francine: shaken and stirred. day of trading, chinese stocks extends the first five day drop since 2006. manus: stocks follow the decline. indices across the continent are in the red. francine: all bets are on. betfair agreed to merge in the latest consolidation of the gambling industry. welcome to "the pulse" live from bloomberg's european headquarters in london. manus: it is volatility, the

word of the day for traders. chinese stocks extended the worst five-day drop since 1996. the marx apparently unconvinced by the peoples bank of china decision to cut markets rate -- the apparently unconvinced. stoxx 60019 -- indices are down here let's cross to our chief asia correspondent. enda, a very good day to you. markets simply unconvinced is the word. enda: unconvinced is exactly right. what the global markets wanted out of china was a circuit breaker. there is a feeling this crisis began in china. dona needed to intervene, to something. it does not look like what they have done has been enough. the central bank will need to cut rates further. that the government will need to

do more to shore up the chinese economy and turn sentiment around. the positive thing is that china has monday of more ammunition in its arsenal if needed -- china has plenty more ammunition in its arsenal if needed. francine: what is next? i guess the question is how much will they intervene? enda: well, so this is one of their key strengths. they have an arsenal that other central banks would envy. they can cut interest rates further. more steps to get money into the real economy, to juice up commercial banks to get them landing -- lending. and, of course, if push came to shove, they could roll at the big fiscal stimulus plan. one thing we do know is that the authority seem to be stepping away from intervening in the stock market now. they seem to shine away from that. hying away from that.

they are relying on the old levers of the central bank. whether or not it will work, time will tell. manus: that famous statement that time will tell. thank you very much. that brings us to today's twitter question. which central bank has the circuit breaker? we are talking pboc, we are talking fed. who was the role of circuit breaker? manus: could the ecb be any part of the story? let's bring in stephen gallo. equity markets remain unconvinced in terms of the first major selfless -- of the chinese. what do you make of the current state of play? stephen: not so much about what equity marks are doing as it is about what is happening structurally in china. i know we have said before we talked which is that china is ina pace of rapid economic

reform and liberalization. and this is as much about growth ischina, while that reform taking place, as it is about what policymakers are doing while they are basically feeling in the dark and learning themselves. francine: we knew this, right? i almost grew up knowing that it some point this was the moment where china was going to, as a big oil supertanker, try to do an 180 degree turn. they always -- we always knew it was messy. stephen: i think that the turning of the oil tanker has been happening for years now. this is just one step in that direction. the movement in the currency has not been significant. the renminbi is only down 4% versus the dollar. over the next six months, we are expecting the change to only be u.s.d 5% lower versus the

dollar. the move in the currency is more about liberalization in our view, than it is about trying to juice up the economy. a variety ofhad move by peoples bank of china. reserve rate requirement, a lending cut yesterday. enda says that they have an arsenal that most of the globe would envy. is this their problem, and for them to solve? do they have the arsenal of circuit breakers to stop what is a very, very aggressive response in terms of emerging markets, equities, and developed market equities and currencies? stephen: the overall impact on growth in china is a lot more limited than it would be if those types of moves happened in the developed market. when you look at market capitalization as a share of national income, it is relatively low. involvement in the to muster market is low. does have a significant

market -- involvement in the domestic market is low. they are stimulating more consumption in china. more additional interest rate reform. that has a significant arsenal in that respect. has a significant arsenal in terms of what it can do to ease policy further. it has macro prudential tools. so the arsenal is significant, but again, it is more about -- theys it's less about what are doing to actually ease policy and more about what they are doing on the pace of reform. ultimately, that will dictate flows into and out of the renminbi over the coming year. francine: what is your favorite place? fx volatility is not really out of control. stephen: our favorite play in fx. in the next three months, we like your ohio and sterling lo-- euro-sterling lower. manus: the jpmorgan volatility

index -- i think it puts it in perspective. are 11.9%. 2813 .4%. so we are nowhere near as volatile -- 3.4%.3, is aroundolatility its 10 year average. that is a good thing for policymakers. the volatility we have seen this week and aggregate in fx has been nowhere near what you would classify is extreme levels. and that is a good thing for policymakers to have some volatility but not extreme volatility, because when volatility is excessively low, imbalances are created. and that makes it harder for central banks to do their job. for example, excessive imbalances resulting from low volatility could make it harder normalize policy. we look at volatility so far in 2015 as normalizing. francine: they do so much.

stephen gallo, bmo capital markets. we come back to stephen in a short while. and we will talk about the fed. manus: what else is on our radar. atomic enemy chiefs have hailed the nuclear deal with iran, saying it is an historic opportunity to resolve long-standing issues. says that tehran has addressed allegations it has been working on nuclear weapons but declined to be specific. supporters of the washington deal see the momentum growing for acceptance. francine: paddy power and befair have agreed to merge. if the deal goes ahead, paddy power shareholders would receive a special dividend of 80 million euros. share prices of both prices have led. thes: warner bros. is

latest hollywood firm to turn its attention to china. the studio is an talk with investment house china media capital to make films on the mainland. china is the world's fastest-growing moving market. -- movie market. francine: and japan has admitted guarantee the main stadium for the 2020 games will be ready by january. now, the prime minister abe scrapped the original plan after construction costs ballooned to $2 billion. tokyo is expected to come up with a new plan by the end of this month. manus: up next, wpp. it is the world's largest advertising company. soar.ts first half sales we will delve into the figures straight after the break. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and streaming on bloomberg.com, your tablet info. manus: wpp has reported a 7% increase in first half sales, but concerns remain about the business exposure to the emerging markets. caroline? caroline: let's dig deep into the first half of wpp. that of a bellwether. the biggest player in the advertising market. half a trillion dollar market, i might add.

the numbers did pretty well. sales up very profit up. sales of 7%. profit up to a similar degree. the dividend beating expectations. ftseest paid boss in the 100 paying out to the investor, upping the dividend 37%. this is where things get interesting. north america. straight of the dollar helps, outperforming -- strength of the dollar helped. western europe not looking so pretty. down 8.5%. of course, concerns about greece rocking business's appetite to splash the cash. this is where the pain is being felt -- china and russia. came under pressure overall. what is really interesting is what they talk about so-called international currency wars. always want to speak out. never afraid to share his opinion and really has been speaking about the international currency wars that have not been helpful. black or grey swans overall.

let's look at what is happening in terms of their exposure to emerging markets. overall, it is 30%. the growth area for the world -- 30 percent. that is middle east, africa and overall. if you looking at the brics, brazil, russia, india china, 12% in revenue last year. and southeast asia was where the pain was. central and eastern europe as well slowing. surprising when you have got -- not surprising when you have russia and ukraine causing political instability. largest wpp's third market. that is bigger than its peers. let's dig into china. how is this economy faring when it comes to wpp? they do talk about concerns, because it is the world's second-largest ad market. they have been fueling people, moving 15,000 people now working for them in china. largest exposure. think of on the come. -- omnicom.

wpp is the biggest exposed to china. but they remain resolute in their optimism concerning this particular country. yes, they say concerns have been aggravated by the recent devaluation in the renminbi. the stock market decline. they are worried about that, and they say this will have a big apact on world gdp if you see significant slowdown in china, but they remain "unabashed bulls." in brazil and in china. they talk about a geographically superior submit -- position in the new market. overall, they are talking about swansf the black-grey remaining out there, some of the eurozone instability. it seems as though he remains committed to where he is piling in the cash. francine: thank you. the latest on wpp. investors and traders have said for months that the fed will raise rates in either september

or december. the odds of a move in october are shortening. manus: some people think september may be too soon given the recent volatility. and december could be problematic because of liquidity and -- it tends to dry up towards the end of the year. yale university professor and nobel laureate robert shiller davis's thoughts. -- gave us his thoughts. shiller: we could see more aftershocks. those aftershocks can shake confidence. they can get people into a panic mode.. at that point, it will be emergency time -- i am not saying it will, but it could happen. the fed will have to take action and keep rates as low as possible. this point, anything can happen. let's discuss this further with capitalgallo, bmo markets. thank you so much for sticking around. when you look at all the market

chatter, how do you -- because we are talking about a possible rate rise,a possible q.e. we are not saying september or december, but october. is this all noise? stephen: it is. in fact, yes. you look at the housing market. there has been improvement in the housing markets over the last 10 months. real personal consumption expenditures grew at a 3% annualized rate in q2. that will be confirmed this week. the jobless rate is falling d's perceptiblefe'd range. things are fundamentally good. it is the moving parts in the thernational scene or international stage which has second-guessing what the fed is going to do later this year. on coursehe fed is to tighten policy later this year. 20% odds for september. we think that is a bit too low.

manus: what you make a very summers saidarry it is about fighting deflation. this is the biggest challenge for the fed, and that raising rates could be a serious error. everybody is trying to fight deflation. it is what killed is at the start of the year. is saying ifmers they go for hike, this is the biggest risk. stephen: right. but equally the risks they take by not doing anything and by taking markets off the focus on eventual tightening is that it leads to a further buildup of an balances, not just -- imbalances, not just a mastic week but internationally as well. if volatility drops too low because of another round of fed spurs risk-taking. and then it makes the normalization process even harder. in combinationat with chinese growth anxiety,

which has impacted markets recently, one of the things the market -- that's already contributed to more two way flow and increased volatility is the fact that chinese growth anxiety is happening as we're getting closer to fed normalization. but that is good, because some of the fed's tightening are already having an impact on markets and preventing that excessive risk-taking. you do not want to get into a situation were central-bank policy feeds the symptoms it was trying to avoid in the first place. and we have seen that. you can blame to a degree central-bank policy on the glut in global commodities. you can blame it on sharp falls in asset prices. in a way, the excess policy continues to the symptoms it was trying to avoid. francine: so, in a way, china is a victim here, if you follow the argument. they are fighting back fed policy? stephen: i see where you are trying to go. i would say that, yes, there is significant, a

impact from developed market policy but also, a lot of what happens in developed markets is structural and relates to the pace of reform and the type of policies in place when that capital enters the economy. manus: if we take what you are suggesting is the way we go for the next couple months, our question to you is have emergency market -- emerging markets seen and done their rou ts? are we overextended? what are your models telling you about emerging market currency at the moment? stephen: the broad -- traded to the dollar is up 7% year to date. we think that will rally 3% to 5% over the next six months. some of that strength and the dollar will impact emerging markets. some worse than others. but the bulk of the occurrences trade the fed's broad rated index have seen a

significant chunk of their rally. w think in terms of where thee oas curve is headed in the united states, is it will continue to price and effective funds rate by 1% by the end of next year. that is on par with expectations for how the dollar is going to perform over the next six months. value of% to 5% in the the dollar, as the fed confirms what the market was pricing and prior to this week, which is about+++

francine: they do so much for joining us. stephen gallo. manus: that brings us full circle to our twitter question of the day. it depends what you think, really, whether central banks can break the circuit or not. central banks -- which one has the circuit breaker? we are both there. francine: let's add #ecb. running out of gas. how are china's oil majors being hit by the crude prices rout? we discussed that next. ♪

francine: welcome back to "the ande" live on bloomberg tv radio and streaming on your tablet and your phone and bloomberg.com. manus: china is not only battling an economic slowdown, state-baked oil majors reported. cnooc just reported now.

first-half numbers. 14.7 billion yuan. the sales did miss on estimates. 89.6 billion yuan. we were looking for a number of 95.9. francine: overall, that profit dropped 56% in the first half. let's bring in bloomberg's managing editor for energy. in terms of the earnings, they are better than expected. a huge price drop. different,oks a bit because it only produces oil and gas. it does not refine or sell fuel. you're seeing that here. what is interesting is that maybe they have beat a bit, itause they had been -- suggest that process is going well. manus: if we look at them, tell me this -- we know and understand western companies very well. shell, bp, exxon. we know when understand what makes them. what makes these chinese

companies different? many ways, they are the same but the key differences that ultimately -- they are still owned by the chinese government. they have to play a political game in a way that shell and bp dozen. as the economy slows, will come please like petro china do the things they need to do, cut cap ex, or are they going to feel pressure to keep the whole economy going? francine: they are saying is everyone else's that oil prices expected to remain low. can you, looking at these rigures, actually bette understand the state of the chinese economy? these massivee refining operations. they are selling millions of liters of fuel every day. what has been interesting is, despite of the talk of slowdown, fulel in china has held up very well so far.

you need to be looking for signs of that starting to change. francine: think you so much. our managing editor for energy and commodities. -- thank you so much. manus: we will talk wpp -- wpp. and the iphone battery. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. manus: here are the top headlines. after a volatility of trading, chinese stocks finished in negative territory. the markets were unconvinced by the people's bank of china's decision yesterday to cut interest rates for the fifth time since november. the shanghai composite has lost half its value since mid-june. francine: meanwhile, the odds on the fed rate rising in october are shortening. investors and traders have said

for months that janet yellen will move in september or december. some think that september may be too soon. december could be problematic because liquidity tends to dry up at the end the year. the world'spp, largest advertising company says that first-half sales reached 6.8%. as business from existing clients picked up in north america. sales rose 5.8 billion pounds, beating estimates. meanwhile, profit before interest in tax rose 7.6%. francine: now, stay with us. we will speak with an -- a head of security. lorna, talk to us about what we learned from wpp. the world is not so ugly at the moment. lorna: gdp has been growing slightly below trend, but has been fueling advertising. their topline growth is almost equally matched by organic growth.

and it has actually been well over 5%, which in my book is a really good performance. manus: china is never far from our headlines. it is important part of wpp's business be a china represents 10% of the global ad make it -- market. how concerned are you? irna: it is concerning, but have have to say that what i think what is really important is that i think it will mean the central banks will not put up interest rates. so we will have lower rates for longer, because the fall and the oil price has taken away the specter of high inflation. if anything, the concern is deflation. it means there is more consumer spending. what drives advertising is corporate -- and consumer spend. the low oil prices another trillion and a half of money to spend. francine: you look at interest rates. and i'm looking at wpp's statement. u.s.gains in the countering uncertainty over

china. the u.s. is not doing so badly. we do not know what the fed will do next. lorna: i think we were almost certain they would pu ut up rat. i think america will be scared by china and will not put up interest rates. so i think what that will mean is that we will get lower rates for longer. manus: i am curious. i want to go back to your statement which is that lower rates for longer, good for consumers. have beeneven years the most fearful times for the average consumer around the globe. retainer less, mortgage. i challenge what you say. i think what is happened -- 1000 point drop in dow. global growth under consent. i would not call that a good backdrop for the consumer. lorna: i think we did go in with the most tremendous pile of debt as well. it was beyond anything we have seen in 400 years of human history since interest rates first were set. i think we had a big amount of mountain of debt.

borrowers being saved by savers -- actually, we are beginning to see that. we've been helped by supermarket wars, being helped by oil price. we are beginning to see consumer spend rising. francine: what is the bingle, single most important trend in advertising at the moment? t, what is the single, bigges most important trend in advertising at the moment? are we in a place where company spend in a traditional way? lorna: i think we have got the dataion to -- with analytics, we get to know who spending -- is spending what. creative industries are driven by data and analytics. that is what martin -- himself says. math man taking over for mad men

. the return on investment is the big mantra. like the idea of the mad men in charge rather than the math. lrorna: i prefer math. i'm equally balanced. manus: i'm interested in mobile. mobile ad spending $50 billion this year. that is trumping radio, outdoor advertising, and magazine. in the whole world -- is the whole world just mobile advertising? lorna: don't forget. manus: do not tell me magazines will be -- will survive? trees.fewer dead more broadband. we had newspapers, television and radio. what happens is the pie grows bigger but it gets more

fragmented. because we all love consuming media. francine: all right. thank you so much. on that, we will leave it. the executive director and head of media sector. manus: paddyy power -- paddy power and betfair have agreed to merge. the tie up would bring together one of the u.k.'s and one of ireland's leading high street bet makers. blockbuster deal. these stocks are pumping. >> absolutely. bettingurope's biggest company, and both share prices have hit record highs. we are talking about paddy power and betfair. what we know about the term so far is that paddy power shareholders would own 52% of the company. shareholders owning the remaining 48%. it is the betfair ceo that is

the ceo of the combined company. he came to betfair from paddy power. we heard that paddy power shareholders will receive a special dividend of 80 million euros. and this obvious way takes place as a wave of consolidation happening across the industry. this obviously takes place as a wave of consolidation. absolutely. what we have seen in 2013, for example, we saw gdc team up with william hill to take over sporting bet. gvd is in talks to make an offer for bwin. esst month we had ladbrok agreed to buy coral. this is a wave of consolidation. the reason we are seeing this happen, a number of reasons --

increasing competition. it is a question of regulation and taxes. we had paddy power's results and we saw the impact on their profits of new taxes. whichit rise of 33%, would have been 68% had it not been for some of those new taxes. also, it is about the industry changing, the move to online gaming, to mobile gaming. and what these companies need to keep up with that, to stay competitive -- strength and scale. manus: thank you. on paddy power and betfair. industry -- how can industry maker of us safer? we will start -- discuss the art of collaborative robotics after the break. ♪

francine: welcome back to "the pulse." in emergingout markets has had the billionaires quite hard. ukraine's richest man has seen his wealth slumped by 40%. and a mexican billionaire has his worth halved. devon pendleton joins us for more. yesterday we talked about some of the big chinese names. today, we have gone to central europe. take us through who has been hit here. devon: central europe. we have ukraine's richest man. steel a big coal and

conglomerate in ukraine. and he has seen his wealth fall in half. so, he's a big name. but another big name poroshenko. he's seen his wealth fall 40%. ukraine already was in bad shape with th ee war going on. but also commodities playing a role here. coca prices with poroshenko's candy business. francine: we have been talking about billionaires -- it is not only because of the stocks, but it is currency fluctuations. devon: when you look at the billionaires, we are counting in dollar amounts. obviously, a lot of the wealthy have is going to be in cash. closely held assets in their home countries. it is going to be affected by currency plunges and evaluations. china and in kazakstan. manus: and mentioned all parts of the globe. where has the most amount of

pain come in dollar terms? if it was not the china guys you went through yesterday. changes everyst day. he is a $78.8 billion. worth $70 billion. and warren buffett worth $60 billion. devon: most painful episodes -- a lot of losses in india. currency pressure there as well as markets being down a lot. very similar and mexico. when you look at ricardo salinas. he's suffering. eso hitting a record low last week, as well as the stock market sbeing down -- markets being down. africa's richest man. same thing. a lot of pressure on the currency. of course, the markets and oil plays a big role, too. francine: have they been speaking out and all about how they see the markets going? bute guys are very rich

they also usually have businesses. they are in power. have they been trying to read china, or have none of them spoken? devon: we have seen a couple of billion or speak up. norway's richest man frederick cert said earlier this week he's very worried about china. he has a lot of wealth and shipping. he has a big equity holdings all throughout the globe. he also has the world's biggest salmon farmer. he has a lot of exposure to different parts of the globe. he is worried about china to you see the ceo of alibaba saying today that hang tight. we are in it for the long haul. manus: 102 years, how long is the long haul? francine: 102. maybe he has a miracle pill. manus: all companies end up at zero. there you go. discuss. you either go buster take it over. francine: get sold. and then you have shareholders.

manus: let's get you up to speed with some of the top headlines. french prosecutors said the man suspected of carrying out the attack on the high-speed train jihadieek watched a video onboard just moments before the violence. the youtube video is said to have contained " islamic preaching that first violent acts." the prosecutors also said he was bullets, an70 assault rifle, and a bottle of petrol. manus: japan admitted -- francine: japan a minute it cannot maintain the 2020 games. -- japan has admitted. shinzo abe scrapped the original stadium after construction cost boomed to $2 billion. manus: warner bros. is the latest hollywood firm to turn its attention to china. talks withis in

investment house china media capital to make films on the mainland. china is the world's fastest-growing movie market. last year, box office receives billion.% to $4.8 recitee: the adults ashley madison is facing a backlash in the u.s. from angry dulteryffs -- the a site. they are being sued by 37 million anonymous users after hacking several gigabytes of their personal information on the internet. they planned to have ashley madison scrub their data but it failed to do so. manus: let's talk about the futures of robotics. in june, a man was crushed to death by a mechanical arm in a volkswagen factory in germany. francine: the incident highlighted a major technological challenge.

how can we make robots and humans work better side-by-side? joining us is our innovation correspondent. this is co-botics. collaborative robotics. traditional industrial robots are very strong. they are very accurate, but they are not aware of their surroundings. if they come across some thing unexpected like a human, they do not stop and fatalities. robots areve intelligent. they are aware of their surroundings. if they come too close to a human, they can slow down, war in human and stop it this means you can work in closer confines and use robots to physically help humans with more challenging ergonomic tasks. manus: this comes through in the store you have written in bmw are pioneers in this. which is the interaction between the robot in the human, the symbiotic relationship. olivia: exactly. there are lots of tasks on an assembly line that are, when you

repeat them over and over again, for humans, it can cause repetitive strain injuries. these robots can take over in those areas. but it is happening in places where there are lots of robots. aerospace and automotive. and the consumer electronics sectors which has relied heavily on mental assembly. francine: robots have been a fascination on the show. we had a couple of cute robots. and when are we going to see -- i have always been promised that a robot would do cleaning or cooking for me. what are we going to see them in our home? olivia: the promise of the jetsons robotics maid. these industrial robots, the next step could be the domestic environment. unfortunately, there are quite a few challenges in the way. in industrial situations come people tend to wear protective clothing and they tend to be all over 18. in the home you have kids, pets, stairs, all these things to contend with. it is much more challenging. manus: that comes to our

acceptance of them perhaps the advancement of artificial intelligence. francine: i would accept it. manus: i would be very happy for permanent -- one of the helpers. i can be your helper and friend in training. francine: thank you so much. out. stories coming you can check out the website, of course, with the latest check out bloomberg.com. manus:, what are we going to check out? we meet campaign is your trying to save japan's hotel to the star. the ocura. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and streaming on your tablet and phone and boomer.com -- bloomberg.com. manus: japan is looking to the future as it plans to host the 2020 olympic games. a monument from its past is recognized as an architectural treasure. francine: it's now facing demolition, but it's devotees are not letting it go without a fight. tom: walking into hotel okura but stepping back to 1962. somehow you're in a different world. >> then people start to speak more quietly. reporter: the first thing is the lobby. a batch of serenity, a meeting place for guests and business

contacts. the bar, straight out of "mad men." >> if you walk through the door, it is an atmosphere -- that -- reporter: over the years, this hotel has hosted the elite from world leaders including's presidents ford, reagan and obama two stars from hollywood's a-list. a mixture of modernism and tradition, the okura's charm will soon be a mere memory. occupies is wanted for a monument to tokyo's next olympic games in 20120. two towers are planned. drawn by the son of the okura's original architect. wilson started a petition to save the hotel okura and was stunned by the response. >> i felt strongly that it was worth saying to people, do you realize this bit of tokyo's history is disappearing? and before long, we will have a forest of twoeowers.

reporter: that response saw the fashion and architectural worlds marching to the okura's defense. thousands shared photos online. in a statement, it says the building is just too old. the rooms have become obsolete. the ventilation and water pump system run down, making it harder for them to compete. okura says they will do its best to preserve the original style, but the critics have doubts. >> these particular buildings in the 1960's, which includes hotel okura, falls in the middle of -- a zone. it is not new enough, it is not old enough. there's a lack of focus of looking at this particular era as something which is very significant. are not: campaigners expected to win their fight. tokyo's desire to make a statement is too strong. if it is lost, then the world

will have lost another precious link to the past. i guess we will find out in a couple months. whether it stays or goes. manus: pretty stunning. you know what? for our listeners on radio, "the first word" is up next. for our viewers, second hour of "the pulse." francine: we are to be a close eye on volatility in the markets. of course, the u.s. and the losing streak we saw yesterday -- will it continue or not? the latest on those features. manus: we will, indeed. and in iphone battery that lasts for a week. that is a revolution that happens. we speak to the directory of the company behind hydrogen battery that says it is possible. francine: we, of course, continue to watch these markets. has been a markets kind of week. we had a brief respite for european equities. they are inow back in the red. they are all down 1.3%.

it is interesting because we saw gains in asia. then they rehearsed an hour before the close. a little bit like the u.s. rally yesterday. mohamed el-erian talks about being worried and an ugly stock market close in the u.s. the u.k. down for the 11th day. miners back at levels we have not seen since 2009. francine: so, we are definitely in a correction for the stoxx 600. i will call it technical terms -- it is zigzag. that brings us to today's twitter question. given the market rout, given all this zigzag and we have seen on the market, which central bank has the circuit breaker? is it the fed, is at the pboc? what can the ecb due to defend the value of the euro? manus: willow bay -- will they count for more q.e. for longer? i think it is hashtag trust. and there seems to be a lack of trust in the ability of the

pboc. we are there. ♪ . .

manus: shaken and stirred. after a volatile day of trading, chinese stocks extend the worst five-day drop since 1996. francine: no respite for europe. indices across the continent are in the red. anus: all bets are on. the latest consolidation to have gambling industry. good morning to our viewers in europe. good evening to those in asia.

a warm welcome if you're waking up in the united states. i'm manus cranny. francine: i'm francine lacqua. this is "the pulse" from our european headquarters in london. manus: chinese stocks finished the day in negative territory. he worst five-day drop since 1996. francine: european markets following declines with indices in the red this morning. tom, china has cut rates again. first of all, why? and the markets don't seem to think it is enough. tom: yeah, so i think there is a set of reasons which are troubling china's policy makers. the lowest reading for the p.m.i. since 2009 in august. markets as you mentioned are in free fall. we had large falls in the markets on monday and tuesday. the concern from china's policy

makers is those two pressures are commounding each other. -- compounding each other. china cut rates again. the fifth cut to try to break that vicious spiral downwards. it has not been enough for the equity markets. who can tell what is driving the the psychology of mainland investors? one of the lessons from the last few weeks, well, we have seen aggressive moves from china's government to attempt to stabilize the market, when markets are so front lying with fundamentals, it is not enough to restore investor sentiment. manus: they are two very eparate things, aren't they? the reality is the market wanted to see them do more about growth. more about housing, banking,

liquidity. that seems to be the preoccupation of the market. it seems they capitulated and walked away from equity and focused more on traditional stimulus. tom: i think one of the concerns over the last few weeks amongst international investors was the degree of administrative controls imposed on the market. major shareholders were told they could not make any sales. there was a halt to trading for more than 1,000 stocks. these dependent look like the kind of mechanisms and policies that we're used to trading in new york or hong kong or the u.k. i think the positive spin that the last week or so is that the government has pulled back from the administrative controls and has resorted to a more recognizably market-based instrument whether

the objective is to boost growth or restore investor sentiment. francine: thank you so much. that brings us today's twitter question. which central bank has the circuit breaker and which one wants to use it? they may decide they will hold back. manus: i wonder if we should have #e.c.b. in there . let's bring in the head of macro strategy at state street global market. welcome to the show, michael. what do you make of where we are? margin trading in china has gone from 2.27 trillion, down by 50%. do you think we're overdone, overrun? >> yeah, i think it is a little disappointed. i think as tom said previously people are beginning to question some of the policy setups in china, if the weather can

actually impact investor sentiment the way it has been in the past they eased very aggressive, almost more aggressive than anyone else. now they are not getting that positive response so there is that question. the other thing which i think is really interesting is how european markets react to that .nstantly here is the odd thing. at the start of the year, at one point this year chinese stocks were up almost 17%. it looks pretty. but you know what? it is correcting previous gains so the interesting thing on the way up is that european markets, global equity markets were quite disconnected. the chinese market has one of the lowest correlations with the rest of the world. it is very low. the interesting thing that i think we have learned this week is actually there is a

recoupling and markets look to be more systemic and vulnerable to china than they were two weeks ago. francine: you said the other day you thought the selloff was overdone. >> yes, it is. i would stick to that. the thing that i am trying to -- we're trying to get our heads around is the idea that the commodity markets and a lot of the rhetoric around china is that the global growth is about to collapse. that we do not you try think what -- it could also be data. things like u.s. g.d.p. what if the stocks were to improve again? that will just be a little bit of a check on this global growth demrue that everyone is talking about. a lot of that comes from reading he commodity prices. there are supply issues there as

well. global demand is softening as well. some markets are priced, emerging market currencies have priced in massive, massive global growth. it is just a question of is it really that bad? manus: that is probably what we're going to try and work out. we overreach. there was a great article written yesterday that comes back to point that the oil market has priced itself into oblivion relative to what market participants are seeing in terms of real demand. you have financial armageddon in price versus stability in terms of demand. demand from china which is a restocker in terms of crisis. to what extent are we seeing financial vandalism versus -- why not? financial vandalism. they have to make money somewhere versus the reality of where we are?

>> a lot of it is that sentiment and positioning and adjusting to volatile tifment it is not vandalism to manage your portfolio on days like monday. that was a black swan day. massive tail risk. few have changed their portfolios in response to crisis. there are parts of it which become unfortunately self-fulfilling and now is the time that you come in and see the adjustments and think about the capital that will restore hat. you have to respond to it. right now this week markets have become more systemic and we're seeing a reaction to that. francine: thank you. michael will stay with us. manus: here is a look at what lse is on our radar.

a historic opportunity to resolve long-standing issues. the iaea said iran has allegations it is working on nuclear weapons. supporters see it growing. francine: the tieup would bring ogether the u.k. and ireland's makers. if the deal goes ahead, they will receive a dividend of 80 million euros. manus: japan has admitted it can't guarantee the stadium will be ready by january that year as demanded by the international olympic committee. shinzo abe scrapped the original plans after the construction costs. toke joe now expected to come up with a new plan by the end of

the month. first half next, sales soared. where did the growth come from? e dove into the figures. manus: you're looking at live pictures. francine: i'm not sure about this. hey are just starting out. manus: some friends of mine have done this. they have come home badly injured. francine: it is basically a festival in spain where they throw hundreds of thousands of tomatoes at each other. it is in poor taste also on such a weak brutal market. manus: red all over the screen and all over the the streets there. francine: we're back in two. ♪

manus: welcome back to "the pulse" live from bloomberg's european headquarters in the city of london. the world's largest advertising company reported a 7% rise in tirs half sales but concerns remain about emerging markets. caroline hyde has the breakdown. caroline? caroline: yes, indeed. w.p.p., the world's biggest advertising company, the numbers look pretty good.

growth seems to be still coming. sales climbing 7%. the biggest earner on the ftse 100. dividends beating expectations. 37% uptick in the dividends. things look pretty good for the next quarter. july, sales up 5%. the previous half, we did see some interesting geographical trends. north america, the strength of that dollar did help sales there. up 17%. the standout performer. maybe some concerns about greece. equally, even more interesting trend if you're looking at where the focus point has been for w.p.p. the vast growth economy. the likes of southeast asia. that is where we saw actually russia and china seal the biggest hit. overall these growth markets of africa, the middle east, asia,

they have been contributing 30% of sales to w.p.p. rit countries in particular, brazil, russia, india, china, 12% of all sales. this is where the pain is creeping in. southeast asia, central europe. they both slowed. russ has -- russia has geopolitical issues there. fascinating comments coming out on china and also what they call the currency war. look at this. the international currency wars have not been helpful as a black or a gray run. they feel the yen being devalued. let's have a little switch and focus in on china in particular. it is dominating the market at the moment. the world's second largest advertising market. about 10% in total.

it is important. it is crucial. it is why w.p.p. -- 15,000 employees there. the largest revenue exposure in china is w.p.p. compared to its peers. these companies are not as exposed to china as w.p.p. nevertheless, despite the concerns that have been sighted in this earnings statement about china, the fact that we are seeing destabilization from the despite the cular, slowing in these particular markets, the outperformance of the u.s., high growth economy, they say the concerns about china and brazil remain, be we remain unabashed. they are not looking away in terms of the long-term trends. francine: thank you, caroline hyde. investors and traders have said for months that the fed will

raise rates in september or december. could october be the time? some think it could be too soon given the volatility. earlier, yale university professor robert shiller gave us his thoughts. >> we could see more aftershocks from what we have just seen over the past 10 days and those aftershocks can shake confidence. they can get people into a panic mode and at that point, it will be emergency time if that happens. i'm not saying it will, but it could happen and the fed would have to take action and keep ates as low as possible. manus: let's bring michael back the conversation. head of rate strategy at state street. if the fed goes this year, it is

serious -- potentially a serious policy error that all central banks are trying to fight inflation. you have some thoughts on that, haven't you? >> i do. earlier in the year i think we were pretty confident that the deflation threat had gone. and so we get a very near term read on the inflation faster than the official data. what that is telling us now is that confidence that we had earlier in the year in part risk,e of the prices, the a double dip in the inflation numbers, inflation is going to go negative again, particularly if europe and the u.k. interestingly perhaps not in the u.s. the u.s. it looks like inflation the next three months is going to go back towards flat. in europe it is going to be very negative. the question really is the fed has said all along they needed to be confident that inflation was going to be returning to target over there, your

forecasts -- ok. current inflation shouldn't matter that much. but the starting point is important. if we're heading back to the euro or lower, the questions outside the u.s., whether the e.c.b. needs to ease again, all of this talk about rate hikes in the u.k., with a really negative angels will rate. francine: does the fed need to ease again? he thinks there is a possibility that the fed needs to ease -- i of deflationary respect him immensely. >> the comments that shiller made, i think it is about two things. the animal spirit and deflation work. -- risk. in terms of animal spirit, i that investor confidence is neutral gnaw.

expectations are falling. in the u.s. almost back down toward their lows. i think the question now is what happens next in the data? what happens next in oil? because you know, if the next move in oil is significantly lower and the data doesn't pick up then the expectations could start to gather momentum once again. that is definitely a risk. i don't think we're there yet. certainly we're in a situation where in the next month, two months, investor confidence is deteriorated even further. the markets are systemic and you have the deflationary risk. i don't think the it is main case now but it would be possible to end in that scenario. manus: if that is the risk tr the consumer and the oil market, there is none of that at the moment. >> well -- manus: at the moment. >> that has been the story of 2015. the deflationary impetus hit us at the beginning.

we had a massive response from everyone almost, except the fed. a lot of central bank surprises easing almost everywhere and q.e. from the e.c.b. i don't think we're quite there yet. the inflation numbers are heading back down. we need to start looking at inflation once again. inflation expectations are falling, they are very low everywhere the numbers are slowing. francine: michael, thank you so much. michael metcalf from state street global marks. manus: we have our twitter question. as michael just said, maybe we should have hashtagged the e.c.b. looking for a council dipped inflation. what central bank has the circuit breaker? francine: the only thing i know for sure, if i'm a central banker now, i would be worried. ♪

manus: welcome back. this is "the pulse" live streaming on your ipad, television and broob.com. volatile swings in china's stock market, they report earnings. one of which came out today. a 50% drop in profitability. let's bring in our managing

editor. we have seen it. we're waiting for them. just give us a pick for these -- of the energy. >> it varies a little bit. cnooc is a pure oil and gas producer. they have horrible results which is a result of the crash in energy prices. they will benefit interest the fact that fuel demand is stronger and oil is cheap. francine: you expect more of the same? crmp nook is different. doesn't give you as much of a glimpse of china's economy. >> i think that is what we're going to be looking for. what it is telling us about fuel demand. so far it has held up pretty ell. what we're looking for, signs of industrial slowdown. one thing to look at for

example, industrial lubricant demand, very boring but it gives you an idea how busy china's factories are. manus: everybody wants the remotest information to the reality on the ground. the campaign within the energy sector, part of their president's drive. what do investors want to hear there? >> this is an interesting aspect of earnings this week. especially at petrochina. as many as 10 executives were shown the door they had a huge management clearout there. it is quite a time to be taking on and i think that will keep people interested. francine: thank you so much for all of that. manus: coming up next, solutions that we all possibly want. iphone, a battery, one that lasts a week? impossible, you cry.

you think that the hydrogen battery, well, that is up to the job. we speak to them next. francine: you can follow us on twitter to talk batteries, china or oil. we're back in two. ♪

♪ ♪ ♪ get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift.

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 after a volatile day of trading. chinese stocks having the biggest five-day slide since 1996. the markets were unconvinced by the peems bank of china to cut interest rates for fifth time since november. the shanghai composite has lost half of its value since mid june. francine: the likelihood of a

decreaseing. is manus: the world's largest advertising company said first half sales increased 6.8% as business from existing clients icked up in north america. sales beat estimates of $4.7 billion. check it all out. >> thanks, after all of that volatility in asia, stocks in asia have pretty much been heading one way and that is down. you can see the flashing red at my feet and also here as we look at the map, pretty much every stock index heading lower in europe. the ftse 100, one of the worst performers. this week, 17-18 western

european markets went into or extended corrections with the dax in germany of course entering that bear market. if i take you to stoxx 600, a couple of days ago it had its worst day since 2008 and then yesterday had its best day since 2011. that rally was shoft short-lived. it is down again heading for its worst august since 1998. i want to highlight some of the biggest movers on the benchmark this morning. it is all about betting company or at least it is here for me. two of the biggest gainers, these two stocks have actually hit report highs today. this of course is about a merger that they agreed on. that was announced today. e heard that paddy power shareholders will own 52% to 48%. it is to with regulation, taxes and the move to onlined mobile

gambling. william hill is moving lower. is that because of concern about ing tition from this bet giant that is pretty much going to be formed there from that merger. i just wanted to give you a very quick check on currencies. euro moving lower today. what i want to headline here, the swiss franc. the dollar gaining. a move out of safe haven currencies, the franc and the yen with all of these growing concerns over china. back to you. francine: thank you so much. in about 25 minutes from now, "surveillance" with tom keene. he joins us from new york with a preview. given the wild gyrations on the market, i want to hear what you think about the fed's next move. tiger: october gets in -- tom: october gets in the way. it has been september and december. and the game playing into next year. certainly what we see at the bloomberg terminal is a delay by

the fed. that is part of debate at jackson hole that we see here in a few days. what i would suggest is a raging debate about global economic growth. we'll drive that forward wrapped around fed guessing. charles will joining us from columbia business school and the manhattan institute and we'll important king to an investor. david pearl is very good on value and cash flow. we'll talk to him about what we see in the markets. francine, it has been wild. francine: it has been wild. zigzagging. all over the place. i look forward to "surveillance." tom keene there. manus: not having a charger on your iphone for an entire week sounds like a dream. but intelligent energy claims to have technology to make it happen. it has patent for a hydrogen fuel cell that is more economic we have urable and

mark lawson here. very welcome to "the pulse." you have the answer. you have the creation to all of my problems, a battery that would last for a week. how close are you into putting this into production with apple? >> well, we have a number of partners across the globe. onsumer electronics. retend not to discuss our partners. we spent 20 years on this journey adopting the fuel cell technology. it is applicable not only to consumer electronics but in cars and the replacement of diesel engines. using consumer electronics is relatively new. francine: talk about -- what are the dangers? it is taking you 20 years. you're one of the few that is trying to figure this out. it looks a little bit bulky. what is the one thing that actually makes you think this

could be delayed? this may be pricey? this won't pick up as much as we want it to. >> the first generation is in the apple storrs called the up. it is the first generation product. now we're on that journey. we're closer to the end of that journey being able to embed the fuel cell directly into the device itself itself so the bulk will be lost. a fuel stick where the hydrogen fits within the fuel stick itself . a picture of what that means, if i was to tell you 13 years ago that i would be drinking water interest a bottle you would think i'm crazy. people drink water out of convenience and freedom. that is what we're trying to bring to consumers. freedom. we want to take them away from

being consumers to being producers. fuel cells produce electricity. to ou value that not having plug in for a week, let's say the cost of a cup of coffee, that is a $300 billion market for fueling. francine: i don't think you have to convince anyone. everyone would be delighted if they didn't have to plug it in every in certain cases one or two hours. what i'm trying to understand is is it dangerous or something that makes it heavier? i don't want a heavier phone. >> no, it certainly won't be heavier. we have been able to embed it into the device. in terms of safety, and that is a very interesting question, around hydrogen. it is a matter of where we draw our outline with -- every day we go and fill up our car with octane which is a high explosive and drive it around with hundreds of other people driving it around. thes a different fuel.

all of our partners use products and we embed our technology again, are used to the developments. manus: the scaleability of this eye, sooin my mind's it on our iphone. the scaleability of what you have created into africa, into emerging markets, into i suppose those areas that rely so heavily on the availability of power, what could happen with that? >> the technology that we have, we make power from a phone up to 100 kill watts for a car. one of the things a that exites us most we're doing in india. cutting edge 21st century technology into india. in the power market we're replacing diesel engines. the exciting thing about that is

that we'll be rolling out tens of thousands of fuel cells. that is probably more than have in the history of fuel cells. the key thing about that is we can get the price down and with the price coming down, we can enter a whole muir yad of markets. -- myriad of markets. manus: coming up next, how can industry make robots for interaction with humans? we'll talk about collaborative robotics after the break. ♪

francine: welcome back to "the pulse" live from london and on bloomberg tv. the route in the market, the ukraine's richest man saw his wealth slump more than 40% this year and a mexican billionaire has seen his worth halfed. it seems yesterday we were talking about chinese billionaires. if you look at how much wealth has been lost in the last couple of months in the merging markets, i would assume it is the emerging markets billionaires that lost the most. >> definitely. absolutely. you have not only the markets coming into effect here but you also have currency. there is e.c.b. evaluations in china. evaluations in kazakhstan. that is reducing the value of

their holdings as we speak. manus: try and give us some context. sometimes we're not recognizable with the names. in ukraine, we know poroshenko. we know he is a rich man. you have come up with somebody who is worse off than he is. >> poroshenko lost 40% of his wealth but the richest man in the ukraine has a very large steel and coal operation and he has seen his wealth fall completely in half. he is still worth $5.5 billion. not terrible but you already have a bad situation and he is significantly worse off. francine: billionaires are exposed to commodities. linked back to emerging markets. we're seeing billionaires in mexico and nigeria losing poufment >> africa's richest man, his

ties into e into cement. you have currency pressure there. his wealth plunged 20%. manus: just when we think of what was discussed over the past couple of days, we had a look at china. and central and eastern europe now. it spreads beyond that. in term turnovers geography, fran mentioned the emerging markets. some of these big boys are under pressure. >> carlos slim, mexico's richest man has lost $14 billion so far this year. he is still tremendously wealthy but that is a significant amount. that goes back to the telecoms market and the a lot of the pressure you're seeing there and a lot of his direct stakes are ing under pressure.

his grip on the telecom industry is loosening. and then you have the market and the currency. it is a bad miss for him. francine: thank you very much for all of that. manus: let's get you up to speed with the top headlines on "the pulse." a french prosecutor says the man suspected of carrying out the attack on a high speed train last week watched a jihadi video the d just moment before violence. the prosecutor also said that he was carrying 270 bullets, an assault rifle and a bottle of -- francine: japan can't guarantee its stadium for the 2020 games will be ready. abe scrapped the original plan after construction costs ballooned to $2 billion. tokyo is expected to come up the a new plan by end of

manus: the studio behind the batman versus superman movie is in talks with the china media capital to make films on the mainland. they surged 24%. $4.8 billion compared to a in north america. francine: ashley madison is facing a backlash in the u.s. from angry plaintiffs taking action turned pseudo name john doe. they are being sued by representatives of 37 million anonymous users. the suit said plaintiffs paid to have ashley madison scrub their data but it failed to do so. manus: is life too short to have an affair? that is the question you have to ask yourself there. in june this year, a tragic, tragic story. a man was crushed to death by the mechanical arm in a volkswagen factory in germany.

how do we make robots and humans work better side by side? joining us to discuss the subject is olivia. livia, what exactly is cobotics? >> it sounds like collaborative robotics. machines that can work safely with humans. they are very good and precise and strong. they can be very dangerous because they have no idea of their surroundings. if a human gets in the way, for example, they can cause horrible injuries and in some cases death. francine: this makes a huge difference of course because robos are being used more and more. are there any industries ahead of the curve there, using more robots and trying to make it safer? >> autmotive and aerospace are two obviously that have been using robots for years.

if they can get humans to work more closely they can free up more space in the assembly line. theg take over tasks that humans have to do over and over again which can cause injuries. consumer electronics, building smart phones, laptops, tablets. this has always relied on humans putting together components. we're starting to see precise new cobots to do this job instead. manus: how soon? this is the ultimate paradigm or me. with the iron. francine: i think you'll have to wait. >> i think that is a while. although we can work alongside on an assembly line where it is carefully controlled. unfortunately in the home, there are lots of added variables.

no pets. manus: me. >> you. more development needs to be done in this space. francine: it is a shame. such a chaotic place. olivia, great stuff. thank you. manus: coming up, there was a 400-point rally in the dow. that crumbled away in the lohsing hour of trade. there is only one place to focus the rest of the day. europe gave up the ghost. what will america do next? stay tuned. ♪

francine: welcome back to "the pulse" live on bloomberg tv and streaming on the ipad and bloomberg.com. manus: japan prepares to host the 2020 olympic games but a monument from its past has .ecome a victim the hotel okura recognized as an architectural treasure. francine: it is now facing temperaturelation but its devotees are not letting it go without a fight. >> walking in is like stepping back to 1962. now you are in a different world. then people start to speak more quietly. >> the first thing is the lobby. erenity in this bustling city.

the orchid bar. >> over the years, this remarkable hotel has hosted the elite from world leaders including reagan and obama to stars on hollywood's a-list. a deliberate mixture of morn earnism and tradition, its unique charm will soon be a mere memory. the space that occupies it is wanted for a monument for tokyo's next olympic games in 2020 and the city's view of the future. two traurs planned. the son of the original architect started a petition to save the hotel and was stunned by the response. >> i felt quite strongly that it was worth saying to people do you realize this is part of tokyo's history? and before long, we'll have --

>> from simple emails that sponse saw the fashion and architectural world coming to its defense. to us hotel wouldn't talk on camera but in a statement said the hotel is too old. the rooms have become obsolete. making it harder for them to compete. they said they will do their best to preserve the traditional style but the critics have doubts. >> these particular buildings in 1960's which include the hotel okura. it is not new enough. it is not old enough. there is a lack of focus of looking at this particular era as something which is very significant. >> campaigners are not expecting to win their fight. if it is lost, the world would

have lost another precious link to the past. loomberg, tokyo. manus: i quite like it. francine: we need to hurry up or stop. for a look at what we're watching for the rest of the day, we're joined by hans nichols. we have had such intense sessions in u.s. stocks. i call it zigzag. turmoil. today we also have durable good numbers out. what are we watching out from the u.s.? hans: durable good is something that is tangible. expectations for the july number a little bit down but that is in part because june numbers were so much higher. here is a fun thing about durable good. i like the numbers. i like all of these new numbers because i don't have american sports to watch anymore. these are my new sports. durable good in june were much higher because it had the paris air show.

won't have that factoring in. we'll get a better number with transportation. francine, i'm not going to give you a prediction on the markets. futures right now at least on the dow up about 200 points and again manus knows more about the markets, so ask him, not me. otherwise enjoy your wednesday. guys? in a life gone by. what new york does the rest tend to follow. francine: maybe that is china now. who knows? hans, thank you so much. hans nichols there with what you need to watch out for the rest of the day and it is markets. that is it for "the pulse." manus: we are done for the day. we're back tomorrow. keep it here on bloomberg tv. we have "surveillance" coming up next. we know tom keene is focused on the markets. our twitter question of the day. francine: which central bank or central banker has a circuit

breaker and actually which central banker is ready to use it? follow us on twitter. tweet us. we'll see you tomorrow. ♪ .

this morning, market struggle to find stability. the dow down 12% for the year. oil, fragile.

michael mckee and brendan greeley travel to jackson hole. the vice chairman will discuss inflation. it is the one thing donald trump has not discussed, the stronger dollar trumps all. good morning, this is "bloomberg surveillance." it is wednesday come august 26. i am tom keene. i take two days off, look what happens. a tent in central park, i had my insect repellent. trout fishing in the pond. i found nature in new york city. >> did you do the boats? tom: we did the gondola rides. i did not sink. it was great. tom: for all of you worldwide, come to new york city for vacation.