francine: angela merkel makes the case for a greek dale in her first comments since euro area ministers were agreed on an aid package. manus: abe under pressure. the japanese economy goes negative as consumers and businesses cut spending. francine: and gold loses its shine as the precious metal's price falls. fall.gold sees its profit welcome to "the pulse" from bloomberg european headquarters

in london. manus: first thing this morning, the german chancellor angela merkel says she is confident the international monetary fund will contribute to greece's third bailout. francine: on wednesday, the german parliament will vote on a rescue package. manus: speaking for the first time since euro area ministers backed the $86 billion bailout, angela merkel said she would consider debt relief to make it happen. ms. merkel: with regard to the extension of maturities, we have room for maneuver. just like we had in previous times, we did extend maturities. the repayment rates. it is always possible to do something else, but there's also a clear statement that they euro can't allow another haircut. ourcine: let's be to

international correspondent, hans nichols, in berlin. how was angela merkel's tone? hans: she was defensive. she knows she has a difficult challenge with the bundestag. she lost about 60 votes when they were authorizing her to proceed with these talks. we will see where that number comes in. what she's talking about here is a leap of faith. she has not guaranteed the idea that mr. tsipras will continue to reform, will continue on what they say is a positive path. way to go out of her praise mr. tsipras, talk about how he's changed things around since they came to the brink. she has a little bit of give in terms of her finance minister, mr. wolfgang schaeuble. pass, 26 billion gets released pretty quickly. 10 billion goes to bank recapitalization. then we start having a conversation about whether the international monetary fund is

going to stay involved. all they say is there needs to be substantial debt relief. in germany, they continue to pretend this is an easy thing to get even though they are only talking about extending maturities. the average maturity of greek debt could be extended to have about a 60-year maturity. merkel,ans, angela she's going on a hiring spree and looking for staff. hans: this is a great story. they are talking about austerity, preaching austerity in athens, and yet at home they are looking for household staff, drivers, and civil engineers. you and i are going to be drivers. we will turn it into a sitcom. an irishman and an american driving angela merkel around. we won't bring francine and because we know she would be the civil engineer. she's very good at math. francine: i'm not sure whether

it is a comedy or drama. manus: look at the combination. francine: hans nichols in berlin. we are joined on the phone by the deputy chairman of angela merkel's party, michael fuchs. great to have you on the program. how will you vote on wednesday? i cannot tell you yet because we will have tomorrow a lot of discussions among the leading people in our party. ask thisto know, and question to both mr. schaeuble and by chancellor, how is going to be the involvement of the imf? board, if it is telling us yes, we will come on board in september and continued to finance greece next year, then of course i will vote pro. but imf is a critical question for all of us. francine: we understand that the

imf has said they will be involved only if the eurozone grants debt relief to athens. this at the moment is not on the table. is it not very likely you will get a response to your question by wednesday? mr. fuchs: i understand there is still discussion going on between imf, mr. schaeuble, and madame merkel. there might be some changes. one thing is very important. the debt sustainability is one of the questions which the imf has. imf has to decide whether they think it is sustainable. beerwise, it is going to dumping money and nobody knows where it is coming back. at the end of the day, it is a difficult weston to decide. i'm really not decided yet. i want to talk to my people, my chancellor, and mr. schaeuble

face-to-face. if you're chancellor and your finance minister say that we just have to trust the imf, again, does that mean there's a big chance you will vote no? i'm asking because you voted yes at the last bundestag vote. mr. fuchs: that was a different question, the question of july was just, are we willing to give a mandate or not? i trust mr. schaeuble very much, so i give him my mandate. he has done well. look at the results. the results are much better than we didn't expect in july, because in july, many of the prior actions which we have now, we are not negotiated yet. so the result is much better, but the problem is still imf. we always said if imf is not clarified, then we will not be

capable to vote pro. so that is what i have to say at the moment. it is difficult to tell you the final result prior to the moment i have the chance to discuss with the leading people. francine: how many cdu and cfu lawmakers do you expect to rebel this time? mr. fuchs: antonin: it is difficult to predict -- mr. fuchs: it is difficult to predict. there were 60 people voting against it. it could be more. francine: because there is mistrust? mr. fuchs: it is a question of imf. see the role of imf? madame lagarde, after the depreciation last friday, came up with a strong statement saying, debt sustainability needs to be well-clarified. we all know that greece is going

up to 200% of gdp, and that is a very tough figure. imf is not willing to play along with such a figure. we have to find a solution. it is a majority question. but it has to be verified that imf, under certain conditions, is coming on board. francine: how do you see the perfect solution? if the imf stick to its guns, and madame lagarde was very strong, i think they are against debt relief, so how do you square that circle? mr. fuchs: debt relief is not possible because of the eu laws. there is no bailout clause. we cannot just neglect it and forget it. we cannot just do it. it is only possible to talk about maturity and whatever. debt relief, i don't think there is a possibility. even the chancellor last night

said no interview, she debt relief. because of european law, i have to say. it is a law question. francine: you were mentioning that angela merkel interview last night. she seemed not to rule out running for a fourth term as chancellor. do you think the greece issue will ultimately decide whether she runs, and what do you say her strongest point is leading to her success now? mr. fuchs: she did not mention it. she did not want to give an answer. she was very clear that in this very moment, it is not necessary that she's going to tell the people whether she is running for another term. but i'm pretty sure she will. and i hope she does, because she's a great leader. francine: thank you so much, michael fuchs.

a pleasure to talk to you as always. manus: let's bring you some live pics now. this is fifa. he's holding a news conference, and this is to announce his candidacy for the upcoming fifa election. there you go. there is one of the names in the hat. probably one of the most followed elections in the sporting world. these are live pictures from paris. dr. chung mong-joon. francine: here's a look at what else is on our radar. japan's economy contracted as consumers and businesses cut spending and exports tumbled. 1.6% domestic product fell between january and march, ending two quarters of growth. new bloomberg study has indicated that china's economy is growing more slowly than official data suggests.

the survey of economists shows they think the economy expanded by 6.3%, compared to the officially reported 7%. it helps explain why policymakers have stepped up stimulus. francine: china's premier, li keqiang, has visited the scene of last week's tangent explosion -- tianjin explosion. the number of people killed in the blast has risen to 114 and 95 are still unaccounted for. investigators are trying to confirm reports that the warehouse that exploded they have held as many as 700 tons of sodium cyanide. tianjin port remains closed. thes: japan has raised eruption warning for a volcano on an island 31 miles from a nuclear plant which was restarted last week. shaken by atbeen least 800 tremors in recent

days, and people have been advised to get ready to leave. francine: malaysia's currency has resumed its decline. a political scandal at home and slumping oil prices as well as a rate hike. the ringgit has hit lows not seen since 1998. malaysia's reserve bank has ruled out using a currency peg or capital controls. manus: the devaluation of the yuan has had a major impact on emerging markets. morgan stanley say they identified 10 nations which could be at risk. those are brazil, russia, singapore, south america, and that's just a few. francine: joining us now is credit agricole's head of ethics research. right to have you on the program. when you look at emerging markets, it seems that the round is by no means done. that the pathase

is still to lighten up on risk for investors. the chinese devaluation last week was seen by many as a sign of the underlying weakness in the chinese economy, which underpins concerns about global growth weakness. if you add to that the potentially imminent fed rate hike in september, that's not great for risk assets. more uncertainty means further risk reduction, further risk aversion. what is different from the asian financial crisis is that it is all happening so gradually. but it doesn't mean that a change in direction lies ahead anytime soon. the trend is still lower for many of these currencies. manus: this is different perhaps to the asian financial crisis that we've seen before. if we look at what morgan stanley are saying, they refer to the fragile five. they expand that. where is the biggest ramifications? >> if you use china as a common

denominator, you have to look at the currencies that have benefited so much on the back of that unrealistic expectation that the chinese economy will keep growing at a breakneck speed and things will perpetuate for the years to come. we are seeing the unwinding of that trade. commodity currencies themselves are still dependent on the outlook for the chinese economy, the property sector, and the resilience of domestic demand. that confidence has been badly shaken by the stock selloff in july. on top of that, we have that evaluationinese yuan , and then the question is, if the chinese now want to switch away from domestic growth, back to exports, what the implications of that is going to be. presumably, that means further

slowdown in global trade. bodes nottion, that well for chinese trading partners. i think they could easily expand the circle to developed countries. japan could be quite honorable. price back of that measure last week, we went long dollar-yen as we think what the pboc has done was to reinvigorate a global currency war. looking around the central banks and g 10, it seems that the oj maybe the closest to responding in kind. francine: given what you've just said, and the fallout we received from the yuan, does it mean the fed will postpone its rate hike? >> not necessarily. the fed will want to move in september. it seems the likeliest venue for

that. the domestic economy is still doing ok. this week could be interesting, with all eyes on the court cpi inflation. if it moves even closer to the 2% target, still quite an important signaling for the market. if anything, the september rate hike will become even a stronger condition for the market. the dollar could do relatively well. manus: you just mentioned japan could be the first central-bank to react to this. how much more qe do you think they could or should do? where would that take dollar-yen? qe will comes that at the turn of the year. the bigger question is, what do they buy if they want to expand their balance sheet further? there are a lot of worries about the impact that the current qe

is having on the markets. they are already quite a chunk of the total market. if anything, the expectation is that they diversify, expand the range of assets. all that needs to be confirmed of course. francine: all right, balentin, thank you so much for that. that brings us to today's twitter question. are we done with the emerging market rout? under pressure. the latest set of japanese gdp figures make grim reading. ♪

manus: welcome back to "the pulse" live on bloomberg tv. francine: japan's economy contracted last quarter. consumers and businesses cut spending and exports tumbled. gross domestic product fell an annualized 1.6% between january and march. manus: that was better than estimates of a 1.8% drop. let's cross over to bloomberg japan's economy team leader. brett miller. when you read this data, what does it mean for japan? from hisas the answer

view. certainly arebers a reality check for the government here. although they were close to estimates, the estimates were really quite weak. japan just crawled out of a recession last year. two quarters of growth now and slipping again. that is bad news. what it means in terms of the bank of japan's stimulus, that is not clear yet. the bank said it expects this weakness to pass. .e will be watching closely wages and consumer spending are the keys to the domestic growth of the economy. francine: why aren't consumers spending? i guess old habits die hard in japan. we've had almost two decades of economic stagnation. that has taught consumers to save.

sales tax increase last year, which really did hurt confidence. going forward, what we are seeing is companies making a lot of profits but not pouring that back into wage increases. without wage increases, we are not likely to see consumers spending. manus: from the conversations you had and the one we just had, where are we? what happens next? is there a hiatus before japan would take action? brett: not necessarily a hiatus if you look at forecasts from private economists. the most likely date they see is october for a possibility of stimulus. after that, some economists look to early next year. there are some now looking at the possibility of stimulus from the bank of japan in october. francine: brett, thank you so much for all of that. hass: anglogold ashanti

emerged as the latest casualty in the drop in gold prices. the mining company has reported a decline of earnings which fell to $26 million. francine: that's down from $35 million in the previous quarter. bloomberg has spoken with anglo golds ceo. kevin, where does the ceo siegal going? gold undergoing quite an interesting period. betweenkely to trade $1000 an ounce. he contends that anglo gold has a plan to mitigate the impact of this. they've been spending across the globe as well as sharing in the capital cost of some of its mines. manus: how will the company deal

with the current low gold prices. there is a debate that we are hovering around this $1200, but it is all down to the cost of production. not everybody is equal in that regard. kevin: the only thing really that the mining companies have to deal with the lower gold prices is to reduce their costs. anglo gold has reduced its cost 12% in the last year. they will look to continue to do so across the world, cutting exploration, cutting spending, and reducing labor costs if they can. thing that they have got in their favor is that they are an international minor, and with the strengthening dollar does come a weakening of variance --rencies, such as

[indiscernible] however, they are beholden to the dollar gold price, which touched a five-year low in july. francine: kevin, will there be a strike? this is one of the main things investors are worried about. kevin: anglo gold gets about a third of its outlook from africa. at the moment, they are in the midst of wage negotiations. --y tabled their finer offer final offer a couple weeks ago. it was a 13% wage increase in some categories of workers. both major unions have rejected that. at the moment, we are in a deadlocked situation. it is certainly looming large on the horizon in south africa. manus: ok, kevin, thank you very much for that. kevin crowley in johannesburg on

the goldminer and the future of strikes in south africa. next, millions of protesters have taken to the streets. we will have a look at the indications for currencies and stocks in brazil. manus: let's have a look. we've got a reprieve after last week's selloff led by the miners and the oil stocks. you are seeing a reprieve around europe. london still down by 0.25%. there is a big glencore report on wednesday. we've also got oil dropping this morning as we've seen opec production may hit a record. they are producing more and more. francine: look at crude. it is 41.7. it is also about a lot more production coming online from the u.s. drillers.

the big question is iran and what opec will do about that. you can tweet us. we are back in two. ♪

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it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. welcome back to "the live from bloomberg's european headquarters in london. manus: here are some of our top headlines. german chancellor angela merkel says she's confident the international monetary fund will join greece for the third bailout. comments are the first since finance ministers back the 86 billion euro aid package. the bundestag lower house votes on wednesday. francine: japan's economy

contracted last quarter. gross domestic product fell an annualized 1.6% between january and march, ending two quarters of growth. that was better than the estimates of a 1.8% drop. manus: indigo, india's biggest airline, has ordered as many as 250 airbus jets. the move further strengthens the playmakers lead over boeing. francine: china's premier, lee k chang, has visited the scene of last week tianjin explosion. the number of people killed in the blast has risen to 114 inhuading to the xoi news agency. manus: more than half a million protesters have taken to the streets of brazil, denouncing corruption in south america's largest economy. this puts pressure on president

dilma rousseff. elliott gotkine has been tracking the story for us. is it too early to make questions like, can recep survive? this in the earlier part of 2015. elliott: clearly, her popularity is not where she would like it to be. her approval rating is down at 8%. or now, it seems that even though two thirds of brazilians want her impeached, that is not going to happen. clearly, brazilians are not happy at the moment. you've got half a million people taking to the streets. you've got the economy there, latin america's biggest, set to decline this year. inflation at 9%. it is painful enough for brazilians, but then they see that 30 sitting politicians are under investigation for alleged involvement in this multibillion-dollar scandal related to petrobras, the oil company. they vent their frustrations on

the street. given that single-digit approval rating to dilma rousseff. not all of brazil's problems are her fault, but as far as most brazilians are concerned, as president, the buck stops with her. brazil's if self-inflicted problems weren't bad enough, there's that china effect. elliott: brazil's currency has also become a bit of a concern. if we get the chart up, the brazilian real against the u.s. dollar, you can see it is down over the past 12 months. although it has been impacted by the chinese yuan did valuation, the falling value of the real is a trend that has been exacerbated by that, similar to the malaysian ringgit. china is the number one trading partner for brazil. it is the number one for

brazilian exports. the number one is iron ore. brazil as a result of that, perhaps as well as the included in morgan stanley's fragile five , four of which went on to be the worst performance of until now, we may be talking about the troubled 10. in addition to the brilliant -- the brazilian real, a number of other latin american currencies. also the taiwanese and singaporean dollars, the korean won, and the south korean brand as well. all those could be in line for some pain. [indiscernible] elliott, thank you so much. elliott gotkine with the latest on brazil, china, and these massive rallies. manus: the question is, will

they continue and will she survive? political strife in brazil, currency wars in asia, a tough time for emerging markets. the ubs head of emerging-market assets strategy. always great to get you in to make sense of these modes. what i noticed from your moves, dread rather than optimism. the emerging-market story is there, but the positions are not nearly as bearish. the positions don't reflect the sentiment. while now, you speak to anyone on em, and they are bearish. when we went to look at positioning, at sentiment findator, volatility, we that the sentiment isn't anywhere close to extreme. we haven't seen catharsis. we haven't seen capitulation from em. everyone is negative, but not on

their book. that is why -- francine: how much further? is in the bottom 10 percentile. is above median. it could fall another 10, 15%. there is room. i think we are moving in another phase. for the last 18 months, you've been depreciating against the dollar but you've held up against the euro. you don't really need the pressure of u.s. fed hikes for em to fall. you are wilting under your own pressure. i think you could easily see another fall of 5% over the next 12 months, and perhaps more. the main point i'm trying to make is that i don't see what is on the horizon to make it much better. the leverage hasn't been taken care of as yet. unlike 2002 and 1998, we don't

have the tailwind of global growth. this is a very bad time to have a crisis. this is a bad time to have your own problems. manus: we need to try and dissect, and this is a conversation you and i have had many times, who is the strongest of the bad -- morgan stanley has this note that we've gone from fragile five to a caucus of 10. they are talking about chile and other currencies. how do you look at the emerging-market space beyond the real, the rand, the lira at a record low? bhanu: i think the rest of asia has problems. beyond china as well. that is where the growth is likely to be most negative. especially when china devalues its currency, not just stimulating internally but also the need for external stimulus. that share is going to be gone

from asia. korea, someailand, countries as far away as mexico are going to get impacted. they may not be fragile in a balance sheet ends. 40% as not going to see you did in the 1980's and 1990's, but you will get impacted. currencies can depreciate further. stock markets can continue to come under pressure. indonesia, korea, thailand, malaysia, and to some extent mexico. francine: you were talking about a 10% to 15% correction. do we have to wait until the fed hikes interest rates, possibly in september? you will see emerging-market outflows no matter what. bhanu: i think dm at this minute doesn't need the additional problems of the fed. francine: but the fed sets policy for the u.s., not emerging markets. bhanu: in a sense, this is the

problem. you are not operationally geared to the u.s. anymore. you don't benefit from the u.s. recovery. but you are financially geared to the u.s. you borrow in u.s. dollars. if the u.s. was to raise rates, that hurts you, but the u.s. growth doesn't help you. is not geared operationally to the u.s. as much as it was in the 1990's. i think that is the problem. have the degree of dollar liabilities, but we've termed this slow-motion commotion. you go for a long period of time . you see interest rates very weak. currencies selling off. that begins to infect creditors. last week, they physically intervened and adjusted rates. today, they say the currency can go up and it can go down.

is the yuan right? some people are forecasting another 2% to 6% lower by the end of the year. will it make a difference to the china story? bhanu: it might make a difference to the china story. chinese exports may get slightly better. but china is not losing market share. the yuan gets cheaper. i think china will likely take market share from some other emerging markets economies. to be clear, euro has already sold off about 20% to 25%. that probably took some market share from em. let's keep this in perspective. this is a much smaller move, but this is not china being done. you can see a further move. i think you can see more than that. they now need a weaker currency. tohink it could easily go

another 3%, 4%. i think that will happen, in fact. francine: thank you so much for all of that. up next, tianjin. investigators try to find out what caused the deadly explosion. we will have the latest from china. ♪

manus: welcome back to "the pulse." the number of people killed in the tianjin blast has risen to 114. 95 are still unaccounted for. china's premier, li keqiang, has visited the scene. investigators are trying to confirm the reports that the warehouse that exploded may have held as much as 700 tons on sodium cyanide. tianjin report -- port remains closed. bloomberg's clement hahn has been following the story. where do we stand on the blast? >> the scale of this tragedy starting to unfold now. a lot of pictures taken a really starting to emerge. there was one shot over the weekend that was particularly stark. crater.huge, big

nowofficial death count is 114. officials are desperately trying to contain or prevent any chemical leakage around the area. it may have helped 700 tons of sodium cyanide and is a possible violation of safety rules. francine: the reaction on the ground has been, how do you describe it, fears? clement: some residents are demanding compensation, compensation from the government. they are calling on the government to buy back their homes. authoritiesn port have said that operations are kind of back to normal, with vessel movements back to levels before the blast. more: do we know any details about the actual cause, the initial causes of this disaster? clement: the officials have

respondershat first didn't know what they were dealing with. they used water and it actually made the whole fire worse. but with lee catch on visiting the -- with lee catch i visiting iang visiting the site, it has made it more transparent. what remains to the scene, what that means, and officials also have evacuated a two-mile radius of residents from around there. lots of questions being raised on safety issues. there were also residents living a little too close to the site of the explosion. the safety questions, rules being followed, and enforcement as well. francine: thank you so much, clement 10 in beijing.

here are some more top headlines. manus: the slowdown in china has seen billionaire investor george soros selling most of his stake in alibaba. $370 million of alibaba shares, but that was down to less than $5 million by the end of june. alibaba has around $100 billion wiped off its value since hitting a record in november. shares have fallen almost 30%. francine: shares in samsung have slumped to a 10-month low on disappointment with its latest smartphone. it comes as the company unveils the galaxy note 5 as it tries to revive rapid growth and regain sales from apple. manus: disney is bringing a galaxy far, far away the theme parks in the u.s. in one of the biggest expansions in the company's history, both parks will get "star wars" themed extensions.

disney ceo bob iger has made expansion one of the cornerstones of his tenure. next year, he will open the $5 billion disney shanghai resort. francine: the universal pictures compton"aight outta smashing the previous record for an r-rated movie. it collected $56 million in its opening weekend. it cost $29 million to make. positive reviews and viral marketing helped the film breakout. manus: still to come on "the pulse," this frightens me personally. why your boss wants to track your heart rate at work. discusswe are going to the technology behind monitoring performance. why? ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio. manus: there's no denying that advances in technology have made life easier for most. from apps that help you locate places to those that track your health. francine: it seems employers could soon take advantage of the latter, with some companies using new tools to monitor the heart rate of their staff. olivia, thank you for joining us. this sounds pretty ominous.

this is big brother trying to understand if your performance is linked to your heart rate and how you cope with stress. olivia: it sounds a little scary up front. it is human optimization. humans are sometimes the missing link. companies are starting to think about treating staff more like athletes. how can they get these individuals into the best physical and psychological conditions to do their job? this can -- manus: this can be a bit onerous for people who watch this on a daily basis. hedge fund managers, traders, this could add to the decision-making process. is that part of the thinking? olivia: all the people i spoke to said it doesn't work if you don't have the individuals seeing a benefit to themselves. there's a whole lot of secrecy around it.

funds, banks, and things like call centers are doing experiments with this technology, but not many people are prepared to do it. francine: we speak to a lot of ceo's and they say the pressure of performing on a quarterly basis is big on them. if you have to perform on a minute by minute basis, are there more risks? does that also have benefits? you seem too stressed, take a break. olivia: there's a load of scientific research linking stress levels to risk-taking. the university of cambridge has done research into this. they are trying to see whether they can correlate how stressed someone is at any given point with the level of risk they are prepared to take and the outcome of that risk taking. the idea is to connect those dots and make it so that if someone is too stress, perhaps

telling them to take a break or do a mindfulness exercise or saying you can't trade for x number of hours. manus: this goes beyond trading desks and assessing who you want to have making financial decisions. it has ramifications for mining companies, for help, for safety. there are genuine benefits. olivia: absolutely. it comes originally from things like health and safety, where it is much more widely accepted. someone out in a construction field, are they suffering from heat stress? people on the battlefield as well. there have been experiments with the u.s. military. area, mclareng applied technologies have done some really interesting experiments. what they've done is try to link jetlagged to concentration levels. these guys are traveling all over the world. whether they are in the pits

changing tires, or looking at preliminary data, they need to be completely on it. they analyze their sleep patterns, flight times, and ged when they flew. francine: i'm a little bit creeped out by it and a little bit obsessed. we look up metrics all the time. even ourselves, looking at wearable devices. why is there so much secrecy, because it is a little creepy? olivia: the creepiness, definitely. the second thing is, it could potentially give these companies competitive advantages. they don't want to give their trade secrets away. the creepiness is the main thing. they have to walk a very careful line to make sure it doesn't go on the side of big brother. manus: it is not about wearing just a wristband. give us a sense of the myriad -- bloomberg tip!

olivia: might be a deactivation chip. it could be wristbands, armbands, heart rate monitors, smart badges that measure your tone of voice, even just having devices in the phones. in some cases, it is just about having a research people of two months where they analyze it and change the way people work. in other cases, it could be continual. francine: do we know that if you are more stressed, you take more risks, or the opposite? olivia: you get amped up initially and you start taking more risks. as you get more stressed, the decisions get worse, you become more risk-averse. men definitely do. francine: i love this. manus: now we know what to worry about. francine: stress or men. we have to get olivia back on. manus: you can go to bloomberg.com and pick up olivia's comments.

be sure to do that. we are going to take a quick break here. breaking news when we are back. ♪

manus: backing the bailout. angela merkel makes the case for a greek deal as european ministers agree on an aid package. germany prepares to vote wednesday. francine: abe under pressure, businesses cut spending. manus: gold loses its shine as the precious metal price falls and gold sees its profit plunge. good morning to our viewers in

europe, good evening those in asia, and a warm welcome to those just waking up in the u.s. i and manus cranny. i'm francine lacqua. manus: angela merkel says she is confident the international monetary fund will contribute to greece's third bailout. francine: thursday, they will let on the package, the day before grace has to make a payment to the ecb. manus: angela merkel said she would consider debt relief to make it happen. with regards of extension of maturities, the setting of the interest rates, we have room for maneuver. just like we had in previous times, we move forward the repayment rates. is always possible to do something else. there's a clear statement that the eurozone cannot allow

another haircut, a debt cut. francine: let's speak to harm nichols in berlin. we also spoke to michael fuchs, a lawmaker. lawmakers might not go for it. hans: unclear how the imf is or paying for it. there needs to be debt relief. in the interview with mr. fuchs, a key merkel deputy, he seems to suggest that some back channel between the imf and wolfgang schaeuble, the finance minister. assuret that is able to members of the german parliament at the imf will participate. this morning in berlin and are important meetings, namely the executive committee of merkel cdu, her party is meeting.

they have to figure out how many votes they can lose. nobody expects this to go down, for this to be defeated in the bundestag. there's a question as to what will do to merkel's political capital and wolfgang schaeuble's political capital. the average maturity for greek debt could be 60 year maturity. manus and francine? francine: manus:-- manus: is angela merkel going on a hiring spree? should i get the cv dusted off? hans: merkel's staff is looking to hire chauffeurs, drivers, household staff, as well as civil engineers. it gets at the diverging economy some data out thursday and friday last week. some muted growth in germany.

elsewhere it looks grim. how greece impacts a third quarter in germany is a key question, how china fx germany is a key question. and a lot of negativity we saw in greece did not happen to the beginning of third quarter. second quarter numbers did not capture it. it does look like they will be spending a little bit more at the chancellery. francine: hans nichols in berlin. our next guest believes greek debt needs to be restructured to low rates for a long period of time. welcome to "the pulse." debt restructuring, will it happen? it will. the situation at the moment is unsustainable. something that is unsustainable comes to an end at some point. will it happen this week or next week?

that is a political question for angela merkel and the european politicians. overtime, absolutely. it will happen. the level of greek debt is unsustainable. , very long rates, 60 year plus, does it happen by absolute default or rampant inflation? there are a few options. it is up to the politicians to decide which they want to choose. back several hundred percent of gdp is not going to happen in a democratic society where people do not want to run surpluses of 5% of gdp into perpetuity. manus: how much discussion to the creditors or the troika, fran just did a discussion with michael fuchs

he said it will come down to whether the imf are on board or not. i want to get a sense of what other politics goes on? out, it was imf in, interesting, hans was saying there was a back channel between the imf and the chancellery to ensure everyone doesn't stay on the same page. have a split, this very carefully crafted bailout falls to pieces. if the imf are out, the bundestag will vote it down. we've got time to work out what to do. we are in a situation where there is payment to the ecb and you cannot find that many euros in loose change at the bottom of the sofa. francine: what does it mean to a fund manager? is greece contained, the vote on

wednesday it does not matter? or does it have an impact? , we arething in greece removed at the direct level from things that happen in greece. the euro do happen, will weaken sharply. that would be good news for the exporters out of europe. it would be good news for the tourist industry in spain and greece. , it ist of our managers the second order effects -- what will happen if the exchange rate comes down, interest rates plummet sharply as a result? the second order issues much more than individual week stocks. manus: where do you see the euro

going? we are at record lows into year government bonds in germany. theave a survey and 28% say outlook for improvement in short term has dropped massively. in july, 50% said things would get better. we are down to 28%. where are you? andy: i'm relatively positive. i am normally a bit of a glass half-empty kind of person. i think now, given how negative .eople have got i think we will see the bailout. ,e will see some kind of debt kyle eight reprint filing, whatever word you want to use. the net present value of that that.

spain employment numbers are going up. gdp is going up. germany is growing, not as quickly as they would like, it is still growing. the euro is picking up in a slow way. we are not talking formula one pace. a fiat 500. francine: thank you so much. andy lynch, fund manager at schroders. manus: japan's economy contracted last quarter as consumers and businesses cut spending and exports tumbled. between january and march. two quarters of growth was

better than estimates for a 1.8% drop. francine: china's economy is growing more slowly than officials suggest. the survey shows they think the economy expanded by 6.3% in the first half compared to the officially reported 7%. it helps explain why policymakers have stepped up stimulus and the move to boost exports with a weaker yuan. manus: chinese premier li keqiang has visited the scene of last week's tianjin explosions. the number killed has risen to 214 according to xinhua news agency. 95 are unaccounted for. investigators are trying to confirm reports that the warehouse may have held 700 tons of sodium cyanide. closed.port remains businesses are disrupted. francine: japan has raised

eruption warnings for the volcano on mount kyushu. it is close to the sendai nuclear plant at people have been advised to be ready to leave. manus: malaysia's currency has risen, battled by the yuan. slumping oil prices and the looming fed hike. the ringgit has hit lows not seen since 2008. malaysia's reserve bank has decided against capital controls. francine: the latest from tokyo, next. ♪

francine:, welcome to "the pulse," live from london. japan's economy contracted last quarter as consumers cut spending and exports tumbled. 1.6 percent, fell ending two quarters of growth. that was better than estimates of a one point percent drop. -- 1.8% drop. manus: brett miller joins us from tokyo. what do you make of this data, what does it say that abe's challenges are?

abe has challenges ahead. getting consumers to spend has been one of the keys to abenomics. to spend sosumers businesses make more products and consumers are just not spending. old habits die hard and japan. anddecades of stagnation consumers are more accustomed to saving them spending. are said, customers reporting higher profits. what we need to see next is companies paying higher wages so consumers can spend -- francine: why aren't consumers spending? brett: it really comes back to wages. somemers need to see confidence that wages will keep increasing. we are getting increases in prices for things like food and that puts pressure on average workers. before we really see any spending, we need to

see an increase in wages. we will be watching to see if the government increases pressure on companies making good profits to start earning some of that into wages. be looking should we for next from japan? easing, moretive structural reform, or delivery on structural reform? brett: there is a big question mark over the delivery of structural reform. a lot of the abenomics so far has been left to the bank of japan and that has a big effect on the yen. program,of abe's economists are waiting for more. the laborr reform in market to free up the economy and get business more active. that will be a big area of focus. when we turned back to the boj, will it increase stimulus or not? many economists are waiting for

october, that could be a possible date for the next increase of stimulus. other they're looking out to early next year. francine: thank you so much. our japan economy team leader. manus: let's get a reaction from our guest in the studio, andy 's.ch from schroeder it does not inspire me that qe works beyond america. japan, thewe look at quarter is one thing. and ase a step back brett was saying, over the last two decades, nominal gdp has really not gone anywhere. over that time, japan has been adding to its government debt. what japan needs is to get to nominal gdp moving again. that comes back to what brett was saying about a third hour of abenomics, structural reforms,

improving labor productivity. this would be controversial, maybe opening of the borders a bit more and allowing more immigration. japanese society is aging rapidly. working age people, the numbers are following. is you want to increase nominal gdp, you've got a few ways to do it. you can increase the number of people working, increase the price level for inflation, or you can improve labor productivity. they need to be looking on all three of those to get nominal gdp going up. a lot of the economic problems they are facing start to disappear by the magic of compound growth. francine: would you say it would be unfair to say that this great financial experiment in japan is not working? to make thatnfair call yet because we have not yet seen if mr. abbe can bring through the third hour.

if he can get through the japanese parliament, there is a lot of potential for gdp to recover quickly. let's not forget, there are still a lot of very good companies in japan who make some good products that we like to buy. there is a lot of potential. they need to find the key to unlock that potential. abe double punched? he has a currency devaluation, and equity market that is flying. he was doing fine and then china came along. they devalued and they have almost ripped away part of his boom. has he been trumped? andy: not yet. the scale of the devaluation we have seen so far for the chinese yuan is very small compared to the currency benefit that the

yen has taken against the dollar and implicitly against the yuan over the last couple years. if the yuan depreciation moves to 10% or 15%, then we are in a different ballgame. , now the chinese authorities can keep it around , that is not going to make a huge difference in the context of the 20% move the yen has had. if the yuan is down 15%, we can have another conversation. thank you so much. andy lynch, european equities fund manager at schroders. results, ifs latest

they are anything to go by, anything but golden. we break them down on "the pulse." ♪

francine: welcome to "the

pulse," streaming on bloomberg.com. the latest casualty in the drop of gold prices. the johannesburg-based mining company has reported a decline in earnings which fell to $26 million in the three months to the end of june, down from 35 million in the previous quarter. kevin joins us from johannesburg. right to see you. where do you see the price of gold going? about gold is trading at $1100 an ounce. the ceo of anglo gold sees it trading between $1050. ounce,opping to $1000 an quite tough for the gold miner such as anglo gold. psychological the

level. everybody talks about dollars, if it drops below their, you are talking about marginal cost to production. how would they cope with that? does that kick in with capital expenditure, mine closures? what is the plan? kevin: he's got a plan that inolves selling stakes various assets so they can share the capital spending plans. less, they plan to cut costs around the globe. despite the fall in earnings, shares are up around 8% or so. comes, if the u.s. does decide to raise interest rates, that will strengthen the dollar, which will mean currency in anglogold does

produce will strengthen. that provides a natural cushion for the company. he sang it is not all doom and gloom yet. have an update on any possible strikes? gets about aold third of its output from south africa. they are currently in negotiations with unions over pay. anglo gold and other gold companies have made a final offer which has been turned down by unions. at the moment, they are in deadlock. this point, they are going to go through a government sponsored mediation program. talk of a strike is on the premature side, but it is looming on the horizon. anglogold ashanti hoping that -- leave it will have to

there. kevin in johannesburg rounding up results. francine: dilma rousseff's dilemma. can the president hang on to power? ♪

francine: welcome back to "the pulse," live from bloomberg's european headquarters in london. i am francine lacqua. manus:i am manus cranny. angela merkel says she is confident the imf will join greece's third bailout and has signaled willingness to consider debt relief to make it happen. merkel's comments, her first since ministers back to the 86 cameon euro aid package, as the bundestag plans to vote wednesday. francine: japan's economy

contracted as consumers and businesses cut spending and exports tumbled. gdp fell 1.6% between january and march, ending two quarters of growth. that an estimate of 1.8%. firmed up in has order to buy 250 airbus a320 near -- neojets. nchengthening the fre company's lead over boeing. francine: li keqiang has visited the scene of last week's tianjin explosions. the number killed has grown, according to xinhua news agency, and 95 are unaccounted for. 2-d port -- tianjin remains closed and businesses are disrupted. manus: let's get a look at markets. mark barton? mark: biggest weekly decline

last week. yuan stabilizing, european stocks are rising. yuan barely changed for a second day. intervention of a verbal variety yesterday in china from the chief economist of the pboc. he said the exchange rate intervention could go either way. it was not just about china, it was about japan. lessconomy contracting by than forecast. is it time for further abenomics? hinzo abe has been focusing on domestic matters, boosting nuclear energy and the military as well. his popularity while he has done that has dipped somewhat. greece are waiting for german lawmakers to vote on the bailout wednesday. comments from angela merkel athens,the asce in

she's confident the imf will join the bailout and signaled a willingness to ensure debt relief. the china spillover into asian currencies is continued. bloomberg-jp morgan asia dollar index is down to a 2009 flow. the malaysian ringgit has fallen 4% against the dollar. being battered on all sides from lower oil prices and political scandal. this is interesting. not one that many are focusing on. sterling was up earlier. one of the boe policy makers wrote an article saying the boe risk damaging its credibility if it waits too long before raising interest rates. are we getting more hawks within the bank of england? i've got to show you the price

of oil, continuing to slide down to a 2009 flow. opec production may hit a record and u.s. drilling activity sustaining its increase . since june since oil hit a time for the year, it has declined by 32%. come on base getting battered on all sides, just like the malaysian ringgit. you.ine: thank and about 20 five minutes, it is "surveillance" with tom keene. he joins us from new york. the u.s. keeps on drilling. tom: oil cannot find a bid. on friday, i'm not sure of the awareness of this, colbert kravis and roberts declared they would restructure samson energy. small story that begins to indicate with the decline of oil means. they will go through a bankruptcy in 30 days or so on samson energy.

maybe that is the tip of the iceberg on what we are going to see with lower oil prices. of course, the commodity knocked on, as mark barton talked about. adam parker will join us from morgan stanley about the equity markets, including his less than successful call recently our energy stocks. david will join us as well from cumberland advisors. we lead with oil and the currency markets. a lot more to talk about as well. a thought,ngs me to last week francine and i were chatting to several different people. to asaid we are getting crescendo of noise in the oil position. hedge funds resume their flight from the oil market as we hit a six year low. do you think we are at a crescendo? all the world is bearish. tom: rather than crescendo, a cathartic movement. we have decidedly not seen that yet.

what i would say is late last week, the major message i got was the shift analysis from u.s. the middleck over to east, as you mentioned earlier. the ukrainian oil but also saudi -- the iranian oil but also saudi pumping. i would focus on the need for catharsis and we have not seen that yet. francine: tom keene with "surveillance." manus: anglogold ashanti the latest casualty in the drop off of the price of gold. price of gold? we heard from the ceo earlier from a reporter in johannesburg. let's bring in our precious in metals analyst. we were talking about the oil , have wed a catharsis reached a cathartic moment in the gold market? >> we can still see more selling

in gold. year,recast is 1110 this 950 year. a lot will be a focus on wendy -- weterest rates will be expect this in september between 0.25 and 0.5%, the rates. of thessure, and a lot depreciation, we will see depreciation in the currencies. we've already seen it on the back of the expected interest rate hike. that can be good news for the producers in a developing country or a country such as south africa, also australia. be dropping inl the local currency. that can be beneficial. they are on a big drive to cut costs. quite a few producers are releasing quarterly performance

reports. we started seeing it in 2012 when we saw the prices on gold starting to collapse. if you took the top 10 largest producers from .12 until now, capex have that the halved. from the time producers start cutting costs, it takes five years to hit output in the market. we think starting in 2017 we could seat lower output from producers. it would be accentuated in 2017. that could support the price of gold. francine: talk about what you are expecting the fed to do. rate hike inting a september? if it comes in december, does it make that much difference short-term? seen theterm, we've

price of gold oscillating a little like a kangaroo. bouncing between -- francine: good analogy. the fed moves or delays its interest rate in december, i don't think we are going to see movements in the price of gold. just as we didn't see it when they delayed it from june. we were expecting june, they pushed it to september. more likely than not it will take place in september. we saw the fed revised its statement and it kind of lowered the bar, saying from june, they were talking about they would increase the rates and the likelihood of unemployment rates they have set the bar slightly lower talking about , adding the word most likely. gold councilrld

says demand is a six year low. yet the chinese central bank is silent for six years, then they tell us how much gold they have in july. their golddded to levels. what is going on? can china come to the rescue? why are they buying? >> china rescued the gold market in 2013 when you saw a massive outflow. china took all that gold. nowadays with the price being sh, investors are not very interested in what the central bank did was actually a disappointment for analysts. inwere expecting consumption china was equal to gold inputs from hong kong. we thought perhaps the central bank would be taking all the locally produced gold, in the wrea of 350,420 tons, we sa from the central bank that they were just adding 100 tons a year.

it pushed the price of gold down 8% in june. the transparency in the price of gold comes at a time when they are trying to push to become part of the sdr, trying to push to be more transparent with the imf. for the first time we revised again. francine: thank you so much. manus: next, tianjin blast. investigators try to find out what caused the deadly explosions. the latest from china, stay with us. ♪

francine: welcome back to "the pulse," live from london. manus: a number of people killed in the tianjin blast has risen to 114. 95 unaccounted for. francine: china's premier li keqiang has visited the scene of the explosion. confirmators trying to reports that the warehouse may have held as many as 700 tons of sodium cyanide. tianjin port remains closed and businesses have been disrupted. clementlimate can -- tan joins us from beijing.

where do we stand in terms of the investigation? slowly starting to unfold. there is one particularly stark image of a huge crater at ground zero, essentially. the death toll is 114. some rescue is going on. officials are trying to prevent or contain, just to make sure there are no chemical leakages. 700 tons of sodium cyanide was on-site. there was a possible violation of safety rules. francine: what has been the reaction on the ground? clement: there's a lot of anger, understandably, and frustration festering because of a perceived lack of information. it has been slow in coming. some residents has protested, demanding compensation for lost

homes. they are demanding the government buyback their homes. the tianjin port authority says the some movement is kind of back to normal before the blast. do we know about the causes? is there any further detail in terms of how this disruption came about? francine: -- ,lement: broader causes information has been scant. we do know some facts of the case. water was responsible for worsening the initial fire. first responders did not know what they were dealing with when otherused water things might have been more appropriate. the fact that 700 tons of sodium cyanide were located on-site and that it is a place where a lot of people were living around the area and safety distance was not

adhered to. visiting overg the weekend, this has escalated to a national issue. francine: clement tan in beijing. point 5 million protesters have taken to the streets of brazil denouncing this management of south america's largest economy. manus: putting pressure on dilma rousseff. elliott gotkine has more. do we think dilma rousseff can survive? has a 8% approval rating. that does not necessarily mean she's going to be going anytime soon. 2/3 of resilience want her impeached. brazilians, as you can see, they are not happy at all. they are not happy with the economy, which has declined 2% this year. they are not happy with inflation at 9% and

rising interest rates. all of that is hitting them in the pockets. on top of that, their anger is being compounded by this multibillion-dollar graft scandal involving petrobras, the state oil company that was supposed to bring riches to brazil and put it among the world's top oil producers. it has not worked out that well. there are politicians under investigation for it but surely being involved in the graft scandal. dilma rousseff was head of ofrobras at the time of some these allegations, some of these issues. not underf is investigation and does not directly accused of having been involved in any corruption allegations. francine: where do you see this going? there are self-inflicted problems -- corruption and calls for impeachment -- you also have china and the compounding emerging-market rout. we are probably going to see more protests. elliott: the chinese d evaluation could

not have happened at a worse time. brazil has china as its number one exporter. china's a destination, brazil's biggest trading partner. china's -- brazil's biggest export is iron ore. coiningorgan stanley this the fragile side of currencies, brazil being among them. currencies which would suffer from a rising global interest rate as they seek to finance their current account deficit. now we might be talking about the troubled 10 currencies, brazil also part of that inglorious group. a few other latin american and asian currencies, the ruble and rand too. they could be in pain as a result of the yuan devaluation because of their exposure to the chinese economy. manus: thank you, elliott

gotkine. top headlines. francine: is floating in china has seen george soros selling most of his stake in alibaba. at the end of the first quarter, %370 million in alibaba shares, that was down to less than 5 million by the end of june. alibaba has seen around $100 billion wiped off its value since hitting a record november shares have fallen on the 30% this year. samsung have and slumped to a 10 month low on disappointment with the latest smartphones after the company unveiled the galaxy note 5 and s6 edge plus. profits to revive growth and regain sales from apple. francine: disney is bringing a galaxy far far away to the impart in the u.s., in one of the biggest expansions in the company's history. both parks will get star wars theme extensions with

construction due to begin in 2017. bob iger has made expansion one of the cornerstones of his tenure. next year, he will open the disney shanghai resort. francine: space land was my favorite. manus: i have never been to disney. francine: you have to go to star wars. manus: the universal pictures film "straight outta compton" topped the north american box office, smashing the august record for an r-rated movie. the biopic based on the rise of rap group nwa cost $25 million to make. positive reviews helped the film breakout beyond fans of the rap group. francine: coming up on "the pulse," angela merkel is due to

return to italy. no time for a holiday. what is on her agenda ahead of the greek bailout vote wednesday. ♪

francine: talking back to "the pulse," live on bloomberg tv. manus: time for a look at what to watch. we are joined by hans nichols. welcome back. we have a crucial vote in germany. heading to milan.

run me through the thinking. need to make sure -- you've seen the government spokesman talking right now -- making sure that german parliamentarians think the imf is going to be involved. they say they have secured the involvement, it will likely come in october. involvement is crucial for so many members of parliament. we heard mr. dijsselbloem friday saying there would not be a bail in for greek banks. we've seen a reaction, some senior debt is dropping, some down 30%. if this does pass and we get 26 billion out the door, we have about 10 billion to recapitalize banks. that may not be enough and some senior bondholders might get hit. at aine: we were looking price movement in a while ago.

a little data out of the u.s. the empire state manufacturing index gives you some indication of where things are going in new york state. down in the last month and is expected to pick back up again. some indication of where we are going. not a lot of data is coming out this week. data heavy last week with gdp figures out of europe. we will be watching and we will report back if anything pops up unexpectedly. francine? manus: we are going to get the fed minutes in the middle of the week. we are going to be focused on that, as well as the potential for the dollar rising. and keeping an eye on the yuan is key, isn't it? hans: i suppose the fed minutes, the reason i put that in the category,y exciting" the fed minutes are out -- we had labor minutes that came out after, we will look at. francine: you know what i will put in the "really exciting" to

look out for, coming up next from new york. pulse,"t for "the see you tomorrow. tweet us. i am @flacqua. ♪

announcer: this is "bloomberg surveillance." tom: this morning oil continues its decline as oil currencies move weaker. how will vladimir putin reacts to the collapse of russian oil?

abenomics is not working. and disney killed three birds with one stone. only a jedi can that do. this is "bloomberg surveillance ," live from our world headquarters in new york. i'm tom keene. joining me, brendan greeley. we will talk about disney in a little bit. they are redoing their star wars product. brendan: they realized they are not just buying movies, they are buying worlds. there is the marvel universe, the star wars universe, and we will see movies forever about this, but also in the parks. tom: what a news morning it is with oil. let's get started with top headlines. here is vonnie quinn. vonnie: company far, far away. the national rate of one point 6% r