the chinese premier of lichens managing his economy to a chess game. brics crumble. standard & poor's cut herself's credit rating to junk as latin america's largest economy faces tss deep it recession i deepest recession. share priceple's dropped 17% since january. ve from to "the pulse" li

london. i'm francine lacqua. i'm manus cranny. the chinese premier says the country still has the policy tools to deal with pressures on growth. he announced that china will open up its onshore currency markets to foreign central banks. he spoke at the world economic forum. >> we're integrating ourselves into the wider world, and china will open up even more. our policy of investing abroad will remain unchanged. these specific policies will continue to encourage more foreign investment in china, and they will expand access to markets. francine: the speech came as china reported -- the fastest consumer price growth in a year. that will compound challenges to policymakers. let's cross live to our beijing bureau chief. did he map out a plan to

jumpstart the economy? nick: there were no specific proposals this time around. what you heard more was the voice of reassurance. there has been so much uncertainty in the last few weeks about the government's intention to valuing the yuan and how it would respond to a host of bad economic data. so he came out this time steady hand on the tiller, reassuring people that china was continuing havereforms that it would the tools for short-term stimulus, but it is still keeping an eye towards those longer-term reforms to create alls of steadier what it c higher-quality growth in the years ahead. obviously, we had various price data this morning in terms offactory -- and in terms consumer prices. talk us through some of the issues around those. nick: sure. i mean, the inflation was

primarily driven by higher food prices, specifically pork and vegetables. the factory prices do suggest continued overcapacity there, but also factors having to do with lower oil prices. so, you can sort of draw short-term and longer-term response from that data, but what it does seem to suggest if the government does have room for more monetary easing. so you may see the government devalue the yuan more. that inflation number is well within its target. getting isage we are that there is continued room for easing if the government wants to weaken the yuan further. francine: what are the drivers behind these prices? manus was talking about this a little bit. of, try toand kind get all the noise behind it,

what is the one thing that policymakers -- what should they be doing? nick: i think the big issue really is where the yuan is going to go. the government has spent so much money in recent weeks defending the yuan. this inflation number shows that they really do have more room to act. can say theou inflation is pretty high, but actually, much of that is driven by seasonal factors having to do with the pork cycle and food prices. stripping that out, it means inflation is quite low. that will take the pressure off them to keep pumping money into the system to defend the yuan. manus: thank you very much for rounding all that up. our beijing bureau chief. francine: our next guest says that more easing is likely in china. he expects another rate cut in the fourth quarter this year. andrew, great to have you on the

program. you are expecting more from the pboc. will it be enough? andrew: i think it will the enough in the context of other things they have done. it is easy to look at the slowdown we have seen in china, the fears around china is this is some that is happened recently. in fact, chinese growth has been slowing for close to a year. and we've seen easing out of china since february. we already see a number of easing measures in the train. we think china is relatively -- has capacities cut the policy rate and the rrr rate further. and we think they will choose to do that more than try to weaken the currency, given the volatility and the broader applications that that initial shock had. it is interesting to see the stability of the yuan in the last week. it seems to us they are trying very hard to keep that stable. i think that makes us think they would pursue other measures to stimulate the economy. japan an an investor,

mp good to do more. a globaling about recession. as an investor, this is not a healthy backdrop. warning signs for major countries they may have to go for further easing. might look atk we this somewhat differently. you have seen a major adjustment in prices and investor sentiment, that investors have gone from being relaxed on global markets and predicting relatively low volatility to expecting very high volatility. and i think this view that central banks have no more tools they can use, they are out of bullets. actually, there are potentially more actions stilted come -- -- still to come. manus: we should be more worried they are going for more bullets again. at the when we look overall data, it is more consistent with the slowdown rather than a recession.

most of the indicators we follow that tracks the turn and the cycle are relatively healthy. and i think the central-bank policy on average will still help the global economy avoid another downturn. yesterday we had a bold call from citigroup tsonga a% chance of a -- saying 55% chance of a recession. that seems extremely cautious. do you have a similar view? andrew: that would be higher than the number we would put on it. it would be higher for a number of reasons here because i do not think we see that type of risk in the cycle models we track. we do not see that type of risk and credit markets or peripheral markets. and i think what we see also is a banking sector, globally, that is much healthier. recentthink about this downturn, the way the banks have traded on the credit side, they are borrowing costs have been well contained. very unusual to have a recession at this point when you have seen global credit

growth only barely move into positive territory in aggregate. i think we put the number lower than that. manus: you say the market -- fighting the negativity. you like japan and europe. what industries? is aboutn europe, it the banks. that is a sector that has a play on an economy and a sector where return on equity in margins are very depressed as well as valuations. so, we see a path to better performance there, both as those margins normalize, as lost provisions normalize and the economy gets better. in japan, it is interesting. i think you can look at the tourism focus sectors as an interesting play. i think you have a very weak yen. even if it does not weaken further, it is the cheapest currency in the g-10. you're seeing some transformation in the japanese terrorism industry -- the

japanese tourism industry. francine: he stays with us. we will talk about the u.k. next. manus: this is what else is on our radar this thursday. ipo the century. this'll take place in november. seeking to raise $11.6 billion. francine: australia's unemployment rate dropped off to 6.2% as companies created three more -- three times more jobs than expected. falling currency and weak rage growth -- wage growth are encouraging hiring. manus: the benchmark rate was lowered from 3 to 2.75%. governor graham wheeler says there is potential for further easing and he is looking

carefully at the data from china. brazil's now, sovereign rating has been cut to junk by standard & poor's. it comes as the president struggles to shore up fiscal accounts amid a faltering economy. exchange traded funds followed 6% -- falell 6%. canceling plans to spill off its german nuclear plant. -- move comes as the company is disposing of radioactive waste. has unveiled a lineup of products including updated iphones, a tv set top ipad designeder for business customers.

tim cook showcased the new products in san francisco. the september gathering is apple's most anticipated annual event and highlights the company's gadget ahead of the holiday shopping season. manus: up next, it is bank of england rate decision day. that brings us to our twitter question. turmoil -- will china derail the u.k. from a rate rise? stay with "the pulse." ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and streaming on bloomberg.com, your tablet and, of course, your phone. as turmoil rocked financial markets, mark carney argued those factors were not enough to deal rail the prospect of higher u.k. borrowing costs. in a few hours, we might find out whether his colleagues disagreed. here to look ahead to the rate guests. are our thank you for joining us. mark, you actually looked at this and looked at three charts explaining why we're nowhere close to a decision. mark: never mind china. i can see three big domestic reasons why we should raise rates. first the pound.

up 17%. we saw the sale of goods overseas yesterday was its biggest drop in nine years. the strong pound is having an impact on the domestic economy. second reason -- prices. british retail consortium says shop prices have fallen for 27 months. 27 consecutive months. and inflation is 0.1%. in what universe should you be raising interest rates? third reason, wages. francine: we have the charts. mark: ok, real wage wages are growing at more than 3%. the average drop in real wages for british workers was 1.5%. manus: this gives you the sense. we pulled back a little bit. andrew, let's bring you in. the three things that mark outlines which is the strength of the pound, the drop in prices. 27 months in a row.

but the question with this -- with one voice of dissent at the last meeting, how unsettled to think the mpc are? the mission china. they mentioned it for the past six months -- they mentioned china. andrew: we have this broader debate in the markets that these other things are happening. china, commodity prices oil. these things are derailing them, they are getting extracted by these exogenous things that they should focus on the domestic economy. the points mark brought up our second right. it is not just things happening in some other universe. the pound matters. it's slowing the economy. you see the same thing with the dollar which is up 20% year-over-year. i suddenly think that has to affect the debate within the bank of england and within the fed. it is not that they are doing nothing. it is as they have been sitting there, financial conditions have been tightening. even on the right has been unchanged. francine: when are you expecting

the first interest rate hike? many people are expecting september, october 2016. andrew: we think it'll be around that time. we think it'll be an automotive 2016. i think he's introduced further downside risks to the pound which is held up very well against the dollar, been strengthened against almost everything else. you've seen recently u.k. economic data has its appointed expectations. there is too much complacency that the u.k. economy is simply so much better than the rest of europe.or the rest of the world i think we see the pound weakening further against the dollar. manus: it was only a couple weeks ago that mark carney said the turn of the year. i'm paraphrasing. but by the turn of the year, this is when we should be beginning to think about rates. versushe so hawkish, market expectations in terms of where the indication is? it is late on. that is a huge disparity.

mark: two reasons. one if philosophy. and one is the book. he does not want to be a one-way bet they stay on hold forever. he wants to see market tightening. second one is philosophy. central bank is to not like being near zero. that makes on kosovo. -- that makes them uncomfortable. i think the fed's in the same boat. there are philosophical reasons why they want to move away from zero even though there is no inflation appeared. th-- apparent. the global economy is so weak. look at the litany of bad news you guys a been reading out all morning. this is not the environment in which you want to shock people by raising rates. it is not mean that you have to see the whites of inflation's eyes. it feels so wrong to me. i do worry they are doing it

for dogmatic reasons. the idea that she raise rates now so you have more scope to pull them down -- it does not help. francine: thank you. we have anyus if more on the minutes, the markets may start to get busier. manus: that takes us to the twitter question. will china turmoil derail the u.k. rate rise? @flacqua.s francine: we should ask our bloomberg followers of fake atreides their favorite charts. we are looking at mpc. up next, apple unveils its latest set of gadgets but can they revive a share price that has dropped to 17%? we take a look after the break. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and bloomberg.com. manus: greece might be experiencing political turmoil. but that does not seem to have hurt the country's largest airline. aegean airlines saw a 30% rise on passenger traffic. francine: for more, we're joined by aegean airlines vice

chairman. thank you so much for joining us on "the pulse." you have had a pretty good run so far. i guess we want to try and find out how much that is boosted by tourism and whether you are concerned that that could fall off the cliff if there's political turmoil ahead. >> it has been the story over the last five years of the crisis, that all airlines and all service businesses of had to adjust to be more dependent on tourism. so, pleased to have a mix of incoming passengers. now it shifted to more tourists. that is what the country needs for development. we shifted that way five years back. it was a good shift for us. no other option. we started at 17 euros. that follows and another 17 routes last year. and two years ago acquiring olympic and creating ythe aegean airlines group.

the expansion of the routes, the athens,up the hub in which is the capital city and feeds into the islands as well, and i think our recognition on how good our services has led us to grow the last couple of years. tourism has shown resilience. it has not really fluctuated so much i the last five years. we have become more competitive as a country. that is more attractive. we see that in reports in britain versus turkey or spain. manus: give us an indication, ryanair we had a huge profit update. they are making a big play in areas like greece. how much of a competitive threat to the european business you are doing are they? >> ryanair is a strong airline. have to realize that greece was a very fragmented market. even now, we have only about 17%

of the international activity to the country. there is very much room for us to grow. at the sam tamez r -- at the same time as ryanair. we cater to a different customer group. for us, the idea is to grow fast but also to keep our different. as they improve, we have to improve further and make sure the premium customer is looking at us. francine: when you say you want to grow, this is by adding new routes? are there any new routes you need in the next 16 months to become stronger? theecondary cities in largest european markets. we have gone from flying to paris to fly to another six french cities. the same policy in germany and in italy, etc. this is creating a more appropriate or more aggressive routing to the islands where we serve 34 destinations. 34 islands.

that allows you to develop a defensive hub and to offer customers a faster access. toulouse to an island in greece. that has worked well for us. manus: you will have a snap election on september 20. we do not know what the outcome of that will be from a coalition point of view. for a businessman, what is the prime thing you need to see from the new administration to change in terms of employment, in terms of running a business? what does this coalition need to do? finally have 75% of the parties in the polls agreement we all want to be in the direction of having an agreement and supporting the agreement of the e.u. what we need is longevity. we need -- this implementation. everybody agrees on 70% of the measures that need to be taken. but we have been slow and

implement demand. francine: thank you for joining us. vice chairman of aegean airlines . stay with bloomberg for full coverage of the snap elections on september 20. next, we talk about apple. ♪

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francine: welcome back to "the pulse." manus: our top headlines. chinese premier and told the world economic forum he's confident the economy will hit the target is hit -- this year. he sees more opportunities than challenges. li said the situation is stabilizing and urged people to have confidence in the world recovery. he said that china has no interest in a currency war, having much more to lose than gain. francine: australia's unemployment rate dropped last

month to 6.2% as companies created three more time -- three times more jobs than expected. -- indicatesjured that falling currency and weak wage growth are encouraging signs. manus: new zealand's central bank wrote -- lowered its interest rate for the third time in three months. graham wheeler says there is potential for further easing if needed. he's looking carefully at the data coming in from china. the currency slumped. francine: let's check in on markets. it is 9:30 a.m. in the u.k.. mark: on one side, you have china, producer prices sinking the most since 2009. falling for the 42nd consecutive month. on the other side, you have next week's federal reserve meeting. mix, brazil who had its credit rating cut to junk throw in the fact that u.s.

stocks sank after their second biggest gain of 2015 on tuesday. a number of factors swaying investors today. we have looked at the nikkei. what a scatterbrained market the japanese stock market is proving for yesterday, i was eulogizing, saying the praises of the nikkei 225. after the 7% jump yesterday, the biggest increase since 2008, whoosh! we are back down again today. 2.5% lower. investors fretting about the u.s. after we had a report rising,job openings pointing to a tightening labor market in the united states. traders are not convinced we will see a rate hike next week. the probability of a move is at 28%. this is the new zealand dollar against every single major currency.in the world al.

are rising against the new zealand dollar after the central bank cut rate. ut could be on the way to boost inflation. and the new sealer central bank governors graham wheeler warns we could see further depreciation in the local dollar, because of the decline in export commodity prices. by the way, the new zealand dollar has sunk by 20% against the u.s. dollar this year. the biggest drop since 2008. quick look at crude oil. it was up 1.8%. it was down as much as 1.8%. little changed right now. earlier fell for the fourth day. the longest losing run since july 27. we have a u.s. stock -- report today which could show industries grew 900,000 barrels a day. from $38een a rebound

on august 24. but it is still 28% below its high set on june 10. oil one to watch. manus: thank you very much for rounding up the volatility on global equity markets. we heard from the vice-chairman of aegean airlines, a company that has performed well despite greece's political instability. now we had to athens where we are joined by a fund manager on the greek stock market. when all around him had failed. he says there are plenty of healthy greek opportunities. avoid banks and consumers stocks. he is the cio of metlife. welcome to "the pulse." you've performed well relative to your peers. in all the turmoil so far in 2015. i'm curious to know about the privatization of opportunities, what discussions of you had about perhaps participating in

those? for would be the top cause you in the privatization hit list? ports, waterthat and sewage companies, public power companies and hellenic petroleum are the most -- my o top calls to be included in a portfolio. invested in greece. actually, my fund has invested 25% of its net asset value in such names. francine: why would you want to put your money, when you are still uncertain about what comes out of the snap elections? i know it has been political turmoil for the last five years in greece. the rest of the european economy is picking up. a little bit. why not hold fire from investing in greece?

quitery, i didn't capture your question. sorry. francine: my point was because of the actions -- the elections, should investors wait for the outcome of that election? >> ok. of course, the elections is a big issue at the moment. i think that what, no matter who is going to win, there might be a coalition government. parties the pro-euro included in this government in rd reformpass on the ha bills to come. so, i don't, i believe current levels in the greek stock market thequite promising for

investor who has a medium to long-term horizon and is selectively buying good stocks with good fundamentals and healthy companies in general. manus: thank you very much for ahead ofs from athens the snap elections on september 20. was the: if greece problem country of europe this year, germany has been the strongest. it's largest retailer is hunting for acquisition targets. the ceo spoke to us exquisitely. >> we basically decentralized the whole search process. part of the discussion was are businesses local? yes, we are international, but we have learned our lesson by the intelligence and what to do needs to be local. take italy. task of tos the

anticipate how is the mark going to develop until 2020. then question what this metro need to adding capabilities from services and technology. then start to figure out, well, are there potential partners for this and come back to the investment committee and say, we found a nice one. francine: dealmaking marks a turning point for metro which is had a rough ride over the past three years during which a cleaned up its portfolio by divesting assets in greece and turkey. his company has been benefiting from consumer spending in the markets. >> germany is blessed with a very good macro economic to relevant. salaries are growing with very low unemployment. consumption is growing. still different by sector. . there is a lot of stuff going on. tourism, automotive. in total, i would say that food

sector is so competitive that we have to flechette right now. -- deflation now. manus: apple's product launch took place yesterday. investors were not impressed. they close down by 2% after the big reveal, particularly, well, it was apple's announcement of the new apple pencil. a digital stylus unveil alongside the 12 inch ipad pro. that's an implement that steve firstarketed at the iphone launch. tim: a stylus? who's going to use a stylus? no. yuck. nobody wants a stylus. manus: nate joins us now. lus."ody wants a sty there is nothing new in this. >> if you ask a graphic designer

if they want a stylus, they opt for a stylus. if you want this, it is $99. there you go. enjoy. and it works very well with an ipad pro. in 2007, we are talking about a phone. that was a time when nokia was leaving. lack very doing an awful lot better than presently. that was a time where people expected a stylus to be the way people interacted with a touchscreen. after five years of i've hads -- of ipads, that is not the way apple needs to continue not having a tylus - -- stylus. francine: it is easier to use. they also brought microsoft on stage. is this, the share price was down. investors were expecting more.

but it is still a turning point for the company. >> so microsoft's joining on the stage was an interesting move. we have seen this in the past before when apple was going back 20 years ago with less financially stable than it is these days. turningks part of a point for microsoft as much for apple, which is that microsoft, his microsoft is more open. it is impressing other platforms. microsoft has been on the ipad for a while now. if microsoft wants office to succeed in the corporate world, it knows it needs to be on as many platforms as possible. pro being aimed at business users. it is symbiotic. i hate to use that term in corporate conversations. microsoft needs the ipad to

succeed in office and apple needs the support of microsoft corporate software to succeed in that space, too. manus: talks me about the tv launch or the rebirth of tv. what does it mean? nate: if you look at the success apple is had with ios, it is based on the app store. it is less and less about hardware. that is why some investors were feeling deflated not to see as many grand brand new product lines from apple. but the real innovation not just from apple but for many companies is happening behind the screens. the apple tv is a great example. it is going to be about the app store. manus: they say the future of tv is apps. nate: absolutely. that is true. what we are seeing now is the ability for holding ecosystem of television to take place. i always use the example of somebody like uber, a business model that could not of existed without both apps and the technology it is built upon.

is thehink that tv next step, what is next? what could an enterprising developers startup, even a big company, what could they do if given access to an existing ecosystem, technology platform, payment system in place with what apple has done and a giant screen? that is what apple is betting on. i would be hard-pressed to say -- i think it is a great move. francine: interesting. they do so much for the analysis. manus: up next, brazil loses its credit rating following a downgrade by standard & poor's. it goes back to junk. we found out why straight after this break. ♪

francine: welcome back to "the pulse" live from bloomberg's london headquarters. manus: our top headline. iran's supreme leader has ruled that any talks with the u.s. -- ysring an address khamenei sa america remains the great satan. city near tokyo has declared a state of emergency and ordered thousands of residents to evacuate after torrential rain caused severe

flooding. 300 homes were flooded 26 miles north of tokyo. the storm also caused contaminated water from the fukushima nuclear plant to leak into the ocean. manus: brazil's credit rating has been cut to junk. s&p lowered the nation's rating to dd plus. investmentenjoyed grade rating for seven years but has been hit with a worsening economic and political instability. francine: let's get more on last night's apple product launch. we got a hands-on look at some of the new upgrades to the iphone 6 and 6s. tom: remember that old iphone 6 you body year ago you are so proud of? that is the outdated model. apple has introduced the iphone 66. s. the phone design is unchanged.

under the hood is a new engine. 70% faster than the a8. apple is touting 3d touch. touch and you get a series of shortcuts. press hard on mail and you see options like writing e-mail. does other things. press hard on a photo and it gives. apple. the cameras are getting an upgrade. 12 megapixels up from 8. and the video with higher-quality 4k. the selif generation can resofie -- the selfie generation can rejoice. come in aphones new color rose gold.

but let's agree it's pink. $299. plus starts at the foes go on sale on september 25 in the u.s.. manus: it is back to junk for brazil. it lost an investment-grade it enjoyed for seven years after standard and poor's cut it credit rating to dd plus. here with more detail on the downgrade is caroline hyde. caroline: you were spelling it out. seven years at investment grade. from standard and poor's dd plus is where we are ranked, one level below investment grade but the outlook is negative. could this be where it ends? certainly, we could see movies and fitch. -- moody's and fitch. much is being focused on by this initial cut. one of the reasons -- we know

the recession is there. in fact, the deepest in 25 years. two consecutive quarters of deteriorating gdp. the growing budget deficit is a key area standard & poor's is trying to highlight, because not once but twice and within six weeks you have seen what was initially planned to be a surplus move to a deficit. it happened in july and again in august. now we could see a deficit as much as 0.5% of gdp. this is what is worrying standard & poor's. e political th situation. the corruption scandal which is embroiling within it. the president. she herself was chairperson of petrgraf when the corruption was having. all of the speeding into the dire economic picture. a sudden fallaway. let's have a look where the foreign currency is being pushed. we are down 30%.

you see the way the dollar has rallied versus the real. 22% higher over the course of year-to-date. let's have a sneak peek at borrowing costs. near record highs if you are looking at the yield on local bonds. indeed, the brazilian 10-year higher.iking credit default swaps is at six-year highs as well. clearly, economic woes are there. what to do? the finance minister he has been trying. under pressure because his one main issue was to stabilize the finances in brazil. he's failed. all because of political wrangling. congress rebelling against his austerity plan and tax hikes and again spending cuts. just over the course of this week, we have seen the rebellion against a delaying of a bill which meant to increase revenue

bringing in, repatriating money parked illegally abroad. we're seeing anti-austerity measures being voted in. federal workers getting more pay that has been vetoed by the present. -- by the president. can we see the finance minister push this through? he says brazil will take legislative action. the question is how can they when politicians are so mired in corruption at the moment? francine: thank you. up next, why hong kong is gearing up for a night of real-life banker bashing. ♪

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manus: managing his economy to a game. francine: std and poor's cuts the credit rating again. the deepest recession in 25 years. manus: and apple unveils a range of new products. but can they help restrive share price that has dropped 17% since january. manus: good morning to our

viewers in europe and africa. good evening to those in asia. a warm welcome if you're just waking up in the united states. i'm manus cranny. francine: i'm francine lacqua. this is "the pulse" live from bloomberg's european headquarters in london. manus: ok. let's just bring you a little bit of breaking news now on audi in terms of mercedes and audi. we have mercedes deliffering their sales numbers. they have overtaken audi for the number two spot. . audi august delivers rose mercedes-benz. francine: basically audi owned by volkswagen. we'll check on a lot of the car makers in the next couple of minutes. in the meantime the chinese premiere said they have to deal with pressures and growth. he announced they will open their currency market to foreign central banks.

manus: he spoke at the world economic forum. >> we're integrating ourselfs into the wider world. china will open up even more. vesting abroad will remain unchanged. these specific policies will continue the encourage more foreign vem in china and they will expand access to markets. francine: the speech came as they reported the fastest scupe rr price growth. to our beijing bureau chief. run us through these c.p.i. and p.p.i. figures. prices down. >> that's right. you're seeing a sort of seasonal bump in pork and food prices. so that explains a lot of what's happening with inflation there with the factory gate what

you're looking at is an overcapacity issue which is of deeper structural concern, but that number is also sort of distorted a little bit by cheap oil prices. you can sort of draw both short term and long-term conclusions from both pieces of data. manus: nick, we talk about trying to deal with the data flow that we have today. on one side you have the factory gate prices and the other side the consumer prices. draw distinction in this data and how they are possibly going to look at it. >> well, i think what is going to happen here is that inflation data is still within the government's range for -- it is below the government's target of 3% for inflation so that is going to give them more room to act with monetary easing. if you look at the yuan, they devalued it by 3% in august.

they have been defending the yuan quite a bit since then spending a bit of their foreign exchange to keep it high. a low inflation number like that or an inflation number that is sort of within target basically takes the pressure off and give them more room to allow the yuan to weaken which would in turn boost exports, and we had a reading on thearler this week. exports were also down. more impetus to keep the yuan weaker. francine: thank you so much. ur beijing bureau chief. thank you for joining us on "the pulse." how do you read china? everyone is still trying to figure it out exactly how the policy tools left? general whether central banks should not take the risk of hiking interest rates. the we look just at

fundamentals, the data flow from the real economy, there is room for concern. so we have seen -- my firm has seen -- we read data and we have seen the softening, definitely since this summer. but we haven't seen a collapse of the economy. i know that a lot of people think the data in china are now very good. however if we look at a comprehensive view of the data, not just official statistics but if you read all the piece of information which is around, i think that there is a softening, definitely, we have been revising down like everybody has been revising down, but we don't see 3% growth. ok? we still see something which is below 7% but within the range of, you know -- and of course in terms of trend growth in china,

we know that they will have to be -- there will have to be a slowdown. there are concerns that the adjustment is toward a lower trend growth. how the economy will adjust to these changes. and ending a long phase of very large, very high roads which is typical of companies. i think the concerns about china the ore to do with financial sector than with the real sector. in particular with the situation of debts, nonperforming loans. high debt. related especially to the local government. this in a way the adjustment has to come. we have written that in the -- the report that we wrote a couple of years ago a report and the t in the world

issue of the china debt. there is a lot of uncertainty about the quality of these numbers, that is for sure and then of course the issue of china opening up and the capital accounts and you know what that would take. manus: that will be -- the capital account is going to involve currency. it is going to involve access to the currency. there is a debate here that they have done a very small movement on the yuan, on allowing the currency bans to widen. what you expect going forward in terms of the currency and are we entering a new unspoken sort of currency battle. not a war. japan is indicating they are ready to do more and the e.c.b. is eavepb indicating they are to do more.

i'm talking battle, not war. >> yes, i would say definitely not war. there is room for concern. i think i agree with you. although i think that the big central banks and the e.c.b. and the fed and the bank of china, the central bank of china, i think they will be maybe wiser than most people expect in terms of navigating through this very difficult time. but the problem is there. also, you know, with this economy, it is not very synchronized. we know that the u.s. is although has disappointed however i think it has stabilized around relatively robust growth. we will definitely have a disalignment in the rate cycle and the foreign exchange rate concern. francine: the markets are obsessed when the fed will hike for the first time. we understand even when it hikes, it will probably stop for

a while or normalizeation will be gradually. are we too obsessed with the exact timing and the exact month? >> i think we are obsessed with the time, when it will be. it will be september. we have to however be concerned on the path of the adjustment and the overall adjustment. this is something that they said at jackson hole. calm councel down. the issue is not so much the date but the cycle of the tightening. there is no doubt that the fed will have to move. i think that we are a bit freaking out because after 10 years of zero interest rates, this is a big change. a lot of uncertainty. manus: you're going stay with us. the we're going to talk a little bit about the bank of england. francine: here is a look at what else is on our radar this morning.

japan filing details of its plan to go public along with its banking unit. japan's government is seeking to raise $11.6 billion from the sale. manus: companies traded three times for jobs than expected. the numbers indicate that record low interest rates are falling and weak rage growth are encouraging hiring. francine: new zealand lowered interest rates for the third time in three months from 3% to 2.75%. there is performance for further easing if needed and they are looking carefully at data coming from china. the currency slump. manus: brazil's sovereign rating has been cut to junk by standard and poor's. it comes as the president struggles to shore up fiscal

accounts amid a faultering economy. tumbled to 6.6% following news along with american depository receipts. francine: apple has unveiled a wide ranging number of products. phones, and a bigger ipad. tim cook showcased the new products. the september gathering is their ost anticipated event. manus: up next, bangor england's rate decision day. that brings us straight to our twitter question. will china derail a u.k. rate rise? be discussing that after the break.

we're both here at flacqua and manus cranny.

francine: to "the pulse" live from bloomberg's european headquarters in london. china's faltered. bank of england governor mark carney argued that wasn't enough to entertain the prospect of higher borrowing costs. here to look ahead to the bank of england rate decision, our

london business school professor and bloomberg chief european economist jamie murray. first off, if you were on the m.p.c. today, would you hold off to have a better idea? >> yes, i would hold off. i would wait for the u.s. the bank of england says they to wait for the u.s. francine: for the fed to actually raise interest rates? >> i think it is inevitable that the u.k. has a smaller economy, has to be kind of following the u.s. plus there is a lot of reasons to you know, concerns. manus: jamie, we catch up regularly on this. give us the house view on terms of what level of dissent there might be. last month it was 8-1. speculation out there from morgan stanley that it could go back on hold and that housing

could be possibly voting for a cut. i love irony. that is great note. >> our central view is it will remain 8-1. really we're expecting the showing look for is the communication. we're expecting fairly new ones. the same 2001 e.c.b. has made. you have got this slowdown in emerging markets. it is a double-edged sword. you have the effect on oil prices which has to be good for the consumer. oil. external demand. it is probably still neutral. that is what we expect nozz the minutes. we have had some pretty weak data. we had some weak data. wage growth. increasing a little bit but not quite as much as we were

expecting. >> yes, so i think the broader trend in wage growth is one of an increase. it is starting to reflect the fact that it has largely been eroded. production numbers got a lot of attention. these things bounce up and down. manus: the weakest in nine years. doesn't that remotely bother you? >> the trend is kind of, if you ok at it, it is not -- francine: you said you would hold off for the fed to do something. if we look at charts, the pound is higher. tightening in some way, of course the monetary policy. we have weak data in general in the u.k. over the last two weeks. we have china. we have the uncertainty of the fed. for the ies you most u.k. economy? >> i think the exchange rate is of course very important for the

u.k. and i think there, the exchange rate that matters more is the euro area. ish sense to dove have euro area. definitely calls for caution. about the data, i agree that we should not pay too much attention to industrial production of manufacturing data, but if you look at the overall trend of the data flows, i think we're more orless -- there is a very similar picture picture of the u.s. we are more or less stable 2.5,2.6. actually this number is a bit lower than what we were expecting at the beginning of the year. if you just look at the comprehensive view of the data, i would say there is a stabilization around the rate of growth which is a little bit, you know, lower than what -- and this is morals the same.

-- more or less the same. it is ok. the labor market is tightening. maybe there is a pickup on wage growth. however there is something that we don't quite understand about trend growth. and you know, also of course the behavior of inflation which is the main concern for the central bank. the communication for the bank of englan has been that inflation will pick up at the beginning of the year because the oil prices which have finished by then, you know, it is really is difficult to forecast inflation. we'll see. manus: one trend which is absolutely -- prices have dropped for a 27th consecutive month. there is a bit of a trend there. the oil will drop out of those numbers. jamie, for you, the -- give me your perspective in terms of how quickly we will get back to the mythical because there suspect a

central bank with a chance of getting to it. the 2% inflation target. >> it is going to take a long ime. it extends the period over which inflation will get to the target by almost a year. so it will take a long time, but the point is the bank of england is looking a year or two ahead. so it is setting policy based on what it thinks will happen and where inthinks inflation will be in two years. my feeling is the wage pressure also continue to build. it is true that growth has slowed lake-effect in the u.k. but it is still above trend. we think it will prompt the decision on rates in february. francine: thank you so much. manus: how much of it is going to impact on the monetary policy

committee in regards to china. will china do more to derail a u.k. rate rise? francine is at flacqua and i'm at manus cranny.

manus: welcome back to "the

pulse" live on bloomberg television. streaming on the ipad and bloomberg.com. speaking of apple. their annual product launch took place in san francisco last night. investors were not that impressed with the new product lineup. shares down nearly 2% at the close of business after the big reveal. in particular, the noum of the new apple pencil to go alongside the ipad pro. >> a stylus, right? we're going to use a stylus. no. [laughter] whopts a stylus? you have to get them and put them away and you lose them. yuck! nobody wants a stylus. manus: the world has moved on. point you made

earlier. you made the point that the world has moved on and how we interact with these gadgets. >> i think the ipad pro is a different product to what jobs in that particular clip was about. it is about graphics and it is about designing. that is who apple is aiming it at. there isn't probably a graphic designer in the world who doesn't have a tablet and a stylus on their desk right now. it is something they need. they don't want to design magazines with their fingers. this is something from my per spebtsive, it is not something a ive, it is not something that went away. it is more nearby. a bit more precise. it needs more precision there. that would be my view. francine: this is the one -- yesterday's announcement was the one people are looking for in new gadgets. the apple pen. we also heard about the apple tv. it is about pleasing gamers.

>> quite possibly. the idea is the introduction of n app store. it is being able to independently develop and relieve apps. so the fact that apple is starting to do that in tv opens up an entire new category of apps. a whole new way of people interacting with a company or with products and when you look at something like, i mentioned them earlier on, but something like uber, the value they have on the business, that is something that physically could not have existed out app season and the phones that powered those -- apps and the phones that powered those apps. the television, that gets exciting and definitely what investors should look out in terms of new companies making software for these sorts of

products. manus: nate, thank you so much for wrapping it ull up a and bringing the stylus up to date for 2015. up next, we're talking latin america. ♪ the only way to get better is to challenge yourself,

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call 800-501-6000 to switch today. perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. francine: welcome back to "the pulse" live from bloomberg's european headquarters here in london. i'm francine lacqua. manus: i'm manus cranny. here are our top headlines. china's premiere had said he is confident china will hit their target this year and he sees more opportunities than challenges. he said the situation is stabilizing and urged people to have more confidence in the world recovery and said china has no interest in a currency to lose much more

than gain by one. francine: australia's unemployment rate dropped last month. companies created three times more swrobs than expected. the numbers indicate that low interest rates and falling currency are encouraging hiring. manus: the central bank lowered rates for a third time in three months. the bench mark rate was lowered from 3% to 2.75%. there is potential for further easing if needed. they are hoog at the currency coming in from china. francine: apple has unveiled a wide ranging number of products. the chief executive officer tim cook showcased the new products in san francisco last night. the september gathering is apple's most anticipated annual event and serves as the head of the holiday shopping season. manus: 10:31.

three days of gains. jon ferro is here with a little bit more. equity markets? the an: we snapped three-day winning streak. we're lower. here in london, the city of london, the ftse 100 down about .5%. in asia, in china specifically, premiere li, soothing words. no such hard landing. and the equity market was a little bit of a reality check. the shanghai composite lower again. after the biggest -- for japanese equities, we come off by 2.5%. for me, though, the action not n equities or bonds, in the fx market. fert li's soothing words. the reality. look at what's happening in brazil as they get cut to junk by sapp. new zealand, a third rate cut in three months. a signal that they could do

more. what does that mean for the currency when it dropped two percentage points. a much weaker kiwi near a six-week low against the dollar. one lawmaker in japan talking about the prospect of doing more saying the b.o.j. should reach for that lever next month. more stimulus from the b.o.j. what on earth did they buy? what does it mean for the currency? a weaker yen. dollar/yen up by .4%. when you look at this debate, a global debate as central banks continue to do more, whether you dawkins about it -- talk about it happening in new zealand. what does it mean for the city of london? the pound, 1.5383. the decision coming up in about an hour and a half's time. no rate change expected. what about the votes? governor carney talking about a prospect of a rate hike. some people think some people

might vote for a rate cut in the next couple of months. francine: thank you so much. in about 25 minutes, it is "surveillance" with tom keene. tom, it is really all about these markets. rally, fall, repeat. tom: really gave up yesterday afternoon. what a shock. i like what jon ferro said about the link oovepblg foreign exchange into what we see from central bankers and certainly the major target will be brazil, the rate cut to junk. front and center. you see this with the chart. the 10 or 11-year note. we'll look at the american economy and of course our guest has been exceptionally cautious about economic growth in america. he is getting a more optimistic text. e'll catch up with achuthan on america and then we'll chat with michael wolf and the comments made on bloomberg yesterday by

scott galloway of new york university. michael wolf will come up to the defense of marissa myer. he was quite upset about galloway's comments and then chilton. to bart manus: we're going to talk to caroline about this in a moment. brazil. tom: it is highly symbolic and really folds over into the political debate within brazil. so that is really front and center this morning. manus: ok. tom keene, the head of "surveillance" in just 25ur7bd minutes. stay tuned for that. we were talking about drunk. -- junk. standard and poor's put brazil back to double b plus. francine: it highlights the economic challenges mays facing

the country. here more on the rate change is caroline hyde. what is the latest? caroline: seven years in the investment grade sun. that has stopped shining. e're now back to junk. the outlook is not bright. meanwhile, this is seven years. notably, the other libor rating companies, moody's, fitch, they still have brazil on investment grade and the question is how long? what do standard and poor's push forward? the deepest recession in 25 years. the trajectory is downhill for g.d.p. the growing budget deficit is rearing its ugly head because not once, but twice has the deficit -- well, the fiscal budget been changed and reor yen tated by the government. in august it went down to a deficit. half a percentage point of

brazil's g.d.p. this is what is worrying std and oor's. what the is this widening corruption probe continuing to ar its ugly head regarding petrol. that is downward hill that we have been v seen in erm -- in terms of g.d.p. have a look at how the currency has been affected vs. the dollar. we have seen the real weaken. 42%. this is adding to the woes of course, particularly for imported good and then of course borrowing costs. this is showing where the risk is being identified by of course the people that own the bonds.

yields spiking to record highs. driving up the risk. credit default swaps. we saw at a six-year high earlier this week. that is the cost of ensuring your brazilian bonds. the market flagging the risk. standard and poor's. now what can be done? what about the reforms? they have been trying. we have seen the finance minister brought in this january. he has been under pressure. he has been thought to be an austerity driver but not managing to get them through. we have seen rebellion against the most unpopular. now at the most unpopular of her career. therefore they are able to vote against austerity and tax rises and spending cuts. the drives are remaining tough. we do understand overall, brazil will take action to boost efficiency and productivity. the question is they had better do it quite quickly. back to you. manus: thank you for wrapping all of that up.

francine: in asia, people of singapore are preparing to go the polls tomorrow. the rime minister -- challenge will be to stay relevant. our southeast asia correspondent assesses what is at stake. >> it is like elections everywhere. oral nts of redrawn elect boundaries. the influx of overseas talent is one of several hot button issues in this election. we will see the day when singapore becomes a minority. >> foreigners account for 1/3 of the population and they are fighting for the same jobs as nate singaporians. -- native singaporians. the ruling people's action party

wants to capitalize on a feel-good atmosphere and the legacy of the late father of the nation. the last election four years ago the party took its slimmest majority in history. it has been in power since independence and needs to win back support. this election is about change. >> we have a younger generation now who want change. who want basically to have their voices heard and as a result, it can't be the same. you can't have a singapore that is run by an older generation for the older generation. >> you must be really excited that you're able to vote for the very first time. >> i am. i'll really excited. > leapts the new generation of evolving rapidly

politics. its amazing journey from third to first world economy has little resonance for them. they want more checks and balances and civil liberties. ing rime minister is pitch stability. >> this election will be critical. you will be deciding who is governing singapore for the next five years. but much more than that, you will be choosing the team who will be working with you for the next 15-20 years. >> singapore is truly at the cross roads. friday's election will show which road the people want to follow. manus: coming up on "the pulse," apple's new gadgets failed to impress investors in the stock. it dropped nearly 2% after the big reveal. but we're going to take a look behind the scenes. is this a moment of silent? apple? stay with us. ♪

manus: welcome back. you're watching "the pulse" live on bloomberg television from london. let's get a little bit more on last night's apple product law firm. brad stone managed to get his hands on the new ipad. >> last year apple went big with the iphone 6. this year it is bulking up the ipad with a jumbo sized tablet called the ipad pro. the pro is a big shift in

direction for apple's ipad line. it is big with a 12.9 inch screen. it also has a separately sold apple pencil. a stylus. a subject that steve jobs once ridiculed as unnecessary. the tablet is running a chip which apple says is faster than with the portable pc's chips in last year. it is 6.9 millimeters thin. thicker than the ipad. they are taking a page from the microsoft surface. the ipad pro is aimed primarily at corporate customers and runs versions of microsoft office.

starts at $79 with an additional $99 for the pencil. goes on sale in november and apple is hoping the pro can give a boost to its tablet sales. francine: let's take a look at their new product offerings. daniel, great to have you on the program. what are you most excited about? the apple pen? the fact that we have a new revamped apple tv or is it luxury watches? >> i'm most excited by the hand sets and of course the iphone is the most important product accounting for 60% of its revenue. it is these upgrades that apple introduceses its most interesting features. the 4 s or the 5 s. and one, you have 3-d touch the camera. it has the potential to really

change how people interact with their imp phones over the next three, four years. that is the kind of -- iphones over the next three, four years. manus: you have maintained this is probably one of those moments for apple where they have not transformed the front of what we touch and hold but what is going on under the hood. >> exactly. that is what apple's key strength is. it is very easy for competitors to have a very high def screen, to have a nice looking screen. what is going on in the software is what makes apple stand out. francine: what is the one thing that disappointed you? shares were down 2% after the close. it is obvious that people were expectsing more. >> shares always drop after apple releases devices. it has always historically happened. reality always falls short of

expectations. i think if there is a little bit of disappointment it would be on the apple tv product. while it is a big upgrade and improvement, a lot of people were expecting an toll have some content -- apple to have some content partnerships and compete with netflix. something along those lines. my guess is the apple tv product is still very niche. they are trying to build up a base and looking to get into a stronger negotiating position with the content providers before they make those deals. manus: ipads for business unioners. -- users. there has been a big joining of force. ipad for business users. ipad sales have been falling. what do you make of that? >> i think it is going to have a good effect for ipad sales.

particularly for ipad and iphone in general. i think the one thing that people should look out for, however, is the potential impact sales. book the same size as the laptop and with that keyboard and stylus, it is actually able to do things a the laptop cannot. that is going to be a very interesting dynamic about how apple will position the mac book going forward relative to -- manus: $199 for thepad. -- the ipad. that is lumpy. >> it is. once you start adding in the stylus and the keyboard and if youed to have 4-gmp connectivity built in, it will get to around $1,300. you're getting into the same price range of a mac book.

francine: what about the apple watch? we have a new collaboration between apple and the -- will this kick off? it seems pretty niche and actually quite expensive. >> you can say that about a lot of different versions of the apple watch. i think the partnership really underscores what apple's ambitions with the watch are. it really wants to push it as a fashion brand and accessory. the leadup to the launch a few pushinggo you had apple it in "vogue." it is something other smart watch makers are doing, partnering with fashion companies and the high brand, high quality brands to get that sort of niche appeal and positioning. it is not just about having the expensive products but about the trickle downfect of having that appeal will encourage people to buy the cheaper versions as well. manus: that is probably the one that i can afford.

thank you very much for being with us this morning. francine: up next, with an interest rate decision due from the bank of england, could china volatility delay a rate hike? that is after the break. ♪

francine: welcome back to "the pulse" live on bloomberg tv, streeping on the ipad and bloomberg.com. manus: we have our bloomberg columnist mark back with us.

a little bit more dissent on the m.p.c.? >> i hope not. there is no -- the only place in the world where there is inflation is -- there is no inflation anywhere else. food prices down 5%. since their peak a few years ago. they are now down 33%. there is not inflation in world. francine: if you're a central bank don't do anything at all? >> don't worry about being near zero. these economic conditions warrant maintaining a near zero interest rate. manus: they are obsessed at getting us off zero and bringing us back to some kind of reality. a little bit of volatility in puff the magic dragon. equity markets go puff, don't they? >> asset prices where you could

have said there is not inflation. you can't use prices as an excuse and say quantitative easing pushed the prices. i just don't think there is an argument that says we need higher borrowing costs to restrain inflation in the future. francine: are you worried about a global recession? >> if you look at -- there is a lot of numbers out there that are worrying. the recovery that we have seen seems feebler than it maybe did three or four years ago. you have to take account of what's happening in emerging markets. brazil is being downgraded and a chinese authorities seem terrified of what might be happening in their economy. manus: it is a game of chess to run the chinese economy. did you know that? > three dimensional chess. also don't forget, the u.k. is

very exposed to floating mortgages. 60% of people still are still tied to bank rates in some way, shape or form. francine: and sterling. >> it is up about 17% in two years. we're seeing the impact on that on our exports. selling good overseas have fallen the most in nine years. this is not an environment where you want to be pushing pound and you know, the u.k. is a victim of the currency war that we have seen. currency war that we have seen. the : we'll see what release brings later on. francine: that is it for "the pulse." keep it here on bloomberg tv. stay tuned for "the surveillance" team. follow all of us on twitter. i'm at flacqua. manus is at manus cranny.

we're asking will the china turmoil rerail a u.k. rate rise? find out in an hour from now when we get the minutes. ♪

>> of this is "bloomberg surveillance." tom: standard and poor cuts brazil's outlook. you do the math. apple up for a

massive upgrade cycle. get out of the courtroom, get on the field, the patriots and dealers -- steelers. good morning, everyone. this is "bloomberg surveillance." i'm tom keene. joining me, our surveillance royalty, olivia sterns. the queen yesterday at the ball on the park. olivia: incredible. tom: it is a big deal that she still goes up there. hundred800% -- a percent. we have the redux because we are with our surveillance royalty, olivia sterns. brendan: brazilian bonds fell after standard and poor