Skip to main content

tv   Worldwide Exchange  CNBC  August 25, 2015 4:00am-5:01am EDT

4:00 am
after yesterday's historic swings. >> the picture remains bleak in china with the shanghai composite shedding. and riding the profitability. profits hit a 10 year low. the minor trading higher amid a rebound in the sector. >> brent and wti crude clawing back. gains after settling in the lowest level since 2009. also boosting oil and gas stocks across europe today. >> welcome, everyone to the show. we just did a read on the indicator for the state of the german economy and business ifo index, current conditions at
4:01 am
114.8 versus the expectations of 113.9 so slightly higher. looking also at expectations in 102.2 for the month of august. that's in line for expectations and sil to what we saw in month of july. the greek crisis and political impact in germany at this point doesn't seem to have had a big impact on german business sentiment. expectations for july at 102.3. >> let's get more on this. joining us on the phone. a pleasure to have you on the show today. will german business have to look elsewhere if china continues to weaken? that seems to be one of the big questions when i speak to
4:02 am
economists. >> at the moment they're still in a relatively good state. this month particularly in the improvement retail sector has improved, construction sector but all the manufacturing is relatively strong. >> the german economy remains a rock in turbulent waters. how strong can it be with weakness out of china but also the strengthening euro which can hurt many of the exporters in germany. >> well, the expectations decline but are still positive. we compared the situation for instance with the situation after the lehman brothers. it's completely different. 2008 the economy was at a down swing. this time we don't see much
4:03 am
impact on the economy. >> i'm just seeing the bund yield extending the rise slightly after this stayed up by just a tad this morning. what do you think the main factors are to watch heading into the rest of the year? we have four months left before we wrap up this current year. what do you think the wildcards are? >> we still see that if other economies which are not in such a sound state, if they had hit by it but i think for the time being it can be relatively confident that it will be completely different than that. >> thank you for being with us. now what a day yesterday, huh?
4:04 am
what a day. falling asleep last night was interesting. i was high for a number of hours. >> it was hard to get your mind to calm down. >> we were here in the studio watching the swings as you were out there as well. i saw a quote from a trader this morning saying something like being a trader these days is interesting. >> to say the at least. >> yeah. so this morning here in europe we've seen this recovery across the board with all of our european equity markets up higher. 2.5%. 3% when it comes to the ftse mib so strong buying on the back of the massive volatility seen yesterday. we're not quite back up to the levels we lost yesterday. >> it's good to provide that context because over the past three months we're still down 17% on the german dax while the ftse 100 down about 16% over the
4:05 am
past three months so a rebound today but taking a step back. significant losses for the european markets. >> and the german markets was officially in bear market territory yesterday having dropped from its high in april. so we saw massive corrections. shanghai, we continue to watch what's happening in asia and china. breaking below the psychological 3,000 mark. it closed down by 7.6%. straight out to sri in singapore for more on the asian markets. just talk us through what we need to know heading further into our european session here. >> well, we had black monday yesterday and now we have car coal tuesday. that's the phrase that patrick mcgee, you're going to thank him for that. it wasn't me that came up with
4:06 am
that. but it's still quite brittle and look at the shanghai composite. we vibrate these support levels. we've taken out 333100 and today we slipped below and close below that psychologically important level of 3,000 so we're at the lowest level since december 2014. now what we need to see is we need to see action by the pboc. they have been noticeable for their absence. that action could come on friday. it has to be decisive and bold and aggressive and targeted as well. what i'm hearing is we could see a crafted package of not only monetary easing but physical
4:07 am
support measures as well. that should help the market. we haven't seen that yet and that's probably explaining why the hang shy composite is still under the defense. i cannot help but feel this is something false. that's where we stand. back to you for now. >> thank you for that. >> thank you. from both of us. >> good morning i want to show you the minors right now. ftse 100 outperforming in today's trade up about 3.8% in
4:08 am
today's trade. profits plunging to a low of $6.4 billion undershooting analyst expectations. the chief executive says china would continue to be volatile and lower demand forecast for steal but a cost cutting program is supporting shares today helping the global miner raise it's full year dividend. stay tuned andrew mckenzie will be on squawk on the street today. >> meanwhile, they reported a 49% decline in first half profits after revenues dipped on the copper route but the company said that price reached the bottom. the ceo adding that they're well positioned to deal with the sell off. investors also cheering the firm's cost saving measures. and the ones that pay out a dividend, most people that we talk to that come through the doors they say it's too early to get into metals right now or the
4:09 am
miners. stay away from anything exposed to china. try your luck if you really want to find big european companies that pay out healthy dividends but if you are in the mining space and you're looking to invest in miners wouldn't you go for a miner paying out dividends? >> perhaps. now they're accumulating more debt in order to support their dividend which is a scary sign. the raise in debt we're seeing not just among these natural resources players but also the oil and gas majors as well. on the china point, china has been for years buying about 45% of the world's base metal. so we sometimes think the weakness in china already priced into these stocks but this is a dramatic shift in growth expectations given the slow down in that country. >> the world's largest metal consumer. they have a massive say with regards to what's taking place
4:10 am
but we're still seeing buyers in the mining today. >> at least in today's trade. >> so everything thrown out yesterday and everything being brought back up today. indiscriminantly. >> yes. >> let's discuss more on china and it's fate with phillip shaw joining us here around the desk. good morning to you. were you able to watch the market moves we saw yesterday without freaking out? >> everyone had a sense of trepidation about it. some people saying they've never seen anything like it before. i'm not sure that's true. >> never seen a 1,000 plus drop in the dow. >> percentage-wise it wasn't that dissimilar.
4:11 am
in 2008 the drops were taking place against a massive change which was the risk that the financial system was imploding. this time around the global background is much, much more benign. >> when we talk about china that really seems to be the source of confusion and the inability of controlling financial markets and steep decline, does that suggest to you it will be ineffective in kick starting china's economy? >> i wouldn't criticize the chinese authorities for not being able to control their markets a lot of people forgot the extent of the rally between last autumn, september, october and june. it went up by 125% and if you
4:12 am
have a massive rally taking place against the background of a slowing economy, apparently on margin trading it's not all together 100% surprising that that correction is taking place very viciously. in term of the economy, it does seem that the chinese authorities have taken a step away from supporting the market, but that doesn't mean they'll take monetary measures. there's a big reserve requirement up over the last few days. it hasn't happened yet. but perhaps they separate out the market moves from the economy. >> do you think it will make a difference at this stage? they think it could stabilize the markets. is that what's needed or do we need to live through market volatility and let the markets find their own feet? come to term with a slower
4:13 am
growing china which is the reality. it's not going to change just because they come through that suddenly the economy is not going to slow down. it's still going to slow down. >> if you're cutting rrr or just easing monetary or physical policy because you're concerned about the economic slow down then that's the right response. having said that you have to try to balance out on financial stability in china as well. if you are cutting rrr to stabilize the stock market that's a dangerous game. it's really the wrong tool. arguably you saw a bubble and that bubble needs to deflate but some correction is inevitable. >> still expect a 0.4% jump in
4:14 am
german growth in the 3rd quarter. 1.7% for the full year but the economist also saying that china will be a bigger factor for business going forward. they also say that perhaps the full recent -- the recent developments in china at this point are barely reflected in the ifo index. the number of course coming in at 102. that was the ifo expectation which was in line with expectations but a worrying sign i would think here that they're saying. perhaps the impact of china will be seen further down the road. >> it really depends on how the chinese economy performs over the second half of this year and beyond we're looking at growth of 6.5%. if it suggests it's optimistic then sure. it's negative for the german economy and the major exporters
4:15 am
to china. notably east asia but don't forget also that there's a secular shift in the structure of the chinese economy where you're moving away from the big infrastructure driven growth toward something more services oriented. it's not surprising you're seeing some softening in the manufacturing and industrial production numbers. the question is how much is acceptable. >> you're staying with us for the time being. >> get your questions and comments through. we'd love to hear from you. is china to blame for the market turmoil? steven roch was on cnbc yesterday and he was quoting saying china is the excuse and not the cause. >> i would say it's both but that's an interesting perspective. >> i was arguing yesterday morning. >> you were saying this. i didn't agree with you. but you were saying that it's not just china. it can't just be china.
4:16 am
>> it is a big factor at play here. >> it's a big factor. i'm not saying it's not a factor at all but 6.5% growth as well, do we believe those numbers? >> well, do you ever believe any statistical authority numbers 100%? but you also have the private sector surveys and other evidence as well. >> what i'm saying is we have known for a long time and we kind of factor into our thinking that well, give or take a bit, right? >> perhaps. >> here's one thing i would say less than two weeks ago we heard from the pboc and they weakened their currency and then we see this market correction. there has to be a correlation response to china. >> but they weakened it 2%. not 20. >> but it's not just that one move. it's what could happen from here. >> will the pboc devalue the
4:17 am
currency. >> i do agree. >> we're going to talk more about this coming up on worldwide exchange. also apple in focus. no longer a bad apple. the ripple effects of apple's dramatic rebound in yesterday's historic sell off. >> also is the correction over or is this just a pause in the sell off. goldman sachs just changed it's forecast for equity markets. the details on that coming up.
4:18 am
4:19 am
4:20 am
>> yesterday at this time a lot of red on our screens. a very volatile opening yesterday morning. yesterday's afternoon trade with the dow dropping more than 1,000 points at one point. the stoxx europe 600 being brought back up. we recalled higher across the board on the european markets this morning so we're seeing a bounce whether it's something sustainable or people are thinking now is the time to dip back in and find the stocks that still hold value and buy back
4:21 am
into the market we'll talk more about that. but higher by 3% at the moment. we're still off by 9% due to yesterday's massive drops but higher by 3% here in this morning's session. dax up by 3% and ftse mib up by 3.5% being one of the underperformers in yesterday's trade. the dax having gone into bear market territory meaning we've seen a more than 20% correction since the high in april. let me just tell you about some of the stock specifics out there. higher by almost 9% trading near the top of the stoxx 600 after reports they sweetened their
4:22 am
offer for the company once again. they're said to be offering 470 swiss franks compared to the 449 that was offered before. shares of rsa insurance over here, higher by 5% trading sharply higher. the british insurer saying it's received a revised all cash proposal from its rifle. rsa is saying that it's board indicated it's willing to recommend the offer spending the resolution of other terms. >> let's take a look at oil prices lou. brent at $43.62. this after oil settled down by 5.5% yesterday. the lowest level since february of 2009 but some of the buyers coming in at this point, wti crude, still below 40 but at $39.14 up about 90 period cents in today's trade. let's keep a close eye on the oil commodity index. let's take a look at the oil players here.
4:23 am
up by 4.3%. bp also rebounding here. this as the natural resource players also outperforming in today's trade. >> the atlanta fed president is saying it's likely the central bank will start raising rates sometime this year. in prepared remarks on monday he didn't go into detail on what might be a change from his previous view but he says that market turmoil, the stronger dollar and the drop in oil are complicated factors in predicting the pace of growth. >> barclay's capital is pushing out the call from the first rate hike from september to march. the u.s. economy is solid justifying a rate move but they're unlikely to begin hiking in this environment for fear it could further destabilize markets. instead they believe they'll offset tighter financial conditions. >> and the rekrechcent volatilid
4:24 am
to conflicting opinions about hiking rates. >> it's going to be very hard for the fed to move in september. it had a window. that window is closing. they can't take the risks of moving in september if this market turmoil continues. >> open market committee members do not react to one day's action on wall street or a correction. they'll do what's right for the sake of the economy whether they're talks or doves or trying to figure out how to be wise owls and begin the process of removing themselves from excessive accommodation. >> the fed question is really remarkab remarkable. on the back of what we've seen yesterday and janet yellen not going to this year's symposium. jackson hall. >> i think one comment would be that sometimes financial turmoil
4:25 am
can be a very passing phase and goes away quickly. we had a central view that the fed would move in september and our view is migrating away from that because we're not sure whether it would have been gone by september. >> the july they were talking about we know the economy is solid but will that translate to inflation around 2% in the medium term. inflation expectations have dropped over the past month or so in the u.s. and that's another reason for the fed to say let's just hold on for a second. let's see how the it is over the next couple of months. we're to suggest it won't last all that longer but the fed will probably wait until the december meeting to raise rates. >> this is notable because it's the first time that you're saying it's not going to be
4:26 am
september. that it could possibly be later. >> we haven't changed our view yet but that's the logical consequence of what's been happening over the last few d s days. >> did you read larry summers talking about they run the risk of unwinding a lot of work if they hike too early? >> yeah, my take on larry sommers view, why the fed shouldn't raise rates, firstly it's not a new view but the view wasn't so much based on what's been happening in china or financial markets. it's the secular stagnation. the u.s. economy will have trouble gathering growth over the medium term. interestingly he mentioned a few months agatha financial stability concerns present a reason to raise rates earlier on and that's a fact which has been almost forgotten i think in circles that the fomc is also
4:27 am
concerned that it doesn't want to have rates at 0 for too much longer if it can help it. that's perhaps another reason to suggest that there may well be an interest rate increase before the end of this year. >> historically speaking, janet yellen is saying they're data dependent. this is the first time they're saying it's the market turmoil that could be factored in and delay that rate hike to earlier than later. >> well, you could argue if the stock market falls that tightens financial conditions what is new is talking about financial stability. if you're concerned that you don't want to condition them for too long that's a slight
4:28 am
departure from the mandate. you could justify it by saying that it poses economic stability risks as well over the medium determine but it is a factor we're beginning to look for. >> i'm just thinking whether it matters that we stay at zero. you know, why do we necessarily have to come back up to 2% or 3% if we're looking at a changed economy from the next ten years why wouldn't we be able to stay close tore 0 for ten years? >> i don't think rates are due to hit 3% at any time soon but in terms of getting rates away from zero it's important over the medium term that people do realize that rates aren't going to stay at emergency levels forever. they shouldn't make their spending decisions on the basis that we're going to have this ultra low level of rates forever and ever and you speak to a number of people that don't remember anything else. so i think a reminder that at
4:29 am
some point rates will not be at emergency levels it's not just putting them up. >> thank you for being with us. phillip shaw. chief economist at investech. >> could airbus see damages after losing out on a multibillion dollar deal? we'll cross live to paris for the full story after this.
4:30 am
4:31 am
4:32 am
hi, everybody. you're watching worldwide exchange. european markets bouncing back in early trade. state side the dow is open higher by triple digits after yesterday's historic swings. >> the picture remains bleak in china. the shanghai composite shedding more than 7% but some signs of divergence holding on to gains. >> china will be a bigger factor going forward as the latest data doesn't reflect the recent moves. >> riding the volatility. profits hit a 10 year low on the china lead commodity route. shares trading higher amid a rebound in the basic resources sector. >> hello, everybody.
4:33 am
welcome back. hey seema. >> hey, lou. >> european markets buying back up again this morning. that's what we're seeing. name of the game. all of our indices are trading positive territory higher by 2.5 to 3%. xetra dax having corrected by more than 20% since the last recent closing high back in april of this year. so we're gaining a little bit back and a survey helping to put more in the xetra dax this morning. all the sub indices beating forecast with current conditions and expectations pointing to signs of improvement. >> that's helping the euro stoxx 50 trade higher. close to session highs despite the sharp losses stocks suffered on monday. now goldman sachs downgraded it's target for the stoxx 600
4:34 am
and euro stoxx 50. uncertainty is likely to continue for up to 3 months. goldman reducing it's overweight recommendation to neutral, separately in a blog post. the risk is low saying fundamentals remain strong. up and down, up and down. here we go with strong calls. the dow jones up by 386 points now and strong calls for the u.s. >> the new york stock exchange volume at 6.5 billion shares yesterday. the heaviest since october 2011. china markets continue their
4:35 am
free fall losing 7.6% in today's trade. despite the sell off that we're seeing in china, investors brushing that off and foe cousin on the recent sell off in europe and u.s. and taking advantage of the buying opportunity. correct me if i'm wrong, at least from what i've seen over the last two weeks we haven't seen this divergence in sometime. they have been moving in tandem. >> yeah, there used to be a time when they didn't and then we started very much looking -- it's always the case of who do you look at. >> follow the leader. >> typically the u.s. and then china for awhile. >> fed and u.s. and still china in a way. >> more fed. >> i'll going to say more china. >> european leaders and finance ministers moved to calm investors insisting china is not a risk to the economy. take a listen to what these leaders have had to say.
4:36 am
>> i'm convinced that china will do everything possible to stabilize it's economic situation china is an important partner to the european union and we're in close contact with them. >> we need to protect our banking systems from these global issues and i'm reasonably confident though i don't think we can be uneffected by what happens in china, i don't think it's going to cause immediate sharp problems. >> i'm sure china will overcome it's economic difficulties which every country has to face from time to time. >> we have been asking you this morning, how much is china really to blame for the recent market turmoil? you can tweet us at cnbcwex. our personal handles on the bottom of the screen.
4:37 am
thank you for watching and for participating in the discussion on social media. joe says do you two need a referee in the ring? i'd be happy to volunteer. >> i get that because i think it's china ian ray also tweeting cnbcwex saying the problem is saying everyone has bet the house on chinese and indian growth and overvaluations have resulted. lou. >> christopher. he talks about how he thinks we'll have two weeks of correction in the euro and u.s. markets, the european and u.s. markets have yet to go. so another two weeks of the correction but we saw a huge move yesterday. >> absolutely. we continue to see it trade at that level against the u.s. dollar. up to date on breaking news, a german economic minister voiced his concerns or lack of concerns. at this point he says we're not
4:38 am
worried about the impact of china. they're trying to ease fears at this point but it's the exporters weighing on the german dax when you look at the luxury in the auto sector. significant declines in those sec tors given the china volatility and what that means for business for them going forward. >> chinese sales making up around 6% of european sales and germany has 10.2% exposure to china as far as sales so the highest exposure is germany at 10%. >> our next guest says russia is most one of the countries effected by the devaluations of the yuan and slow down. this due to increasing trade lengths with beijing meanwhile a less positive casualty could be
4:39 am
poland which has greater china exposure than headline data suggests. let's get the word. peter a pleasure to see you this morning. how bad could the story get for russia given the weakness in china. >> we've only seen the start is part of the problem. china has been building up massive trading and going both ways exports from russia into china they're immune and they have done the historic levels once a year or so. but that's going to have effects in emerging markets as well. >> we were just talking about the currencies briefly and i was looking at the massive drop in the dollar yesterday and thinking all the emerging market
4:40 am
countries might be quite happy now seeing their battered down current sis coming up again. do you think this will continue? >> they're in a difficult situation at the moment. we're having to see depreciations occur in terms of particularly energy and metals exporters and south africa is particularly in the frame there. russia as well but we think it makes a lot of sense to be up around 1330 but we could be going back to that temporary high but there's still a lot more stress to come from exmerging market exporter currencies to come still and
4:41 am
we're seeing that stress flowing through into commodity imports like poland and hungary as well in this time zone. >> we've been speculating and continue to do so about whether or not the pboc will stabilize the markets. whether they cut rates or cut irr, insert more stimulus. do you think they will? >> there's more options available. there's rrr is the most immediate tool available to try to promote some sentiment through toing that but what we really learned is these have really come through and the chinese still have an amazing ability to sweep problems under the carpet. they don't seem to have run out of carpet yet so there's a lot
4:42 am
of options available. we've only seem them start the deal we inquirity markets as one example. >> peter, thank you very much. you're staying with us. hang on just a second. we need to get through a couple of other stories this morning. airbus is considering legal action against japan's ministry of defense for a lack of transparency in an multimillion dollar helicopter deal. now a lawsuit is one option for the aircraft manufacturer after it lost out on a contract to rival companies bell helicopters and fuji heavy indices tell us what you're hearing and seeing in regards to that? >> we've seen a significant decline. it was down 4.7% yesterday. 4.5% on friday and we're recovering a bit today on
4:43 am
airbus. it's up 3.3%. of course it's still in negative territory over the last five sessions. we're still down more than 10% for airbus shares. now regarding the story this morning it lost a contract in japan where the defense ministry placed an order for 150 helicopters. it's worth $2 billion. they complained about the lack of transparency in the process. an industry familiar with airbus say that the company may have lost the contract because of a significant lobbying from u. s. authorities. airbus declined to comment on the report and the japanese
4:44 am
defense ministry claims that the selections process has been appropriate, fair and fully transparent. >> thank you so much. sticking with the transport space, boeing reportedly told workers in it's satellite division it expects to cut several hundred jobs this year. reuters says that's due to a downturn in u.s. military spending and delays in commercial orders. a total number of cuts are being finalized. take a look at the price action today. up by .4%. >> still to come here on the program, tim cook's core message. get it? core? >> they like doing that. apple core. core message. we'll get the apple ceo's take on the impact from china. we'll be back in a second. you're watching worldwide exchange. you can find us on twitter or e-mail, world departments widwi.
4:45 am
we'll see you in a second. ♪ we stop arthritis pain, so you don't have to stop. because you believe in go. onward. today's the day. carpe diem. tylenol® 8hr arthritis pain has two layers of pain relief. the first is fast. the second lasts all day. we give you your day back. what you do with it is up to you. tylenol®.
4:46 am
4:47 am
now in an unusual move apple ceo tim cook wrote an e-mail to jim cramer assuring him on the company's performance in china. this was amid the chinese inspired sell off. but take a listen to the moment
4:48 am
the e-mail exchange was revealed on air. >> i sent tim cook over the weekend saying i'm trying to cover apple and tim sent me this this morning before the show began. i'm going to read it. as you know we don't give mid-quarter updates. we rarely comment on moves in apple stock but i know your question is on the minds of many investors. i get updates on our performance in china every day including this morning and i can tell you we have continued to experience strong growth of our business in china through july and august. growth has accelerated and we've had the best performance for the year for the app store in china. obviously i can't predict the future but our performance is assuring. china represents an unprecedented opportunity over the long-term as lte penetration is low as the growth of the middle class over the next several years will be huge. signed tim. it's a great jumping off point for what we have to talk about
4:49 am
because a lot of what people most fear is the largest stock in history doing poorly. because the largest company is affected by the chinese market. >> now shares in am recovered at the close over 2% lower after falling as much as 13% during the session and apple suppliers in japan saw an initial boost in trade today following china. but initially jumping about 4% while they rose about 3 and at the end of the session it was quite a mixed picture but let's take a step back. tim cook ceo of am wrote an e-mail to jim cramer reassuring that they're a strong market. the research firm put out a report saying that smartphone sales in china fell for the first time ever in the previous quarter. >> yeah, i mean, i guess i'm a bigger picture type of person,
4:50 am
right? and i feel like it's slightly longer term. they did this deal with china mobile in 2013. they're allowed to sell the iphone in china. they're increasing the number of stores to 40 by mid 2016. i just ask two questions, one are more people going to be connected in ten years than are they now? and are more people going to be using mobiles in ten years than now. >> yes and yes. >> and three is china's middle class going to become wealthy or less wealthy over the next ten years? yes or no. >> we would think yes but who knows given the recent volatility that we've seen. >> i'm not saying it's correlated to that but just in terms of when you make bigger picture investment decisions sometimes the real basic questions. >> demographics the trends support further growth in china specifically on the technology front. that's something that tim cook was also eluding to. he says that the app store in china had the best performance
4:51 am
of the year. he also says iphone activations in china accelerated over the past few weeks but really interesting to see the price reaction to those comments from tim cook to jim cramer. >> yeah. >> other tech stocks on the move in yesterday's session. they saw some of the largest trading volumes on the nasdaq. pull up the screen. netflix, facebook, qualcomm and microsoft seeing significant losses. netflix has been the best performing stock on the nasdaq 100 so far this year. it doubled in 2015. some investors coming in. you can see the stock losing about 7% in yesterday's trade. it wasn't just tech. bio tech also a big underperformer. celgene was down double digits and then recooped losses ending down 4.7%. i would say that the nasdaq bio tech index despite the recent losses is still up about 7% year
4:52 am
to date. >> it's definitely been one of the outperformers along with technology. >> that's what helped the nasdaq reach the new highs of, what, 5,142 but of course has now come off those highs. >> all right. south africa. you're quite excited about this. >> i am. i am. >> please go ahead. >> south africa second quarter gdp rating is out later on today. it's expected to slow to a half a per cent in the second quarter. peter is still with us. emerging market economist, what are your expectations for south africa's gdp. it comes back to what you were talking about now around china. economies have to take advantage of demographics so they're
4:53 am
creating the right environment for growth to happen. that's not happening in south africa. we have poor energy security. there's been intensification of electricity outages through q-2. there's a huge amount of regulatory uncertainty going on, particularly in the mining sector which is leading to quite significant job losses at the same time and given the sort of odd structure, the currency doesn't help the economy at all really. and there's a very inadequate growth rate when they have the potential to be growing at 5 or 6% if it had the right structure in growth. >> you eluded to some but we're seeing a multiyear low on the malaysian ringett. the indian rupee as well. this depreciation in emerging market currencies. how does this story end,
4:54 am
especially ahead of an impending fed rate hike? >> we've had this weakness coming through while at the same time pushing the fed way out. we were talking about a 50% chance of september or not and now it's a 50% chance of this year or not. that's the worry. you can have fed lift off even in this environment as they want to come off 0 and remove some degree of a policy. combining with this global shock is going to provide a lot more opportunity for overshooting in many of these currencies. the asian ones are interesting because malaysia and indonesia are particularly susceptible to the china shock that's going on. there's more longer term turn around potential for indonesia
4:55 am
and people linked to china or not. it's going to open up these very big gaps and relative value trades between emerging market currencies. >> what happens when or if the fed hikes rates? what happens to emerging markets? >> so these current sis like turkey and south africa, they really overshoot fair value quite a lot. so i said earlier, you know, we can define fair value levels roughly around current levels but there's a certain amount of panicked deleveraging if you like. some home buyers coming through. remember in 2013 we saw retail money flow out of emerging markets but there's a huge amount of cross over investment, institutional investment money in the emerging markets: there's going to be enough to cause it to come through but we were still saying that even with the fed pricing in september.
4:56 am
>> peter, thank you very much. emerging market economist. now european markets, in case you're joining us, positive territory across the board. higher by some 3%. so buying back into these undersold or oversold markets in yesterday's session we were looking at so a lot of green on our screens today. many markets up by as much as 3%. >> u.s. markets taking their cues from europe. future with a strong rebound on wall street. this after stocks in the u.s. closing significantly lower. the dow closing at an 18 month low. the nasdaq down initially in correction territory. we were just talking about the nasdaq. it took 15 years to break it's highs hit back in the year of 2000. just four months to come off those highs but futures indicating a higher open. the dow up 334 points in premarket trade. nasdaq up 98. s&p 500 higher by 38.
4:57 am
>> the asian markets as well. i want to mention anthony writing in saying a pleasure to see you. looking for the miners to start announcing deals, consolidation, acquisition, things like that so we can just talk about that a bit while we look at the asian markets. on top of that blind squirrel says the problem is we have news to china being the reliable crutch. now china is getting dodgey. keep your tweets coming through. @seemacnbc. you can find us on e-mail. worldwide@cnbc.com. much more to come after the break as well. we'll be talking much more about the volatility that's been seen. we'll be back in a second.
4:58 am
4:59 am
5:00 am
welcome to the second hour of worldwide exchange. i'm seema mody. >> these are your headlines from around the world. >> the dow poised to open higher after yesterday's wild swings. this as we're seeing a dramatic come back in europe with all major indices in the green. >> the picture remains bleak in china. the shanghai composite falling below 3,000 for the first time in 8 months. >> dennis lockhart indicates it could delay the hike as they forecast the lift off to march of

43 Views

info Stream Only

Uploaded by TV Archive on