the cop is a pmi moved lower -- composite pmi numbers moved lower.encies, in a moment, the debate over whether scotland should keep the pound continues to run. more than half of english voters approve scotland's plan to keep the sterling if it votes to break away from the u.k. it is less than a month before scotland heads to the polls. a nobelspeak to prize-winning economist from cambridge university. our first interview of the day. thank you very much for joining us. i wonder if you could help us join the dots on a few things. when we look at the eurozone were we have seen monetary union without fiscal union and the limited success according to take do you think that we from that a confusion that we need to have monetary union and fiscal union in tandem at all ?imes or is there a way to make it work were scotland can be fiscally independent and yet keep the same currency as the rest of the u.k.? >> the euro has not been a great , particularly for the mediterranean countries. there are cases where you really want a separate currency. scotland and the

slight gains for that services pmi better than expected. it was italy, actually, that came in much weaker than expected. so the performance for that market was dented in the last 30 minutes or so as a result of that.. but let's have a look at the top stocks that we're following this morning. telefonica shares down 1.5% after the firm offered 6.7 billion euros to buy vivendi's brazilant unit. vivendi shares, meanwhile, as you can see, trading just over 4.2% higher right now. we move into the german markets, trading lower this morning by just over 8%. the firm issued its second profit warning and announced the departure of its ceo the. first a profit warning just over a month ago. look at the foreig exchange markets, too, the dollar, that's continuing to stabilize as far as the last couple of sessions are concerned. slightly under pressure this morning. just under 0.1% lower as we saw that weaker pmi in the services sector in italy. relatively unchanged in the trading session today. we have the rba standing pat on rates right now, very little

bad pmis in europe.a couple of things here and it's got folks in there a little bit nervous. let's look at the perfect storm we've had over the last few days. we had the argentinian default, i think the sanctions that europe put on russia and, as well, the u.s., because we have such a big trade in russia with europe, if europe starts to have a tit for tat with russia, that could be a big headwind in the u.s. because that could slow down europe even more and i think europe is slowing. that's one of the big reasons that we saw the sell-off here yesterday. and also i think with that gdp surprising everybody at 4%, how do we have a 6% turn around? i don't know. but that gdp number suggesting rates might come up sooner rather than later, as well, those things lend to that sell-off yesterday and it's going to be interesting to see if we get a great jobs number how the market takes it. i think it takes it badly. >> taking place in the markets, this has been the season kral that were just a little postponed beca

pmi came in at 61.7. the reading may show that government stimulus policies including tax cuts and infrastructure spending are helping boost china's economy. for more perspective, let's bring in maranda car, the head of china research at nsbo. i look at the numbers, two-year high on chinese pmi. i was told last year we were going to get used to lower growth. what are people telling me? we are not seeing that in china right now. >> there are three main reasons for a big slowdown. thinking there was a massive slowdown and this was the beginning of the end. property, credit markets and the anticorruption campaign, all of those three, particularly with the investigation on wednesday, particularly those three have been removed. we are getting back to more normalized growth rates. >> let's talk about the anticorruption campaign. one facet of that has been bending on luxury items like high-end drinks. you see some of the drink companies, sales across the board in china are terrible. how does this impact the wide

pmi data rose at the fastest years.l the pickup in manufacturing counteracted the property slump? >> can to ask an easy one -- it will help. there is a property bubble of some kind. one day disguising -- there will be a chinese banking crisis. it is one of donald rumsfeld's known unknowns. the pickup in manufacturing will economykeep the growing. they may achieve the 7.5% growth target. >> it is good news? >> the flip side is, given the choice between moving on and implementing economic reform, which would mean a slowdown in growth, or filling of the punch bowl, they filled up the punch bowl. perhaps that was because there was opposition to reform. that is one of the factors behind thend i -- -corruption campaign. the longer you don't change the economy, the further you head into a dead-end. two keyave the economies, united states and china, showing great guns. you have geopolitical risks weighing on the market. buoyant about the relatively good data? or should we worry about stimulus on the west side? back inwe see a r

investor sideline the mixed pmi data. instead, eye jackson hole for more details on how hawkish the fed really is. checking out, shares under pressure after sales fall in its key markets. the ceo telling us u.s. consumers don't have enough spending power. >>> and not hurt by sanctions, profits rise in key russian markets, sending shares to the top of the stoxx 600. and ukraine's foreign minister telling cnbc the country needs russian influence to resolve problems at its borders. coming up, roger minerson tells us why president putin commands so much power. excludeing fuel, slightly higher than anticipated, 0.5% growth month on month and 2.4% growth year on year, which is bang in line with expectations. the downward pressure for nonstore retailing and petrol stations is dipping a little bit. after we had that retail sales and public net spending data through, as well. so this is what we're seeing. retail sales, though, weaker than anticipated. july is being a foggy month pretty much across the board. you're looking at the

pmi. 6881. services. pmi. why does it matter? three quarters of u.k. gdp. since november 2013. look at the mpc meeting. the bank of england meets thursday. they decide. many expected to stay unchanged. what we are looking forward to are the minutes released on august 20. if anybody says the data is good, it is time for a rate hike. they think the dissent comes this month. does it matter? the color in the inflation report is the big one. when do we get that first rate hike? the data is getting better and better and better. >> yes. i guess we will have to wait and find out. it's what makes it so fun. thank you very much indeed. jonathan ferro with the latest on sterling. up next.lance" is tom keene joins us with a preview. >> good morning. we will talk about china. will talk to dr. economy about the changes in politics. we will talk about china pushing back against the united states. sir martin sorrell will join us as well from wpp. i'm excited to speak to him about social media. i'm excited to speak to him about facebook and google. we are looking forward to

. -- pmi. it is probably the one that we pay the closest attention to. >> it really does not feature is highly on the radar. >> it depends on the cycle as well. it depends on where you are in the cycle. for now, pmi is moving in the right direction so that is good. >> do you have property in your portfolio? it is something that you recommend? >> we are overweight in china. we like interest rates and property in china. >> do you actually by physical property? >> if you want to invest in china, there are three ways of doing it. banks, property, insurance. or you go for a basket of stocks. >> if you want to get exposure to property. >> we know marley -- we normally look at individual stocks. >> did you have china bank in your portfolio? my china's disease -- my china studies has it in the portfolio. >> what about china trade? people are signing off on abenomics. this is probably the last kick at the can and it doesn't work. >> we are underway in japan because we think there needs to be -- more nee

what about china's manufacturing pmi figures?ing, obviously, in the second half, we have seen it popped back up, but what do you think of this official pmi today ? >> i would not be surprised if we saw some more slippage. they have responded to the micro stimulus measures we have seen in the last three months or so. i suspect there will be no way getting around the need for broad-based stimulus as we move to the latter part of this year. that means a broad-based reserve rate ratio cut coming through in the economy. doesnk the inflation side provide better for china. and the linchpin will be considering that to try to launch the economy sustainably on that new growth trajectory. been the lower rate than the 7.5%. >> making moves by thepboc. pboc.ing moves by the thank you for joining us today. coming up next, a volcano in papua new guinea disrupts flights from australia. all the details when "first up" returns. ♪ >> checking some other stories making headlines around the world. the thai prime minister has named his cabinet. nowor

inare seeing pmi's weaker manufacturing and services.n that you are saying that with companies as well. within that you are seeing deflation emerging. we are in negative territory. it is not a pretty picture. if you -- as you talk about yields we are in a different picture. ago andhat over a year that was a much more liquidity driven thing. >> we had a conversation with joseph stiglitz yesterday. predicating you are your trade on, what is driving your thinking as you look at things? >> a lot of things. can the ecb do more, not really. lose andis likely to the dollar looks pretty dominant. it will be -- not be falling out. the ecb has done all they can. this was being talked about. the central banks thought you would never create a single currency. >> we know it is not perfect. so if you look at the progress made between 2010 and now, in a to make it work longer-term. nothing will happen and that front in the next five years. sterling has been wobbling but i still think there is still some legs and sterling as we move toward that rate hik

even though chinese pmi is at a record low.his carefully because we talk about the manufacturing side of this entry a lot. hsbc reading of services pmi is not really encouraging. today -- eurozone market eurozone, services pmi set to come in at 54.4. >> construction was strong yesterday. >> above 60. contracted,ly didn't it? a percentage of the gdp was negative. >> i will talk to kevin daly of goldman sachs later on. wages, growth is at a 2009 low. unemployment is at a 2009 low. how do you square that at the meeting and inflation report later this month? >> do we not care? the bank of england underestimated. >> you will have to tune into "on the move" to find out. >> jon will be here. more on israel and hamas. we will see you nice and early tomorrow. ♪ . >> welcome to "on the move." jonathan ferro. we are moments away from the start of trading. futures indicating higher. china and hit records. what does it mean for european trading? mark, let's start with you. >> profit last quarter down. do you know why? because of charges lin

and pmi in asia china. it is at a record low. is it the rebound we have been looking for? touchhyde screen. >> on the downside. we have one big fall today. the second profit in one month. the warning. almost down 9%. second profit warning. what happened? we waved goodbye to the old chief executive. he is going to be taking over until next may. german construction company has and shiftingtself gears into services. it does not look too pretty. biggest loser on stoxx 600, axel, a german publishing group up 8% at the moment. with a standout results and the media company and these sales are up 8%. they beat analysts' at simmons. another german standout performer up 26% in terms of profit, bmw. currently trading up nearly 3% on the stock price. company that is strengthening. the biggest maker of luxury brands. it is on the success of the x5, it is all about sport-utility vehicle. 6ey said our series 3, 5, and are all dominating the sectors they are in. beating the markets euro. profitability is where it matters. to you. >> thank you. some of the top headlines. chinese stocks fel

pmi.

the french pmi speaks to the french economy perfectly. miss then pmi contraction in the second quarter. but there are much bigger issues. what is going on in the ukraine. such as the french economy. the fact the italians have given up on reform. the gdp numbers of the sizing the downside to those scenarios. in spain, things are looking great. >> are you being unfair on the italian prime minister? he was elected. politics early has gotten away way of the reform process at italy. markets have given italy this for the time being. bond yields as in spain and portugal have gone to low levels. but it some point, i think there is going to be a crack in the eurozone that may involve france or italy. but certainly those of the economies that need to be worried about. >> of course, many people will watch what janet yellen has to say at jackson hole today. is she going to disappoint investors, and if so, define disappoint? it can mean different things to different people. >> i don't think so. this is not the form she wants to use to deliver any sort

it is an easy act to follow very eurozone pmi, china pmi. >> nothing think china's pmi will definitely we are actually below the bloomberg consensus on this. we are looking for a 1.7% year on year reading in the u.k.. we are slightly above the consensus. on the u.s. were looking for 2.1%. in both those cases you will drag in different directions. ultimately, we think that the sterling is going to find support from the broader economic data in the u.k. in terms of the growth numbers. >> i want to get back to jackson hole, but because of gone down this road, let's stick with it. we're going to crack on with rates. wages will catch up. where are we? what are you actually focused on? is it wages? is it inflation data? where do you focus? >> i think you have to look at the whole picture. ultimately, that is what the bank of england is doing. as a clear focus on wages because we have had extraordinarily strong growth and an output gap and the u.k. close rapidly. and yet we haven't seen this pressure and wages. above that may be compositional, some of it may be in labor supply shock as the ba

. >> and chicago pmi.he data with italy back in deflation, cpi for the eurozone .3. >> plus. >> setting up a move for the ecb next week, right? >> the debate is out, but moving to a situation where you may ask, be careful what you wish for. there's an important contribution for rate strategy where he says look at where you are on bunds, german bonds, extended valuations trading 150 basis point below treasuries. they are tracking for deflation and ecb failure, you can argue. therefore, if the ecb comes in with massive asset purchases, will it change the underlying assumptions. in other words, if it comes in buys, is it made by waves of selling on sovereign debt. that's new, but an important contribution we have moving forward, and may be why they are reluctant to do that. >> no move next week, right? wait until later in the year, the fall? >> i expect a consensus. people are picking ideas from the air. i think they point to the fact they have this big horde of cheap cash available in september. they might t

and we got a read of euro pmi purchasing. it was down. ultimately, if they can persist, and all the geopolitical risks can have an affect. >> mike, what did you make of the week? >> one of the points i would make, with the geopolitical issues, some of the things to worry about, whether or not we're going to get involved and if it's going to be in a big way. the middle east, it's like a coal fire that never goes out. and the other thing is, with weakness in europe, italy, spain, looking at possibly negative economic growth there. that promotes the central banks to try to continue to lubricate the economies. a >> carter, what's your take? a staggering move in the markets, but yields just want to go lower or remain low at this point. >> well, a week -- this is status quo if it continues. and things that were very cyclical, industrials snapped back. the thing that dan speaks of is very important. europe is in trouble, and their rebound this week just sets them to get in trouble again. >> or, it's a late stage phenomen phenomenon. >> let's tal

and over in china, of course, pmi falling. about a six-month low, and we are continuing to see the impact. far as the seeing as impact coming from the slowdown in the housing market, and this is beyond the property sector itself, and the pboc also coming out on the weekend with the second quarter monetary policy report. i think a key take away their is that they did give fair warning, that it adds risk relatively quickly, so perhaps shooting , andexpectations australia, retail sales slightly better. they have revised the may figure upward. this is before the rba rate decision tomorrow, and that is just about it at this point in time. we are seeing a mixed bag. the philippines, there we go, up, and malaysia is still leading those gaining across the region today. keep your eye on the ring it, which is falling. >> all right, david, we will check in with you, and we will stick with singapore for the moment because retailers are being hurt by the downturn in visitors from china. risings already facing competition are under the grea

after the pmi number, the flash estimate from hsbc manufacturing activity, at a three-month low. we saw a big sell-off of the hang seng. but the market has come back and the shanghai composite has recovered, as well. prebl investors are front running the idea of more front runners coming into the system. hsbc put out a note today saying in all likelihood, we could see some bolder action from the pboc, a cut in the main policy rates or even a cut in the rrr are something that for the hsbc is looking at in items of policy measures. so all in all with all of these markets, louisa, just marking time really ahead of janet yellen which is the maybe event for this week, of course. back to you. >> sri, thank you. >>> we were talking about jell-o last hour. >> jell-o? >> yeah. >> loads of people say trying mixing cherry, orange, raspberry jell-o with cranberry relish for an awesome side dish or dessert. use less water. whew! >> i'll stick to strawberry, louisa. it's a staple on our table at birthday parties. i remember it well when i was in short pants. >> i know. and no to the person ask

they sold tokyo and sydney stocks straight after the pmi figures were released. but tokyo and sydney remain in the positive for the day so far. tokyo looks set to extend its winning streak to a ninth day, sydney, to a sixth. but the hang seng ran into selling pressure on the weaker than forecast factory activity in china. the index opened lower this morning and is down half a percent at the moment. >>> now let's turn to currencies. the minutes from last month's federal reserve meeting and the u.s. currency higher against the yen and the euro. the dollar is now back at 5-month eyes against the yen in the upper 103-yen range and against the euro, the dollar is closest to its highest level in almost a year. the euro is also weaker against the yen and fallen to seven-month low. >>> the number of foreign visitors to japan has hit a record monthly high. some have been attracted by a weaker yen. others, from southeast asia, are finding it easier to get visas. officials at the japan national tourism organization say last month more than 1.2 million tourists came to japan

this week we got a reading of euro pmi purchasing data. weaker than expected. we're starting to see some of the geo political stuff seep into these euro economies. if they can persist -- and you named all of these geopolitical risks out there. they all have an impact at some moint and multinationals will be affected. >> mike, what did you make of the week? >> one of the points i would make, with the geopolitical issue, the thing you need to focus on when worrying about equity prices is whether or not we're going to get involved and in a big way. the middle east we've got a lot going on there, don't we always. it's like a coal fire that never goes out. i'm not sure i'll concern myself that much as far as u.s. equity prices are concerned with that. and the other thing is, with weakness in europe, italy, spain, looking at possibly negative economic growth there. one of the things that does is that promotes the central banks to continue to try to lubricate those economies and one way or another that money is going to find its way here. maybe that is helping to offs

did of the disappointing pmi and it looks a bit strange.ll get you a much better .hart when we come back the agricultural bank of china sang sustained economic momentum is something to be questioned and we may just see some profit taking. >> i mark barton in london and these are the top headlines. american and british officials are inc. an online chase for the killer of james foley. he was beheaded by a video -- in a video made by the islamist state. they have analyzed the audio to help identify the killer. israel is bowing to target more hamas leaders after killing three commanders. the raid was followed by a barrage of rockets and a wage of israeli attacks, the defense minister says forces will continue to hunt down and attack hamas leaders were ever they may be. set tota governor was become indonesia's next president. the court rejected the allegations of fraud. the verdict in the most vices leadership contest since their return to democracy. leaders are stepping up diplomatic efforts to ease separate --kraine, celebrating a second anniv

we have pmi data out this morning. construction grew.his was on the upside. , it is down the from better than expected. we need to build a few more houses. the other one i want to show you is israel. dollar versus the israeli currency. we are going to talk about the are is him industry. weakening has been over the last year. that is a significant headwind for the tourist industry. there are plenty of others. let's talk about it. they are pulling some troops out of gaza. they may be winding down this assault. impacted therely tourism ministry. let's join eli golden. he is joining us from tel aviv. he is the president of the tourism organization. thank you for taking the time to talk with us this morning. badly -- think of the tourist industry. how badlysense of affected it has been by what we've seen over the last few weeks. >> it is very bad. year.e facing a record 3.5 million visitors. july and august are the record season. they are the high season in the hotel business. around expecting to have 85% occupancy. in tel aviv and we fell do

pmi. it is followed by the university of michigan confidence. a lot happening. -- ies have decelerated should say accelerated to the downside over the course of the past our. they are down about half a percent. king and burger procter & gamble are at 7:00. chevron at 8:30. berkshire hathaway after the bell. chrysler's july auto sales up. that is below -- that i stocks, bonds,t currencies, commodities. linkage between the futures. dow futures -110. under 134. the nymex crude, well under. the six near 17. there is the dow. will have the graphic on that and a moment. dollar-yen, 102.94. gold into $1300. alan krueger is joining us in the 7:00 hour. here is a regular unemployment rate. in 1981.he recession down we go. we roll over to the 6%. the red line is chair yellen's headache. highers a much unemployment rate of 12.7%. cap here versus the gap year. "why" of fed policy right now. they are moving in the same direction and that is the pushback. we looked at the front pages. we did not know where to begin this morning. scarlet fu will help us out. >

pmis in europe were weaker, but china was great. u.s. numbers this week, which is causing the tension, and i don't think there's enough here to get so blown out of the water, but i get what's going on. on a relative value basis, people have been looking at the entire landscape saying with need to take something off the table. i'm surprised markets traded down as much as they did yesterday and surprised they didn't come up off the payroll today, but china was very resilient. emerging markets remain resilient. two days in a row they have out-performed developed markets when most people would think if the fed's raising rates, these carry traitst trades will be most at risk. i don't think they are. >> i think that's exactly what's going on in the market is people are readjusting their expectation of what's happening with the fed. i think the most accurate thing you can say about today's jobs number is the fed is in no rush for the exit at all. so, people, even just a week ago were saying, listen, we're going to get an interest rate increase

we had positive pmi data but today's numbers are on doing a lot of optimism.w broad-based deceleration, slowdown in industrial output, slowdown in retail sales, fixed-asset investment. loan growthis with collapsing, that the recovery in the economy risks being over almost as soon as it began. this, you have a government that has a growth target. it is over 7%. still they have that target. they want to create growth and it does not matter what growth looks like. what will we see is a policy response? >> the message from china's government, especially from china's central bank up to now has been that growth is on track and they are content with targeted micro-measures to support areas of the economy which need it. we have a note from the central economist that argued that if unemployment is low, we do not need to do much to stimulate the economy. i think the data will change that dynamic. i think it will bring more extreme moves, potentially cuts to interest rates on the agenda. >> we will keep an eye on that. thank you for joining us this morning. israel's iron

all volume until we get some clairety tomorrow from china with the flash hsbc pmi numbers and jackson hole. steve, back to you now, sir. >> thank you very much, indeed, for that. how many of commerce bank group do you think the german government has got? it has over 17%. you think commerzbank and you think all of those problems that we've seen throughout the eurozone and concerns about capital, concerns about zombie loans and all that. did you know this stock is up 38% over the last 12 months? yes, it's coming off a bit. not bad considering all the problems that this company has got. there you go. my screen says 38, but it's 33. the german government says it's sees no reason to sell commerzbank stake now. according to an official, german government has received the -- regarding the bank state says the finance minister. maybe i need to read that one and get geoff cutmore to interpret it for me. let us move on. >>> islamic state militants have released a video reportedly showing the beheading of a u.s. journalist. the white house says it's urgently working to verify its authenticity. th

personal income july, chicago pmi, and the university of michigan sentiment index.as you heard in the headlines, a five-year low. the ftse 100 is off by 0.9%. tesco is weighing on the index today. that is why it is underperforming. the cac 40 up by 0.1% off the session highs. apple and allergan were the most popular stocks bought by hedge funds in the second quarter. this according to the latest analysis from s&p capital iq. we're now joined by paba savich. walk us through some of the findings of the report. >> absolutely. so what we found was we -- the report is called hedge fund tracker. and it looks at the top ten huj fund index. what this does is allows us to look at the stock picking hedge funds, so we're not looking at, let's say, the super market hedge funds which name that indices, other mutual funds, pension funds, but the ones that are going for the stock picks. what we saw was that allergan, with 1.4 billion in buying, there's a lot to do with ackman's kind of activist investor that was going on. the other one was apple. there was ambivalence because ther

the close that is always positive for me, overnight, a lot of people are talkin talkin, china service pmiame in lowest since 2005, we always look at china. but this market, i don't know if it will put back tomorrow, it is difficult, but trend is higher, i look at charts of day. we're sitting on major support in dow and s&p, if we hold here for a couple days that is a trigger to get back in. >> for most of our lives, august has been a dud, but 3 years ago when we were downgradeed it was one of the most volatile trading months of the year. year. charles: i like the fact that more than once, went today's session buyers stepped up, they didn't have to. >> i know there was more fear with ukraine and russia. some analysts saying it was just another reason to sell-off. >> if you are nervous, and looking for reason, you have a lot of profits, but russia amassing troops on the border of ukraine is a big tkaoeul. doedeal, deal, does it change fundamentals of disney, no, to what degree remains to be seen. >> a lot of weak investors right now, looking for reason to sell, looking for that next crash,

china's growth stalls while data suggests germany can stand economic risks unless eurozone pmi data isdown. inutch retailer loses ground the u.s. and feels the pain of a weaker dollar. financial heavyweights have bwest. central bankers and financial chiefs gather in jackson hall as the fed symposium takes off. a warm welcome to "the pulse."

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the pmis that have come through haven't been what you have been expecting. nothing goes down in a straight line. it's a 23 rsi, relative strength indicator, which to me that's at the bottom, that's an oversold condition and it won't go on forever. >> right. >> but the point is it's not time to back up the trucking and cover that short. >> we're looking at stock specific stories. it's interesting to hear during earnings seasons some of these companies citing russia and the possible impact on consumer confidence it can have. hotel stocks mentioned it in their earnings. >> why wouldn't you throw it out? >> the kitchen sink hand? >> if have you an excuse to use, you might as well use it. >> that itself environment we're in. i don't think it's that surprising in my opinion. the rsx, though, it's interesting. we are getting back down to the levels the press secretary said i only mentioned that, it's setting up to me again for a shot on the long side. we had a big move. >> quickly, i've spent so much time around here, i hate to oversimplify the complex yilt t. comp

i think we'll see more of that next week when we get pmi. it is counterintuitive but that is what people are watching and people are very sensitive to right now. david: dan, i look what is happening in europe and japan and i get a little concerned. i see japan going into recession. we already have italy into recession. germany may be slipping into recession. doesn't that mean we'll have fewer people to sell our goods to? >> two points to make on that. in the first quarter of our year we did awful. why did we do awful? people attributed to weather. it was a one-off. here is the other point. is europe a one-off? we are trying to make a lot out of it. we don't know what caused it. maybe it will, maybe it won't. one thing to remember even with the poor economic numbers out of europe u.s. did well in the first quarter. liz: i'm so sorry i have to interrupt you. hold on we got jcpenney results. jo ling kent has them. >> liz we have loss of 57 cents a share which is improvement on estimated 93 cents loss the street was expecting. we're looking for

the pmi number came out to europe, if you equate that to gdp, talking 1 1/2% gdp, with errors maybe one 1/4%. they are growing. bad numbers have come out of europe, no doubt about it. however there are good bright spots people are not talking about. auto sales are up. loan growth is starting to moderate a little bit and the jobs forecast is little bit better around the eurozone. yes, the numbers have been bad as of late but still growing. david: hold on, joseph stiglitz just didn't say that coming out of nowhere. he knows what he is talking about. >> so do i. david: germany is in recession. -- italy is in recession. looks like they may go through some qe themselves. that is killing euro. there are strong headwinds, right. >>> exactly, there are strong headwinds. he knows what he is talking about. i have money on the line. i have money where my mouth is. i am short the euro, i think 1.30 might be a good target but i think there might be a bright horizon for the euro zone. germany has been shrinking, you're correct, there are recessionings going on but there are bright spots that will car

the pmi underperforming in south africa.s terming -- turning on emerging market currencies. also the ruble and the peso. this is a mini wobble potentially. the only thing that changes the difference between a decline to an exit this in currencies is volatility in that is rising. >> here are today's top headlines. russian fans billions of dollars of food from the u.s. and the eu. resident vladimir putin has ordered restrictions on food and agricultural imports for one year from countries that have imposed or supported sanctions against them. we have policy decisions from the european central bank and the bank of england. the ecb is expected to keep rates on hold near zero. mario draghi is weighing sanctions against russia -- if it will undermine a recovery. policy could be split over the timing of any rate hike. that will stay at a record low at .5%. the 78 our interest is nearing its final day. president obama calling on both sides to extend the cease-fire agreement. the u.s. is involved in talks with cairo to broker a lasti

closing up the books here we're looking at the numbers later on in the week particularly around the pmind the ism, nonmanufacturing tomorrow morning give us a sense of where the bulk of the u.s. economy actually is, and it should reflect that higher gdp number that we saw on friday giving us a sense of perhaps we should see some more wage gains going on. but the market behind me today, totally bulletproof. really shrugged off the european news, really shrugged off any idea that geopolitical conflict was going to be a problem and settling very squarely in the black both today and for the year. ashley: yeah. it's been impressive. lincoln ellis, thank you so much. >> you bet, take care. liz: small cap stocks have been on quite the wild ride. last month the russell 2000, i mean, this picture really shows how tough it's been the last couple of weeks. russell 2000 fell more than 6%, that's it's largest monthly decline since may of 2012. investors moving from small to large cap stock due to worries about valuations. ashley: need one of those go pro cameras to jump off that chart. does that mea

. >> we will get the service sector pmi before that. >> the dallas fed is going to look at manufacturing. the london markets are closed today. it is a bank holiday. we don't know when that is going to happen in london, but they happen from time to time. >> we will get the new home sales at 10:00. i thought this was in august yarder. forget about it. futures are up five. the 10 year yield is up 2.3. the euro dollar has plunged. there is no other way to put it. that is a while number four mario draghi. there is a nice spread between the crude. we're on to the next screen. we're looking at the equity nirvana. this is a low number. the dow is over 17,000. the german 10 year, that is not a misprint, .93. that is stunning given where we were last week. let's go to the monitor to show what is keeping esther draghi up at night. this is the german two-year. this is all you need to know amid a new low in the italian 10 year. the ramifications are back on the united states. belowa jump condition zero. by any definition, this is germany flat on its back. >> i feel it we just keep saying the same thi

one of the warning shots they say wake-up calls is the pmi data, which came out last week. something to watch. it is a fairly uneventful trading day. >> talk to me about malaysian airlines. gete is a speculation they job cuts, review their fleet size, and possibly look at their ceo and who is in charge. where are we on this story? >> it just about what we know so far. dramatic changes could be coming. let me go through this so you can get the details. the airline is said to be it is asng job cuts. much as 20% of the current workforce. they will be looking at reviewing their orders for new aircraft. change ationed, that the top. they are looking at replacing the ceo. at as many looking as three people up for the job. malaysian week airlines is set to report their .ast set of earnings a lot of moving parts. all know the disasters malaysian airlines has had to an alreadyn top of very competitive airline market in southeast asia. >> thanks for that roundup. let's have a look at european equity markets. london is closed for a bank holiday. paris and frankfurt up nearly 9/10 of o

we have seen improving pmi. we have seen a lot of targeted measures this time around.e see a fine-tuning of monetary policy. october, the hong kong-shanghai mutual market access. that will be supporting chinese equities. we see a 20% upside from here. let's just kick it out to one equity market, which is also an under performer, and we are talking about tokyo. gdp data is expected to be a pretty horrible number given the sales tax hike, but there is an anomaly and these -- and the first and second quarters. if we get weak data, which we are expecting, is it already priced in in your view? >> to some extent, it is already priced in. looking at 1.4% gdp growth this year. japanese equities, we have been positive. we see quite a bit of value way. -- a bit of value. on relative terms, trading at a discount to the rest of your developed markets. we do see a resumption in yen weakness coming forward. we see the dollar-yen at about 105. that is going to help the nikkei 225. it is going to create quite a bit of demand for japanese local equities to a tune of about ¥11 trillion,

pmi comes ining 1058.7, the best since 2005. this is a broad measure and includes most of the service industry. it tells us that the service industry is doing well in this country. take a look at the new orders index, 64.9 from 61.2. business at 70, 60 2.4. we have not seen numbers like this in about eight years. 62 -- activity, 62.4. capital goods, nondefense x 3.8% after falling 1.4% in the prior month. we are making some real progress here, looks like some good economic news to trade him today. thank you. now it is time for the top is the stories from around the world. get that is publishing in two. ae company will become separate entity and will have a publishing unit including 81 newspapers that will be shut -- spun up to shareholders. they had been losing ad revenue and reader since 2005. there is a new leader in the world's largest smartphone market. the company is based in beijing and was founded four years ago. the company has won market share by selling cheaper devices directly to consumers. a 72 hour truce is underway

a lot of stuff coming out of the u.s., some stuff coming out of asia as well, including flash pmi.re important -- u.s. or asia? >> both are important to depending on where you are invested, obviously. from a u.s. perspective, there was enough evidence that second-quarter growth picked up order on quarter. uppedn economists have their forecast for 2014 based on the revision, the positive revision to the first quarter and the second-quarter numbers. we think the u.s. is on track to deliver about 2% for -- 2% growth for 2014. china has been the biggest surprise in the last two or three months. >> even with the aggregate financing figure, that really surprised to the downside. >> if the flash numbers indicate a lot of momentum, i think markets might be a little concerned about china. they might find [indiscernible] readings, themi markets would indicate that -- [indiscernible] the rally you are seeing in china could continue. >> there is a forecast that we could see rate cuts coming out of the pboc. --you think that chinese that the chinese government is trying to do all it can to shor

important, timeline and for our markets, we've got data out later on this week on thursday, the flash pmi numbers from china. that's where we stand. back to you now. >> sri, lovelily. thanks very much indeed for that. >>> as we leave the asian markets, there are those who think that europe is going to become increasingly like japan was several years ago. stewart richardson, nice to see you this morning. stewart is with us for an rng. stay with us. you might want to get involved in this next conversation. there are those who are a littlup set about bhp billton's announcement this morning. they told us assets will be poured into a new company listed in australia. andrew mackenzy said options for its earning capital to investors are opening up. >> as a competition, we will be intense and get more intense than i believe as a consequence of that. capital bhp and bhp billiton will rise and we will have more options with regard to distribution to shareholders. >> all well and good, but why has the share price been falling? john joins us on the line from brisba brisbane. john, what are the shareh

services pmi, and then at 10:00 we get the isam factory data. but it isrky data, important.d for that. earnings before the ball, coach, liberty media, time inc. and cvs caremark. disney andell, groupon and potbelly. bloomberg will have covered all day today of the u.s. as the summit heads down and washington, d.c. and coming up right here on "bloomberg surveillance," there will be a conversation with bloomberg lp founder mike bloomberg and u.s. secretary of commerce penny pritzker. areant to make sure you up-to-date on everything happening in washington. >> in terms of company news, we have got to start with federal investigators. they want to know more about general motors' subprime auto loan. gm's financial unit says it is cooperating. they settled and $98 million to help boost financial claims. american international group giving a profit to his retiring ceo bond in motion -- bob benmosche. benmosche paid the record government bailout, cut jobs, and narrowed. agrees to settle claims it did not pay employees for all hours worked. $6 million inhi overtime and labor pay. off

yesterday, we have a services sector pmi. that was very strong and that accounts for roughly three quarters of the economy. so what kind of data do you want to be looking at? do you want to disregard the data that we got out this morning? >> well, it has been quite choppy. earlier in the year, we had five consecutive monthly gains in the ip data. this is a very strong trend. so what we've been seeing from data in may and june is likely to reflect in pullbacks off of these strong data points. we are seeing that the cmi manufacturing remains quite strong and it growth outlook remains strong for the second half of the year. >> what does this mean for the boe, though? we're not expecting a change, but what we're really looking at is the inflation report and we're looking at the minutes for any clues as to when we'll see that first rate hike. with all this patchy data coming through. do you think that the boe will actually be pleased because it can hold off on that rate hike for now? >> it's likely to implicate that it's continue

>> it is certainly seeing as strengthening pmi and industrial production. we are also seeing an easing of product. we're seeing some stimulus package and we're seeing the slowdown in housing stabilize. can the government achieve 7.5% growth in the second quarter? so the growth target of 7.5 for the year is. that's good news for us. it's actually good news for the world. >> it is good news for the world, isn't it? let's talk about what shareholders can expect from you. you've reached the debt target earlier than expected, yet you were pretty vague today about what kind of returns shareholders could be looking at, whether we could be looking at a share buyback program, a ec dividend. can you enlighten us here? >> well, that's a decision for the board in terms of the mechanism that returns will make. but they have made the comment that the material increase as shareholder returns will reveal that. this is good news for our shareholders. and it turns a commitment that i made this time last year that i was committed to shareholder returns. >> so we'll have to wa

wednesday we get the hsbc flash pmi, so that should give us a sense of whether we are seeing stabilizatione chinese economy. remember, property, that sector still remains the weak link, still remains in clear and present danger broadly for china. back to you now. >> good to see you today, sri. thanks indeed for that. >>> robert shiller thinks the u.s. stock market looks very expensive right now. the noted yale professor and economist writing in saturday's "the new york times" says the cape ratio, which is a seasonally adjusted measure of stock prices which he helped develop, is at worrisome levels. shiller says cable's seeking to keep adjusted price-to-earnings ratio is above 25, a mark that's only been surpassed three times since 1881. this was in 1929, in 1999 and 2007, which were followed by major drops in the market. let's get a view from carter worth, chief market technician at stern aegean, joining us now. thank you for joining us. is shiller right? are we at worrisome levels on the s&p? >> well, i think it actually was a very interesting article that many of us read, and what's impo

again, going back to this kind of question of where are we globally, in fact, market has a nice global pmisn't get a lot of press but interesting nonetheless, finance arias seeing robust growth, service sectors driving global growth. interesting nuggets here, but the point is we're still in a finance-driven kind of expansion. that can be good or bad. you kind of hope it's priming the pump guy for broader strength. the more we see that's happening the better i would think. but talk us through where you're putting money to work now if you still think the ten jere going to 2%. >> yeah, i do. today obviously a little bit of a hiccup on that. but we've seen days like this before in the tlts so i'm not that concerned yet. sara just mentioned, german yield are 1%. in my opinion for a number of different reasons, u.s. yields have a lot more to go on the downside. ask me about a trade, though. look at mcdonald's. that's about as bad comp numbers as we've seen out them for quite some time. at a certain point you have to believe it has to be priced in. i think it has to be priced in. levels we've tra

and it's expecting what we've seen on the sort of loosening of credit standards and on sort of the pmi it's expecting that to move into higher earnings, and therefore, at some stage, the equity markets stage a recovery that we're waiting for. >>> now, in big deal news, u.s. oil pipeline giant kinder morgan is consolidating its vast empire in the largest deal in the energy sector since exxon bought mobil for $74 billion back in 1999. seema mody's at the headquarters of cnbc with the details on this. we forget how big a deal it really is, seema. >> louisa, it is definitely a mega deal. kinder morgan, which operates 80,000 miles of oil and gas pipelines and 180 storage terminals in north america through three separately traded units, now the company will spend $44 billion to buy out the outside investors in both units. kinder morgan energy partners, kindor morgan management and el paso pipeline. the founder says they will expand the reach of the projects they can do. the shareholders of the three units will get a premium of between 12% and 16% of friday's closing price. kinder says the ne

i think the economic data i am looking at tomorrow is the pmi numbers, were also the initial claims,, then you get a whole slew of retailers, again, gap and roth stores and children's place and sear's. so we will get a lot more of an indication in terms of the consumer end and how that's fareing. >> and going back to sentiment levels about this market. it's not just stocks overbought. it's bond, too, incredibly overbought. so it will make friday's look, if we bought to that extent on stocks and bonds the rumor? what does it take? >> interest rates will flow up, all of a sudden, we don't have all the uneasiness around the world. i think it will be interesting to see how yellin talks markets and rates back down now that we've run away, if you will, from all the geopolitical events. >> what happens if we get food and comment at the same time yellin comes out? >> then you wish you were bonds. >> i think we go back to the economic data, i think that's the most important, if we are seeing a recovery, it's actually a good thing. you got to get the market to do whatever it does, make a shopp