joe: we're moments away from the closing bell. i'm joe weisenthal. scarlet: and i'm scarlet fu in for alix steel. ♪ scarlet: stocks try to hold onto their gains in the close, but late selling dragging the s&p lower. can investors recover from china's currency devaluation? joe: the question is -- "what'd you miss?" bureau for china receipts. -- fear over china recedes.

what's next in the currency drama? scarlet: plus, turkeys currency -- turkey's currency falls to an all-time low. joe: the greek economy grew last quarter, but don't break out the champagne. we've got the charts that show what is really going on. scarlet: we begin with the markets. the dow and s&p 500 little changed, although the dow did swing 140 point today. the dollar bounced off a one-month low, meaning energy and metals prices resuming their decline. joe: oil getting smashed today, really ugly. must call my and -- much calmer end to the week. home depot really doing well, and sort of a flat day, but not really bad. normal august day. scarlet: you have some data on greece you want to show. joe: this morning, we got news that the greek gdp actually group, which confounded everyone -- the greek gdp actually grew, which confounded everyone. look at these two lines. the orange line is real gdp, the

headline gdp that you normally get. typically, nominal gdp -- gdp before it suggested -- is above real gdp. in greece, it's below real gdp. when you're nominal gdp is shrinking, it almost does not matter what real gdp is doing because you're going to keep digging a deeper hole -- when your nominal gdp is shrinking. there's very little to get excited about in the greek economy. scarlet: let's go to my bloomberg terminal because i want to look at the relationship between apple and the s&p 500. apple made a fresh low this week, the lowest since january. huge applications for the s&p

500 since apple is the most influential stock with about 3.5% weighting. apple reported earnings, disappointing investors and taking the s&p 500 down, but not for long. it has since recovered. any divergence in the past has not lasted long, so you would expect this gap to close at some point as well. joe: you have to be impressed with the market hanging in as well with the company people are saying is the market doing badly. pretty impressive. joining us now is the managing director and global head of g10 currency strategy. scarlet: thanks for joining us. we have to start with the devaluation of the yuan, the story of the week. if you look at how it performed on tuesday, tumbling 1.8% compared to the dollar, but losses have moderated since then. down only .2% today. we had three days of

adjustments. is the worst of the volatility over? >> we would think so, but you also have to recognize that there is incredible skepticism in parts of the investor community, and there's a bit of a "show me" attitude with respect to what happens next. if we see a couple of days of relative stability and nyfix a kos -- and the fix goes the way chinese authorities wanted to go, markets will buy into it, but like i said, a decent segment of the markets thinks this will not work and will have to be convinced. joe: yesterday, we talked about devaluation of the yuan and china's search for growth. >> the problem with china is that its export growth model is really busted. that relied on currency depreciation and the pricing of

currency being too low, and of course, they cannot keep that up forever. they have got to find a new growth model. joe: is the chinese growth model busted? steven: i think it is, but i would focus on demand rather than exports because they think gaining share in terms of global exports, even coming into 2015 -- they have been gaining share in terms of global x funds. they are facing the difficulty of shifting the economy from investor-based to consumer-based. i think that's the major issue, and the debate in the markets among people who think this is leading to currency wars -- they are arguing this will -- they will try to make up for the deficiencies on the domestic side by grabbing even more market share.

scarlet: we will go into that later on, but when it comes down to it, the government and if they mean what they say -- the yuan is not a freely traded currency. we know that. the central bank said it would allow market forces to dictate the value of the yuan. what is your confidence that china will keep its word and do that, especially given what we've seen with the stock market meltdown? steven: my first answer is i might have $4 trillion of confidence they will do that. it gives them a big pocketbook with which to enforce the guidance they have given to the market about where they want the yuan to trade. that said, the market does have to gain confidence that this is sustainable. part of what we are seeing again is not just a reflection of what is happening in the market but concerned about the chinese economy, that the sense that, you know, 7% at this stage does not mean much, that the actual growth numbers are very low, and they want to see if there's a

way they can bring to bear a set of policies that will get growth to a stronger level and stabilize the equity markets and other asset markets. joe: outside china, it's been a bloodbath in a lot of emerging-market currencies. brazil, malaysia, turkey. how much further will this all? what will it take for it to turn itself around? it's hard to find any emerging-market bowls -- bulls at the moment. steven: in some of those countries, domestic political issues have to be resolved first. some of the very short-term pressure we see is that these pressures are coming to a major point. but i think the main case right now that some are beginning to make or at least think about is the question of, you know,

basically things are very cheap. everybody knows priscilla is a mess. everyone knows turkey has its issues. -- everyone knows brazil is a mess. everyone knows turkey has its issues. does the valuation turn out to be attractive? if you are a fed bear or dovish fed, do you think brazil is cheap? i think it's too early to tell, but i am much more hawkish on the head -- on the fed. scarlet: i want to pick up on what you said about the political tensions. the turmoil is certainly there. is it a coincidence we are seeing all these issues arise at the same time as all this emerging market stress, coming from china or elsewhere?

steven: i don't want to say it's a coincidence, but i think there's a long term cycle we are looking at. there was a time in the 1980's and 1990's where everything went well for emerging markets. terms of trade, liberalization in the economy. somewhere, they came off the track and markets began to realize two or three years ago that the story they had bought in 2000 seven and even the story we're buying a 2009 did not apply anymore -- the story they had bought in 2007 and even the story we're buying in 2009. joe: they still have a long way to fall before they look attractive? steven: i think we still have another episode of decent pain before it becomes a goodbye -- a good buy. scarlet: which industry has already carved out $60 billion of cost cuts this year, and it's likely not enough? the answer after the break. ♪

scarlet: before the break, we asked which industry has cut $60 billion in spending and still has more to go. joe: the answer is the beleaguered oil industry. jefferies says oil will need to trim investment by a further $26 billion. scarlet: companies need to protect evidence, but it also means more pain for oil service companies. a 24% drop in full year 2015 revenue estimates according to analysts surveyed by bloomberg. ugly. let's get to the top headlines -- doctors say jimmy carter's age and family history will complicate his cancer treatment.

the former president revealed cancer has spread from his liver to other parts of his body. carter's father and three siblings all died of cancer. joe: a dramatic increase in reports of drones sightings by pilots is raising safety concerns. there have been within 650 reports of drones flying and manned aircraft. last year, it was 238. federal regulators fear more drones in the skies increase the potential for a deadly collision. scarlet: hbo knows the way to sesame street. the iconic children's show announced a new five-year partnership with the cable network best known for more adult-themed programming. the next five seasons of the show will be available exclusively on hbo and its online service. it will still care on pbs and its member stations -- it will still air on pbs and its member stations. we're going to go over three charts.

first, chinese exports, but specifically, china's share of global exports, more than 13% now compared to 10.5% in 2011. that was a real surprise. what do you make of this? steven: it links to the fears you see in the market that maybe they are embarking on currency wars and trying to make up for the deficiencies in the domestic economy by grabbing market share internationally. if you look at it from a pure trade side, you might ask why the currency have to -- has to depreciate. there are plenty of countries that would love to have even half that export share. their argument would be that it's not trade, its capital outflows, and that they are trying to adjust their currency so that the balance between the

capital outflows and trade surpluses is in balance, but there's a lot of skepticism. scarlet: does it mean china needs a strong u.s. economy more than the u.s. needs a strong chinese economy? steven: i think everyone needs a strong u.s. economy. the one caveat is that the u.s. economy just is not what it used to be. we would be grateful if the u.s. economy could grow, say, 3% instead of 2.5%. that's not enough to be a locomotive of global growth. the import share of gdp in the u.s. has been flat for five or six years, so we're not getting any sort of huge growth bonus, and my conjecture is exit code was probably getting the bulk of that. joe: our next chart looks at canadian compared to mexican exports. we have an talking about canada and the weakness related to commodities -- we have been talking about canada and the weakness related to commodities. what's the story? steven: if you look at who has

been grabbing north american export markets, the answer is that canada's exports have been flat or falling. 2008, the peak of the previous cycle, they were 50% higher than mexico. mexico has made that up and more. the relationship between the canadian dollar and the mexican dollar has been flat, so the canadian dollar's depreciation has not gained them any competitive advantage. scarlet: is this because mexico diversified its economy and canada just kind of sat on its laurels? steven: i think mexico is a cheaper place to produce and you have enough human capital and engineering skills to produce almost anything you can produce

in canada and do it a lot cheaper. scarlet: we want to head over to julie hyman. breaking news of a big acquisition for goldman sachs. julie: general electric continues to slim down. goldman sachs will require an online banking unit from gd that has about $16 million in deposits -- an online banking unit from ge. this according to the two parties. i'm looking at the statement from general electric. the ceo in the statement saying coupled with a split off of synchrony financial, the transaction will facilitate a complete exit from u.s. banking operations, eliminate the exposure of u.s. positive insurance safety net to ge capital and thereby significantly reduce a regulatory footprint in the u.s. again, this has been the long-standing wind down of these financial operations. this, the latest step for ge, but as you mentioned, it also

looks to be a big step for goldman sachs. scarlet: thanks so much. joe: last question -- when you look at the global economy, what's the number one issue that keeps you up at night? steven: the u.s. recovery has been going on for six or seven years. interest rates are zero. you realize this will not go on for another six or seven years. you have to be scared that when the time comes for the next cut, if you are at zero or close to zero, you are going to have a lot of problems, that your tools for stimulating the economy are just inadequate. you will do another round of qe, and there's all the skepticism about what it will do. i am worried, and i think a will -- i think they are worried. joe: the next easing cycle not going to be so easy. thank you very much. scarlet: what can you get for

only 30 canadian dollars? a bottle of whiskey for one thing, but you would be surprised that some of the other answers. ♪

joe: "what'd you miss?" scarlet: 30 loonies may be worth more than you thought. joe: 15 beers, one bottle of whiskey and 3/4 of a bottle of mickelson work, but it can also get you a barrel of crude oil -- three/-- 3/4 of a bottle of maple syrup. let's start with your take on today's economic data. did you see anything particularly interesting? carl: this was a welcome respite for a lot of week data recently. retail sales data appear to be in line with expectations, but back revisions showed us a stronger expectation at the end

of q2 and a pretty decent start for q3 as well. it's really all up to consumers to carry the next leg of the recovery. significant headwinds will factor into the other data release out this morning, which was the import price data, showing the effect of the strong dollar. scarlet: the currency market turmoil we've seen has not shown up yet, so the next couple of months will be interesting. carl: right. this was the july report we saw this morning, but just wait until we get the august and september data.

this is certainly something that is on the radar screen of folks at the end. normally, exchange rate is a fairly low-ranking consideration, but it's moving up the list of rankings because it is impacting other parts of the economy like the factory sector. joe: do you think that september because of what we have seen over the past few days is more likely than it was a week ago? carl: last friday, things looked decent. now we have this evaluation in china and some knock on effects in vietnam, for instance, and elsewhere. this diminishes the broader economic outlook and therefore reduces the chances of the head moving in september -- the chances of the fed moving in september. scarlet: americans are managing households better. aside from student loans, delicacies are falling and home loans, auto loans, and credit card -- delinquencies are falling. is this a drag on the economy? carl: we certainly had deleveraging for many of the past several years.

i think lower default rates is certainly a reflection of an improved financial position for most households as we face a stronger labor market, less debt due to deleveraging, and some of that due to default, and generally, a stronger labor market. joe: you are looking at retail sales compared to aggregate income for the u.s. what do you see here? carl: this is the story for the fed as they look at economic momentum, which is dependent on consumers. what dictates consumer spending? the most important thing is income. sentiment matters. the savings rate matters. that has been edging lower since a spike in the first part of the year. it is employment income that will drive consumers to spend. looking at the last jobs report, we see that aggregate income

growth is free accelerating, not to a dramatic degree -- this is not the economy taking off -- but to a sufficient degree to show that consumers are picking up the baton and leading growth into the second half. scarlet: what will be the quality of growth? carl: a lot of consumer-led growth, very weak roof. -- growth in the industrial sector. by that ranking, i would not given a very high grade. joe: what about people who say you have to keep an eye on inflation? carl: what inflation? the inflation we see in the u.s. economy right now is in the rental sector. a lack of supply in the housing rental units due to a hangover from the last cycle. elsewhere in the service sector, not much inflation. as we look in the goods sector, we see outright price to kleins, which will only intensify as the price continues to appreciate. -- we see outright price declines.

the fed certainly pays attention to market expectations. the fed does not want the initial move or subsequent move to be shocking to the markets. they do not want an outside reaction. -- outsized reaction. what we see now is a lot of other parts of the financial market are doing the heavy lifting for the fed. dollar is up in trade-weighted terms 20% year on year. that really is accomplishing a lot of heavy lifting and maybe means the fed, if they go in september or december, will probably be moving more slowly after the fact. scarlet: thank you, as always, for your perspective. joe: we'll be right back. ♪

joe: "what'd you miss?" scarlet: don't miss this -- jcpenney reports earnings before the bell tomorrow. the retailer still coming up promotions and cost cuts and discounts. as we wait for same-store sales, analysts are looking for a 4% increase, but the company is targeting 6% over the long term. joe: tomorrow, we get university of michigan consumer sentiment.

some of these numbers have not looked great lately, so it will be interesting to see if this never confirms that trend. -- if this number confirms that trend. scarlet: especially with the activity out of china. ♪

>> from our studios in new york city, this is "charlie rose." [video clip] ♪ this is the first time i am thinking passed tomorrow. ♪ >> we are going to rise up. ♪