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tv   The Pulse  Bloomberg  August 21, 2015 4:00am-6:01am EDT

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manus: worldwide selloff. global stocks had for their worst week of the year, accelerated by the poorest chinese manufacturing data since the global financial crisis. siegrist quits. the greek prime minister says he is stepping down and calls for snap elections. can he ditched the dissenters? and, ready for war. kim jong-un orders his troops to be fully armed and prepared for combat after exchange of fire with south korea.
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welcome to "the pulse" live from bloomberg's european headquarters in london. i'm manus cranny. let's bring you the eurozone manufacturing data. the comp is it for manufacturing comes in at 52.4. are also as numbers beat, 54.3, giving us a composite number ahead of estimates at 54.1. we are amid easing cycle in europe, so that is important to note. the euro has been trading that little bit higher. 1.1249 is where we are. that is better than the market had estimated. the composite number 54.1 beat estimates. it is a big week for markets. we've had the weakest chinese manufacturing data since the global financial crisis. emerging-market stocks fell
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towards the worst week in two years. the latest from beijing in just a moment. let's get all the market moves wrapped up with caroline hyde. caroline: a torrid week on the markets. $2 trillion worth has been erased in terms of market valuation across global equities. we are having the worst week in nine months. this is where one of the clouds that is building this perfect storm is brewing. you are seeing not one, not two, but three entering bear market territory. we are expecting the hang seng, chinese stocks, to close more than 20% lower than their previous peak. it is not just hang seng we are looking at. you are expecting the likes of indonesia to end in a bear market. you are expecting taiwan as well. this is across the board in terms of a flight out of these assets.
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what kicked it off? china's devaluation, the drive to devalue has been caught and the contagion is spreading. we are entering a bear market in hang seng. this feeding into equities. i'm going to show you how this is feeding into europe. we have risk aversion here as well. money coming out of the dax, the cac. we are now seeing the opening of the greek markets still down 1.5%. we've got our own cloud brewing in europe. that being political risk in greece. called snapas elections and on the back of that, we are put back in the fray. they paid off 3.2 billion to the ecb and the deal, 86 billion euros, was signed off. we are down across the board in terms of equities.
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look what happened when we got that manufacturing data out of asia. the aussie dollar selling off. chinese manufacturing, 47.1. that is well in contraction territory. the concern about global growth, about chinese growth, is being amplified. aussie dollar trades lower. as i mentioned, you are seeing gold having its best week so far this year, since january basically. gold trading about flat, but in terms of a weekly move, we are seeing gold continue to push higher. the dollar lost its value. people grapple to find safety. the oil story keeps on falling down. below $41 aly, barrel. this is the eighth straight week of declines in oil. this is the longest losing streak since 1986.
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that is how we are faring across the asset classes. i'm going to show you the flight to safety in terms of bond markets. money going into germany, into u.k., out of greece. yields coming up on the two-year. looking at the 10-year, some other story. a little contagion. spanish and italian borrowing costs push higher. this is a story we need to keep watching in terms of the effect across the eurozone, across the equity markets. as i say, the worst week for equities we've seen in nine months. msci world index off by 3%. manus: great roundup. hong kong ending the session in a bear market as caroline was saying. that brings us to our twitter question of the day. where do you think volatility is going to show the most?
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is it the equity markets, the bond markets, or affects? -- or fx? where did you suppose the most amount of volatility to come through? francine is out for today. , all abouttwitter volatility. i love the line on one of our stories today, bad day for the fab five in the u.s. some tech stocks lost $45 billion yesterday. let's talk about the causes. china manufacturing data. let's go to our bureau chief in beijing, nick wadhams. why the drop in china's numbers? we've had a lot of efforts, even in the run-up to this, to reinvigorate the slowing growth. nick: there are competing theories about what is happening in the chinese data. one of them is that all the stimulus measures the government
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has put in effect haven't had time to kick in. this data is from the week of august 12. this may be too soon to tell. the other theory is that all those stimulus efforts aren't working. we need more time to see what happens. certainly, this is just more depressing news as sort of a slew of bad data coming out of china in recent months. manus: taking what you just said, we've had interest rate cuts, and they were some months before hand. we've had a variety of reliefs in terms of lending practices to the housing market. a little easing. there were a certain amount of stimulus. depreciation, or the beginnings of a movement in terms of the currency. from your perspective, from what you are hearing, are people
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theng more on concern that stimulus is just not working? nick: i think what we are seeing is a real concern about the fundamentals in this economy. for so many years, growth has been propelled by infrastructure investment, state investment in industrial goods. it has been off the back of the steel sector, cement, things like that. also on external demand. as the external demand has weakened, exports to europe were down in recent months, you really start to focus on the fundamentals. bloomberg has an internal gdp tracker that sows gdp with 4.6% in july. that is well below the government's target. increasing concern about the fundamentals of the economy and how the government is going to manage this transition to having the market play a greater role rather than leading investment
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on its own. manus: thank you very much, nick wadhams. our beijing bureau chief rounding up all the data. let's switch our attention now to the periphery of europe. alexis tsipras is stepping down as prime minister of greece. he's called for snap elections. tsipras said he felt a moral obligation to give the people of greece a chance to judge his recent actions. gentlemen,ladies and now that this difficult cycle unlikelyto an end, an usual attitude of those who want to keep their seats, their office regardless of the conditions and circumstances, i feel the deep moral and political obligation to put in your judgment everything i did. the rights and the mistakes, the success and failures. this is why i decided to submit my resignation, and the
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resignation of the government. manus: bloomberg's tom mackenzie is live in athens today. good day to you. more drama from tsipras. we thought that he would go down this road. tom: absolutely. another role of the dice for mr. tsipras. it wasn't entirely unexpected. his hand has been twisted by the members of his party who refused to back this bailout, effectively ending his mandate to govern. it lends the question as to the stability of the bailout program. alexis tsipras will be hoping that new democracy, the largest opposition party, will fail to form a government, thereby ushering in elections in september. that, he hopes, will give him a mandate. he's hoping that his popularity will continue to us translate into strong votes.
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new democracy are currently trying to form that government. pleased to say that i'm fromd now by chris o dimas new democracy. in amove puts your party difficult spot, doesn't it? >> it is not in a difficult spot. the country is in a difficult spot. we didn't need an early election as we didn't need a referendum. we didn't need an election back in january. what the country needs is a stable government that will act decisively to face the problems we are dealing with at the moment, a government that will be able to rebuild the credibility the country needs, and a government that will act decisively regarding the issue of illegal migration. the country is in a difficult position, not the party.
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the prime minister seems to be wanting to escape from responsibility. that is something the country will have to deal with. tom: your leader is looking to form a government. it is looking unlikely, isn't it? >> it is rather unlikely. the leader of the opposition is doing exactly what the constitution describes in its procedure. it does take three days. let's see what happens in those three days to have a clearer picture. tom: timing is crucial. we were speaking to the labor minister. he told me that september 13 is possible. you agree with that. that gives you very little time to organize. >> but as you said in the beginning, it was not unpredictable. electionpect an early ever since syriza party lost majority in the parliament.
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we had a hung parliament. we had a minority government. however, i do want to underline that there were other solutions apart from an early election. we could have had a national coalition government or even a further extension of the current coalition government with other parties inside the coalition. tom: given your relatively new leader at the helm of new democracy and the changes in your own party, how confident are you of winning back the votes syriza won off you in january? >> we are very optimistic. take into account the seven months that syriza and the independent greeks were in power , seven very valuable months that we lost from negotiations. that impact to the society was huge. we had the capital controls. we had problems with illegal migration.
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they didn't actually show any thetive progress within country. we do believe the electorate will understand that stability is the most important issue at the current time. tom: how likely is it there could be a deal between syriza and new democracy given that you and your party have moved to the center and it appears mr. tsipras has also moved to the center? >> i would argue that mr. tsipras, after seven months in that theknowledges other political parties that were in government were actually justified with what they were doing, trying to progress with the bailout, trying to stabilize the economy.
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i would say that mr. tsipras is the one that shifted. tom: so a coalition is not off the cards? >> it would not be the first priority. tom: christos dimas from new democracy joining us, giving us an outlook of what to expect, possible coalition partners. back to you, manus. manus: thank you very much, tom mackenzie in athens with christos dimas. here's a look at what else is on our radar. north korean leader kim jong-il and has ordered the army onto a war footing following an exchange of fire across the demilitarized zone. the shelling was the worst since 2010. each side accuses the other of provocation. southr this month, two korean soldiers were badly injured by landmines that seoul says were planted recently by the north.
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twitter shares dipped below their $26 ipo price. that is down almost two thirds. the selloff was triggered three weeks ago when jack dorsey, the cofounder and interim chief executive, warned it would take a while before twitter is able to reverse the slowdown in user growth. hewlett-packard earnings missed estimates after sales declined across the board. 9%shipments fell more than as customers, their spending. -- hp planso spit to split in two. shares have fallen nearly 32% this year. says he will apologize for the iraq war on behalf of the u.k. labour party if he is elected as the new leader next month. he told "the guardian" that he would say sorry to the british
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people for what he called deception in the run-up to the 2003 invasion and the iraqi people for the suffering. next, tsipras calls for snap elections. can he ditch the dissenters? we are going to discuss the issues. that is coming up next right here on "the pulse." ♪
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manus: welcome back to "the pulse."
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we are live on bloomberg tv and radio, also streaming on greek prime minister alexis tsipras has announced he is stepping down, clearing the way for snap elections. it is a move citrus will likely use to bolster his power. but is it the right move? let's bring in our next guest, wolfgango piccoli. great to have you with me this morning. this was your best case scenario. -- how much of a gamble is this? or is this just a very smart move? wolfgango: it is a gamble. there was no other option on the table. the party was split. the leftist platform was becoming more and more vocal as a different kind of party and the agenda they had in terms of the conditionality of the bailout. pushing ahead with existing
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arrangement was not possible. tsipras now decided to move earlier than expected. leftistby surprise the platform, not give them much time, and also try to minimize the sort of wear and tear that can damage his popularity if he were to wait for october, november as some people were expecting. manus: it is interesting about holding onto momentum. he is popular. he is riding high. i love what angela merkel said the dilma rousseff yesterday evening. tsipras stepping down as part of the solution, not part of the crisis. wolfgango: there is nothing else they can say. you cannot interfere with the democratic process in a country. even if they don't like what happened, they were pushing athens to postpone the election
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to try to get the first review done -- euros he got 25 billion yesterday and he pulled the gun. wolfgango: he got 13. the other 10 is in escrow. banks,10 billion for his 13 billion, and then he pulled the gun out of his pocket. how itgo: now, let's see is going to be to get to an election date. questionstill a huge mark about that. the leader of the new democracy this morning got a mandate to try to formulate a new government. new democracy now saying, i'm going to use my three days to try to do this. same, thedo the elections are not going to be on the 20th of september. we might have elections in october. let's see whether the plan is going to happen. then there is the huge question
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mark on which coalition arrangement will basically be materializing after elections. manus: that is a very interesting scenario. three days, his popularity wanes, and it gets pushed to a later date in october. my question is, could the risk of implementing the program, could it potentially disrupt disbursements of any kind? you are not able to do the first assessment as scheduled for october. this entire calendar is blown up. once we get to the first review, that will be delayed. own partners might ask for more fiscal measures if the situation has worsened between now and the first review time. manus: great to have you with us
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this morning. putting some context around the greek story, wolfgango piccoli, managing director. the north korean leader, kim jong-un, has ordered his army onto a war footing after an exchange of fire across the demilitarized zone. let's bring in our bloomberg reporter on the ground in seoul. what is the latest there? know, thealready north korean leader has ordered his troops to be fully armed and ready for combat in the frontline while he has declared what he calls a semi-state of war along the border area. just now, south korean president park visited a frontline unit and said she would not accept any type of provocation from north korea, which means south korea will continue to deal
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sternly with a north korean attack. we have a growing chance of a military clash along the border, which is already one of the most heavily guarded borders in the world. we are now monitoring where things go from here. of hisin terms posturing, this is perhaps the most significant posturing that he's undertaken. he has been in power 3.5 years now. most is one of the significant things he has done since taking power 3.5 years ago, but three years ago, he did the clare a state of war against south korea when tensions were high and u.s. and south korean defense forces were conducting military drills and north korea was very angry about it. that was after north korea conducted their first nuclear
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test. this is not the first time he's declared what he calls a state of war. if there really is war, there is so much he will lose from it. he is only three years into power and he has now consolidated his power as much as he wants to. manus: ok, let's see what the next move is and who blinks first. thank you very much. let's quickly check in on some of these equity markets. , the 2015y futures gains have been wiped out. volatility in the u.s. equity markets this morning. i love my line, the fab five wiping out $49 billion in the tech sector. look at the european equity markets. london in correction, european equity markets also sliding.
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this is on the back of chinese data slowing down. london in correction. gold, go on, gold. that is rallying. up next, we talk about the asia and africa impact. ♪
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manus: welcome back to "the live from bloomberg's european headquarters in london. the greek prime minister has quit his post and called for a snap election. he's likely to use the move to shut out dissenters and return to power with a more manageable coalition. a greek government officials is a vote could be held by september 20. twitter shares dipped below their $26 initial public offering price, down almost two thirds from the peak achieved
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soon after the stock began trading. the selloff was triggered when jack dorsey warned it would take time to reverse a slowdown in user growth. hong kong stocks have entered a bear market. taking their decline from an april peak to 21%, and global stocks are headed for their worst week of 2015. the slide has been accelerated by the weakest manufacturing china data since the global crisis. that came as the s&p 500 suffered its heaviest selloff in 18 months. africa is battling the global currency markets with one hand tied behind its back. the foreign-exchange reserves equal to less than 1/10 of the emerging market average, nations from ghana to zambia are finding they are powerless to stop their currencies from tumbling.
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china's devaluation and the prospect of higher interest rates in the u.s. we are joined by the ceo of pan african bank ecobank, albert essien. welcome to "the pulse." it is always great to get the that does somebody run a pan african bank. these are tough times. china is throwing down, the fed is hiking, and currencies are under pressure. what does that mean for you? albert: these are challenging times. you know that china was actually the catalyst for growth in africa. buying most of the commodities from africa. with china devaluing, it has some implications for africa. muchse goods will be cheaper. african exports will be quite
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expensive. as theld see that chinese manufacturing sector will look inwards, the chinese consumer will look inwards. they will not want to import a lot from africa. manus: draw the circle for me. you lend to pan africa. you have exposure and risk to this slowdown. my automatic question would be, are you assuming you are going to have bigger nonperforming loans, more defaults or risk? albert: not necessarily. is some risk with regards to consumer goods in africa. that withews is credit, you always have the chance to restructure. real challenge will come
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with cross currency exposure. that is lending in dollars for companies that actually generate local currency. why do i say so? thes say 30 naira to dollar. without any increase in productivity, if the naira moves to 100 to a dollar, your portfolio moves to 100, which means you need to generate that much to cover a dollar. that is the challenge. what did the banks do? the banks have started combating those loans at a higher interest rate. african central banks want to stem the slide in their currencies by pulling out liquidity. manus: is there anything that can stop the slide in the currencies? we saw kazakhstan have to give up their peg.
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will the nyro go next? manus: -- albert: i cannot hazard a guess. hims: if you had lunch with -- albert: if i had lunch with him, i would ask how the intent to continue the hold the naira where it is. i guess the best thing would be to manage flows. manus: we were just chatting in the break and i said, is there anything that can stop the slamming of pan african currencies? we've got just a few of them to show our viewers. they have taken some of the biggest beatings in ghana, less so in the naira. we've got ghana as you see moving. you, these to
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currencies, they are under pressure. there's a lack of foreign-exchange reserves. what needs to happen next? africa orst past for do you see a more material move? albert: i think african governments should take a middle to long-term action plan on the currencies. it is not a short-term play. i don't think most of them can hold the currencies by just intervening in the market race. that is what the ghana central-bank started doing, but don'talize that since we meet u.s. dollars, the pound, or the euro, you need to increase productivity. you also need to be disciplined in terms of reducing differences and make sure you spend what you earn, or go out and earn a lot. manus: you also said that flow is important. and if there is an upside -- i
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smiled because you will tell me the upside. albert: the upside is, if you are a pan african institution, you tend to attract flows from the u.n. and other multinational agencies. flows, now ifose you sit on foreign currency, you can play the market very well. but you also need deposits. you need liquidity to buy the foreign currency. that is where the tightening is. once you are able to get the liquidity, then you can play the foreign-exchange market. manus: to get more liquidity and get more deposits, are you going to do more deals in terms of acquisitions? albert: no. manus: i've never had a ceo directly answer. albert: i don't think the market is in the mood for acquisitions.
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cobank would want to build on our efficiencies and not go after more acquisitions. manus: where is going to be the biggest market buildout? albert: nigeria. when you manage the downside risk properly, nigeria still offers opportunity. that properly as a bank, then you should be able to hold on to your line of growth. manus: i have a feeling you will be getting a lunch invitation to the central bank governors house. great to have you with me in the studio. albert essien, ceo of ecobank. next, it has been a rocky year for commodity billionaires. almosthest 65 losing $100 billion between them. there is one surprise winner. you want to hang out with me to find out who. ♪
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manus: welcome back to "the pulse" live from bloomberg's european headquarters in london. the stresses in global markets rolled ashore in america as the s&p 500 tumbled the most in 18 months. hong kong stocks just entered a bear market. how do you navigate this market?
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let's bring in our next guest. thank you very much for coming in. trying to make some sense of these markets, what i would say is this. we know china is slowing down. they've gone through a small devaluation. is this a reality check for the next leg lower in equity markets? >> i think you have already seen a pretty big correction. we don't really expect more bad news. it appears the chinese economy is weaker than we thought. that is why i think the investors are becoming more cautious. manus: when you see the policy responses from the chinese, and we spoke to our bureau chief in beijing this morning, he said the market is very split. they are not sure whether this is stimulus policy that aren't working or just haven't worked yet. what is your take? >> the chinese economy needs more stimulus.
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the question is how you can deliver that. try -- they talk of the markets, but obviously it didn't work. now they will try also with the currency depreciation. the thing is, it is not big enough. they cannot do much more, otherwise you will get some problems exposed. it is not easy for the chinese government to provide stimulus. manus: so you think they will go again for the currency. how much more of a devaluation? >> i think they will allow the renminbi to depreciate a little more. you are already seeing a pickup, so conditions are improving or the underlying growth is very weak. about europe and germany. we've had this.
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london is in a correction again. the china story is really driving those core european equity markets down. how do you perceive europe? you still have quantitative easing. we are nowhere near finished there. maybe we are at the end of this initial move lower. how do you position yourself? >> we still believe that european equities offer potential. first, you have monetary stimulus. you have a weak currency, you have earnings growth, which is not the case in most other countries, and that is very important. it is very important for european earnings to rise, and the valuation is ok. on a global basis, europe still feels to the upside. manus: you have penned in nearly 18% growth in earnings. -- from anther thing
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industry perspective, looking at the autos this morning, the biggest monthly drop in three years. 40% below the stoxx 600. where is the value in europe? that is just one that caught my eye. from your perspective, where is the value? >> in europe, we prefer the domestic rental sector. we believe the domestic cover he is in play. from a global point of view, we still like tech. we still believe this sector is cheap. you have very limited exposure. we expect the fed to rise rates. we still believe that tech globally is a good sector. the weakness may challenge this issue, but we believe there is upside. manus: $50 billion wiped off the fab five, you see that
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potentially as an industry that has opportunity. treasuries have been a cracking run. the line here is, treasuries roar. the global equity market rout is transferring money into treasuries. i think the expectation was for the fed to raise rates. having said that, we see weakness in global growth. investors tend to react in the way you expect them to do. we believe that we are not going to see major decline from current levels. manus: before i let you go, do you think there is a potential the world reenters recession? >> i think there is a risk if you see china falling in terms of growth to 3% or 4%. i don't think the situation is as bad as it was in 2007 because of the monetary support. we think the probability of a
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global recession is low, but rising. manus: great to get a little bit of optimism. luca paolini. that brings us naturally to our twitter question of the day. should have added oil into this, but i like the power of three. where will volatility show the most, equities, bonds, or fx? join me on that conversation. if you want to put oil in there, feel free. time for our top headlines. hewlett-packard earnings forecasts missed estimates as sales declined across the board. pc shipments fell more than 9% as customers cut spending on software and services. hp plans to split in two later this year. shares have fallen by nearly 32% this year. china has released the first
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pictures of a military drone taking part in live firing exercises. the tests were carried out in mongolia last month. officials say it was intended to widen the aircraft's capabilities. a new study says july was the warmest month on record. combined land and sea % degreesres were 0.8 celsius above the 20th century average, breaking the mark set back in 1998. this year is on course to break that record again. the commodities rout has slashed the ranks of the world's super rich, with the wealthiest 65 losing almost $100 billion. if are the biggest winners, there are any, and losers? who better to tell us, our bloomberg billionaires editor, robert franco.
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outodities themselves wiped $2 trillion in equity value. 65 billionaires? there are really not any winners in this scenario. $100 billion is a lot to lose even for these guys. you have bonnie who had a fortune of about $23 billion. he's lost about $3 billion. that is the largest oil refinery. in the u.s., harold hamm. he's the largest u.s. fracking billionaire. saw it coming many years ago. he is down about $11 billion. giving back the billion he paid to his wife. very high profile divorce. not a lot of love happening. manus: when we were chatting this morning, you popped over to the desk. are there any winners? , if we talktually
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about alternative energy, those are the opportunities. robert: there's a couple of winning scenarios here. one is that. the commodities billionaires in places like russia and china, some of them are seeing marginal increases because they sell their products in dollars and pay their expenses in local currencies. some of those guys are seeing increases. the one we were talking about, he owns the largest producer of wind farm equipment. he is seeing a couple hundred million dollars rise this year. suppose there's a little bit of interest in alternative energy as oil falls. the love around oil seems to be dissipating. suppose there is energy going towards the alternative energy market. manus: it really has been a tumble to was week for the
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chinese and the commodity billionaires. i love the story on ivan as well. rob: glencore, they are the largest commodities trading enterprise on the planet. really big merger a couple years ago. $9had a fortune of about billion. he reinvests all his dividends into glencore. manus: [indiscernible] rob: one has sold out, but he's lost about one third of his fortune. manus: painful. rob, thank you very much. rob lafranco. coming up on "the pulse," we find out how drones are keeping inspectors safe in the oil and gas industry. ♪
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manus: welcome back. routine inspections on structures such as oil rigs can be dangerous for all personnel involved. a u.k. start up wants to change all that. bloomberg's innovations editor joins us now. she's going to tell me how. this really caught my attention this morning. drones. i thought amazon had this market wrapped up. tell me about it. drones. olivia: amazon still has yet to
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deliver a single parcel by drone. manus: don't burst my bubble. olivia: but there are companies commercializing the drone space. one major area is oil rig inspection. traditionally, you have to inspect them by sending men up on ropes. it is very dangerous. it takes a very long time and is very expensive. drones can be sent up, fly around the structure, and use thermal cameras to detect wear and tear and prioritize which parts need to be fixed first. manus: this is significant investments in human error -- advancements in human error, image gathering, and 3-d modeling. olivia: humans would have used these cameras, but drones can move in a very methodical way around the structure and repeat that same pattern every time they do the test. they can build 3-d models so you
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can plot the cracks, the wear and tear, and monitor that overtime to reach a point where you can predict which parts need fixing before they break. disrupting,rms of is there a complementary process where drone technology and human will interact or is it going to take away most of the human? olivia: the companies i've reached out to, they still rely on having human drone pilots and human inspection engineers. but just on the ground, not dangling from the ropes. however, they are trying to move toward complete automation. in which case the inevitable robot uprising may be upon us. manus: thank you for coming down. we are going to get a lot more with you, olivia. for those listening on bloomberg radio, "the first word" is next for you. for our view works -- our
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viewers, there's a second hour of "the pulse." we are going to be talking to the bank of america merrill lynch chief european economist, gilles moec. we are also joined by david rawlinson. ♪
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manus: worldwide sent off. global stocks go further worst week of 2015. accelerated by the poorest chinese manufacturing data since the financial crisis, hung -- hong kong stocks enter a bear market. the british prime ministers stepping down and calls for elections. against the dissenters, and ready for war, kim jong on orders his troops to be fully armed and prepared for combat. that is after an exchange of fire with south korea. ♪
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manus: good morning to our viewers i know europe, good evening to those in asia, and a warm welcome if you're waking up in the united states. i manus cranny, this is "the pulse." live from the headquarters in london. the riskier assets are sending the stock to their lowest level in two years. into a bearares go market. we'll have the latest from beijing. first, let's go to caroline hyde to wrap up all of this news. caroline: the worst week for global stocks in nine months. of $2 trillion wiped out of market valuation. that isect storm currently brewing in europe has to a large extent in asia. was seeingluation
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other countries seeing the evaluation contagion. thenam are seeing that value. many people are feeling the emerging market in asia, in particular, did see emerging market currencies continuing to fall. we are seeing continuing falling in the equity market. 3 are currently in bear market. i want to show you the taiwan money, that is in a their market. 20% lower than the highs previously in the year. you have similar things in the han sing. indonesia, this is where you are seeing the pain. people are getting out of the equity market, particularly when you see china's data. it is intensifying that concern that global growth is slowing. china's growth is concerning in july with retail growth underwhelming. today, we have the first manufacturing figure since 2009. a contraction worse than
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expected. no wonder the shanghai is off by 4% at the end of trade on a friday. keep it here. i want to show you what happened to the eu and how this is filtering into europe. it is blowing dark clouds this way, it is a storm in our own making in athens. .5 percentage points. everyone is focusing on political instability. snap elections by alexis tsipras are called. what is that mean for the stability of the government and getting through the reform process that has been so hard? we are in contraction territory. off from 10% from the previous highs. the stoxx 600 is feeling this. if you dig down to who is sending off the most, the companies exposed to china and asia. technology, our holdings, often by 2%. the biggest chip designer in the world, the designs go in most of our mobile phones, there is a key concern about china growth
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dragging that lower. let's look at the stoxx 600. it is currently off by 6/10 of a percent. we are seeing the stoxx 600 also enter correction territory. that means that it is 10% off of its previous ties. this is up 8% from its previous high, but we are lower than 10%, that means contraction territory. we want to see what happened to certain assets on the back of the manufacturing data. big move in the aussie dollar. we saw that despite lower. australia, a big resource of player. it feeds into china, one of its biggest trading partners. the aussie dollar will be affected by that. the continuing effect in the emerging market route is affecting currencies. we have been looking at the malaysian ringgit all week. it is losing value versus the dollar. lastly, we are seeing gold coming off of its high. it has been one of the out performers. that is a safety. gold is on its best week
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this year. manus: can that last question mark we have a lot of corrections. well done. that brings us to our twitter question of the day. where do you think that volatility will show the most question mark equities, bonds, ?r sx join me on twitter. we are #thepulse. i am @mannuscranny. let's get to our beijing bureau chief. the data has dropped. we have had a number of efforts to reinvigorate growth. what is the debate? is stimulus not working? i think it is a little too early to tell of it is not working. one is that stimulus is not working, that is one theory, the others that it'll take a wild to kick in. the interesting thing is that
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this data was below estimates. this is the latest in a slew of chinese data that has not only been bad, but has been below estimates. that suggests economists, analysts, everyone is underestimating the depth of the malays in china. compared to other countries, you are talking about growth in the range of 6% to 7%. it is slowly, and there is a concern after this latest that of data that the situation in china is really quite a bit worse than people were estimating. manus: again, i suppose the question is about reliability, in terms of the data, and the true state of the economy. a variety of people have been here talking about the real rate of growth in a china is somewhere in the bust phase of 3% or 4%. what is the issue about reliability? nick: trusting the economic indicators in china is a very
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risky game. this is a government that sets a growth target each year. this year's is 7%. it is generally hitting that target. is pmi indicator is one that -- it gives a small window into manufacturing and whether it is contracting or expanding. bigger indicators also show problems. exports, down. industrial production, down. inflation, very, very low. supply, liquidity in the market, is shrinking as the government looks to prop up the yuan. connecting the dots, it is the broader issue that the economic downturn looks to be more serious than people thought earlier this year. manus: thank you. our beijing bureau chief. have a good weekend. bringsee what next week from china. could it be more currency
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volatility? -- alexis tsipras has called for snap elections. he says that he felt a moral obligation to the people of greece to give them a chance to judge his recent actions. greeks, ladies and gentlemen, now that this difficult cycle has come to an end, and unlike the usual attitude of many who unfortunately consider themselves entitled to keep their position, their seat, their office, regardless of the conditions and circumstances, i feel the deep moral and political obligation to put into your own judgment everything that i did. mistakes,, and successes, and failures. i will go to the president of the republic to submit my resignation and the resignation of the government. manus: tom mackenzie is in athens. what is the immediate impact of his announcement and the political landscape?
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i just had wolfgang in and he said that it might go until september 20 as mostly as everyone thinks. the other protagonist may take their time in terms of saying, we would like a chance to form a government. tom: that is a good point. timing is crucial. the new democracy, the main opposition party, he is now trying to form a government to ward off those elections. his met with the greek president that she has met with the greek president to give him that authority. he has three days to do that. even speaking with his own mps, the sense is very much that he is just taking the box is constitutionally, and it is unlikely that he will be able to needed inugh votes greece to form a government. it seems very much that the elections are on course. the date we are unsure about. there are shifting political
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sands. we heard the left platform formally known as the rebels who voted against, or refuse to back, the bailout of alexis tsipras have come out with a new party. popular unity led by the former energy minister. they have 25 numbers. that makes them the third largest political party in greece. that means that they are also allowed to try to form a government after new democracy. it is unlikely they will be of to do that, but it is an interesting development, and will they take votes away if it comes to an election from alexis tsipras? thee's also a concern that far right party will pick up votes as well. immigration is a big issue. the communist party, they and party, anddawn popular unity -- three parties that are against the bailout and want to return to the drachma. manus: earlier this week, they
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received the first of this bailout.6 billion euro will any of that impact alexis tsipras' positioning in the polls. has the reality kicked in about what he has really signed them up to? this is why the timing is crucial. we have not had a strictly up-to-date poll, but the latest shows that alexis tsipras remains the most popular leader. kickoughest reforms will in innovative september of art -- in late september or october. property tax was part of the reason for new democracy's failure in the loss of a large number of boats in january. we have income tax, tension reform, labor reform -- it is all mounting up and will put a lot of pressure on regular greeks who are already under a
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lot of pressure. alexis tsipras wants an early election so that he can have a strong mandate to go ahead and tackle that. manus: tom mckenzie in offense for us. let's look at what else is making our radar this friday. n has ordered his army onto war footing ordering and a change of fire over the village rise to zone. the shelling was the worst since 2010. each side accuses the other of provocation. tensions were already running high. wereth korean soldiers badly injured by landmines that seoul said was recently planted by the north. have dipped below the original $26 public offering. that is down two thirds. that is soon after the stock began trading. selloff was triggered three weeks ago. jack dorsey, the cofounder and chief interim officer, warned
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that it would take a while before twitter would be able to reverse the slowdown in user growth. -- if you selected as soon a next month. the frontrunning candidate told the audience newspaper that he was sorry to the british people for what he called deception. invasionnoffs of 2003 and the iraqi people for their subsequent suffering. tsipras callss elections, we know that, but can he really rich the dissenters? how will the market reacted to the news? that is up for discussion after the break. ♪
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manus: welcome. live from bloomberg's european headquarters and a london. just when you thought it was over, there is a little more greek, left. alexis tsipras announced he is stepping down as prime minister in a televised speech last night. he called for snap elections. what will the financial impact to be and the impact for europe? ,ank of america merrill lynch the chief economic editor, welcome to the pulse. is this that much of a risk question mark should we care? >> if you think of what is done to secure the deal, it is
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basically that we need everything. his also gone against the referendum that he himself organized. to refresh thed democracy. in the end, i think it is positive and something we need to see before we can see any kind of implementation of the deal. i do not think that it is necessarily a negative. it obviously creates a noise, but we need to be sure that there is some sort of political -- the rest of europe? a four year high. germany is giving us a little bit of a bump. a worried about contagion from china, or am i frontrunning my doomsday scenario? that for looking at us. what is interesting is that we have the continuation of nice german manufacturing in spite of china already having reduced
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imports. if you look at the figures for the second quarter in july, chinese imports were falling by 8%. in spite of that, you still see in thebly high sentiment german sector. that means two things, either they are still doing ok, actually, in china, we do not know about that and do not have aredetails, or b that they doing well elsewhere. they said to be doing well in the u.s. and eastern europe. including russia. they do very well in the rest of europe. the rest of europe is in a recovery. spain is doing well. italy is doing less horribly than they were a few months ago. france is doing ok. this is still supporting the german economy, even if it is quite clear as we get into the second half that if we continue to see a slide in chinese demand, yes, it will at some point materialize in the data, but not for now. there are lots of other positive
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things supporting germany and the rest of europe. manus: yet run numbers in terms of even if chinese growth traps. three point 5%, you have run a model, and come up with icons. >> if you get the halting of gdp that isf 3.5% in china, not the base scenario, but even if you get there, that would give you a drop in chinese imports by 17%. if you work at this through metrics, it would give you an impact on gdp, both in the eurozone and the u.s. what is interesting is that normally this kind of thing should be a drop in coveted prices, and boost consumer spending. there is big difference between area.s. and the eu in the u.s., and the last year and a half or so, the drop in commodity prices has not been spent by consumers, they saved
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it. in europe, they have spent it. income is not doing as well in europe as it does in the u.s. any kind of windfall is immediately spent. at this stage, we have to take perspective. it is obviously bad news. it is not hugely bad news. manus: that takes me to the ecb. everything that has been written this week is that china, exporting deflation, going for depreciation relation, does this mean that the ecb may need to do more -- may possibly need to up its game in the qe arena. which sounds like something they would choke on. >> they have been saying that they would have to continue qe after september 16. the problem for me is when do they say that -- i think that one of their issues is that if you look at the inflation
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forecasts, they have been telling a similar story for some time, which is, this year or next will not be great, but do not worry. by 2017 inflation will be back on target. with the new the gears for oil goces, they will have to again for 2015 or 2016. they were probably be able to dodge the bullet and say that 2017 is not going to be far from 17%. for september, it is probably ok for the ecb to say, the market has quite an to -- has gotten quieter, we're still ok. do anything.eed to especially in a situation where they have to wait for the feds to know what it will look like. by the end of the year, if we have a continuation of the drop on prices, plus the fact that it is hard for us to generate domestic inflation, i think that they will have at one point have to say look, we are in the long game and will have to continue
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at 16%. i guess they would have to have this concession by next spring. they will be under pressure to do that this winter. manus: thank you for running everything up for us this morning. from the bank of america merrill lynch. kim jong-un orders the north korean army to be ready for war after a change of fire from the south. the latest from seoul after the break. ♪
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manus: the north korean leader kim jong-un has ordered his army to war after an exchange of fire over the demilitarized zone. let's get to davis was on the ground in soul. what is the latest in terms of the exchange of fire? tensions are mounting. the north has given the south this deadline to stop the propaganda broadcasts across the demilitarized zone. a deadline of tomorrow evening's old -- of tomorrow evening soul time. used to these threats. you're not seeing signs of anyone worrying on the streets of seoul. the military is on high alert. an unpredictable regime. people are waiting to see if they can find a way to ratchet down the tensions.
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this is probably his most serious strike in 3.5 years. that is what our copy is saying. andrew: in terms of an exchange of fire, they did conduct the third nuclear test and has launched long and medium range missiles in violation of u.n. sanctions. it is all in terms of how you gauge seriousness. in terms of firing on the south, this is serious. there were casualties in 2010, but these exchanges in fire in terms of shelling is rare, even though tensions between the two sides are always high. opening fire is something that does not happen very often. manus: andrew, thank you. andrew davis on the latest infraction between north and south korea. next, it has been a rocky year for commodity billionaires. they have lost a dollar or two. we tracked the richest right here at bloomberg.
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almost between them, they have lost $100 billion. there is a surprise winner. join me on twitter. i'm there. through the day. @mannuscranny. the only way to get better is to challenge yourself,
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manus: welcome back to "the pulse." we are live from bloomberg's european headquarters and a london. i am manus cranny. alexis tsipras has quit his post and called for snap elections. he is likely using the move to shut out dissenters and return to power with a more manageable coalition. greek government officials say a vote could be held by september 20. twitter shares dip below the $26 initial public offering. that is down almost two thirds from the peak after stocks began
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trading. the selloff was triggered three weeks ago when the interim chief executive officer jack dorsey wind that it would take time to reverse the slowdown in user growth. hong kong stocks have entered the bear market, taking the decline to 21% from the april peak. global stocks are going for the worst week this year. this light has been accelerated by the weakest chinese manufacturing data sent the global financial crisis. texas intermediate had its biggest streak of weekly losses since 1986. mark barton, in 1986, was he working at the bloomberg? i was not at bloomberg in 1986. we are in correction territory. that is the big story.
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stocks are on track for the biggest weekly decline of 2015. similar to the world country index which is on track for its biggest weekly decline of the 2.2 trillion, that has been the value of stocks, that was monday through thursday. three weeks of decline for global stock markets and managing markets had their worst week for a couple of years, down to 2009 lows. a emerging-market currencies, particularly asian currencies, sinking to their lows since 2000. it is all about china. the manufacturing index sinking to its lowest level since 2009. the shanghai composite is wiping out all of its gains by just one point from july 8. there is the chart. you know what, manus, it is not only about the decline. look at oil. it is down the cusp of $40 per barrel. eight straight weeks of decline.
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that has not happened since 1986, the lowest level since march 2009. crude is 40% below june's high for the year. gold is the haven of choice. it is lower today, but over the week, the best week since mid-january. will the fed delay its rate increase? that is what is boosting gold. it has rebounded 7%. still, it is on the worst track since 2000. focusing on asian emerging market currencies, the euro is up and up to the second consecutive week. the longest winning streak for the euro in two months. week at a france, strong out of germany, strong at of the euro zone. the euro zone economy is picking up momentum with the pmi composite, the measure of manufacturing and services is close to a four-year high. ineresting yields rising
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france and italy. germany is on track for a second week of declines. just some amazing stats. $2 trillion wiped in the first two weeks, that is what i would focus on. manus: that is a big number for all of us. let's get to tom keene. he joins us from new york. the market just wrapped up some of the size and scope. global equities wiped. emerging markets are under pressure. oil is at levels that we have not seen a round of losses like this since 1986. this is beginning to get legs? tom: yesterday afternoon is when we got the legs moving. the german 10 year yield is coming in. the quiet story is a lower safe haven move, price up yield down
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in the 10-year german yield. it is one of the leaves linking in the golden route into different pieces. we will have 2 wonderful guests on "surveillance" to drive this cross asset and economic conversation. .effrey currie of goldman sachs he has not only been dead on on oil at 39, but he has been quite good about lower longer. we will talk to jeffrey currie about commodities and how they link into everything else going on. we will have a special guest joining us with his first interview with baron von bank. ofwill speak to dr. leavy his harsh criticism of what mark carney is doing. and for that matter, janet yellen. the doves into september-december debate either washington, and how that reacts to what we saw yesterday in the markets. manus: we look forward to that. i wonder, will goldman --
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it could be $10, tom. we look forward to that show. "surveillance" coming up at the top of the hour. let's go deeper into the emerging market currency story. it is were the worst years since 1997. the selloff is spreading from asia to chile. how long will the slide last? where will it go next? a little bit with more. welcome to the pulse. this roller coaster of selloff is gathering pace. is it nearly done, or what is your view? >> i believe that we will have much more to see in the selloff or the global selloff of emerging-market currencies. this is a key scene for us for the emerging market are since may of 2015. since the summer, anticipating
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the selloff. driven by china and said years. i believe that we have another 5% or 10% to fall in the emerging market currencies. manus: another 5% or 10% lower. i am looking at the spectator sport at the moment. brazil is down. turkey is down. differentiate the fees for me. some of this is politics, and some of them are lacking fx reserves to defend themselves. bernd: it is the bad, nation at the moment that some countries are facing a lyrical pressure and political problems like , as well as the domestic news is not good at the moment. that is pressuring currencies down. at the same time, they face the worst external pressure since the financial crisis of 2008 and 2009 for emerging
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markets. there's an exodus out of emerging markets and the external backdrop, especially with china, has significantly deteriorated over the last couple of weeks. manus: that backdrop of china, i'm fascinated to get your take. the are calling what chinese are doing a dirty float. that is what it is. it will depreciate, but on our terms. bernd: that is right. it is a dirty float. they are setting the rate to the level of the last trading base. he can fluctuate plus or -2%. china has an incentive for a week or currency -- way weaker currency. the week chinese data that we have seen for the last couple of weeks. i think that we are in a competitive devaluation of currencies, globally and in emerging markets. china has made the first move. we have seen kazakhstan dropping 25%.
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we are seeing potentially other countries in africa, like nigeria, following this move. globally, it is not just focusing on regional countries. manus: in the very near term, which you see the yuan getting to? weakeningsee the yuan further of the next two or three months. we think that we will see weakening pressure on the chinese currency. manus: we have written an article. 10 currencies that may follow the currencies down. big thinking bubble, the glass bubble, could societies move? could the attention currency come under pressure question mark will the next pressure come from? like the former soviet union. also in africa. like i mentioned before, nigeria.
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i also think that it is inevitable that nigeria will devalue the currency. it has been around 200 for the last six months. forward price is indicating a 3% drop over the next four weeks. i think another 15% evaluation is in the cards or the nigerian currency over the next four to eight weeks. , that isure from oil definitely reason to believe that nigeria will devalue its currency. giving levels, that gets you an invitation back. the commodities have slashed the ranks of the world's super rich. losing almost $100 billion between them. the question is, is the slide set to continue question mark what would that have on the billionaire
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leaderboard? here is our bloomberg billionaire editor. we are joined now with the latest. commodity tycoons? market fortough these guys. we're talking about the big numbers. the bears are growling. these guys have a fairly large fortune that they require three comments to delineate their fortunes. -- million.n about $10 actually 11 billion dollars. that is factoring in the billionth that he has had to pay to his ex-wife for the to force year. it is pretty bad. manus: if the commodities don't get to your ex-wife -- rob: he he he married to more times and still get the divorce. the biggest oil refiner is in indian billionaire. he has lost over $3 billion. it has gone down from $23 billion to just below $20 billion.
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manus: talk to me about the energy people that might benefit. rob: we have a guy in germany that is not a household name. he has a company called intercom, which is also not a household name. it is the largest producer of wind farm equipment on the planet. he is not comparable to public we traded companies, but it is comparable based on the market companies.f related he is up a couple hundred million dollars. he has a $7 million fortune. glencore billionaire? that yesterday he was quoted as saying that please find me the man that can display what is happening in china. they do not know what is going on. glencore has been hit hard. the world's largest commodity trader. he is down from $9 billion to $3
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billion. one third of his fortune. other billionaires created after that merger, there were six of them, 4 have fallen off of the billionaire status. wealtha dissipation of for the commodity billionaires. thank you very much for joining us. a little bit more to come over the next couple of weeks from the billionaire team. coming up next, some of london's biggest names in the restaurant industry. they are about -- do they really value their mission and stars? find out after the break.
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manus: welcome back to "the pulse." live on bloomberg tv from london. our michelin stars a blessing or a curse? veterans of the restaurant business know that receiving the coveted star can have a major impact on business, but is it always positive question mark is it really worth it? with us to discuss is ollie sabbous, founder of dabbou restaurant. thank you for coming in. let's kick it off with you. you have a coveted star. does the business materially change when that moniker is awarded to you? ollie: for us, we were already busy. we had a following and great reviews already.
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it did not hurt in any way. it was the cherry on top as such. it did not change our business, but with the star, the michelin star, all of a sudden, you get a walkingaliber of people through door looking for job. that was the biggest change. we'll already busy. for us, that was the difference. manus: a bit of a war for talent in that zone? ollie: it is. cooking is a hard way to make a living. certain numbera of people prepared to dedicate themselves to it. yeah, there is, edition for staff. well, when you have them you have to keep them. manus: when you pay these kind of prices, you expect a certain level of staff. david, you advice some of the major household names that we know along with ollie.
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when ramsey set out to open a new business, is that the prize for them? is that the objective? is this when you say, this is how you get there? david: the example is set on getting a michelin star. i think it is fair to say that not only gordon, but other chefs have gone on to do other concepts with a michelin star -- not necessarily the olden the golden. they say that having a michelin stars expensive to maintain. and to the bottom line could sometimes steer you away from michelin stars. manus: you said you had your following, ollie, and that is great. but, do you think that you would chef andkled as a businessman if you did not have -- you have the fame and the name, do you need a michelin star? we did not actually pursue one.
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for me it was about having a great restaurant. said, for us, it was a blessing. it should not define the restaurant. to make the chef veered out a different path than they were going to do anyway. manus: like any accolade in life, when you get one, well has 10 has three -- well heston has three. does it instill a sense of ambition and creativity? what does it do? or are youor 3, happy at 1? ollie: we never expected to get one in the first place. we have a bare-bones set up. it is a concrete floor. that said, i forget that we have
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one most of the time. beo, your standards should your own. it should not be, i'm worried about losing a star. issued be, that is going to be good enough for my reputation and customers. the customer having a great meal. that said, i would love to get a second. i never thought i would say that. i've never been explicitly driven by michelin stars. for me it is being able to cook my own food. for me, every year, we are better than the previous year. 2 would be lovely, but i'm not complaining. manus: there are a lot of genres that we go through in london. one of them is chef table, private dining, we see that in all of the major hotels. what excites you about london. there a lot of new concepts around this part of town.
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from your perspective, as a chef, where does london ranked in terms of inspiring you? ollie: i love it. theuys anything goes, on field now, there are lots of restaurants, where before, they might have been more formulaic and tested. now people are looking to do new things. some of them might be rubbish, but there will be a few jim ideas in that. ideas in that. the trend has been the formalizing -- de-formulae zing eating out. the people who have new ambitions in the food industry in london, they have powerful purses. formula are they interested in? the michelin star or deconstructed? david: i think it is very
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deconstructed. rocca, they are very happy not having michelin stars and their the most successful. don't get me wrong, michelin stars have their place, and ollie is a great example about how michelin is moving with the times. only michelinthe star operator to have a dj. some operators are very happy without the ashland stars. manus: very quickly. we want more. what do i get when i walk into yours? i would say we undersell and over deliver. a shorter and more concise form. the producers are quite happy. ollie dabbous and david rawlinson.
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next, we will look at the roadmap to the next elections for greek minister alexis tsipras. stay with "the pulse." ♪
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what: it is now time for to watch. tom mackenzie is standing by 4s in athens. we have had the breaking news overnight.
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the television announcement. it is now theater this weekend of the others trying to form a new government. the shifting political sands in greece. new democracy and its leader, they have gone to the president, and they have three days to try to form a government. evidently, we hear that you will meet with a parliamentary speaker at 1:00 p.m. athens time. people within his own party think it is unlikely that he will be able to do that. then you have the new party, the latest anti-austerity party i know europe. popular unity. they have 25 members. their lead by the former energy minister. they will have a chance to form a government. it is very unlikely, most people think. if itte for the election, happens, looks like september 20. we have heard from new democracy and syriza that it could be
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september 13. manus: they get very much. hunkering down for the long haul. tom mackenzie. that is it for "the pulse." francine will be back here on monday morning. bloomberg tv finishes in europe it is picked up by "surveillance" ♪ tom: globalstar markets joined
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the global calamity.
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wiki leavy and jeffrey curry, emerging markets are causing janet yellen from september to december. good morning, everyone. interestingmost writing. i am tom keene. we will get to this. is anybody in the office of prime minister in greece? brendan: he has to and resigned his government in order to call a new election in --. he is going to result government and he is confident he can win the next election. it very hard to understand if you're not in a elementary democracy. this is a move of strength. tom: i will go with that. we wi


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