iaea oil prices. alibaba down 34% from its peak. jack ma will have explaining to do. those earnings out today. good morning, everyone. this is "bloomberg surveillance" from new york. moments ago, the chinese appear to be reacting to the market. brendan greeley, help me out here as we truly rip up the script. twoone and evaluation, date of depreciation. 9% improvement, strengthening of the renminbi. brendan: the question has always been what are they willing to do. they also want their own control over it. we are reverse engineering this. we do not know this from the bank. we are looking at the tape. tom: i know you are going to get

to top headlines. to bealk of a briefing held at 10:15 on august 13. i believe that is into their morning as well tomorrow morning. let's get you caught up on what occurred overnight. here is julie hyman. china's decision is rattling market today. theks are down around world, and futures in the u.s. indicate u.s. stocks will be lower at the open as well. commodities also declining. hsbc's senior economic adviser told bloomberg we could see this as a bit of a payback. china is in a difficult position because every other country in the world has devalued against china.

julie: emerging-market stocks have some to their lowest levels since 2011. they are now in a bear market, down 22% since hitting a peak last december. the price of oil is bouncing back from lowe's. -- from lows. it has come back a little bit. a little under $44 per barrel. prices are down more than 18% this year. hillary clinton has agreed to turn over the private e-mail server she used while secretary of state. it tos told aides to give the justice department. general electric has sold off another chunk of its finance business. capital one has agreed to buy ge's finance unit, which offers organizations such as nursing homes.

capital one is best known for its heavily advertised credit cards. the firm is the seventh largest commercial bank in the united states. new york jets quarterback geno smith will be out for 10 weeks after having his jaw broken in a fight with a teammate. the player who punched smith has been cut from the team. over anly a dispute airline ticket. tom: are we having fun in august? over an airline ticket? are you serious? julie: the other player was conducting a football camp. i guess he did not go. brendan: here is how you can tell it is a story. it is on both the front and the back page of the "new york post." post" and they someone who hit a cop.

tom: that is a serious matter. we go to mohamed el-erian to see if he has an opinion on it. it is believed that he never took a swing at bill gross. let's look at our data check. this is the carnage we are seeing, the news happening right now. s&p futures deteriorate in the last 20 minutes, -23. ever sol, a rally slight in oil. look at the yields. julie hyman mentioning the 10 year yield getting in the vicinity of 2%. the dow, 17,400. the german 10 year, quickly i want to go to the mac terminal, the bloomberg terminal, and i want to douse the "it is just 1998" malarkey i have heard over the past few days. the headline is, we have gone

through that weakness, new weakness on a quarterly chart. if you go long, you can compare. we are nowhere near the angst that we saw in 1998. brendan: to twin that with some of the politics, there has been an announcement that there will be a cabinet reshuffling. here was an assumption that was going to get rid of oil structure -- of oil subsidies. tom: we have markets on the move. dollar,nminbi, .enminbi, showing speculation all else will fight the deflation wars. the german two-year to new negative rates this morning. you wonder, when will the swiss 15-year note print negative. jon ferro stays up nights

worrying about such issues. tim craighead is in hong kong this morning. me start with you and give you less time as we go to mr. craighead on the immediate news. what is the significance of the deflation wars the mario draghi and mark carney if they react to what they see in china? jon: there is a safe haven bit in the bond market, the german 10-year yield at an all-time low. but there is also the deflation bit as well. if you devalue the currency and deflation, for the likes of mark carney it is getting difficult. don'tflation data says you dare. if it continues to stay around zero in china after those , -- the question is not what happens tomorrow, it is

next weekend the months after. if this depreciation valuation continues. brendan: is there any sense that this news, a day and have hold, what this will mean for the engine of europe? --: it is important purchasing power is very important. also dilution of earnings. it is why you see the luxury good makers get hit today. it is why you see miners, those stocks getting crushed as well. tom: let me go to tim craighead in hong kong. we had just seen a sharp reaction, day two of the evaluation. give us a perspective how the stage managing this is an. are they in control of the markets, or are the markets in control of their destiny? tim: it is pretty fascinating. band that managed

they set. from that perspective i have to believe they are in control. but the construct of what they did yesterday was sort of that shock -- and you think 2%, what is the "2%, but it is a signal. it is a signal that the game has changed and we are not in a 10-year strengthening. we have an opportunity to see change toward weakening. give us a window into the strength of the chinese banks. how badly are they buffeted by this inflation over a slowing economy? realizesbank cost team there are issues -- our bank's team realizes there are issues. asre is a lot of reserve well, both from the standpoint of the bank's balance sheet as well as what the pboc and the

central government can do. that is not necessarily on our hit parade of the biggest concerns as a relates to china. we know it is there. we do not think it is a ticking time tom -- a ticking time bomb. brendan: one reason china was propping up currency was to keep capital in the country. his china at a risk of capital flight now? tim: it is a good question. we do not think that is that the governor deal. there are a lot of controls. it is not an open currency flow economy. suddenot like all of the you can see an evacuation of capital, and their are still huge reserves internally in china. to both of you, this is important. rachel evans just published for bloomberg the goldman sachs research that the chinese are getting in front of the fed that is raising rates. suggest this you

is asia reacting to what they presume janet yellen will do? bear in mind that we have had a massive appreciation of the dollar, and the chinese currency has bounced along the bottom against the dollar. to keep it there was going to be difficult. we have seen this kind of movie, but in reserve the -- but in reverse before. who am i to argue against goldman sachs? tom: jon ferro, thank you. on short notice, tim craighead, thank you so much, from hong kong. i love the question from brendan greeley this morning. i love the idea of germany selling trains to china. is that derail this morning? hans: the french made great

trains, the germans do as well. tom: what is the real economy effect of all this mumbo-jumbo we are talking about? hans: we have seen a corruption crackdown. audise fewer bmw's, fewer . we have seen them talking about how they are going to have to trim back and at least trim sales when they look at -- audi's biggest market is germany, so it will clearly affect them. of this because of this because of the selloff in the equities market. china can feel a little less rich buying fewer cars. we just heard something from the chamber of commerce saying that the new normal could be slower growth. brendan: one of the things we have been asking all summer -- which is more important for the china?n economy, u.s. or

hans: at least the first quarter of this year, greece did not affect german growth. we will get a big picture of how these issues in greece have affected the german economy tomorrow when we get german gdp figures out. it seems like china is a bigger story for the germans. what is reported in the popular press, greece dominates because there are read pensioners taking vacations on german dimes. see this in dollar at 65 earlieras this morning. what a morning it is. stay with us worldwide. our twitter question today, what else will the yuan takedown with a? good morning. ♪

tom: good morning, everyone. futures deteriorate, -20. let's get to our top headlines. here is julie hyman. julie: a u.s. military helicopter has crashed off japan's southernmost island. the japanese coast guard says the crash site is believed to be off the eastern coast of okinawa. no word on how many people were on board. the u.s. has 25,000 troops on okinawa. "the wall street journal" says credit suisse and barclays are in talk with the sec and new york's attorney general over alleged wrongdoing. it was home sweet home in major league baseball. tuesday march the first time in history that all 15 home teams won on the same day.

each day, a 50/50 proposition. the odds are one in 32,768. the last time that happened was in september of 1989. brendan: tom, where the red sox playing at home? tom: no. that is a little game i play called poking the bear. alibaba down 35% since the post-ipo last fall. june, jack ma told the new york audience do not be scared, the company is a bet on the chinese consumer. julie was covering alibaba in those breathless days of the ipo. -- leslie was covering

alibaba in those breathless days of the ipo. leslie: a year ago when it was going public, everyone was rallying around this company. people could not get enough demand for its shares. the whole concept of betting on the chinese consumer was a good thing. now it is seen as a fear tactic. betting on the chinese consumer, the company has been trying to expand, diversify its reach, and get 50% of its revenue outside china to prevent this concern. brendan: i have a note from cantor fitzgerald that is dated august 10, but it might as well be dated june 1. "macro concerns about china's economy remain a key issue long-term." that is almost the only concern for alibaba now, right? leslie: it is one of the many concerns for alibaba. government reports are saying that the products may not be up

to snuff. tom: everybody is gaga. jack ma with a big speech in new york. bullems like it one way market call. when does that end? today's earnings could be a catalyst. they are expecting 33% revenue growth compared to a mean of 66% over the last month. hans: that is worse than twitter's. we know the twitter story. julie: they are very far from the goal. 83 percent of revenue was from china. where are they on getting more international revenue? leslie: that is a big problem for their website. that was the u.s. website that was supposed to be more of a u.s. bet here. they sold that.

it was not working, so they sold that off. another part of their plan has always been to get u.s. smaller businesses, russian small businesses, european small businesses to sell onto alibaba, not the reverse. tom: you talk about currency adjustment. on theu bring them up renminbi -- brendan: i would argue that they had a competitiveness problem. the great wall of china helps national champions grow in the internet space in china. it makes it very difficult for them to figure out how to compete outside china. they do not have to compete in their home markets. tom: 10 seconds -- where are margins? .0% ebitda can they continue that? leslie: they do not hold the inventory now. they made that acquisition over this week, which was the biggest that they have ever made, a $4.6 billion stake.

what that does to markets will be interesting. brendan: leslie picker, thank you. alibaba's new, zhang.aniel s good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." we need to make clear that the chinese renminbi has appreciated over the last 20 minutes. we do not know if it is central-bank action. there is speculation about that. out onll street journal" twitter with a comment.

we will not say that until we get confirmation. a second day of appreciation, an abrupt 9.3% reversal in euro-renminbi, and dollar-renminbi, for whatever reason. brendan: i picked something that , when you hit on the stanley fischer earlier this week, the productivity numbers, why we cannot increase productivity. john k in the ft writes -- brendan: this is a problem with numbers. so much of what we consider economic activity takes place within the home and is therefore in measurable.

he is talking about all the efficiencies that happen within home production. i have agree as well. our lives are more efficient, even though it is not increasing actual transactions moving back and forth. tom: stephen stanley was adamant on this yesterday, the service sector, technological progress is really challenging. brendan: not just service sector. this is something you and i were talking about yesterday. hans: i thought that was an off-line discussion. you and i are going to get in big trouble. brendan: culturally in europe, people leave the workforce. women are expected to leave the workforce after having a child. hans: a second child is where you see the big drop off in germany. these are challenges. every working family that has two working families are dealing with it. .om: this is important

thanks to david myers for bringing this to my attention. bloomberg news is reporting the pboc, the central bank of china, is "said to intervene to control beyond the evaluation." so this leads us to a managed innceback or appreciation depreciation. what does this mean for your american investments? in the next hour, an important conversation with brian belski, with us for the entire hour. stay with us. "bloomberg surveillance." ♪

♪ ♪ ♪ get excited for the 1989 world tour

with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. tom: good morning, everyone. "bloomberg surveillance." greece -- the soap opera continues. the drama continues as well. hans nichols is with us this morning, not in berlin but in

new york. much going on today. futures were -24. they improved to -18. here is julie. julie: china's do valuing of the yuan is rattling markets again. stocks are down around the world and futures indicate u.s. stocks will be lower at the open. commodities are falling, too. we are seeing the renminbi strengthen, especially if you look at offshore trading. aney suspect in insider-trading ring has been free on bond. he is described as a linchpin of a global ring that stole press releases allegedly and make $1 million. he worked on wall street before starting his own hedge fund. donald trump has plenty of plans for how he would run the country. he is just not ready to unveil them yet. michigan herters in

will announce policy specifics over the next two weeks. his former campaign aide says off track gotten because of the controversy over last week's debate. >> i am not sure i heard anybody else giving advice that was not a good idea, never mind what my own advice was. politics particularly at the presidential level is about big picture ideas and getting people to latch onto them with memorable phrases. that has gotten trump to where he is in the polls, and it is what he needs to return to. julie: mcdonald's is cutting costs in an effort to revise sales and plans to shrink in the u.s. before -- between store openings and closings, mcdonald's will end up with 59 fewer locations. same-store sales have fallen for seven straight quarters. pro football -- new england nflterback tom brady and

commissioner roger goodell will be in court today over the deflategate scandal. a federal judge wants to talk about settling the case. brady has appealed his four-game suspension in the matter. brendan: i am coming around on that story. i have been complaining about how much we are covering it. but it is not about tom brady, it is about the unchecked power of the nfl. julie: i think football and the nfl are the worst, and this story does nothing to disabuse me of that. you you can call it what may -- a currency war, maybe a deflation war. we are thrilled to bring you , a greaturtz of nomura asia and china watcher for years at bear stearns. looking right now for the deep pocket. michael, how deep are the pockets across the banks, across the equity markets, and across the commodities base in asia?

can they weather the storm? michael: tom, i think they can. thanks for having me on the show. the real issue in terms of the volatility over the past two days has more to do with the uncertainty as to how far this chinese currency depreciation is going to go. we think it will be held to a single digit move. markets are probably comparing what is happening right now to some of the historical decals -- ls that we saw in china back in the 1980's in 1990's. tom: i am worried about jakarta and taipei and the rest of asia. how will they adapt and adjust to a china that can handle the stress? michael: the jakarta relationship is probably the most worrisome one, given that even a relatively small-scale depreciation of the renminbi is going to make china less likely

to be an importer of basically hard commodities and energy imports from the rest of the region. jakarta unfortunately finds itself at the lower end of the spectrum where it is mostly exporting basic resources. there, the currency devaluation is more of a problem. julie: we are due to hear from the pboc tomorrow morning china time around 10:15. this may be a silly question, but will we get any clarity from them? will they tell us what they plan to do? michael: the pboc has been on the front foot even today in terms of making it very clear that there is no need for extended depreciation of the currency. one of the more prominent members of the monetary policy committee is a former bank economist with deutsche bank. he has been widely distributed in the chinese media, having made comments yesterday evening,

that there is no need for extended depreciation. i expect any comments tomorrow will reinforce that same message and allay much of the concerns. capital moving out of china they say was limited last week to foreign banks reducing their positions. do you see that changing in the last two days? are we at a higher risk of capital flight now? michael: i think you just asked the $64 billion question. iere is no comfort level that can give with your viewers. if the central bank were to allow an entrenchment of expectations of a deeper and longer lasting currency depreciation that we would not perhaps see extended capital flight challenge for the central bank -- what i suspect is that a lot of the statements of

reinsurance -- of reassurance coming out of china are designed to allay those concerns about capital flight. michael kurtz, thank you so much. else intervened on the intervention in china as well. julie hyman heads out report. julie: someone who does not pull any punches -- we are talking about him again -- donald trump -- yes, noted economist donald trump spoke in michigan last night and talk about -- and talked about china's did valuation -- china's to evaluation as well. donald trump: china has no respect for president obama whatsoever. they devalue their currency, and i have been saying they have been doing this for years. this was the largest evaluation they have had in two decades.

they are making it possible for our businesses, our companies to compete. they think we are run by a bunch of idiots. julie: he wants to tap carl icahn as the treasury secretary. , i want to lean on your experience for this. when you talk about respect and how it affects currency fluctuations -- that chicago thing -- what is that? tom: mr. trump is somewhat accurate in that this was a huge devaluation back 20 years, but we have had a massive renminbi appreciation, keeping, for example, senator schumer happy since 2005. if you do look at this latest devaluation, you look generally at the downturn we have seen in the chinese economy, particularly the chinese stock market -- we have seen the selloff in chinese

stocks, and they have coincided with this selloff in stocks we are looking at -- apple, general motors. brands -- about a quarter of its sales are in china. brendan: this goes back to what hans nichols was talking about, that we should look at the second-order effect of people who sell stuff to china. hans: that is what mr. trump is getting at. we know that political rules do not apply to donald trump. one that will apply is that his comments on china will be washed away. every presidential candidate is very harsh on china. can we just talk about trump all day every day for the next six months? coming up, and explosion in cheap phones in india and china is leading to a way we use the internet.

a look at america online, no longer. this is "bloomberg surveillance ." good morning. ♪

tom: what a morning. good morning, everyone. worldwide, "bloomberg surveillance," keeping you abreast of the worldwide market.

here is brendan greeley with the single best chart. thedan: phones are changing way countries use the internet. here is what we are looking at. these are top countries by internet users. merrill lynch is transforming the world at this report. candace browning is with us. surprised by these numbers because i would have guessed that the u.s. was now even with china. we are now nowhere near china, and i would have guessed that we would be way ahead of india. we are now just slightly ahead of india. structureet particularly in india, and brazil is also up there, is still not great. what is driving the change? is it phones? candace: it absolutely is phone. in 1995, less than 1% of the population had internet

conductivity. today it is 40%. the united states is at about 9%. china is at 25%. india is at about 8%. there are tons of investments that come out of this internet. brendan: such as? the sharing of the economy -- all of those things are not possible without an internet connection. brendan: how does it change when you are looking at a place like india, that still just has 2g phone access, but cheaper and cheaper smartphones where you can perhaps have one per family? what does that sharing economy look like? the big opportunity in india will be e-commerce. if you look at india right now, we are looking at a 36% compound annual growth rate in e-commerce over the next 10 years. it is huge. it will be the biggest e-commerce market right behind

china. it is not going to be the sharing economy initially. it is going to be e-commerce. hans: do we have a stat of the median age for someone's first smartphone? candace: i do not have that attractivene of the things about india is how young it is. that is a big contrast to china. julie: speaking of china, the usage there -- we have alibaba earnings coming out in a little while. e-commerce -- it does not matter how many people are using the internet if they have less money to spend, if the economy is not a strong. how do you balance those two competing effects? candace: that is absolutely true. a china there needs to be shift from the industrial sector to the consumer sector. it does not really matter, what matters is the momentum. we are concerned about that in

china. tom: you are being way too humble. you have put together one of the best research teams across all asset classes on wall street. you have made a claim for that is an institutional investor. i cannot imagine the hiring .ecision for michelle meyer it is just one example, francisco blanche, who has been busy recently. how do you sit at your desk with -- how dot experience you make that decision? candace: i am always looking for people who can tell a client something they do not already know. that is the main criteria. intellectual curiosity. for example, one of my best analysts in the united states is actually an anthropologist. she uses demographics to understand what is happening in her industry. tom: the other part of the question -- at bank of america,

merrill lynch, do you have a bias toward either? candace: i do not really have a bias. we hire both. it is critical thinking skills. one of our great analysts is also an investigative reporter, because you are always asking the next question. , what doestells you that make you think about something else? that is what the markets are about. tom: can you come back when we are not talking about international news? hans: who has the highest concentration of band-aids among four-year-old? that is my question. browning, bank of america, merrill lynch. julie: let's look at top photos. number 3 -- a photo of neural activity.

this is the central nervous system of a complex organism. it has been captured on video for the very first time. central nervous system of a fruit fly larva. recording.cameras researchers are hoping to see how brain and neural activity drive behaviors. brendan: this is what happens when you fire up a terminal in the morning. tom: very cool. next? it is science. number two top photo, 96 million black polythene balls covering a reservoir in california. they have been released to cover the water to protect it from evaporation. each of those balls is $.36, and he deflects uv rays. brendan: it has become an internet meme in the last 24

hours since they were released. they are filled with purified water, so in case they are copper mise they do not taint -- so in case they are compromised they do not taint the water. go to history, the number one top photo of never before seen photographs of charles and diana's wedding, going up for auction on september 24. -- it was only one the only relative allowed to take these photos. brendan: they are really well framed. we did a show this morning in the 5:00 a.m. production meeting, people than been alive. it was limited to me, tom, and julie. there were some others? perhaps david myers. and it might go to the

chinese. tom: very good as well. futures, -17, improved from a -24 earlier. let's go to our twitter question -- of course, on china. we need your informed answer. stay with us, worldwide. "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." let's get to top headlines with julie hyman. julie: a white police officer has been fired for killing an unarmed black teenager. the shooting took friday -- took place friday in dallas. videos show him driving a vehicle through a showroom. the police officer who shot him was still in training. he could face from a charges. last month. send agreed to sell "the financial times" newspaper. now it is getting out of financial publishing. the price is $731 million. is -- ar is at sore -- milestone for high wire

daredevil nick melinda. highest highhis wire walk ever. holds nine-old guinness world records for his stunts. he walked across niagara falls in 2012. those are your top headlines. brendan: wow. compare todoes that the one who walked across the wire at the world trade center? brendan: there are two ways to look at it. one is the drama of what you are able to achieve, walking between the world trade center's. the other is the length. exclamation point. those guys are only second and third of people overshadowing

jeb! the other one is donald trump peerless in. donald trump: there should have been 2 million people watching. do you agree? there were 24 million people. and i think the 24 million people are going to go to 28 million.r 30 who do you think they are watching? jeb bush? i don't think so. times nichols is with us. he covered the george w. bush white house, but more importantly, you have covered campaigns and you know how they really work. when you look at money and organization and getting on the ballot, is it possible to say that jed is still the front runner? the: yes because he has establishment behind him and he has the money behind him. but he is still behind in the polls. in the last 30 years of presidential politics, the most

successful presidential candidates -- jesse jackson, john mccain. ran two successful campaigns. mike huckabee never made it past iowa. if the strategy will get you a buzz, you will be mentioned in some wikipedia entry. it is unclear if it makes you the party nominee or the president of the united states. a report in "the wall street journal" about exactly that -- that not only is he focusing on his cable appearances, his staffers are asking him to do appearances in person, the way you are supposed to. five-person parties in new hampshire. he is not doing that either. up toyou need to show people, talk to voters, and ask for their vote here it -- and ask for their vote. brendan: we are doing it again. we are supposed to talk about jeb bush and we are talking about donald trump. julie: bernie sanders is drawing

enormous crowds. going to bespoiler bernie sanders and not trump at all? will trump end up being a sideshow in the end? you saw lyndon johnson 1972, jimmy968, carter being weakened in his getting big-- crowds matters and it will hurt hillary clinton. but i suspect she will be the party nominee. brendan: do we make too much of the heritage of the bush name? hans: no. oll, you look at hillary's connection to her husband's name, and it is a net positive. take in thea better

last those go hours. a follow on from yesterday's action. 65 when ile was walked in the door. a little bit of strength there as well. stay with us, another hour of "bloomberg surveillance." ♪ tom: it is the second day of

devaluation and china. german yields drive more negative in the past 30 hours. the dow and dow futures down almost 400 points. eawer for longer as the ia sees lower oil prices well into 2016. macy's has been an mu from the retail -- has been immune from the retail meltdown. we consider the magic of macy's. live from our world headquarters in new york. i am tom keene brendan greeley is with me, julie hyman as well. we link in on the chinese devaluation from earnings on alibaba. julie: we have slower revenue growth and had been anticipated. revenue coming in it 22 point billion yuan, at his growth of 28% which sounds good except 33%.

that already would have been the weakest pace in at least three years. we are seeing slowing growth from alibaba. the other big headline is the company is going to do a buyback. an earnings per share number of 368 yuan. the estimate was for 350. it is like an american company. missing on the top line and beating on the bottom line. brendan: right after that ipo, it was the assumption that alibaba is a supernatural company. it is not. it is tied to its home economy. julie: i am just looking to the statement and seeing the commentary from the cfo, it made significant progress, monetizing mobile traffic. mobile revenue exceeding 50% of their total commerce revenue. the buyback here -- over two

years. it is going to take them a while. tom: no guarantee here. reportdifferent earnings for many major companies. we will continue this discussion further on bloomberg television and market makers. daniel zhang, alibaba ceo coming up in the 9:00 hour. it is been a busy morning and currencies and fixed incomes. here are the top headlines. marketshina is rattling again and is rattling markets again and spurring the people's bank of china to intervene. the currency sank for the second day. bloomberg news reports that authorities did intervene to report the yuan. stocks are down around the world and futures indicate that u.s. stocks will be lower at the open. hsbc's senior economic adviser

tells bloomberg you could see this as payback. >> china is in a slightly difficult position because the roman be has been a strong -- reminbi has been a strong currency. every other currency has tried to devalue against china. julie: emerging-market stocks have sunk to their lowest level since 2011. they are now in a bear market since hitting their peak last september. the price of oil is bouncing back from its lowest close in six years. west this -- west texas intermediate rising to just under $148 -- just under $48 per barrel. prices are down more than 18% this year. right now we are a little under $44, $43.67. hillary clinton has a great eternal her e-mail server. to givetold aidse

the server to the justice department. she wrinkly know if -- received classified e-mails for nongovernmental systems. ge'sal one is greeted by capital finance unit. they are priced at about $9 billion. capital one is best known for its heavily advertised credit cards. the firm is now the seventh largest commercial bank in the knotted states. new york jets quarterback geno smith will be cut up to 10 weeks after his jot was broke in a fight in the locker room. we want to continue on alibaba down 7% now. breaking news, we have another merger. there is a blur of the morning news wrapped around what we are

seeing. china may devalue -- maybe it is depreciation. all else will fight the deflation wars. two-year is as good as any thrust. jon, we have a better improvement in the tape in the last two hours. any idea why? jon: things are just stabilized. that tip from the bund market has just stabilized a little bit. but that climate significant here in europe, down by 2%. the selloff is still there. tom: within the closing of trade intervention by the chinese, it begins to show some management of that color around the -- collar around where the rim and be is -- reminbi is. tom: -- jon: at the end of the day we're

made a lot of noise about what is happened there it the idea availablecurrency is for the free hand of the market to do what it will is not true. and what happened, the people's bank of china called for banks to buy the currency. this is not a free trading currency and it will not be for a long time to come. brendan: in the city were you are, this movement in china, is that the only news that matters today? jon: it really is. front and center. there is a difference between stimulating an economy via cutting rates which would be risk on for the international markets and stimulate markets via fx. for everyone else that is risk off. we have to identify the repercussions and the spillover of china and try to make a judgment call whether this is a one-off or whether it continues for weeks and months to come. tom: jon ferro, thank you so

much. we need to get your attention on day two of the devaluation morning. deflation is indicated by the german two-year yield. all the commodities, you don't care. 401(k)'s,tter is our equity markets where dividend growth is supposed to keep the inflationary evil at bay. i got that on google. brian belsky is with capital markets. pros who of notes from say, thank you for trying to be non-hysterical. have you adjusted your equity allocation at all based on what we have seen? guest: good morning, what is going on? everything but nothing. it is the same trend for all of this year. but" typen a "eyeah, market. hear his out analysts talk. no change in numbers and no

change in rating. we continued to believe the market will define growth for 10 years. we think the u.s. is the place to be. how do you combat volatility by buying stability. who has the best markets in the world -- america. brendan: are you saying that or saying that in scare quotes? you say this is how analysts talk. that has not been altered by 48 hours? we do not because invest for 48 hours we invest for 18 months. what is happened is that investors are proactive and not reactive. we're too focused on what happened and not what is going to happen. in hockey terms, we have to skate to where the puck is going not to wear the puck is. guest: are you and voiding -- are you avoiding companies in north america that have china exposure? if you look ahead -- are you concerned? alibaba is the latest example.

the revenue growth is slowing down, you have apple and gm and all of these young brands where they are selling off because of china exposure. guest: the rhetorical question is -- like we didn't know this would happen? come on. if you take a look at the volatility, a told you this would happen. been sellinge you these companies that had this china exposure? guest: we don't own those companies. the only one that we own for private clients in canada is apple. apple's future will not be dictated by china. period. it will be driven by their cash and how they will grow from here and how potentially down the line they will break up the company. about theou're right dream of the prior cycle, who are we dreaming of? guest: it was emerging markets, china, low-quality qe. that was going to happen. what will happen is quality,

growth, stability. who provides that? american companies. they have benefited from what we call the last -- lost a decade where all the prior strategies were working. brendan: brian is running for president. julie: why not, there are enough of them already. with what we see in canada as well in the commodity slowdown. let's bring it back to china. our twitter question of the day. what else will the yuan take down with it? ♪ [inaudible] [inaudible]

tom: good morning, everyone. noting, hyman was alibaba a little light on revenue. where was the high? you are taking it to 100. it has been a 30% decline from the peak. julie: it has lost more than goldman sachs in terms of market value. the high was 119. tom: you wonder what we will say a year from now. brendan: i think this is one of

those things where you did not get new data just knew realization. that alibaba is tied like a millstone to the chinese economy. tom: it reads like jack ma's speech at the club in new york. it is essentially an ad campaign wrapped around good growth earnings as well. this morning the chief executive officer of alibaba on "market makers" as well. let me get to the morning must-read. this is off the desk, going to brian belsky on the reactions of certain markets shows just how much investors may be buying into the idea that china is engaging in competitive evaluation. to theociated risks chinese financial system of trying to catch up with depreciation. it just seems far too high. there is a lot of noise in there but it is almost marty zwai from ages ago. do not fight the fed. do not fight the pboc.

how do you see it going? in thechina is still beginning stages of drawing down capacity after growing at a high rate and learning how to grow the economy within that rate. this is still very early on. tom: i agree that it is early on. do you acquire shares this morning? we are heading toward some sort of cathartic event that will get people off this. buying in these emerging markets to feel pain. tom: we are nowhere near sweat. brendan: it is fascinating listening to brian belsky talk. women talking about how as it shifts, was see more developing markets in indonesia and brazil. brian is already there. the attitude has shifted. tom: to be clear here. you are not aggressively buying the opportunities this morning. you need to see more. guest: investing is not a binary

if that. should you be -- event. should you be all in or all out? no it depends. you should be talking to your financial advisor in terms of what works with risk. tom: brian belsky with us. we will continue this discussion. julie hyman is focused on macy's. doing much better than many and retail. it is "bloomberg surveillance" stay with us. ♪ tom: good morning everyone.

"bloomberg surveillance." julie: greece is one step closer to getting a new $94 billion bailout. its third. the greek parliament and lawmakers and other euro area countries still have to approve that deal. two of the biggest european

banks may pay tens of millions of dollars to settle u.s. investigations into so-called dark pools. the wall street journal says they are in talks over allegedly wrongdoing. dark pools let them trade stocks with greater secrecy then can be done untraditional exchanges. insday marked the first time history that all home teams one on the same day. each game is a 50-50 proposition. the odds were put on a night with a full big-league schedule at one and 32,568. the last one was september of 1989. the basic assumption is that the red sox are away? brendan: what you missed is brian belsky pumping his arm. it is so exciting. guest: let's keep talking

baseball. brendan: we are not going to do that. we are talking macy's. we have a veteran retail reporter right here on set. julie, we were told last year that among retailers macy's had done the most work to integrate off-line and off-line -- what we call on the channel. what is the more important lens for macy's? adaptit's own ability to to the internet or is it secular trends in terms of what consumers want? julie: i would say right now it is secular trends. they had been an out performer but now it has faltered. you look at the sales that had outperformed the industry for several years had seem much were performance recently. estimating that we could see potentially flat sales to even a little bit of a decrease of sales. in some part to the downturn in handbags.

we have seen coach faltering. watch sales have not been a strong. and the u.s. consumer. brendan: brian belsky, do you see an opportunity in the great handbag revolution? ,guest: you are asking the wrong person. i think people have become more selective. they are still spending $100. but they are spinning at two or three stores -- spending it at two or three stores. does that hurt or help macy's? it probably hurts. julie: you had the west coast port shutdown that affected merchandise levels, inventory management, etc.. many retailers are still feeling the effect of that. --: the money question is does that mask the new deflation of tempered nominal gdp? bmo,you set up strategy at

are you setting it up with assumption of dampened consumption? guest: we set it up under the assumption that the u.s. economic it sure will be improving. also under the assumption that this has been the slowest recovery in the history of recoveries. let's find companies that can operate and outperform in the slower growth recoveries. tom: as you see the slight vectors there, you have to pin it on use of cash. guest: sodas amazon and stocks like cosco and nordstrom. they are positioned with respect to their cash flow. brendan: julie, you have been watching these changes. group and how does that differ from five years ago? argue i think you could that the competition is much less like for like than it used to be. in other words -- they are still competing with the nordstrom's or the neiman's or the lord in

taylor's or the sac's of the world, but also to a much larger extent with online in a way they were not before. brendan: with target, too. julie: with target, t.j. maxx, marshalls. the discounters. retail has been outperforming macy's this year. it is up about 2%. part of that has to do with people shifting spending downward. not just that they are shopping in fewer stores, it's that they are looking for deals. brendan: economists know that habits learned in a recession in doer. do we know what the american consumer will look like in 10 years? guest: they are still in the bunker. when jobs come back, that will change. they are notif buying stocks and are still on a fixed income they are not going

to macy's and touching that handbag. they are still depending on amazon to drop off the t-shirts with the drone. they are still very price conscious. macy's, operates differently than new york city -- in new york city than des moines iowa. they will go to macy's for target or t.j. maxx items here in new york but not necessarily in des moines, iowa. brendan: you see consumers is cyclical and not subject to long-term trends? guest: you always by retail when the world is coming to an end. that is the best opportunity. last yearerperformed which is why this year you have a night big rebound. julie: so this would not necessarily be the time to buy retail? guest: i don't think so, especially considering from a relative valuation standpoint we are at a multiyear high. frombrian belsky with us the moke capital markets. from the capital markets.

stay with us. ♪ tom: our twitter question on

yuan. let's make it more narrow. michael mckee carries in his wallet vietnam dong. we have never done that before, folks. here is the weakness of the

vietnam currency against mighty china, and even vietnam prospers and improves over this devaluation by china. very cool. brendan: and you have seen american investment into vietnam. there is the possibility of the tpp passing. tom: that gets us to the top headlines. everyone affected by china this morning. here is julie hyman. julie: the decision to devalue the yuan is rattling markets again and spurring the people's bank of china to intervene. the currency sang for the second day. bloomberg news reports that authorities did intervene to support the yuan and banks were told to limit some dollar purchases. stocks are down around the world and futures indicate that u.s. stocks will be down at open. they are now in a bear market down 22%.

back assays it will buy much as $4 billion worth of stock over the next two years. they are trying to revive a share price getting hammered by concerns about the slowing chinese economy less than a year after going public. alibaba's market value has plunged about $100 billion since november. an insiderct in trading ring has been freed on bond. investigators describe him as a linchpin. he worked on wall street before -- donald trump has plenty of plans for how he would run the country but is not ready to unveil them yet. reporters he will announce policy specifics over the next few weeks. roger stone says trump has got off track.

on bloomberg. >> i'm not sure i heard anyone giving him advice at that was not a good idea, never mind my own advice. politics at the presidential level is big picture ideas and getting people to latch onto them with memorable phrases. trumped tot as got where he is in the polls and it is something he needs to return to. stone said he quit trump's campaign after the debate. roger goodell will be in court today over the deflategate scandal. brady has appealed his four-game suspension in the matter. brendan: greek prime minister alexis tsipras is speaking right now to the transport ministry and there are rumors he was speaking for the last several days with angela merkel. we have hans nuckols -- hans nichols with us.

is he in political control of greece? hans: he is not necessarily in control of the timing of the schedule. the speaker of the house may delay the start of the vote which means you actually have a vote on friday. the most important thing happening right now in germany is that he has confirmed that merkel and tsipras spoke yesterday and that they exchanged arguments. i would not take that to mean there was an argument but rather they exchanged opinions. more importantly, they are insisting the international monetary fund stay part of this agreement. what we had in the last 24 hours is a technical agreement and we are far from a political agreement. this conversation gives me an indication that we might not be all on the same page. brendan: do we have a with count in the to start -- do we have a whip count in the bundestag? hans: that doesn't matter.

merkel will get this through. she has a pretty firm majority. i am not concerned about her losing this in the bundestag. i am concerned about her finance minister demanding a tougher deal. and going back to square one. brendan: can alexis tsipras say anything to make her job easier? not say could probably anything publicly and continue the private line of communication. brendan: hans nichols, thank you. tom: that was interesting. i don't think they are aware of the state of the greek economy. let's do a daily check right now focused on asia futures. the euro is stronger of the last couple of days without dollar strength. 42.80.rude up maybe the idea here of brent crude doing a little bit better

this morning. one of the headlines is that 1116 has1.16 has -- that moved. there is the data check. brendan: this is "bloomberg surveillance." i am brendan greeley with tom keene. tom: this is an important point, but all of the hysteria about china and modest moves of devaluation need to bring some common sense and link in here commodities with the equity markets. the bank of montreal has a heritage of looking west to alberta and the commodity business of canada. brian belsky -- is that how you say it? bmo capitalith markets. we've all read about the amplitude falling off.

give us a statement right now that your team sees on canadian oil. is it too late to adjust? guest: know and they are in the process. of starting to adjust. if you look at the better part of 12 to 14 years wti is treading higher. four really only been quarters or so that they have to adjust operating structures. we need to see the forecasts continue to come down and we need to see companies rebuild their balance sheets. for the same reason we love financials and tech we do not like energy and materials. we need to see massive structural reform and we are still in the early stages. in both our canadian strategies and american strategies we remain under for our materials.

tom: how do you buy the coming combinations of energies? what metrics the look at? guest: we mention a little behavioral science. when i received notions and calls from clients, then i will start thinking about it. at the end of the day, with are starting to approach that in gold and materials in canada. perspectivemental we need to see wti forecasts come down, cash flow and balance sheets continue to gain and earnings dramatically go down. dramatically go down. then we will start to see the semblance of providing real value in these companies. isndan: your broader story not that lower commodities mean trouble in china, but really good news for the actual engine which is north america. this: we are moving toward notion of a manufacturing

renaissance. the more volatility we see overseas, the better for america and north america. companies was a i don't want to deal with these companies. let's bring capacity back. that is a very key notion. warren buffettd with the precision gaspar acquisition. guest: this is been our opinion all along. it is better for america. let's bring companies back and literally few will this. julie: isn't that just marginal? manufacturing is a small minority of the u.s. economy. guest: it is, but the age of our equipment is at an all-time high. we have not replace a lot of our infrastructure with respect to roads and bridges massively under built. we think the economy will be taking more toward the industrial side. i'm not saying it will not be 70

present consumer -- 70% consumer. we will see marginal improvement. brendan: it's been pointed out that we will not get that investment until capacity is closer to full capacity. guest: we will not see the investment until we see an accommodative government. saying let's talk about how we will program the economy. that means tax incentives, corporate tax changes, repatriation. we will not see that in the current regime. ,om: i look at this, brian alberto gallo putting out a reaffirmation of trouble in emerging markets. you cannot tell me this will not knock over into the u.s. stock market. it has to. will we see a correction? guest: i think we have already seen that. in the prior block we talked about some sort of a calamity. we need some sort of a control off the lead to market, but that is not going to derail the 20

year bull market. tom: brian belsky with us. oil helpful with canadian in alberta. our twitter question of the day, what else will yuan take down with it? ♪

tom: good morning everyone,

"bloomberg surveillance." billion.$4 that is the amount of stock that alibaba will buy back. up 35% since its post-ipo high last fall. it came after they posted first-quarter sales that rose to the lowest pace in three years. leslie pickard joins us now. we just got earnings in this hour from alibaba. is jack ma having a terrible, horrible, no good, very bad day? is interesting to see this information because he was the one saying the whole time that shareholders come third. he was saying it is customers, then employees, then shareholders. $4 billion for a buyback would suggest otherwise. brendan: was the share price based on the assumption he could magically transcend the chinese economy and become a great company?

are we learning that they are just a plain old company? guest: alibaba is a very big bet on the chinese consumers. i think that is certainly the case. the whole notion that alibaba is this magic force that can somehow continue to grow when the chinese economy is slowing and continue to be on the super that is not -- path impacted by the overall economy is coming to fruition. brendan: brian belski is here do we spent too much time looking for you to for's deco -- looking unicorns? brian: a time people look for a super special path -- we live through that in the 90's. tom: i am taken aback by their press release last night. it is all most childlike. i don't mean that with

disrespect. it is definitely not gap, definitely not cfa, definitely not american. is this a company that says we are definitely -- resolutely china and we do not give a damn about reporting metrics in the u.s., or are they trying to get a more us-based dialogue with wall street? guest: i think they are trying. the bulk of their numbers are here. they cannot afford to not have gap and not have u.s. standards in their accounting because investors would run for the hills. it is told big -- too big of a company for the accounting metrics to not be up to snuff. growing our business internationally is a strategic priority for the company. this is an earnings report. i don't see it. have you seen this, leslie? this tone? guest: it is obvious that they

are trying to appease investors in terms of the numbers and are hoping to spin their will help them recover. tom: i have never seen a press release with more use of the word "we." brendan: i want to tell the audience, when tom keene says "i mean no disrespect" he means disrespect. bloomberg surveillance. good morning. ♪

tom: good morning, everyone. futures -15. that is a big improvement over the last two hours. has shutis drug maker down a plant that produces an hailed medication after discovering the bacteria causes legionnaires disease. the facility was closed after routine testing found the bacteria in a self standing cooling tower. a 400 employees that work there have been told to stay away. acquisition today in the financial technology field. app agreed to buy software makers son bar. -- sungard.

it makes software for financial institutions and is owned by seven private equity firms including kkr and silver flake. and john paulson made billions betting against subprime morbid -- mortgages and now he is profiting from another bet that has taken longer to mature. land. lotsquired about 35,000 since 2009 and less you the company shifted toward selling. 70's --invested about $770 million. those are your top headlines. brendan: we call it "ro boadvising." that is what you call algorithmic trading when you offer it to smaller investors. elliott weiser is a proponent of roboadvising. what do you do on a high volatility week like this week? guest: let me say i am not

necessarily a proponent of robo-advisers as opposed to human advisers. what is happening today is you have a number of companies offering algorithmic designed models which can replace what a human and financial advisor might do but the problem is they cannot replicate what human beings actually do which is to listen and ask questions and pick up on the body language in a week like this the robo advisers what do anything different than a human advisor because they are not reacting to day by day or week by week trading activity. they are replicating fairly traditional modern portfolio models that will not be reactive to the week or the day trading. brendan: how is it better than an etf? guest: that is a particular style of product and what the

robo advisers are trying to do is take the best of different products types and really replace with the human being ostensibly is doing which is providing the guidance over the portfolio. so they won't necessarily replace etf's, they will use them inside their portfolios. brendan: you have a vested interest in this because you are a human being. brian: last time i checked. brendan: is the role of the human ever going to disappear? guest: never. what we have today is that technologies are going to disrupt human beings that should be disrupted. those that are not adding real value, but the reality is insightful and thoughtful financial advice you will always have a need for a human being to listen and engage. tom: how are the algorithms? i'm sure they are proprietary but what is the secret sauce? guest: i don't know. tom: how can i invest if i don't know? guest: i agree with you.

thishumans have been down road, they are all great until there is a two date deviation shock. is it based off of ratio analysis are technical, is it an inertial algorithm? guest: there are a variety but the robustis trying to take the technology and apply it directly to the human being. they are using these same tools you use looking at the markets. tom: what is even better is that a robo advisor does not have to go through o'hare and be delayed. high tower approach is that we are the best of both worlds. we use all of the best technologies and we bring the best of those two worlds. the combination of those -- tom: i don't know what a robo advisor is doing. this drives me nuts.

brendan: let's bring in brian belski. are you worried for your job? no -- brian: no. julie: do you use how the rhythms in your strategy? brian: of course. the bigger question is what is the percentage of assets that are going to be run? is it lower and accounts or larger? larger and accounts will not qualify. great point.ke a there are approximately $40 billion to $50 billion inside the robo advisers space and by comparison there are $6 trillion -- tom: what is the track record. how many basis points of people picked up? guest: i am a skeptical is you are. i don't believe there is enough data. tom: it is logarithmic august.

-- is it advisor helpful to you on the downside or does it make you alpha on the upside? guest: we don't know because we have not had any downside examples. i am with you, tom. when we have a human being involved a human being can look at all of this and listen to thoughtful people giving qualitative examples and they can form judgments. when that happens you get advice. saidlike brendan greeley -- is your job at threat? brian: no, i love it this is good for my job. julie: so what do you use it for? guest: robo technologies or the space of startup businesses. we are the largest in the company with sophisticated financial advisors. we are a company that has been

around for seven years. we believe that human beings are the source of good advice. we are not a proponent of them replacing human beings but we keep an eye on those technologies because in the hands of a human being like brian, the technology is very helpful. thank you. twitter, what do we do? julie: we asked -- what else will the yuan takedown with it? u.s. rate of a increase in september is taken down more. tom: well-written. julie: we have seen the chances of a september increase going down by 10 percentage points over the past when he four hours -- over the past 24 hours. tom: do you agree with that, brian belski?

stocks go down with oil? brian: no, we have proven that as stocks go down, oil goes up. nk.y dealing -- they de-li julie: the tpp trade deal. there will be no corporate takeover of u.s. sovereignty. is that donald trump? brendan: it was, you are right! julie: just joking. it is not. is percolatinge again. we received terrific research from all of our guests over the last 24 hours. what i see is the humility out there about these moves. these are historic moves by china. but it folds deal and political economics, political finance and political investment as well. brendan: jeb bush is speaking in

nevada today. he is desperate to keep himself out front. he and hillary clinton are focusing squarely on each other. they are both pretending that trump and sanders are not happening. he has a bigger organization. as hans nichols pointed out, we could think about treating him as a front runner but right now donald trump is up in the polls -- treating him -- julie: analysts are looking for unchanged growth in terms of the sales. macy's has been struggling with waiting u.s. consumers looking for bargains and not buying expensive handbags or watches. then also tomorrow, the overall retail sales for the u.s.. should be a good read on the consumer. tom: the major headline is a calming to the tape. brian belski, thank you so much. we will continue on radio.

robert cinch will join us. "market makers" is next on bloomberg television. we leave you dow futures negative 132. stay with us. ♪

announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. stephanie: good morning. it is wednesday, august 12.

you are watching "market makers" and i and stephanie ruhle. erik: i am erik schatzker. once again, have a look, s&p 500 futures down almost .75 of 1%. world equities index down .4 of 1%. german the short-term sovereign debt instrument, down and finally,rd low stephanie, copper trading in london down yet again. fallout, the kind of let's say, but the surprise move china is having on global markets. stephanie: do you think this is a sign that could be a slowdown? alibaba reporting slowing sales and they announced the $4 billion by back in the hopes of reviving its lagging shares. we will have more on the latest earnings in this hour. a lot to cover. i do not like this