afterhanghai's stock hit investors worry they will not continue to support the market. federal reserve officials continue to signal they are prepared to raise rates. governors single bank says some assets are still miss price. good morning everyone. it is a bank holiday but europe is getting ready to train today
over what has been another interesting asian session. to digest, the ripple effect coming to china, still having a big effect on asian economies. the signal seems to be that a september rate hike is still very much on the cards at the moment. it is the 31st of august. it delivered the correction that everyone was anticipating. the big question is -- is there still more to come? that is the twitter question of the day. tweet us. i want to show you a chart. this is why we are asking the question in front of us this morning. look at the options skew when it ets at theinese moment. really telling everything at the moment. the bear has a smile on his face
but he maybe smiling for quite some time. if the puts continue to rise, this is the effective way of showing how the market is operating and how it is signaling we may need to fall. the market is fighting puts, that tells you the best is still on for the downside. let's go to hong kong now with the latest. dayt is certainly a down across the asian pacific. uncertainty over china and the federal reserve following the conference over the weekend. a lot for investors to digest. as we move toward the closing day we are seeing stocks moving the lowest since 2012. certainly a significant move to the downside and china has been the poster child for this.
we are seeing the shanghai composite reversing friday's gain. remember it was up on friday by about 10%? not today. it is down under investor questions whether the fusion into the market will stimulate the market. modest selling pressure in hong kong. the hang seng and chinese enterprises index moving. tech stocks, linobo moving lower. banks are what we are focusing on today. some striking numbers. the fact that many of the big 'd oute banks have not eeke any kind of profit this year. brokerages will boost the markets and buy back shares. what to give you a sense of some of these brokerages in china in steep declines today.
everbright security down about 5%. sidic is the big -- citic is the big surprise are today, downprise about 9%. quickly checking in on the banks today. bank of china, bank of communications -- i correct myself. the fact that bank of china, its latest results not coming in as expected. the chinese construction bank earning zero-- profits in the latest quarter. it is driving the wider markets lower. economic data, you hinted on the lead in -- i can tell you japan, south korea and the industrial production numbers are not
suiting investors. worse than expected. we will continue to follow all of these numbers and the impact that china will have on this market. tomorrow we get manufacturing numbers from china. guy: looking forward to seeing that data. let's go to beijing. expanding --s extending their decline. ports cominghe through and feeding into the market. government throwing a lot of support at the economy, is the fear that that will start to fade? guest: i think that is right. there has been an extraordinary amount of support thrown at the market. starting with a cut in interest rates, the reserve requirement ratio, what looks like more state-sponsored buying. at the end of last week, china's
finance minister announcing that the local government bailout -- that scheme helped shift some of the high interest debt from the local government balance sheet has been expanded to 3.2 trillion yuan. there is no shortage of support for the real economy or the equity market. for china's equity investors, that hasn't been enough. we are seeing the shanghai composite index falling today. one of the lessons of the last few weeks is, with prices so far out of line with fundamentals, almost any amount of government inadequate tos stabilize the equity market. guy: a question that a lot of people will be asking is how much gearing is still in the market?
it is a heavily geared market. it was done on market. how do they manage that deleveraging of the market? do they need to do more? guest: i think there is still a lot of leverage and the market. there is a positive and negative take away. thategative take away is what leverage did on the way up it is now undoing at lightning pace on the way down. perhaps that means we have not seen the bottom of the market yet. the impressive take away is that the story this year has been the story of that buildup, and dragged down from leverage for margin finance. what is happening in the equity markets isn't telling us much about the real economy. it would be wrong to read across that china is in a hard landing
scenario. guy: thank you for the update. tom joining us out of beijing. jackson hole was a big focus over the weekend. -- annual reserve now over annual retreat for the federal reserve now over. plenty of big policymakers that were not there, yellen, for instance. but despite low inflation or no inflation, and this market turmoil, the sense seems to be that we are headed toward a rate hike. brendan greeley was there for us. let's get a wrapup. : jackson hole conferences over. the traveling caravan has moved on. the question of the week, will volatility change their plans? the answer he got -- not really.
we talked to the st. louis fed, the kansas city fed -- they all say the same thing. we see you, but we are not that concerned because we take the long view. we talked to james bullard, he said the federal open market committee is not comfortable changing policy in the middle of volatility. we did save the interview for the head of the reserve bank in india for friday. famously, 10 years ago, he told the conference exactly what was going to happen in the financial crisis. it all came true. we asked him, what are the fault lines today? we're in auld say period of growth. it would be better if we grew faster. i will also say that central banks have done what they could do. i think in general, across the done, central banks have
pretty much what they are capable of. now others have to step up. brendan: that is the answer. central bankers to the rest of the world. you do structural reform and fiscal reform. we have done enough. we are exhausted. guy: many central bankers are telling us that they have done enough. and other areas need to be more of a focus. central bankers are going to remain in focus this week. central banks still front and center. rba.ay, watch the the reserve bank of australia out with a rate decision. heavily linked to china. in some ways they are a proxy to china. we already have an ecb rate decision. i cannot wait for what mario draghi has to say.
then we get to the big one. we think at the moment the number is around 200,000, that is something we will watch carefully for. we have a g-20 meeting friday as well. guys like jack lew will be there, wolfgang schaeuble will be there as well. a little bit more clarity from the fiscal front versus the monetary front. a lot of central-bank chat throughout this week. eurozoneof today, inflation. mario draghi will pay attention to that one. gdp numbers as well. look at the long data at india's bond market. people are buying out of anticipation but maybe we will see the governor of the central bank in india following china.
>> the distance that we have traveled, as well as the current outlook for the economy -- both of those would suggest to me that the timing is close. course, atlanta fed president dennis lockhart saying array kite -- saying eight rate hike from the fed is close -- saying a rate hike from the fed is close. it is 6:15 in london.
london is closed today. it is a bank holiday. no trade out of london. let me tell you in the meantime the stories you need to know. chinese stocks continue to fall. weighing the level of support from beijing. the index down 15% for the month of august. the equities market rattling investors this month. as you can see, we are continuing to fall. isaysia's prime minister standing firm after two days of mass government protests. tens of thousands have called for him to resign over allegations of corruption. supporters say the rally failed because they did not have sufficient numbers of ethnic malays. angela merkel calling on
european counterparts to take on a greater share of the refugee crisis. the u.k.france and have asked for an emergency gathering. germany expects 800,000 refugees to enter the country this year. japan's industrial production fell unexpectedly in july. 0.6%, missing by the bloomberg estimate of 0.1%. again, not a loss. aaron, what does this say about the economy and how much of this is down to china? the economyoks like limped into the third quarter. it is a big issue for japan right now. china has been slowing and weighing on their overall export growth. this was pretty bad industrial production data. it comes out last week showing
consumer spending was not very strong, and data showing the central bank's main inflation gauge is essentially zero. all, not so good at the start of the third quarter. guy: where does this leave abe, abenomics and where does the boj go next? on the stimulus front -- go next on the stimulus front? arran: it is a bit early to make a call. the governor boj, said in new york that exports would pass. -- weakness in exports would pass. other readings point to slightly higher rates of inflation. a lot of this depends on china, as you mentioned earlier. what happens in that export
market will have huge effects here. we will have to see. guy: ok. thanks for the update, anne scott joining us. thank you for that disappointing data. let's bring in brandon brown. he is here for the next hour and a bit. very nice to see you. tokyo selling off. shanghai selling off this morning. it was a disappointing month for equity markets around the world. my question to you -- are we done yet? was that the warm-up act or the main event? guest: i would describe it as a serious market tremor. it is very unlikely that is the end of the story. we are in, what i would describe as, infected markets. on underation going
this monetary experiment. this asset price inflation is eight monetary disease. unless some economic miracle turns up, we know that they have bad endings. typically with asset price inflation's, you get a series of tremors as you get to the late phase -- guy: how long does it last? guest: that is a tricky thing. from history it can be from three months to two years. why i would be pessimistic this time, when you look at previous asset price inflation's, you may find you have a series of tremors, but something turns up -- some economic miracle, which postpones everything. looking at the world at present, you would never say no to an economic miracle but it is hard to see one coming in terms of risk. so i am pessimistic. guy: the big news coming out of
the fed is that we are clearly in rate hiking mode. we will not be delayed by the volatility in the market. how worried are you about that? guest: i see the fed -- this is the most talked about 25 basis point rate rise in the history of humanity. it is really not very important. it is a bit like jobs friday. the media and everyone markets and up session about this 25 basis point rise, but in terms of economic importance it is trivial. there is a huge amount of position taking which may be -- guy: it is a sentiment point, isn't it? whether or not it has a real impact, we will wait a long time for history to tell us that, but it does have a sentiment impact. guest: i think it does, but looking at the bigger picture.
i would see the sole discussion of a 25 point basis rise from the fed as being a tremendous amount of white noise in the background. even more than greece, which was a huge amount of white noise. in many ways, the strongest argument is that it will at least stop that white noise for some time and let the markets get on without interruption. guy: if this is an early tremor, give us a sense of the magnitude of what is still to come. ja talked to us over the weekend. he famously set the ducks in line for the financial crisis. he says there is still -- huge: we have had a temperature drops and commodities and commodity currencies. what we still have is very high speculative temperatures.
or at some equity markets silicon valley type equities. what you did see last week's some of the china and emerging-market selloff, did move to some sort of process of contagion. you got this selloff in nasdaq. it is a bit like everyone has been wearing rose-colored spectacles. can one lookter, at that silicon valley and somehow remain on splintered? it seems that the splintering process goes on. guy: i want to come back in a few minutes to talk about if that is coming, where one positions oneself. joining us for the next hour. let's change gears. disputes, years of arbitrators have upheld suzuki's request to terminate the agreement with volkswagen, which
will sell its 20% stake in suzuki. why did these companies not click? reporter: it seemed like such a mutually beneficial agreement initially. it would provide suzuki access to technology, and give volkswagen wider access to the indian market, and together they would focus on small, fuel-efficient cars. they reached this agreement in 2009, but two years later relations soured after suzuki agreed to buy diesel engines from fiat. suzuki accused volkswagen of violating the partnership by not sharing technology. volkswagen is now going to sell its 19.9% suzuki stake which is valued at $3.8 billion. could they come to an agreement again? here is what the suzuki chairman
had to say. satisfied with the outcome of the arbitration process. it is like removing a small bone stuck in my throat. i feel refreshed. i do not think you would remarry someone that you divorced. reporter: in terms of what happens next, you can see that sounds like an acrimonious split. suzuki wants them to sell back their shares, volkswagen says the buyer is not decided yet, but we note in the past that fiat has expressed interest, but have not commented since we have heard about the end of this agreement. suzuki may have to pay damages. japanese arbitrators say they have reached the agreement. what seemed like such a promising agreement has ended bitterly. guy: thanks very much indeed. an update on what is happening in autoland. asian up on "countdown,"
stocks continue their biggest monthly the kind in over three years. let's look at the charts. could be a nice head and shoulders forming on the session. maybe that is where the close is coming up. we will show you that chart. that is the msci asia-pacific index. you can see the 8% decline in the month of august. more still to come. that is our twitter question of the day. "countdown" continues. ♪
guy: it is 6:30 in london. london closed today for trading, a market holiday. let me tell you about the stories that you need to know this morning. chinese stocks continuing to fall. the benchmark index down 14% for the month of august. the equity market rattling investors this month as they struggle to figure out where the economy goes next. isaysia's prime minister standing firm after two days of protests in kuala lumpur after allegations of corruption and mismanagement.
and the italian energy for eni has discovered a supergiant gas field off the egyptian coast. they say it is the largest market in the mediterranean and may hold 30 trillion cubic of natural gas, the equivalent of 5.5 million barrels of oil. let's talk about the asian markets. shanghai is giving to bounce a little bit as we see. let's check in on what is moving the markets. caroline hyde is standing by with the details caroline: we are seeing a coming off its lows. have a look at what chinese stocks are doing today. they are sinking, but we are seeing them come off those initial lows. the shanghai composite off by more than 2% this morning. many headwinds circling once again. the market trying to test the desire of the chinese government
to these markets -- to prop up these markets. how much are we continuing to see money continue to go into the share market? attempts at a rally on thursday and friday. now confusion as to how this .oney will prop up chinese stocks back on the downward trajectory. the shanghai composite off by 5%. options traders, the most pessimistic on chinese stock market ever did -- ever. the all country world index off by 6.5%. erased inn have been the value of global shares. it is the equivalent to several times the ftse 100. we know the ftse 100 will be shut today as it is a bank holiday. the government asking brokerages to continue to prop up.
they will continue to crack down on the manipulation in the market. let's take a look at futures today. we are seeing them tell you lower across the board. look for u.s. markets to sell off and europe as well. a look at the commodities spectrum for you. oil off by more than 1%. you have copper falling as well. just stick to the crisis on the new york and the shanghai exchange today. but playing into the mind of will china continue to prop up and notably, central banks , and of course, trying tockson hole, talk down to worry about inflation. they say inflation is rebounding. thank you very much indeed. caroline hyde on the market. let's talk about what is going
on in tokyo feet let's go to hong kong. michael joins us now. can i just get your take about the implications of the china slowdown and what it will mean for regional economies? we have already seen the market effect let's dig around exactly what this means for the real economy. if the poor japanese -- is the a reflection data in its largest trading partner? >> i think it is the leading edge of that. i think the data will continue to deteriorate he cut the chinese economy is already slowing. data have been far from impressive until now, despite economics. one wonders just how bad they are going to get going forward. is this -- what is the policy response to that? boj will deliver more obvious to us -- will deliver more stimulus.
ultimately, i am sure they are going to be dragged into doing even more qe to try to push down the value of the yen. temporarily, that might give them a bit of a leg up. there is nothing much more they can do at this stage. basis of that, shouldn't i be buying the japanese equity story is jamar -- equity story? doing that, be absolutely. unfortunately, i think he will have to be quite nimble. they are a bit slow pressing ahead with this extra stimulus. , everybodyeyond that will try to catch up a few months afterward. you might get a brief spring boom, but it might be a sour summer next year if you try to maintain that strategy long-term. guy: we talk a lot about monetary policy. the governor out of india say,
we have done enough. the fiscal side, what more can the authorities do? >> nothing really, short of the bank of japan monetizing government debt, which they are really just saying, go and build more bridges and we will monetizing the whole thing. that is basically throwing it the entire kitchen sink. japan might end up going down that road, but we are not quite there yet. you have debt to gdp of around 250% and fiscal deficits of a percent of gdp year after year, which is fantasyland. guy: we will leave it there. thank you very much joining us on the latest japanese data. not exactly rosy right now viewed the leading edge of disappointing data, his words, on what we saw this morning. let's talk about what we have learned out of jackson hole. asset prices in global markets
are not right. that is the message from the reserve bank of india governor. we caught up with him in jackson hole. he kicked off the conversation talking about growth and whether central banks have pulled their weight with the policy store. -- story. >> it would be better if we grew faster. i would also say the central banks have pretty much done what they could do. it is not a view that is universally held by central banks. in general, across the world, central banks have done pretty much what they are capable of. ,ow others have to step up whether it is through structural reforms -- in some cases, fiscal policy. be -- we havet tried doing too much. as a result, in certain asset
markets, prices are not correct. and they may correct. smoothly or happens in a more volatile fashion, i think it is anybody's guess. >> do you believe the secular stagnation argument western -- argument? >> we are going -- growing far more slowly than previous recoveries. is this because of debt overhang? i do not think so. i am not sure if this is a more .ong-term factor given all the innovation that is thatning, you would hope we would find some way of monetizing all the good stuff that is happening and find that we are growing pretty strongly. rajan at jackson hole, indicating that some asset
prices still are not right and maybe we will see more volatility. it brings us to our question of the day. get involved in this one. is the correction over? is what we saw last week it or is there more to come? if you are on the terminal, join us through the terminal. you know where to find us. brown --ng brennan brownn browner -- brendan back in. if i am short the market, i have done really well over the last week. can i take those all or should i keep them on? forward, the key issue as to how and when this develops is the u.s. economy and global economic trends. i think there is a main scenario developing that the u.s. economy
slows down substantially under the influence of lower oil price and a cutback on business investment. that you do see some reticence by u.s. business to invest. given the increased uncertainty, you will probably see less equity by that -- buybacks. you may see some general response of the economy in response to the emerging market slowdown and the stronger dollar. you are seeing some leading are pointing to some signs of slowdown. what one has at -- to be aware of, with a lot of if you conductc, policy on the latest data, it is bound to be a fool's road.
we know that data gets revised. guy: looking at the q2 gdep index, it was revised up. time as we had gdp data out, the picture for what happened in 2011-2012, it looks now as what we had been was pretty near to a recession even though people thought the economy was much stronger. we may find something like that now. guy: if you look at the earnings ratios at the moment, they are fading. multiples in the equity market are getting harder and harder to make the -- to make. >> you are seeing that in this gdp data. theyall the adjustments, were down 6% or 7% over the last year.
pictureings-per-share which we have seen on wall street is not the same as the underlying profits. there is a divergence then. a lot of these earnings figures and data coming out from wall street are subject to financial engineering. and they reflect a lot of froth still from the emerging markets, which are now fading. describe -- our first guest described the data we saw out of japan as being the leading edge of the china ripple effect. if you look at the japanese economy, how much do we understand about the chinese relationship and how that will work its way through? quest china is very important on the export side. it is also important on the japanese consumer side.
i would make the general point that if you look at the 2.5 years or so, we have overall growth for the japanese economy. you have to say that this huge monetary experiment has not actually done anything to boost the growth rates in japan. the monetary experiment and united dates has led to a slower than normal recovery. the question in japan -- i do not see japan able to go forward with the yen devaluation. in this world of currency warfare, i imagine these conferences coming up in autumn, it will be pretty clear that japan cannot repeat this devaluation and initiate another currency war. i think what we are going to see, which would be very negative for other asian actiones -- i think the
from japan is carrying out economic reform. we have to get the third arrow. can abe really implement economic reform? guy: stay with us. plenty more to come. he is going to stay with us. plenty more coming up on the show. we are going to talk about technology next. tois' scene gaining momentum we expect that we will speak exclusively to a startup ceo with eyes on the nasdaq. stay with us. coming up next on "countdown." ♪
rattling investors as they struggle to anticipate what is next for the chinese economy and the reaction of the authorities. german chancellor angela merkel is calling on her european union counterparts to take a greater share of the refugee crisis. u.k.ny, france, and the have asked for an emergency gathering over the next few weeks. germany expects 800,000 refugees to enter its borders this year. high-profiletting -- is not keeping high-profile movies for the end of september. they say they want to focus on developing original content instead of having to share comes with other providers. the metrics, be cautious and be careful. that is mark andreessen telling emily chang why he thinks things
are looking up for u.s. companies despite the currency headwinds. what's i think the markets have been trying to adapt to the new economic data coming out of china about the issues in the -- in the chinese economy. currency -- global currencies have moved against the american multinational. i think wall street is slow to adapt. dollar is much stronger versus other currencies. when we miss our numbers because of currency changes, the perception for investors is it is an excuse. in the last six months, it has been true. i think the currency shift is reflective of the u.s. doing pretty wealthy there are issues in many other countries around the world, but the u.s. is doing pretty well. benioff told me he thinks there will be a lot of dead unicorns ahead.
how do you think the shakeout looks when it comes to private tech? startups.e are some of them are going to work really well and some of them are not going to work at all. it makes sense to prepare for environments in which it is not easy to make money. to me, that does not translate into a call for panic. of -- thethe head rip, goodf sequoia is times, what does that say about the market? >> 2008 was not good times. our general attitude, i do not know. it would be be measured, be cautious. we do not tell them to put that -- to pull back. if anything, we tell them to push forward. for the companies that are doing well, i think they will do really well to emily: you are big on founder ceos. what do you think is happening
at twitter? >> i think founders should run these companies whenever possible. i think that would be great. guy: mark andreessen giving his thoughts on what is happening in silicon valley and the tech landscape right now. let's bring it back to europe right now. when you think text -- tech and not often think france. it has a thriving startups in in paris -- start up scene in paris. tell us about this start of sin -- start-up scene. >> when you think about france and technology, you might have negative images of the government trying to delay sales , but the reality is that france has a thriving startup scene.
criteo is now listed on the nasdaq. deezer seeking to raise as much as $1 billion. companies do not contribute as much to gdp as in the u.k. gdp in france compared to 10% in the u.k. that number keeps growing. what you might think, there is relative red tape in france, it actually takes less time in france than in the u.k. or germany. i spoke with one very ambitious french startup. they want to be the leader of the internet of things. they want to create the next connected objects. instead of focusing on big data, they want to focus on small data , transmitting very simple messages from connected objects
be it could be appliances in your home or even your pet. i spoke with the ceo of sigfox about whether he is planning an ipo soon. >> it would depend on the business direction, but it should be in the u.s. york,the nasdaq, new maybe 2017 should be the right time. we have to see how things are going. but maybe next year. is already backed by samsung. they told me they are planning an ipo as soon as 2017. guy: let's talk about what the french digital minutes of -- minister told you. what did she say about the reforms that are in progress? priority is to make it
even easier for french startups. ollandent along-- h actually travel to california, the first time it is president traveled there in 30 years. they want to attract the big giants like google or facebook. of taxation.issue of course, google uses techniques to avoid paying taxes in france. so i asked the digital minister how she is planning to tackle the tax issue. >> we are asking these companies to pay the taxes. at the moment, we are dealing with each case on a digital basis. reform the is, to rules at the larger level, we have to work on both sides.
sometimes, it ends up in litigation with these companies at the national, domestic level. amongstto find a level all the members and there is a common will to go in that direction. >> the digital minister wants to tackle this tax issue at the european level and at the national level, we will see reforms presented later this month in france, which may include a reform of the labor law or startups. guy: thank you very much indeed. interesting conversations being had. at the very much a story moment, and an area that has suffered over the last two days. -- the last few days. a quick update of what is happening in shanghai. this is the last couple of days. the reason i show you this is people get excited about head and shoulders formations. i have kind of maxed it out for you. we are on the cusp of figuring
out whether we go up or down. keep an i on that. it could have a meaningful impact as we enter trade here in europe. five minutes until we start getting a better start of the equity session. we will keep an eye on that little head and shoulders formation. let's carry on the conversation brown, very briefly. are sitting here in europe, how much should we take away from asia right now? >> you are dust -- you were just discussing china. what happens in china is going to be critical to market development. china was the biggest carry trade of all. is there has been a certain amount of caution from chinese companies going out and repaying dollar debt. if we got any sort of
guy: shanghai slides. k toauthorities wor continue to support the market. asian equities set for their worst month since 2012. the message from the fed is that the hike is still on the table. at india's central bank governor tells us that some assets are mispriced and the could be volatility to come -- there could be volatility to come. good morning, everybody. it is 7:00 in london. it is a bank holiday in the u.k. no trade here, but plenty of trades still to come. we have had an interesting august.
we are almost done with a month and it has delivered a big market correction. s&p,e show you the probably the best benchmark there is out there at the moment. this was the month that was. the big question now is, are we done or is there still more to come? that is our twitter question of the day. was that just an early warning or is the correction over for now? join the conversation. if you are a terminal customer, you know where to find us. join the conversation that way as well. i want to show you something else that is what is happening on the shanghai market right now. this is the shanghai comp. zeb is about to update us on how trading is going. let's highlight a little head and shoulders formation, just keep an eye on that over the next few minutes. i think it is going to be interesting to see how shanghai
finishes up. more details on the trading session out of asia. eb: certainly a significant move for the shanghai market, the biggest selloff since 2008 extended on the doubts about the government's willingness or ability to rescue the markets. you are seeing the shanghai composite down 2% so far on the day. if we look at it on it dirty-day basis, it has been a volatile month -- a 30-day basis, it has been a volatile month. marketk at the overall in china and it has had a huge impact on markets around the world. the focus today is whether last week's action, the deposit and interest rate cuts that will have an impact on trickling through, as well as the government's efforts to buy shares. still a lot of confusion left in the market here. we are closely following the
chinese brokerages. that is where we are seeing a lot of activity because china is asking them to do more to try to prop up the market. let's take a look at the biggest names we are following today. citic securities is one of the biggest brokerages in china, a big drop. falling asrages all the government asks them to step in and do share buybacks to make sure this market does not fail. this market is usually levered. over $700 billion has been borrowed to prop up the domestic market in china. margin financing that is now coming due. investors are calling in these loans. they want to get out of the market because they do not see value. we had a bank of america report today saying that the shanghai a-share market would need another 35% decline before it
looks attractive to investors. let me give you a quick snapshot of what is happening across the region today. it is a down day for the asia-pacific index. you are seeing selling pressure in shanghai moderate somewhat from the earlier move. the hang seng is now positive. we are seeing southeast asia get a bit of momentum to the upside. taiwan, particularly. japan, we are watching the yen today. it has been advancing on this safe haven buying. that shows you the fear in the market. your preview the previous hour about the options trades, those options traders are not optimistic that china will be able to overcome this stock rout. disappointing data out of japan and south korea on factory output. guy: that data, as one of our guests put it earlier, maybe leading edge of the disappointing data we might get over the next few months.
september joining us out of hong kong. he mentioned the options trades. i want to show you this chart. skew.t shows you is the this is an etf options skew. , theuts, the negative bets price of those rising. that is telling you that maybe -- it is not a 100 percent guaranteed indicator, but maybe one to pay attention to. the prices of those are rising and that tells you that there are those in the market that believe this market still has further to fall. let's talk more about that story. shanghai extending the declines that we have seen. we are hearing what is happening with the brokerages this morning. alan, we saw the rally late last week. a seachange today? tell us what is going on. support is only part
of the story. the big news today was the bad news about brokerages. in terms of state support, the question is not only whether or not china will continue to support this market, but whether the measures are working at all. some of the biggest brokerages fell more than 7%. the government has ordered 50 brokerages to pony up to $60 billion for the stock market rescue fund. executives have admitted to insider trading. more bad news for the brokerage industry. in terms of state support, look at what has gone on over the past week. the first two days of last week, the china composite fell more than 10%. we heard the government say they would continue to support the
stock market and a big rally last week. today, reporting that the government would scale back large-scale purchases. we do not know whether or not the government will continue to support the market or not. what we do know is that investors are getting increasingly pessimistic about the stock market. there is options are at their highest level versus the list once -- bearish options are at their highest level versus the bullish ones. guy: allen talking us through what is happening there. brokerages under pressure in china as the train story begins to come to a close as we work our way to the european open. it will be interesting to see how that comes through. is that a direct china story or does that start to ripple across into the european equity session? i am looking at the fair values we have got. we will try to get you a little bit more on that.
london is closed today. it is not budget very -- budging very much. you have the dax down 1.1%. down about 1% as well. you will see some volume out of the market today, but pay attention to that. europe looks like it is going on the back foot this monday morning. it does look like a softer market open. the fed is a big factor in this as well. message coming out of jackson hole over the weekend was very much that the rate hike story is on the table, stays on the table wepite the slow inflation are seeing at the moment and the turmoil out of china. brendan greeley has a wrapup for us. conferenceson hole is over. the traveling caravan of central bankers and economist has moved on. will volatility in the market
changes the path in september? the answer we got -- not really. we talked to the presidents of the atlanta fed, the kansas city fed, the cleveland fed, they all say the same thing. but we are markets, not that concerned because we are taking the long view. we did talk to james bullard. changinghe fomc is not -- not comfortable changing policy in the middle of volatility. we did save the interview for rajan for friday. he famously, 10 years ago, told the conference exactly what was going to happen in the financial crisis. as predicted, it all came true. we asked him what we should be worried about. say it would be better if we grow faster. i would also say that central banks have pretty much done what they could do.
it is not a view that is universally held by central bankers. ,n general, across the world central banks have done pretty much what they are capable of. now others have to step up. >> so that is the answer. central bankers to the rest of the world, you go do structural reform and fiscal reform. we have done enough. we are exhausted. brendan's bring in brown into the conversation. rajan telling us that central banks are done. over the last half hour, we have talked about this policy experiment that is being conducted. in your mind, it is not delivered very much. is the sense that the policy makers will have to do more, particularly out of europe, asia, japan? the message from the fed is, we are done the other policymakers
cannot be thinking that. >> the policy experiment has failed in its basic terms of getting a faster recovery. you do get this negative effect of the experiment on spending everywhere. there is a wide awareness of the danger down the road of some major shock here. so they hold back their spending. in this sort of context, more experimentation may have a negative effect on how the economy evolves from here. i would come back to one key point -- the silent markets, to some extent, during this market selloff in the past few weeks have been the credit markets. if you think back to 2007, 2008, the tremors started in the credit market. watch in key point to
addition to the economic data. do we have any incoming signs that what we have been seeing in equity markets, do we get any sort of tremor in credit markets? guy: you saw signs in the run-up to this. the credit markets were maybe starting to signal that something was a little bit wrong. can i take you to our twitter question? ,our sense of what we just saw can you put it in context for us? was last week the end of it, the beginning of it? are we just at the foothills of these kinds of corrections? >> my sense is that we are in a late phase of asset price inflation. you do have, in this late phase, market tremors. what we saw in the last few weeks is a typical tremor. you cannot talk about a healthy if there is a
sickness in the markets. we are going to see more. i think the keys to this is going to be how fast the emerging markets those down and the events that come out. we have had these huge price changes. where are the financial stresses building up? erupt,of those around -- that could be the catalyst. guy: brendan is going to stay with us. the overall tone of the twitter responses i am getting are very much negative. i think the markets will continue to decline. the correction is far from over, says one commentator. i am more convinced that a movement away from zero interest rate policy will send the market
into a tailspin. stay with "countdown." here is what you should be watching this week. tuesday, rba rate decision. rate decision on thursday. what is mario draghi going to say? we think the surveys we have been taking will be around 200,000 or the u.s. jobs number. larry summers is going to be there. jack lew is going to be there. wolfgang schauble is going to be there. some big, high-profile guys will be attending the meeting. today, a lot of data to delve through as well. 1:00 p.m., we will get some gdp numbers out of india. will the indian central bank the cutting rates? it would be interesting to see exactly what happens. plenty more still to come.
we will dig through all of the data here on bloomberg television. more interviews coming out of jackson hole. as we had to break, let's give you a clip of the atlanta fed president. >> the distance that we have traveled as well as the current outlook for the economy, both of those, to me, would suggest that we are close. the timing is close. ♪
the dax down over 1% at the moment. down as well. this is the information the bloomberg terminal spits out for you. prices kind of the missed at the moment. indicating that we will get a negative open in europe this morning. let me tell you about the stories that you need to know about. chinese stocks under pressure. traders weighing the level of state support brokerages -- of state support. brokerages falling. the government will contribute another $100 billion to the rescue fund, according to key figures. angela merkel calling on european union counterparts to take on a share of the refugee crisis. germany, france, and the u.k. will be gathering within the next two weeks. germany alone expects 800,000 refugees this year to -- this
year. malaysia's prime minister is standing firm after two days of antigovernment protesting. allegations of corruption and mismanagement. his supporters said the rally failed because they did not draw a significant enough number of -- the message from jackson hole is stronger inflation will push the u.s. and europe higher. he inflation number has policy numbers later in the week as we get the interest rate decision from the ecb. paul goldman joins us to try to make sense of things. how challenging are today's numbers? they reflect the low oil price. they reflect the drop we have seen in the commodities market. how much attention is the governing council going to pay? is important.
they reflect all of these factors. thenumber should be .1%, annual inflation. to the weakest level since april. april is the first full month in which quantitative easing was carried out by the ecb. it is not a good number you want to get inflation back to under 2%. as you know, yes, lower oil prices. there has been a strengthening of the exchange rate. all of this will be factored in. the key here is it is not certain how inflation works. this is the message from academics at jackson hole and it is accepted by central bankers, including mark carney and various fed people as well. if you do not understand how inflation works and you still want to control it, that is worrying for some academics and one former governing council member. quite the challenge ahead for
central banks. we are looking forward to your coverage on thursday. thank you very much. paul goldman joining us out of frankfurt. we will bring you that data. the data are important right now everyone is paying a great deal of attention, including the central banks. mike mckee and brendan greeley caught up with the reserve bank of india governor in jackson hole. they kicked off the conversation talking about growth and whether central banks have done enough at this stage. i think our growth would be better if we grew faster. i would also say the central banks have pretty much done what they could do. it is not a view that is universally held by central bankers. ,n general, across the world central banks have done pretty
much what they are capable of. now others have to step up. from himill hear more in a few minutes time. let's stay with india right now. governor rajan indicating that may be central banks have done enough. if i look at trading in indian bonds, the sentiment seems to be very much that he will deliver another rate cut fairly soon. what is the take on the indian economy? what do you think he should be doing? >> i think that india, of all the countries in asia, is the great beneficiary of the commodities prices. they import so much oil and have historically imported a lot of gold as well. with both of those prices as low as they are, he does not have to worry about inflation, which has historically been the number one thing that the reserve bank of india looks accurate if he
wanted to cut interest rates, i think he could be if i was him, i would just wait because there is no pressing need. the world is a pretty fickle place right now. it might be better to save his ammunition for an even worse time, if such a time comes. guy: do you anticipate that such a time will come? we are coming to the end of a fairly bearish month. the markets beginning to recognize that there are significant risks out there. how much of that is relevant to what is happening in india? it is an economy that is still growing at a fairly decent rate. gdp numbers out a little later. what are the risks for india? manydo not see that because the major disappointment has been the failure of prime on ther modi to deliver general sales tax and the land reform and the various other issues that we expected him to push through by now.
surprisingly, the market is very willing to give him the benefit of the doubt. , not a man who gives up easily. he will push things through even if it takes longer. the other thing i would say, which i find interesting speaking with friends in india, is that we have now over 15% -- consecutive months of inflows into domestic equity funds. even the foreigners are put off by emerging markets now. the investors are keen on stocks. that might seem strange. the reason is, coming back to gold, that they have lost their faith in gold. they are looking for alternatives. bond yields were very low compared to what they have been in the past. local investors are actually buying stocks. , we aret to change gear watching the political disturbances in malaysia very carefully right now. give us your sense of how that story develops. give us your sense of how malaysia fits into the asian contagion story that we are
seeing rippling out of china. domestic malaysian politics are concerned, there is very little contagion impact of that to the rest of asia. it is well-recognized to be a specific country problem. this problem i do not see going away because the executive office of malaysia actually has a lot of power. short of a nonconfidence vote in parliament, which i also cannot foresee, i do not see an immediate solution to the political problem. the irony is that the political problem has engendered a andapse in the currency half of their economy is in manufacturing. the manufacturing benefits from the low currency. and they are growing. i think their latest gdp print was 4.9% year on year, which is very respectable. guy: we have to leave it there. mark matthews.
guy: good morning. it is 7:30 in london. the market is closed today, a bank holiday. frankfurt is open. let me tell you about the stories you need to know about. chinese stocks extending the biggest two-month drop since 2008. brokerages are under pressure today after the industry was told to contribute another $100 billion to a rescue fund. the benchmark index is now down more than 10% for the month of august. hasian energy firm eni discovered a "supergiant gas
field" in the mediterranean sea and may hold 30 trillion cubic feet of gas, 5.5 billion barrels of oil. they said it validated their strategy to search in mature areas for energy. toshiba gaining the most in four years in tokyo trading. they say they expect to report an annual loss. they are working to regain investor confidence. the tokyo market was down today. let's get more details on what has been happening in asia. zeb eckert has an update. what have we learned? what do we know? what do we not know? zeb: we know there is a lot of sensitivity to china and that filtered through to a lot of these markets today. investors will be watching closely to see how china's manufacturing sector holds up. this has had an impact to the
australian market today. we saw the pullback in copper prices. of course, the aussie currency falling significantly. commodity producers moving in the session. you are seeing some of the drill search and other mining services companies falling in the session. that is just one piece of the puzzle. china is the bigger story. right now, we are seeing some of the earlier declines moderating. that is good news for the market, but does not erase the bigger question in china about the health of the market. valuations are well above what people are willing to pay. bank of america and merrill lynch out with a new announcement saying this market needs to come down by about 35% to make it attractive to ordinary investors, who are already overleveraged to the tune of over $270 billion.
lower.s from anbenefiting upgrade at goldman sachs. oki electric seeing a downgrade by goldman sachs, the biggest decliner on the nikkei. this is as the chinese government investigates citic securities. there is talk of insider trading. it is also telling other investors to ante up to support the challenges that the market is facing. check out citic securities. one of the biggest decliners today. everbright looks like it is faring the least worst. i will leave you with this.
banks we are closely watching. some of them have not heard any money at all this year. that is because of challenges with the chinese economy. bank of china had a 1% rate of profit growth. china construction bank with zero profit growth. staggering numbers for such big banking giants. guy: massive. nice work. thank you very much indeed. zeb eckert updating us. let me tell you about the front end of european trade. london is closed, so that will take a little volume out of the story today. frankfurt as we get ready to trade. it looks like we are going to get a soft open for the cac, down 1%. this is the fair value calculation that we get on the terminal. the dax down about 1.15%.
what kind of stock stories are we watching? let's find out. caroline hyde has the details. caroline: it will be an interesting one. amidst the bank holiday in the u.k., we are expecting the dax and the cac to fall lower. once again, the federal reserve in focus. investors worried that the federal reserve might raise rates as early as september. the ripples coming out of jackson hole and all of the key central bankers that were there -- of course, the ecb being represented. mark carney and stanley fischer. all seeming to feel that inflation is not something to worry about too much. does that mean we can still see a move come september? what would that do for growth? sentiment is negative. a couple of stocks to watch for you. volkswagen is key among them. selling the state in suzuki
motors. that could mean some cash coming their way. $3.8 billion overall. also, keep an eye on allianz. this is the insurer to their infrastructure on could be airport in for an nice. how much would they be willing to pay for that? anz could be set to move on the back of that news. interestingly, i want to focus on a few assets that should be a focus for investors this morning. commodities are continuing to drop. we are seeing copper coming off its lows. we are still down by .5%. we are likely to see oil on the downward trajectory as well. keep an eye on miners. the euro up .5%. yen, both being seen as
they haven trade. the correlation between the yen and the euro is at its highest since early 2007. guy: thank you very much indeed. keep an eye on eni as well today. the huge find in egyptian waters. let's take you to our twitter question of the day. we have been watching asian trade soft. european trade looks fairly soft. is the correction over? is there more still to come? let us know your thoughts on that one. let's bring in david do it b buick.-- david how would you answer that? david: we have had quite a shakeup. what i did not like is that there were so many people away at the time. it is hard to get an objective
view on things. everyone was very happy to pin the rosettes on the chinese government and the shanghai 42% in two drop of months. then we had to look west to see what the central bankers were doing the -- were doing. before.i were talking helpful so sure how forward guidance is. before jackson hole, william dudley had things to say, stanley fischer had things to say. nothing from janet yellen, which i found funny. i knew that richard fisher was going to make the key speech, which he did do. mark carney endorsed it and said, i do not care what happens in china. exposure to china is pretty limited. exports of about 15%. ,he thing that surprises me
maybe we will cut them now, inflation is nowhere. it? but that is now, isn't they are all saying that inflation will be up in two years. thed on a perception that economies are recovering. therefore, we will see wage growth and that will feed through into domestic inflation. david: i trust that you are right. china is clearly a problem. they have been extremely economical with the truth. 3%,rowth is any more than they would be amazed. that has an effect on the rest of asia. not being disrespectful, but abenomics is nonsense. it does not work.
we have had it for two years. nothing has changed. nothing will change. you have 125 million people living on the east and south coast of japan. they live in dwellings much the size of this desk. how much consumer goods can you buy? unless you have a really buoyant export market. are you a believer? i am not. states, thee united united kingdom, they cannot do it on their own. u.k. at .1% in the you said 10 minutes ago that you .1% in europe. it is 1.2% in the united states. we had a nice bounce in oil and sweet. how long before russia is going to pump it up before all it is worth? hello, iran. welcome to the party.
you talk about inflation being a big factor. this next one is going to really cheer you up. what we have now is a bunch of central bankers talking. >> embarrassed. guy: jackson hole, i guess, probably just a big talking shop in some people's minds. wyoming, it is very pretty and they all want to talk. despite lower inflation, the sentiment seems to be that the fed is still moving towards a rate hike. here is a collection of some of those central bankers that david has been talking about giving their views on what will happen next. howe the key question is, much would you want to change the outlook based on the volatility we have seen over the last 10 days? i think the answer is going to be, not very much. >> we should be telling a coherent story that we are not about what happened the last 10 days on wall street. we are about trying to shape
inflation and employment. >> i think we should expect some volatility. what it means for monetary policy is not yet clear. it is a complication. it is something we watch. i am not ready to say it has a particular long-term effect. at every meeting, it is going to be a live option. in between meetings, we are judging what shifts have occurred that would change our forecast. for me, i have not seen something that would change my own sense of how the economy is doing. >> i am in the mode of looking at all the data, evaluating, including the volatility in the financial markets, and we will be putting in new forecasts at the september meeting. my view so far in looking at all the factors is that the economy can sustain an increase in interest rates?
why we boost the distance we have traveled as well as the current outlook or the economy -- both of those, to me, would suggest that we are close. the timing is close. central-bankhole, central. coming up on "countdown," eni says it has found a giant gas field. we will tell you where exactly. let me show you what is happening with futures as we go out. let me give you a heads up on how equity markets are likely to fall here in europe. london is closed today. it is going to take a lot of volume out. take a look at the line on the dax. it looked like -- it looks like down 1.2%. looks like we are going to get a soft open this morning. break and be back in a couple of minutes.
8:46it is 7:46 in london, in paris. me tell you about the stories you need to know this monday morning. chinese stocks extend their 2008.t drop since brokerages very much under pressure. $100ndustry forced to hold as a market rescue fund. -- $100 billion as a market rescue fund. the german chancellor angela merkel is calling on the european union to take a greater share of the refugee crisis. germany, france, and the u.k. have called for an emergency gathering within the next two weeks. germany alone expects 800,000 refugees this year.
a "supergiantered gas field" off the egyptian coast and it says it has been the largest find it has made in 30 years. discovery validates its strategy of exploring mature fields. let's get more on this story. walk us through the significance of this find. >> good morning. find.i, it is a big as you said, it is the largest in the mediterranean. oil and gas companies are judged on their reserves, how much oil and gas they can produce and sell. replacing those reserves is an important metric. this find will go a long way for in improving that metric.
execution will be a the issue. they need to get that out of the ground and sold into the egyptian market. that is always a challenge. they had a similar find a few years back off of mozambique and that has come back with more gas than they initially thought. so there is upside. there is potential for italy to l&g exports. those are some of the upsides that eni will be looking for. guy: egypt has an economy that is struggling at the moment. we have seen that over the last couple of years. a lot of political problems. how does this favor the current government? how are they going to take advantage of this? >> this is a big win for the government as well. we are talking about eni now. they have been in egypt since the 1960's.
egypt, which is to be an exporter, is now importing natural gas because the demand is such that they need all of their supply. in a period of economic crisis, they are losing out on a valuable commodity. this will help the industry and maybe help them get back into a position where they can export. a big fine for egypt and they will be eager to get this underway. guy: great stuff. thanks for the update. let's begin to wrap this show up a little bit. we are heading into the start of european trading. london is closed. looks like we will get a soft open. payrolls on friday. ecb on thursday. the reserve bank of australia market david buik is with us. let's talk about the ecb and the fed. the fed, what number do you
expect on friday? what signals are we going to get out of the u.s. economy? number is bloomberg pretty accurate. ,000ve heard as high as 223 in terms of unemployment. if that comes through -- clearly, the federal reserve knows what the figure is already. the tone has been pretty positive. americaed states of tends to be isolationist. this is how it is in the united states and this is what we're going to do. i think we will see a 25-basis point hike. i do not think we should because i do not think the world is ready for it. guy: how does the market react? david: i think there will be a selloff in asian current these and emerging-market currencies. clearly, there is a message that we have got to wean people back
onto the commercial rates of interest in the united states of america. we are still not seeing inflation, but i suppose what janet yellen is saying, we have got to make it start somewhere, so let's do it now. big revision on upside. i am impressed. guy: you have to go through the numbers and look at the rebels -- durables. investment still not that great. what reason would there be to wait? david: we would like to see a bit of a followthrough from the kind of data that is coming through from china. is it going to be consistently bad? is it going to affect inflation? is it going to cause huge problems like trade imbalances around the world? a country like germany would be severely affected if china is really on the downturn. that is the barometer of the
european union. you talk about the ecb rate, the change on thursday. quantitative easing has been there three or four months now. should be about five months. we still do not know. no one in the world knows how positive the effect of quantitative easing is. what we do know is that without it, we would have been in serious trouble. asking how you extricate yourself from that, i do not know. my colleague last week was talking to caroline and said that instead of hiking interest rates, the bank of england has 17 billion pounds worth of treasuries that will be renewed. try to cut back the 375 billion little by little. i think that is the best way. we could not take too much in this country. the american economy might be
the same. guy: it has been a pleasure. thank you so much. david buik joining us. stay with us on "countdown." we have a busy week ahead. tomorrow. ecb on thursday. u.s. jobs on friday. an awful lot of data that needs to be digested. the central banks still very much front and center. then we go to turkey on friday. we have wolfgang schauble and jack lew. plenty of coverage out of that. today, fairly busy as well. the inflation story very much still in focus. that is not going away. eurozone inflation expected a little later on. oil prices continue to soften. .ndia gdp inflation is not a big story for that economy right now. the show.of wraps up
equity markets looking a little softer as we head into trade. who is going to take you through that open? jon ferro is. sawed --et pricing rip whipsawed by jackson hole. changed quickly. another comment, we are going to have an interview with the eni ceo. one of the first oil majors to scrap the dividend. they have a big gas find. guy: looking forward to that. .on ferro up with "on the move " ♪
jon: welcome to "on the move." i am jonathan ferro. moments away from the start of european trading. u.s. fed officials refused to rule out rising interest rates next month. chinese stocks hit over fears that authorities will not continue to support the market. and stock rout. prospect overthe u.s. rate hikes for the first time since 2006, european stocks have the worst time in four years.
we down by 77 points. ftse 100 futures -- no action on the footsie. a couple people here enjoying a bank holiday. someone who isn't -- caroline hyde. caroline: no rest for the wicked. $5 trillion wiped out of global markets over the course of the last month and it is set to get worse today. the two key issues in the minds of traders -- china and the federal reserve. will china prop up their market as they lead into this victory parade later this week? the jury is a bit out. risk aversion. key central bankers over in jackson hole, the ecb, the bank of