francine: on the upcoming european and asian markets tracked the biggest gain in four years. manus: the positive move snaps a two-week selloff. that arranged $8 trillion. francine: the u.s. fed president says the rates look less compelling. ♪ francine: welcome to the pulse. live from bloomberg's european headquarters i'm francine lacqua. manus: european markets are

ripped up. the are checking the biggest gain in u.s. equities in four years. francine: yes they are. that rally came after a selloff. overnight, china's benchmark index posted a 5% index -- 5% gain. let's get context. mark barton is back in the house. things are wrapping higher. the fed's magic discussion did the job. fedo the -- mark: u.s. caused the big rally in the united states. he spoke yesterday. in an unexpected comment, you have to say, he said from my perspective the decision to begin the normalization process seems less compelling. the keywords sit is desperate keywords -- less compelling. getting close.

is the six days that preceded this rally. yesterday, prior to the s&p 500 fell by 11%. it's sunk by 11% yesterday. it rose by 3.9%, biggest 2011ase since november 30, , all because of his comments. trade -- reducing the probability the fed will raise rates to 24%. 18th, the odds were 28%. we are going to have technical fun here. look at the emerging markets index, this is a one-year chart. i want to look at the 50 day moving average and the 200 day

moving average. the purple line is 50 day. the green line is the 200 day. above for line should be the green line. this is not a good trend we are seeing. the trend is very much a downward one. i've looked at the rsi, the relative strength index. means anabove 17, it below.s the trend is negative. we are no longer undersold. the index has written for the second day -- index has risen for the second day. a little bit of technical fun. mark barton with the charts. manus: let's get to output a

question. when do violations really start to matter -- when do you asians start to matter -- when do valuations start to matter? us. when do they start to matter echo francine: he says investors need to keep the volatility in perspective here at this perspective. -- in perspective. david, welcome to the polls. call things have been cheaper than they were. you buy great i don't think

valuations tell us very much. ofwant to have the drivers corporate strength. the anchor for equity investments right now. manus: the other thing we are seeing is the correlation between the chinese markets and developed markets. that has been flipped on its head. if you look the moves in yen and copper. that relationship, is it an incorrect assumption? to we looking for a reason settle in these the developed markets? daily: i don't think the chinese equity market tells us anything about equity growth. it is a bubble on the way up and down. now it's bursting in their face. we need to get past this. we need, if we're going to see a sustainable rally, we need to get past the crash in the

chinese market. i hope they let it go. i think we need to find a bottom in commodities. both things are pointed desperate things are pointing to a weakness in chinese economy. it is not as pronounced as it appears. francine: you think that the market route has nothing to do with some type of global recession. what about commodities? i know it is a supply problem. do not have any doubt in your mind there could be something more ugly out there? david: i think china's industrial base is slowing dramatically. if you look at your industrial production. the consumption of things like cement. if you look at rail carloads, electricity production, absolutely. the old china is going away. the new china is emerging. it is about services, higher tech development. for a long time, your weakness

and commodity demand from china has been a part of our narrow view of commodities that we have expressed through the australian dollar and canadian dollar. it didn't just happen overnight. commodities have been in the bear market for three years. now we are seeing a capitulation of them which signals the beginning of stabilization. i wouldn't be surprised if most of these commodities find stability here at very low levels and stay there. i am not calling a rebound. these massive dramatic falls is likely. it could be an improvement to sentiment that will help drive a positive view on equities that we will see next year. manus: the euro. i'm looking on a weighted basis. over the past month, where up to .3%. -- we are up 2.3%.

i didn't want to get it actually .trong -- actually wrong there is a certain amount of irony. it capitulated and we find a bottom. david: my belief is there is not a safe haven trade. pushing the fed back. secondly, hedge funds use weak currencies as funding currencies. they borrow and euro and yen and invest in places like malaysia. if malaysia is making a lot of money, you have to close the trade. under extreme market stress conditions, it was a short squeeze on both of these currencies. i think they weaken again by the

end of the year. below 1.10 one the euro-dollar. jp morgan global market strategist. we will be talking about the fed next. hundreds of french politicians are gathering. francis lobby that represents more than 750,000 french firms. it comes at a time when france's economy is saying zero growth. onombergs caroling going joins us. great to have young program. what is the mood like. >> there is some concern that china, although many executives say the concern with china is only for the short-term. it does not effect short-term decisions. you have as many as 9000 french

companies with a big presence in china. i spoke to one big executive who is exposed to china. just a month ago, they had their ,nnual forecast for revenues because of less demand from chinese builders. i spoke with him and asked whether he was concerned about what we are seeing on the market. ours when theyke look get different matter. china is ai think , and thatat will grow will use a lot of our technology. if you look short-term, depends on the market. caroline: schneider electric's doesn't think it will have further impact. --hink we are not leaving

we're not living with a new normal in china. in china.ation driven that is normal. in the short term, we are seeing some adjustment. france had zero growth in the second quarter. stagnation. way behind the others. our executive -- are executives getting impatient? are gettingey impatient. we had slightly good numbers this morning. mrs. confidence slightly raising. -- business confidence slightly raising. this improvements are very small. it declined by 0.1%. 3.50 5 million jobless people in france.

-- 3.50 5 million jobless people in france. -- the new, young very dynamic expect her. when you later -- one year later, [indiscernible] triedhink the government movement in terms of reforms. they are try to push some new reforms. we have seen that this year. it is insufficient? i believe not. we have to reduce public spending, as i told you last year. i think we have to continue to do that and go faster. i think france needs to continue to make some clear reforms. caroline: labor reforms.

these are the things that executives want to see in france today. inside the prime minister's house, he has promised he will start cutting taxes for businesses. that may not happen before 2017. could that be too late? 2017 is the year of the next presidential elections in france. manus: lots of potential surprises. thank you. francine: stay with us for more on the french story. he speaks to us exclusively about the state of the european nation. his hopes for france's future. we bring that exclusive interview tomorrow. manus: what else is on our radar this thursday morning. the federal reserve dialing back. says china was copycatting the outlook.

in the unscheduled statement, williams said the case for an early rise is becoming less convincing. way has lost 5% on its investment. it follows the biggest selloff in chinese stocks in two decades. manus: greek prime minister has ruled out leaving the coalition with opposition parties. if he goes month -- alexis tsipras says he will not combined the parties that she will not combine the parties. own party youhis need over a third bailout. party mu own tinied over a third bailout. for 137,0004% raise

employees. the company's biggest and more than a decade. it takes the standard rate of pay from seven pounds eight pence to seven pounds 86 pence per hour. manus: belichick says he would tax himself more if he became trump says- donald he would tax himself more if you became president. targeted hedge fund profit which currently hangs at a lower rate than regular income. >> yet seen my statements. i have done very well. the middle class build this country. not the hedge fund guys. funds people in hedge they pay almost nothing. it is ridiculous. francine: i don't know if he's my friend, but i am obsessed with his interviews.

you gets more interviews on the website. .p next, central bankers monetary policies. how will recent events sway the conversation? that is what we are discussing next. ♪

francine: welcome back to "the pulse." we're a lot -- we're streaming live on bloomberg.com, your ipad

and your phone. china slowdown is complicating. >> from my perspective at this moment, the decision to begin the normalization process at the september meeting seems less compelling to me than it was a few weeks ago. normalization could become more compelling by the time of the meeting. francine: as the market moves, to wyomingre heading to talk inflation and monetary policy. janet yellen will not be there, but expectations will shed some light on the timing of and should rate -- of interest rate increase. manus: david stubbs is to with us. it is all about inflation. america does not have that problem.

a disinflation environment we are going into. david: inflation has been the biggest hole in the bank of england. as we near production of rate -- we the core inflation get an update on friday. it is very low. uptrendt signaling an that would conceal the deal on a rate hike, especially with these market conditions. francine: i want to show you a chart of inflation. i think we have that for you. we'll have a look at that, but basically, i want to go back to china. if you're at the fed, you're looking at inflation. david: it is a measure of market expectations of future inflation. this is telling the fed you're going to miss your inflation target right now.

it is screaming at the feds there is no reason to raise rates. there are no arguments to get into stability, the need for measures. on the inflation site, the market is being what it expects. the china turmoil does make a difference. it manipulates interest rates in the market. conditions in the market matter a lot to the federal reserve. china is a big source of the world's goods. deflation there and a slightly weaker currency may matter somewhat. the message inflation when it

+++ the feds to raise interest rates did i think it is coming. we need to be patient. francine: bullis up to mystic on china, because you saw this coming. when you look at chinese land, looking at some of the state owned companies, they were quick to say think gasoline demand would peak. figures below expectation. it gives us insight into refining. if you are fed, how do you read into this? they are changing course. it is going to be painful. is there anything that says we should wait six months to see what it goes, because of turmoil ? david: to clarify, i believe china is slowing sharply. traditional investors are careful research driven active management can say -- can play an active role did consumption, services. even the housing market which is stabilizing. fed and oilo the and gasoline, absolutely. i think we are on the cusp of spending andxtra confidence come through from the low oil prices.

on friday, that report could thatfurther production consumers are finally spending. that is right on schedule. these things take six months to a year. yet to convince the consumers. they have to be able to see that it is not just temporary. my personal view is it is lower on oil. tot is going to feed through consumers and businesses in the united states. it is pro-equity, pro-margins, pro-earnings. that if i -- i would think just wait one month. i think what you need is that kind of stability. this is the most essential desk this is the most important central bank -- this is the most important such a bank in the world. manus: thank you. francine: later we speak to

kansas city reserve resident in jackson hole. that is at 11:30 london time. trump says he would tax himself more. you have a whole interview coming up. saysepublican front-runner he would simplify america's tax law and target hedge fund profits which are taxed at a lower rate. it is answer is yes, tremendous burden of the country. i'm saying for the good of the country. none of them are going to support me. i don't want their support. speaking of that, hillary clinton has many hedge fund people supporting her. in the end, i would say the hedge fund people are making a lot of money and pay very little tax. i want the middle class to be

thriving again. we're losing our middle class. cut?uld you change the tax >> i would change it. i would take interest out. who makeake people hundreds of millions of dollars pay some tax. i want to lower taxes for the middle class. i would to lower taxes for people who are making a lot of money but need incentives. >> that would affect people and you wouldal estate -- like to raise in taxes on yourself? >> that's right. i do very well. . don't mind pay some taxes the middle class is getting clobbered in this country. funds,people in hedge they pay almost nothing. it is we did kilis, ok? ok?t is ridiculous,

more: politics is interesting than economics. david: i think this is fascinating. attacking hedge issues. america's tax load needs reforming and simple vacation. he is certainly bringing an energy. we would discussing whether he can get through the primaries. houthi the -- how would he go head-to-head with hillary. how would he attack the issues that affect the middle class. he lives a very middle-class lifestyle, does the? francine: i can't get enough of this. how do you model a dollar if he becomes president? david: what a question. i think it will probably be stronger. it will be pro-business.

it will be a nationalistic tone. -- francine: all right you heard it here first. ♪

francine: "the pulse." welcome back to -- welcome back to "the pulse." i am francine lacqua. manus: i am manus cranny. european stocks started the day strongly. 5% at theosing up end. the federal reserve is dialing back expectations of a rate hike next month. dennis daugaard says china's -- work work obligating

obligating the outlook. statement,eduled william dudley says the case for -- arly rise is becoming alexis tsipras says the party would not put together the government. they were at some parties -- they were the parties that support him. he did not rule out a government of national unity, just that he would not be prime minister. despite stronger sales in china. caroline hyde is here to break down numbers. where was the disappointment? a look at the line but -- the lineup. maybe you are a cognac drinker.

overall, focusing away from the actual booze and the profits they make. 2% rise overall. that was below estimates. many looking for 2.6% overall. and pull down. china, sales are falling. last year, sales plummeted 20%. now just down 2%. it is a thorn in their side. vodka that brand absolute . challenging markets means they have taken charge of 104 million euros. u.s. a bit of concern. russia dragged down europe. asia hurting because of china. -- number one brand in china. approximately 50% of their

profits. 40% of sales in 2014. it is crucial, but they get there makes right. no real light at the end of the tunnel. the investor challenging a volatile economic environment. they don't let us know what they think of the route in the stock market. but they think of the devaluation. compare that to debbie bp who gave us their view. instead, we are having to analyze. , the french rival, this is why they are hurting the very extravagant scotch whiskey. perhaps some of the higher end scotch whiskey. cognac is doing so well.

when they're clamping down on giftgiving. areaare refocusing on an of the emerging middle class. slightly less expensive tricks that they produce. could that be an area of growth? what about locally produced alcohol? certainly, the scots a make locally in india is reaping rewards. they have seen significant growth in india get could they make that work for china as well? by with still standing their confidence. the third quarter, they were confident in their pricing makes. thee hearing they stick by growth in markets. they say it is improving. so far, we're not getting any bang for our buck. back to you. francine: caroline, thank you. the very latest on liquor. economice annual

compose him kicks off today. will topglobal selloff that agenda. we are joined by our chief international economic correspondent, simon kennedy. been six or seven times to jackson hole. is a great gathering. yellen is not going to be there. simon: they are extremely important. they are in the middle of in the shadows of the teton mountains. it once there,rk you're in this large facility with other taurus. taurus.other monetaryiscussing

policy issues. they do so behind closed doors and in a way that allows them to discuss the end up epidemic side of monetary policy. -- discuss the epidemic side of monetary policy. they hope for a nice discuss of atmosphere. they will talk about markets. they would talk by china. we are hoping to get a clue on whether they will still hike this year. september looks unlikely. it is not completely off the table? compelling was the comment from bill dudley. what everyone is going to be watching is saturday morning. janet yellen is not there. stanley fischer is a member of

the fed. he is pretty close to janet yellen. if they want to communicate a message on september, saturday would be a good time to communicated. manus: he said that every indicator that the fed looks at, inflation is not their problem as long as the fed reserve members are alive. they are fighting deflation every single central banker that is gathered there is fighting deflation. this is the risk, they can go for a 25 basis point hike in the u.s., that would be a replica of a mistake. it would be like 1939 again. simon: -- simon: all of them think about some of those increases. new zealand when up twice. the feds caught in a trap.

they don't want to move prematurely. they are in a bit of a catch-22 situation. september,'t hike in everyone goes the fed is really worried. situation. that fisher might try to keep a holding pattern going. maybe talk less compelling. keep it on the table if they need to. francine: thanks so much. a jackson hole veteran. next, diamonds are forever. is the same true for their prices? sophia hirsh is here to discuss the impact on the business. ♪

francine: welcome back to "the pulse." where live from bloomberg's london headquarters. buts: diamonds are forever, could the same be said for the value? economyaltering chinese -- the weaker schwan may

becomeas the products more expensive for local consumers. manus: they have lowered the prices after an attempt to cut diamond production. down about 40% so far. that's down about 14% so far. joining us, sophia hirsh. great to have you with us. results a little bit later on. rough diamond prices are down. is this nirvana? sophia: with the gold and platinum prices being low as well, the finished time at prices haven't changed too much. we deal with mirrors don't. -- we deal with rarer stones. francine: what is your biggest concern for the business? if oil prices are down, that is

a benefit. if you can pay for cheaper raw diamonds, that is a benefit. to make it more about emeralds, rubies, could that play into consumer consciousness? sophia: we specialize in rare-colored gems. it does mean that we always have some interesting gems for the consumer. manus: [indiscernible] wasn't for you. point was the craftsmanship is amazing. what these guys do is pretty unique. the crest the ship, how are you finding that? sophia: i think we have huge

talent in the u.k. there is great british craftsmanship. more could be done to develop the skill set. a lot of young people coming into the trade in a very difficult trade. if you look at platinum, you need many years of apprenticeship before you can start making a piece. francine: in terms of the diamond, do a lot of people come thing --is a romantic do you find more people use it as an investment? diamonds tend to fluctuate in price but not that much. sophia: long-term it is a stable investment. it is something tangible. you can see it, you can enjoy it. it is not going to go down by 30% in a crash in the market.

find sapphires and rubies are being purchased. with a long-term view of handing it down to the next generation. knowing there is something of value there. manus: this was a story that francine shared. the millennial challenge which 35-year-oldsto --ually -- a drop in number that millennial interest and demand, how do you appeal to that? changing.ings are it has been the same in fashion. more people are looking for individuality and something that is not manufactured and available in 300 stores worldwide. that trend has been noticeable. you have chanel buying berries.

well.translating as customers wanting something unique. sofia, thank you for the interview. we're getting breaking news about chinese intervention during a military parade. talking about the communist party. let's get to marks desk. that china hearing -- before this key military parade. this is a parade that commemorates the end of the second world war, september 3 and beijing. .e heard a bit about this this is a priority of the chinese government. it should be surprised that the government stepped into the markets. the trend has been that his steps and in the last hour of trading. shanghai composite

today. this is a one-day chart. the market started the day lower . before 7:00 a.m. london time, it was negative. across your screen shows positive to negative. the last hour of trading, look at that push up to 5.3%. the shanghai composite rising at the close. the biggest gain since july 9. gained in the last 50 minutes of trading. where hang the intervention aheadis to shore stocks of this big parade on september 3 in beijing. it has been a crazy week. i want to show you this other chart. this is an incredible chart. this is the shanghai composite guide in the last eight days. 6.2%, eight days ago. 7 days group, up by 1.2%. 4.3%. 1.3.point -- down by

today, the biggest gain is july still. the index is down from june 20. that equates 2.66 trillion dollars -- $2.66 trillion of value. mark, thank you for wrapping that up. russia, india, south africa. the chinese market has dropped. that's a much china has lost. we are going after the stock market again. they don't want to necessarily support that market. the market is interpreting as if the pboc did not want to interpret more. it is going against what the market is thinking. a fake goldman sachs in china. that is coming up next. ♪

francine: welcome back to "the pulse." we had breaking news on china, sent to intervene on the stock split let's get to mark barton. you were telling us about how these chinese stocks fell in the last two weeks. mark: what an amazing time since the 12th of june when the chinese stock market hit its peak. now it is down by 43%.

at the top of the hour, i'm going to tell you how much global destruction of value there has been in equity markets. bad news from china, authorities have popped up the market ahead of this key military parade on the third of september to commemorate the end of the second will world -- second world war. lake given another bottom, to this rise in the european stock market. what i wanted to do is show you how they fared for the last four days. over the four-day. , you can see down by 4.2% -- .42%. yesterday, the market did decline. the bill dudley comment came after the market closed. the day prior to that tuesday was again of 4.2%. monday, down by 5.2%.

because of that, the overall .4%. down so many equity markets are in correction. the one most noted is the s&p 500. it did not correct from most four years. it is correcting. if the s&p 500 is correcting, you have to take note. manus: oil has had a pretty great move. euro is trickling lower. oil, we had data yesterday. it was supposed to show an increase. it showed a decline. that's one of the reasons why oil is rising. it is a risk on/risk off thing.

we're talking about wti falling below $40. moving back into those riskier assets. those are the ones that are followed by a large amount. oil did rebound from earlier this year or june. since then, it has fallen by 30%. on a currency basis, we have had money moving into the yen and the euro. we had a reversal on traits today. -- on trades today. francine: mark barton there with your moves. from backs, watches, smartphones, but what about a global bank? manus: one company appears to have done just that. he have to say this is audacious. they call themselves the government acts. what do we want to find out about this? is not the same

company. not affiliated. since mayn operating 2013. we managed to get some footage of their website. it is inaccessible since yesterday. basically, this is a company where the name in chinese is the same name that goldman sachs uses in chinese. because thecovered, askedasino workers union for this to be investigated, because they said this company was linked to some gambling people. they call themselves goldman sachs shenzhen. it is in brackets. i guess goldman sachs is angry about this, so they are taking action.

they said they are looking into the matter. history doesn't give much indication that they are going to be of to do much good michael against at the case chinese sportswear company who used the chinese version of his name. there is a history of there being difficulties. say this is one of the stories -- you have to say this is one of those stories. , great to chat. a second hour of the pulses coming up. we will be going through those china headlines. bloomberg school is ready to intervene today. this is before the military parade. this is what we thought the pboc didn't want to do. manus: they are reverting back

to support the real economy as opposed to the equity market. we are going to debate it all. we're both on twitter. join us for the debate. ♪

manus: china's government intervened to boost the stock market as european and asian markets tracked the biggest gain in equities in 4. years francine: removes snap a selloff that erased 800 chilean dollars in global markets. manus: the new york fed president says the case for raising rates next month is less compelling. we look ahead to jackson hole. good morning to our viewers in europe, good evening those in asia, and welcome to those waking up in the u.s. i am manus cranny.

francine: i'm francine lacqua. this is "the pulse," live from london. china's government has intervened to boost the stock market. european asian and equity markets tracked the biggest gains in u.s. equities .or four years mark barton, we have a rally underway. mark: the scoop is that china propped up the market today. it has propped up the market many times in recent weeks. it wants to prop up the market ahead of the military parade on the third of september. this is an important parade for the chinese government. at the end of today, the market will stop -- wooshed up.

one of the things i want to focus on is the discussion of value, the value of global equities in the last few months. starting from the high in june. this is essentially the value of global stock markets across the world in the last 12 months. i have circled two periods. orange circle is the day the yuan ondevalued the the 11th. since then, global stock markets trillion of value. global stock markets have lost $13 trillion. of value the chinese stock market in its entirety is worth $4.9 trillion. in itsanese stock market entirety is worth $4.6 trillion. the hong kong stock market is worth $3.7 trillion.

put those together, that is $13.2 trillion. that equates to almost the entirety of the chinese, japanese, and hong kong stock markets. if you have doubted the size of the decline, a, in recent weeks and b, in recent months, that puts it to bed. $13 trillion, equal to the size of the chinese, japanese and hong kong stock market. so much going on but that is something to get your head around. francine: thank you so much. that brings us to today's twitter questions. start toaluations matter? difficult to determine. we are talking about u.s. stocks and whether they are overvalued. tweet us @manuscranny and @flacqua. manus: our next guest says much .eems priced in bank of america-merrill lynch's head of european equities.

put it in context, $68 trillion at the start of the year and down to $60 trillion. the restver dramatized of the world because of the chinese equity markets? is equal toelloff the chinese, japanese and hong kong market put together. that gives you the scale of the reaction of the developed world markets. . china is the second-biggest economy but in terms of the likely impact on the european economy, it is relatively small. germany, the most exposed european economy, has about 2.6% of its gdp exposed to china. for the rest of the eurozone it is about .6% of gdp. of china,l impact even if there's a significant slowdown, is limited.

that is what we started to see in data, german pmi friday, the ifo. good french business confidence this morning. what we did is we panicked and said china is a problem, big deflation, global currency war, this is a disaster. markets go down substantially. we are beginning to say hang on, how big an impact is this. yes, it is negative, in that negative on the scale we try to price? francine: the chinese government intervened by buying blue chip stocks. , or this smell desperation at least the pboc is there? james: be direct intervention has been unhelpful. if you remember 2008 -- francine: unhelpful because it

has not worked? james: unhelpful because it sends the wrong message. back to 2008, various european governments were shortselling, direct interventions and markets. but what really turns markets around is when you start as an investor to sense the economy turning around. that was true in 2009 and has been true this year in europe. the ecb started to do qe, we started to see that our data. see isvestors want to the chinese investors taking action to turn the economy around. which is why the rate cut and a reserve ratio cut has been more effective than any direct intervention in the market. this, which brings me to we are going to get gross numbers in the u.s. today. 9 straight quarters of growth in europe. u.s. gdp will come in about in thealuations are down u.s., should i buy u.s. stocks? we've been looking at --

european equity market at lowe's on monday was yielding about 3 3/4%. the u.s. equity markets have come down substantially. thisocks across the board, is almost a correlation event. hase is a stock here that been hammered for no reason at all, it is now on a decent valuation. i think that is what investors are starting to do and what they should be doing at this point. our chief economic correspondent said the problem is stocks. if they do something in september, people say they raise rates good if they do not, people say there is something really ugly. we will probably see a market correction to matter what the fed does. is that fair? james: i don't think it is. what bill dudley told us yesterday is there are some

things the fed needs to take into account. in july, we did not know what china's problem was in terms of .he deflation it has unleashed if you are the fed, the one thing you were worried about is your inflation objective. ourre less likely to meet inflation objective, let's see what the fallout of this is and then go in december. our official call is that the fed still goes in september. i think the view is things would have to be better from the data on market front for that to happen. manus: thank you very much. this technically a september hike. let's see where we go. james barty of bank of america-merrill lynch. francine: let's go to france. a company that represents french businesses is holding its major annual event today. hundreds of executives and politicians are gathering in a paris suburb at a time when china slowdown is casting

a shadow over the french economy. carolyn condon, what is the mood like? caroline: there is some concern among the executives. they see the stress as a .hort-term concern in the long-term, they still see china as a growth story and a place where they can do investments and business. ceo, oneith the suez of europe's biggest water and waste companies. they have a big business in china and a partnership with a water group. i asked the ceo whether he saw the chinese slowdown as a catastrophe. have a listen. >> a catastrophe? certainly not. i do not believe

it could be a catastrophe at all. for the world economy, of course, china is a bigger economy worldwide. so i slowdown should absolutely impact the rest of the world. what is going to be the impact is difficult to say. i do not see measurable changes in china. caroline: the suez ceo is among the executives who see china as a growth story. especially at a time when the chinese government is focusing on fighting pollution in the air and water, that is the main business of suez. they will keep selling their services for waste and water treatment in china. manus: there has been a number of terrorist attacks in france. over the last couple months

you live in france and speak to business leaders all the time. what is the sense of confidence? is this a growing social and economic threat? caroline: sadly it has been a recurring theme in the news here in the past year. thecharlie hebdo attacks, shootings in a jewish supermarket and just last week mass shootings on a train that was stopped by some passengers. on topuld have an impact of sluggish growth in france. i asked the ceo of lafarge whether that was impacting his investments and he is confident. >> i think it had some impact at the beginning of the year, but -- [no audio]

caroline: the suez ceo also told position, that they terrorism threats are not impacting business confidence. said, for example, that we are living in a different world today. we have to adapt to the terrorism threat. this should not reduce optimism and our ability to do business. francine: thank you so much. caroline connan there. we apologize for the technical error. we have a little bit of breaking news out of ukraine. basically, a 20 percent principal write-down with main creditors. we will have a look at the situation shortly. manus: stay with us, a manual the french economy minister will be speaking to bloomberg. the future of

france, we will bring you that tomorrow. the federal reserve is dialing back expectations of a rate hike next month, two days after dennis lockhart said the and oil slump was, getting the outlook, .asting doubts bill dudley said the case for an early rise is becoming less convincing. prime the outgoing greek minister has ruled out leading a coalition with opposition parties. month'sils to win next snap elections. alexis tsipras says he would not with newsyriza parted democracy. rebels in his own party mutinied over a third parallel. -- third bailout. sainsbury's is increasing wages for about 85% of its workforce.

this comes ahead of the compulsory introduction of the u.k. government's national living wage next week. -- next year. increase is% wage the biggest increase in decades. it takes the standard rate of pay from seven pounds eight pence-- pounds 30 seven pounds 8 pence to seven pounds 38 pence. manus: donald trump said he would tax himself more if he became president. he said he would signify tax -- simplifiedt tax laws and target hedge funds, which are taxed at a lower rate. mr. trump: i do not mind paying taxes. the middle class is getting clobbered. the middle class build this country, not the hedge fund guys. i know people and hedge funds,

they pay almost nothing and it is ridiculous. francine: we are also getting some breaking news out of ukraine. reaching a restructuring deal after five months of negotiations. what the deal is a 20% cut for private bondholders. the finance minister, often one of the guests on this program has been negotiating with franklin templeton, they own and a lot of ukraine's bonds. they said they have agreed with the private bondholders, this is what we are offering. a 20% write-down for ukraine bonds. manus: around 2.8 billion dollars on a total of $19.3 billion of debt. been ongoing and discussions have caused a great deal of discussions. francine: up next, central bankers and leading economists head to jackson hole.

how will recent events sway the conversation? we discussed that. ♪

manus: welcome back to "the pulse," live from syntax european headquarters. a deal withreached major bondholders, franklin templeton one of them. 20% write-down on devalue

of bonds. that is what they've done with the private on holders, will rush to accept this? let's bring back james barty from bank of america-merrill lynch. restructuring is a theme. we are knowledgeable about what happened with greece. here is ukraine. is this a progressive step? james: if you look at what the imf says about debt burden, it has to be affordable. greece and other countries that need to restructure debt, you need to bring down debt levels to levels they can afford to repay. the key point is getting into the right level where the country can afford to pay it and the creditors get what they can. francine: the key point is how you put it, it needs to be affordable. james: christine lagarde and the imf have said that. you need to get a point where the country can afford to

service its debt obligations. francine: the fed is dialing back expectations of a rate hike next month two days after dennis lockhart said china's slowdown and the oil slump or complicating the outlook. the new york fed president casting more doubt. >> the decision to begin the normalization process at the september fomc meeting seems less compelling than it was a few weeks ago. normalization could become more compelling by the time of the meeting. dennis talk the markets moved their focus to the fed. heading tokers an jackson hole, wyoming. janet yellen will not be there. vice chair stanley fish will shed some light on the timing of the next rate increase. next great increase, -- next rate increase,

september, what will make you change that? is it stanley fischer? is it weak data out of the u.s.? james: that is what bill dudley said yesterday. the case for a september rate hike is less compelling. this deflation out of china and emerging markets. the fed will want to assess where we are in terms of market and the data. in my mind, while a rate hike is possible in september, markets will have to be in a better position. the fed will have to be confident that what has happened in the last few weeks is not going to cause the inflation numbers in the u.s. to come in lower than they thought. the hurdle has gone up significantly. sous: our markets just inextricably linked to soft and easy money? the s&p rallied 1% as soon as dudley took the heat out of september. s&p went up.

in asset markets survive rising interest rate world or are we also addicted to 0%? james: we can survive provided there are not other shocks. markets were oversold but we need central banks to blink. we had the pboc with the rate cut and we had the ble say inflation was going to be lower. bill dudley said the rate rise for september is less compelling . you raise rates went conditions are appropriate. we just had another deflationary stock. -- deflationary shock. we will get to the point where the market conditions are good enough and they can raise rates. , europe,my in the u.s. japan have been improving. but we've got to get to the point where that is generating enough inflation for them to feel comfortable.

moreine: are you expecting europeqe in? -- more qe in europe? expectation was always that they would extend beyond 2016. the case is growing stronger. the has happened is causing inflation projections to come in lower, i think that lays the ground for another round of qe. francine: james barty, bank of america-merrill lynch's head of european equity strategy. manus: the london underground is to defer the start of night to service. we had a threat of strikes, four-day strikes this week. tf felt are saying they seek a be introduction.

the work-life balance. francine: the start of the night mid was scheduled for september. looks like it is going to be in the next couple months. if they find an agreement with the unions it means everyone is happier. seems like everyone is happy. talking about everyone being happy, donald trump says he would tax himself more if he became president. speaking -- bloomberg,king to the front runner said he would andlify american tax laws target hedge fund profits, currently taxed at a lower rate than regular income. : yes, the carried interest is a tremendous burden. i have friends -- and enemies, mostly enemies. none of them are going to support me and i do not want their support. i could get it if i wanted.

hillary clinton has many people from hedge fund supporting her. hedge fund people make a lot of money and pay very little tax. i want the middle class to be thriving. >> change the tax code? mr. trump: i would simplify it. >> you want to tax carried interest in the same way? take carriedwould interest out and let people who are making hundreds of millions of dollars a year pay some taxes. it is outrageous. i want to lower taxes for the middle class. for people making a lot of money and need incentives. that would also affect people in real estate partnerships, you were in a fair number. mr. trump: i am ok. >> you would like to raise taxes on yourself? not mind paying taxes. the middle class is getting clobbered the middle class built

this country, not the hedge fund guys. i know people and hedge funds, they pay almost nothing and it is ridiculous. trump -- ionald annot get enough of it as newsperson. as a trading person, how do you read him? manus: it is very entertaining. james: we are in the early stages of all of this. people are not seriously asked who they want to be the republican candidate. he's interesting and different, he's done the same thing in the u.k. as chairman -- jeremy corbyn. when it comes to people choosing their leader seriously, they make different decisions. manus: a conversation with the ceo of the card chipmaker jim alta. ♪

francine: welcome back to "the pulse," live from london. i'm francine lacqua. manus: i am manus cranny. china's government has intervened to boost the stock markets. shares and shanghai finished up more than 5%, ending the worst five-day rout since 1996. european equity markets tracking the biggest one-day gain in the u.s. equity market in four years. reserve: the federal

dialing back expectations after dennis lockhart said they china slowdown and oil slump are complicating the outlook. statement,eduled bill dudley said the case for an early rise is becoming less convincing. prime the outgoing greek minister has ruled out leading a coalition with opposition parties. next month'so win snap election. part itsays his syriza would not put together a government with parties that supported him. tsipras did not rule out a government of national unity, just that he would be prime minister. francine: let's check in on the markets. 10:30 london time. we had quite a lot of breaking news. headline the china

explains the aggressive rally on the shanghai composite. a rally fueled by soothing words , pushing backley potentially closing a window on a rate hike. europe, thearket in dax up three percentage points. in positive territory for the week. ftse 100 in london up 2 percentage points. almost every stock in positive territory. s pushing higher, wti back through $40. in china, we were up 3%. into the close we had a rally and finished up over 5%. a five-day rout, we stabilized very briefly. we get the scoop that the chinese authorities were said to have intervened, pushing higher ahead of a parade in china. it tells you how political the .quity market is

a look back at the yuan, a little bit of stabilization for the chinese renminbi. been busynd china has selling dollars in dollar-denominated assets. what you would expect is a rally in treasuries, we have not had that. the story is that china has been selling treasuries. environment,rse china is trying to stabilize currencies. 2.16% ahead of the big one. going to listen to people, listen to janet yellen, william dudley and stanley fischer. back to you. has thetanley fischer international flavor. tom keene is at the head of

"surveillance" and 25 minutes. it is pretty surreal. and then and the u.s., our scope this morning that the chinese are supporting the chinese equity markets. everything the market participants have said should not be their focus. are they concerned about social issues? i would say they are moving towards a september 3 celebration. the headlines that they are deep alluding beijing shows the moment. we have risk on trades coming off the dudley comment. we will look at the markets, jonathan ferro bringing us up to date. brad hints from stanford bernstein. in two weeks, we come back from .ummer

.e talk about the future as we look at m&a, and particularly energy m&a, we saw that yesterday. a little bit of normality here, even as we focus with mike reagan on what is going on in china. manus: i suppose the other thing is this, are the chinese selling u.s. treasuries? that is a great one in terms of the currency move. tom: i think you are dead on. there is a real mystery to the quality and makeup of reserves held by each nation. there is a question about the size of the russian reserves. that is certainly a study for the coming weeks. manus: see you at the top of the

hour with "surveillance." francine: now, gemalto, the supplier ofetst chip cards released earnings. -- margins were muted. the ceo olivier piou joins us. you are at the forefront of one of the most interesting and controversial industries. there's so much hacking and security concerns, you can do a lot to help industries across the world. what is the one trend in your industry that you see as the most exciting in the next 12-18 months? mr. piou: of course, what is the most active at the moment is the payment industry. and also the internet of things. more and more objects get connected and they need to be protected. governments also because they move more and more to programs,

need that security, whether it is products or services. the enterprises of course have a good performance. concerns aree across the board in more and more industries. hacking that you are more and more concerned about? is it terrorism? probably forgetting something else? madison scandal already put so much focus on the hacking and the fact that there is data we need to be careful about. is it just because we've been talking about it a lot that analysts are focusing on hacking? types of you have two attacks. those that are done by the bad reason,ause there is no which is where gemalto is

well-equipped to defend users of all enterprises. it started in the telecom space and has moved to banking. it is now moving to government, allenterprises and connected objects. that is one class of security. there is another class which is by cyberattacks government, state-sponsored attacks. which is a class of cyber intelligence and not at all the business of gemalto, which is growing fast. it is not all what we serve. forerve enterprises defending against the attackers trying to steal products, not for cyber security. francine: is it something you are interested in? when you look at ashley madison

and all the data, is it something you would consider in the future? we acquired a company called safenet, very well-known in the space of cloud-based security last year. this is a good part of our growth. 32% growth, 10% comes from safenet, 11% comes from our own growth. another 10% comes from currencies. that space is certainly something that, clad security is something that needs to be addressed. definitive. the issue is that many of those service providers did not pay or they werention making statements that were overly optimistic. today, all the enterprises are

faced with this need. it is why we grow so much in the domain. we serve the large brands that you know, i cannot give names, on the large retailers that are online, shops are using gemalto to protect them. francine: we know that gemalto sells a lot of passport security control security. because of the recent attacks on week, do youlast think that that market for security machines will actually widen significantly? francine: -- we do.u: it is not what we do not do the detectors of explosives that you find at the airports. yourain job is to convert identity, you as a human, into

the you say you are on the internet. we can offer you a trusted environment to shop online, to communicate our mind, to do online interactions with , without leaving your couch. car when youyour have an autonomous car. all of these objects are in your toket that you use every day do online transactions. we do not do physical security. if you are walking home or on a building construction. about the car hacking, this has been at the forefront of all the news outlets.

how do you address that issue? it is part of our machine to machine and internet of things security. serve car manufacturers and the main integrators that provide technology to car manufacturers. audi andd to work with other manufacturers. what is clear is that you have a race between the quantity of digital content you put in a car and the fact that you have some people trying to demonstrate .heir skills against it we contribute our security knowledge. .ut the question is how quickly

understandhing we well. is the same thing as banking security online or telecommunications security. francine: thank you so much. olivier piou, the gemalto ceo. shares take aa hit after one of the biggest deals of the year falls through. we will tell you why the deal fell apart and what are the implications. ♪

manus: welcome back to "the pulse," live on bloomberg. gloomy times for syngenta. the stock last 18% of value yesterday. this morning, rallying nearly 5%. monsanto gave up bids. they have walked away from the turningsticide maker, down an offer of $46.2 billion. matt campbell is our reporter at large. if you are looking for a volatile trade, who would have thought you would get it in pesticides? matt: swiss pesticides is about as boring as it gets. this is high drama. monsanto made this increased offer, a big offer just shy of $50 billion.

they have walked away, they are not going hostile. francine: more m&a? , will theyft apart be bought individually? matt: there are other players in the industry, dupont, dow, dupont has fought off an activist challenge. there is basf, not very acquisitive. this is a consolidating industry. deals. pressure to make i manus: don't pick we've heard the last of it. manus: global equities were worth $68 billion at the beginning of the year. to doed solid equity deals. there's nothing stable about this piece of paper.

matt: you can do a lot with cash or mostly cash it history shows great m&a boom's, whether that is around 2000, 2007. you really need equity to fuel these huge deals. if 2015 is going to be a record year for m&a, which is possible, that is largely going to come from issuing equity. if you do not know what your shares are going to be worth tomorrow, that becomes impossible to do. down, itrkets settle will put the brakes on large transactions. another: if we have correction around september 17-18 wendy fed meets, will that stop deals until we are leveled off? does it take a fed hike, even if small, to settle markets and keep m&a at current levels? if you are trying to

structure a transaction, what becomes different is volatility. if shares are trading in a narrow band that is low, you understand where the band is. if they are zooming up and down, it is impossible. this is what syngenta argued in feeding off months into here the author was worth 470 francs a 430 francs aworth share in three or four days. if this continues, it gets a very tough. through the gone chinese billionaires and the central and eastern european billionaires. telecom billionaires, the , they weredo these the vanguards of m&a. they were were the deals were getting done. confidence does get shaken. matt: that is right. in the telecom worlds, no one wants to take a risk. if you talk about industries that need to consolidate,

industries where technologies need to make decisions, that is at the top of your list. francine: thank you, matt campbell. windows 10 hast reached 75 million devices since its release at the end of july. six times more downloads per device on the app store. microsoft had the goal of reaching the fastest adoption rate ever of one billion users within three years. nasa has issued a new alert about global warming, saying sea levels are rising. an increase of at least a meter is unavoidable and melting of polar ice is driving by burning fossil fuels. nasa says see levels are going to rise. manus: donald trump says he

would tax himself more if he became president. speaking to bloomberg, the republican front-runner said he would simplify america's tax target hedge fund profits, which are currently taxed at lower rates than regular income. i do very well. i do not mind paying taxes. the middle class is getting clobbered. the middle class built this country, not the hedge fund guys. i know people and hedge funds and they pay almost nothing. it is ridiculous. francine: more from the donald trump interview later on. full's gold, you've heard of fake handbags and watches, what about a fake bank. the goldman sachs of china that is not what it seems. that is next. ♪

francine: welcome back to "the pulse," live on bloomberg tv. manus: china may have a reputation for knockoffs for everything from bags to watches. what about a global bank? francine: one company in shenzhen appears to have done just that. calling itself goldman slacks. sachs.ot exactly goldman people kind of think it is goldman sachs. ra: it is goldman sachs

shenzhen financial leasing company. according to a filing, it existed since 2013. until yesterday when access was stopped, it had a website as well. on the website, the chinese word which meanssachs, tall and prosperous, they are using the same word. the logo is a little different. you could be forgiven for being misled. the company itself, a receptionist of the firm saying we are not the same company as the u.s. bank. it seems they are not pretending to be the same but you have to ask why they are using the same name. manus: what is the phrase again? nejra: tall and prosperous. .anus: make your own praise what are goldman sachs saying? saying they are

not affiliated. they are looking into the matter. the way this came to light, a u.s. casino workers union sent a letter to the person onarheading this crackdown corruption happening in china at the moment. they said you need to investigate this company. it is linked to a group of gambling companies. we have not actually heard back from the investigation. it isality of this is very difficult for overseas companies to get anywhere when they try and fight trademark cases and china. that might be difficult for goldman sachs. francine: thank you so much. china.est on th manus: national burger day. -- nald's big, i likeam very social media.

we are big on national days. the 27th of august is not only national burger day, it is national just because day and global forgiveness day. "surveillance" is next. ♪

>> this is "bloomberg surveillance." as markets find a bid, at least for right now. stanley fischer will speak

saturday at jackson hole. it has been a decade since katrina. new orleans is simply not the same. good morning, everyone. this is "bloomberg surveillance." it is thursday. with me, vonnie quinn this morning. 10 years on. it is so hard to believe. people are so delighted with the city to have moved down there. tom: my one memory is the sugar down -- superdome, whatever it is called. vonnie: it is an amazing story of rebirth. tom: much more on the markets. we almost get back to a little bit of normality. vonnie: grief stricken colleagues of two murdered tv