how bold will the pboc be? will we see aggressive monetary easing and fiscal support and a weaker currency to boot as well. that's what we hope to see but remember the pboc is being very careful and very calibrated. having said that they do have the policy scope to move more aggressively if needed. as far as the market is concerned there's a distinct lack of confidence that's related to where beijing stands. they have been in and out of the market and blowing hot and cold. one minute they're cheering the market and the other they're cracking down on speculators. so very mixed signals. so that's what is putting the shanghai market on the defensive. we did come off the worst levels on the day. we were off by well over 4% after the pmis. we did stabilize toward the close. we're off 1.3%. i want to highlight the nikkei 1225 suffering today closing almost 4% lower. we have weak capital spending numbers as well. so that soured the mood as did china, sena, and remember japan and china very strong trade linkages. that'

chinese markets reopened with the pboc saying that the worst is over. more girls emergency migration summit in berlin is said to be preparing to add 6 billion euros to the federal budget to deal with the crisis. the french president will appear on national television later today as it approval rating stands at just 19%. welcome to countdown. i am guy johnson. anna edwards is off today. in the meantime, let's talk about what you need to note this morning. chinese markets have reopened but remember that the u.s. is closed. it is labor day. no action stateside today. friday that was probably a little inconclusive. on therkets closing downside. not as much as the european markets did but nevertheless lowered. the payroll data was weaker but was it really conclusive enough to drive us either way when it comes to making a decision on what the fed will do. i think that was a markets conclusion as well. we ended up softer but there was not enough action around the payroll number. it did not change the argument very much part let's talk about what is happening o

the pboc released its latest reserves data.that china is burning through its final cash. -- it's pile of cash. how long can this go on? david: at this rate may have about a hundred billion a month. that being said, if it was malaysia -- to put things into context. angie: it is not like they will spend $100 billion just to prop it up. presumably it cannot go on forever. david: it is unsustainable in the long run. august was a bit of a blip because that is when they announced a new mechanism to determine the exchange rate. that also fueled speculation it would fall further. you had outflows as well, tied to it. it is also an obligation they have to meet when people want to take my out -- money out. they have to exchange it to u.s. dollars. april, may, from june, july, and august, it goes back to this time last year, you put it all together -- we are looking at 400 billion u.s. dollars from this time last or when we are closer to four -- 4 trillion. colleagues said was the hope is when they make the currency adjust, and they stop

we see that the pboc will market-driven formation.hat's commitment, at some point, maybe after the fed decision. that could help settle the market. rishaad: if it happens next week, a lot of people are banking on it. jian: we look for a further delay of the fed. rishaad: how did the market rout play into this? we haven't seen the $5 trillion worth wiped off the equity markets in china. jian: i don't want to speak with hindsight, but i think most observers, especially from the outside, she did the chinese equity market was a bubble. it was clearly deviating from economic fundamentals. it was driven by liquidity, and had high leverage. it was partly the government for the purpose of boosting the equity market, that help to deleverage the economy. based on that, the market can only go up. at the moment, only the government really can intimate meaningful reform. recently we have started to hear about reform again. rishaad: we hear about it but -- jian: that republicans the market going -- that will help to keep the market going. rishaad:

we had the deputy governor of the pboc saying that our economic fundamentals are fine. not go over- it did so well with other finance ministers, including japan. the other finance ministers may have been reassured by japan was not. wasaid china's explanation not detailed enough and he expects more from revealing some of the internal tension at the g-20 but overall a reassuring tone from china. the leaders seemed to accept it. a did not single out one nation but they did talk about interest-rate, waiting for monetary policy to develop and evolve in the developing world. that was a clear reference to the united states and the possible rate hike as early as next week. this meeting was a precedent feel on the federal reserve. the fmo see meeting in washington next week where they may in fact decide to hike the benchmark interest rate. we will watch that very closely. they do know that growth in the emerging world and other economies is not moving at the peace that it should because reforms have installed. into that category, india, and parts of southeast asia as well. those

. >> maybe we have been too harsh with china and the pboc and what the government has been doing over the past couple of months or so but don't these things need to work themselves out? aren't we too strict with them in saying you know what, your pbo stimulus didn't work the next day or the next week either while sometimes it does take a few years and we still don't know whether our qe here works. >> there's quite a lot of evidence to suggest that qe doesn't work and may do harm. if you lower yields enough you'll encourage people to buy more financial assets and stop spending. they have pension revenue targets in mind so there's good arguments for suggesting that these things don't particularly work. >> do you think though that despite of everything we just discussed the pboc will still step up their game and add more stimulus whether that's another benchmark rate cut or rrr cut. do you think that because they're feeling the pressure from the market they want to do more even if they maybe realized it may not actually work? >> it's almost inevitable. they need to encourage investor con

of the pboc. it's a little frustrating to people be saying that they shouldn't be talking about china when that was the reason that this was put forward for over 30 days why the market was doing what it was doing. >> you think that the fed chair feels like she needs to give clarity where it was lost one week ago? >> i think she would like to give clarity. i think she would be limited by providing clarity in places she can't provide it. wronk she can tell you what is going to happen with the data over a period of time. i think all she has to do is give you your best. >> stooefr, what about -- >> my mother and my best friend call me steve, and that's it. >> steve -- >> up until this point. >> there you go. >> steve, you only get a chance to be. >> that was just, you know, disaster. >> two and a half years. two and a half years after the financial crisis. somewhat disastrous. yes. >> if that's the case, then why did they not do it? >> because they wanted some clarity from the prior 30 days, which is

obviously the pboc can have reserves. they can use some government debt.ouldn't help enough to pay for all the losses. having confidence in the slowdown is key -- if you lose confidence, it becomes a self filling prophecy. it is a very fragile equilibrium. francine: this is a credit crunch -- are we looking at a credit crunch? alberto: there needs to be a credit crunch. francine: a controlled credit crunch -- if it is uncontrolled, we are looking at a world recession? alberto: on balance, i still think they can keep control. the equity is one of the least easy things to control. it on the debt side, i think they still have control. it is very important that key reforms, the reforms to control the overhangs, need to be implemented very soon because otherwise if they continue to grow, china has doubled its debt in the last five years since the crisis, never had a credit crunch are deleveraging. this, ifon't stop rates remain, if the overhangs remain, we have a bigger systemic crisis next year. francine: what are the chances of a systemic crisis? 10%, 15%? al

as they have been cutting but not a pboc in emergency mode, is it? maybeou could argue that the policy response has been clumsy. it does not feel panicked. maybe not as nuanced as it could have been a but not panicked. maybe some feel it could have been enacted in a slightly better way. to be acting and that way. politically, beijing on the fiscal side, a slightly bigger picture in terms of not just looking at the economy directly but the invitation, etc. the political story is probably more interesting for authorities. jonathan: we talked about the caterpillars of the world and of struggle. since thisown morning. things are not pretty at glencore. guy johnson, thank you. shell gets cold feet. decide to abandon offshore alaska exploration. details after the short break. ♪ jonathan: good morning and welcome back to bloomberg tv. i am jonathan ferro. about 13 minutes into your trading day. where stocks are trading. the ftse 100 is it down. fun weighing on this index print talks ending with liberty global. -- vodafone weighing on this index, talks endin

these figures continue to be tamed that takes the inflation pressure off the authorities and off the pboc and that does give them some room to maneuver. back to you. >> thank you for that. we'll discuss that in london. joining us is the economist and strategist. thank you for joining us. let's kick off with the china data this morning. imports weak and exports falling for a second month in a row. big cause for concern or not really? >> i don't think so. the trade within emerging markets is going to be driving of global trade. you've seen a real slump in discretionary spending from russia, indonesia, brazil and if you look at overall trade there's no negative. so the growth in the u.s., japan, europe. that's reflecting the chinese numbers. you always have the pricing effect commodities and volume commodity imports are weak. that's the fact that they're weak at the moment. it's about 10% year on year. until the housing recoveries. until housing starts to recover you're not going to see the import numbers improving. >> but doesn't really matter does it? what's causing the weakness in chinese

we'll see more cuts or we expect more cuts and as chief em economist told us this morning, the pboc is now running just to stand still and when things are slipping, when confidence is low, of course these cuts have much less effect and that's really the longer term problem china faces now. >> there's also a wider question as to what else the central bank can do to stem the decline in the markets and help the economy. do they have anything else left in their tool box? we have been seeing them use unconventional monetary easing but what else can they do? that will be interesting to see if they can continue to allow their currency to weaken. not a good sign for the exporters. perhaps a reason we're seeing the big export stocks underperform in today's trade. >> the big unused tool they haven't put into play over the last year or so is the fiscal policy side but their long-term aim is to shift the economy more from investment and state-lead to consumer lead and that's a big negative for the long-term. so that's really the problem they face. they could cut rate hugely down to zero. but why d

what about the pboc? the people's bank of china has an impact. where does that come in?ly the most -- the third most traded currency. the chinese authorities want to get the you into the sbr. that has been there major policy intonts to get the yuan the sbr. he opened a big pandora's box at the time, and all hell broke loose basically. now we're at the situation where the emerging markets are not only worried about the fed but also the pboc. tom: i am going to ask you if we have a policy mandate in brazil right now. the chart of the brazilian real is an elegant, beautiful reversal to the support looking for further weakness ahead. real, andur call on what do you see the brazilian government doing about it? >> the call on real and dollar-real is on the upside as well. if you look at the central bank of brazil, they have the highest real interest rates on a forward-looking basis in emerging markets. despite this, they have not been able to protect the real. there is very little that they can do. i would say it -- they would be very well advised not to talk about effects wit

the pboc is starting to come into their own, and you look at the mess that the fed and the pboc has put them behind, the market stabilizing here and i think it looks to make a big move off this bottom. >> so you're talking about monetary policy. that's your argument here. so this isn't about china slowing, which it obviously is but you're saying their version of the fed is beginning to be more accommodative to that? >> they definitely will be. the other thing is you've had this easing on the monetary side. on the exchange rate side, they've been actually pegging to the dollar, which has been obviously rallying. so they're sucking all the money out that the monetary easing has put into the system. it's not an advisable strategy and it needs to stop. i think that's what's really the play here. once they figure that out, the market will move. >> so what kind of growth rate do you put on the chinese economy right now, especially when you consider the impact that it's having, the slowdown and demand for oil, the commodities, it's having this worldwide impact on all of that. >> i think the ma

that, those speculations the pboc has intervened in offshore yuan trading.mf deputy managing directors say that china's opening up is a good sign. --it is important the cut because they are opening to the central bankers. [indiscernible] i think it is a very important step move forward. it is very precautionary. steps, thef these devaluation, the subsequent intervention to keep it where it is, the yuan, and now today's announcement. do any of these steps help the process move along for the review? >> i think it is the other way around. china is such a big economy and open economy. it is important for china. steps, the august thingss, all of those [indiscernible] china's capital market is much more open. much more market-based. perspective,mf's is the new fixing mechanism come is it a move in the right direction? devaluation,nstant a managed further when percent, and then they kept it stable. we are going to keep the yuan at a stable level. that does not sound like the market will be helping to determine the value. >> they put exchange rates in the market. i

michael: we thought they were ready to go on the august 11 decision by the pboc.t did rattle markets and we think it led to a tightening of financial conditions within the u.s. we use that opportunity to say that we do not think the fed will go, partially related to the concerns you just mentioned. is there downside risk to china? downside risk to global growth? you do not want to be tightening rates into that, so we think they will skip this meeting and not raise rates. scarlet: when you look at the economic conditions in the u.s., the bloomberg survey found that economists on average believe we are ok, that we are not due for a recession until 2018, and that would mean the current expansion would last 19 years. give us your take between the start market and others? can they create exceptions? michael: yes, and there is real estate valuations that support consumption, so, yes, a sharp glide equities, it could create recessionary conditions, and you are right. we have been in a very long expansion. it is a reflection of how far we fell and how gradual recovery is,

the rare step of boosting its currency by a record amount of 1.2% offshorearea amid speculation the pbocas involved. singapore votes today and an described by the prime minister as herschel. is people's action party seeking to expand its power and capitalize on the way the patriotism sparked by 50 years of independence. the campaign was dominated by the rising cost of living, immigration and the state of public transport. speculation is rising that japan is preparing to boost stimulus is the economy stubbornly refuses to pick up. dojing economists say the may expand its support when policymakers meet next month. is this likely? zeb: 11 of 35 respondents see the bank taking this action and adding and it -- additional stimulus. some say emergency action could happen is early as september 15. next week, given the pair was state of the economy the expectation is that japan would rebound from that. certainly events of not played out that way. we have china slowing down, the devaluation of the currency. robbins at home exports are not holding up in domestic spending is not where it should be.

at the moment, i think the pboc is behind the curve in my view.t, whenthat is just you look at the market, you see massive run-up that we had last year. ever since then it has been down. pu: i don't think the chinese -asian market is settling down just yet. find a clear price if you prevent people to sell or have a lot of restrictions on that. thateople are afraid investors are pulling out. you have to build the confidence rather than going which hunting. the people make may some mistakes, i think government, yes, this is the right issue. people are abusing markets, but at the same time increase transparency will allow you to tell what should be the right price. rishaad: last question, what would come up most from the clients you have at the moment. these are the uber rich kinds. they think this will be a repeat of the financial crisis. if you look at the magnitude of the following of the stock and it is almost repeating what happened in 2008. naturally, people are asking if it is another financial crisis. at least the global wise, we don't see it

thatu have a confidence the pboc is on top of it?vety on thes part of the authorities when it comes to intervening in markets. let's step back. we criticize the chinese authorities in 2009. how much money went into the western financial systems echo how much money it in to support markets in the economy? it is a good thing that they intervened. you can couple about the way they intervened. i was last on your show three weeks ago. i come back to find markets where the art. there has been a lot of volatility. they are not going down. we talked about greece earlier. kris is up over the last three months, despite the uncertainty. up over the last three months, despite the uncertainty. francine: equities still think it's a party. equities doesn't think it is a party anymore. markets are down 10% to 50%. 15%.% to volatility in corrections is a good thing. expectationsple too far more realistic levels. eyed optimistsry with no evidence coming through. it from the bottom up. you can be optimistic about the economy in europe, but there is sti

francine: nick, what does it mean for the pboc going forward?draw any conclusions about the chinese economy? nick: well, it is the latest in a whole slew of bad data. it has been such a long time since we had a data point where we thought, wow, that is encouraging news for china's economy. clearly, this puts pressure on the government to act. if you look at interest rates in china around 4%, compare that to .s. and. in europe -- u europe. thanks have a ton of money locked up for reserve requirements, more than 15%. what we are seeing is further evidence that will press the government to cut interest rates as forecasted by the end of the year. francine: nick, thank you so much. let's get to mark barton. glencore is down 17%. mark: the biggest decline ever. this is the intraday chart coming close. what we are seeing is quite astonishing, the worst week ever for glencore last week. is aove in the share price move from investech, warning that there is little room for shareholders in glencore stock should low commodity prices persist. shares are down

where do you see pboc and china headed for investors when they take a look at these markets, one looksbrighter than the other. where does china come into this? >> we're still quite cautious here. they do expect to be some kind of pick up in the fourth quarter but at the same time we are very concerned that what we could be waiting to see here is a sharper slowdown in the market has been expecting. people had started to price out that risk because every year china started week reporting and managed to recover as the week went on. downsidern is that the risk we do have to the forecasts and theout reverberations within the global market are bigger as well. they've clearly shown some willingness to deliver rate cuts and rrr cuts and in some ways you are a number of stimulus measures but we still don't know whether really china is moving to its new normal weather is something that the world will have to deal with that china isn't going to be able to move away from being such a strong export company -- country to have that internalized the mystic demand. angie: laura fitzsimmons. we will lea

sell bonds after .etting approval from the pboc it will allow the hong kong unit to sell $1.5 billions. it is lobbying for reserve carlin -- currency's status for the yuan. sources say the chinese stock have derailed discussions. the brokerage firm had been in talks to buy muscle investments for $1.8 billion. there said to be in discussion with other bidders. he will go under chemotherapy versioneatable of lymphoma. story, vw'sbig scandal over cheating on u.s. air pollution tests could take a toll on the german carmakers asia strategy. let's bring in shery right now who has more on the situation. probe just widening, the is widening, and the fallout is widening. theould see a delay in chinese expansion. they have not been doing great of this year in china. analysts are saying any damage to vw's brand image or reputation at this point could be a game changer in their competition against toyota. of course, the revelation of this cheating in the u.s. admissions test comes after two recalls in the chinese market already in the past two years. they are risking losing customer trust. china

whether the pboc is prepared to cut interest rates and the requirement ratio to inject more liquidity into the banking system over the next six to nine months. if all of that happens, i think the market has bottomed. mark: you say valuation could come down and still the most expensive stock market --. stock market even after the route. some say in his to fall by another 20%. do you see it falling another 20% before it stabilizes? khiem: not really. weightedt the average ratio of the combined shanghai index, it is trading 14 times at the moment. that is not that expensive really. needs to fallit by 20% to make it cheaper to i think it depends on government policies. if policies are more deliberately easier, i think the market can rebound. mark: thanks for joining us. head of asian markets there and asset management. getting an opening price on glencore. they have risen .5%. this -- risen 12.5%. the biggest decline on the ftse 100. it has fallen by 30% since china devalued its currency. its 31 million dollars that pile -- trimming its $30 billion debt pile. cut that pile by one third. i

tom orlik: a school for our reporters, news that the pboc may be imposing reserve takingments on a banksfor positions on the exchange markets. the obvious interpretation of the china central bank is moving the exchange rate toward the markets. they still want to see it have full control. they want to impose controls and how it functions. jonathan: thank you for raking get down. tom orlik joining us from beijing. if your were -- wondering what's behind china's rout, a admitted tos wrongly reporting china security regulators are studying an exit from support measures. and his video, he expressed regret for causing "such great damage to the country." we are joined by our guest, andy lynch. lynch, spreading vicious or the hardhe press data? andy lynch: more on the data. farmarkets have gone up so and it was exhibiting traditional signs of classical bubble territory. lots of new people entering the stock market. [indiscernible] handed out stock tips. the classic bubble territory and bubbles always burst. there are good things happening in china. the economy is probably still growing a little

the pboc and senior government officials were at pains to stress the worst of the turmoil is over, andurn. we have zeb eckert looking at the talks regarding the global economy. zeb: they were optimistic. you wouldn't expect them to say anything else. china was really the focal point. everyone wanted to know whether the volatility in the chinese market had seen the worst, and whether the economy was on a path to stability, if you will. we had a full-court press. the central bank governor as well as his deputy, speaking, presenting this roadmap forward for the chinese markets. they went on to say, we stopped a freefall. "our economic fundamentals are fine." the japanese weren't convinced, the finance minister hitting that china, saying they weren't detailed enough, referring to the plans. we had the wider g20 pledging to competitive devaluations, avoiding a currency war, although in some cases, a currency war already starting, china's devaluation having a significant impact on markets. the way forward for china, in focus, because pr investor vinci speaking on the sidelines, saying these

sri-kumar: the pboc probably needs to communicate better, but it is hard to communicate.are you going to say? we will not devalue unless we are pushed by other countries? fourbrendan, what does a real do? brendan: at that point we are no longer talking about currency war and trade, we are talking about a confidence loss in brazil. trico i agree with brendan. goes to four, it will probably exceed the lows it -- the in the fall southern hemisphere, in the spring of 2002. if you go beyond that and look at the other countries -- the vietnam dong and the korean won, the japanese yen -- what mr. druggie did yesterday is suggest aghi didt mr. dr yesterday, that is a currency war. tom: is jenny yellen in a currency war? sri-kumar: she is not. tom: we could go for six hours. we should do a nonstop show. we are stopping all commercials to go to 12 noon with sri-kumar. brendan: today is friday, which means if you do not already know, sales are starting of "star wars" gear. that is happening right now, right now! we are going to talk about that in our single best chart next. tom: the

so there is a lot the pboc can do.ust a question of when they will pull out the big guns again. tom: thank you for that update from beijing. the various stock markets continuing to drift lower in china. this is important. morgan stanley economists suggest we will see lower and slower across the mediocrity call the global economy. elga bartsch is cohead of economics at morgan stanley and has run their european shop for years. she sees minimal inflation in the u.s., clearly a conundrum for vice chair fisher -- for vice chair stanley fischer. you guys argue like cats and dogs, and you do not come to a consensus or one view. there is a number of nuances within it. how much is everybody on the same page in your new economic outlook? we have spent in a norm us amount of time to debate it internally, and i think with the baseline calling that the economy is ok -- yes, the economy is disappointing, but that's yes, the recovery is disappointing, but it is continuing. the gradual return of inflation to central-bank targets over

turbulence that we saw from the collapse in the shanghai equity market and the surprise move by the pboc in august. this pmi data is clearly not on the same order of magnitude. at the same time, if this weakls a run of week -- data ahead of the fed's october meeting, that will be a factor which cancels janet yellen to exercise caution. guy: thank you. beganpresident xi jinping a weeklong visit to the united states. he spoke to a gathering of business leaders including bill gates, xi jinping said china will maintain strain -- stronger -- strong growth. >> given the economic and financial situation at home and abroad, there is no basis for continuous depreciation of the r&b. we have the exchange rate decided by market the buy and demand and allow the r&b to flow both ways. we are against a currency war. we will not lower the r&b rates to boost exports. anna: david joins us with more. words oni jinping's face value? david: the president of mexico once said they defended their currency like a dog, and the following week he valued. in this case when he brings up the similar talks about no fur

do you feel confident the pboc has this in hand? of the big wars from the outside world, from the west, is that it is a huge transition -- one of the big worries. so, further huge corrections and stock markets will happen. do you feel confident this is not the case? were gradually building more close contact with her international financial institutions and regulators like central banks. to pay more attention to globally what happened in china, the equity impacts in other markets. example, we, -- for are talking about london, the shanghai composite. there will be a new program to connect to the chinese market. it will be very good and positive for people to gain confidence. and also, for the global allocation of china's domestic asset management. manus: thank you very much. the deputy ceo of haipong securities. francine: gauging growth. the world economic forum releases its local competitiveness report. we take a closer look next. ♪ francine: welcome back to "the pulse." here are some of our top headlines. manus: world stockmarket's

reached the point of diminishing returns as far as what the government and pboc can do next? >> i think one of the puzzles in 2015 has been how slow the government stimulus has been to gain traction. we have seen several moves on interest rates, moves on the reserve requirement ratio, substantial fiscal stimulus. none of this has started to prop up growth as aggressively as we might hope. even so, i think that one of the reasons why pessimism on the chinese economy is overdone is government china retains enormous policy space. that is a contrast to the western economies where interest rates are on the zero bound in the room for fiscal space is exhausted. china can still run a more aggressive fiscal stimulus. opened thethey have possibility of the yuan depreciating as well. weak butmbers are china still has significant room to do so been about it. jon: thank you for breaking that down. i what to bring you into the conversation. when you look into the trade data, what we used to get good traded up we would say, things must be bad, that can't be right. when we get bad data, we s

what does this mean for the outlook in china at the pboc? >> there are growth gaffes emerging.he 7% growth target challenge for 2015. want to geters there -- on the monetary front it is becoming more positive. ands now below the cpi rate authorities will not want to erode the returns to savers. for industrial companies the lending rate is quite high. for fiscalto room response. economist says there will be more spending on infrastructure which is basically how china does its stimulus and that is needed. it remains a big drag on the economy. let's get some final thoughts from luca paolini. china is goodin there off and a host of people who want to prove that it is bad. and the chinese beige book is to do that and now the data is not so good and you get people coming out of the woodwork saying to ignore the data that things are better than the data might suggest. which one is it? >> the general consensus is that chinese growth is much weaker than what is reported. when you look at the consumption they seem very solid. the new economy is doing well and the old economy is not doing

. >> the quote from the pboc boss, correction stock market is almost done. okay, then. >> if you believe him, i guess. for more on how it impacts these markets in the u.s., let's bring in a chief economist and strategist. david, you've been on the network saying the bull market is still here. do you believe that? do you have confidence in that call this morning? >> well, i had confidence in it last week, and just as much if not more confidence in it today. i think that we became almost seemingly immune to the reality that in every bull market, you typically get a correction every 18 months or so. this time or so it was about a 45-month stretch, so corrections normally correct the excess overvaluation on the marketplace. we went into this with a 17, 18 multiple. we're now slightly below 15. a lot of the excess in the valuations have been taken out. a bear market full stop requires an economic recession in the united states. so if you think we're going into a bear market, at least have the right macro call that the u.s. economy is going to tip over. there's no

it does help the pboc deal because it is a foster devalue -- plus to the value. the difference between capital loss, they have to clean up the difference. sure he is pointing out, the shanghai composite, roughly unchanged. pointing out, the shanghai composite, roughly unchanged. rishaad: the prime minister has underlined his support for the deal with china. it has become a political football. is at risk of being struck down? let's get over to paul allen in sydney. what exactly is the issue? paul: it is pure politics, angie. moving the motion in the house, tony abbott is trying to bring things to a head. there has been considerable opposition to the free trade agreement from unions and the opposition labor party and it boils down to the boringly named investment facilitation arrangement. in plain english, what it means is that a chinese firm can fly in temporary workers for a project work over -- worth over $150 million without asking a. he ends can do the work. the opposition labor party points out that this would -- without asking if australians can do the work.

offshore amid1.2% speculation the pboc was trying to contain the turmoil and chinese markets. traders to say it was an attempt to align exchange rates at home and abroad. -- un's offshore move stands it is up only .8 percent. trading volumes are at $28.1 billion today compared with $39.1 billion at the same time yesterday. a firm backed by a billionaire plans to see -- sale 800 million shares. can buy new shares for every 800 they own. it is now said to be eyeing up the health-care sector. reports today saying it could make a play for australia's health scope. 30%es have fallen at least in the last three months, buying spree.ic let's head over to japan now. it is gearing up for its biggest ipo and almost two decades. ready todea was a most go public. it is obtained approval from the tokyo stock exchange for it, which is likely to happen in november. the government is planning to itse $11.6 billion from sale, along with japan's insurance groups. 80% of shares will be offered to the japanese public as part of shinzo abe's plan to get households to invest their savings back into

it it expect the pboc to talk up the liquidity time as they have been doing. that's my read on that. let's take a look at the broader markets. it's important to say, yes, the authorities are pulling out all the stops to try to stabilize and restore calm in the stock markets with limited impact. it was quite a volatile day yet today. there's still leverage that needed to be, and with that leverage comes volatility. we started the session off in a very good fact everything. and this is where the shanghai composite is down by 2.6%. later in the week, you get a lot of numbers, inflation data and trade balance, that will be important to see whether the chinese economy is waffling in terms of slowdown. what it mean for the fed, the negative feedback loop for these markets has really been through the stronger dollar. it has firmed the asia side like winget and the indonesia rupp as well. malaysia and indonesia, 4030, knocking on the door, 433 now. that's where we stand, wilf, back to you. >> sri, thank you noofor that. the governor said he's short of the chinese resp

supportive measures from brokerages easing a crack down in beijing and within the last couple of hours the pboc outlined it's going to be requiring reserves for all foreign exchange derivative purchases that's according to a document seen by reuters. let's talk more about the asian markets and get the details on that with sri that joins us once again. sri, if people are just joining us what do they need to know in order to continue their session? >> so overall it's quite a subdued session. let's start off on china because they're getting very mixed signals in term of policy, intervention so on the one hand, though, these reports that the brokerages officially sanctioned are pledging fresh support, fresh buying in the stock market. on the other hand, we're getting some reports of the official crack down on margin debt in the grey market especially. illegal margin financing there. that continuing. so we're flat at the close. 3,155. remember the china markets, shanghai and the hang seng will be closed tomorrow. shanghai will be closed on friday as well. so there's going to be thinly traded volumes

indices opening sharply lower before reversing to finish almost flat also within the last hour the pboc outlined it will be requiring reserves for all purchases and that's according to a document seen by reuters. let's talk more about what's taking place out of asia. sri joins us. good to see you. >> good to see you too. it's a fairly subdued session overall. let me start with china. we came off the worst level of the day to end flat at 3,155 and there were real cross currents today and you eluded to them. we got reports that the brokerages were stepping up their pledges to support the stock market so that helped confidence to a degree. some are connecting the dots here and saying that that officially sanctioned buying by the brokerages are just in preparation to put the best foot forward on the stock market for the victory day commemorations tomorrow. and we got reports that the government in beijing was continuing their crack down on the unofficial market. the margin financing. margin debt. remember it's created this volatility so here you have these very mixed signals in the chinese

of course the pboc took markets by surprise just over a month ago. depreciating by nearly 3%. >> hewlett-packard expects to cut around 30,000 jobs as it's trying to adjust to this reality of falling demand. they're splitting enterprise units from its pc business in november of this year. the cuts will come on top of the 55,000 already announced and it will come from the company's faster growing corporate, hardware, and services operations. they will be global but hp didn't provide more specifics. the cuts will result in a $2.7 billion charge in the fourth quarter this year. hp shares is down 1% in after hours upon the rehe's of this announcement. don't forget, david will be sitting down with meg whitman in an interview at 15:00 cet on squawk on the street. >> microsoft will hike it's dividend. it will be paid out in december. reporting a net loss in the latest quarter as it broke down the value of its nokia phone business that they just bought for close to $7 billion. shares rose from 2% on tuesday on the back of that announcement. another .5% in aft

dealers are thinking this is rare intervention on china's state banks acting on behalf of the pboc andpushed up the price by close to 1.5%. speaking to cnbc yesterday, david tepper outlined his views on the market volatility stemming from china. >> they keep making policy mistake after policy mistake after policy mistake over there. it's a learning curve to get on to the market economy. you could say that and maybe one day they'll get it but it's hard when you have somebody on a learning curve. it's good when somebody is a one or two trillion economy. it's bad when they're 10 or 11 trillion dollar economy and influence the world's economies it's bad for them to be on a learning curve. >> china overbuilt a lot of things he says and for 17 years that currency was a one way bet which was to strengthen versus the u.s. dollar. he loves talking about flow and where flows are going. his view is that china is growing at maybe 3 to 4% real growth and his concern is maybe they're not growing at 3 to 4%. >> there's so much consensus that even if it's not the 7.1% that it's only .5% lower. for me

there's also a sense that we could see more movement from the boj, more movement from the pboc as well let me finish by saying we've seen these gains before and whether they're going to be short lived or whether they're going to be sustain sd the big open ended question here especially as we're heading toward the fed meeting next week. that's where we stand. back to you. >> thank you so much for that. let me pick it up here with european markets we are seeing the european equity markets charging higher. dax up by 1.7% as well and cac 40 with bigger gains of 2.2%. let's take a look at some of today's best performing sectors. cyclicals driving the gains across the stoxx 600. bmw higher by 3.4% and these are the stocks that suffered as a result of their exposure to china and close behind is the auto sector's basic resources with miners trading higher across the board remember on monday we saw the big debt cutting plan that spurred gains in the sector. also up by 4.3%. shares of ryanair are soaring after they raised their profit outlook by 25%. this thanks to a strong pound and poor weathe

so the liquidity position slois looking that much more precarious so we could see more moves by the pboc to top off the liquidity but in terms of the policy outlook a lot of people are telling me we need to see bolder measures and policy support to stabilize economic growth. so drawing a line under growth expectations for the world's second largest economy is imperative at this juncture. there's a couple of events the markets will be following. in october we have the psc. so this is a very important forum where we could get more clarity on the structural reform agenda where we could see some momentum on the score that could be positive for the markets. and in early december the stock market will be celebrating 25 years of the shanghai markets. at this point in time have the markets really evolved? and at what point are we going to see a fully functioning, deeply penetrated stock market. the shenzen could galvanize the market. with that leverage comes a lot of volatility still. >> let's talk about volatility. >> there's been so many sources of volatility, china, the uncertainty about the

. >> what else is left in the pboc's tool box? we've seen a number of liquidity injections in the last couple of weeks. the devaluations of the currency and not to mention five rate cuts. what else can they do? >> you'll have to see a lot more support in helping nonfinancial corporates rollover their debt. we're seeing that from a lot of the local governments. a lot was delayed because of the volatility this year. you'll have more issuance than you typically would. it's less about stimulus and more about reducing the cost of rolling over debt because that's where it is. >> would you buy or sell at chinese equities here. >> if you have access you're still selling. we're not at the bottom yet. >> i'll leave it there. thank you for joining us here on worldwide exchange. head of global strategies. >> keep your e-mails coming in. worldwide@cnbc.com. you can find us on twitter. still to come here on the program we'll be hearing from the ceo of sony as he talks hacking, new smartphones, business strategy among other things. stay with us.

how much damage has that done to the projection of competence by the po's -- pboc?by the government in dealing with the stock market, which caused some collateral damage in terms of public confidence in the government's ability to manage the economy in general. is trying tot rebuild the confidence. we heard about the central bank governors statement over the weekend. the interest rate cut 10 days ago, i see it as a concrete step to increase, to in-store public confidence -- to restore public confidence. rishaad: very quickly, do we expect more interest rate cuts? does that send another signal that things are worse than first thought? >> i would expect more. we expect another 100 basis point cut. cuts in the global environment of low interest rate and negative interest rate, there is still room for further cuts. we expect another 25 basis points of a benchmark cut. --se are necessary matters it could hurt the confidence further. rishaad: thank you very much. a quick check on the trade. we had toward the tokyo lunchtime break. shanghai and how long pretty much -- and

whatlarge extent, look at the pboc released. we are essentially back to normal for lending growth. distortion. a lot of these funds were funneled into prop of the stock market. the stockrop up market. u.s.is about 127 billion dollars. this was a drop from july. that's when they stepped in to stabilize the stock market. bank loans five at a six-year at a-- bank loans spiked six-year high. aggregate finances. this puts together what we just saw, bank loans and other forms of debt creation. all the way back to march, matching estimates. back about one trillion renminbi. it looks like other sources of financing to pick up the slack. about 46slates to million, 47 billion u.s. dollars. --july, we did not money supply, fairly unchanged. 13.3%. that was the same level of growth in july. just to put this into context, highest levels, going all the way back to this time last year, does it reflect a lot of the cash injections? the previous reductions in rate requirements for banks, plus these regular cash injections from the central bank. if you look at money market rates, which is also engag

onon, you have a great story central-bank action that ties back to china and pboc.ill be up to the governments to step it. medium -- i of the medium through which they are broadcasting their thoughts. the idea that they are running out of ammunition -- that monetary policy generally is exhausted. ideauantitive easing, the is that governments will have to step up with the support of central banks. government cut taxes with spending but they do so in the knowledge that central banks will buy a bond. tom: simon, i love stephen engle ander phrase -- i don't believe that is in the cfa curriculum. when you hear the physics of coldfusion, what does that signal to you as an investor, when you look at central banking? tim: indeed. we try to look at what companies are saying, we try to look at what fundamentals are doing, because the central bank has become such an important part of investor policy. it just becomes a much more important part of our analysis. it's something we have to be increasingly more aware of. of thehink at the end day, it will still be over a long period

the pboc have outside influence on the em currencies base but are still takers of monetary policy.s they move away from that, they are accepting what the fed does. schwab knows flows, of what people do with their money. the flows of brazil and china, what are the flows you observe? ofit depends on what type account you have that swab. we've seen a tremendous amount m amongility and cal those investors with advised relationships. where disciplined process they have people helping them versus the more trading oriented folks. that's where the activity has been greater. what we are seeing in terms of biases, u.s. versus non-us, it's not that different than what you see in the aggregate. week flowse close -- and more recently in the last month, a pickup and flows out of some em areas. >> are blue-chip american stocks nicely priced? replaced --was repriced earlier this week. >> not for your traditional deep value buyers. the market is fairly reasonably valued. if you start to see these big multinationals get down to even more reasonably valued levels, you might see that buyer stepan. --

the pboc are buying gold as a form of currency. will that demand continue?at your baseline scenario? thers: my baseline is that people have been buying it in enormous quantities. it is virtually impossible to get physically gold to ship to these countries. we get permanent requests in russia now -- would we please sell our physical gold to india and china? i really worry that the market, the paper market, is something that could be stamped on, people say -- sorry, we will have a financial closeout. you ought to be in the physical business. francine: it's difficult and dangerous to store. it statistically becomes a lot harder to manage. peters: yes. under the bed is a great place. [laughter] francine: talk to us a little bit about your concern for interest rates rising and whether the first fed move makes a difference. peters: do you think the fed will? i am not convinced. the cost of funding will go up. that will increase the deficit. at a time when china is selling treasuries, it's not a good time. the labor market -- it's not as strong as people think it i

the pbl chief economist -- pboc chief economist commenting today on theseminar in seoul chinese you onel be more market determined and a long run and do not need to aid depreciation. interesting comments after the devaluation. a sense of what the chinese fact is doing.- effect hong kong is growing. latest economic numbers disappoint investors. fixed asset and output for august. weak across-the-board print board. in australia, sever headlines driving the currency. that's because malcolm turnbull said he will challenge tony abbott for the leadership role of the liberal party. in the a major story sydney market is certainly having an impact on the currency. i look after the aussie dollar. this is what you have. it has been holding up will generally given the fact the data out of china has been very disappointing and major trading partners. look at the chart of the aussie cents, it hasu.s. reversed course. a strong session added the open. the currency will will want to follow. in japan, telecom shares have been big movers today driving the original benchmark it lower because of the japanese

the week started with the pboc governor saying that the rout inequities is close to ending. authorities book ended the week by saying that authorities have sufficient tools to prop up the chinese a economy. the shanghai composite rose for the first week in four. the attention turns to the federal reserve policy meeting next week. this is what's happening today, the -- european stocks are falling. the stock i'm keeping my eye on is the basic resources index. miners were the worst-performing industry on the stocks 600. miners have rally this week and none more than glencore. a week ago it had its worst ever, but this track at his on track for its biggest weekly advance. earlier that it is scrapping dividends and raising money in order to cut a $30 billion debt. it has rebounded since slumping to a six-year low on august 24. it is mirroring fortunes in the chinese economy, but it is still below is high for the year. that's by about 30%. sterling today is down, but over the weekend suffered its best week since june. the bank of england throwing the cat among the pigeons yesterda

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 t

would you ask about the pboc? do you feel comfortable that we understand enough about china? didier: clearly, we don't know enough about china. it is extremely difficult to really know what is going on. we have beenn, investing in china for over 20 years, our impression is that the economy is not collapsing. what is happening is that this rebalancing is probably faster than people think, and therefore for the outside world, for us, it does feel like they are hobbling. manufacturing is going under, but the services are improving quite steadily. look at e-commerce, retail. this is going well in china. it is the extent to which china can manage its economy. without having the support from liquidity that has been provided for so many years by other countries. today you are getting outflows from china because the u.s. qe is over. trayst all these carried coming back, which is happening at quite an unfortunate time because that is when china would like to open its capital accounts, let the outflows take place. way, aoday is, in a victim, which is not politically correct. they are a