quarter. germany grew through exports in the second quarter. we go to berlin for a failure to rebalance. the u.s. correction may not be a bear, we look for safe havens anyway. this is bloomberg "surveillance," live from new york. i and brendan greeley. joining me is vonnie quinn. tom keene is out. he did send an e-mail," more cowbell." vonnie: futures in u.s. pointing to a higher open. brendan: i take issue with the post showing a bear on the cover. spent last night looking up the difference between a correction and a bear. vonnie: we are three days into this.

it is just tuesday. brendan: top headlines. olivia: chinese stocks -- brendan: chinese -- vonnie: chinese stocks taking another dive. shanghai composite down 7.6 percent. the benchmark has lost more than a fifth of its value since thursday. there are speculations the government is abandoning market olivia: chinese stocks -- support measures. europe is bouncing back from markets in the u.k., france and germany in the green. same-store in the u.s., the s&p 500 coming off the biggest two day drop in more than six years. future indicate stocks will be up. the price of less texas intermediate more than 2% per barrel, it felt more than 5% yesterday. atlanta said president -- atlanta fed president dennis lockhart expects the central bank to raise rates this year. he admits the matter is complicated by china, oil prices and a stronger dollar.

or cleese says the fed probably will not raise rates until next march. -- barclays says the fed will not raise rates until next march. china is who donald trump blames for the market turmoil. they want president obama to cancel next month's visit by xi jinping. walker blamed the market tumble on what he called china's manipulation of the economy. he said president obama should cancel the visit. donald trump said he would give him a dinner, a mcdonald's hamburger. get down.'ve got to yuan, devaluation of the

changes in currency, it has been an unbelievable market run. there has been a shift in gdp in the u.s. in the last two quarters. normal market a correction. but i'm still a long time believer in the stock market like warren buffett says you have to look at a long view. brendan: watch the interview with salesforce's mark benioff at 4:25 eastern on bloomberg television. portfolio gotyour hammered, the world's 400 richest people lost $124 billion yesterday. the biggest losers, according to bloomberg, the world's richest person, bill gates, lost $3.2 billion here jeff bezos lost $2.6 billion. warren buffett was down $2 billion. hard to know whether they notice. brendan: i'm more of a 401(k) buy and hold investor. i did not mark to market

yesterday. we've got a data check, what is going on? vonnie: let's take a look at how things are shaping up. at the open. thou about 3% higher. nasdaq seeing a 3.5% gain for futures. 1.1 seven overnight, down to 1.1534. 3.5% toude futures up $44.19 a barrel. the volatility index about 40 share. a big gain. brendan: we were at 12 this summer. vonnie: copper, another bounce. brendan: i spent all afternoon building this. a look at fed funds futures,

what people are willing to pay for protection against a rate rise in september, december and march of next year. expectationthy earlier this year that there would be a rate rise. the closer we get, we get a real difference right here in august. this is a difference a month makes. seen everything shift to where it was. december is at september, mark is at september. they think the fed is going to look at this and tap the brakes. vonnie: in january, there's no push for a january move. -- n tranter is smiling jason trennert is smiling. of a: it is part liquidity situation for banks during the holiday. i think the fed wants to raise

rates. you have to, it is data dependent. data beforesee the it makes any determining factor. jason trennert with us advising caution. a little more relaxed. we will come back to the u.s. in a second. china, two engines propel the world's economies forward. engine number two is in flames. nick what joins us from beijing. has recovered, hans nichols joins us from berlin. let's start in beijing. what indication do we have that the chinese government is going to intervene in the equity markets are real economy?

nick: rumors are flying that they are going to lower interest rates or cut the reserve requirement banks are required to have. have been flying for a long time. offgovernment has held intervening in the stock market. they now it looks like taken the position that they do not want to intervene, they want to let the market run its course. vonnie: at what point does this become untenable? that is the big question. the concern about china is that the underlying fundamentals are a concern. bloomberg put growth at 6.6% for july. when they target a rate of 7%, it is cause for concern here the more we see data that shows the economy is struggling, the more pressure will be on the government to intervene.

brendan: hans nichols and berlin. yesterday, a drop in the dax looking at germany's exports to china. bad news on the gdp numbers. give us the good news first. we basically had gdp numbers that confirm what we thought, 0.4. and then we have ifo, that is real time. for august, an assessment of german business executives. it came at 108.3. 107.6 was the estimate. looks like business leaders are looking through china, just like last month, they looked through greece. theyet the expert story on gdp numbers and we got, it was largely export driven. i'm having a hard time reconciling these two numbers. if the economy is so reliant on exports for growth and we look around the world and there is not optimism, why is the ifo

survey so optimistic? maybe you have a theory on it. brendan: can you give us a data check on whether or not germany is any closer to its long-awaited rebalancing towards consumption? this is something the u.s. treasury has been begging germany today. hans: no. when you look at their current account surplus, they're on their way to having another surplus. they actually have a surplus when you talk about their budget deficit. demand ishat china's slowing, that could help germany. china is important less. when you look at the trade deficit this year it is twice what it was for the end of 2014. some mixed data, not quite sure how to price it. it looks like the sentiment is optimistic. brendan: nick wadhams is in beijing. hans nichols is in berlin during his first non-greece hit in months. jason trennert with us. let's look at these two engines of the global economy. days and longer

drops if you look back a month. the u.s. engine, if that is only have rely on, is it running? jason: the u.s. has a current account deficit, it detracts from gdp. consumption at 68% of gdp. government spending 20%. good in actually looks comparison to the rest of the world, largely because it is self-propelled. the consumers, u.s. consumers, have a lot going for them. ,ages seemed to have bottomed housing is an engine, savings rate is high. americans are saving. oil priceave lower and lower commodity prices, which are going to lift real discretionary income. brendan: the consumer who wakes

up and sees this, is it the end of the ball but not the end of the world? there this is something is debate on. the average investor has not gotten back into the bull market. if you look at mutual fund an etf flows, there has been that redemption since 2009. there has been a lot of pensions endowment foundations, institutional money that has .one into equities the retail investor got sc ared and looks at this and says it is not my problem. vonnie: let's get your take on what has happened in the last couple days, is the crash over? against would caution thinking it is over. if you are an intermediate to long-term investor and you are buying high-quality stocks today, you will be happy a year from now. whether you are happy to months

artm now, i'm not sm enough. i think there is a lot of value that has been created in the last couple days. you will see more volatility as we go through the fall and until you get greater clarity on what the fed is going to do. on a long-term time horizon, there is a lot of stuff for sale. brendan: jason trennert is going to be with us for the entire hour. my take away so far is that the billion as lost a lot, nobody else is back in the market. thee it is just billionaires losing. we look at the s&p 500's winners and losers from the selloff yesterday. this is bloomberg "surveillance" on bloomberg television. good morning. ♪

brendan: i am brendan greeley

with vonnie quinn. of thingsnd a lot people said yesterday. "we are all looking for capitulation and wondering if that is what we had on the open. i'm afraid only had is chaotic's chaotic." -- dislocation bush may be making himself look worse after using the term "anchor baby." bush tried to justify using the term yesterday. many latinos consider it offensive. he said it is "more related to asian people who come to the u.s. illegally and have children." that sparked a new round of apology demands from asian leaders. twitter is shifting methods for measuring effectiveness. raising eyebrows from regulators. -- it hasrom prompted the securities and

ask whatcommission to it will use. said ads, the company is not being investigated. the pro football season starts today. madden 2016 is on sale. it lets you act like a franchise owner, it retails for $60. i see a lot of people rubbing their hands in glee. brendan: madden has been around for so long. there are pro athletes, when they finally meet their heroes, they say i've been playing against you in that in my entire life. lessens the pros have learned, strategic lessons. vonnie: are you a fantasy player? brendan: i don't know enough about football. you cannot be with the one you love, love the one you are with -- investors'

hearts are broken with stocks from apple to ge down. brendan: we have to break in. an interest rate cut from china. this is the long-awaited intervention we have been looking for. china has cut their reserve ratio by half a percentage point. brendan: i'm going to go to jason trennert. the answer we have been waiting for, will china intervene? jason: this is the intervention. i would caution against thinking this is a panacea for what else china. -- what ails china. it is a welcome development for china. brendan: it cut the requirements ratio to increase the money supply. vonnie: we are looking at the dollar index, off about .5%. stocks in europe continuing to climb. futures in the u.s. rising more. brent up 3.6%.

brendan: let's throw that to mike regan, who is with us to help us understand. what does this mean for u.s. markets? we needm keene said more cowbell, we just got it. tom keene has the fever, there's only one chore. for risk assets, as jason said. after we heard overnight that they are not going to intervene in the stock market directly anymore, this is the backdoor way of intervening. halfway returned to where we work with china now where we were with europe a year ago. we were waiting for mario draghi to make a move, every bit of bad news was interpreted as good news. has movedink china more quickly. iron hee, the ecb, the was draghi said we are going to do whatever it takes. the size of the ecb balance

sheet declined by about a third years.e following two china is moving quickly because frankly the stakes are higher politically and socially in china. vonnie: some bond market moves -- a huge move in the german bond market, german 10 year yield up 66 basis points from about 55 following this announcement. china has cut the reserve ratio by .5 percentage point and is making some other moves. the pboc saying the economy is still facing downward pressure. brendan: jason trennert, can the chinese government six their problem right now? we've been talking about two engines. the chinese engine is in flames. can they fix this engine with monetary policy? jason: no. you cannotngly that fix anything with monetary policy. monetary policy is one tool that governments have. there are 4 tools -- fiscal policy, monetary, regulatory and trade. lord onlynd out,

knows -- longer-term i think you are going to find that the western world could not fix everything with monetary policy, either. it is palliative, it moves the train down the track, but it is not going to solve all the problems. brendan: the other issue is what happens in china ripples around the rest of the world. particularly developing markets. sitting with their hands on the trigger in malaysia, indonesia, brazil, watching this move? jason: it will make a difference short-term but there are structural issues for china, particularly the amount of debt it has, this will take a long time to work out. this helps on the short-term. mike: the big question i would have this morning and may be jason has a thought on this, you look at the big rally in the futures, people were expecting something like this. how much of the futures rally is baked into that. you see the future cocaine right now -- jason: i would -- you see the futures gained right

now. jason: i think there is more uncertainty. china has lost credibility -- i would seek to go the other way. i would sell the rally. chinese policymakers have lost a lot of credibility in the last three or four months. it is going to take time to get it back. vonnie: they were trying something and it is causing some instability. they are jumping in again and trying something else. if you look at emerging-market africanes, the south rand up 1.3%, mexican peso extending its again. jason: it is certainly different from 1997. a lot of emerging markets has far greater currency reserves.

this is only two days old. i think this will be a process. wrote a column making the 1997-19 98 comparison. you keep seeing people try to pick what year we are in. the comparison to 1998 that bothers me is we had the bubble being inflated under us, we had a dip based on the asian crisis it we do not really have the bubble going on right now. is it possible that that was a quick bounce back in 1998, three months that a market was down, is it possible that this weak stretch could be longer because we do not have the bubble mentality? brendan: hold on, we have got nick wadhams. we go back to beijing. this is breaking news. we have reserve requirement ratio is cut for chinese banks and chinese interest rates cut as well.

should we interpret this as a sign of strength or panic? nick: [laughter] this was was that widely expected. when you look at the reserve for climates, for the amount of money banks were forced to keep, it was considered to be quite high. as the government was looking for ways to free up liquidity and get the economy moving, the reserve cut was seen as a natural step. a double move with the interest rate cut. like you are saying, there's a credibility issue here. the problem with the pboc and the chinese government is the question of transparency. often we really do not know, not an unexpected move. do ton: what does this china's attempts to rebalance its economy? if it is throwing money into the dotem, that is likely to exactly the opposite of what it had hoped, which is get people to buy things.

we've had increasing signs of the last few months that the move towards a stronger consumer society was not really working. that the shift away from infrastructure investment and exports to having consumers takeover was not working. they've said repeatedly that they want to press ahead with these reforms. they have not said they are backing away but this does seem to suggest they are reconsidering the pace at which they would do that. vonnie: how do investors in china react to the pboc move? the teased to reading leaves of the federal reserve and other companies as well. investors used to pboc statements, how do they react to them? i think what you had seen in the last couple days was investors freaking out about the

fact that the government had been so silent and had not really done anything. an expectationy that this cut to the reserve requirement would come over the weekend. when that did not happen, you saw this big slide monday. i would not be surprised when trading comes back tomorrow morning if we see a big pop. stepped the government in and did what it had been signaling it would do. they take quite a lot of lead from the government. i'm pretty sure we will see a rally tomorrow. seeing futures in the shanghai composite index higher. brendan: even if they are not directly intervening, they are intervening through monetary policy. we had jason trennert and mike reagan on the desk with us. as soon as this is over, they've got to sit down and tell american investors what to do. what is your 22nd message for american investors waking up this morning? my message would be to not

get too freaked out by the chinese stock market. at a mediantrading of about 60 times earnings, that compares to 20 in the u.s.. savers only have about 7% of their money in the stock market. brendan: nick wadhams in beijing. his message to america -- don't freak out. we go to our twitter, question, ?sking the same question can the world fly on one engine this is bloomberg "surveillance." ♪

brendan: back to our breaking news china just cut its benchmark lending rate by 25 basis points. julie hyman has an update. julie: positive market reaction,

which is what you would expect. just hearing from jason trennert and your other guests, folks were looking for a reaction from the chinese central bank and they got it. this is after the big decline we had in the shanghai composite, 15% drop over two days. reboundedeng overnight but japan did not. the nikkei continued its march lower. u.s. futures reacting to the headlines, we are seeing the again here of free .5%. u.s. futures were already gaining. seeing an extension of those gains as we go through the session. a similar reaction and european stocks, we saw a rally firmly in place -- ice should -- i should say a rebound. an extension of that rebound not just in u.s. futures, but in european stocks as well as we

look at this reaction to china. reaction to china, the reaction to the deep selling we've had. a five-day rout and the global out stockhas wiped market value from global averages. coming back from those levels and then this chinese action definitely adding onto that. there was the expectation that we would see some sort of action . you could even argue that the rebound, some of the rebound in stocks and u.s. futures was an anticipation of something like this happening. and our julie hyman news desk letting us know what happened. news out of china, china has cut its benchmark lending rate 25 basis points. it reduced reserve requirement ratios, injecting money into the system. nnert with us.

vonnie: something tells me the state dinner is back on. there's been an agreement between north and south korea over a military standoff. north korea agreed to lift its war" andte of expressed regret over landmine explosions that wounded south korean soldiers. south korea has stopped propaganda broadcasts. a detente. a former attorney general has a warning about the investigation into hillary clinton's e-mails. he says if proven the accusations could derail clinton's plans. >> the one that presents risk is theone involving destruction of government documents. it carries a permanent

disqualification of holding further office. he was attorney general under george w. bush. president obama may issue an endorsement during the democratic primaries rather than wait until voters selected candidate. the president has remained neutral. there is speculation that might change if joe biden decides to enter the race. monsanto making a run at the -- s rival send into yngenta. syngenta's board may meet today to consider the bid. justin wilson has died. wilson was injured sunday after a piece of debris struck him in pennsylvania. wilson was a seven-time winner in 12 seasons. those are your top headlines. brendan: so hard to watch. vonnie: messy markets, that is

the word of kit juckes. it may actually be u.s. equities. here to point us in the right direction is lisa abramowicz, bond market reporter at bloomberg. and jason trennert of strategic s continues with us. all bets are off as it looks like the safe haven trade, ll let's talk about the euro. it was safeday haven and today it is perhaps anything but. the difficulty of finding a safe haven is symptomatically of the post central bank intervention era. the central banks have gone to the bond markets and have basically pushed down yields so far on government bonds that for those same bonds that were traditionally safe haven be atments to once again place that you can stash your money is being called into

question. you're seeing a reversal in yields on the u.s. 10 year and u.s. two-year and u.s. 30 year. we are going back to a situation where bonds are not the supersafe place to park your cash anymore. it sort of shows the dilemma that want investors and other investors are having right now as they try to hedge against downside risk. brendan: jason trennert, this is lesson, risk is everywhere. jason: even private equity, which people are trying to portray as having little risk, i i'ma list here -- intrigued by what you are saying. this is a list of how many companies in the u.s. have lower credit default swaps than sovereign debt. speaks to the idea that many equities, i believe, are really the new sovereigns. they could be proxies for sovereign debt. 58 companies in the u.s. that

have lower credit default swaps than french sovereign debt. there are 75 companies in the u.s. that have lower credit default swap risks than japanese sovereign debt. i'm in agreement with lisa. i don't know how much of value there is or how safe haven, intelligent of a safe haven you are getting if you are getting less than 50 basis points on a sovereign debt. vonnie: lisa: lisa? depends on thef company. this can be fickle. people look at apple, which was driving the u.s. stock market yesterday. i-america. it is questionable whether in 10 years we are going to have ipads and iphones. talking safee are havens, we look to the united states. janet yellen is going to wake up this morning, probably artie has, and look at what happened in china, cutting interest rates. what is the message to janet yellen? jason: the fed has been

consistent and said it is going to be data dependent. .anet yellen is a steady hand she's been chairwoman, she has been involved in central banking for a long time. to use the term your reporter used in china, i don't think she's going to be freaked out by what happened. i think she will see this as a welcome development. vonnie: she will do a little relieved, i would imagine. i want to point out in "the wall street journal," this was the fed's stock price correction and the stock market collapse is the inevitable result of the fed's policies, namely quantitative easing, that produced abnormally low interest rates. much of the miss pricing will likely unwind in the months ahead. the moves this morning really feldstein ishat

saying, we've become a central bank dependent world. government policies -- there is fiscal, monetary, regulatory and trade. on a car, one of the wheels is overinflated. another will, regulatory policy, you are down to the axle. is in aral bank situation where it is the only game in town. central banks are not supposed to do that. they're supposed to create price stability, not generate growth. banke: some of the central influence has basically run its course. you can see that if you look at energy junk bonds. yield has surged to about 12%. it lost 2% yesterday alone. not something i can have a central bank put that can rescue the value. god'sn: from your lips to ears, we need something more than monetary policy. we have looked at the mac monitors and are looking at

federal funds futures. in the time we've been talking, we've actually seen them price in a little higher risk of a september move this morning. probability of that move based on federal funds futures, 26% this morning -- it is now at 28%. the markets are seeing what has happened in china, the extension of credit to the market, and are exhuming -- and are assuming that somebody at the fed is taking notice. fair point.is a data dependent is the phrase. lisa: but what data has changed here? jason: that is my point. lisa: is it more just finger in the wind dependency? data has changed, why would you see the moves being materially changing what the fed wants to do, especially if china is going to be trying to help out the situation.

the fed is going to be looking at employment, housing, all of the same sorts of things. , 62dan: the two year yield basis points -- a big move. brendan: the market is not listening to you. , thank you soz much. we are going to our twitter question. two engines, the u.s. and china. can the world fly on one engine? maybe the china engine is working again. let us know. this is bloomberg "surveillance." ♪

brendan: i am brendan greeley. this is bloomberg "surveillance." looking at china's rate cut and reserve requirement drop. looking at the stoxx europe 600, that has jumped since the news out of china, 6.63%, up 4.43% so far on the day. as news breaks, which you are seeing around the world and particularly in europe, confidence. we are going to take a look at our single best chart. it was supposed to be the commodities index and we would tell a story about a super cycle. since 1990 nine

has produced this beautiful art, that is no longer the story. china just cut its rate. we are seeing a leg up in the has hour since china indicated that it will increase its, sorry, decrease its benchmark lending rate. jason trennert is here with strategas. commodities asw suchh a broad gold, anything anybody might consume. should we look at the commodities index as a china play? been: they have certainly the marginal buyer. there might be a sense where the global growth is going back a onele bit to more engine. it will continue to be an engine for growth, maybe not as it was

before. vonnie: is september back on the table for the fed? basically they concern yesterday that we heard from dennis lockhart was stabilization, will it be off the table because markets are unstable? jason: i'm not sure it was ever off the table because this happened so quickly. i think the fed -- i would imagine the fed is taking a broader view. for the extent to which china does not seem to be compounding some of the policy mistakes, i would argue that their embrace of the stock market or encouraging people into the stock market was a policy mistake. to the extent that they are making good policy decision it brings september back on the table. brendan: let me describe what you and i have been trying to do. we keep looking at the news and going turned the car around, jason goes we are ok. vonnie: funny you mention turning the car around.

turnaround tuesday. they said that even before this happened. a note analyst out with that said the immediate reaction is to spur more risk on. we were already in risk on mode anyway. brendan: stoxx 600 has taken another leg up. year yield 69 10 basis points, 55 yesterday. let's get some news. member for a top photo after yesterday's stock market reaction, global market had varying reactions -- from germany to india to new york city and china. were watching their screens, almost $3 trillion was erased in value from stocks. volatility still dominant in asian markets this morning. the vix here about 40. we will see how that changes today. brendan: give us your best said trader face. jason: probably like that. vonnie: i think you are cool as

a cucumber. number two, pope francis is losing field off plans to meet inmates and their relatives on september 27. for the special visit, inmates from one program are making the pope a chair. it's a vocational program that helps inmates learn skills for that released to the real world. it is not only beautiful, can you imagine lifting that onto the plane? sure thei'm pretty pope, even this frugal pope, has a service this will take care. he's not going to call friends to help him move it. andie: if you were a trader there were margin calls on your trade, somebody else was having a bad day. andng the world track athletics championships in beijing, u.s. runner-up molly huddle lost and metal by

celebrating too early. edge theher teammate bronze. how sick would you be if that happened. you would be happy to your teammate. brendan: we were talking about this morning. no pity for that, you are responsible for your behavior. when i see something like that, i think that is exactly what i would do. that is exactly what would happen to me. coming up, we continue our coverage of china's rate cut. live with david kelly from jp morgan funds. this is bloomberg "surveillance." ♪

brendan: good morning, bloomberg "surveillance." taking a look at u.s. futures, up 3.75% on the day. of that alone is from the news out of china, a 25 basis point rate cut in their benchmark rate and reduced reserve requirements as well.

here is the vonnie quinn. france will instill its highest honor to 4 americans winded while stopping an attack on the train. a teacher and artist who has lived in france for more than 20 years, he will receive the legion of honor medal. warner bros. wants to bring hollywood to china. the studio is in talks to form a joint venture in china that would produce local language films. the deal would be the biggest yet. debutedhe walking dead" with the the audience ever for a new cable series. the series is a spinoff of "the walking dead," one of the few table shows to draw audiences

that rival broadcast networks. i saw on twitter a heat map of the world covered in red. caption was- the w, this is not from "the alking dead." brendan: temptation to make a zombie joke about china. we are joined by david kelly, jpef global strategist at morgan funds in new, massachusetts. washing beijing -- watching beijing. one of the things we've been reading in the last day is comparisons, historical -- is it 1997, 1980 seven. when you look at what china is doing this morning, watching equity markets instead of intervening, moving on monetary policy, are they learning the lessons of 1929? china is a very different

economy than the u.s. is now or was in 1929. i think china will want to control the story. china will want to control .olatility they've made some attempts to allow their exchange rate, that did not work out well. they've tried to protect their stock market after allowing it to soar. people do not realize how much it had gone up before. this is helpful. this is better than trying to control the stock market. will change the economic growth story, but if it breaks stability to markets, that is positive. vonnie: does this show half fragile financial markets are memberse might be some of the federal reserve saying there's instability here? "surveillance -- david: i don't think so.

you have to look at how speedily markets moved yesterday. people were playing in that game, trading very fast in and out of markets. was the vast majority of global investors enjoying the summer vacation and wondering what was going on. read that this was a situation of mass panic or mass as variousso much players making some money on the ups and downs. i don't think that's where we are. get than that, we've got to over our dependencies. to world seems to be overly dependent upon china spending money it should not be spending on infrastructure. at zero, thed rate economy does not need it. it is like a two-year-old threatening to throw a tantrum. you've got to do it. if the federal reserve raises rates in september, i think it

will provide reassurance to markets if the federal reserve realizes -- to answer your question, markets will have a reaction. if they get over it, markets will be more self confident that they can handle normalization of interest rates. economy canglobal handle it, i think the federal reserve out to get going. brendan: we talk a lot about the american consumer and how we have a little bit more independence from china. germany and europe do not have that luxury. yields up on the german bund. can europe wean itself from dependence on exports and china? david: exports to china could not be more than 2% of the european gdp, maybe less. % of the story is europe having confidence, european consumers to have confidence to spend money themselves. brendan: i'm sorry, i've got to jump in.

a quick four x check. the ruble and some emerging market currencies reversing course this morning, they are strengthening. . . .

>> this is "bloomberg surveillance." brendan: beijing intervenes.

china's central bank cuts rates for the fifth time. -- move since start markets the move since stocks market surging. and the commodity meltdown is on hold. oil rebounds from a six-year low. good morning. this is "bloomberg surveillance," we are live from our world headquarters in new york. i am brendan greeley with vonnie quinn. tom keene is out today, but he has been e-mailing in guest suggestions. what a difference in our makes. vonnie: this has been a phenomenal month for us, and market events around the world. brendan: it has been the next extraordinary august. janet yellen is not going around the world, but the rest of the central bankers are. there is almost too much. vonnie: everything is ok, as it

turns up your let's start with this morning headlines. a developing story we're following this morning -- china cutting a key interest rate after another steep drive in its stock market. 5th interest-rate cut. these moves come after the shanghai composite fell by more than 7%. of its more than 1/5 value since thursday. the latest attempt to stop the economy's retreat. if chinese troubles are not today. int europe the s&p 500 is coming off the biggest two-day drop in more than six years, so same thing in the u.s. futures indicate stocks will open higher. oil rebounding today. climbedtermediate has somewhat, it fell more than 5% yesterday. despite the market turmoil, the president of the atlanta fed is still expect the central bank to raise interest rates this year.

he will not say if favors an increase next month, but he admits the weakening yuan and stronger dollar all, kate the issue. barclays changed lockhart's forecast yesterday. the bank will probably not raise rates until march. it will be interesting to see if that call continues today. the cofounder of salesforce.com says he is not surprised by the meltdown. marc benioff told bloomberg's emily chang he takes the longer view. evaluation of changes in the currency, of course, you also have a six-year bull market. it has been an unbelievable market run, and there has been a slight shift in the gp in the united states downward in the last two quarters, and those things set up it is time for a normal market correction, but i'm still a long-term believer in the stock market, like warren buffett says, you have to look at the longview.

vonnie: you can see the entire interview with marc benioff. join us for "what did you miss" at 4:00 eastern here on bloomberg tv. two republican presidential .opefuls say china is to blame they want president obama to cancel next month was the visit by china's president. walker says it has tumbled because of china's the relation of the economy -- china's manipulation of the economy. meanwhile, trump said he would give him a mcdonald's hamburger and say we need to get back to work. >> listen, the developments have resounded possibly for donald trump. brendan: everything is positive for donald trump somehow.

jason: it is true, but donald trump has been flirting with becoming president every two years for the last 10 years. he is the only person being consistent about china's manipulation of the economy. vonnie: i want to do a data check. let's take a look at s&p, ,utures pointing about 2% 810-year yield has moved higher by about six basis points -- a 10-year yield has moved higher by about six basis points. $1.1498. nymex crude oil, futures, had theya bit of a risk-on, are higher by about 2.9%. second screen, please. brent crude showing rebound 3.12%, and vicks is above $40.

2.5%.ng markets, about brendan: enforce the markets vonnie is describing are all , fornding to china's drop that, as always, we go to enda curran in hong kong. jason trennert is also with us. there is a parlor game here in new york that goes like this -- how far is the communist party willing to go to say that economy? how to doubt parlor game change this morning with this news? well, i think it is what the global market in china called it to do. it is up to china to try to respond to put things right. it is quite a complicated move today because on the one hand, the move can shore up stocks,

but usually quite conventional policy because earlier today we usinged they're not unconventional policy to intervene in the stock market anymore. so kind of going back to the old playbook. on the other hand, it is about getting liquidity for the system because of the yuan. it have to balance its own policy measures. it is quite a complicated move today. enda, the common criticism of abenomics in japan as they inject liquidity. you could do almost the same accusation of china this morning. sort of twoso angles on this. the liquidity they put into the system is to offset their intervention to support the yuan. that is one side of the story. the liquidity they will inject to go to commercial banks, i two will work. we cannot conclude just yet it

is going the way of abenomics, but they have two different purposes in what they are trying to do today. vonnie: enda, on the point you note it is important to that the choice of instruments that the chinese use this morning is not straightforward. there manufacturers consider how much they want to slow credit. how do you read this movement? what do think the leadership decided today? enda: well, if you set back and look at today in the stock market as chinese stocks have their first -- their worst four-day rise since 1996, putting a freeze on major sales and olli rehn's rest of it, they have opted to go for conventional policies. in june and july has not worked, so now they are trying to target fundamentals, let's cut interest rates, let's

try to get money into the economy and see it that will slow it and help stocks in the process. it is kind of backed to where it started. brendan: ok, enda curran in hong kong, breaking news and to now, about 40 minutes old, they are dropping their benchmark 25 basis points. good thing where jason trennert with us from stretchategas. on are not a freaker outter news like this. how big of a deal is this? ason: it is certainly positive development. there are no two ways about it. i said that i think there was clearly some real concerns that chinese policymakers have lost a lot of credibility with their encouragement of people to buy stocks and then their subsequent mishandling of the route and stocks after that. clearly there are other questions with the devaluation, how they are handling it.

i think this is positive, but as i said, as you were mentioning, too, there are structural problems that china faces, and this will help, but it is not going to be a panacea for what a a the chinese economy. saide: jason, earlier you steve cell up with dividing pockets of value, and you might want to be in the middle. still going? i --on: when you on the soft when you are on the soft like i am, you have to serve two masters. people have short time rise in, and you have people that long was a people who are longer-term investors, as i said before, i think you will feel good about the fact that you are probably in this period buying stocks a year from now. whether you will feel about this two months from now i am not so sure. there is a process where you have to determine what monetary policies will look like in the

u.s. and also how china is going to do with some of the fallout. brendan: briefly, let's look at the very long-term and commodity. things like copper for the basic economy, real quick, is that move merited? does this move in china indicate new commodity demand? jason: no. edge offust taking the what has been a very dramatic three days or four days. brendan: ok, jason trennert, thank you is always for staying in a certain minutes, coming in this morning to help us digest this news, jason trennert of strategas, as always, advising caution. which country has the most to lose from china's slowdown? tweet us -- can the world survive on one engine? tweet us @bsurveillance. ♪

brendan: this is "bloomberg surveillance." with vonnie greeley quinn. tom keene is out today, but he is e-mailing inl. we are looking at u.s. futures. the chinese economy was cratering, now there is some indication of support from the communist party. we are looking at futures continuing their move up this morning. vonnie: not just futures, the german 10-year yield is a big mover, let's hear from mark mobius, a chinese investor.

mark mobius, chairman of the emerging markets group at franklin templeton investments. about their investment strategy. mark: do not get excited here to take two days off, wait for the market to stabilize, and then come in. do not say goodbye when everyone else is selling. take your time. vonnie: so, cautioning to take your time, wait for markets to stabilize. is that today, michael, is that the day that markets stabilize? michael: this is what volatility looks like. it reminds me of 2011 when the u.s. credit rating was cut and we had a 400-point down move up, back-and-forth for a week, but it all depends on what type of investor you are. if you are a young workaday investor like us, and all you

have a 401(k), the laughing you want to do it start tinkering with it. if you are a traitor that is profitable, then you have got your system, and you're are using your system, and you do not really listen to anybody. , i was surprised to look at the roundup of the smaller companies that do not tend to export have dropped as much as the s&p 500, which includes larger companies that do export. are we going to see distinctions today on the market tween companies that sell on china and companies that don't? obviously as he said, smaller companies are more domestically focused, so the stronger dollar is actually a boon for them. they are importing cheaper and selling to u.s. consumers with a lot of spending power. the s&p has a great exposure to form consumers, so if it does not happen today, it is going to happen. brendan: of course, one of those companies apple, having real problems yesterday. tim cook felt that he had to

tweet that everything was just fine, they have a plan. michael regan from bloomberg news, thank you. humes coming up on the markets. this is "bloomberg bloombergce" on television. again, the chinese central bank has cut interest rates 25 basis point and expanded the reserve -- # reduced the requirement ratio. ♪

brendan: this is "bloomberg surveillance." i am brendan greeley with vonnie quinn. you are looking at the stocks, the story yesterday was europe and germany in particular with exports to china had entered a bear market. that is not the story this morning. stoxx 600 europe wide up 3.9%. bush may be making himself look worse instead of better after using the term

"anchor babies." he try to justify using the term. many latinos consider it offensive and a it is more related to asian people who come to the u.s. illegally and have children. that sparks a new round of issues with asian leaders. raised eyebrows among federal regulators. company,his year, the twitter, -- twitter told the sec it would track responses to ads. the company is now not being investigated. and football season kicks off today. if you are mad about madden, the latest version is now on sale, madden 2016. draft fantasy and features and even lets you act like a franchise owner. it retails for $60. it sounds like a lot of fun. brendan: that, and there are now

generations of fun in that $60. madden feels like it is as old as football now. vonnie: i tell you what is a lot of fun and probably fantasy in the markets, we are seeing commodities higher today on the news that china has cut interest rates for a 5th time. specifically, brent up, and wti $39.34.y 3%, with us as michael levy from the council employee relations, a senior fellow there. we also have the book that he co-authored on the screen, "by all means necessary." we also have peter pelikan with us back on the markets. michael, you said there would not be a stabilization until we see a floor for oil. is that where we will end? michael: no one can say with any confidence that they know where

we will land. stabilization is a bit much to ask it one of the key things we have seen is an acceptance that saudi arabia and others will not comment on a regular basis to stabilize prices, so that is not mean they won't hold them at 100 dollars. we have already determined that. you will continue to see surprises on each side. you do not have someone in the market that is to come and iron is out. that means this volatility may be not at this extreme level, but this volatility will continue indefinitely. the commodity story is almost exclusively demand from china. .roadly let's look broadly at what is coming on in the real economy of china, which is the move we saw today from the central bank is sort of one thing that they can do, but it will not necessarily give them any closer toward rebalancing the economy, which is what economists all universally seem to agree that china needs to do. what do they do?

what other sets can the communist party take to get the economy moving toward consumption? michael: this is their fundamental challenge. they have three pieces to deal with it -- they have the stock market, which in some ways does not have a big connection to the broader, real economy, but it affects confidence, politics, and their freedom to move. then we have a short-term challenge of getting the economy running in the short run, then the have the redeveloping challenge. part of the problem is some of what they will do to deal with one of those challenges is going to hurt them on the other. vonnie: peter, let me bring you and here from bloomberg intelligence. you see oil rallying today, but maybe because of the application, china might do something. maybe it is something else entirely. we still have wti below $40 a barrel. does it stay here? the oil markets have obviously been negatively reacting to the fact that china is falling or cratering, and at

the very best, though, this is likely a short-term rally. brendan: peter, you have done some good work that you sent to us about demand globally. supply with the advent of fracking in the u.s., can you paint a picture of the next year of what demand will look like? let's step back from this morning's news. peter: if you look at the longer scope of how things move, demand is no longer really being driven by the maturing, rich world. it is really driven by emerging economies such as china and india. that consumption growth is expected to drive oil prices higher, but unfortunately, as you're seeing right now, that demand is not there. the world is now looking for where is the next driver of demand growth. unfortunately, as we look into the landscape, there is not much out there. brendan: really there are two inches, one of the u.s., which is not performed up to speed, and china, which is not performing at all right now.

is it fair to say that the chinese engine is in flames? michael: i don't not know if "in flames" is right, will but we certainly have mechanics on the scene. the long-term, you are right, people are looking more on demand than they were a few months ago when the focus was entirely on supply. when the price first crashed, it was just crushing at the front end of the curve and the backend and was still sort of fixed, so that means he will solve there was a lot of supply. now over the last few months, prices have fallen at the front end and back end. that is a sign that people think we may be settling in for a fundamental balance between supply and demand, and that is driven in substantial part by expectations of lower demand. brendan: that is really interesting to hear you talk about that because a lot of predictions that we get, vonnie, here on set basically show the price of oil going back up. that honestly feels like a hopeful reversion to the means scenario rather than

fundamentals. coming up, the story of the morning is the rate cut from china feared we will head to hong kong to understand how that is going to look like when it radiates out through asia. this is "bloomberg surveillance." good morning. ♪

brendan: good morning. this is "bloomberg surveillance." you are looking at the big board from the floor of the new york stock exchange. that was the story yesterday. it will likely not be the story today. the news out of china -- the central bank of china has cut basis pointsa five

and reduced reserve requirement ratio spirit that will inject some liquidity into china. that news is moving markets all around the world her let's go to bloomberg's julie hyman. julie: let's start in the united states. futures up by about 4%, s&p -- ies, and you can see just want to be very deliberate about this -- futures were already rising going into the interest rate cut out of china, and yes, we saw another leg up after that news came out, but we already were up around the percent even after that news came out. i have seen a lot of strategists come out saying yes, this was a correction, but we are not going into a bear market your to strategist at jpmorgan says they did gretchen would be unlikely at the same time strategists cut their forecast. we might see some others follow. we've seen a correction on the

s&p 500, a drop of 11% from its 21,ing record back on may the chinese rate cut helps at least for today. there are a couple of etf's that i look at, which is the sxi. the etf is up 7% this morning. this is the larger chinese-traded shares offshore, then we have the shares up 4% morning. apple has moved, which has fallen 12%, upgraded to outperform over wells fargo this morning. the analysts saying the correction is overdone, and we did hear from tim cook yesterday who had written a letter talking about rank in china. fitzgerald cantor lifeways concerned about overblown market concerns and a

rational valuation when it comes to apple. , applese, brendan is not alone cured we are seeing a lot of rebounds in momentum stocks and financials. hanks, julie hyman. it is not the only news this morning. vonnie: two koreas setback from the brink. landmine,said -- by a and the south has promised to stop blasting propaganda broadcast across the border. attorney general said the e-mail controversy could threaten hillary clinton's presidential hopes. he discussed it here on bloomberg tv. michael: one that actually present in all sort of risk for her is the one involving disruption of government

documents by someone who was their custodian. that is a felony that carries a three-year penalty but also. they permit disqualification from holding any further office. he was former attorney general under president george w. bush. spokesman raised a possibility when asked rather joe biden would join the race. the president has been careful that's far not to favor either his next president or mrs. clinton. higherns are fed up with prices. the american customer satisfaction found the rate of unhappiness about cars is the highest it has been since 2004. japanese and south korean cars scored higher than those from the u.s. and europe. not surprising, brendan. tondan: real quick, we go the monitor, this is federal fund futures. this is the rates now, this is the protection you are willing to pay for a rate rise,

december, march. they work this up yesterday, some changes today. markets are not seeing that much change in the rate, but december, a little more projection for that, march come a little more for that as well. markets this morning changing their predictions of what the fed is going to do. vonnie: all right, i want to give a quick data check right now. we are seeing europeans talks rising. for current 4%. futures of 3.6%. we need the gap at the open. the 10-year yield is 2.70%, quite a large move, and we are seeing the euro chain -- trading at $1.4091. $1.17 yesterday. nymex crude bouncing, 2.6%, and you are seeing nymex, wti at

$39.24. brent futures as well up almost 3%, trading at $43.86. still above $40. seeing a small balance for copper, and the msci emerging markets index as well. brendan: this is "bloomberg surveillance." i am brendan greeley with vonnie quinn. tom keene is out but here in spirit and e-mailing regularly. vonnie: in fact, one of his in thishat he made up particular hour after the news, china cutting interest rates for a fifth time, we want to go to hong kong now to get reaction from david goldman of the reorient group. david, give us your initial thoughts on these moves and the comments as well, commentary. china urgently needs an easing of monetary policy. it has the highest real rates in the world for the past year. demands, it has

also pushed up the currency and her their exports, so of course the economy is slowing because of monetary policy errors. a rate cut is a good thing. the trouble with the pboc is that what it has done is been piecemeal and has failed to explain to the markets what its intentions are, so i think the effectiveness rate cuts, as positive as it is, is not nearly enough. the pboc has to do more, it has to explain itself to the markets. brendan: help us understand this in u.s. terms. one of the innovations of ben bernanke's and janet yellen said is increase communication of your what kind of things do the pboc need to do to make these rate cuts have some kind of meaning? what do they need to engage in? david: first of all, has to say they cannot keep the rmb tied to tied to a rising dollar. it should have cited to singapore, to trading partners.

second, have to say that real interest rates are too high, and it wants to reduce real interest rates, so should've done a 200 or 300 basis point cut to begin with. ppi, that a negative is still effectively extremely high real interest rates for most chinese businesses. this cutn other words, may not be the end of it, and we could see much more bigger cuts to come. so what would that do, then, to u.s. markets and the federal reserve's thinking? david: the federal reserve in my view should not be threatened to tighten into a very weak economy. nds futures have actually driven commodity prices and the dollar almost tick for take for the last six month. the federal reserve's erroneous view of the u.s. economy is far too optimistic, and it's broken model as the source of the problem in the first place.

the big news is that this is a noncrisis, it is a panic created by central bank errors and could easily be it alleviated by a correction of those central bank errors. i'm looking to the fed to say, than things are different we thought, so probably we should sit on our hands and not do very much until the dust settles." in that case, the markets would come back. is engaging in monetary policy because everything else seems to be difficult. fact, china in liberalized both deposit and lend rates past one year in the same move. that is probably the most important thing that came out of the pboc announcement overnight. it was not contained in any of the news reports, but our china economic team was translating

the release for me just as i left the office. that is an extremely important flea market liberalization move. it is part of the overall foreign package, and indicates the seriousness to the chinese government to pursue reforms even as it were under fire, so that is long-term and extremely positive development. i think it has to be emphasized that with the changing china at the low 7,ex we are at the all-time low. we are at the same level we were at 2000 eight, so from the standpoint of a patient investor looking at the broad ties and reforms of monetary policy, hong kong stocks are extremely cheap right now. brendan: thank you, david goldman, from hong kong, the managing director of reorient group. vonnie, it was interesting to hear him talk about the other things we did not see in the english language press releases, and what assessed me is china's really appealing to the imf.

liberalizing policies your dower toward a question, of course, we are asking about the world's two engines, to borrow a metaphor from tom keene, can the world fly on one engine? is there still just one? let us know @bsurveillance. ♪

brendan: this is "bloomberg surveillance."

greeley with vonnie quinn theater tom keene is off today, but as discussed, he is e-mailing regularly. china cut interest rates in the last hour, made a bunch of moves on liquidity as well we were take a look at how emerging markets are reacting. bloomberg emerging markets reporter katia porzecanski is with us. is rallying,ble emerging markets around the world are rallying, currency in latin america has yet to trade, trading should be relatively soon, so i'm sure we will be seeing rallying across the world. this is cutting rates and cutting reserve requirements, which is what a lot of people were calling for in order to see some rebound in the emerging world. brendan: we have got carl riccadonna with us from bloomberg intelligence or diamonds rested with the dynamic with the ruble rallying. help us square that circle.

how do we get from the pboc to the ruble? risk-off, risk aversion tight play, everything moved too far in one direction, and now you're a sibling getting a rebalancing in equities and currencies across the world. brendan: we have a panel here, michael levi is here, you made a noise like you can explain the ruble. michael: if i see brent moving up, the ruble has been moving very closely with oil prices. vonnie: are these moves related to oil, or are they correlated with the potential and not just potential but actual central-bank moves? michael: i think it is a mix depending on where you are looking in the world. if you are looking at russia, it is closely tied to oil. if you are looking at what looks like a rebound in the united, it has much -- united states, as much more to do with the broader economy. katia: initially, stocks in the em world were rallying before china made its move. it could be a dead cat rallying initially. vonnie: exactly, and maybe some

anticipation that china will do something as well. jackson hole this week, our own brendan greeley heading out for the central bankers convention. carl: sure. vonnie: what will they be saying in terms of interpreting this week? carl: originally, the outlook was this will not be that important of jackson hole, janet yellen is not attending, the focus on inflation, then reading theminutes of fomc meeting, they need greater confidence -- vonnie: this one individual china move. carl: this is only one of many moves coming from china and will continue to come from china, so there economy is lacking, they will have to take more action beyond this. they aren't evaluating their currency, so we will see a huge amount of measures. the confidence the fed has that we are eventually moving back to the inflation target. katia: the question i have is

emerging markets -- from one minute into the next, investors can get really depressed or really optimistic for no reason whatsoever. something i'm curious about -- china is making all of these moves. our investors going to get the signal that china may be worth off and things could be turning around again? brendan: we will be watching that for today. of course, katia porzecanski telling us the dead cat bounce may turn into dead cat soaring. our twitter question -- can the world fly on one engine? ♪

brendan: this is "bloomberg surveillance." greeley with vonnie quinn. tom keene is off today. big news out of china, vonnie. vonnie: exactly, brendan. china cutting rates has dominated the moves. we are joined on the phone with more perspective on what this rate cut and all of the rate cuts this morning mean for the future of the leadership. jonathan, thank you so much for joining us. thatentioned the other day china is trying to liberalize and the question would be whether china would have the guts to stick with it till the end. is this the end, is this china showing guts, or is this china

reacting to the unstable market? jonathan: i am afraid it will be seen as the second more. the room for interest rate cuts has been seen for a sometime in china. inflation is very low, there is no reason not to of donna's, they want to ease monetary policy to push of growth, but they put off this interest rate change again and again, and now of course it will be seen as a reaction to what has happened over the last few days, particularly in the stock market. is the: jonathan, what next nonmonetary step that china should take, and what if the next nonmonetary step that they are actually going to take? jonathan: well, i think they should do what they may be doing with the following the shanghai market. they should let the market find its own level. that is the first thing, have the guts for that, to let through the reform process. what they should be doing is to be starting a meaningful program

to deal with the state-owned enterprises. these are often monolithic listicions -- monicopo operations. they lend to growth and job creation, but the reform process really has not got to grips with keds problem at all, linn with the state owned enterprise problem, you need to do something about excess capacity, 20% or so in steel, also in major heavy industries. you need to deal with excess capacity to deal with inflation, which has been haunting china for three years ago. those are steps which leadership should be taking pretty quickly now. brendan: jonathan, i have michael levi from the council on foreign relations with us in the studio. i will let him jump in with a question. michael: jonathan, there is clearly a struggle going on in the communist party, over the leadership over exactly how to proceed. how does what is happening in

the market now affect the relative power of the reformers and those who would rather go a bit slower? jonathan: well, i think the stock market gyrations of summer will put a cloud over the reformers. they will say look, this is the danger you get into when you liberalize, when you allow the market to have its head. reformers are still there. pushmade a bit of a forward with the change in the fixing rate for the renminbi, but you will see very quickly the authorities came in and put a floor under the currency. that is maybe linked with joining sbr's across the fed. i do not think xi jinping or the leadership are in any political danger at the moment. i know some people have speculated on that. it may be that the outcome of all of this will actually be more orthodoxy and less of an inclination to flirt with the reform, which is exactly what china needs.

i mean, that is reform in the us, not to flirt with it. brendan: jonathan fenby in london, he runs the china team for trusted sources for trusted sources. we have michael levi from council on foreign relations here with us in the studio. what does this uncertainty do for china's infrastructure plans around the world? all the money they have been spending everywhere, in brazil, nicaragua, africa. michael: i think you can look at at least one or two ways. if chinese demand at home is not materializing, if you do not have a need for putting in new infrastructure at the pace they need to essentially absorb their excess capacity, then that create appetite for doing more abroad in order to absorb their capacity and so on. at the same time, we are talking about the politics, and you have the anticorruption trials still going on. no one wants to get their head out to far.

going and doing exciting ventures, everyone in the world, it is not something leaders are going to do unless they are really confident that they are not going to get burned. vonnie: michael, let me bring up a chart that was sent in from tom keene, missing the action this morning. brendan: [laughs] vonnie: the one-year real rate in china, we heard that from jonathan fenby as well from trusted sources, we are well away from the lows, where it had been here what can we infer from this? michael: i do not know what i can infer except they have a lot further that they can go. they are balancing so many different imperatives here. we had one person talking about how this is ill essentially a short-term move, and they need to figure how to get longer-term change happening. brendan: carl, everything with her this morning, the news that has come out of the pboc, the liquidity they have and injected into banks as well, what does the chinese engine look like? carl: there are big questions to the degree of which is actually

in gauging. that is why you see the string of policy actions feared again on this currency move, whether it is liberalization or paying to the dollar when the dollar is weak, and then strengthening, we are free-floating -- i still am skeptical that that is a liberalization move and not just chasing after easy growth through the next court currency devaluation. ofndan: jonathan fenby trusted sources said this is an appeal to the imf, but you are a little more skeptical. carl: i am not christine lagarde, but i'm certainly more skeptical. we have seen this story time and time again from the u.s. to europe to japan. everyone is playing the game, the value your currency to jumpstart the economy, and then you can eventually back away from accurate it worked in the u.s., and we saw with the german figures, it is working in europe now as well. so china does not want to be .egged to a strong currency the strong dollar is going to have a significant feedback

mechanism to a number of sectors. manufacturing, the labor market in general. brendan: so that is china not liberalizing by just exercising. i think you have got some twitter answers. vonnie: i do. we asked the question -- can the world fly on one engine? let's have a look. we had a lot of answers today. people very much glued to the television sets. first answer that we chose -- it depends on the field. zero interest rate, massive market distortions, and widely related assets may cause the jet a1 to about the weight --to evaporate. brendan: sometimes you can follow a metaphor to fall down the rabbit hole. vonnie: thanks for getting all of that in 120 characters. second answer -- world will fly -- unlesswerful powered engines as none have totally failed. no risk of crash landing by captains are reducing altitude.

third answer -- sure. the manufacturing engine, and eu. engine, not the paper shuffling u.s. and eu. brendan: it is good to remember that there are four engines. i'm going to jackson hole. we will be talking to a lot of be president steered we will asking be same questions of them because of course the one subject of jackson hole is going to be will there be a rate rise in september or not. the market right now is saying no. vonnie: i am excited about that because they get together behind closed doors. my agenda today is in fact the u.s. economy data. the case schiller home price index is out at 9:00 eastern. we cannot forget what is happening in the u.s. because the that ultimately will decide whatever they do based on that, new home sales out as well later

on, and consumer confidence. brendan: my agenda is also looking at the u.s. elections. that is right, we are so talking about that because of course they all have to respond to what is going on in the markets. we have phil mattingly in d.c. with us. phil, what is going on. who said what? phil: never let a crisis go to waste, brendan. a few candidates were willing to take what is going on in the markets and try to use that to push their goals, none more so than donald trump, who is pretty much always in the news and have been talking about china i -- aboute started china a lot. he started with an instagram about how "china was going to bring us down," and that the united states needs to "uncouple from china." then you have bernie sanders being the primary driver of this. you know, brendan, the white house is saying pretty calm on this. gotdan: ok, phil, we have

to get out of this, but a day without donald trump is a day wasted. michael levi of the council on foreign relations, thank you, carl riccadonna, thanks you as well. "market makers" continues. this is "bloomberg surveillance." ♪

good morning, it is a

tuesday in new york city and it's shaping to be a better morning. stephanie ruhle is off today. we have a rebound. 500 futures are up almost 4% this morning in nasdaq futures are up in excess of 4% after china cut interest rates and lower the amount of cash banks must set aside in an effort to reflate its economy. we are looking at potentially a 500+ point gain for the dow industrials which is the fourth biggest gain in history. opened not even officially. it's a similar picture in europe as exchanges are open there. the worst date yesterday for european equities since the financial crisis has given way to a powerful rebound. most industries are up in excess of 4%.