francine: the people's bank of its dailyhes reference rate triggering its biggest one-day loss in two decades. manus: google transforms itself into a conglomerate called up about, as the tech giant searches for a new feature. a rescue greece -- package that could be worth 76 billion euros. a rescue package that could live into "the pulse," london. i'm francine lacqua. i'm manus cranny cranny.

first, china has devalued the yuan, cutting by 1.9%. francine: that ends a peg to the dollar. the decision led to the currencies against one-day loss in more than a decade. run us through the immediate impact on markets. >> absolutely. this was an abrupt move by the chinese. the yuan's biggest drop in two decades and a lot of lingering questions, or questions that will spark geopolitical questions that will have to be dealt with with trading partners. let's talk about the market impact. we begin with equities which saw a more muted impact. the hang seng index now turning negative. the shanghai composite flat. it was higher earlier. that looks like it is basically unchanged. same thing with hong kong. the dude see optimism in chinese shares on speculation -- we did see optimism in chinese shares

on the speculation that this would boost exports. not market friendly to those countries that would be adversely impacted, particularly in the asia-pacific because of china's move. countries that are being impacted, commodity currencies, we saw a move lower and commodity currencies. many currencies in the region because of this move on the yuan seeing more than 1% drop. check out the singapore dollar, biggest move since 2011. we saw the korean won 1% move. the kiwi down 1% earlier. it looks like it moderated some of those earlier losses. the aussie lower. we do see some retracement. the fact the chinese have taken this decision is having a global impact. the euro moving as well. and certainly this biggest emerging market, its move

rippling across world markets and world economies. the impact of china's move to stem its struggling economic challenges. francine: thank you. manus: the people's bank of china says the move is a one time adjustment. let's find out more. our china economy reporter, kevin, choices from beijing. his raisesuation, t more questions about the timing of why they have done it. i think there are two reasons why they have done it. the first one is, as you mentioned, the export sector has been struggling. we saw exports down 8.3% in july. there are economists who would say the yuan has become overvalued. and there has been concern by polly make -- policymakers that china is falling against many

competitors. so this is kind of a small step in that direction. in itself it will not bring a big boost to exports. but it is a signal to the struggling export sector that they understand their problems. i think the second part is that imfa desires to join the special drawing rights currency basket. the central bank hatched this move for pressure on the currency from the markets to depreciate. if this leads to a more market-driven exchange rate, then that would indeed help china's case for joining me imf. -- the imf. francine: at the same time, i thought china wanted more -- not more exports. this smells of china going back to what it has been doing -- boosting growth through exports. mean, yeah, i undoubtedly, this is a shift back towards the old growth

drivers of helping investment. we have seen some support recently for infrastructure investment. now we are seeing help for the export sector. i think the question really is whether it is a transitional development to help the economy through a rough patch or whether it really is backsliding. jury is stillhe out. we need more evidence probably to determine. manus: thanks for the round up. francine: that brings us to today's to the question. how concerned should we be, how concerned should the markets be about china's currency? we bring on michael metcalf at state street global markets which manages $2.4 trillion. we wake up and yesterday we said, they will not devalued. are you concerned that it smells of all china or a sign of desperation because growth is not doing well?

michael: the one thing i would agree with kevin is that the renminbi has become a problem for china because of the devaluations elsewhere and the real exchange rate in china has moved a lot. this is what we monitor closely. by our estimates, the renminbi 10% overvalued. let's take the currency like the australian dollar, which trades on chinese fundamentals. that's currently 14%, by the same measure, by the same measure, the yesterday dollar is 14% cheap. china is a massive disadvantage because of its peg. so, what i see this as, actually, is not something to worry about. they not something to say are going backwards and anyway way. i think this is a perfectly sensible policy move. manus: based on your model, it

was overvalued. can we expect them to move again? they referred to this as being a one-off move. do you believe that? or is this the beginning of a much more progressive move in currency? has delayed the decision about inclusion in the basket. a while back, remember, the focus on china was -- to delay the inclusion in the indexes. i think china is responding. he currency needs to be free-floating. let's make it freely floating. the interesting thing in terms of whether this model works, the model is simple. p basket.rge pp think a big bank index with 10,000 -- it shows clearly that the renminbi is stressed against currencies like the australian dollar. interesting thing, will they let it float completely and let it

get to a level where ppp hits? it is going to get a lot cheaper. that is the question. it should move a lot more. i think the big question -- when exchange rates move a little bit, the biggest move in 20 years -- look, it's not much bigger than sterling. the scale of it is not large. but because the currency has been some manage it looks large compared to history. the big thing in the next month or so is actually this should go a lot further. will they allow it? francine: you suggested the chinese government has your confidence or the policymakers. with that be a fair something? is tryinges, china to shift to a consumption-based economy. however, let's be realistic. exports are still important part of the country. just as they are in germany. the peg the manage exchange rate

has left been doing them at a competitive disadvantage. and this move helps to mitigate that. francine: does francine manus: does it shift and if you market strategies? michael: there seems to be a disconnect in terms of what certain markets are pricing in. i think commodity markets and emerging markets -- markets currencies have been hit by this perfect storm of fear about china and fed tightening. they have priced in far more than the differences we had a couple years ago. and yet, the message we're getting from the fed is that rates, yes, they're going to go up but gradually. and the same for china. china is slowing but here is another measure where they are trying to mitigate the slowdown. in terms of valuation point of view, it is industrial-linked

assets. emerging markets currencies. commodity currencies that have moved so far. this move, this is an easy by china -- an easing by china. the reaction has been to hit commodity currencies. na, this is easing by chi which should be supportive of assets in the medium-term. francine: interesting. michael mccaul fair from state street global markets. manus: china has released pictures of the new 100 yuan note in circulation from november. the pboc says it would be harder to forge. but easier for machines to read. the design is select to the 2005 series -- is similar to the 2005 series but has security features and is the largest note in chinese currency. francine: here's a look at what else is on our radar this tuesday morning. greece and its creditors have

agreed to terms for a third baailout. manus: google is reorganizing into a company called up about. the new strategy gives the main web operations such as its search engine, youtube more independence while offering investors greater visibility in a plan to expand in new businesses. shares jumped. they are of 6%. thecine: -- has restarted number one sector at its nuclear plant making japan's return to atomic energy for years after the fukushima disaster. protesters outside the facility. the majority of japanese voters oppose the return of nuclear power. manus: sources tell us nomura is cutting jobs in london. 60 are to go. in the fixed income and credit positions. highre said to include

yield bond traders and analysts had fixed income business are being squeezed by banks needing to hold more capital. ext, google spells out a new future. of thek down the abc's new company structure and its new name alphabet. ♪

manus: welcome back to "the

pulse," live on bloomberg tv and streaming on bloomberg.com, your tablet and your phone. google is reorganizing into a holding company called alphabet. the new strategy gives schools main web operations such as the search engine and youtube independence, while offering investorsors -- greater visibility for the expansion of the business. let's bring in elliott gotkine. but an interesting name, their choice of name -- it's either, when you take at how they came up with google, an inverted name, so far -- what's the point? theott: the point of restructuring changes is too, i suppose, formalize the fact that google is now a conglomerate, not just about the search engine and the maps and videos. it is about everything from the science division that -- tells you how much glucose in your system if you got diabetes.

to calico that looks at china's -- longevity. which seems like a far-off prospect. google ventures,google x with driverless cars. they are formalizing the fact that there are all these disparate his misses. giving greater visibility to employees and investors. in terms of the name, you have to wonder where they sitting around watching sesame street and saw alphabet? manus: i like the name, actually. francine: i was thinking of alphabet soup. you do not know what is in it. elliott: when you reach your children at night, instead of b is for ball. francine: does it make a difference for investors? elliott: in extended trading, shares were up by 6%. that seems to be a positive response to the changes. the visibility -- clearisibility so steer to of google. how much are they spending on these ventures. should google be involved in

these things? much spitting out how revenues -- we do not know how much details we will get on these individual businesses. revenues.up the more of his abilities on what these companies are doing might allow them to spinoff more easily acquisitions. i suppose in the cutthroat world of silicon valley talent exposition -- talent acquisition, many people want to go to startups. there are losing people to facebook. perhaps now that you have got types, people would be more inclined to join him. perhaps that might make getting top talent to join the google or the alphabet family easier. changing. is not the company when you type -- this will take time. as alphabet will be in january, will come as alphabet will be

still be google. francine: i love the stories. the latest on google -- sorry, alphabet. manus: breaking news. prudential. the global life insurance business. it has first half total operating profit 1.88 billion pounds. that is actually up on last year's numbers. we're looking at the stock. it just spiked higher. dividend remains the same. if you are a shareholder, the dividend is just over 12 pence. the asia operating profit comes in at 632 million pounds. francine: this is a company that is seen a change at the top. an american is in charge and these numbers are of the former ceo who is now a credit suisse. we will not see for a couple of months with the new ceo will do. manus: let's move on a little bit.

bring back in, actually you know what? tech wrap. francine: a tweet sent out by twitters ceo helped the company stock jumped. jack dorsey was publicizing him purchase of $870,000 of shares in the company. it comes as the company struggles to boost user numbers and find a permanent chief executive. .anus: the american i.p security company is set to announces sale tof its data storage. the deal would be the largest private equity takeover of a tech company this year. francine: alibaba is buying into the old-school world of brick-and-mortar retailing by purchasing a stake in a, script that will allow china's biggest e-commerce operator to add stores. the companies will partner in logistics and online sales to

target deliveries. trying to rebel -- rival amazon. manus: let's bring michael metcalf back in. $2.5 trillion under management. we just read about the tech business. we are looking at huge moves in this market. where are you most focus in terms of industry? michael: we are looking for places that have some exposure to the cycle. as i said, we think the central bank is going to be very shallow. also looking for places the perhaps are over-owned and offer value. i think going back to comments we were making before, the areas that have then hit the hardest has been anything links to the commodity cycle. that, to us, seems to be discounting -- a major recession, which we don't see. and so, i think that is the area

where there is value, potential for investors to reassess. so, it's materials. even energy. it is those kinds of areas that we would be, we'll be looking at. basically on the assumption that the fed will tighten this year and that we are not going to see a huge fallout from china growth? michael: exactly. it is not just the fed tightening. the market takes on board the idea that this will be a shallow cycle. the communication from the fed all the way through -- and to be fair the bank of england is the same -- the markets are obsessed about the timing of the first move. and haven't spent a lot of time thinking what comes beyond that. i think the reality and the communication is that this is going to be very shallow. if it's going to be shallow, all these growth linked assets --

have discounted far too much of a slowdown. francine: thank you. michael metcalf from state street global markets. we will talking russian next. absolutely. russia's economy shrunk the most since 2009, contracting 4.6% in the second quarter. francine: it comes after a currency crisis drove consumer demand while a selloff in oil threatens to drag the country into a deeper recession. for more, we are joined by ryan chilcote in moscow. not encouraging news. where's the russian economy headed? ryan: it is not headed to a good place. were abysmale numbers. a contraction of 4.6% in the second quarter is more than what most economists thought they were going to see. when you consider that in the first quarter, the russian economy contracted by 2.2%, which was less than what most economists thought was going to happen. a lot of them have been upgrading the forecast for the russian economy and they were disappointed by yesterday's

numbers. if you look at the underlying causes -- the investor production is down. investment is down. importantly, consumer demand is down. that is easy to understand, because the rule has been week heard that has been feeding into inflation -- the ruble has been week. that has been feeding into inflation. importers have been passing on the cost hikes to consumers, and consumers have been both cutting back on whatever they buy in the shops and also have been pretty spooked. tim ash from nomura has a good no doubt where he says $7.00 drop i the price of oil equals 1% of russian economic growth. he also points out that even when the price of oil was $100 a barrel, before the crisis in ukraine, the russian economy was only growing by 1% a year. which suggests there are much more fundamental issues with the russian economy. and the first one is perhaps

that it relies on oil and gas income for 50% of the budget. manus: let's talk about the currency. it has been one of the most battered currencies of 2015. captured the attention of the world. what are the prospects for recovery? we have a lot of debt maturing in the last quarter of the year. big: oil, again, is a factor. i remember asking the head of russia's largest bank where the ruble is going to go year ago, and he tells me -- he says, wha t's going to happen with oil. the ruble has been hostage to the oil price. 47%.s down by not difficult to see the connection. but you're right. the russian con -- companies and their debts abroad is another big factor. they go $55 billion that has to

be repaid -- they owe. ahead of then and russian central bank met yesterday to discuss the ruble. can't do anything about the oil price. what they can do is affect hominy people are changing their rubles and depreciating the hard in-- ruble into currency. the central bank said that only 31 over 65 billion have to be repaid. most of that money can be rolled over. that did help the ruble. ultimately, this is an oil story. history tells us at least over the last six months, it is going to go down. manus: thanks for the rhino. -- the round up. francine: michael, in terms of value to be had in russia, you have your own inflation figures. think.bas ad as we michael: one of the reasons the

gdp was disappointing is because you the perfect storm of not just lower oil prices and sanctions but high interest rates. the weakest the ruble has been one factor protecting -- preventing the central bank from lower levels. the publish inflation numbers in russia are very high, towards 15 %. interestingly, if you collect a lot of online prices, and the annual rate of that inflation is around 9%. us suggest theto central bank has more room to cut and suggest that official -- inflation might fall. there is hope there that, ok, q3.e q2, maybe it's lower rates does not help the ruble. it does suggest that russian rates could get below 10% towards the end of the year. francine: thank you. manus: up next, a deal is done.

its creditors reach an agreement over the bailout terms. what happens next? we go live to ask to discuss the implications for that greek deal. ♪

francine: welcome back to "the pulse," live in london. i francine lacqua. manus: here are some of the top headlines. greece and creditors have agreed terms on a bailout. the country's parliament must pass the measures required by creditors before a meeting of the euro area finance ministers scheduled for friday. francine: google is we organize it into a new holding company called awful that. it gives its main web operation such as the search engine and youtube or to independence while -- more independence while

offering investors greater visibility's. shares jumped in after hours trading. electric has started the number one reactor s economic plant more than four years after fukushima. the testers camped outside the facility. -- protesters camped outside the facility. a majority of japanese voters oppose the return to nuclear power. francine: china has on especially devalue the yuan. the people's bank of china cut by 1.9%. the move triggered the biggest one-day loss since 1994 . a senior fxwith strategist at ubs. how much of a surprise was it and does it smell of deprivation orause -- of desperation china liberalizing?

>> timing is a surprise. china liberalizing? probably if they did want to move anything, it would be -- at the enf of th-- end of the year. not too much on the desperation side. you can make your arguments about export numbers. but the issue there is if you look at chinese growth, investment demand is coming up. real estate market. that is -- if you cannot fix that, the yuan is going to be week. it is a liberalization step as well. on paper at least, resolutely mores -- we'l pal pay attention to market forces. to reflect supply and demand. they don't think they can encourage markets to generate strong depreciation.

that is edges and because we just had a conversation with state street and they said, according to their model, purchasing power was 10% overvalued. my question to you is, can we expect more significant devaluation or will they let it settle for a while? geoffrey: we need to put that in context. how much did the swiss bank move? by chinese standards, it is a big move. if you look at how they have appreciated in the past, 5%. maybe there will be some symmetry on the other way round. much asabout pace as levels. if they allow you to margins too soon, a lot of short dollar come along -- positions. long positions.

even though they want to move towards a market determined framework -- it's only sensible. francine: what does it mean for the rest of the currencies? this seems like a call to buy dollars. geoffrey: you saw the reaction overnight. i think for the asian currencies in general, people worry about the race to the bottom. are we going to get a currency war. ? china has not participated in look at where the dollar-yen went. are they going to trigger something new. the jury is still out. for g-10 a key things to watch for us try and new zealand. chinese demand might on the margins -- even 5%, how is that going to impact demand? one thing i euros, would watch is reserve outflows. if it becomes unstable, then you

get a bid for dollars. your take on the argument as to whether this helps china get to special drawing rights at the imf or does it hinder? actionyou look at this more actions to come? geoffrey: it helps. they have shown commitment to moving towards a market framework. there are other aspects. for usability. a lot of these definitions are in the eye of the beholder. more actions to come? pboc has said we want convertibility towards the end of the year. anything towards a market determined framework is helpful for me imf point of view. from the u.s. point of view, china has devalued. with that result in the usual bashing of the undervalued currency?

francine: thank you. the senior fx strategist at ubs. manus: talks to finalize a bailout of the package for greece, they're officially complete. the greek government will submit the agreement of parliament with the aim of voting on thursday according to state run e.r. tv. our reporter joins us from athens. a good day to you. they got it across the line but tell us about the final terms of the bailout. were there any surprises? 35 different lines of legislature to get through. >> it seems we have little surprises if any on the third greek bailout. there are 35 prior actions that greece needs to undertake. ofn there's a larger set reforms towards october and

front andon the -- for the reduction. at the moment, there is an agreement on the hot topics of late which were the privatization fund and also, the energy markets in greece. the greek finance minister said there are a couple of small details that need to be addressed. we're not aware what those are, but they are not a dealbreaker in any way. francine: what are the next steps for securing the bailout? euro ministers meet on friday. >> the greek government will submit the bill to the parliament as soon as this afternoon. that will be discussed in committee levels tomorrow. then no thursday, -- on thursday, they will vote. on friday will

have the green light to discuss the issue. next week there is enough time for the rest of the european parliaments to vote for the bill, so that the first installment of the 86 billion euro third bailout package for greece will be -- by august 21 greece needs to meet a payment 3.2 billion euros. manus: let's talk about the august 20 date. there are concerns and they arein over whether they going to actually stick to that schedule. and whether it can actually meet those deadlines. there are a lot of things will happen. the eurogroup has to meet. the german burned a stick -- g bundestag has to me. >> we have to keep in mind that this bailout has a three years horizon. there are lot of issues. has averted to fall.

however, it is a harsh package. if you look at it fiscal-wise, recessionary-wise, there are a lot of things to be done so that this is actually been -- able to benefit. the greek administration says let's get this deal done and maybe in the next month or so see if we can make it a little bit better for the greek people. if there is any risk at the moment, that is stemming from the greek political front. if you follow greek media, there is a lot of talk on coming elections as early as mid-september. so, that is the main thing. will be ableeece to meet their deadline payments. manus: thanks for the roundup. in athens. thank you very much. up next, japan puts the switch back on.

we examine what the return to the nuclear power is. ♪

manus: welcome back to "the pulse," live from bloomberg's european headboards. our top headlines. the tweet sent out by twitters interim ceo helped the stock jump.

jack dorsey was publicizing his 0,000 worth of7 shares. he says he and that -- is investing. it comes as the company is looking to boost user numbers. francine: china has released pictures of a new 100 yuan note in circulation in november. it will be harder to force but easier for machines to read. the design is selected the 2005 series but has enhanced security features. it is worth $15.00. thes: the crew of international space station have enjoyed their first taste of food grown on board. as part of an experiment in feeding the astronauts on future missions, nasa has been running veg one. in zero gravity, growing plants. the result is a lettuce. the samples will be sent back

to earth to be analyzed. in a tweet, nasa calls it a giant leaf for mankind. started itsapan has first nuclear relation under new safety rules introduced after the 2011 fukushima disaster. they brought the number one reactor at the sendei facility back online earlier today. we get more on that, the bloomberg new energy finance head in japan. he joins us from tokyo. the restart mean for other reactors in japan? one marks the first reacted to be restarted after fukushima. it is a milestone for getting japan back online, but it is just one step. one go smoothly, the next reactor will be sendei two.

subsequent reactors are still turkey. they have to go through the evaluation. -- subsequent reactors are tricky. it will be a long way to bring japan back online. manus: what's the impact on international energy markets. lost ballajor states their nuclear programs. this is quite an important step. ali: it's relatively important. it is not going to do anything to change germany's position, if japanit does is manages to restart a nuclear fleet and there is no incident, then it sort of pushes back confidence in the industry. to be able to recover from the down side experienced at fukushima. it has an impact on commodities. market is electricity not physically connected to any other market but it is the globally.enter for -- as japan brings more nuclear

reactors online, demand for gas will go down. lng prices will remain low for the next two to five years. francine: what about the impact on nuclear suppliers? ariva'seresting, situation is a little bit unique. last year, it had huge losses. the challenge for ariva, it developed a new technology. the first two projects they were deployed were over cost and behind schedule. right now the second project in france is mired in challenges with the material used. it's likely that it will remain in trouble. the french government is right now working out what they can do to actually bailout arriva, withg -- a joint venture chinese investors. long story short, japan's

restart does not mean that arriva will be in better shape in the future. francine: think you so much for all of that. bloomberg new energy finance head of japan. here to discuss what this might mean for the future of the nuclear industry, is the senior research fellow at imperial college london. this is quite a significant move for japan. globals it play out on a basis in terms of how you use the nuclear? the response to the fukushima accident was very. you have companies like germany, italy deciding not to return to nuclear power because of italy taking an early phaseout program. on the other hand, the united states and the u.k., i'm not sure that fukushima made all that much difference. the big challenge to nuclear power is the front end costs. they are extreme expensive to build. rriva'swas saying, a

records over new reactors in france, the only two being built at the moment, has been externally bad. that is always the issue -- financing expensive things within a competitive market. i'm not sure that actually an accident caused by a 50 feet in 1970's was relevant to plants being built today. francine: but it is perception and there are safety concerns. even if you get financing, there has been a huge backlash because people are afraid of them. the u.k., the opinion polls took a dip after the accident but with any year, public opinion was back to be pro-nuclear. countries,any central and eastern europe, where fukushima had no effect on public opinion. whereas clearly in germany, france, it did have an effect there. we should bear in mind that it's

fairly clear that nobody is going to die as a result of the radiation from fukushima. disaster because of the effects of the evacuation which was unnecessary. francine: we did not know that at the time. malcolm: i don't agree. we did know at the time. but many people died because of the evacuation. there were many of the people in hospital removed from hospitals that were stress-related illnesses. one of the things that is coming out in the states is a reappraisal of measures that should be aimed to do the least harm and the most good. rather than to pick one particular issues -- levels of radiation, which are not above the natural level we get in almost all of the -- but balancing that against the other human effects of an evacuation. i think that is a major international debate which we would should have had a long time ago. in terms of the actual -- if you look at the figures on death

rates from nuclear power, they are minuscule compared to any other the fossil fuels. in japan, those are really the alternative. manus: we talk about emissions. this is a big year for climate change. one of the industries that will help reduce emissions is a nuclear business. that is undisputed. does that message need to be purveyed across the world more? if you want climate change, you have got to accept a certain level of nuclear. japan's gas emissions have risen. germany has seen a significant increase in greenhouse gas emissions, because the winners from the closure of the nuclear plants have been coal in germany and gas in japan. really had any affect on the rate at which renewables were being deployed. those plans have not changed. of makingo nice way energy. there are all absolutely awful.

whichncludes renewables, have huge environmental effects and do not produce energy when they want them. the world needs an increasing amount of energy. we need to recognize the balance in the various effects rather than focus on one or two. it's really essential if we are going to get through this massive challenge of growing energy demand, even the hiccup in the chinese economic growth, still increasing their emissions significantly. india is increasing its emissions. europe is not doing too badly. the u.s. is doing quite well at the moment controlling emissions. that this is a global issue. we need a global solution. francine: thank you so much for all of that. fishy business. yes, it is. and it is a luxury item. that's bypassing russia's ban on food imports. mmm. ♪

to "the: welcome back pulse," live on bloomberg tv and radio, and streaming on your tablet and phone and bloomberg.com. manus: russia's retaliatory sanctions have included food items like fois gras. francine: but there is one item associated with wealthy russians that they would not dare deny them. it is helping one business in italy boost sales. this is the white sturgeon

caviar. a sturgeon that takes between 12 and 13 years to -- the maturation time. most associate caviar with russia not italy. but this farm to the east of h produces 25 tons would help italy overtake russia as the second-biggest producer in the world. >> our markets are mainly europe, u.s., and russia. it sounds amazing. we start off the russian market a few years ago. today, russian market is the most important country for us. we export caviar to russia. in the past, it was the opposite. into get caviar excepted russia, it had to swallow some pride and change the labels. so russian buyers are unaware of its origin. even during centuries against the west, caviar has avoided the van. russia had to look abroad for it

thanks to overfishing in the caspian sea. with a tank full of belugas, the rarest of all sturgeon, the timing is good for the italian company. >> time is money. and life cycle of the sturgeon is between time -- 10 and 12 years. the beluga takes 20 years to produce roe. kilo $15,000 for a 1.8 tin, it is a good time to export. i do look away bit -- a wee bit. francine: it is a little bit like marmalade, but a lot more expensive. for our viewers, the second hour of "the pulse" coming up. manus: the method behind the money moves. china's devaluing the yuan. we go live to beijing to it we find at the reaction across asia.

francine: also, russia's recession. we look at the country's sharpest contraction since 2009. then we talked africa and nollywood. lights, camera, it is a hollywood -- ♪ .

anus: people's bank of china slashs the rating for the yuan. francine: spelling it out. google transform s itself into a conglomerate called alphabet. manus: and a deal is done. greece and the creditor s agree to term s on a rescue package that could be worth as much as 86 billion euro s. good morning to our viewers in europe. good evening to those of you in asia and welcome to those wake g

up in the united states. i'm manus cranny. francine: i'm francine lacqua. this is "the pulse" live from bloomberg's european headquarters in london. in term s of what we're seeing with the figure, very closely watched. current situation, a little bit better than expected. it is the forecast, the expect ations that serious lijund shot what we were expect g. a figure of 31.9. it came in at 25. that for me is a little bit worrying. manus: we seem to have passed over that bridge for now. there is euro. up an eighth on the day. trade g above the median for his quarter. ok. first up, china.

mark: but for china it is a big deal. biggest evaluation in 25 years. biggest movement in the yuan. get a look at this chart. this is the shot of the day. this side a one-year chart. china devalues the yuan. this is dollar versus the yuan. look at the spike. i have gone from dollar to yuan rather than yuan/dollar. it would have been an invert of this chart. we would have seen a downward spike. this is the shot investors like to look at. e dollar started the day

6.0297 against chinese currency. look at that whoosh upwards. biggest move in 20 years since china unified in 1994. it is yuan that is seeing big movements today. have a look at some of the other currencies have been affected. this is the chinese currency against all the major international currencies. all 17. you can see all 17 are rising against the chinese yuan after this devaluation. the currency that has benefited the most is the dollar, though. earlier, all 16 major currencies were falling against the u.s. currency. look at the south korean yuan, the singapore dollar, the australian dollar. these were the biggest decliners of the day. singapore, biggest fall since september 2011.

taiwan, biggest fall since november, 1997. investors speculating that other countries might seek weaker exchange rates to keep exports more competitive. i want to finish with the bloomberg commodity index. this is price over the last 12 months. it measures 22 commodities. we saw the biggest rise yesterday since february. some of those gains have come back today. the concern is that oil, other industrial metals will cost more. they will be more expensive because they are denominated in dollars and that of course could hit demand for commodities. what a day. a ripple effect across financial markets. manus: mark, thank you very much. we'll see where that story leads us to. mark barton. francine: let's find out more with bloomberg's chinese economy reporter, kevin. prompted the banks to

devalue the currency? >> i think for china, it kind of kills two birds with one stone. on the one hand, its export sector has been struggling. there are many economist who is say the yuan became overvalued. so this is support for a struggling export sector. on the other hand, china wants join the i.m.f. special currency basket. it has framed this latest move as a market reform and that it was driven by pressure to depreciate the yuan. if indeed that is the case and we see a more market-driven yuan going forward, that would help china's goal going forward. manus: the question is this. china has resorted to old growth models to drive the export story, to drive housing story rather than rebalancing to the er side.

that's what we had always been led to believe they were on the road to. >> yeah. i think, you know, the economy has been struggling recently and so china i think has recognized reality here that it needs more sper from the drivers. it has helped investments with various stimulus measures and now it is helping the export sector a little bit with this deevaluation. the question whether it is a traditional meth to help the economy or whether it could represent some backsliding going forward. i think we'll have to see further evidence to decide which it is. francine: one of the implications going forward, will you know -- do you think there is a big chance they will do more or is this it for now? >> i think, you know, depreciation means that there will be more capital outflows for sure.

and that is likely to be offset by further cuts in the bank's reserve ratio by the central bank to keep enough liquidity in the economy. francine: kevin, thank you so much. manus: that brings us to our twitter question of the day. it is when they have these polls moves that this comes up again. how concerned should we be or are you that china's currency bout china's currency move #"the pulse," at flacqua. they have dope a few things but it is certainly out there in terms of a question. simon, itto our next, is unclear to me. growth is lower so they are scrambling around trying do something, is this easing or free froting?

>> i'm going to go with yes, you should worry about it. 1.9% after a 22% increase in the dollar index over the last two years. china has had to live with it. let's be fair, it is only a modest improvement in terms of trade. we don't know yet whether this is a one-up adjustment and then they start to see a rather more free-floating currency. this is what they have been talking about since november 2013. but we have got to see what happens next. i think that -- i look at this in the context of past policy moves by china. we know back in 1998 during the asian crisis china sat there with its currency pegged with everyone else devaluing against it. that was praised by president clinton at the time.

between the summer of 2008 and the summer of 2010, it repegged. it was the defacto policy crisis mode. keep its currency stable. what we have seen over the last few months is we have gone back to the standard crisis policy mode. this is the first time we have seen china devalue in the midst of one of those policy moves. from that perspective, potentially given the fact hate the comes directly after the deterioration of export numbers and directly after the p.p.i. data came, it has clearly showed anufacturers under pressure. if they genuinely believed in having a moneys float currency why dependent they let the currency do that over the last four months anyway? to me it doesn't feel this is a move towards having faith in

free-floating marks, the study says we are so nervous we are making a devaluation. francine: hoping for the best. >> hoping for the best. manus: the question is have we entered a currency war and is this step one of a myriad of steps? >> there is a good argument that says we have been in a currency war for 15 years. over the last couple of years, potentially in a very, very small way could be the first -- that is why it matters what happens over the next few days. the reserve currency started to move in 2013 or 2014, we saw greater flexibility in currency and china seemed to be making good on its policies. there were promises about policy. if we go back to that, it is a different story. francine: when you say this will register with policy makers

elsewhere, are you talking about the fed? >> absolutely francine: you think the fed interest rate hike is at risk? >> no. i think they will say a very close no to the fact if they believe china is manipulating its currency over time they will look at that when they are thinking about their own policy. go back to 2001, 2002, when there was a very clear battle between china, japan and the u.s. over currency policy. the battle of rhetoric. ultimately what the u.s. did back then was a policy of neglect. obviously they deny that's what they did. i don't think the u.s. is willing to let other people play that game after trying to end the currency wars by doing what it did. manus: we have seen some pretty big moves in terms of reaction. aussie, kentucky wisconsin. -- kiwi. are those moves oversold? >> no, i don't think they are.

they are a fairly reasonable reflection of people's opinions. if we are going back to that kind of world, a world we have not been in for several years, people will themselves want to go with keeping the currencies competitively priced. no one wants to see themselves undervalued . manus: meanwhile china has released pictures of a yuan note. it will be harder to forge but easier for machines to read. the design is largely similar to the 2005 series but has enhanced security features. francine: it is the largest note in chinese currency worth $15. this is another story we're watching. greece. an e.u. official said they have agreed to tails for a fifth bailout.

more than four years after the fukushima disaster, polls suggested a majority of japan voters oppose the rounch nuclear power. francine: the u.k.'s largest ensurer beat analyst estimates led by gains in asia. it is the first set of results under the new c.e.o., mike wells. manus: up next google spells out a new feature. we break down the abc's of that structure coming up next. ♪

francine: welcome to "the pulse" live from bloomberg's european headquarters here in london. googsl reorganizing into a holding company called alphabet. the new structure gives its main web operation more independence while at the same time offering investors greater visibility into plans to expand new businesses. let's bring in elliott gotkine. alphabet. i'm increeged by the name. the thinking is -- intrigued by the name. investors like it.

elliott: they like the restructuring changes. i'm not sure why they voted on the name per se. we saw trading rising for google by 6%. they seem to like the restructuring plan. google is a con demrom rat. it has more tentacles and more pies than an octopus in a bakery. we have -- for example, we have google. maps, youtube, advertising, all that kind of stuff. life scientists. helping detect diabetes. calico, which i wasn't familiar with until the announcement which looks at ways to extend our lives which seems like jolly god thing this time of day. - good thing this time of day. nest helping you change your central heating from your smart

phone. building this kind of reorganization allows kind of a -- they are going to hire new coast and pay them pretty well to look after all of these divisionsened that way they will become o as a whole better prepared for the future. manus: let's talk about what this really means in terms of what they are doing. they are setting this company up in a structure that will maybe allow them to float off pieces, to be more transparent, to take advantage to have next big paradigm shift for google. is that a fair assessment? elliott: the c.e.o. said we want you to get a better handle on this company. they want to be more transparent without giving anything away. by showing investors -- some may be wary about exactly what is going on under the hood, now they will have a better idea how much revenue it is generating and how much money bits are sucking away from the main

operations and they may say that is wonderful. we're so glad you're investing in wi-fi balloons. or they may say put all of that money into driverless cars. i'm not sure that is a good idea. it makes spinoffs more easy. izz will perhaps enable them to better attract top talent in silicon valley. nowadays people want to go for the young startups. google being a grand daddy. not quite a dinosaur. perhaps a manus. together they have some kind of currency options in one of the smarter growing areas than google as a whole but google as a whole seems to be doing pretty well. we have the earnings. up about 25% so far this year. up 6% in extended trade. investors seem to have

rediscovered their love for google. now i suppose it will be alphabet instead of google as the mother ship that looks after it a little bit. francine: great analogy. ellyot: i don't know where that came from. francine: let's round up some of the other big stories today. jack dorsey was public lissizing his purchase in the social media company. he is investing in twitter futures. manus: the american i.t. ecurity company is selling its storage data business to veritas. francine: alibaba is buying into the old school world of bricks and mortar retailing by posting

samsung. the company will partner in logistics and online sales to target deliverries. ia s: up next, russ recession. we take a look at what has caused country's sharpest contraction since 2009. ♪

manus: welcome back to "the pulse" live on bloomberg television, streaming on the ipad and bloomberg.com. the russian economy has shrunk the most since 2009 contracted by 4.6% from a year earlier prment we had a currency crisis that jolted consumer demand while a selloff in oil threatens country into deeper recession. for more, we're joined by our russian expert reporter, ryan chilcote. ryan, is this as bad as it gets? ryan: it may not be as bad as it gets. there is two really alarming things about the numbers we got yesterday for g.d.p. pch one is these numbers, 4.6% contraction are worse than economists were expecting. the contraction in the first quarter was 2.2. less of a contraction than many economists were expecting. part of that is because oil is rising then. a lot of the economists started

to upgrade their forecast. one of the underlying reasons for that contraction which is consumer demand. easy to understand why consumers are buying less in the shops. part of it is the ruble has been weakening which leads to inflation. the importers pass on the cost rises to the consumers. they pan ache bit. they start buying less and the big thing we learned this month is not only buying less but their incomes have not been rising anywhere near -- they have not been getting raises anywhere near inflation. that is something very different from the 1990's. the russian government has been telling russians for the last several months that the second quarter was going to be the bottom, the worst in terms of the contraction but there are a lot of economists saying actually -- for example capital economics, we could have a contraction of more than 6% in the third quarter. hsbc saying it could be even worse in the fourth quarter.

watch the oil price. that has a big thing to do with this. also watch consumer demand in general. russian consumers sentiment, how they feel about how things are going. manus? francine: ryan, i'm actually going to pick it up. what are the prospect turnovers ruble strengthening? ryan: we all know it is not a new theme that the russian ruble has been hostage to the oil price for a very long time. brent over the last year has fallen by 47%. the ruble is down by 43%. you don't have to be a rocket scientist to see the connection. it is the worst performing currency to have last three months. what you want to focus on now is all of these russian companies that owe money in foreign currency. $61 billion worth of debt that comes due by the end of the year. the central bank trying to get ahead of the depreciation said only 31 billion of that has to

be repaid. if that is the case, there might not be as much downward pressure as some people think. watch the oil and watch the ruble. manus: up next, we're going to talk greece. ♪

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francine: welcome back to "the pulse" live from bloomberg's european headquarters in london, i'm francine lacqua. manus: and i'm manus cranny. francine: an e.u. official says greece and creditors have agreed o terms for a third bailout. a meeting is scheduled for friday. manus: google is reorganizing into a new company called alphabet. it gives the the search engine and youtube more independence. greater visibility into plans to expand new businesses.

francine: shares slumped in afterhours trading. japan's return to atomic energy more than four years after the fukushima disaster. protesters camped outside the facility. manus: china has unexpectedly devalued the yuan by the most in two decades. they cut the daily peg to the u.s. dollar by a record 1.9%. the move triggered the yuan's biggest one-day loss since 1994. let's get a little bit more on those markets and the moves. johnny has it all. john? jonathan: that china story, painting this equities map blanket red. the ftse in italy, half a 1% on the ibex in spain. the dax and in frankfurt down over 1%. the cac 40rks some significant

losses there as well. if you're just waking up on wall street, the dollar against the chinese currency. dollar. bashing along the bottom for most of the year and overnight a surprise move. the biggest one-day drop for the chinese currency in two decades. there we go. a stronger dollar, a weaker chinese currency. is this really about market discipline for the currency or just about a dreadful set of export numbers over the weekend and reacting to that. you can talk about politics all day long. for the market it is about one thing. it is about purchasing power. that is why you see the spillover into the commodity markets. copper down about 2% on the session. losses year to date get even deeper, down 18%. the metals markets in the red. the countries, the currencies, also ssie dollarses a

falling out of bed as well. what does this mean? purchasing power. diluting the foreign revenue. multinationals selling good, services. how does that map out for you? b.m.w., daimler really getting hit this morning. daimler down 4%. that is doing the damage to the dax. burberry, the luxury players down over 2% apiece. that is doing the damage for the cac 40. the chinese story playing down in luxury. auto sales in china at a 17-month low. the china story playing out. commodities, fx and equities as well. you understand that, you'll understand pretty much everything else. back to you. francine: thank you so much. in about 25 minutes we have "surveillance" with tom keene. what are we looking for today? >> jon ferro's summary there of all of the moves how this will affect everyone to see a managed

flow. what i would focus on is the language, i saw a little bit of that in the "wall street journal" article. this is not a one-off. that's why you see the automakers this morning in europe. every day they are going to adapt and adjust a seismic move that has reverberations across all of asia and much of the united states including frankly the fed. we'll speak with the acclaimed author on his china later on "surveillance" this morning. francine: i'm obviously obsessed, tom, with this story. it depends on whether you're an optimist, a little bit of tinkering to make it free floating. and if not, you're panicking because growth is just not as good as they said it was. >> i once sat on an airplane and i read 14 flavors of floating currencies.

this is a good thing this morning for china and the global system and every academic i know says float is better and this migrates china a little bit more towards the flexibility and the malleability of a floating system. francine: tom, thank you so much. tom keene, "surveillance" in 25 minutes. i always like it when you talk about plane rides. tom: a total nerd fest. francine: i like it. tom, thank you. manus: let's talk about greece. it has finalized a bailout package. they will submit the agreement. the aim for the lawmakers is to vote on it on thursday according o state-run erttv. marcus, what can you tell us about the final terms of the bailout? were there any surprises in

this? >> perhaps the biggest surprise is how quick lit has been concluded. if you're used to the previous exercises of bailout negotiations, when you -- yesterday when there was optimism that it would conclude today, it was hard to believe that it would actually happen. now beyond that, from the point of view that the government agreed to accept this third bailout, this third memorandum of understanding, you know, what we're seeing and hearing so far about measures, what has been reported about measures, very much it is about, you know, a lot of technicalities, the implements, the broad outlines of things that have already been agreed like the eliminationor early retirement and privatization 3r58s, etc. there are not any bigger surprises in this. it seems that the government wanted the deal done.

and it has been pushing for it to be done as quickly as possible. the next what are steps for securing this bailout? >> well, the big issue for the government is the redemption on august 20 of the bond held by the b.c. obviously everything needs to be before that starting with getting this deal through the greek parliament. the timetable they are hoping at this point will be done on thursday. any other parliament that need to approve it can also approve it and it is not confirmed, but e greek timetable -- the finance minister meeting on friday, to rubber stamp this so that the funds can be disbursed by august 20, the first crunch. manus: greece now looks more likely to be able to pay the e.c.b. back on august 20 as you referred to there. but there are still concerned

about whether the can follow through on its overall debt scheduling program. what are the prospects that this bailout is going to succeed. eric northeast was with us -- niese was here yesterday. >> if you look at the speed with the way this last round has gone through, maybe we are finally in a new world. the july , since -- agreement talked about ownership to have program by the greek authorities. the greek authorities may have, this isn't ad that deal that we wanted but it is a deal we're stuck with. they are showing they want to stick with it and implement it. further forward in term turnovers political landscape on the horizon, will very likely have elections before the end of the year, possibly even as early

as september. but that kind of has to be put into the assumptions. in drafting this and that will probably return almost certainly. this rnment in favor of package. so that, you know, that political, you know, risk, that has always been the case, kind overp remains, but you can't really see -- see it dragging on as an issue too much in the immediate term. manus: marcus, thanks for rounding all of that up. francine: twitter's stock rose yesterday after jack dorsey tweeted about his purchase of $875,000 of shares saying he is investing in twitter's future. caroline joins us on the latest. dorsey hasn't made as much of a fuss over his past transactions. caroline: he hasn't because usually he sells and he sells big.

jack dorsey has sold $15 million worth of twitter shares. of course cashing in. what would a founder do thsm this time he is buying a bit. $875,000 worth. that is a fair amount. it made people focus on jack dorsey investing in twitter. also some of the executives buying in. the c.f.o. buying $200,000 worth. a director bagged a quarter of a million dollars worth in the last few days. the executive team is starting to back twitter. that helped the shares rally yesterday, up about 9%. so too did a deal with the nfl. football, everyone loves a bit of highlights and video on twitter. they have extended a multi-year deal with the nfl to bring you yet more coverage and they hope that will lure in the brands and advertisers and also you have to put it in per spebtpive yes, he

is buying $875,000 worth but he has already sold $15 million worth. shares are still down 18% but it was a kick yesterday. manus: making a few dollars. depends on the timing of it. alibaba, i love this story. they decided to take their biggest ever stake in a bricks and morter business. caroline: 20% stake cost them $4.6 billion. this is their bigbiest ever investment. -- biggest ever investment. buying bricks and mortar and retail outlets. why? this is about a promise to deliver you quicker, faster, get you your products in two hours. suning, by buying they have 1,600 outlets suddenly

and access to 290 cities. his could be a bit of a theme. we could see a similar deal with e commerce giants getting into retail erts. this is the way this they are a going. shares rallied. everyone loves it. clearly this is the way that low are going. alibaba has been on an acquisition spree. $9 billion worth of deals. 22 already. francine: caroline hyde there with the latest on twist twitter and alibaba. coming up next, lights, cameras, africa. manus: i love this. this is about nollywood . we're going to speak to the c.e.o. of the company dubbed the netflix of africa. you don't want to miss it. ♪ 6

francine: welcome back to "the pulse" live from london on bloomberg tv. manus: irokotv, the netflix of africa has built a global audience since launching a nigerian platform back in 2011. francine: many of its viewers are in north america and europe. they have about 5,000 titles as part of its subscription service from the nollywood film industry.

joining us is the founder of irokotv. great to have you on the program. we're very excited. nollywood is huge. >> yes, it is. francine: when are you going to start selling that to audiences across the world? >> the biggest challenge is selling it to people who don't have access to it at the moment. there are some people in africa, 25-50 million tv households. we see it as the first consumers -- the first to get excited about it should be people in africa. where we are translating. we have to focus on the african audience. there are about a billion people of coverage globally. we look to bollywood as an example of the industry. it is still growing 50 years after it start. it is a big focus for us to be african and be focused on content that people love in a way they can understand. that is over the primarily over

their mobile device. manus: that is exactly what netflix actually did and has delivered. yosealso have your own stude producing about 100 films. how important is that going to be in the business model? >> we have a huge data, people of the internet. we're trying to understand what makes a great movie. how has it changed over the last few years? if we can translate some of that, get some feedback and create our own content in house, that makes perfect sense for us. make sure we can get content that really resonates with them. francine: back in april, there were reports of a planned deal with netflix to provide netflix with nollywood films. can you confirm or deny that? >> i can say nothing.

francine: you're leaving me hanging. manus: have you had discussions with netflix? >> what i think is important is since 2010, i have done -- i would say the first bringing nollywood to a wider audience. netflix has a small selection of nollywood movies. they have indian and korean movies. for us, it is anything which raises the profite file and evangelizes the qualed of nollywood is amazing for us. manus: we can turn this different ways. you're just not going to go there. talk to us about mobile. when people talk about investing in nigeria, a telecom story, your company is that sort of combination of telecoms and content. talk to us about mobile. >> i lived in nigeria for the last five years. i was born and bred here. over that five-year period, i

have never had a 24-hour period of constant electricity ever. what is really important is you generate power by yourselves. my generator broke down. once i sat in the house at night with nothing to do other than my mobile phone. it was like an epiphany for me, that is the reality of most people in africa. electricity is pretty scarce. more importantly, i am old school. i grew up with a desktop. most people in africa will never have a desktop. if you take the view that that the customary use, over the last six months, we have been looking at our data. the biggest thing we realized is android the is only platform that makes sense in africa. mobile is the only thing that makes sense. we essentially realign the entire company. a dot.com in africa, you download it to the android app.

streaming is the big, powerful thing here in the west. we don't even have streaming anymore. data is still quite expensive. we can't make that product and more importantly access to that content as affordable as possible. francine: how much can you grow by? do you have a goal in five years, i want to double? in 10 years, i want to triple? >> if you lay it out there, there are 900 million people in africa. 16 million paying people for the tv audience. facebook has 20 million people. mobile device for all intents and purposes be larger. 16 million people in paid tv. by 2020 they want 25 million.

we feel they should be significantly larger than that. one thing with we need to hold on to is 500 million mobile phones in south africa, they will need content. we just want to lead them to that content. francine: jason, thank you very much. the founder of irokotv. manus: when you have breaking news, make sure you tell us first. official business. bypassing russia's ban on food imports. ♪

francine: welcome back to "the pulse" live on bloomberg tv and streaming on the ipad and of course bloomberg.com. manus: russia's retaliatory sanctions on the west include a ban on imports of food. one item that president putin wouldn't dare deny them and it is helping one business in italy boost their sales. bloomberg went there to meet them. >> this is the white caviar. it takes 12-13 years to produce ette. reduce the maturation time. most people associate caviar with russia, not it they are the

second biggest producer in the world. >> our markets are mainly europe, u.s. and yause. it sounds amazing. we start up the russian market three years ago. today, the russian market is the most important country for us. we export caviar to russia. in the past, the opposite. >> to get his caviar accepted in russia, though, he had to swallow some pride and change the labels so russian buyers are unaware of its origin. even during sanctions against west, caviar has avoided the ban. russia already had to look abroad for it thanks to overfishing in the caspian sea. the timing is good for the italian company. >> time is money. ly the life cycle is norm

10-12 years. imagine that the beluga takes 21-22 years to produce. that's why caviar is an expensive food. >> at $15,000 for a 1.8 kilo tin of its top offering, it is a good time tokes port. -- to export. francine: i always thought it was russian-made. "the that's it for pulse." keep it here on bloomberg tv. stay tuned for "surveillance" live from new york. manus: you can follow us on twitter. i'm at manus cranny and francine is at flacqua. a little bit of pressure on the commodities, the autos and of y good on the back whether china is desperate. francine: it is all about china. i know tom keene will focus on china. they will also talk tech news. we had a lot out from twitter and alibaba. that is coming up next on

"surveillance" with tom keene and his team. we'll see you tomorrow. have great day, everyone. ♪

>> this is "surveillance". tom: china capitulates. they devalue the renminbi. let the currency wars began. greece reaches an agreement with

germany and the creditors. tsipras wants greece to support him. don't be evil. google, they restructure. will google buy twitter? it is all the gossip. good morning, everyone. live from our world headquarters in new york. this tuesday, august 11. there is nothing going on with the currency. the first thing i thought of with china was brazil. they invented the currency war. n: obviously, we saw a devaluation. is that going to continue? will they let the currency move both ways? tom: we will have this this morning. stephen roach will join us in our next hour. our top headlines. julie: china taking a big step to try to boost its economy. the country's central bank devalued the yuan by the most in two decades. a one-time adjustmt.