say, we are going to
get more policy response -- is that what you would expect from china? >> i suppose so. it was the first quarter were growth was actually better. we were talking this morning about numbers disappointing. they have actually been doing .he opposite fairly recently economic growth in the first quarter was better than expected, and i think that was of fiscal stimulus that the chinese were embarking on. i would imagine you will continue to see that if private demand continues to slow. the government step in to boost economic growth. that will be the case everywhere, should be the case everywhere. manus: have that conversation with the germans, with the rest of europe. thank you very much, peter elson
. up next, the search for returns with the bank of england's post-brexit stimulus, crushing government bond yields. which stocks are attracted to invest in? it's a beautiful day in london. stay tuned. we've got a new political u.k. time. 9:30 we bring you all the news and analysis and conversations around the uk's vote to leave fridayto that is every -- the eu. that is every friday on "the pulse." this is bloomberg. ♪
government bond yields. have a look at this. this is the dividend yield for the ftse all share relative to 10-year government bond yields, channeling 2006. that was the last time you saw a real push on this differential. we haven't seen a differential like this in almost 10 years. share index has returned. that's an all-time high relative to the gilt market. the mid-cap companies have jumped to their highest in more are a year, and small caps up a record. let's bring in our guest, peter elson, cio at seneca investment managers. is this all about the pound? >> no, absolutely not. this is a very interesting chart . the interesting feature of this chart is not so much what the
dividend yield has done to the market. the dividend yield has actually stayed very stable over this period. is the fallnd this in real bond yields we have had over the past 15-20 years. u.k., u.s., europe, japan, and in the u.k., we've got the .0-year at -1.5% we've got negative rates in europe, japan, close to negative in the u.s. .hese are extraordinary numbers is, what areesting they telling us he if those bond yields are rational, what does it tell us about the long-term future for economic growth?
manus: what you say spells pretty much economic doom and gloom. >> it's telling you in the u.k., you are going to have a negative growth for the next 50 years. can that be right? can that be right when we've still got so many -- there are some demographic reasons why growth is going to be lower, but if you look at productivity, has productivity growth stalled forever? we have had three waves of proper tip -- productivity growth. the steam engine, the internal combustion engine, and the digital age. are we finished? i don't think so. there is plenty of scope for new technologies to come along, whether it is electric cars, quantum computing, all sorts of other things that are going to start to drive economic growth again, and you will see real interest rates go up. manus: there are a couple of shifts in your portfolio.
>> we bought that in january when we saw the dividend yield around 10%, 11%, and we thought, surely if dividends get cut in you are looking at a 5% yield. in january, you have the spot price around 28, but the forward curve, two years forward, oil $45.till at sure enough, we saw this huge rally. the rally happened a lot quicker than we thought. our target price was reached away quicker than we expected it to be reached, so we thought, well, take some profit. manus: take some profit. nobody ever died of banking a profit, did they?i think rockefeller said that once. cior, thank you very much, at seneca investment managers.
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."y: welcome to "on the move 8:30 in berlin. we are counting you down to the european open. i am guy johnson. i am alongside caroline hyde in germany. party like it's 1999. the s&p, dow, and nasdaq have hit record highs to that hasn't happened this century. are you invested? crude heads for its biggest weekly advance to the saudi's say talks may include action to stabilize the market. it is the world's biggest producer talking up the price.