this coming on the back of the news flurry this morning out of the pboc. weittle stronger than what had been expecting, but nothing that would spook investors the way we saw happen last week in that terrible week of trading in. had the pboc conducting regular money operations, quite common to see this ahead of chinese new year when my quiddity becomes quite tight ahead of the seven-day golden -- when liquidity becomes quite tight ahead of the seven-day golden week holiday. the chinese authorities certainly trying to encourage the idea that stabilization is coming to the market and there is no need to panic. that is the rhetoric we have been getting from the pboc as , the chief economist coming out and saying look, it's all a bigeen misunderstanding. it look at this in the context of the u.s. dollar. while the yuan has been weakening against the dollar, it is stronger against all of its other trading pairs. that was also one of the reasons for the devaluation, to bring it back in line in relation to these other currencies. it's also why we saw the pboc -- b

this is really important to the pboc. you have people in hong kong buying the currency and selling it in shanghai. there is a lot of hot money flowing in and out of the nation. goal isthat there and to create as little a difference between the currencies as possible all stop today what they did was brought down the onshore currencies 0.6%. at the same time they step into the offshore market and pushed up the offshore currencies. i think their goal is to narrow the difference. i think their goal is to punish speculators taking advantage of the difference in rates to make money for little effort. >> robin joining us there from hong kong. let's welcome our guest, jim bevin joins us now in the studio. great to have you here. let's talk about what the chinese are doing. there inobin gangly is asia saying he is very clear. they are trying to narrow the gap between the chinese currency measures. other investors we spoke to say there is a lack of handholding, they are not taking the markets with them or explaining what their inte

are you confident that the pboc has a handle of the situation?he researchers saying eventually they will have to deal with janet yellen, because euro bound and q.e. jonathan: if we are talking about a banking crisis, then i think they will copy what has happened in the west in terms of q.e. they have got the ability to do a lot of moves. fiscal moves, we have seen the moving, reducing interest rates. they will go further. draghi saying i will do whatever thanks. -- it takes. pboc will come out with a similar statement. francine: what is the fed's definition of "gradual"? we talk central bank diversions in the dollar next. ♪ francine: welcome back to "the pulse." u.s.later today, the federal reserve releases the minutes from the december 15 fomc meeting at which rates were raised. will we get clues about the timing of the next move? we hope so. the markets hope so. we continue the conversation with jonathan bell. thank you for sticking around. we were talking before about some of the calls we are getting from the u.s., and you are saying we should

the pboc move to create a broader basket of currencies. optimistic view or's insistence ability -- or the yuanstability, against the dollar has sunk to this five-year low. ist tells you that the yuan not necessarily as volatile as it seems. if we take that longer-term perspective be on these one-day moves,r one-week relatively the economy and currency are stable versus its major trading partners. stephen roach's would yell university in connecticut. he has been writing about the fact that this devaluation, or so-called devaluation, may not necessarily be a devaluation. is sparkingt china new currency devaluation is really a stretch he tells bloomberg. it depends on your position in the market. it is an active morning. we will watch it closely given this zigzag with the chinese currency. it is an interesting time indeed with respect to the currency. we're trying to keep up with these fast-moving stories. we want your opinion. tweet us your thoughts. let's get to some other stories. continues to see its slump. >> absolutely. record stockpile

the pboc works in mysterious ways. on a serious note, it is strange that they have chosen to do this today. slumped,, the stocks creating a bit of concern in the markets. yesterday, reportedly buying market fears.ming they decided to upset markets again with this move the move today, the weakening and the fixing, was not a huge move. they weakened it by .22%. we have seen them do .1%. what really matters is the principle of the thing. on august 11, when china devalued the currency, they said they would take the previous closing price into account. we have seen today's fixing, about .17% of yesterday's closing level. people are speculating that this ofgoing back to the days fixing and how much trust they can have in the pboc policies going forward. that is really the issue here. they are not doing what they said they would do and the hope for transparency is not really coming through. the reaction function is key for the markets as we work our way forward. thank you very much indeed. let's get more from our guest now. w

let's put it that way in both the regulators and the pboc. now, they're evolving as well but it doesn't inspire a great deal of confidence as you eluded to. in the here and now we're seeing a degree of calm but it's an uneasy calm after the pboc indetected $20 u.s. equivalent into the markets to help with short liquidity operations so that's helped to restore some confidence but we're still in for a bit of a rough ride this week in the near term because of what you wanted out earlier. friday we get the sale shares expiring. so what they do with the shares they have under their dealt is a big open ended question. are we going to see any selling pressure in the days leading up to january 8th is another big question and on top of that the macro data. still not out of the woods in terms of the economic sluggishness we're seeing in china externally so another test of the market and the broader economy both on the external front and internally and of course the import picture is a proxy of domestic demand. so here we stand. degree of stability but

pboc, a lot of this instance are blondes.t is using a variety of instruments to manage its economy, which again pboc is not as necessarily independent. grindj and the ecb it's a there. talking about tweaks to their ratios. ecb, they kind of know the playbook. you just do more. and the question now we are starting to see for both of them and they are both alert to this, is doing more -- does doing more have an effect? the feeling was mario draghi did not do enough. they know the playbooks. for them, it is an easier job. draghi a year ago, was only just entering this q.e. period. now you know you can push rates more negative and you can buy more assets. the pboc has a harder job. francine: a lot of this is actually priced in? so, what does it mean from an investment point of view? terms of fixed income markets, the core -- is in our opinion insanity. o curtail whate t they are doing now because they see better growth coming through, you could see another rout in the bunds. cpihey don't do enough, the undershoot, we could see a

what more can the pboc do for instance? do you expect we'll see additional cuts from the interest rates? >> well, more interest rate cuts and also rrr cuts will likely come this year. but pboc also fine tunes the market and almost a weekly basis. so early this week we saw them inject quite a bit of liquidity into money markets. just to calm any tightness, potential tightness and calm nerves as well and we do think that more of these ad hoc measures will be coming with the pboc always ready to inject liquidity. just to make sure that money markets remain stable and short of interest rates to relieve debt servicing costs. >> but frederick the problem is that so many of the measures that the pboc has taken not just over the last couple of days but the last months or so seem to be incredibly heavy handed. that's what it was criticized for over the last year or so. when do you think they'll finally let go of that approach and let market reforms take over? >> we have seen a tremendous rally in chinese stocks and the chinese autho

we are awaiting daily fixing out of the pboc. rishaad: we will have a more detailed look at that story later in the program. we do want your program. -- we do want your opinion. considering an ipo. new details are coming out about the plan that may offer investors a lucrative alternative to a full-blown selloff. knew that they were perhaps planning this on friday but we got a little more flesh on the bones, haven't we. confirmation last week on friday that saudi aramco was considering an ipo. it seems now that they have shifted the focus to their downstream assets which means that the 10 million barrels a day of oil in the field they produce from may be off the table. but, there could be refinanced assets, a global refining empire that runs from the u.s. to saudi arabia. into asia, south korea, and china. did would make it, if they make that a public company, that would put it at the fourth largest refinery globally after exxon, shell, and china was sinopec. the value of that company could be seen at $100 billion which would stil

i think the pboc will be very anxious.hing china needs to do in its own best interest. >> that sounds like it is going to be competitive devaluation. what does that mean for other currencies? michael: that is the $64 trillion question. thate already seeing happen. it will be accelerated. the fact that people do not want to talk about this, is why people are doing their best not to talk about it. strengthening your currency does not help. you can do something that might help a little and makes the matter worse for everybody else -- or you can do the right thing. >> happy new year. he has used a different sort of stage. find out how this heavy-metal rocker is hoping to strike a chord with voters in taiwan. ♪ rishaad: this is "asia edge." from the opposition says taiwan voters want change because the ruling administration is not listeningt. to improveng government efficiency. china, itrnings from could collapse if the new government rejects the one china framework. stephen engle met another candidate who is quite literally ro

transparency isn't exactly something the pboc is known for.tion any more than devaluation is happening in currencies across the globe, but it's also necessary for china. currencies they are competing with in the region are falling off. this is something we should expect, but it's not signaled very well and that's the major problem. the ecb and fomc will let us know well in advance and we usually don't get caught by surprise. what does that tell us? china is doing what they should have been doing a long time ago. the problem is their currency becomes more of a transmission mechanism of what their economy is doing. in the past when they would take their currency to the dollar regardless of how much their economy was increasing or decreasing, we didn't feel it that much. zenni, i want to bring you into this. art pointed out that this was echoes of what happened in august. did that change your overall investment strategy? will this? >> august saw the markets back up. and it continued through the year. does it change our view? absolutely. ofre's th

since then, the pboc has shrunk the gap to its narrowest sense november.an sachs says it has agreed to settle in investigation for $5.1 billion. that would cut fourth-quarter profit by $1.5 billion, closing out a year of record legal costs. the ceo saysine -- he is happy to have reached an agreement. here is juliette with a look at what is moving the markets. we are using this word so frequently, a roller coaster ride for asian investors. juliette: hold on to that roller coaster. it is continuing. the shanghai market down by 1%. despite the fact that we saw a good rally in the main u.s. -- certainly a pullback after the big rally on the market yesterday in late trading, led by small caps. here in hong kong, the hang seng adding to losses. down 0.4%. a rally coming in the oil price. elsewhere, good movement in the region. japan, higher by you .7%. sharp, the standouts today on reports the bid was increased. korea, pretty flat. australia, can ok. built-in -- shares responding from a low. another stock, equity coming off earlier gains. up 2.5%. as 11% on repo

>> i think, i mean, the pboc, it's clear they have been supporting the yuam. we have seen signs of what appears to be intervention on shore and offshore and then just in the last few minutes we had this data on the foreign exchange reserves which showed another $100 billion going out the door in december. now that's not all being spent on intervening to prop up the currency but there is intervention going on. it's a question of what the objective is here. uncertainty is being felt around the world but also in china. one thing that happened since the beginning of the year is the beginning of the year is when ordinary chinese citizens are allowed to take their allocated 15,000 u.s. dollars and exchanges into 50,000 u.s. dollars and there's been a big rush of people using their allocation early in the new year but it's also been watched inside and the expectations of further depreciation are adding to the people trying to get their money out. >> we have the yuan intervention on the one hand and you have the stock market regulator intervening here as well. when yo

what are your concerns specifically about what is not being done at the pboc level?> the concerns at the pboc level is the amount of opacity in terms of guidance we are getting on what the currency plan is going forward, what the plan is for accommodative currency policy. the group thatk is in real trouble is not necessarily china as much as it is china's trading partners and the rest of asia and trading competitors as well as any country or region that makes their money by taking stuff out of the ground and trying to sell it to china. much of the emerging markets are being held at gunpoint by the lack of transparency. angie: lack of transparency, but remember who their audience is. 1.4 billion chinese citizens. calm the waters domestically. is injecting cash into the system in place of a rrr cut. beyou think they need to much more transparent, much more obvious with an interest rate cut? chris: i think it would be really helpful. if you look at the equilibrium rate for where china's interest rates are, i think they could be meaningful lower. they sort of moved in in

what exactly is the pboc trying to achieve?ese policies are more inward looking, rather than outward looking. if you remember, the pboc is not the only central-bank to carry on practices like that. in 2013, it was said the federal reserve would taper off and lead to a lot of tension in emerging markets, a lot of capital outflows from the emerging markets. it was a pretty rough time. is doinga and the pboc is trying to shake out the speculators from the market, but they could definitely communicate with the markets better so there is not a run on the currency, which defeats the purpose of opening of the market. anna: thank you. still with us, matthew beasley. things are calmer after that storm we thought earlier this week. we are talking about anglo american, one of the stocks that was hit so hard. index sank by 4.1% yesterday to its lowest level since 2004. is there any part of the commodity spectrum that you find any clues about where we are going in at this story? >> not really. demand is clearly being called zinc andtion on

the pboc balance sheet is falling right now. you can just create more renminbi and buy something domestically. stresses in the interbank market in the united states during the crisis. the fed flooded the system with liquidity. i think a more domestically-focused operation by the central bank is where we are heading right now. manus: david stubbs stays with us. here's the week ahead for you. we hear from fed voices. dennis gives us his view on the u.s. economic outlook. that is 5:40 p.m. u.k. time. anna: we also hear from robert kaplan. tomorrow, president barack obama delivers the state of the union address. manus: thursday, we will get the rate decision from the bank of england and the ecb will publish the account of its december meeting. anna: up next, wti hits a 2003 low. we look at what company might be for sale. ♪ anna: welcome back. let's get the bloomberg business flash. nejra: ubs will double its staff in china over five years, adding about 600 people. the ceo that a time of volatile anyets is as good a time as for revam

interventions from the pboc. oil on the move. tell me about the pboc.do you expect in their ammunitions drawer this year? alberto: when people look at china, they think about a lot of reserves, a lot of capacity for the sovereign to increase government debt. the reality is, even if you are a trillion or, you can go broke. they have capital leaks, capital outflows. even though they have capital controls, they have to potentially repair the banks which have been lending massively over the last 10 years . there are already some losses in the economy. the economy needs to transform itself. all this has a cost. we estimate the ammunition they have a similar to the losses already in the economy, plus the capital outflows during a period of three to five years. they have to use the ammunition very cautiously. that's why they are deciding to devalue rather than spending more reserves or more sovereign debt to do stimulus. manus: that paints a fairly bleak picture when you stack up the pile like that. alberto: in 2016, the china slowdown will come back. last yea

earlier, the pboc did set that reference rate. no more weakening. investors like stability, but positivity was not the case in wall street's thursday session. it was red, it was ugly, and it was down on the order of 2% to 3%. major markets extending three-month lows. the s&p seeing it's worst yearly start since 1928. it is because of what is happening with china. take a look at this black chart right now on your screen. that shows trading volume this week on s&p futures. that more than doubled between january 6 and january 7. between 9:00 p.m. we have passed that key hour. that is when they fiction the yen. we are now seeing that leg up in futures. people care more, especially since they have been losing money. a sobering number, $2.5 billion equity. losses in but today maybe we are going to see a turnaround. >> we will see. give us an idea of who is really -- who the main victims were on wall street? i don't think there was any sector which escaped. >> there was a lot of red and blood all over the palace. technologies was the one of the performing

pboc, the central bank, is trying to manage this currency.ast week's spread sent ripple affect through global markets. this is just another way which they are trying to manage this gradual depreciation of the currency. or -- it hit a record. effects, where is the largest impact going to be? effect -- theost most direct impact will be on the sales of bonds inside of hong kong, the offshore yen-den ominated bond market. with such high rates, it is spiraling down. what will the effect be on new issues? the yen depreciation over the past few months has shrunk the market. if this current reversal of the spread, the drying up of it may have an increased negative affect on the market in hong kong. manus: thank you very much. anna: our next guest says he continues to see renminbi depreciation in the coming months. talk about your calls on the currency. these things are very much tied up with weight -- with what we're talking about here, the central bank trying to stop speculators from shortselling the currency in the offshore markets. do you think th

what we see now is that the pboc will give market forces a greater say only when it suits the pboc, whennts to do something that it thanks is at its own interest. it will not allow market forces to come away. whether it has an impact or ony, in hong kong, global currency commodities stock markets. it will do what it is going to do, and that will make it really difficult to bet on the currency either way in the short-term. caroline: so much for a free market. robin spelling it all out, thank you so much. we love a bit of i told you so. let's check it on how the european markets have been open. some phenomenal moves in the retailers this morning. william morrison's beat analyst estimates, shares surging this morning. it is leading all the retailers hilar. devon's is also trading higher, morrison's up by 11%. the biggest move since 2004 for the fourth biggest supermarket. why? because for the first time in four years they managed to post positive like for like sales, the chief executive showed off what he is made of. another retailer also beat analyst estimates and posted a 1.9% like for li

influence due to the intervention of the pboc. they could intervene here in the offshore space. that is the gap between the onshore rate and the offshore rate. is widening. that's the weakest level since december of 2010. have a look at the shanghai, opening a little higher. it seems to have accelerated those gains over the last 10 minutes. bank of america merrill lynch green.is will go back to of the year,he end which is roughly 22% down from where we are at the moment. what else we following? broader picture, third day of declines led by australia, the mining space down. japan on the way down as well. i weakening in the reference rate, every currency and asia has weakened. the reference in rate, every currency in asia has weekend. -- has weakened. we will get more on this. it may be reducing its out foot. -- it output. those --s as well as declines as well as those listed in taiwan. tsmc down 1%. shares of of china bank down sharply, china's biggest homebuilder. know today that we did not know yesterday? >> we know about the resumption of trade in hong kong, opening inning at

i do think that the pboc could follow up with some more action possibly as early as the weekend. remember we still have data on saturday, the cpi print may provide it by 50 basis points. that could be another round in the reopen next week. it will be interesting to see the payrolls when you look at global market sentiment to see if the narrative shifts away from the chinese markets and the volatility we have been witnessing and the u.s. and the stronger dollar and domestic economy over that. that's where we stand. back to you. >> thank you, sri. reaction from the china state regulators, expectation weighing on the u.s. dollar overnight. we saw the markets move in tandem with the action out of beijing but fears that it could continue lead markets back down. we saw it close into correction territory. >> now bearing the downturns in mind they're now pricing in the next rate hike in june. that compares to previous forecasts for march. all of this following the volatility we have seen. now the chicago federal reserve president says the central bank is keeping a close eye on china and

what will the pboc do today?.arkets open stay with us. ♪ >> from our studios in new york, this is "charlie rose." jackson isuel l. here, the highest grossing actor of all time with $10 billion in worldwide ticket sales. his newest film "the hateful eight" is the sixth collaboration with quentin tarantino. tarantino has said jackson is one of the greatest actors to ever say my dialogue. here is the trailer for the hateful eight. >> what makes a man brave a blizzard, kill in cold blood?

we have also seen the pboc and the market. let's go to hong kong., walk us to the action taken and the results generated. so the pboc decided to inject funds into the money markets today. this is in reaction to them climbing when the pboc had laid off on adding funds to the money market. last tuesday, they decided to scale back their interventions. this was aimed at decreasing boring costs and the economy and aimed at calming investor concerns sparked by the 7% decline in stocks yesterday. part of a wide-ranging effort by chinese authorities to try and calm anxieties. bad,g if things go really we will have to stop the slide. jon: at the height of the selloff, a lot of people look at policy makers. they said they were exacerbating concerns by a panicked sponsors. getting -- panicked response. getting ipo's. banning selling a full stocks. have they learned anything from the summer at all? now,e problem is that about 80% of china's stocks are held by individual investors. letting the stock market slide with so many of your citizens involved is a bit da

we saw news from bp oc. -- pboc. 655.57.you take a look at it on a year on year basis it is strengthening 5.6%. we saw quite a rise in the hang ong, rising nearly 3% friday. the a shares also rose 3% on friday. china raising rhetoric about the yen saying -- if you continue to short the yen you are doomed to suffer huge losses. according to radical speculators. reckless speculation that it will face higher trading cost and legal consequences. as we continue to see that we had into the chinese new year holiday as well as the quarter and book closings. a shortage of liquidity. a big challenge coming up or the the boc as we run up to that time. we heard that the monetary authority has told some banks to cancel their repo agreements with interest rates deemed excessive. a higher opening in china markets and hong kong as well. rishaad: we are keeping an eye on developers. foreign banks continue to shrink their headcount. barclays did just last week. haslinda: it is looking bad. it has been tough for the office gete or a glut is ab

need news following this fixing from the pboc. 46 .36 against the u.s. dollar. we saw the off shore market play a bit of catch-up, gaining now. asian stocks reversed earlier losses. we are seeing gains across asia right now. s&p futures seeing some gains. we have an update now of what shanghai will likely be doing. 2.5% gains. that is what it looks like we will get at the open. 2.5% gains, and it looks like volumes should be spiking. if my data is correct here, and this is just the opening minutes. it is not as accurate as it would be about two or three hours into trade. 20,000 times the daily average. that number tense to go down. 2.5% gains at the open for shanghai. hang seng up .8%. the heavy weighted stocks look like they are going to join this rally. hopefully it holds. we will see what happens, will be a free-for-all or just a free-paul? back to you. >> waiting for the opening numbers to come through. "trending business" when we do return. we have a terminal on the markets across the world. four days of deep, deep declines over in shanghai. circuit breaker

angie: are you telling me you are preparing for a pboc surprise?o believe they will do anything to outrageous ahead of the new year, but more along the lines of the bank of japan. they are a central bank which can surprise, unlike the federal reserve, the rba. if we do see a delegation -- a think the market is not prepared for that at the moment. especially as we are seeing this axing mechanism over the last week or so. , i think new year things could move around a little bit and could get pretty ugly. i am looking to short markets based on what we are seeing in china here. angie: you are shorting china. i think a lot of people did that in january. they have used really short-term tools with the 7-28-day reverse repos just to inject money into the market ahead of the new year . after that, do you think that is going to be just as effective or do you think they will have to do more? chris: just to clarify, i am not shorting chinese equities. i think developed market equities could be a cell on good rallies, but it is going to be driven by china. wha

for the pboc, the real challenge is getting better with its forward guidance.ine: how much do you worry about the boj? they are struggling to achieve their targets, and then you had so much yen strength this week which is the last thing they need. simon: yeah. so, the boj, that yen-chinese yuan cross rate is absolutely material to the regional currency war. it puts the ball back in the boj's court to come back with more q.e. adjustments ine the december meeting but i think they will have to do more, because the exchange rate has really moved against them in recent sessions. to that is going to start damage japanese manufacturing which has just been showing signs of starting to stabilize. francine: what about europe? it's crazy. the first four days of the week brought all of the angst we had but distilled it and ball down and exacerbated investors' fears. correlation between what happened in europe and the rest of the world was huge, but we have such a comedy to policy from the ec -- accommodative policy from the ecb. simon: lower euro starting to come through.

hang seng gained after the pboc gave the chinese yen much stronger midpoint rate.tokyo japanese stocks looking directionless. nikkei ending in negative territory down about .4 of 1%, led by retail stocks and tech companies. over in south korea, kospi rebounded with china, gaining about .7 of 1%, but heavy foreign selling continued. nicole: in beijing, tracy yu, thank you very much. lauren: s&p five hundred and dow industrials having worst start ever. down 5% over past four trading days. s&p 500 off 5% as well. nasdaq is having the worst year since the year 2000, down more than 6%. so the question is how should investors position their portfolios this year? let's ask liz ann sonders chief investment strategist at charles schwab. she joins us on the phone. any optimism today? >> obviously futures are up so a little bit of a rebound. unique to see this type of cluster of big down opening days. i think the problem it happened to have occurred in the first several days of the year. another part of the year, we saw similar activity last august but we're starting the year

thanks pboc. we are seeing the mix bag. nikkei and kospi down.f and 1%. right here at home, more selling, we saw glimpse of green but today right now this morning 118 to the downside for the dow, oil pulling back by three cents, gold banes a buck 80, that's what we are watching as far as commodities. taking you through the next several hours is sandra smith. mornings with maria start right now. >> sandra: good morning, everyone, with me this hour is fox business dagen mcdowell. [laughter] >> sandra: he's looking good on tuesday morning. top stories this morning, president obama to announce executive action on gun control later this morning, which includes expansion on background checks and buyers will be checked when purchasing guns from dealers even if they're bought online and gun shows, the president is bypassing with the move and gop candidates are fighting back. >> the word that president obama is going to abuse his power to try to cease our guns. >> this president needs to stop focusing on what he's constitutionally forbidden to do. >> beca

maybe the pboc won't do as much as we thought. the market is tanking on the back of that. >> look to the oil market. we will talk about the saudi-iran tension. we will discuss that a little later. the headlines, your morning brief ahead of the market open. shanghai slides, circuit breakers kick in, manufacturing data disappoints. oil prices rise as saudi arabia severs the medic links with iran -- severs diplomatic links with iran. goodbye baxalta -- could buy baxalta for $30 billion as early as this week. >> chinese stocks halted after the csi 300 index plunged 7%. manufacturing weekend for a fifth straight month. the longest-running since 2009. escalating middle east tensions saw investors shun riskier assets. tensions escalating between saudi arabia and iran. ties andbia has cut expelled diplomats after the embassy in tehran was attacked. this comes after the execution of a dissident shiite cleric. it might beher says necessary for the central bank to increase rates if financial markets are overheating. using regulatory tools sh

the pboc repeats they want to maintain a basically stable yuan.here is no one in the world who believes that. why are they making those headlines this morning? enda: this has been their consistent message to the market, and this is why the market participants are so confused. the authorities have said we ofe no intention devaluation, and we will keep currency stable. but they cut their interest rates to the lowest since august yesterday. it is hard to thread out what the narrative his. i suppose we know that china wants to free up the currency, and along the way there will be bumps in the road. but that is a fairly generous pace in terms of what is happening. tom: sunday evening in new york, we are thrilled to bring you this morning, michael darda. economics inking the market with a real attention to the animal spirit of the nation. i want to get to the jobs report in a minute. we have never seen what we saw yesterday. to amend and adjust your equity exposure because of the turmoil in global markets? think the turmoil is a reflection of a set of c

the pboc has increased its cash injections.: this market is getting more stilted more disconnected from reality. as the days go by. the 10 year bond yield is up because more people are. sorry the bond yield is down because people feel there is nothing to buy. stocks are down to levels that haven't been seen since the crisis of last year. so that is happening. is going down where it had been going up for the past few days. people don't really know what is going on. they are running for safety at the moment buying bonds so that they know that their money is safe at least for now. another disconnect is really disconcerting. policy statements are coming out and the actions are very disconnected from that. short-term, they want to calm some of the volatility of the market. they believe they have achieved parity between the onshore and the offshore yuan rates. .rtificial parity as soon as the pboc stops intervening in the offshore market the offshore yuan tanks. they can't carry this on for much longer. they have a limited amount of

requirement coming from the pboc. we have done a survey. they say 15% devaluation.on is what the chinese risk a one-off devaluation event to thehey just succeeded -- guy: one could read they want to do something pretty quickly. of someequences magnitude would be such that within the context, with the such amount ofnd the, we don't know what unintended consequences would be after such an event. here could well be one of these numbers probably too high to take on. world we looked at the markets from the perspective of the equity side in terms of $7 trillion in quite off equities. sovereign bond markets seeing a substantial return so far this year. this is the sovereign bond index. world equities down. give me your perspective on the world and we're talking bear markets. we have made a great deal of news this week. guy: there is a run to safety. it illustrates the state of the world. investors on the sideline. quite a high level of bullishness going into 2016 with many headwinds we knew about. what we are saying is a readjustment of risks. investors are raising cash aw

pboc said they made a realignment that they want to make.on and then that we needed to see something like a 20% devaluation because inhave seen a 34% increase unit post labor cost, and without robust external demand, which they are not getting, they need to do something about it. astill think we need to see better yuan-dollar rate. there is substantial downside there. want to be moderating the pace of the decline, but we need to see this with a good seven handle. if the market is spooked by what it has seen, frankly, they have seen nothing yet. talking about the market being spooked, if you look at one indicator in china, things are not that bad. i am looking at the seven-day repo rate, so you can see the internal bank rate stress. and has been flat for 2015 relatively so for 2016. well off the highs from last year. is the market stress kind of a ghost, does it not mean that much and the signs are stable ?> >> we need to be cautious when we talk about market variables in china. you could hardly say that the shanghai market is a functional ma

i think it is happening for many reasons, not the least of which is the central bank, pboc, is quite conflicted in its policy targets. they want to renminbi keep the stable -- keep the renminbi stable. , thatwant to believe there are factions in the government that would like to see it weaker. time, they are adding liquidity and fueling credit expansion like there is no tomorrow. goals are incompatible, and they are leading to a lot of confusion and uncertainty amongst investors. thoset: you can see spread, the difference between the offshore rate, which is what is traded in hong kong with the spot rate, the cash rate, in china on shore. we see this gap widened, the spread between offshore and onshore rate widened, does the bank have a rate in mind. late last year, i know it has been covered on bloomberg, pboc introduced a trade-weighted did saylthough they they were introducing it as a reference indicator, not as a target. having said that, what we have seen during the last week or two slide steadily to .he bottom end of this target is involved and entailed with significant tweaking

this is what the pboc was doing, intervening to prop up the currency. can you pull it up again? >> they wanted to keep that gap from widening further. earnings coming out better than estimates, $.48 a share, although for-year earnings are down compared to last year. 2.78ue coming in light at billion dollars. this is no surprise. coal rolls back, that will hurt the rails. that hurting the industry. , we as we talked yesterday have seen some of those rails rollover, so what that means for the global economy -- with ourhart along deep dives, you can see them on our twitter handle. equity strategist at ubs, oil below $30 a barrel, first time since 2003, is this justified? are we looking at $20 oil? think we are getting to the point where it is overdone. there are several things at work. the market was somewhat spooked by saudi arabia floating the concept of an ipo for the state owned oil company. then when you broke to that level of $32, the technicians , and to traden below 30, which is saw today, was inevitable, but the way we think about it is that the cure for low prices is low

pboc says do not short they you on to your peril. -- short the yuan to your peril.ght short when the pboc aggressively intervened in the market. almost 70% of record highs. they are still out there. goldman sachs group president is the latest to come out and say china will eventually have to devalue the yuan again. ofis adding to this chorus saying we could see another 10% valuation, 15% even by the end of this year. means the bank of china takes the reins when it comes to shaping the narrative. at least we know where the market is sitting. >> define that as a 50% cut. thank you so much for that. china's baidu has moved up the grid in the race for the driverless car. many investors are seeing their worst start to the year. how long may the bears stick around? when first up returns. angie: at least 28 people have died in the blizzard that has paralyzed much of the eastern united states. many places saw more than three feet of snow while central park in new york had its biggest 20 snowfall on record. all broadway shows were canceled for the first time since superstorm

on pboc has been running foreign policy for the last decade.uirement and that's unconventional which takes us back to the 1930's. as the money is flowing out again and they are investing more broadly, they are using unconventional policy, gradually lowering the banks required reserve ratio. you cannot really compare what with what the fed or the bank of england are doing. their policy is unique to the chinese unique situation. i think they are doing a good job managing it. if you look at the balance sheet it's dropping like a stone because the foreign exchange reserves are going down and money is flowing out of of a trillion dollars per quarter. it's a massive domestic monetary policy challenge for the pboc. francine: and you say you are bullish for china. how concerned are you? >> my concern is not that there are bad loans and it will be hard for the chinese government to fill that gap. as they see various pieces of the financial architecture take bumps because of the reform and transformation process, the government is the key actor of the ch

the the pboc is stabilizing -- the pboc was stabilizing, but they began allowing their currency to strengthen -- the line went do wn, because that is what happens. we were talking about the dollar using value against the yuan, and it reached a low in 2009, trade around here. right around here. and here, of course, is the devaluation in august. if you look at what kind of move we have made, we have retraced more than half a decline from the high, early 2009's. joe: it seems like it was a small move but if you look at it, it was meaningful. i want to dive into the terminal and talk about something that is south-- which korean export growth. they are in a very trade dependent economy, with all kinds of technological stuff. it's a really ugly chart. this purple month is the 12 month losing average, down to its worst level since the crisis in 2009. this is a real bellwether for global trade. by much more to say on it. alix: south korea overlooks coal mines. that could be dangerous. "what'd you miss?" the weekend tension between saudi arabia and iran was expected to drive oil prices higher. the mar

. $20 billion in the financial suspended the pboc they run with the cash injections. the regional federal reserve actors have dismissed the concerns with the stocks and they said that the u.s. economy is on solid ground. >> we have seen the economy growing and there have been ups and downs and i think the economy came back significantly and the expansion is on solid ground here. show this upt to 2%.it would leave things at the obama administration is warning -- widening who qualifies as a drug dealer to of firearms are the hands criminals. >> although it is a strong getef that way need to complete arms around the problem and congress needs to act. i asked my team to see what more we could do to strengthen the enforcement and prevent the guns from falling in the wrong hands and make sure that the criminals and the people who are mentally unstable and those who could cause harm to themselves or others, they are less likely to get a gun. story, you on this can go there. >> let's check the rest of the asian markets. no reprieve from the intervention so far. nothing prophe

that's what we saw back in august and that is a big hit to the pbocs. >> exactly what they were saying. there was so much confusion about what their actual strategy is and what the next move is as well. what happens? are we going to see this again? are we going to see them put another ranges in place? horrible week. horrible start to the year. >> absolutely horrible week. let's stick with the markets. let's show you what european equity markets are doing. we're in a little bit of a recovery mode. we're just off the session highs. we did kick off the session in negative territory but then recovered quite a bit. bit of a bounce back. that was the worst week since august 2011, the depth of the european debt crisis. we are trading close to three-month lows. want to show you the markets one by one. the dax really bearing the brunt of the losses last week off by more than 8.3% today. rekoupg some of those losses but only marginally by 0.95%. the ftse mib up. the ftse 100 lagging a tad but 1/3. now, of course, as we said, it was a week to forget for global markets and a terrible start for 201

the pboc stepped up to the plate with supportive measures.ossibly as early as today maybe friday or the weekend. we have seen this forever. >> we all remember last august. drag this down as well. sri thank you very much for the set up. out of singapore this morning. clearly he mentioned the currency. that's the big concern that something more rotten is happening in the chinese economy that they have to resort back to the export model to prop up the exports to meet the growth target and what does that do to the global economy? even if the u.s. isn't as exposed via corporate earnings or exports to the chinese economy, china impacts every single country's economy on the globe and the question is what does it mean for global growth? >> right. the currency has been the sparked that caused all of this last week and i was writing in an article in november and i mentioned the fact that 2% declines, 3% declines that we saw in august, they're nothing. we need to see much more to see all of this flushed out and we're starting to get toward the highest s

we are asking foreign banks to raise the amount of deposits that they make at the pboc.this enough to stabilize the yuan? we do not even know yet how much they will be doing. ashok: that's a very short-term move. it's to bring some temporary content market. the underlying problem is simple. you can see that in terms of the way the foreign reserves are following. internally, china has continued to slow. there's a lot of money leaving the system simply because there are not enough investor ,pportunities or to speculate which is what the money is all about. the money continues to come out of china. inevitably, you have a currency under pressure. more importantly over the last two years, the chinese currency has actually become overvalued. become uncompetitive. we have seen the first round bring it down a little bit in terms of devaluation. that is another somewhat like an store for this year. this is preempting the forthcoming weakness and the land for the rest of the year. week from thest ubs, they were saying to me at some of the trillion dollars of our close to go. some

is the pboc guiding the one lower or are they responding to market pressures.tally unclear is happening there and what you're seeing is a lot of uncertainty about why they are moving that reference rate. the second thing is the cbr see meeting. the circuit breaker that has been instituted will need some tweaks. there is a halt of 15 minutes after the market falls and trading is suspended for the day at 7%. but as soon as you start to get to 3% to 4% down the market starts to panic. everybody wants to unload shares before it gets suspended for the day so there is a snowball effect that makes that circuit breaker cut off inevitable. there will need to be some changes their and we are all waiting to hear the results from that meeting. let's see what those results actually bring to the market. chief nick bureau wadhams, let's bring in patrick armstrong. he's the chief investment officer. what a week. >> what a dirty start to the year. information -- intervention everywhere abounds. >> the like volatility. >> the market is overreacting. that's the big driver of the

perhaps a sentiment being held by the pboc. injecting liquidity into the system or before markets open. at the same time weakening the currency's reference rate. we are still seeing the onshore and offshore work -- rates diverge. futures up about five and a quarter point. japan and hong kong. i will a. dollar-yen fairly straightforward. rishaad: after one of the worst starts of the year in decades, the government hopes lines will work to improve market mechanisms. what are they doing exactly? there pretty critical when it comes to what can happen. most indices have reversed early losses. the chinese securities regulator trying to reassure investors this morning they will fine-tune the circuit breaker system as it serves an important role in stabilizing markets. goldman sachs says it is too early to turn bullish. suggestions that the index will be negative in the first quarter. the bank maintains its target at 4000. it doesn't change anything theamentally because investor makes is still dominated by retail. circuit breakers, the

a fairly large injection of cash from the pboc. 6 billion. takes it roughly to about $240 billion. they want to keep the money market rates in check for the chinese holiday. back to you guys. > thank you very much. let's bring in jane. great to see you this morning. so much to talk about. let's start with an asia focus to the conversation. we're seeing the pboc flooding the financial system in days past and today and leading up to the lunar new year, concerns about liquidity in the system. are they doing anything unusual this time around given the amount of volatility around the china story? >> a lot of the activities are unusual. the market conditions have been unusual. i think what they are doing in terms of spreading market liquidity, you can say that is normal. there are concerns about the new year. they want to keep things calm. i think really that is at the crux of everything they are doing now, trying to calm conditions. if we look at the amount being moved last year, over the whole of the year, we had about a 6% decline. that compares with double digit declines. >> against

but there are some pboc things going on. the capital flows are the biggest driver. time below 6.5 on the rnb in a long time. a longer trade dag so london is trading now in their daytime and a huge open market evaluation. >> how much of this is market distortions? how much of this is reality? you did mention there's a slow down. maybe not completely out of touch with what we should have been expecting but there's a lot of market uncertainties and that made people nervous. >> there's huge market uncertainties. people need to separate the stock markets performance from the real economy. anyone that expects otherwise is naive. service weakened for us in the fourth quarter. this two tier economy narrative john was talking about and most of the market believes this is not what we saw in the fourth quarter and when that starts to trickle in that's going to be scary. >> that's different from what we heard from john and someone earlier today. you think services is slowing down too? >> we were some of the people that developed this narrative. there's a cap on the -- a floor o

pboc,e, when we look at if we look at these chinese moves. haseems that prime minister indicated no stimulus. know, it is like mr. stieglitz mentioned, there is a debate in china. perhaps what is happening is not as tightly correlated to the economy as the headlines might suggest. a credit demand has been stabilizing. the housing sector has shown some signs of stabilizing. metal prices are at historic lows. interest rate cuts, and a lot of targeted lending. the government has pumped in hundreds of billions of dollars trying to get things moving, and they are starting to have some impact. the government is keen not to add to an already large debt in china. they are trying to manage expectations. data over the coming days will tell us just how the economy has been traveling, and if indeed things are stabilizing. francine: how worried should we be about this capital flight from china? it seems every chinese millionaire and billionaire is taking money out. enda: this has got to be one of the biggest concerns in china right now. as the yuan has we

they might be watching at the pboc. we shouldn't say a load of tosh.i'm trying to use very technical and grandiose language. but if i am suffering from confusion about what they are doing, i should resort to -- maybe it is a little disrespectful, so apologies to anyone who finds that overbearing. nick bring in somebody -- nelson. i'm deflecting. he's ubs's head of european equity strategies. i use the very colloquial word there. it sort of encapsulates it, doesn't it? >> it has been messy, very messy. the problem we have here is that when you look at the chinese entre markets, is dominated by retail investors. so it's media less mature market than other markets, a different demographic, different types of investors. it's not pensions or insurers, it's people who are newer to markets, and maybe there is more speculation. think the problem with the circuit breakers, as we all now, is that if you get to a period where you know there will be a stop in the ability to sell a stock, maybe try and get your cell order's in first. we can certainly see people cha