the evergrande theme. the moment of truth coming up this week. this is bloomberg. ♪ manus: it is "daybreak: europe." stocks in the u.s., equity futures ripping through the 4400 mark this morning, concerns on the risk of contagion from the evergrande debt crisis. it will continue until thursday, that's when they find out if the liquidity crisis is as dire as it seems. we are showing you three deviation moves -- standard deviation moves. let's bring the scale of those moves to alan higgins and get context. good morning. you have seen many precarious moments and markets. lots of people in the analogy. evergrande, if it is an unruly or unsightly default, it has the risk to drain liquidity away and that is the bigger market risk. how do you put evergrande risk in perspective? alan: good morning. interesting, those big cbs moves, especially in china, from a low base. if you are going to hedge against the worst case, find some china cdf's at the worst level and i guess make a trade. it's hard not to see this as a

banks were expecting evergrande to miss the deadline.s unclear whether they will declare the company in default. some lenders are waiting for evergrande to propose a loan extension plan. credit suisse may move its asian investment banking operations into global securities and advisory business. the board is set to be meeting to discuss strategy. sources say it would mirror a similar decision last year, bringing market activities into that unit. it is the latest move in a -- in an overhaul that was hit hired by the scant -- hit hard by the scandal. the agency is reportedly taking action against mizuho financial group and its banking unit. the nikkei reports the plan includes directly managing the lenders system overhaul and maintenance to prevent broader financial network concerns. they have had seven system failures since february. fedex has cut its annual earnings outlook and posted quarterly profit below analyst expectations. the company struggled with higher costs including those associated with the tight labor market which rose to $4

we are watching evergrande.ainty surrounding the developer, markets may worsen. but in the long run, sees opportunities. let's bring in jenny zeng, head of asia-pacific income at alliancebernstein. what factors are you watching at making these selections to see who the winners and losers are in chinese property? jenny: good morning. chinese property right now is in the darkest moment, but there will be a dawn for some. we are looking at the fundamentals of this company right now. their most important thing is refinancing capability. can those developers survive a prolonged shut down of the offshore market? chinese developers all have pretty tight liquidity, some better than others, but they are pretty reliant on the offshore market for normal financing, the cash structure. and now, because of what has happened to evergrande, plus the overall tightening by the government on the sector in terms of sales and mortgages, we see the market is very stressed. we are seeing a considerable amount of chinese bonds are at s

and the fallout for evergrande. haidi: how concerned should we be about the commodity slump as well? it comes on the top of the steel output curves that we saw in china. >> yes. the commodity is -- well, the china real estate market, also the decline of some commodities as a direct result of the chinese government. and the u.s. trying -- the maturity and the reduce of the pollution, the move to the clean energy, all these macro policies had an effect on the property market. so to a certain degree some decline of the commodity price is desirable because the chinese worried about the rising commodities squeeze the small and medium sized enterprises. haidi: all right. i want to bring in market reporter that joins us with some views -- when it comes to dip buyers, are we starting to see them emerge? >> yeah. it really does seem like there's a little bit of -- i mean, you said it earlier in your question to ye this idea, you might need a reason to sell a little bit. a little bit of a reason to push out and reallocate in

all that brings us back to evergrande group who is evergrande group?got to this point, let's get more on the story. it's a name, ewe nice, that a lot of our american or european viewers may not be familiar with, may have heard in passing. who are they and what is happening with the company >> reporter: well, you know, brian, the company is the second largest developer here in china. it's a name very well known among the chinese. interestingly enough, most market watchers, as well as anybody who invests chinese real estate are betting that the government is not going to step in with a direct bailout, not wanting to encourage some of the excessive lending that the company has been known for more recently it currently owes about $300 billion, and that's one of the reasons why people are quite nervous about what's going to happen next. because they're wondering whether or not beijing is going to step in at some point are they going to think that the risk of financial contagion is too great. you can see it reflected in the stock price. the stock price has b

annmarie: the evergrande pressure is easing. the developer saying it will pay the interest due tomorrow. the vaguely worded exchange buying does not specify when or how much of the $36 million evergrande will pay. that is left to analysts' guessing. a filing here that has confounded many, it is confusing analysts, we are stronger on these markets, but what do we know about the repayments in evergrande? >> it is unclear whether there is a repayment or not. they did not say they were going to pay anything. often in these situations, if something is resolved after clearinghouse, a deal has been done between the borrower and the lender. that does not have to mean repayment. it is unclear what the situation is going to be. there's the dollar bond, $86 million in dollar bond coupons tomorrow. i guess the only thing is there is a 30 day grace period before the bond can be declared to be in default. obviously through the rest of the year, there is $550 million of coupon debt that is due. even if we get past thursday, we will see what ha

but who is the evergrande?den debt threat and what is the real risk to global markets. >>> and jeff bezos pledging to give away $1 billion to one cause this year. here's a hint, think oceans. it is tuesday, september 21st, and this is "worldwide exchange." >>> welcome back good tuesday morning it's 5:28 here on the east coast thanks for joining us, there's a lot going on let's get to your morning money and see if we are getting more follow through selling after monday's big selloff we are not futures they are higher not where they were, not what we lost, dow futures up 307, just over 1% so maybe looking to regain about half of our 650 point drop markets, as you know, maybe you were under a rock, who knows, took a tumble on monday. the major averages ending down nearly 2%, the dow down more than 650 points. there was one potential upside to it all. we ended well off our lows of the day. buyers really streaming in in the last 15 to 20 minutes of the market the dow closed 300 points off its low from the session an

evergrande could damage confidence. a look at china as it announces plans to improve intellectual property protections, including boosting from losses. it would also accelerate legislation covering big data. artificial intelligence. gene technology. washington often accuses beijing of hacking for high-tech research and tertiary education. joe biden will meet at his counterpart, emmanuel macron's, face-to-face meeting to mend ties following the outraged officials in parish. biden has spoken with him over the phone for the first time since the agreement was announced and agreed open consultation would benefit in the situation. biden plans to meet macron in person next month. let's look at the first word have -- that's a look at some of the first word headlines. david: i'm here. yvonne: let's bring it back to the anchor desk and bring in sophia. hong kong traders, we are coming back in a big way after the holiday. seems like they are looking at this situation. everything is fine. >> very positive in hong kong. quite positi

, and, number two, it is risky to be short evergrande. able to keep it going longer than many people thought they would have. >> what is amazing as i look at your report, which i held up and i had in front of me, you said at the time that the company's debt was nearly $12 billion back in 2012. now we are talking about what is said to be more than $300 billion. >> yes amazing. that's what we know of right now. there could be other skeletons in that closet, wouldn't doubt it whatsoever. there will be collateral damage. i don't think it is systemic whatsoever i think the market data being down is just because it can't go up every day and we are just back filling the excuse. i don't think there's any form of contagion coming from evergrande through the global economy. >> what is the collateral damage then that you are speaking about? >> well, equity holders will probably be wiped out. i can't speak for the debt they probably will lose a lot of employees, and, unfortunately, some of the real estate speculators in china and some of the employee

tether said they have no evergrande concern, thank you.an brothers collapsed which acted as an accelerant for the financial crisis could the same thing happen with tether just say i'm concerned why should you care about tether if you earn other cryptocurrencies do you have an idea of how much bitcoin and others are purchased with it? if tether collapsed it will cut the whole crypto ecosystem if you own crypto, i recommend taking something off i know there are lots of younger people who own this stuff. i wouldn't be surprised if crypto goes mainstream owning crypto is a crowded trade. i don't want you to lose money if this space gets hit by evergrande these could be truly vulnerable thanks to the tether connection. take tether out and it wouldn't be if the chinese communist party liked tether, that would be one thing. they don't seem to have much interest in stopping this problem at the source by bailing out evergrande or they don't want to bail out the shareholders and creditors i know crypto lovers don't want to hear me say sell. if you h

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but -- evergrande operates. but questions geffen the silence from beijing this is clearly some sort of learning moment, right? a teachable moment. and investors are expected to walk away with some sort of lesson learned. but take a look at what ray dahlia has to say when it comes to weighing in on the systemic race debt crisis arguments. >> a moment produces pervasive structural damage through the system that wasn't rectified until the treasury came across in terms of its borrowing and then the fed came across with quantitative easing. but this is not that kind of a shakeup type of thing. this is -- $300 billion is what they owe. and this is all manageable. shery: bloomberg economics also says that the tur mole in evergrande is unlikely to trigger a lehman-like financial crisis. let's bring in our markets reporter ye xie. i'm hearing a little bit more consensus toward the not lehman shock campus. whether it's barclays, citigroup, u.b.s. and we have bloomberg economics. so why the anxiety in the markets, why is i

are very low but an evergrande could damage confidence. >> the evergrande situation seems particular has very high debt for any emerging market economy. really the highest any emerging market economy has had and the government has been working to get that under control. there is not a lot of direct united states exposure. the big chinese banks are not medically exposed. vonnie: the japanese prime minister has warned about china's rapidly growing military influence ahead of the first in-person meeting of the so-called quad group. he told lynn by the changing power balance could threaten japanese prosperity. she will join leaders from the u.s., australia and india on friday at the white house. beijing says the group is pursuing confrontation using a cold war mentality. u.s. treasury secretary janet yellen reportedly wants wall street to assist with negotiations on the debt ceiling. bloomberg has learned janet yellen contact banks from jp morgan, citigroup and wells fargo. u.s. funding could be exhausted in october. sources tell us she is asking the business community to pressure republ

there was angst yesterday prompted by evergrande and somewhat moderated today but evergrande still inecline after moody's set the chinese developer is on the brink of default. we are joined by our guest, a global macro strategist. china is something you look at a lot, your research a lot. what is your take? >> this is a particular challenging time for investors with the risks of policy mistakes rife across all parts of the world. i think global markets are trying to grapple with the idea of a disorderly unwind in policy stimulus which could take what is a natural midcycle slowdown first in china into an economic slump and i think that's what we've seen the past couple of months, huge degrees of policy uncertainty. the short run is the adverse market effects we've seen the past couple of days. with the caveat that over the next couple of weeks policymakers err on the side of caution, and that is how policymakers often respond, they manage market drawdowns and selloff to a large degree with effective moves. we expect not just in china but also the u.s. and all over the place, for policy

trades. >>> what could chinese developer evergrande's debt crisis mean for u.s.. details on tradingnation.cnbc.com more "squawk on the street" coming up. it's a wishlist on wheels. a choice that requires no explanation. it's where safe and daring seamlessly intersect. it's understated, yet over-delivers. it is truly the mercedes-benz of sports sedans. lease the 2021 c 300 sedan for just $449 a month at your local mercedes-benz dealer. >>> on behalf of spacex welcome home to planet earth. >> thanks so much. it was a heck of a ride for us just getting started >> that was the voice of jared isaacman, ceo and founder on what was a flawless landing to cap a mission. this is the all-civilian crew of spacex's inspiration 4 mission, it splashed down saturday off the coast of cape canaveral florida, sine proctor, mission specialist christian dem bros ski. an altitude of 366 miles donations to st. jude's children's research hospital skyrocketed upon the landing, musk adding $50 million donation to the pot as well, above the $200 million goal set by isaacman in addition to

-- evergrande. the boj governor saying he thinks that situation is likely contained and is not a replication of japan in the late 1980's and early 1990's. we are also getting bruce richards saying he is buying more -- or for the first time, i should say, this week evergrande debt. he did admit that home buyers, suppliers, and onshore bondholders will be paid before offshore investors. we do know that the housing authority in china has stepped up supervision of their bank accounts to ensure that homes are completed first. the priorities are the investors, not necessarily the creditors. haidi: we have learned that government authorities are stepping in to buy evergrande's stake in banks. this is pretty much indirect or even you could say direct government intervention to try to help. >> it is indicating that the government is taking, you know, some sort of intervention. not outright intervention to save this company, but taking steps to basically achieve the goal that it wants to achieve, and that is

jon: china making preparations for evergrande -- evergrande's demise. up a half of 1%.i have got a minority position in evergrande. jon: you made one move out of cash? tom: it is a barbell strategy. [laughter] check this pastor joins us for two short a visit -- too short a visit. you are only the one -- the only one in the room to get to the sunday talk shows. how do the leaders of this great nation get to the sunday talk shows of the calendar put in front of them? jack: the sunday talk shows will probably be a little tense this time. tom: a little tense. jack: monday is really a very key day and we are sort of building and negotiating toward that. monday is the schedule vote in the house on the senate passed infrastructure bill that has been back and forth between moderate who say they think it will pass and progressives who think they will withhold their votes and do not think it will pass. republicans now in the house are whipping against this despite a qassam republican support in the senate. monday, we will find out -- despite getting republican support in the sena

sevens from evergrande.ce to ensure markets that there is pleasure is him it -- exposure is limited. force to provide data on semiconductors and they will get the latest on the chip crunch. tom, first of all, we made it to friday. and the markets barely made it to friday after a heavy week on evergrande. tom: started sour today, but three days of solid runs. the evergrande story took a backseat, more payments next week, that may drop for the price of that company and whether we get systemic risk out of china. the property sector on the drive there. what it means for the second-largest economy of the planet. the reflation trade was front and center when it comes to u.s. markets, the biggest one-day ticket we've seen since march. still a ways away from the 170 we saw in the early period of this year, but some forecasts suggest going higher on the u.s. 10 year yield. the benchmark down about .7%, the dax in germany also lower by 135 points, the politics front and center two days ahead of that important election

no communication from evergrande or the government in beijing over what the plans are for evergrande.n keeps getting more difficult. you mentioned the electrical vehicle unit saying it will not listed shares on the shanghai board, and that was one plan for evergrande to raise funds. this was their most valuable unit this year, as recently as summer. evergrande is quickly running out of options. that 30 day grace period was essentially triggered last week on friday when it did not repay the coupon that was due. giving at least evergrande more time to negotiate with bondholders. but it does not give investors much in the way of confidence. francine: thank you for the insights. u.s. treasury secretary janet yellen and fed chair jay powell visited capitol hill twice to testify before a congressional panel. other central bankers take center stage on tuesday. we will hear from the likes of christine lagarde and powell himself. the ruling coalition in japan will choose a new leader, who will almost certainly going to be the new prime minister. we get chinese pmi's on wednesday, with official

was sold by an evergrande unit.here is the potential for cross default here. it's debts aren't really widely known about. as you mentioned, the $45 million coupon coming due today, we haven't heard word on the coupon that was due last week. we don't have clarity on that. there's a lot of unknowns hanging over that. in the meantime were seeing some of the u.s. hedge funds and u.s. investors buying up and seeing an advantage here, recovery bets on evergrande. of course we don't have proximity to the situation. there are lots of interesting bets being made here. yvonne: i read one report on why you're seeing these names buying evergrande bonds, basically suggesting you have to assume the recovery rates are higher than what the market is pricing in right now. then i look at something like gpi have with this line saying they've stopped buying chinese sovereign bonds into their investment portfolios. do you think it has big implications given the japan well not buying chinese bonds? >> i think it is incredibly important.

evergrande is trying to pay down that debt.s some concern that will cause other property developers to also cut the prices of their apartments pulling the broader market down, there is a lot of concern there. the pboc is providing more liquidity to help relieve some of that stress, much uncertainty still remains. manus: john with the latest there on that indebted developer and its travails. how are asian markets reacting to the latest on evergrande, let's go to singapore to break it down for us, jules. >> we also see a weakness coming through in asian stocks in china coming back after that two-day holiday, the index falling through its 50-day moving average lower for a third session, it's longest losing streak in about a move. we look at how chinese assets are doing in general, we were expecting a bigger drop than what we're seeing, down 1% on and dropped 1.9%. the injection of liquidity calming things somewhat. it seemed like the pboc wanted a weaker yuan, you see the yield on the 10-year 3.86%. what next for evergrande and wi

if you have chinese economic growth decelerating faster because of problems evergrande evergrande withwns in other sectors as well, how much can asian consumption hold up the ground if china worsens? >> thank you for having me. i think china is still very important to the overall picture of the asian consumption so let's start with that. if we were to look at some of the recent data on why the weakness is coming through in china, half of that is covid related. china has a zero-tolerance policy against covid. the ways of such in covid cases that we have seen in china, we have seen lockdowns happening in mass testing happening. that has affected consumption activity as well as economic activity to a certain extent. as a result of that, consumption and china is pretty weak. on top of that, we are also seeing some fears of prosperity and what that means for migration in china. we think over the long term that will mean the outcome of prosperity will mean that will expand the middle class in china and the consumption and china will be very much in tact. that should pull up over the long-ter

that bond was not issued by evergrande itself. be guaranteed by evergrande and another unit. indications are of course, there are big questions over the nature of this type of debt that evergrande may be guaranteeing that is not perhaps very widely known. haidi: how many more of these private placement debt obligations do you think there could be? reporter: this one was not listed on the exchanges, there was not a lot of clarity for a long time about the precise nature of the guarantee. quite simply, we don't really know the scale of this. when you look at the complexity and sheer scale of evergrande's operations and guarantors, you can get a quick sense of just how complicated that might be. haidi: we know that there is a long list of potential disposals. does this put a dent in terms of that debt burden? reporter: it depends what type of burden we are talking about. when it comes to thinking about the wmt or supply, these pressing payments, yes. that may be directed towards those concerns. when we are talking about creditors and

the evergrande fallout spreads. investors join thousands of chinese households demanding on the back from the embeddable -- embattled developer. plus, the energy crisis goes global. the u.k. considers drafting the army to get fuel to petrol stations. chinese homes to cut back power usage. good morning. there is a smorgasbord of risk to hit these markets. you and i grappled with the dominant narrative -- is it evergrande, the fuel crisis, is it a fast fed paper -- taper? or is there a global re-rating of rates? good morning. dani: good morning. i would say if you look at all of those, you could make the argument that rates is the least. energy is going to be short-lived, rates is a global market move. we have central banks in coordination starting to tighten policy. manus: absolutely. the new bond market tantrum. yes, the fed must tighten first, that's what you are used to happening, that's what every model has -- no. the bank of england, two year yields, bang. a new bond market tantrum, but not in treasury. a big mo

yvonne: joining us with the latest on evergrande.dd the woes and property sector, then you talk about the power crunch we have been talking about all morning. we start to see more economists downgrading forecast for chinese growth, in particular when it comes to electricity cuts. rishaad: this is going to happen because of the property story. down to 20%. let's not forget prices will have a big impact downstream that affect profitability, and that in turn will slow down economic growth. yvonne: ppi prices could spike to at least 9% this year from a year ago. also, when it comes to growth forecast, they have been talking about these latest moves. they cut estimates 7.7% to 8.2%, he is saying pmi numbers, expected below 50. they knew stock on the shanghai exchange -- they will issue up to 2.6 billion shares on project development. they reported a 221% jump in profit in august, the stock price has gained more than 12% this year. prudential plans to raise as much as $2.4 billion from a hong kong stock offering, they are selling up to 130

, so we are still seeing that pressure with evergrande itself. the pboc injection, as dave mentioned, at least helping to stabilize everything outside, talking about money market rates moving on the back of that, and a global bond selloff, you can kind of see what the truth is, and part of it was that evergrande story. david: the absence of haven bids, the morgan family came out with two levels to watch here a couple weeks back. one was just below 1%, the other was just below 1.4%. they are seeing triggers that essentially might mean more selling and higher yields ahead. on the bank of england, that is the other story, really. may be november, but pricing is more towards february or march next year, rate markets essentially scramble to price in all the commentary out of the bank of england. yvonne: talking about fed expectations later on. let's bring in kathleen hays. norway hiked its key rate while the pbo we said you have two economic stories going on, and yet, one conclusion. time to withdraw the stimulus. why now? kathleen: it is a similar st

is there such a thing as an orderly default on evergrande?at does it need to be to remain a non-systemic event for risk? stÉphane: i think what needs to remain is to contain the defaults to the very weak players in order to teach a lesson to investors, to make sure it doesn't spread to the full sector. as i was mentioning, you can do without 14% of your economy if you are china. one has to take into account also the fact that china had a pretty rough third quarter as far as growth is concerned. there had been some policy tightening earlier in the year that had some affect on the third quarter, but you have the flood, you have the delta variant that reemerged, and you have all of the regulatory crackdowns. really now what you need from the chinese authority is i would say impetus for the fourth quarter. we are coming from a pretty high level of growth. china probably reached its peak in the first quarter of 2021. economies slow down a lot in the third quarter. we need the chinese economy i would say convert to its trend growth of roughly 5% an

so is evergrande _ the global economy. so is evergrande too _ the global economy.onomy. so is evergrande too big to i the global economy. so is| evergrande too big to fail? well, the decision will come down to the chinese government. there is a lot going on, isn't there? it's london tech week where the uk looks to lure global investors. the tech sector in the uk is on course for a record year of investment. 20 new unicorn companies — these are start—ups with a value of more than a billion dollars — have been created in six months compared with the 2a years it took to create the very first 20. the newly appointed trade secretary — anne—marie trevelyan — is due to give a keynote speech at this event later where she will unveil the governments this 5—point plan for digital trade. so how does the uk compare to other european start—up hubs in germany and france or even silicon valley in the us? joining me now is george windsor, head of insights, tech nation. i'm actually based in nottingham. i i'm actually based in nottingham.- i'm actually based in nottingham. i'm actu

shery: every other day we get new headlines on evergrande. of course, we will be waiting to see how the stock performs. it has already fallen below that ipo price. when it comes to the chinese market open in about 50 minutes time, we have a new backer. jp morgan leh keen japan, not to mention other -- liking japan, not to mention other emerging markets. telling people to offload attack because the growth so far has gotten a bit too far, haidi. haidi: yes, very interesting to see whether the japanese rally will continue, how that could be beneficial for the cyclical driven rally. over to sophie kamaruddin in hong kong, what are you seeing when it comes to the start of trading in tokyo? sophie: nikkei futures in chicago are printing higher. . it. assesses the different economic paths by candidates to take over the world by suga. ishiba is not in the race. political risks are seen a beating. jp morgan's strategist is also bullish on the yen. and another analyst has upgraded her price target to 4500, but she is cautioning chasing the gains, sayin

concerns over evergrande.om central bankers and business leaders on the subject. >> the evergrande situation seems particular to china. there is not a lot of direct united states exsuppose jury. >> we midwest must monitor for a spilloverfect. i don't see this developing into a global crisis. >> the capital markets and the bond markets. we have to stay close to that. >> they own everything. the land, the companies, the banks. i don't see this -- that brought lehman and the whole system down. francine: joining us to talk about the markets a global investment officer. thank you for jing us. joining us. let's the read on evergrande. even if it is not lehman, how much can it hurt stocks in europe and elsewhere if it dissolves? >> i think there is a contagion risk that could be quite large. we can see today that the news on evergrande is having an impact already. what we saw earlier this week, the dramatic selloff on the bad news. and then we started to see things like iron ore prices and the materials sector had co

evergrande failing alone likely would not catch that action. it may yet to be proved overoptimistic. some smaller firms, several are hong kong listed. central china real estate was down more than 6% yesterday. these are companies listed by s&p, also fantasia. listed in hong kong. rise son which is a china listed, it trading today. yesterday civic fell 87%. it has an offshore bonds do on october 18. 240 something million dollars. conversely, city is out with a note saying the evergreen crisis is not the li bin moment, however it could have contagion seized to some of the smaller banks. yvonne: local media in china have not exactly highlighted what is going on. you are not getting a whole guidance. unless we hear something, most analysts are saying we are not going to see the end of this right now. reporter: that's right. there is policy guidance from the central government on the issues, but there are also lots of rumors about the future of policy in hong kong. look at the big four developments. henderson land. those big companies lost $6.7 bill

the evergrande thing, everyone wants the pullback and we all want the pullback. i've got two they want to buy and they're a little rich and they're not crazy rich, but if i can be patient i can get them cheaper. that's not happening. >> you don't want to reveal? >> trust me, i'll tell you as soon as i buy them. >> that's a deal >> i'll let you off the hook you have to do what you have to do. >> thank you as long as the fed is pumping all of this money in and they still are, i think it's hard for the market to pull back dramatically, so i don't think we'll have a big down movement and i was hoping monday would turn into more than it was, but flat is what we're going to get. steve made a really good point before which is within the stocks that he was buying somewhere down 10% to 20% and there's dislocation under the surface so you won't get the opportunities and i think we'll buy the names that i want to buy a lot cheaper, but i think it's hard to have a major pullback. they have these consolidation periods ahead where our version of correction or whatever we're go

if evergrande isn't too big to fail, what happens next?'s welcome back chief strategist at the clock tower grugt and author of "geopolitical alpha. and ward rick mcneil is managing director and cnbc contributor. great to have you here marko, let me start with you the evergrande issue has been out there so long everybody assumed nothing would be done about it what do you think is being done? >> i think we should look at the other analogs in china that can provide some sense of where the chinese policymakers are likely to take it one of the things we heard in china is that investors should really focus on restructuring businesses such at the h ad a group which is the beleaguered airline/airport business whose restructuring plan is coming to the forefront. first of all, original founders, private holders of equity will be completely wiped out but the business itself will be restructured there will be local provincial soes that will take over the airport business there will be a private company that will actually take over the airline business

it is not just evergrande. it is just the biggest.n dollar bonds, you have seen a rally in prices over the last 24 hours. is this a good buying opportunity for foreign investors? chen: i think the chinese authorities seem to hint that they would like to see the payment on this dollar bond being honored, but i simply don't know how. i think the dollar bondholders are going to have a haircut, probably not as much as domestic bond orders. guy: there is some suggestion of $0.25, $0.30 on the dollar. we'll see where we end up. this may not be a systemic event, but it is going to be a huge economic event. the chinese economy has focused on construction, on building stuff for many years, and construction is the biggest portion from a sector point of view of the economy. if we were to see evergrande going down, and we are going to see a ripple effect into other builders as well, they are going to be much more cautious. they are going to take a much more cautious stance. what is the economic effect of that, and what will be the economic effect

how acute is the contagion risk from evergrande?> you know, this is a builtup anticipation of this week. there were some nerves, jitters in the market as you know, the regulators in china have already told big banks that they were -- do not expect their bank loan interest payments today. we have two big coupons on dollar bonds as well as onshore bonds that are due on thursday. more than $100 million due. there's all that pentup nervousness in the market on top of that and mark talked about it with these reports maybe the property tycoons will be the next one in the cross hairs of regulators in china, there was a reuters storying say beijing will no longer tolerate mo top in policic behavior. anyone who nose hong kong and i've been here a long, long time this city was built on developers, right? they're the power brokers here. maybe not so much any more. given the big regulatory push and what beijing has exerted on hong kong with its political change and the national security law. hoham says this is a paradigm shift. people need to k

evergrande looks to calm angry investors. the debt ridden developer may offer discounts in its repayment plan. the imf's christin -- japan's leadership race widens. the former communications minister is seeking to become the country's first female prime minister. paul: the big story in australia at the moment is that the alliance with the u.k., the u.s., and australia to give australian your submarines, obviously, that has upset the fans, who had a $90 billion deal in place with australia to provide new conventionally powered submarines. one says france has been stabbed in the back. another former prime minister saying that those subs could have been retrofitted anyways so some questions over that. further muddying things, china wants to join the cp tpp so it will be interesting to see how that application proceeds, considering china's disputes with a couple of australian -- existing ministers, australia and canada. shery: quite a turnaround, at a time when the u.s. withdrew from the tpp, and now, you have china want to join

and keep in mind, it's, evergrande is not systematically important institution.per it's 4% market share in china. >> and in terms of their recent clamp downs, in other areas do you think the chinese government will live to regret those, whether it is to make it more difficult to bail out companies like evergrande or the entrepeneur spirit >> i think they will not bail them out they will restructure it investors will take a haircut. the focus will be remember on an restructur restructuring, designed to make sure that individual chinese people a that put money down for an apartment will get the apartment and those that invested in the company get their money back as well but they are not going to bail them out in the traditional way. more broadly, i would say, that for me, what the chinese government is trying to do is address some very wide, indeed, socio economic issues in china those that are like inequal access to education and protecting small companies from anti-competitive practices and i think big practices and protecting consumers they have gone about it i

and obviously evergrande shares have been sinking. and this has been a key ally of evergrande. as you said, part of the clique, the poker buddies, joseph lao and new world of development chairman henry chung and others who have kind of backed the billionaire founder of china evergrande through this crisis. but again a slow moving train wreck and wealth descruks of course. so what we got is a statement of the hong kong stock exchange is chinese estate holdings run by joseph lao and his wife are further selling down their stake, now down to 4.7% from 5.7%. also in that statement, the c.e.o. chen woi han is selling out her personal stake. last week we got a statement from chipa estate holdings saying if they did liquidate their entire holdings which they have 4.7%, they could be sitting on a loss of about $1.2 billion. the stock, though, evergrande was up yesterday. we got a little bit of spattering of news in this slow-moving train wreck obviously. there's reports that the -- fairly burgeoning and bright spot in evergrande universe if you will, that's the life insurance division,

faber the dow is down just ten points from last friday's close as investors show some comfort in evergrandeeadlines and an even more hawkish fed stocks look to rally for the second day, as the fed gets ready to roll back the massive stimulus. >>> beijing asking local officials to prepare for what they're calling a possible storm, that is if evergrande fails. >>> the fda does give vax boosters approval. jim, it sounds like you're impressed with how the markets handled some of the more hawk ish plan >> a lot of people were talking about how china and evergrande is a lean-in moment. what they're not doing when they're doing that is watching our eunice yoon, who is a remarkable reporter. i think she's the greatest we have she made the clear point, she was in front of empty buildings, and is basically say, look, they're not going to let the policyholders, because we have a wealth management division, and they're not going to let the people put up money for properties, which she said there were $300,000 units, they're not going to let them lose the money, also that there's no social unrest. david

evergrande has eggs poe sure.n the other handed we could see things accelerating for the hiring of these two financial advise ors to help that potential kind of ease and find a solution for liquidity crisis. the ever grandwarning. what we're watching these coupon payments that are coming through through the rest of this year. $670 million worth of those ana: rebecca june wilkins with the latests on evergrand e. morgan, very good morning to you. evergrand de a troubled property developer. and where they end, we will see. but it does seem to be coming to a climax that story. yes, concern around indebtedness but regulatory clampdown with all this in mind, your client it is people youtube to, how enthusiastic are they about china at this point? >> secondly what,'s happening with evergrande is adding risking in the sentiment with china investments and definitely we're seeing kind of a repositions on how to play cyclical exposure, this business psych. we are in a very deep market led recovery. i think these regulatory c

evergrande is what i am talking about. to a report from asian markets, the company will be restructured into three separate entities at the turnaround plan finalized by the chinese communist party. joining us to discuss his and a andy browne. investors want clarity. they are less freaked out than they were on monday but they would still like to understand the details of the plan. what do we know so far about with the communist party plans to do about the evergrande mess? andy: i think the first thing to note is that this whole evergrande mess has been choreographed from the start by the government. they most likely want this because it signals to them a completely new phase in the direction of the chinese economy. what the shape of a future evergrande looks like i think is completely unclear. i think there are two considerations top of mind. one is social instability and that means delivering homes people have paid for but have not been built. and secondly, unemployment. that means pending evergrande's suppliers. these com

the problem with evergrande is we don't know how messy it could get.e don't know all the connections. i think this is where life will get interesting. there's been a lot of borrowing in the shadow sector. we don't know who holds the risk. evergrande still feels like a black box. alan was drawing the connection to copper. we just don't know yet what the implications are. alix: i was reading a note over the weekend about how evergrande is a deflationary impulse in china. on the flipside, you have record high power prices all over the world that is inflationary. when they go more green, it becomes more inflationary. there are these opposing forces at the same time that china has to manage. guy: the china story is interesting. it could hit growth quite hard if consumers are not protected. that will be one of the challenges authorities have to deal with. the u.k. is managing that as we speak. the implications hard to manage and understand. the ubs chief of strategy is joining us on the line. let's start with evergrande. how messy could this get? >> i don't

we don't have anything, any of our assets backed by evergrande.e out early because there was a lot of speculation but we've seen this in stable coin or at least defi market there's a lot of fear there's some sort of overlap, despite the name stable coin it really is linked to things that could potential be risky there's not as much disclosure and some folks would want. that's something that gary gentzler, for example, is paying a ton of attention to. the whole defi market, bitcoin is one thing, and it is seen in the crypto market as at least more stable. you know, there's a lot of other deviations and examples of things that aren't necessarily bitcoin. they're sort of their own, you know, you think of ethereum or solano which has gotten a lot of attention, but gary gentzler and the sec is paying a ton of attention. you had coin base dropping a product that had hundreds of thousands of people on a wait list >> i was going to ask you, kate, before you go, coin base did announce this morning, i forget the language they're using, they're abandoning th

evergrande is the biggest shock to hit the financial markets since covid. in a way it's scarier because it involves quite a bit of debt if people look at evergrande it involves product and spvs. i think the fact that the small caps rallied and the s&p managed to hold flat shows that the shock of yesterday was the big impulse and today is a little bit of the ripple effect i think it's quite constructive actually >> you think it's constructive, but for all of the reasons you laid out, why the market was constructive because evergrande is a hairy problem, isn't that a reason to be cautious about the market longer term since we don't know how this will play out and don't know the impact on not just the chinese economy, but the sentiment of the chinese consumer unlike our markets, the chinese retail investor plays a big part in the markets over there. a lot of wealth is tied up and losing money can have an impact on the psychology and then, therefore, the economy >> yes yesterday was a big shock to equity markets but they barely budged oil barely moved ten-year

>> we are not exposed to evergrande is the short answer. china has been built on building independent credit decisions and credit underwriting. we do not rely on notions of too big to fail. we have not had any material credit. you call it a back sworn, the timing -- swan, the timing was unexpected, but the motion [indiscernible] around many other sectors, i think the writing was on the wall. it started creating regulations around other sectors. people are trying to see how to keep the industry more regulated broadly. >> despite what you are saying could evergrande be a systemic risk for the asian banking industry? do you see that having an impact? >> i do not think a lot of banks are exposed. total exposure about $20 million, and i do not think that will destroy the asian banking industry. i do think one thing, the recognition we been doing for several years as the recognition that counter risk and china is important. i think a lot of investors are going to be much more careful relying on size and too big to fail. in terms of the amount of

that it is onto evergrande, and interest payment due today. conversation is about the energy situation in europe and that is developing a way that is unexpected in the u.k., with bp closing u.k. fuel stations on a driver shortage. these energy problems not unique to the u.k. a similar thing across europe. tom: we are seeing that with energy and with climate change as well. in the mediterranean serious buyers. kyriakos mitsotakis is the greek prime minister and has the most original path through childhood to the height of politics of anyone i know. my life was transformed in 1969 by the movie, except i watch the movie, i lived it. it was a tumultuous time for greece. congratulations to you and all within your politics and even the opposition increase to this most stunning recovery of greece. what did you think at the low point of the greek economic debacle? what were you thinking about to make greece recover as it has? p.m. mitsotakis: we took over in 2019 with the clear mandate to make the economy grow again. we were hit by the pandemic but we

at one point, evergrande's c.e.o.rejected a $100 million yacht as too plain. >> evergrande is now basically the poster child for what beijing is looking to do as it reigns in the sector. >> schifrin: michael hirson is the china practice head for the eurasia group, and is the former u.s. treasury chief representative in beijing. he says the $300 billion of debt amassed by evergrande, whose headquarters towers over shenzhen, china's silicon valley, was considered too risky. >> china is now basically five years into what they're calling a financial de-risking campaign. and essentially it's a reflection of the fact that xi jinping and the chinese leadership realized if they don't get serious about debt risks, it could bring the whole system down eventually. >> schifrin: but in reigning evergrande in, the communist party faces risks: not only of more protests outside of evergrande's headquarters that police tried to hide. but also contagion. last week evergrande's troubles led to the dow jones' worst day in months. experts

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with evergrande, of course.s third exchange china is set to talk about, the revamp will be interesting, right, whether china actually needs a third exchange is a big question. david: the stocks have rallied substantially today. the news on the new exchange that the president mentioned, adding to the list of reasons why you are on track for the best week for chinese stocks in hong kong since the start of the year. also, this week has been about turmoil, that has led to some of these gains. let me read a note here today -- the beijing exchange, they say, is expected to benefit some brokerages and vc firms by bringing in financing. the market is making a decision that will go up 8%, from this time last year. rishaad: stephen engle, our chief religion correspondent, -- chief north asian correspondent is with us. stephen: this market will attract liquidity, which has been a nonexistent. the national equities exchange corporation, which is the current beijing market set up in 2013. very little liquidity and therefore

you've got now a 90% drop or so in evergrande.ents to the dollar, the second, third tiers are 60 cents to the dollar if they're lucky, but this thing is moving out and it's going to be a serious set of knock of on effects that i don't think have been fully appreciated to date. maria: you know, there was one source yesterday that told me that they believe there are people on the board of evergrande that were critical of xi jinping and they made some critical comments about him and as a result they believe that evergrande will not be bailed out by the ccp and, of course, it's part of the massive crack do you know that the ccp has been doing on business overall. but roger, tell me who you think is most exposed in the united states. you know, there was the selloff yesterday partly on fears that this could have a contagion effect and could be china's lemon brothers moment. do you see financial institutions getting impacted from this evergrande situation? >> well, first, i mean, we need to remember that we are talking about a company th