down and futures lower. points.res down 122 a lot ot talk about caroline hyde has your european market open. caroline: we will see how they open. we expect them to trade lower a second day down they go. the biggest move in the yuan in 21 years. seeing devaluation, the market getting more of a say in whether currency goes. the emerging markets give it the thumbs down. it is a selloff, europe sells off, cap 40 up by .9%. we will see -- greece opened at half past the hour. germany potentially dragging its

heels over this bailout. will they get the money and time for august the 20th? we wait for germany's open, but big hits coming to the automakers in germany. look what it is doing to commodities. depreciates, there is less desire to be importing. copper up by .4%. check out what happened to the yuan. this is the dollar higher, the yuan lower. almost a 2% selloff in terms of the current for -- currency. look at what it has on the rest of the foreign currency. the dollar is up, the malaysian dollar -- currency falls off. look what it did to the sycamore currency, down. u.s. dollar up.

clearly, this is having an impact across the board. check out the yield moving terms of u.s. treasury. bound by eight basis points. flowing into u.s. assets, flowing into the dollar. are we seeing a delay in terms of foreign cost rate rises? could the u.k. be put off? could janet yellen be put off? i wouldbasis points, give it flavor of how the moves are happening. what are the effects? yesterday, auto selloff. daimler down by 2%. we see it in a little bit. audi is its luxury carmaker. it is all about the luxury impact. this is going to hurt european exporters. jonathan: thank you very much. we can feel the pain in european

equities. let's get over to elliott from the emerging market. yuantt: the impact of the depreciation rippling through emerging markets in terms of currencies and stocks. in three ways they are being usected, it has been telling that the chinese are less likely to consume those imports. if you are exporting on the world stage, you also find that chinese exports are now more competitive because they are cheaper. with commodities to boot, that is a triple miami/ some cap -- triple whammy. the biggestralia as and south korea, taiwan, new zealand, all of these countries taking a hit. all caps china among their top trading partners. we will see how it will affect

those, but it is some in the maybe they can do without. perhaps that will reduce the amount that they will be importing from many of those countries. we have some intraday moves on the currencies. the dollar strengthening against the yuan. the mexican peso down as well. it is having an impact across the board. jonathan: let's bring in some of the bloomberg team. they've been following this story throughout the last 24 hours, and that, i want to start with you. they told us it was a one off move, but if you will take notice of of the markets want to see, if we are heading lower debt to keep cutting the reference rate. they can't just be a one-off move can it? nick: the government is saying we will give the market a

greater role, but at the same rate, sos is a fixing they are quite clear to make to read states with that 2% dan. the government's intentions are not exactly clear. this will obviously benefit chinese exports, chinese growth at a 7% target for the end of the year. it is really anybody's guess as to what the true intentions are. , theyinquish some power are really pushing to boost those exports. jonathan: it is not really clear what the objective of the chinese government actually is. i get several pieces of research, one camp saying it is all about exports, the other saying this is about sdr inclusion. they can't both be right can they? lie: i think the first camp is correct. this is about stabilizing the economy.

exports fell over 8% in july alone that had to be terrifying. i think the latter matters as well. china is moving very deliberately, knowing that the imf is looking over its shoulder. the big reward is sdr inclusion. that they areear not perturbed by how china is handling this so far. the question is tomorrow, certainly the chinese currency fell again today which was a surprise to some people. the question is what it does tomorrow. in some ways, it is saying the currency might've gone as far as we wanted to for now. as far as territory, we really don't know. the question is really what happens tomorrow in the months after that. let's talk about the regional implications. 1998 being 1997 and

thrown around a lot this morning especially when you look at malaysia. the wider impact, how many months could display out for? : it is difficult to overstate what happens when the world's second-biggest economy devalues its currency by 2%. down 10%.it is little moves like this can have a huge impact. vietnamnt widened -- widened their own trading band, there is talk of a currency war. you have the premier saying that china did not want currency devaluation because it did not want to rely on those old growth drivers. his credibility is at stake here. you have to see if the government sticks to -- they said they are allowing me yuan

to align with market forces. but they also want to make sure that it stays stable. this doesn't look like stability. tomorrow we will get a much clearer picture as to whether they will allow the yuan to continue devaluing. jonathan: to bring you into the conversation, when you hear what is ais satying, it significant move. when people say the words currency war, and link back to what china did yesterday, what do you say back to them? eurow: the point about the is well taken. you have to remember japan. the yen is down 35% in less than 7 says that ishe g ok, rich australia is down, the but whenhat is ok,

china devalues they say it is a crisis. you can argue that is the second-biggest economy we want stability. china sliding into crisis is in no one's best interest. space foreathing officials to look around and think which reforms matter the most. debt andjuggling stocks at the same time. in some ways, this may take some pressure off those problems. if that is the case, then the ends justify the means for me. jonathan: it is personal. thank you very much for joining us this morning. let's get the investors take. i need a sensible head. bill, asset management at j.p. morgan. i'm hearing things like currency crisis, and currency wars. give me the reality check. what is this?

markets, the knee-jerk reaction, does it turn out to be much bigger? bill: factor in the month, we are in august. we don't have much volume two take those moves. we have a market which is truly a summer market. if you are talking currency wars, let's be crystal clear -- but that europe down 10%, australia down 10%. if this is china entering a currency war, they brought ap shooter against a canon. that is not the way. ais has all the hallmarks of statement of intent in terms of gradual liberalization of markets which is with the imf has asked for and welcomed. never in mind, china has to walk a fine line. they were accused of being currency manipulators a few years back.

this is them taking baby steps towards liberalization regime of their currency. i don't personally see this as being a major devaluation trend. jonathan: a lot of people talking, talking about it cut to the rrr rate. has to gonk the pboc down now? john: they have shown they will use all of the tools available. slowdown a significant that is taking place in terms of exports. there is a desire to see a greater presence from the spending inconsumer the makeup of their gdp. the tools could include rate cuts, reserve rate requirement cuts, some intervention from the pboc.

i will ask you -- jonathan: i will ask you this is just a knee-jerk reaction. down another 3.3%. if this is just a knee-jerk reaction, is the market reaction the right one, as far as you are concerned? john: for the market to pick a negative slant on this is probably understandable. the technicals of the equity markets technically have not been great as of late. there is an undercurrent of continuing oversupply of commodities. there is continued pressure downwards on iron ore, on copper, and other parts of the commodities complex because be still have this structural oversupply. markets, which of the big oil component, have been coming under pressure. it is little wonder that the market has taken a somewhat cautious. turn to this

with a few months we have had -- just not that much good news. the markets are absorbing quite a lot. they are looking at this move, and seeing it as an opportunity to the risk further. thethan: he talked about critical point that they are exporting deflation. it is bullish for bonds, bearish for stocks. i look at treasuries rallying this morning down nine basis points on the u.s. 10 year. the yield at a record low. markets.t across bond when the document knee-jerk reactions, is that the one of -- the position you want to be in? wouldconventional wisdom have curves flattening to a rate hiking cycle. when weurves flatten

seen what is a decent place very move -- deflationary move is for a reasonable. to export from china. lower back ends of curves make sense. as we go into the potential fed rate hike, certainly one this too, is are terms now compressed? have we gone too far in assuming we are in a deflationary world? froma jobs report today the u.k.. labor markets aren't in that bad of a shape. deflation significant could be mistimed. jonathan: the initial read falling, see bonds is that wrong?

john: we are seeing a reaction from losing commodities. bear in mind, why do bonds rally? other times because of safe even flow. it is a combination of the two. compressed,remely that concerns me that we could be in the middle of a rate hike the time than we need to rethink those gyrations. jonathan: you will stay with us. coming up, job stay in the u.k.. we take you ahead of everything you need to now. returns.ela merkel 35% from a high . 50 minute into the session it is china tantrum day to. a lot to talk about we do it after the break. ♪

jonathan: good morning, this is "on the move." let's gige up to speed on the top stories. econhinese plunges for the -- second straight day. china is trying to give markets forces more sway in determining the exchange

rate. stocks entered a bear market. it is robin 20% from a september -- it has fallen 20% from a september peak. agreed to sell its 50% stake in "the economist" magazine. at the seven the financial times last month, the stock is lower in london trading this morning. it is jobs day. growth estimated to have slowed from the previous month. governor mark carney weighs interest rate hike. us. great to have you with do i ignore the pullback and

wage growth today? line.es, bottom we know it will slow. this is a three-month average. it was a very strong march. the overwhelming trend is that it has picked up from last year. the really big question to ask today is on the employment side it was the figure for unemployment falling. is that a blip? is it a volatile single month figures we get from the oms? a will this be sustained? that is the really big question. jonathan: a lot of people talk about wage growth, the bank of england very good at talking about wage growth. do you share that optimistic view about wage growth? john: if you look at the underlying surveys, but they

suggest is that the service sector is getting on a 3% wage growth. fed released a report recently looking at the way in which wages and inflation are linked, and that the relationship may be nonlinear. we could see much greater tightness in the labor market, certainly not to look forward and wondered that becomes more inflationary as wages grow. jonathan: i go back to the inflation report. the vote was 8-1, and everyone thought that was more dovish than we expected. the inflation report, it was more -- you thought it was more hawkish than others did? rob: i did, both from that and the press conference that came after it. the vote was a seven-to in disguise. unless he had a change of heart,

his vote cannot be too far away. i don't think the vote was that important. honestly, inflation at the minute is likely to be close to zero for several new months. hiking, butase for what he really do it when inflation is zero? no. we have the bank of england projecting inflation returning to target in two years, rising above it in three years. the talk about productivity having improved. mark carney use the words excessive demand multiple times in this press conference. i don't use words like access and demand close to each other ever. he did is a number of times. he also said we don't to the markets hikes, not in so many words, but it was a pretty

clear answer. he was signaling that the markets undercooked it. jonathan: i want to bring in a voice from the other side of the atlantic. he spoke to the fed vice chair, who said the united states and u.k. are in a similar position. >> the behavior of the british economy is remarkably similar to that of hours in terms of inflation and unemployment. there are fewer and fewer that are growing decently. >> the problem is not with the part that is unusual, that is going just fine, it is the inflation part. if we were just inflation target or's, we would be in the same situation. you, if: john, to stanley fischer headed up the bank of england would we be

talking them at the rate hike you're talking about? we have to bear in mind that a central banks job is as much to project forward where they expect data to go into look through some of the near-term issues we face. this is about an inflationary trend around the globe which is the commodity complex. the idea that we should be knee-jerk into that just at a point where anecdotal reports suggest that there is tightness in the labor market and some firms are struggling to hire. so would be asleep at the wheel, not to look forward not it today. miles, theavid member many thought would put for the rate hike had this to say -- the longer you leave it is slightly more steep the projection goes. how do we know when it is too late? when do you have to move? aboutd we be talking

february? rob: you only know after the event. for 18 months of been talking about this. maybe longer than that. late,ow when it is too when wage growth suddenly picks up. in the current environment, i don't think that is likely to happen. we should see inflation pressures slowly growing. have sterling strength providing long-term disinflation pressure. i don't think there is a big risk that inflation will certainly shoot higher. that is what they are saying. i find absolutely no pressure to. it might be a mistake because inflation is very low. let's just keep waiting. in november hike

was very likely, february bus my call. just wait and see. i don't think right now there is a big risk it would get behind the curve. question,the final they were probably have the take note of what happens in china. does that play into the thinking? when carney came to take this job he talk about a state philosophy. should i be worried about them inflation coming from china? for: what you are looking is the u.k. economy looking at the domestic pitch more than international pitch will stop these are very heavily geared towards commodity markets and international pressure, but the should not be ticking that up and translating that back across the globe. better to have local jobs and improved services, that has to do with the things the central bank are watching. sure, they keep an eye on china

and will be mindful about what the fed to do. but this will be a domestically driven decision. jonathan: thank you very much for joining us. after the break, we break down the big story -- it's china. ♪

>> weak exports were part of the reason, but i don't think it is the only reason. i think that is important because for right or wrong, china really wants to get this into the basket by this review. they removed a technical obstacle. i'm sure that was one of the factors. >> they claim it is a one-off, i doubt it. it is not a coincidence this was taken on the heels of sharply declining export. >> china has a massive advantage peg.se of its pag --

it is not something to worry about, to say they are going ackwards, i think this is perfectly sensible policy move. move you ofisk interest rates leading the rally. that has some concern around the global growth picture. that china coming after the export data is making a move of -- currency.o >> they probably want to keep them for now. theselia, new zealand, commodity exports on the margins. how will that impact demand? marginal for now, the one thing i would watch would be the reserve of outflows. the becomes able, at the same

time, china has to sell treasuries as well. >> that's what you are seeing today, here is a competitive valuations. people see that china will be valuable at 1%. from japan to korea to mexico to over thethout this consequences if the u.s. cannot escape the implications will stop that is something we need to take into account. the result western that the chinese move today will cut short the fed tightening. tantrum, day 2. here's a picture of the markets for you. the 5100 pulling back once again with blanket red across europe. it is down by 90 point. a 2009 low down 7.5% in just two days.

caroline hyde will breakdowns of constituents of that. againeavy pressure once -- down by 220 point. >> you mentioned the minors -- devaluation, you can see the -- china's devaluations, you can see the end result. forknow, some people like theeconomist talking about exposure of certain commodities out there. of theird lose 50% value against the u.s. dollar over the next nine months. thatare some currencies, is the percentage of exports of those countries that go to

china. look at australia, almost 40% to china. up the at the top you have singapore. a country that exports to china or compete with chinese exports taking a hit across the board as well. the chinese devaluation is affecting you yesterday, today, and going forward is -- as wekll. caroline hyde looking at some of the stock movers. . the founder of this company, they're off by 5%. it is listed in hong kong as well. di -- glencore is leading the devaluation when it comes to mining. , theyning stock, downm,

also trade it. an interesting element for china, henkel is a german company that owns right guard. , if you name it, it does it. the estimates had been for 3.6% growth. they confirmed that 2015 nonetheless, but look at goldman sachs saying once again look beauty companies are really exposed china. their concerns about the skincare market eating sucked up by local competitors. .2% a german utility beating estimates. great work finding a

stock in the green. from one crisis to another one. the legislation allows recapitalization of the country's tanks. the deal has hit a little bit of a roadblock. let's get the latest from our bloomberg team. what is the latest from athens? we have a small correction to the timeline that alexis tsipras had in mind. it will not be voted for tomorrow as the parliament speaker presented some technical obstacles to the procedure. anothermay be in for round of those greek votes in the very early hours of friday morning.

the bill will pass, the eurogroup admitting that on friday. how much of their net disposable income is wiped out. the first round of elections will be in september. that is about it at the moment. to listen to have what he's talking about domestic policy. isre you are, angela merkel back from holiday in faces new grumblings about aid to greece. do we need to pay attention to that? aid iso, because german and has been the key to all of the greek bailouts.

there the single biggest contributor. the signals from germany have were thinkintek they wanted an agreement but it had to be airtight. among germanctance in merkel's party block against being railroaded into a deal. that is the real question, how does this all play out? willie developed develop as the deal take shape. what other distractions that she face? >> angela merkel has been front and center on greece. she has otherme, things on her calendar.

next week she is scheduled to go to brazil. brazil is what of the big emerging economies. these are things that can get held up by the greek crisis. angela merkel needs to tended to other business. that trip is supposed to stop -- begin on august 19th. jonathan: a big thanks to the bloomberg team. we go from one european crisis in greece to another one further .ast ukraine, seven months after the nation declared it would need debt relief talks with creditors coming to a head. ryan, and separatist go, why?

ryan: she says ukraine's creditors have one final chance to strike a deal. chua to california because that is were franklin templeton is located. billione more than $7 of the $19 billion worth that ukraine wants to restructure. the second biggest holder of ukrainian bonds is russia but they consider themselves to be official creditors so they are skipping the topics. there -- the talks have been going on for several months with thal distance between

that will not be good enough. it to be getting interesting. talkhan: i feel like we about greece in the following question makes it feel like we talk about greece even more. how likely is a payoff? >> you look at credit default swaps, right now in ukraine investors think that ukraine is more likely to default on its debt than greece. you'll get bond yields, the two year, investors become more about ukrainian bonds. the debt is still trading at about $.50 over the dollar. that is still very distressed debt. concern about of whether investors will get paid. the ukrainians want to keep that $7.5 billion on the island.

they want to get more from the imf. boy do they need the help. with the economy there any war waging in the east. it is reason to do a deal. it is nowhere close. jonathan: thank you very much for joining us. tv, amid on bloomberg new signs of a china's slowdown, the e-commerce giant report earnings today. they lost more than $90 billion since november. theinutes into this section dax is lower. .he selloff continues in europe ♪

jonathan: good morning and welcome back to bloomberg tv. it is jobs day here in the u k. the unemployment figure executives to it 5.9%. the data will be released at 9:30 u.k. time. exitove complete pearson's from business publishing after selling the financial times last month. the stock is trading lower. plunged foryuan has

the second straight day. the move came just one day after the record 1.9% cut yesterday. the people's bank of china is trying to give market forces more sway in determining the exchange rate. ali baba reports first-quarter earnings later today. it is been a difficult year for the former stock market darling which is trading at its lowest since it started last year. how has it performed over the last quarter? really has been the largest destruction of wealth since its peak in november. just looking at the numbers, it is 90 billion plus, that is more than the market value of goldman sachs. a slowdown in china's market is a reason for this, and combined with the fact they are facing a

lawsuit and had that previous dispute. a combination of these has made alibaba one of the biggest sources of shareholder losses. jonathan: how are they trying to cope? the: that is one of objectives. they talked about an expansion with russia, brazil, or the u.s. they brought on a former goldman sachs employee and asked them to head the global expansion strategy. stake they at the a stronghold and household appliances. also an extensive network covering 2800 counties in china. that is something they can tap into. jonathan: before the market opens, tell me, what do we need to look for in the earnings?

people will be looking at their mobile performance, revenue generated from that sector, and also look at mobile user growth. they will also look at their share-based compensation. should continue to look at that and see whether management plans any handouts in the coming quarters. jonathan: thank you very much. a look ahead to alibaba earnings. , 48 minutes into the session in europe let's gige up to speed on the equity markets -- a brutal moves. index.he lid on that glencore down, it is getting brutal for the miners. we will update you over the last 24 hours. we look ahead to the pulse with him. we do that after the break.

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>> if you compare that to what brazil or japan has done, it is miniscule. it was shocking, and unexpected because of their own past. fundamentally, they will take it back to the state

we had before 2007 -- unlikely. that is not essential fundamental driver behind the move. >> i think that china is very clever. chinapart of stability in is their exports. there been trying to increase their imports. ok, but theg exports are tough. china is not like it used to be. it is still quite expensive .ecause of their revenue we see it as an opportunity to improve margins. china has no respect for president obama whatsoever. got the take strong action. how can we compete? they continually cut their currency. they have a doing this isn't just starting. this was the largest evaluation

they've had in two decades. they make it impossible for our businesses to compete. they think we are run by a bunch of idiots. chart, for 12 month now let's get us another view from someone in the room. markets,d look at the at a 2009 low, we talk about malaysia, or bonds, thicker pick. manus: two words, it's is a miniscule move, but that is what i would call robbing peter to pay paul when peter doesn't have a lot in his swag bag anyway. we are finding it tough to get growth in china, so you know what? we will export deflation around the world.

then we try to rebuild our growth story. maintaining growth, maintaining the stock market, but doing it by devaluation. but someone slap the break on, it devalued to quickly. you will get people discussing if this is a managed evaluation, is it a managed float of the yu an. day two, it is not going very well. adviser, we get his perspective on what he thinks about this devaluation. two year government bonds and germany, the most negative and it's ever been on record is -.29%. the question yet ask yourself, one is deflation, or two, is the world in a much more sinister

place than we know? therefore, you want to buy government bonds from germany or the united states. -- if australian bonds the aussie dollar is on its knees, what chance is there for the rest of us? jonathan: when you talk about rebounding -- rebalancing and economy, wouldn't you want a strong currency? manus: quite possibly, but i just love donald trump in some kind of ironic way. truly mad, two or three years ago china was stealing all of our jobs because they were cutting our wages now they are stealing our wages because they are moving towards more free-floating currency which is what the u.s. had tentatively welcomed. tour -- your cake

and eat it. for the markets, you have to make a decision. markets,the bond whether it is inflation, or a risk off. in asia, it really needs to be talked about. is this something bigger or just a knee-jerk reaction? thes: i think this is beginning of something much more substantial. incourse markets over react the very first instances. then they posit, reflect, -- pause, reflect. jonathan: maybe he does, he is coming up after the break. do not miss "the pulse or go. we are right on the asia story. coming up later, a key one for

us. at. jobs data comes out 9:30. that is it for me. ♪

yuan plunges. manus: the international energy agency forecast yet another drop in global oil demand. francine: and we get u.k. jobs data in half an hour. unemployment is expected to stay at 5.6%. we will bring you the numbers as soon as they break. welcome to "the pulse." i'm francine lacqua. manus: and i'm manus cranny.