moody's estimates

this is what moodies is highlighted again. moody's has not pressed that panic button. chinese paper is still investment grade. but it does send a signal. what it suggests is that it may be less of a good thing, of course, for international investors to invest money in china. now, those signals are very much there. what we've had in china in recent months is an effort for them to try to protect the value of their currency. not let it push down. by doing that, they have stopped people from being able to take money out of china. that, too, has been a bad signal for many investors. of course without investing -- investors coming into china, there is the problem that more own news will onus will be on domestics to keep up the pace of growth which may be unsustainable. if you look back at some of the japanese newspaper stories over the last few months, there are stories that many japanese companies, this will also relate to u.s. companies and other foreign companies, are having difficulties because they cannot take money out of china and back to the parent, this is creating

and director of moody's around the desk. let's talk about the first quarter. i spent a lot of time talking ubs and the numbers and being very bullish. we see this, given seasonality, how much of the strength was se seasonality and how much is strength? >> well, we do expect that the markets will remain volatile. so we're not saying that one quarter necessarily makes a trend. but it was a good quarter for the european investment of funds and the market revenues with the exception of barclays. but really, what we saw was that capital markets revenues pulled the revenues for the quarter. because as revenues overall were relatively flat. and that's really reflecting, you know, weaker results in some of the noncapital markets where low interest rates continue. >> much of 2016, i feel like we talked about the fact that u.s. banks were gaining markets here at the expense of the european rivals. do you feel with that strong first quarter, european investors are able to claim back the risk markets here or is it too early? >> i think

this puts them solidly below the top tier in terms of moody's anyway. granted it's not a market moving call, but an acknowledgment of, you know, potential risks there. >> and none of us expect that moody's is going to come up with the smoking gun when it comes to debt. >> watch iron ore prices. not rating agencies. >> there are things to be f focused on when its comes to china. and china, a possible tax war could be on the horizon as the tax plan may have an impact on china, specifically on its manufacturing sector. our eunice yoon has more on that story. eunice? >> hey, guys, i'm at an apparel company in china. just like where you are, everybody here has been talking about whether or not president trump is going to be able to get tax reform done. the reason for that is because if president trump is able to make good and follow through with a large corporate tax reduction, that could have a big impact on manufacturers like this one. now, i have been in and out of factories all week. i was speaking to one owner of a textile manufacturer who is investing

copper is on the move after moody's downgraded china. we'll hit the future pits next. ♪ predictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance. talk to your advisor about a brighter financial future. >>> welcome back to "the halftime report." i'm jackie deangelis. we are watching copper today falling after moody's downgraded china's credit rating for the first time in nearly 30 years. china the world's largest consumer of copper. did you short copper on the down grade? >> i did not. that was a mixed down grade. think of how moody's hedged themselves. that was actually an upgrade. the modern day silk road from 2,000 years ago in china, that silk road we're calling one belt one road will touch 50% of global gdp, and that infrastructure should buoy

it encapsulates moody's reasoning for this downgrade. debt to gdp soaring. 280% in terms at of the debt to gdp ratio, an increase from 240% from 2016 alone. you can see the diversions when it comes to gdp growth stabilizing, easing, but debt continuing to grow. it expects the financial strength of china will be eroded in the coming years as a result of the economy-white debt and built up. slowing, andially even though you have financial reforms, deleveraging, particularly the financial sector, moody's saying that will not make a difference when it comes to this constant increase in contingent liabilities held by beijing. we will continue to watch that story. singapore, taiwan, malaysia coming on line. we are really watching the aussie dollar falling over on that news. take a look at what we are seeing across markets in asia. have the aussie dollar falling .2%. this after barely budging in the last couple of sessions. when we are seeing equity markets broadly in the green, the nikkei leading gains, not surprising given to sessions of , al

the credit ratings agency moody's has downgraded china's credit score. it warns that levels of debt across the economy are expected to rise as economic growth slows down in the coming years. what are they worried about, rico hizon? they are worried about a lot of things, sally. the chinese economy is facing some difficult challenges, and this is another wake—up call for beijing to institute more economic reforms. it is like we are seeing the ratings agency downgrading the local currency by one notch, and also changing its outlook to stable from negative. but this could really make things more expensive for the chinese economy, because it will meana chinese economy, because it will mean a rise in the cost of borrowing for the government, and for state owned enterprises. moody ‘s said this reflected expectations that outcomes would erode over the next two years, with debt levels rising as growth slows. the trainees economy expanded by 6.7% in 2016, compared to 6.9% of the year before. —— the chinese. this is because beijing is trying to rebalance t

anna: china downgrades, moody's cuts its rating for the first time since 1989. stocks slipped to a seven-month low. and when in rome. trump heads to vatican city for an audience with the pope, but back home, the budget fights drawing criticism from both sides of the aisle. ♪ a warm welcome to "bloomberg daybreak: europe." from here in the city of london, i'm anna edwards. welcome to vienna. the sun was shining as they began to arrive yesterday afternoon. duration of the november agreement, 6, 9, 12 month at $54.n, and crude the scale of the cuts, 1.8 million barrels is what they had agreed the last time. could they go for something much more significant? all take you back in time. 5 million barrels back in the late 1990's, and the grand coalition which is ok and non-opec. do the heavy lifting and get on with your job. that is the message, but could they bring more non-opec members on board? they get together today to study the prospect of what a 12 month extension might mean. we will be chasing around vienna all day. anna: some critical things to talk about wi

what is your take on this downgrade from moody? naturally, the chinese are very important in japan in the context of trade and politics and especially risk in northeast asia. hope, that china's economy will remain stable. ofthis sense, the downgrade china is a bit of a concern, but at the moment, i think the chinese economy will be stabilized in terms of gdp growth rates, somewhere in , and if thend 7% chinese economy stabilizes, then actually we don't have to worry too much. recently, china's trade is slowing down and japan's export to china is slowing down after being boosted in the first quarter. , the growthconomy rate of the gdp was 2.2% in the first quarter, but there is some downside risk in the second quarter. as exports will not be able to be the driver of the economy. in this sense, the chinese economy is key for japan. >> hang on one second, because i want to return to these headlines. this is a big surprise, china aa3 byut to ai from moody's. as yvonne was saying, china's financial strength will be eroded somewhat over

china's finance ministry said moody ‘s was exaggerating the economic difficulties. do you think they work? you might expect them to say that the china is on holiday along with the us and the uk and with the debt to gdp and china of 300%, i think it is not particularly surprising, but maybe in the sense that it's taken so long for this downgrade to come and it was all so interesting that hong kong was caught up in the mix with its rating downgraded but will it outlook raised to neutral from downgraded but will it outlook raised to neutralfrom negative, much to the chagrin of politicians in hong kong, so not unexpected and driven clearly by the debt levels across the economy particularly with state—owned enterprises. the reading will be the slowest growth seen in eight months if that is what we see. in other business news, the head of vietnam's‘s low—cost carrier, they are meeting stock exchange officials in new york about a possible share listing in the united states. the company listing in the united states. the com pa ny wa nts to listing in the united states

we'll also hear from vice chair stan fisher and presidents john williams, on the earnings front, cigna, moody's and transcanada report before the bell. >>> still to come, becky has more on warren buffett's big ibm move. an expert's take ahead of this weekend's french election and we're counting down to the jobs report. we have a busy friday morning for you. stay tuned. arns. it's great to finally meet you. nice to meet you too. your parents have been talking about you for years. sorry about that. they're all about me saving for a house, or starting a college fund for my son. actually, i want to know what you're thinking. have a seat. knowing that the most important goals are yours. multiplied by 14,000 financial advisors, it's a big deal. and it's how edward jones makes sense of investing. you...smells fine, but yourin your passengers smell this bell dinging new febreze car with odorclear technology cleans away odors... ...for up to 30 days smells nice... breathe happy, with new febreze. hey you've gotta see this. cno.n. alright, see you down there. mmm, fine. okay, what do we got? okay, watch

moody's is aligning with the performer. it goes faster in terms of dealing with leverage and lamenting market based reforms. , back tong we remember 2011, the s&p downgraded the u.s. from aaa. remember all of the squealing out of the treasury department at that time? not at all sizing that a sovereign debt surprising that a sovereign government would push back. nobody likes to get criticized. jonathan: we sit here time and time again. wondering how far behind the curve the likes of moody's are the at this point. looking at the disruptor in china, it is not like we learn anything new from this report, is it? again, you see, in academic research, that sovereign credit decisions basically lead market defense. there is a whole lot of people with sharp pencils, actually betting with their clients assets on different sovereigns and they've got a lot more moody's or s&p so it is not surprising they are behind. alix: moody's has the same downgrade in china and japan. what should china's credit rating actually be? >> isn't it remark

by dropping the rating, moody's show that even though growth remains around 6% in china, it doesn't think the country's government will manage to rein in its debt burden. the chinese finance ministry is unhappy about the downgrade or responded to the move by saying that modi's was exaggerating difficulties facing china's economy and underestimating efforts to reform. brent: terrorist attacks and political turmoil have severely damaged turkey's tourism sector. so, it's getting new attractions. how about a beautiful coral reef? governor of the providence of antalya just sunk a military tank for corals to grow on. that is supposed to attract fish and in turn, tourists are the tank now sits on the ocean floor, 14 meters below the surface of the village. that's all for the business news. how is that for a dive? >> difficult taking a tank. -- tanking a tank. almost 100,000 christians have flocked to berlin for a celebration of the protestant faith. the event that happens every two years is also marking the 500th anniversary of the protestant reformation and the memory of martin luther, the man

we are also taking another look at this moody's downgraded china yesterday. we will be speaking to china's homegrown ratings agency. it is interesting the cousin, they have taken very contrary views compared to the other big three ratings agencies. speaking to the global credit rating head of the ratings team at 40 minutes past 10:00 in hong kong. that will be interesting, because i am sure he has a different view than moody's and the rest of the ratings agencies. of course, all the action on markets as well over the next couple of hours. plenty more to come. this is bloomberg. ♪ ♪ it took me a while to learn how to pronounce it. >> you had a losing record, then you won the national championship. >> we ended up winning one of the greatest games of college basketball. >> you won your third gold medal. >> the international anthem being played, nothing better than that. >> will would you say is the most important lessons of leadership?

guy: moody's view. mark cudmore joins us out of singapore. china has been downgraded, the market has gone so what, why? about woody'smore catching up with the market. we have been trading this china story, this deleveraging story, reform story for a long while and the pressure is putting on the bond market. this is moody's reacting. it is hard to see what the market reaction has been. the yuan is strictly -- slightly stronger and bond futures are trading slightly better bid. iron ore has slumped harshly but it is hard to know if that is related to the downgrade. the move did start to hours after the downgrade. werer metals traders asleep or this is a separate issue. not enoughote that foreign investors hold chinese debt, that is one of the issues they had. that prompted me to wonder why this matters in that case. it is mostly domestic, isn't it as far as the holders. crack sexily. that is one of the things why there has not been much of a reaction. they're not -- there are not a lot of foreign investors that this will affect their investment.

because moody's have concerns, they are more likely to put the burden of any stimulus on fiscal policy, so more government borrowing and concerns about increasing debt amongst some of the state—owned enterprises and local government which makes them think the debt situation combined with slower economic growth means it is not as strong as it was. is it a real problem, debt? not an immediate problem but across the economy as a whole. we are talking about 30—50% of gdp, which compared to greece is very small! but there is household debt, local government and state owned enterprises, all of these add up owned enterprises, all of these add up to the burden which is quite large for a country at that stage of economic development, but not an immediate catastrophe. andrew, thank you very much. a quick reminder of how to get in touch with us. the business live page is where you can stay ahead with all the day's breaking business news. we will keep you up—to—date with all the details with analysis from the bbc‘s editors right around write around the world. we wa nt right around write

moody 's still has an a—i credit rating on china, that its fifth highest. it hasn't die grey lid tojunk its fifth highest. it hasn't die grey lid to junk or below investment grade. —— hasn't downgraded it. moody's is putting an ample warning light over things we know for a long time. it has a huge amount of date on its state owned enterprises, it's nationalised industry. it has a lot of debt on its authority. but it is a country with huge reserves, $3 trillion of reserves. its current surplus is $200 billion a year. this is not a country running out of money. but economic reform, how quick will that be? how worried is the president about closing down inefficient industries but creating an employer and? does it create political tension? there are some trends that are in conflict in china. of course, china, the world was biggest population, if it suddenly sees that economic growth tightening, that affects the whole global economy. thanks for that update. we have spent although it's been a sixth arrest in relation to manchester. more on that at the moment.

moody's learned -- warned last year and the imf warned. and moody's took a step of putting the china sovereign they madethe first since november of 1989. it is a significant reminder about the challenges china has faced. authorities are preaching the need to rein in. the steps have been quite modest. when you see a judgment like we saw today from an next journal watcher like moody's, it is a sharp reminder of the challenges still ahead in china. moments, thefew federal reserve will release minutes from the main meeting. this is the meeting where officials left rates unchanged and signaled they were not alarmed by the weakness and first quarter gdp. >> we learned two things today. number one, at the may meeting, they were on course. not committed, but on course for a june rate hike. number two, there was wide agreement they should not cease from one month to the next the reinvestment of assets on the balance sheet when they begin to reduce the balance sheet. the existing eight -- the end -- the interesting thing is we are balancerogress on

mark andy from moody's analytics. andrew, i guess that's back to you. >> okay. steve great to see you. great interview. thank you for that. when we come back, just when you thought leg room couldn't get any tighter we're going to tell you about which airline is cutting space for economy travelers. joe will also tell you about his travels on southwest. and pay for the "a" group. coming up at 8:30 a.m. eastern time senator bob corker's going to join us live. we've got a lot to talk to him about. >>> still ahead, "squawk box" goes out of this world. >> to infinity and beyond! >> neil degrasse tyson opens a portal to the cosmos in his new book and he's taking us along for the ride. the celebrity astrophysicist lands here at 8:40 a.m. eastern time. stick around. you're watching "squawk box" on cnbc. >>> welcome back to "squawk box," everybody. shares of true yo are plunging this morning. the cloud communications company warning of lower than expected full year revenue. the company's ceo says that uber is to blame for this. the ride sharing giant will reduce usage of

china moody this morning. this is "bloomberg surveillance. " in new york and guy johnson is aligned it with the news out of manchester shows us the broader and bigger investigation right now. guy: this was always the concern, security forces in the united kingdom, the individual was not acting alone and as a result, the news we have seen ,urther arrests is interesting given the fact the prime minister has raised the security threat level in the united kingdom to its highest level. you are looking at pictures from manchester. tom: there we are with further mourning and a number of people and identified and missing. we need a full update on manchester, here is taylor riggs. >> and the u.k., three men arrested in connection with the suicide bombing in manchester that killed 22 people, police not releasing any other details. the british government has raised the terror threat level from severe to critical for the first time in one decade. that means another attack may be imminent and prime minister theresa may tak

moody's says that the deal will add to its perngs as soon as next year. >>> also this morning lyft is teaming up with alphabet's self-driving car unit waymo to develop a pilot program. the companies aren't releasing many details. waymo has some of the most advanced self-driving technology and has just started testing cars in phoenix, arizona. lyft office ride sharing services in 300 u.s. cities. the deal isn't exclusive. lyft will continue working on a self-driving program with general motors, which is a major investor in lyft. >>> coming up former nato commander james stavridis will join us to discuss the cybersecurity, as well as north korea. we will be right back. >>> on deck, right here on "squawk box," former major league baseball superstar alex rodriguez. and starwood capital chairman and ceo barry sternlicht. they'll step up to the plate and take a swing at the issues that matter most to your money. from game changing policy issues in washington, to market curveballs. we'll cover it all. grab a hot dog and a cold drink, the 8:00 a.m. hour is sure to be a grand slam. "squawk box

i want to go back to the moody's down grade. youomes at a time when think about the efforts to open up the bond markets. does this cast a bearish shadow over how foreign investors perceive the chinese bond market , and also what does it mean for chinese firms under pressure from a fund-raising point of view? with some of my friends who are bond investors. feeling is this ratings change will not be that big of a deal. perhaps the supply side of the was looking for the downgrade, so the timing was more of a surprise than the actual move. liquidity, the onshore markets, how quickly they can move their money in and out, the credibility of domestic ratings and things like that, and what ,hose means for chinese bonds that is more or less included in the global indices. all of them are far more important factors for investors than the particular ratings change itself. you talk about some of those reforms that were suggested or required by the msci. do you think progress is made to get a share inclusion in the next few weeks? have tried

housing problem of -- speaking of 2007-2008, how worried should we be about home capital trowels and moody's cut ratings on big banks. >> my guess is not terribly worried. this has been one of these long percolating slow motion crisis for a long time now. canadian housing market did not tank with ours, so it's hard for me to see why the banking system is choking on bad housing debts. >> worried about canada in the next u.s. sub prime crisis? >> no. no. >> got other things to worry about. >> in the scheme of things, i worry about big things like china. you know, you worry about the things -- >> you said it like trump. china. you worry about china. >> you know -- now you're really hurting my feelings. now you are getting back at me for the streamers comment. i know where this is going. i'm now talking like donald trump. >> irony is real estate shows in cana canada. >> yeah? the brothers from canada? all right. massive ransom aware attack hitting asia attack this afternoon. here's what we know so far. >> hey, kelly, well, we do know that it's scores of countries, some estimates put it north of

the next m is moody's downgrade on china's debt. >> what do you think about that? >> it's not a huge thing. however, debt is a huge thing. in 2000, china's gdp was $1 trillion. japan's was $4 trillion. today, china is 11 trillion, and japan is still 4 trillion, 17 years later, but the debt to china is off by 2 trillion to 30 trillion, so that's what people are worried about with that second m. >> right. >> e, earnings phenomenal. you all reported this day after day. up 13%, and so this is one of the things powering the market. the final, the r, is what winston churchill calls a riddle inside a mystery inside of enigma, and that's russia, political machinations, washington, could affect the market, and if that's the case, you can go ahead and use that as an opportunity to buy. hope it doesn't happen. if it does happen, that's a good time to buy. the earnings -- you know, there's so much cash on the sidelines, interest rates are very, very low, the market is high, kelly, and volatility is low. this is not a great recipe for a long term, but i think it can continue fo

they paid 31 cents on the dollar, and moody's did a study in 2010 of all of sovereigns that had defaulted between 1994 and 2010, and they averaged a rate of 31 cents on the dollar for defaulted bonds, so in a sense they bought these bonds that the average default rate already. they bought them, really it was a fire sale. it's as if the bonds had already been defaulted on when they bought them. so -- >> what would be preferable about the potential outcomes if goldman sachs and other institutions essentially said, no, we're not willing to put up our capital to buy these bonds? do you think it would hasten the demise of the regime there or somehow reprioritize their spending and not service the debt and maybe essentially feed the people of venezuela? >> i think it's -- >> i'm sorry -- >> yeah. >> i think, first of all, it's not entirely correct to say that they are supporting the regime in particular. they are supporting the bet that whatever happens, and i believe they are supporting the bet that the regime falls apart, which is no what they were not necessarily talking about that story, bu

i believe moodies did something similar earlier this week. all this after warren has sold out a third of its shares. another beg week of earnings is headed our week next week. i love this calendar, it looks so exciting. snap is the first time the company will report quarterly earnings since going public. i know it doesn't meet your big money to the mark threshold, however. it's a lot bigger than many. >> the crazy thing about snap, they must be in the $20 billion. >> 27 billion. >> by the way, snap, snap is 20 times bigger than shake shack that you talked about. >> real quick. >> it's interesting to see how they characterize their own results, what metrics they want to put forward, because they were trying to de-emphasize user growth in the ipo. >> by the way, mark hauthen an analyst said he wouldn't be surprised the user growth turns negative because of the strong growth and what facebook, instagram is doing. thank you, guy, for being here. appreciate it. have a lovely weekend next weekend, that's it for "closing bell." "fast money" starts n

cnbc did a tracking update with moody's, it declined to 0.1% from the previous reading. the economic surprises have been coming in negative. >> absolutely. that's been one of the surprises that the market has done so well, it's surprising to see the various measures they all measure the same thing and the economic data didn't do so well in q2. but we're very optimistic. that's what the fed has been saying this week that, you know what, just look through this. the minutes said look through this. just see if things will continue to improve going forward. >> is that why the market has remained resilient in the face of some weaker economic data? >> i think the market is disconnected from fundamentals. the last time i was with you guys i talked about the ecb and monitoring how aggressive both the boj and the ecb were going to be coming into this year. in fact, between the two of them, there's $1.2 trillion of balance sheet expansion. let's not forget they're not just acting on benchmark rates. the boj is buying equities and the ecb buys investment grade. in particular ecb buy

moody's cut them for the first time since 1989, going with hong kong hours later. googles gameplaying artificial intelligence program created a three match sweep of it human opponent. this chinese player has been playing since he was 10 and said not a machine could be him. -- alphago is is perfect. veterans say it will be years before computers could master the game. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ thank you. we are counting down to the major market open in the asian fake. let's go to markets reporter adam haigh joining us from sydney. good story -- good morning to you. starting flat, seems like markets in asia are pointing to an uninspiring start. good morning. fairly mixed start in 20 minutes or so with the japanese and australian and south korea sessions get underway. we have some news in currency with theith the rand development around zuma, looking at the rand as negative. going later on into the trading, we have china closed, the u.s. and u.k. close, but we are l

amherst and moody's at 3.8. action at 3.2. and bank of tokyo at 2.9. look at the futures market, the uncertainty shows up. not in june expectations which is around 60% for that hike. but in expect anxiouses for the -- expectations in september. you have a bun of people who think it happens, a bunch who thinks it doesn't. >> did we expect the discussion to begin about shrinking the balance sheet and what do we need to know about that? >> when and how much and how it proceeds. we have some general statements from the federal reserve that they're having this conversation now. we expect to know more say by the end of the year. maybe as soon as the fall. does it taper the reinvestments? you have a statement by the way from the treasury. which said, hey, we're getting ready for this. that means we have to sell more to the public because the fed won't be buying. it's interesting to see how the bond market reacted which is not at all. it suggests to me that the bond market is ready for the reduction of the balance sheet and if the fed plays its cards right it

. >> china has had its credit rating downgraded by moody's, which says rising debt and slowing growth casting clouds over the financial outlook. talk this through the consequences of the announcement. slap on the wrist. for china really. it is another warning. authorities do need to get a grip on the rising debt that has been a key driver of economic growth in china over the last decade. we have had a rating terms warning before. movie's warned last year and the imf warned. and moody's took a step of putting the china sovereign rating -- the first they made since november of 1989. it is a significant reminder about the challenges china has faced. we know the authorities are preaching the need to rein in leverage and rein in credit assistance, but the steps have been quite modest during the easy a judgment like we saw today from an next journal watcher like moody's, it is a sharp reminder of the challenges still ahead in china. >> in just a few moments, the federal reserve will release minutes from it may meeting. this is the meeting where officials left rates unchanged and signaled th

i think moody's is right, but kind of late, right? the chinese stock market has not been doing well in two years. chinese imports of u.s. go has fallen for 2 1/2 years. we've seen the slowdowns in the stock market and in terms of their imports of u.s. goods. so i think it is a real slowdown, neil. neil: let's say that, you don't buy these levels or seem a little grand. now moody's is saying, china is acknowledging we can't continue to grow at this clip, real or not. if they start slowing the fear seems to be, if moody's is right, the fear is real, that this economic catalyst for much of the world be is going to affect much of the world, what do you you think? >> i think that's true. not only in terms of imports and exports, neil, but we have businesses over there. they have businesses over here. china's main problem, as i see it, neil, they printed a lot of money for a long time, kind of inflated their economy. then all of a sudden the real estate bubble happened over there and they pulled back sharply. neil: right. >> i think that is

moody's has come out and confirmed our aaa credit rating. these are matters for the credit ratings agencies to decide. as a result of the decisions of this government, spending is back down close to the long-term average. we are bringing it down to 25% of gdp. theave reversed deteriorating trajectory we were on when we were coming into government. remain on a pathway to surplus by 2021, a seven .4 billion dollars surplus, quite a bit higher than anticipated only a few months ago in our pre-christmas budget update. sophie: moody's pointed out they do see the debt growing to 45% and the coming years. they also pointed out that australia has been coming from a low base compared to its top rated tears. you see this can be maintained given the desires of this budget? our projections show we go back to surplus in 2021 and 2027-2028.urplus to if you exclude new net capital investments and look at our operating balance, we are rejected to return to surplus by 2020. our cash flows are positive and we are not adding on from 2019 will be so net debt pe

-moody's downgrade luke: the real reason has to do with a home capital issue. tell me something we didn't know what we could go, month ago, a year ago. that is the rationale for the downgrade. it could happen at any time. the connection is that, to my mind, this is a time when lending standards are training -- tightening, borrowing is at the lower end of the spectrum, there is a squeeze on home margins and lending standards. at the upper end, the government putting in macro credential policies, a lot of charges about the foreign buyers driving up home prices, pricing canadians out of the market. all about home prices in toronto and vancouver. theou want to call on canadian cycle come when you get the squeeze on the lower end, why not? and what we got from that moody's report, the senior vice president of the agency said, "expanding levels of private sector debt could weaken asset quality in the future, continued growth in canadian consumer debt, and elevated housing prices leads consumers and canadian banks more vulnerable to downside risks facing the canadian

after the chinese news came out from moody's, we saw the renminbi weaken for couple of days in a row. so that is starting to stabilize now as well. are going to look at all these assets this morning as stocks, we are still a few hours from the opening up but look for more moves in the debt markets. we're going to get to all of those for you today but first i want to get the first word news and will go to juliette saly. u.k. police calling it underminingtrust their investigation. in yours time -- new york times published photos from the scene that british police were yet to release. seven arrests have been made so far in the u.k. in connection with the attack. meanwhile, promised or theresa may will lead a group of seven gathering in sicily a day early to return to britain as the country races to prevent further terror attacks from the network behind this manchester suicide bombing. she travels to brussels day for a nato summit urging the alliance to fully join in the fight against islamic state. u.s. buys collected information revealing senior russian intelligence and political offici

this came after moodys downgraded their credit rating for the first time since 1989. but i can go into that —— but ican go 1989. but i can go into that —— but i can go onto that investor. he still believes in his investments there. china is a planned economy. what the government plans is what happens. because the government controls the major banks, controls the major features of the economy, the major features of the economy, the biggest companies, so if they wa nt the biggest companies, so if they want 6% growth, they will get it. they are not fixing the numbers. they are not fixing the numbers. they do is poor more money on. however, there is a problem in the private sector. many of these companies have borrowed too much and we re companies have borrowed too much and were dealt a payback. —— pour. and there will be in trouble. and to govern it is well aware of the dangers, which is why it they will need to tighten up. sharon —— sharanjit leyl, thank you very much. in other news, shares in online retail giant amazon have risen above the $1,000 mark f

we saw credit ratings downgraded by moody ‘s. will it filtered through to the rest of asia? in the last few yea rs, to the rest of asia? in the last few years , we to the rest of asia? in the last few yea rs, we have to the rest of asia? in the last few years, we have seen to the rest of asia? in the last few years, we have seen correction in the first half of 2015 and 2016 was driven by chinese concern. afterwards, we haven't really heard anything from china. from a market perspective i would say it is a positive sign but if you look at the depth of gdp numbers in china at 260%, relatively high, we should not forget that most of those debts are held by domestic investors, hence the volatility we see in other markets and not so evident, like in china. the downgrade may be the first signal that the government is supposed to work against this. actually, they have done so over the last few months already. growth has come down substantially so they have tightened up a lot in terms of leveraged. going in the right direction, we need to see more of this over the next few quarters.

you mention the moody's downgrade came as a surprise. the consensus was the impact in terms of macro conditions and sovereigns would be limited given how contained the chinese economy is, but what about the impact on chinese corporations? on the markett has been relatively muted. 92% of the debt that is issued by chinese corporates is renminbi denominated. this year, we have seen a record amount of dollars debt being issued by chinese firms, and that is because the yields have been taking up relative to the cost of debt offshore. we have another terminal that shows this diversions between the yields on shore, the cost of debt on shore, versus that offshore, and it is that divergence which has encouraged any corporates to move in issue dollar denominated debt denominated debt come up a and real estate sectors. the real estate sector has $158 billion in outstanding u.s. , and itenominated debt is the airline says well, and shipping companies. when the yields take up, they are the most boehner ball because they have two borrowed to buy ship

moody's rates the nation process goals and that's very high. want to bring in william foster, vice president and senior credit officer, so, bill, you just heard ed up about, you know, that there is perhaps some optimistic projections here, particularly on wages in the budget. what do you say on the aaa rating? >> it does not change much in terms of our perspective on the credit and outlook. much consistent with the aaa rating and stable outlook that we have. the fiscal position in australia's relative when you look at ratings. there are 12 credits and australia's debt burden is one of the most important aspects of the profile that we look at. it is just under 40% of gdp, in in theth the median aaa space. this budget works toward fiscal consolidation and is indeed a deficit. the things we are looking at is to what extent that will contribute to the debt burden overtime and medium framework. betty: before i ask you this question, let me show a few bloomberg terminal charts that illustrate this debt burden australia has. what is interesting here,

the chinese government has criticized moody's decision, saying that used inappropriate measures in their calculations. incorrespondent and beijing is brian kopczynski. brian: economically, this could create some problems for china's economy, raising costs, for example, for issuing bonds to companies, and in addition, it might hurt china's overall financial soundness, in particular both the stock market took a bit of a hit this morning, so that may be more of a temporary thing. perhaps moreover, though, it is more political. some say this is an embarrassment and a loss of faith on the chinese government, talkingly as they are about the reforms in the economy. economyese leadership this meeting this fall is one of the biggest meeting of chinese president xi jinping's term. a strong,to be seen confident, and smooth sailing. more than anything else, it is more of a face issue. that is brian kopczynski in beijing. let's take a look at how the markets have been reacting in europe. a mixed picture in the markets this lunchtime, shares falling in london. paris and frankfurt, though, seeing overa

but that's the case as moody's ratings service is downgrading them on the basis that the economy will cool down and debts will rise. they think china's economy will slow down to 5% growth by the end of the decade from currently at 7%. that beijing will increase spending to support growth. china's finance ministry takes issue saying that moody's methodology was flawed in the process. >>> amazon opening its 6th bookstore in new york city tomorrow. amazon has devastated the brick and mortar bookstore industry but opening its own stores and after new york, it's got some more stores planned for this year looking to open stores in walnut creek's broadway plaza and san jose's santana row. >>> stock market working with a four session winning streak. today a flat start. the fed releases the minutes of its main meeting. it will give further clues as to its rate hike plans for the future. let's go to the big board and see how we're doing at the moment. the dow up 26. starting to pick up some speed. nasdaq up 5. s&p up 1. good day for mountain view's intuit, topped earnings and its shares run by

kate moody is back in the studio with an update on the business news. in germany, the new prime minister -- the countries looking to reboot is their business ties. kate: saying they're made to work together as they signed eight bilateral deals covering things like job training and environmental issues. they vowed to speed up work on a broader trade deal between india and the european union. the talks are an effort to counter a growing trend of protectionism that is then interpreted by some as a pivot away from the united states. just days after saying europe should take its destiny is on hands, angela merkel walked alongside india's prime minister, addressing of business for him in berlin, she stressed the need for free trade deal between the eu and new delhi, signaling a possible alternative to washington. >> all over the world we are witnessing protectionist trends. networks are deeply interconnected. we believe it's necessary to be open and create fair trade positions. this is why do so important for free make progress with a trade agreement between

traders are seeing bigger price jumps ahead for the currency halloween moody's downgrade of china and the shift in the pboc fixing mechanism. we have the yen on the advance, trading around 110.92 a dollar. that is the only g10 gainer against the green here. the euro is sliding about a third of a percent.this is after the ecb chief comments that monetary support remains necessary for the euro area.while we do have the yen strengthening, we had the nikkei declining. volatility on the nikkei 22 the lowest level in three years. take a look at the movers. ic stocks along with electronics makers dragging in tokyo. haidi: thank you. let's get the first word news with rosalind chin in hong kong. shows few signs of ending years of drink. although unemployment is at its lowest in two decades and wages are rising, the household spent -- spending fell off. retail sales beat expectations in april, showing a 1.4% rise against the forecast decline. >> the household needs to have a higher expected wage growth. that also hasn't happened since 2013. we really need to see this nominal risk continued to

back to the moody's question, one thing is they are placing all those carriers around capital outflows and they are working quite well. just judging from the exchange rate and from the market sentiment, the market is no longer as panicky as it was likely last year. fundamentals, balance of payment, the longer-term sentiment, most people think we should [indiscernible] from here. the market is pricing above seven or even longer from here. these measures would be in place until the fundamental expectation of the market shift in the medium to long term. in the shorter term everybody expected to be stable. we need a change. scarle>> great to have your perspective. did, we wrote about this, our teams combined a year ago, it was in june last year. it was a different scenario where china was selling off u.s. equities, they were selling treasuries. they were dumping all this into the market. part of it was related to the blips we had in their currency as the country is taking efforts to shore that up. the opposite is happening. not to the same extent. in 2016 china liquidated half of its u.s.

moody's cut its debt rating for the first time in 30 years with concerns over growing debt. china will have to borrow more to maintain the levels of economic growth the government wants. >>> looking at the financial markets right now on wall street, the dow is up 47 points. >>> graco has issued a recall. more than 25,000 car seats are recalled due to reports that the harness webbing can break in a crash and may not keep children restrained. documents posted by the national highway traffic safety administration claim that graco traced the problem to a single batch of my ride 65 convertible seats made on july 22, 2014. the famous baby brand says it will provide a replacement harness free. >>> ipads are helping blind students to learn and interact. kenneth craig shows us how. >> reporter: at one of the oldest schools for the blind in the u.s., nearly 300 students are learning to see the world in a whole new way. each one has his own ipad even though almost all of them are visually impaired and some, like jessica have no vision at all. >> technology is changing all around us. an

. >>> china's debt rating was cut by moody's for the first time in nearly three decades. that country's rising debt and slower growth prompted the rating agency's move, which could mean higher borrowing costs for the world's second largest economy. the chinese government called the downgrade inappropriate. >>> for years, as you probably know, there's been talk about chinese workers taking american jobs. but now there seems to be a new trend that's creating jobs in the u.s. >> reporter: in this man's vision of the future, everything you see produced at his factory in china will be made in america. he founded a textile manufacturer here, but three years ago he started a plant in south carolina, an investment that will total $220 million. "the u.s. has obvious advantages," he says. there's a lot of concern in washington that the u.s. isn't competitive compared to countries like china. but more chinese businessmen believe the opposite, that the u.s. is gaining competitiveness in manufacturing, and they're looking to invest. american john ling makes a living helping choice com