my view is if i look at the underlying economic data, the underlying strength of the us. economy and the upgrade of the first quarter where many thought it was a bad negative quarter it has been upgraded in the positive territory. the underlying economic data in the u.s. warrant a rate hike. the u.s. economy can stand it. the u.s. economy in my view needs it medium to long-term and i'm convinced that the u.s. will see a rate hike in september but i'm not focused on the next policy decision. if they move in november they'll move in the medium to short-term. rates will start going up and they need a longer term anchored communication process to make clear that the current turn around in policy will be followed by a moderate and more adequate raising of rates. getting the medium term communication right for the fed is much more a challenge than getting the first move right. >> interesting bis paper saying that the fed will lead the charge in terms of the tightening cycle. do you think that so many other central banks will follow suit? many of them are still firmly in easing m

. >> the underlying economic data in the u.s. warrant a rate hike. the u.s. economy can stand it. >> a late stage rally sending chinese shares sharply higher posting their best single day gain this month and fuelling speculation that the government has once again intervened in the market. >> a shining performance. all three stocks jump on better than expected earnings despite weakness in china. >> up to 30,000 jobs are set to go at hewitt palett-packard. cnbc speaks to meg whitman later today. >> let's get straight to markets as susan said in the headlines there. a late rally in asian trade. really only in the final hour seeing the shanghai composite close up by 4.9%. also hong kong as well as you can see up about 2.4%. it had been so far pretty weak in asia. especially in china the last couple of days but a strong finish today fuelling speculation that the government may have intervened. also possibly playing catch up with europe and the u. s. the volumes have been subdued. the 10-day average volume in shanghai has been steadily falling all through september

when in reality the underlying economic data, whether it's auto sales today or consumer sentiment, spending, housing, all the rest of it, you go down the line it's very strong in the u.s. economy. it's more technical in nature than the fundamental economics of what's going on in the united states. >> if i look down at what sectors are shaping today, a lot have obvious explanation. one that stands out today are financials. citi down almost 5%. bank of america. a lot of the regional banks have taken a big hit today. what is that about? is that a tell potentially the fed cannot raise interest rates as it thought it would do in this environment? and today was the first day after jackson hole that that might have become evident? >> if interest rates go up it bodes well for the regional banks. a lot of this is broad-based sell-off and more fear than anything else. >> those regional banks have nothing to do with china. it's partly the fed that they aren't going to raise interest rates. and raise profits for regionals and banking, and also general fear in the market. >> joe, just to go back to the

look at what has happened in the markets the past couple weeks and take it with the underlying fundamentals and economic dataere is clearly a dislocation. i do not think we can focus on what is happening in the markets and say, as a result of this, clearly the underlying economy must be weaker. certainly to the extent by volatility lingers and we see the sloppiness of the markets even longer, back could have an impact on sentiment, which could lead to having an impact on the economy. as of right now, there is clearly a dislocation. alix: thank you so much, joseph tanious. up, the cost of your morning cup of joe could be going up and you will have the weather to thank for that. alix steel with the details coming up next. ♪ olivia: el niÑo is forecasting an especially powerful punch. scientists say it could be one of the strongest on record. to the 1950's and that is making starbucks nervous. alix: what is el niÑo at the end of the day? incomes and messes up all the weather. you get a lot of rain and flooding and you get temperature shifts. it is good for some commodities and bad for others. this could be the

underlying economic growth is still reasonably robust. we had flash pmi dataost countries. again, pmi is holding. the benefits come through, lower oil prices, and that would benefit european economies and even china. we has taken the pain that we see -- anna: earnings downgrades in some cases. nick: absolutely. cannot see through to capital goods companies, but we haven't see the benefit of the lower oil. i think that takes time to come through. consumers need to be confident that it is a permanent phenomenon before they start spending the money. anna: it could be quite significant in europe as well? in the u.s. it seems to drop down to the bottom line, easier than a dozen europe. nick: it is a mixed picture in the u.s., partly because of the capacity. in some areas it hasn't dropped. in europe, it could add .1% to gdp. anna: whether people are too gloomy depends a lot on how big a challenge they think the chinese economy faces, and how material that will be for the rest of the world. the u.s. has a strong-ish growth story, so it can withstand those headwinds.

economic data regarding industrial output. the continues to impact the markets. investors see this underlyinggrowth the story in china is not a month-to-month story but a structural issue that will take a lot of work to fix in one that the stimulus by has not yet fully addressed. that is reflected in this decline today. 3.5% on the shanghai composite. having an impact on in -- in hong kong. those are the a shares trading lower. the chinese companies listing here. tech stocks, in hong kong, they are advancing nearly 2%. of 1.7%. -- property shares have been quite active today. japan, the nikkei 225 advancing in this session. it has been an interesting move today for the yen. we have been watching that closely at the bank of japan kept its policy-setting on hold telling shinzo abe's government that it is his turn to come up with a new policy. we will check in on the japanese yen because this is where we stand. 119.87. there has been quite a move there in the wake of that boj decision. it looks like the governor and colleagues are waiting to see what happens with the federal reserve this week an