plunge the most in three weeks on the concern of a strengthening property market. ands: the bart weekends tylan stock market falls -- thailand's market falls after the attack. francine: we get the figures in half an hour. welcome to "the pulse." i'm francine lacqua. manus: i'm manus cranny a very

good day to you. china's stocks have slumped from the highest level in three weeks. the benchmark index sank6% following concerns that the government will pare back efforts to prop up the equity market. after a drop in interest rates and removal of property restrictions. economics chief asia correspondent is in hong kong. mini rout?ket is this the rerun of a big run? enda: it is early days to tell whether we are going for another. it's certainly a correction. it has come about because we had some good numbers today. we had some data. that is interesting when you consider the big stock markets

we had in june. it kind of illustrates perhaps the net effect on wealthy consumer confidence with what -- was much less than people anticipated. we will need to see more durable prices before calling a turn in the housing sector and before calling a turn in the economy. francine: what does it mean for the wider economy? how much can we read into this? enda: one of the recent stocks fell today was people were supporton less from the government for stock prices but also less stimulus from the central bank. it is too early to make that call because, away from real estate, the economy still remains fragile. the stock market crash has taken a view of stability away. we have exports that remain slow. if real estate sector, even prices are picking up, there are a lot of houses that have not

been sold. going forward, the chances are according to economist that we may see more interest rate cuts and more steps by the government on the fiscal side to try and get credit flowing through the economy to rev up growth. manus: are we going to see more measures to boost the housing market? because that, in essence, would support growth at the margins, wouldn't it? enda: you cannot rule out any more measures. if anything, they might encourage authorities. because they have taken steps on the mortgage site to boost lending. now, you could argue the central bank has not had too much bang for its buck on the monetary side. to any, they will cling positive data they can get. this shows that may be on the housing side, the real estate side, those rate cuts are starting to help. i guess we could not rule out rate cuts before the year-end.

francine: think you so much. the latest on china. discuss allus to the elements in china is our chief investment strategist frankel impaired a very good morning to you. welcome to the show. ut.ther mini ro0 down 6%. to pull really wanted out all the stops, had they done so so far? michael: i do not think they have but they certainly have a lot of firepower. this latest intervention cost them 60 billion. that was the figure i saw this morning. they have got trillions. but then, of course, you have the knock on effect because they .ave gotten money in the u.s dollar if they start having to that, you some of would then get the ripples spreading out from this. francine: are you concerned about the ripples? , down 5%, dohis not exactly know the reasons

behind the devaluation. quitel: markets are cautious at the moment. we are in this limbo phase as we run up to the rise in interest rates. no one knows what that is going to mean. there is going to be a psychological impact from that. but i think there are times when you just have to take a longer-term view and look through the situations. as you know, i tend to monitor the site -- the technical side as well. and there you are looking for the dominant trend over time. and what we are seeing coming out of shanghai at the moment, to some extent there is some noise. and we are having to assume the government is making the right calls. it is interesting in the situations because you can react one of two ways. gosh, they have done something about a weakening economy. if they recognized it right, and the measures a start to impact then itomy positively,

is grounds for optimism. i think they may need to make some changes with what is going on in the property sector. you have to bear in mind there is a lot of money on the move in asia with the prospect with the taper tantrum. money was drifting. money was drifting back out of asia. so we could see more of that. manus: it is interesting. est that said that he did not believe the markets was extremely positioned. where's your biggest exposure in e.m.? do you think another big lay lower in currencies is in the cards? it may well be. we monitor. our main focus is the u.k. for investors here and elsewhere. but inevitably, you look at the4 index components and

you have exposure to emerging markets whether you like it or not. people will follow through on their view is emerging markets by going through particular stocks. have aean, we may well bit further comeback. overall come i think i mentioned before, that the indications are that we are now forming a top i n the s&p in the ftse 100 which 2007.parable to that sounds bearish. it is not going to happen overnight. but even if we see it over the next year, it will be an adjustment. interest rates are going up third and the loss of economics say if the cost goes up, you expect things to adjust. francine: what is your take on commodities? is there anything you would like owning? glencore closely. activist investors want to get in.

would you be interested in any of the commodity play because you think they happen over and? interesting.is it is difficult to get a handle on where the balance point is for the price. it is under some pressure. the indications are that supply is adequate, and that where -- there will be more. the chart for brent is suggesting we are about to see a golden cross, which could imply that the oil price might start to rally. it might not be a big rally, but it may be the beginning of consolidation. so, that could be interesting. francine: manus: beginning of the bottom. you will stay with us a little time longer. that brings us nicely to our twitter question was his -- francine: are stocks due a correction? #thepulse. a lot of people saying, they are starting to correct. it depends on how big that correction is.

tweet us. manus: ok, the shockwaves are spreading from yesterday's bomb blast in bangkok. aat has weekend. all of this can only hurt a slumping economy. francine: let's get the latest with caroline hyde. d state ofsad, sa affairs. this is a tragic human event, tragedy that has occurred in thailand but also it is hitting hard the economy, which is coming under stress. fallen by thai baht half a percentage point. it is the lowest levels in's april, 2009. this is what stocks have done. trading about 2% at the moment. at one point, falling the most in eight months in terms of the exchange. severe repercussions happening in the economic markets. certain stocks off by 6%. we are seeing thai airways been

hit. one of the key hotels falling significantly in trading today, because the tourism hit is hard because this is where the bomb was felt. where the bomb exploded in bangkok surrounded by hotels. ine frequented shr by tourists and locals, the bla st included the chinese and filipino tourists. hitting hard to terms of emotional tragedy, but the was aimed tost hurt foreigners could already you have the government coming out and saying dissidents should delay their nonessential travel to bangkok. is going to be hurting insignificantly when you said cancellations are happening from high end chinese tourists. francine: how much does tourism in tribute to the economy?

any thought about the impact on gdp further down the line? if you dign fact, through the numbers, this is going to have significant -- tourism, 10% of the national economy. 25 million tourists visited thailand in 2014. a quarter of them coming from southeast asia. they have even managed to peg a number to how much they thought this revenue would bring in this year. the government expected thailand to bring and $51 billion just through tourism. the problem is, the rest of the economy is hurting. you have been speaking about the emerging market rout. we know what this thread of a federal rate reserve hike would do. the weakness is being felt in foreign currencies. that this is an economy that is seeing weak local demand and wheat exports -- that being hurt by d valuation in the yuan. -- by dev valuation and the yuan . you have the finance ministry

just last month downgrading for the third time. downgrading gdp growth for a third time. this is just reconnecting the specter of what was -- the violence we have seen in this country. we have seen political unrest and the 2014 coup where we saw the government to post. so this is a key concern. could we see this sort of volatility, this political unrest returned to the thai market when they are so dependent on tourism? the tragic event clearly being felt throughout the markets. manus: thank you very much. here's a look at what else is on our radar this tuesday money. the german finance minister wolfgang schaeuble has akssked mp's to back greece's bailout. even though the imf is not committed to footing part of the bill. wolfgang schaeuble's letter comes as the lower house prepares to vote tomorrow. francine: royal dutch shell has

confirmation to drill oil off of alaska. the company halted drilling in n agroundr a rig ra helping prompt the obama administration to revisit u.s. rules for exploration in the region. manus: jeremy corbett has spoken out on u.k. banking crisis. the hard lined left wing mp has been a strong critic of british banks. corbyn: i think we have to examine what happens when the banking crisis came about, examine who was responsible for the banking crisis, and then work out how we take things forward in the future. get u.k. inflation data and under half an hour. the report for july will show a big fat zero. we will bring you that figure as it drops at 9:30.

manus: given the go-ahead. we have more on the shell news on its drilling adventure. what does it mean? ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and streaming on your tablet the phone. won permissionaas

to drill for oil in the arctic waters of alaska. u.s. government has granted the permit for the well. francine: this is the first time drilling has been allowed in the region and three years after a rig ran aground in 2012. our bloomberg chief energy correspondent joins us and we have michael frankel. how significant is this? shell has been waiting for the final permit. until now, it was able to drill but it had to stop before reaching the area before it believes -- where it believes there is oil. $7 billion, 10 year experience that shell is putting together is for real or not. i think this is a momentous time for the company. if they are able to finish the well on time before the winter arrives. manus: nothing would be produced out of this if they tap an oil well. 10 yearse are five to

away from production but because shell has been spending so much money and time in this well, it is important that this year they show results. francine: at the same time, and i want to get michael's thoughts on this, infrastructure spending must be going down because when you look at the oil price, it keeps on sliding. will put too much pressure on infrastructure? javier: i think that is a very important question. shell is one of the few areas where shell is saying we are going to continue spending. this is strategic for the company. this is not for the next two or three years, but for the next 10, 25 years of the company. the key question is -- if that is going to happen. oil.need to discover manus: you hold shell, but you are holding it for a different set of reasons. e's saying is h that the companies are looking

longer-term. this is about management decisions. this is the sort of decision that tests management and have got to get it right. yes, we're interested in the yield an indication are it would competitive and attractive. it is a solid company. the resources, if you go through this cycle, we see recovery per oilre still going to want unless green energy really does make big inroads. francine: this is not the only company you will look at. if you are in the oil majors, you have to give more to make sure the people stick around when the oil price goes down. michael: that's right. who knows if they would need to raise money somewhere along the line as well? from our point of view, shell is a main exposure but we are looking to spread client risk as well. briefly, is there anything at all that gives you a reason that opec could beginning closer to an emergency meeting?" javier: i don't see any

indication whatsoever. to waitfor opec we need for december when the next ordinary meeting is scheduled. francine: thank you so much for joining us. next, u.k. inflation is due in just under 10 minutes time. will it be a big fat zero? we preview the numbers up next. ♪

francine: welcome back to "the pulse," streaming on your tablet, phone and bloomberg.com. ero-flation, that is what we are likely to see when we get the u.k. inflation data. figure that will be closely watched by mark carney. carney: our objective is to have inflation -- not at zero percent. bringated objective is to information -- input --inflation back. the inflation can be explained by the prices of commodities and imported goods since last year. this temporary period of below target inflation has provided a wealth boost to real incomes.

the near-term outlook is muted. it would not be surprising if we have another month or two of negative inflation. given the very substantial moves in oil prices and the changes to some utility prices as well. we have seen big moves in oil, but also changes to utility prices. francine: let's bring in the chief investment strategist michael franklin and january. thanks so much for sticking around. let's kick off with you. what are we expecting and how -- to oil? owing nto jamie: the bloomberg survey is putting prices at 0% inflation. and that is where we are internally. theory does tend a surprise. you can get plus .1 or .2, but it tends not to be related to domestic cost pressures.

this time the uncertainty is over the timing of clothing and footwear sales. how much that will push up and down. a little on diesel and petrol prices. the underlying picture is if service inflation is it 2% and that is what really matters. manus: a lot of the exposure is u.k. zero-flation, how do you factor that in? how do you take advantage of it? michael: slightly perverse because we heard with woods that they are cutting back because of the problems in the oil sector. in very, we can enjoy the benefits of lower oil prices, but if you go to the fuel pump, how many times do you have to take advantage of the lower price? it is nice to get that boost. you can spend the money somewhere else. in terms of the companies we are looking at, you have to see the other side of the coin.

so, it is a bit surprising, given the way the oil price has fallen so far, that there has not been a acre feel-good factor. -- a bigger feel-good factor. francine: of course, the short lived-ness of this. how long will it stay solo? our estimates suggest you get the peak impact at the end of this year and it will start to drop out at the beginning of 2016. the bank of england is looking a year ahead come in two years, setting policy. so it needs to start think about lifting rates fairly soon. manus: thank you very much. chiefmurray is our european economist from bloomberg intelligence. we will break that data after this next break. bringne: coming up, we you those u.k. inflation numbers. a reminder, you can follow us on twitter.

there.ie murray is also it was key what he said about the rate of interest rate rises. that is what we are looking for. ♪

francine: welcome back to "the pulse, " live in london. manus: we have cpi data, inflation data breaking now. year on year, we have cpi comes in at a rise of .1%. we get a slight rise and it is because of the core cpi coming in at 1.2%. up she goes. francine: a look at the pound. 1.5639.

let's kick it off with you. a surprise to the upside. this means that actually mr. c arney's job is easier. >> these are good numbers. 1.2%. the consensus was 0.9%. the underlying inflation pressure is picking up faster than we expected. manus: you have done a look at the oil prices. they are near six-year low. this was the big drag on the inflation numbers. oil prices and sterling. jamie: we think there will be more of an effect on the headline inflation numbers from the oil over the next couple courses -- quarters. it will not be in till 2016 that that begins to dissipate. 017, we expect that to have entirely disappeared. the same with the exchange rate. this is how the bank of england is thinking about the economy. at thect the rates beginning of the year. piecene: we had a nice

saying that the markets probably focusing on the wrong things, because if you look at economists expectations, they are expecting interest rates to rise quicker than the market is pricing in. is that fair? that view asre well. when you think about how fast rates might lift, you have to think about what the theory underneath is. and we think that things like credit spreads will ease further. we expect the temporary growth,es like -- trend we expect that to dissipate over time. some of these factors explain that disconnect between market expectations and economists expectations. manus: just reflecting on those limited andarney, gradual. this difference between what the economist committee think and the traders, what have you penciled in in terms of rate hikes? core inflation data

which is higher than the market had anticipated. can that shift the thinking in terms of the timing? because the market thought it was august at the earliest. e essential for you that we have a rate rise stays in place. it is a clear story as to why that will happen. generating some wage inflation. for the rest of the year, will -- we will see a slight improvement in the rate of unemployment. at will surprise in 2015 th unemployment sat around 5.5%, but this is due to q1 weakness. we will see them higher again in order to increase production. so, throughout the rest of the year, we will see further tightness prompting more increases in wages. francine: pound rising to 1.5643. at what level does it start to become very and comfortable? jamie: i do not think that that

is their primary concern. it will focus on the inflation numbers primarily. i'm looking at the terminal and i can see quite a big contribution -- a bit on food. i would not take this at face value. manus: let's talk about the broader argument, because the most recent voice from the bank of england we've heard is christine forms. the go to-- is the biggest risk. is there a swell of dissent because we have had 1%? the market was disappointed. what do you make of her comments yesterday? risk is actually quite low. one thing that has not achieved much intention is the measure of money supply is the economy. the economy. we've had an increase in the production of goods and services. if you can think about this in terms of what it means to prices it puts downward pressure on prices. so the temporary -- aside core

inflation is quite weak. we probably will not see 5% growth in nominal wages that we saw pre-crisis. % growth.e like a 3.75 the things that would push inflation beyond a comfortable level do not seem to be a rising over the course or medium-term. francine: you are we have to break it down. the increase in headline seems pricesue to clothing with smaller discounts in summer sales compared to with year later -- to a year earlier. of this is the timing of sales. last year they had been late and this year they had them early. that just plays around with the annual number. so, i don't place a big weight on that. manus: the one other line that food and nonalcoholic beverages. it will take time to break into these and make slightly more, but a first reaction.

an annualized basis for the 13th month. the longest drop on record. if you take away the words and myself means is fran, and yourself, we have more money and more disposable -- we are able to buy more. in terms of good news for the economy, low-flation, we have got more money. and goods are cheaper. it is not good news? kallum: it's excellent news. this reinforces the key story that has been driving the u.k. which is the consumer services sector. u.k. consumers are willing to spend and they spent a windfa ll that they got from low inflation. to drive an increase in demand for goods. francine: thank you so much. here's some of our top stories today. shockwaves are spreading from

yesterday's deadly bomb blasts in bangkok. has weekend and the stock market fell. the tourism council is seeing cancellations, 23 people were killed during the blast during rush hour. francine: chinese stocks have tumbled from a three-week high as traders speculate the government will intervene. german finance minister wolfgang schaeuble has 's bailouts, saying it offers a sustainable path, even though the imf has not committed to footing part of the bill. the lower house prepares to vote on the 86 billion euro bailout package tomorrow. francine: let's get more on that with hans nichols. what are the key takeaways from the finance minister yesterday? hans: he did two things.

he wrote a letter to parliament backing this. he said that greece is on a sustainable path. he insists the imf will stay involved. we've not heard anything definitive from the imf. here is what he told public television and interview last night and he said "i am very sure the imf will conjure to the program just as we declared this to be indispensable." that gets added, because the german government is saying the participation is indispensable, yet what you have nothing unqualified from the says they will participate. all we have is a place to review the program in october to see a, if greece is abiding by reforms and b whether or not the creditors and europe will reduce the debt burden. here is the european from the european stability mechanism laying out what the bundestag has. these are the only assurances the german government has ahead of the vote tomorrow. not a whole lot. contribution to the

financial assistance at this stage is undetermined. when you quick note, look at some of the polling out there, 57 percent of germans want to see this rejected. and then you ask a separate question. will you, do you think the greeks will follow through with the reforms? only 13% of germans polled. 84% do not think so. one other quick note it we heard that greek capital controls are being eased slightly. the new transfer limit is up to 500 euros now. there is an exception, for students and parents want to transfer money a broad for students, from 5000 euros to 8000 euros on a quarterly basis. manus: on that piece of news, they are trying incrementally just to move the agenda forward, to move the story forward, saying that we are

rehabilitating. the discussion is also about protecting depositors. this is just incremental towards what some form of normalization? of no motivation but you cannot have normalization until the banks are recapitalize. if this happens in that there is problems, you can see the 26 billion go out the door this week third of august 20 they have the 3.2 billion euro payment to the imf. billion, 10that 26 billion for banks. once the banks get re-capitalized, then you can maybe relax some restrictions and make it easier. in athensne agrees and brussels and berlin that you need to do something for the banks first. and then you can return to normalcy. manus: thank you very much. hans nichols in berlin on the latest from wolfgang schaeuble. francine: a great interview that he gave. coming up, we have more to talk about with glencore and shareholder activist trying to get a little bit more. of course, it has scrapped some

of the subsidies for oil. what does it mean for dubai? we discussed that next. ♪

is trading near its

lowest price in six years following speculation that the global glut will be extended. francine: it is had a severe impact in the united arab emirates which has been forced to take measures to boost public confidence. let's find out more. what has the uae decided to do? month, the uae took the decision to remove subsidies that a given residence and its nationals. every month it is going to be setting its price to global prices. so now this month, for august, prices have risen 24%. now people have to pay 58 cents per liter for gasoline. this is the big stuff. the imf has long been recommended that the uae and other gulf states to take this step so that way that money can now be used for investment and also toward other government

projects. manus: talk to me in terms of the impact. the impact this is having on the ground in dubai. are people talking about this? is this costs and -- c tensionausing? causing tension? 90% of people who live here are ex-pats from other countries. local population understands it is a smart move. the government can save $7 billion next year with the subsidies are moved. so they know that can be reinvested and other things like education and job creation. so in that sense, the local population, there's buy-in. in terms of where the pain might be felt at the pump, that could be for the 90% of people who live here who are expatriates coming from other places. this is a place that really relies on having to drive

around, take your car, especially a lot of families. in that sense, a lot of expatriates, people coming from other countries, they have to pay for things like education and housing. a lot of people complain that some of those prices are rising. so in that sense, this, could be expensive. it could make this country where people otherwise come because they do not have to pay taxes and that lifestyle they get, this might add to their expenses. that cost of be a question for people. francine: very interesting stuff. thank you so much. investor harris associates is one of the biggest shareholders in the commodities trainer and it is betting this years worst performance on the ftse 100 will recover. big bet by harris. gives a sense of the size of the bet and what is the basis for it. >> $1.6 billion is the value of

the state. they have gone from just over 1% of the end of june 2 4.5% -- to 4.5% " a pretty significant position built at harris associates. he was described as an active investor. i put that to him yesterday and and says hehat tag is not in glencore as an activist. he says the stock is undervalued, but you would think, having 4.5%, the shareholder would try to use that as leverage in the future. francine: this is a great script because you're the one that found out that he held 4.5%. did he tell you, is ebay -- banking on dividends? he does not expect it pick up in trading or commodity prices? jesse: he thinks they are near bottom in terms of metal prices. he referred to copper.

he likes that business. he likes the trading business. coal is not the greatest place to be right now. so, yeah, we will have to say. ipo cameok, when this to the market, when this was banner waved, this is my path for to-do deals. this is a company that is seen a 40% slump in demand. it has $31 billion of debt. what are the options for glencore? jesse: that is an interesting question. to the scale that we saw them do previously. i $31 billion debt pile. a lot of analysts are concerned about that position. some of the levers that they can goingcutting capex forward, they could trim the dividend or scrap it completely which is being raised by one analyst as a possibility. they will probably maintain the first-half dividend at six

cents. full year is where they may have a bit of headway to tweak it. francine: so, tomorrow we find that more because they release earnings. what are we looking out for? jesse: the big focus will be on the trading business. that is impossible for analysts to four casper you have. so that is the big unknown -- that is impossible for analysts to guess. you do not know what the prices are. the trading business is the big focus. they put a target out there in the market, a full year of between 2.7 and $3.7 billion. analysts show it will be underneath at. -- that. we have an interview with ivan glace and burke first thing in the morning. his commentary around how that they can turn around the trading business is interesting. dividendstest and the and it may well be that this script dividend -- rather than cash. chatted yesterday.

lower the dividend, raise equity. they never raise equity. leverages it be too risky. speaking of everything you just said, he is fairly bold. ceo. prone to doing what the market does not think. bold, ambitious, conjuring. he may double down on coal. raising fresh capital is the last lever they would look to pull. francine: thank you so much. jesse back tomorrow after having spoken to ivan glastonberg. manus: no pressure there. make sure to give an interview with him. mall screen success. how the u.k. is making television for the world. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and streaming on your tablet and phone and bloomberg.com. manus: forget we hear about television being a dying industry. british producers have never been busier. they are making braun content for digital channels. one.ate one, take >> they have been going for five

years now. we have steadily grown and now have large-scale productions. poldark. wolf hall and sherlock. sky.for we have had trolley for four y ears. this is the fifth series they are filming. the tv industry in the u.k. is incredibly buoyant. we have benefited from the high-end television tax incentive the government did in 4.ril, 201 we are seeing the benefit of the high number of u.s. show is coming over to the u.k. to film. whiche some great shows are exported, and it should not be surprised that they are so well received over the world. throne, abbey," game of "x factor." they are made in england. we should be proud of that.

the is the top year from bbc. it did not really influence the show. it would always have a life after the bbc. we were approached to ask whether or not -- yes, carshin -- crashing into things and it was rather a mess. how people are watching television, i think it irrelevant.s it is all about entertaining and audience. how that audience taste that information and watches it is the most important thing. it is not whether it is going to be shown only on a terrestrial channel or a digital channel. storytelling is storytelling. people are going to watch it. go.cine: they good stuff coming out of u.k.

television and the producers prefer those listening on bloomberg radio, the first word is up next. the second hour of "the pulse" is coming up. manus: we are going to break down a little bit more on the emerging market rout. we are going to talk a little bit about gold. on china.also, focus more trouble as stock slides. the biggest drop in three weeks. we will find out what triggered the move as housing prices in the country pick up. manus: also on the program, oil is trading near its lowest price in six years. dutch shelll just one permission to drill in the arctic? we will speak with the ceo of harmony gold. talk china andll u.k. inflation and the pound. it shot up after that we had that inflation figure. better than expected. it means that we are no longer -- i dare to say we are a little bit less in the deflation danger territory. a reminder, you can tweet us.

and the twitter question of the day -- do you think a lot of the rout will continue in stocks? tweet us. ♪ .

manus: china selloff. the most in three weeks and there is concern that strengthening property market will reduce the prospects for stimulus. francine: thailand's stock market falls following terrorist attacks. manus: u.k. inflation rises to .1% ahead of expectations of that big fat zero, the pound is surging on the news. good morning to our viewers in europe.

good evening to those in asia. a warm welcome to those waking up in the united states. i'm manus cranny. francine: i'm francine lacqua. this is "the pulse" live from our european headquarters in london. manus: first, china. stocks have slumped by their highest level in three weeks following concerns that the government will pare back efforts to prop up the equity market. francine: after a drop in interest rey rates and the removal of property -- let's find out more. are the stock losses relateded to the higher house price and are we seeing an end to the property slump? >> well, we certainly had a drop in china today. i think the key to watch going forward will be whether house prices pick up in the tier three and tier four cities. the signs came after the stock

market crash in june. it is an indication that perhaps consumer confidence and household confidence hasn't been damaged as much as people think which is driving people to defect from the stock market. maybe there will be less stimulus on the way if this is a sign of the economy -- it is very early days. manus: you need to see a little bit more continuity. for the wider economy, this could be good news. >> well, it is if it holds up. real estate is a key component of the chinese economy. we still have weak exports. we still have spare capacity in in factories. manufacturers are suffering. we have a sluggish performance on the consumer retail side. china's economy is stabilizing

but the stock market crash has paved a lot of that. in the near term, it remains quite sluggish. francine: the question now is whether the government intervenes or policy make rs intervene. will we see more measures to boost the housing market? >> i think there is every chance they could do more. today's data shows that some of the policy moves, the interest rate could be having an impact and it might encourage policy makers to do more but economists say we'll have to wait and see how the rest of the data plays out which will of course dictate the extend of further interest rate cuts that we'll get and of course the government on the one hand is trying to reign in debt but on the other hand it is promising to put money through these polls banks to try and prime growth. at the very least we can say we

can't rule out further stimulus. manus: thank you very much for rounding that up. the uncertainty in china continues to increase the risk of connotation across the region. our next guest says higher volatility for the markets. welcome to the show. your very immediate response is the pdoc. mixed with what is coming? >> i think more rate cuts. i'm not so sure they will be effective. liquidity conditions are not abundant. in terms of what we twal expect , more weakness. that is consistent with what we're hearing. that said, i think it is interesting that they came out with this devaluation just before the start of the fed tightening cycle.

they are saying to themselves we expect a little bit more dollar weakness. if we stay exchange rate is more market flexible, it allows them to have a gradual depreciation in line with a stronger dollar. it kind of kills a couple of birds with one stone. of cine: what do you make the stop sign that we saw today? down 5%? >> in my mind it is an indication how nervous the market is. we get one batch of somewhat better housing data despite the fact that we had export data very poor, p.m.i. data poor. we're not going to get as aggressive stimulus measures. what you saw it is clear they want to have a slightly weaker currency. that being the case, it doesn't make sense for people to sell stocks that grelf. e're more likely to see more

liquidity. weakened by 1.6%. about 650 by the end of the year. is that the kind of drift you expect or are you expecting something more? have they overarched? this is a question i have been asking all week. ? ere are you going the yuan >> towards year end, we can see 650, 655 pretty easily. then toward the end of 2016, probably near the end of 690. we're not talking huge, enormous moves. that's not how the chinese do things. they do it in slow steps. the argument that we're going to see the end is a bit of an overstatement. there are two issues. one is depreciation. many of these countries in asia, they are already dealing with a

pretty difficult sort of policy mix. some sectors and others. we are more likely than not to see these currencies weaken in any case. acting more as a catalyst. one of the points that you make is the biggest difference is markets are more volatile than g-10. where would you put your money? >> for me, this is a question, where do you put it? you to bet on the dollar. that makes sense from foreign investors. i think asia is less, i would say less volatile and vulnerable than latin american countries. that continues to make sense. regarding asia, having a broad long dollar. we're not yet in an environment where carrying higher interest rates is making an impact. export prices, commodity prices have fallen quite a lot. we're dealing with a fundamental

shift in terms of trade. they need weaker currencies. that is what they are g.e. getting at the moment. >> if you take the whole story, china, the actions from the central bank. the fed move. does this not smack of central banks really scape scraping the bottom of the barrel in terms of ability to deal with any crisis. we have had a human tragedy. >> i think they do. the question is how to use it. if you think about how bad things are now, what would be the broader solution to all of these problems that we're seeing merging markets? obviously you need higher interest rates to stabilize currency. you'll need some kind of venture wall dollar swap basically to allay concerns on dollar-based liabilities for the banking sector, etc. to get from where we are now to do, things have to worsen quite

a bit. i think things will definitely get orse before they better. francine: indonesia holding a key rate. is that a surprise? >> not to me at all. it is a little bit early for them to talk about cutting rates. they were quite aggressive at hiking the rates last year and the year before. francine: peter, thanks so much for all of that. manus: that brings us to our question of the day. it is very simple. are stocks due a construction? -- due a correction? down over 12%. will that continue? we haven't had a correction in the u.s. in a long time. four years. francine: we haven't. the conversation we were having with peter about the

fluctuations. he thai back has weakened. they have seen cancellations and all of this can only further hurt a slumping economy. manus: reths let's bring in caroline hyde. we were state there is a very, very human side of this story and then the financial market side. caroline: there is a human cost and also a wait placed on the economy. the hunting for suspects caught on camera after this tragic event. already we're seeing the feeverling this play out across the market. we're feeling weight of the market with the downward trend that we're seeing in a thai bar. have a look at my screen and what it is doing to thai stocks. this is the biggest move for thai stocks that we have seen in eight months. some of the hardest hit are

those exposed to tourism. central plaza hotels by 13%. the airport operator falling. thai airways international down 6%. gauges of tourism are feeling the biggest pain today because where the bomb hit was primarily focused on where tourists tend to be. here it landed second-degree where the malls and hotels are based and the hind shrine. local thai people and chinese and filipino visit ofs were hurt. the -- visitors were hurt. clearly we're already seeing high-end chinese tourists canceling some of their trips. the hong kong government saying since the, please delay your to bangkok. travel

manus: how much toimp -- give us a sense of how much tourism contributes to the economy. the shocking scenes that we showed, you're going to be a bit more concerned about spending your money there. 10% of the nation's economy is based on tourism. you have $51 billion in how much the government thought they would bring in by tourism this year. will that be dampened? will that figure be accurate now? will that number be eroded because once again, we're starting to see perhaps that painful resurgence, that spector that we have seen in previous years of political unrest in thailand coming back to the fore. may 2014 where the coup happened. u.b.s. already saying we didn't want to be buying into thai

stocks now anyway. the economy was already suffering. local demand on exports and the downward trajectory accentuated by the yuan devaluing. already u.b.s. is saying look, you have rising nonperforming loans and slowing growth in that country. this will not have a long-lasting effect on the economy or investors sentiment but they think it adds to thailand's woes. francine: thank you. manus: a look at what else is on our radar. this tuesday, u.k. inflation rose to .1% in july. that was ahead of the median estimates for zero growth. the core figure was the highest in five months thanks to clothing prices.

the pound rose. francine: sloible has asked to -- schaeuble has asked to vote yes on the bailout. francine: the hardline left wing m.p. has been a strong critic of banks. >> i think we have to examine what happened when the banking crisis came about. examine who was responsible for that banking crisis and then work out how we take things forward in the future. francine: up next, given go ahead. find out why shell has been granted permission to drill again in the arctic. ♪

francine: welcome to "the pulse" live from bloomberg's european headquarters in london. manus: shell has won permission to drill an oil well in arctic waters off alaska. francine: now this is the first time that drilling has been allowed in the region in three years after a rig ran by shell ran aground 2012. hahier, this is quite significant. significant.

they have spent $1 billion and 10 years of planning and they have not been able to drill a single well. now for the very first time they are going to be able to go all he way to the point where -- they allowed shell to go, now they can go all the way down and prove where this big $7 billion is going to find any oil. manus: they have spent $7 billion and many years getting to this point. to step back from this kind of project would send all the wrong messages. >> i don't see that the company can step back. if they fail with this well and they have to withdraw from the arctic, i would expect heads will roll at shell and some billions of dollars of routines will have to be taken. shell is very confident that they will find oil.

the permit arrived quite late in the season. swirnt about to arrive. they have only a few weeks to finish the job. it is one of the few long-term projects that shell is keeping intact. it is preserving it. they are cutting everything else just to keep this going. francine: halve jer, how significant is it that they keep his going? javeer. it spiked back up. if you have too little oil? >> yeah, it is that important that while shell is cutting jobs and spending, they are not cutting anything related to the arctic. this is the project that it could propel the company for the next 10-15, 20 years. this is not about producing oil in two or three years. they think it will take many more years to be pumping oil.

this is about how shell will look like. manus: another day, we're treading water around this six-year low. is there any sense from the analysts that -- what is the word that we had? crescendo of noise around the bottom? >> no, not yet. the price seems to be trying to find that bottom. if we don't really get there, i get the sense talking to oil analysts and traders that we may be approaching the bottle of the market. they are pumping at the highest level in years that probably with a return next year. it could go to an all-time high. there is no indication that we are going to go any time up. i think the best case scenario is that we find bottom and we can't bump up and down around that bottom.

francine: thank you. manus: still to come on "the pulse," all dressed up. how this summer's clothing sales turned u.k. inflation positive for the first month of july. we'll discuss that after the break and also the impact for the bank of england. ♪

manus: welcome back to "the pulse" live on bloomberg i guess

the, streaming on your ipad and bloomberg.com. rancine: u.k.'s inflation at .1%. the bank of england's 2% target. manus: let's bring in bloomberg chief economist jamie murray. it had to do with the summer sales and airline first a. what do you think at this stage? >> well, the bank of england always said they expect the inflation rate to bounce around towards negative and positive territory and around zero. that's what we're seeing really. volatile components driving the rate. airline fares. it has a big effect. they went up by 21% this year in july opposed to 14% last year. and clothing and footwear has had a bouncing around effect.

the broader picture is oil and sterling strength are weighing on the headline rates. francine: we had a great bar chart actually that we saw linking the price of oil and the strength of the pound to the inflation figures. jamie, this doesn't mean we're out of the woods in terms of deflation for this country? >> no, i don't think most economists put a lot of weight on that being a risk. we have had low inflation for a long time now. here is no evidence that it is -- the bank of eng slant worried about what domestic pressures will do to the inflation rate. it looks fairly safe and benign. manus: the survey, the words that carney used, this is where the difference comes in. it is going to be interesting how the market prices interest rates through today. at the moment, the economists are going for what?

about 25 basis points every time when it starts, whereas the market is suggesting the first hike is going to be next year it is going to be in increments of .1% or .15%. there is quite a bit of difference in terms of thinking. >> i think it boils down to -- they tried to explain why it should be the case, interest rates need to go up faster. i think you have to think of it. convincing information for why it should be lower. the trend in growth is lower. the trade consistent with it is lower. the other is credit spreads are higher so the rates, the households can sustain all that they can, it is just lower permanently. economists don't generally think these things will last forever. major markets are lake-effect more worried about that and place -- little bit more worried about that and place a little bit more weight on it. manus: coming up here on "the pulse," well, there is a glimmer of hope as gold climbs for a

second day. kit last? that is the question. most -- can it last? that's the question most commodity traders are asking themselves. we're going to speak with the c.e.o. of harmony gold next. see what he thinks. ♪

francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. manus: i'm manus cranny. here are our top headlines. chinese stocks tumbled from three-week highs. it comes after house prices in the country rose in more cities than fell in july. the first time that happened in 16 months. francine: the shock waves are spreading from yesterday's deadly bomb blast in bangkok. the tourism council said it has

already seen cancellations. at least 23 people were killed during the blash during rush hour. francine: schaeuble has asked to back greece's third bailout even though the i.m.f. hasn't agreed o foot part of bill. they plan to vote on the 86 billion aid package tomorrow. francine: mark barton that is latest. mark? mark: ahead of the parliamentary vote in germany tomorrow on the third greek bailout. china sentiment weighing on stocks at the open. as a group, the stoxx 600 is now trading higher. we're just awaiting tomorrow's key german vote. germany not only the national parliament that has to pass the bailout. four other national parliaments have to do so within the next 24 hours or so.

still, stocks are higher. lower, though, in germany. a key metric has been crossed in the last four or fife days. the dax is trading below the 200-day moving average for the fourth day in five. nerds like me and tom keene, that is not a good indicator. the dax down sbi 1/10 of 1% today. greek investors awaiting tomorrow's key german vote. the positive from wolfgang schaeuble, writing that letter to parliament. he of course is a staunch critic of greek actions in recent months. but he says that his pier peers should vote for the german bailout, which of course is expected. away from europe, attention continue toss turn to asian currencies. e know events in bangkok

yesterday, the tragic explosion which cost the lives of many. the dollar once again rising to its highest against baht since 2009. it will already have an impact on the slowing thai economy. ing with emerging market economies in literally 90 minutes time, the turkish central bank decides on its latest interest rate policy. only three economists say the central bank will raise rates. it is a tight call with the turkish lira of course fueling a record low against the dollar. really, really quickly, i want to show you what's happening in the bond markets today. little change as you can see there. just got time to mention sterling after inflation. correct higher today. manus. .1%. way a long, long, long

away from that 2% target. manus: we sure are, mark. thank you for run all of that. tom keene is taking the helm with "surveillance" in just under 25 mince. we just heard mark wrap up the emerging market. my question to you is this is materially different as of 1997 or 1998 as it is being referred to this a lot of our stories. we don't have fixed currencies and the deficits are not as bad. is that fair? tom: yeah, i think it is fair. there is a big distinction between how the central banks are positioned versus where they were in 1994 and 1997 and 1998. with that said, manus, i would suggest a second derivative this morning is sobering. you see that in the oil decline that mark was talking about and on to the reaction in emerging markets. what i would watch number one, though, is something that has been off the radar and it is russia. ere is a ban from 60 to 70 ruble. we're not there.

dollar/ruble, 66 rubles per dollar sa weak, weak russian currency. you wonder how mr. putin will react to that. anastasia will join us from morgan. we will touch on russia and the fed. we'll speak about interesting economics as get housing data today. francine: tom, thank you so much. looking forward to "surveillance" in 25 minutes from now. manus: harmony gold has posted a net loss for the three months ending in june. he company's c.e.o. joins us now live from joberg. you're making a promise to the market. you're taking some write-downs in this quarter. you're making the promise that all operations are return to

profit next year. my question to you will be this. how sure can we be that the writedowns on your assets -- can you assure the markets this it is worst over the writedowns? >> i think we can be fairly positive on that. obvious lit depends on the gold price and what happens there. we assume sort of -- going forward and it dependses a lot n input costs. we really restructured, there is always more room to look at some cost reductions but we are pretty confident going forward. manus: one of the things on tying your story up, you're a high-cost producer. therefore i have to challenge you and say -- the challenge for you is that gold doesn't slip much further. where are you expecting the worst case scenario to be?

what are you preparing for as it were in your doomsday bag? >> well, if you of you look at the south african scenario, of course we are very geared to the rand gold price. it has been weakening like other currencies. that has been sort of static for the last while. nd so that is one of the key metrics. we are in a busy period of wage negotiations. that hasn't been finalized. these sort of once-off events may affect us but in general, we're in a rights positioning for producing some good results on our assets. by nature, our assets are fairly low grade. that obviously has some -- manus: you mentioned the wages and the negotiations. let's get to it.

have is unions rejected the final offer and how likely is it if you had to rate the likelihood of going to strike, what is that? >> well, the unions have indeed rejected the wage offer. we now go through a 30-day period of negotiating basically through the department of labor. and what we have put on the table is basically our final offer. now that is an affordable offer. if the union is trying to get more out of us, of course that means further restructuring and that means loss of jobs and that is the last thing south africa needs. manus: that is absolutely the last that i think south africa needs. the government has called on mining companies not to cut jobs. are you feeling pressure from the government in these negotiations whether that is explicit or implied? >> yeah. i think there is that pressure, but at the same time, we have to do what is right for our company. and therefore, you know, we job have a moratorium on

losses and continue to produce with losses if that is what the case is. but the unions at the same stage need to understand the ability to pay these increases and if they try and push us beyond our ability that will result in job losses. manus: i want to get your sense -- we read a lot yesterday about demand from china, that chinese central bank buying gold, that indian demand was low. take as a c.e.o. when you talk to the buyers. who are the buyers out there? what are you hearing? are the chinese in the market? we see gold at $1,300 u.s. dollars? >> gold is a fairly strange commodity in that it doesn't quite react the same way as copper or nickel or iron ore or anything like that. there is a lot of sentiment value around gold. of course there are buyers in the market and it is really a good investment if you look at

currencies. you were talking about various currencies weakening earlier on and the news, obviously the gold and the price of the gold would be, you know, holding their value. i think a lot of countries would be looking at gold as a sort of secure currency if you like. more than anything else. obviously, india has been a big jewelry buyer. jewel i have still the mainstay of the gold goes. fortunately for us, as much gold as we can produce gets sucked up by the market. manus: we'll have to leave it there. the negotiations with the miners. francine: coming up on "the pulse," calling on india. why lenovo is moving its mobile manufacturing business there. that's coming up next. ♪

manus: welcome back to "the pulse" live on bloomberg television. ow the german finance minister wolfgang schaeuble has asked to back their third bailout saying it offers a sustainable path even though the i.m.f. have not committed to their part of the bill. francine: they plan to vote on the 86 billion euro aid package

tomorrow. hans, what are the key take aways from the finance minister? he said i know we don't have the i.m.f. support but trust me. hans: that is exactly what he is saying. he is saying he has credibility and saying that the i.m.f. is going to go onboard. merkel and schaeuble are lobbying and pressuring and they want their party to pass this. part of that is pwba campaign, merkel was on sunday night and schaeuble was on last night. here is what he said. i'm very sure that the i.m.f. will contribute to the program just as we have declared this to be indispensable. the problem is the i.m.f. has said no such thing. they have not said they will absolutely join this program. they said if greece continues to reform and if there is some sort of debt relief without that reduction or restructuring is up for debate then they can join in october. only the thing they have to go on is a letter from the european

stability mechanic minimum that is lending the money out. the e.s.m. said in a letter the i.m.f. contribution to the financial assistance is at this tage undetermined. 50% of the german public doesn't like this deal. when you look at the percent of germans that think greece is going to follow through with these reforms, 13% think they will follow through. 83% think they will not. yet merkel and schaeuble are trying to push this through. merkel heads off to italy this afternoon. mr. schaeuble will be manning things here trying for that wednesday vote to make sure there are not too many defections. guys? manus: thank you very much. hans nichols in beuerlein. let's talk about lenovo. they have begun to manufacture smart phones in india. why suddenly go to india? there is a bit of a theme here.

>> it is not the first and it plans -- it is already making computers in india. it could have gone with its factory in the south to make them but it is going through a subcontractor. it is going to be making the lenovo brand and also motorola, part of the broader lenovo group. one of the largest start-ups in the world. it is already manufacturing there in south india. o is one-plus. the prime minister of india made an india push. people want to get into what is now the third biggest smart phone market. t is much more economical. that's why the mobile phone makers are going if there. you have the number three market in the world accounting, growing by 44% a year.

lenovo itself accounts for 60% of all smart phone sales. india really seen as a big growth market and i suppose just shows at least in this respect the policy of raising tariffs. francine: i find this crazy. i guess i grew up believing that china was the cheapest place where you could manufacture things. the biggest chinese company moving to manufacture in india. are we going to see a lot of companies, not only the ones related to tech come into india from china? >> that is what the prime minute ster wants. it is clearly not going to work for every company. tragse tariff for imports won't work.

in terms of population and the consumer market, then it obviously makes economic sense. certainly these companies are big enough and the demand for their products is large enough to justify having factories both in china and india and other parts of the world as well. anus: interesting. this is an outward looking prime minister that is really encouraging investment in a whole variety of ways. >> he is trying to put a rocket under the economy, isn't he? that is that was plaverage he stood on when he was elected. o would be i suppose one item of evidence to point to his -- -- lenovo showing that his policies are working. it is something he will be very happy with. and other smart phone makers will see they need to get in there as well.

francine: this is my tweast day. david cameron -- we had the inflation figures. rising in july. this is a core measure as price growth increases in five months. a chief economist has been tweeting it is good news inflation remains low. low prices and rising wages give working people more security. when the economists -- they are focusing on the risk of deflation. mr. cameron trying to put a spin on this saying you're still better off. stick with us. manus: more money in our pockets. good news all around. francine: i love when it a prime minister tweets eco. manus: it is what to watch. the german chancellor is meeting in milan. home depot and their earnings from the u.s. ♪

francine: welcome back to "the pulse" live on bloomberg tv and bloomberg.com. manus: british sprires never been busier. they are making content for digital channels and bloomberg took a look at what is driving their success. been going for about

five years now. we have steadily grown and now have some large scale roductions in sherlock and patrollies which we're on the set of now. for about four years. the fifth series that they are filming at the moment. the tv industry in the u.k. is incredibly buoyant. we have benefited from the high-end television tax incentive that the government forced in in april 2014 and we're seeing the benefits of number of u.s. shows coming to the u.k. to film. we had some great shows that were exported. it shouldn't be a surprise that they are well received all over the world. "downtownon abbey." "game of thrones." "sherlock." they are made in england. we should be really, really

proud of that. always going to be -- going to have a life after the bbc. and yes, proached there was the inevitable crashing into things and all that happened. how people are watching television is fairly irrelevant. it is all about storytelling and entertaining an audience. how that audience watches it is the most important thing. it is not whether it is going to be shown only on a regular channel or a digital channel. storytelling is storytelling. if you tell that story well, people are going to find it and they are going to watch it. francine: for a look at what

we're watching for the rest of the day, we're joined by hans nichols in berlin. merkel headed to italy this afternoon. hans: yes, she will be visiting the expo in milan. she has tweaked it a little bit because she needs to race back here to shepherd that vote through the bundes talk. and brazil a key story as well. manus: if she is going on her way to berlin to look at the expo, i wonder what kind of a to ask for is going a little bit of support terms of her plans for the rest of europe. let's talk about home depot. hans: we'll get home deep before market. this is of course the u.s. sort of do-it-yourself big construction store. their numbers are a good indicator of just what's happening in term turnovers housing boom or bust as it were. they beat the last couple of quarters. i don't know if you have home

depot in the u.k. but i suspect both you and francine are do it yourselves. you prefer getting your own lumber from the lumberyard. i know how you're spending eekends, fixing faucettes. manus: fran did offer this morning to come around and do a little bit of d.i.y. i have to that long new mirror that i have got. francine: i'm actually not that bad. talk to us about capital controls in greece. hans: we have a slight loosening. this gives you 500 euros to transfer abroad. perhaps the biggest move here is for students or parent s of students traveling abroad. the limit has been raised up to 8,000 only to pay student trution if for no other purpose. it is a return to normal normalcy. guys? manus: thank you very much for running up what to watch.

i wonder if she will enjoy the expo. francine: i don't know. i'm thinking of hans with a drill. that is neither here nor there. up next, it is from new york, "surveillance." ♪

announcer: this is "bloomberg surveillance." tom: china -- i will get it out -- china considers managed appreciation. china considers further on managed equity meltdown as oil

continues to descend. ukraine simmers, oil moves south. will putin move further west? walmart is not happy. they replace zone merchandise supervisors with department managers. .ood morning, everyone thi this is "bloomberg surveillance ." i'm tom keene. brendan greeley and vonnie quinn here as well. walmart is the pulse of america -- but is it anymore? brendan: it used to be the best logistics, and one of the things we are learning is that they are behind in logistics. marines too hire help them figure this out, and now they cannot do what amazon does. right now, though, what an amazing market. let's get to top headlines. here is vonnie quinn. vonnie: investors in china may be betting that the government will