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tv   On the Move  Bloomberg  August 25, 2015 3:00am-4:01am EDT

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maybe we will get that little bit of a rebound at the open. let's get straight to it with caroline. caroline: half a trillion euros wiped out the stocks. auld we see a little bit of bounce back. jp morgan coming out and saying it is time to buy. they welcomed buying the stocks after the fall. look at the manufacturing data. are set for growth. 6%. does it really back of the significant moves. clearly, a little bit more optimism. tentatively to buy into the riskier assets. we saw a slight reprieve in asia. not much though if you look at chinese back. the storm seems to be contained in china today and in europe where looking more optimistic.
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the euro coming low once again. phenomenal. we see the euro being seen as a haven. we are currently up almost 5% in the euro. were choosingthey the euro instead of the pound, the frank, the dollar. now, we are seeing it take lowered. lower.o is going meanwhile, commodities recovering ever so slightly. what a selloff we saw. crude was at 38.72. still below the $40 a barrel mark. nevertheless, a little bit more optimism coming in. copper is basically flat this morning. it had been taking that little bit higher after the dramatic selloff we saw.
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that has been playing into the equities that i want to show you this morning because we have had some phenomenal earnings coming out. the big minor, bhp billiton among them. we will see it move higher. because it keeps its dividend promise. to theemaining committed dividends. they are reducing production in the oil and gas area. production cuts and our other three pillars. iron ore, coal, and copper. 52% slump in profit. sales down in excess of 20%. they are committed to the dividend which is blowing -- which is supporting the market. syngenta up 7%. a 15% premium being offered by monsanto. there are still a lot of regulatory issues because monsanto would become the number one player in agriculture. that are offering 5% more than previously for syngenta.
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will they snap but that's with company? that too could be snapped up insurance --your zurich insurance. they are offering 5.6 billion .ounds a nice uptick. 11% higher. minutes into the session of the ftse 100 snapping a ten-day losing streak. we are higher by what we 5%. a rebound -- 1.5%. let's go over to david in hong kong for an asian market wrap. you are seen three different stories across the asia-pacific. markets ended
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higher. compared to yesterday overall, we are doing a little bit better. -- theseou are seeing are the china's markets, india to a lesser extent, japan and then the rest of asia. it does seem to be limited to these two big markets. what happened in japan -- the it moved depending on what happened in the japanese yen. an inverse relationship between the tw will. you go along on the stocks in short on the year. when we woke up, the yen was much stronger compared to when we went to bed. $1.18, it went back up to $1.20. we are back to $1.19 which is why the story for the japanese -- it opened 4% lower end of the yen started to we can come flowed back into risk assets in japan and then they yen started to strengthen again. japan ending the day 4% down. that is the story for the nikkei
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225. the other big story is the shanghai composite. another big plunge today. a .5% yesterday. we are closing up shop right now at 7.5%. everything goal sector is down big. 7%-10%. the shenzhen, if you put those teed of ibo together -- two together. let me put this local media report which came out this morning. in china. -- it mayties regular be a sign of maturity. one sign of that is that following the plunge on monday, the regulator did order regular markets to work overtime.
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that is a story we are looking at here as regulators. jonathan: another bad day for chinese equities and the shanghai composite falling once again for the fourth consecutive session. the question for many investors is when will the government come to the rescue if ever? nick.bring in expectations are high for policymakers to step in, will they? as david mention what you are seeing is people trying to read the tea bags -- tea leaves. you're trying to prove the negative so the market keeps falling so that is an assumption that the government hadn't intervened. what you are seeing more broadly a lack of clarity about what the government's intentions are. how crucial is the market to the broader economic performance? we know this was a market in bubble territory. trades were trading at 61 times
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their earnings. that compares to 20 for the s&p 500. there was a feeling that this market was a bit inflated. certainly, there is a lot of concern that the market has blown through these past levels. 3500, now 3000. the question is what will the broader impact be? savers have about 7% other savings tied up with the stock market. there may be a feeling that a market plunge will not have a broader impact on the economy. jonathan: i hear that again and again that it will not have an impact on the broader economy. strategists will say the same. donehat the government has is set the narrative that they are panicking. we have done through that 3500 level. we have dropped through 3000 points. it is a reputational issue becoming bigger in china. certainly there are a great
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many questions about the .overnment's credibility whether it has the tools or the wherewithal to manage a crisis. if you put the stock market acai, you do have some broader indicators, some really bad data in recent days that suggest the economy is worse off than people thought. at the same tent, the government does have a great many tools at its disposal. -- it has trillions in forex reserves. banks are required to keep a great deal of their money in reserve in case of crisis. the government could roll back that. there is a lot they could do to ease liquidity and pump cash into the system that they are holding off from doing. maybe they are sticking to that dictum of giving the market a greater hand. we will just have to wait and see. jonathan: for more, we are joint by one of the sharpest minds in london.
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i don't really know where to begin. i will go back to one of the most interesting points of yesterday for me. i huge cap lower in u.s. equities at the open. if we sell something in the bond market, we could -- we would be talking about liquidity for days. when you reflect on what happened yesterday, what should we be talking about right now? it is what we would describe as a brittle market. it applies to equities and bonds of alike. reflected iness is the fact that you could have episodes like this. add to this the seasonals from august, a lot of fundamental value managers on holiday and you have futures led markets that can do the type of news that you mentioned now. jonathan: they are looking at -- their exit strategy. do you step back long-term?
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>> the u.s. market is proving to be the safe haven because people have greater confidence, domestic demand, and feel that the fed has room to postpone hikes. and therefore the market is seen as a more resilient one. we think that the value is opening up elsewhere. periphery of the europe and asia. it is too early. we are still in this reversal of expectations. many houses change assumptions. we will have to go through that meaning affect -- weaning affect. have you had your convictions challenged as far as your concern on when the fed will hike interest rates? alle have had december
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along. we have not changed our view. people talk about the fed being central here. we do not think that is the case. the macro drivers of these moves lie in an oversupply of bubbleties, possibly a in the equity market in china which was alluded to before which is now deflating. of confidence in the ability of chinese policymakers to sustain demand. jonathan: we will talk about fixed income and commodities. the remarkable thing about yesterday -- if you told me european stocks are down 5%. same moves in treasuries. yours moved higher. what is the story in bonds? they have not been at the epicenter of this move. we have seen tremendous decline
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-- the starting point for bonds was already very low. thate are not focused on class right now. in europe it is being managed by the ecb, the bond complex. treasuries, i find it remarkable that with the declines you're seeing in stocks, we have managed to break below 2%. jonathan: the reason for that going forward. a much flatter yield curve. lower inflation expectations. despite all of the noise around china, they turn the page on fx policy. at goldman sachs, you do not even change your gdp forecast. why not? >> it was artie low to begin with. the official numbers were called at 7%.
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production has a 1% handle and the heavy industry is probably already in recession right now. that in a way is already being felt in people's accounts. jonathan: the fears around china? are they excessive? >> i think they will be manage the situation. one of the problems we have had this year, which was a big challenge to our commodity call was that in april-may, the chinese started stimulating and the equity market when up. the price action in commodities so we had a big bounce in commodity prices which in our view was unjustified. and now we are converting to fundamentals which are largely supply-side led. jonathan: stay with us. talk about commodities
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being pummeled at bhp billiton. we will talk about the wider commodity markets just after the break. then chinese fallout. how the slowdown in the east could weigh on growth in germany and south africa. is said to have boost its takeover offer to syngenta. 50 minutes into the session. the ftse bouncing back. we are up by 1.3%. we will be back with you soon. ♪
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there is not a single catalyst for this. this is a route over china and global growth and the fed. the probability at the -- at the height is receding. badhe chinese economy is so that it will pull the global recession,o another than i do not think it is likely we will see a 20% correction on the s&p 500. >> i tell people to because just because i do not think china can come up that recent -- that easily with a solution. they have other things on their radar screen.
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is why this market is trying to find its own level and therefore it is clearing at a lower level than most people had expected. sure that china will find the right response to overcome its economic difficulties which every economy has to face from time to time. into a crisis.g we have to respond to that crisis by addressing the real problem. the real problem is the huge structural imbalance in the world economies. china has over invested and iser consumed to where it over consumed in underinvested. jonathan: those have been some of my guess. -- guests. a ten-day losing streak. we are up by 78 points. 1.33%. the dax is up by 126 points. this is after the the worst day since 2008.
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we are raising some of those losses. the shanghai composite and ugly place to be. down by 7.63%. the biggest one-day route in some 20 years. let's bring you up to speed with some of bloomberg's top stories. the people's bank of china has injected money into the market to help support the financial system. -- as added the shanghai composite fell off below 3000 points for the first time in eight months. the s&p 500 entered a correction yesterday. $2.7 trillion from global equity markets. today, we get a little bit of a rebound. futures and oil trading higher. dennis lockhart says it continues to project -- to expect the hike in a decade later this year.
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they complicate the outlook for growth. september remains a live possibility. team september becoming a smaller place. commodity prices tumble and the concern over slower growth in china rises, caroline: bhp billiton and they are saying cautious things about the near-term. near-term volatility is going to continue here in china. they say they expect the ongoing economic reforms that china is doing to contribute to a perio
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of market volatility. this is coming from andrew mckenzie. thehe long-term, --modities on outlook particularly by china. they are looking quite optimistic about the second half of the year when it comes to china. this might be helping the share prices. china will grow at a stronger pace in the second half. they see 7% growth for china this year. they say that china is not impossible to read. that is a funny comment. andrew mckenzie of bhp litan says it is possible. they are articulating their forward strategy well. let's have a dig into the future. they are remaining confident about their outlook about the emerging markets continuing to organize. focusing on cost cutting.
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they say they are pulling every lever. they are working every lever to survive the current oil price. they are also reducing their capital expenditures. they are squeezing the lemon is what the ceo says of bhp billiton. they are trying to cut down on costs while they are seeing the commodity route continue. they want to protect their dividends. this is driving the share price higher today. they stuck to their $.62 dividend. they are committed to a progressive dividend. a similar story. profits are down and sales are down. the dividend this time is not protected like at bhp billiton. it was slashed to the tune of 73%.
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talking about some recovery in the media and they feel that potentially in august, there are possibilities. jonathan: be sure to stay with bloomberg tv. we will be all over the miners throughout the morning and we will be speaking to the ceo of bhp billiton about those earnings. andrew mckenzie will be our guest this afternoon. -- big energy players. march-april time, they expect the rebounds to happen. goldman sachs is saying that will not happen.
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him jonathan: short equities or the flipside? francesco: bonds are another thing. i will give you one fact. jonathan: thank you very much for joining us this morning. up, we talked germany and
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how the companies in europe's biggest economy is coping with the selloff in china.
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jonathan: good morning and welcome back. 30 minutes into the trading session in europe. let's get you up to speed where equity markets are trading. nothing like yesterday. biggest one-day drop since 20 oh way. we are up by 1.7%. the ftse 100 stamping a ten-day loss. -- snapping a ten-day loss. the dax up by 1.69%. nothing like a turnaround tuesday in shanghai. the u.s. dollar raises some of the losses from yesterday. just about to reach $1.15. remarkable move over the last
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few days. a strong rebound for brent. bynt, below $44 but up 2.37%. a lot of stock moves to talk about as well. let's do that with caroline head. caroline: a bit of m&a. i am focusing on syngenta. it is up by 6.4%. it is being bid for at a higher price point. juan santos, the u.s. company, dominant agricultural player, is looking to up its bid. to the tune of 5%. that could drive the stock higher. we have seen a juicy premium being offered overall for syngenta. we are seeing an uplift to 470. we are calling it 380. will it go higher on the back of this monsanto bid?
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will people believe this bid can get through. when it comes to the regulators. have a look at syngenta up by 6.3 2%. rsa also being driven higher. it is based in the u.k.. up by 5%. -- york insurance -- zurich insurance. it once a bigger piece of the pie. 520 p is where it trades. .t could get as high as 550 p five point 6 billion pounds. perhaps rsa will want more. bhp billiton. up 6%. they stand by their dividends even though their profit dropped 52%. the second half should improve. jonathan: let's move on the story and talk about china once again. this time with a german angle to
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it. gdp figures showing 0.4% growth in the second quarter, in line with estimates. china is germany's biggest non-eu trading partner, but impact could we see? let's check in with hans nichols from berlin. when we talk about what is at risk in germany, let's get specific. hans: specifically the auto company. more macro speaking, what we see in these trade numbers, we get a sense of how export driven they are. some of it was trade related. some of the numbers came back negative for inventory. exports were up by 2.2%. private consumption was up by 0.2% capital investment was down by 0.4%. indication, a strong
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indication that the second quarter of the economy in germany was very export driven and was not relying on capital investment. if you look at what the world looks like now in the third july, you saw all kinds of uncertainty in greece and august has been even greater uncertainty in china. in some ways, i am looking forward to the number we get later on today to get a sense of where business optimism is. economy.export driven we saw that clearly with these numbers. most of the growth in the second quarter was export driven. on the trade deficit with china, in 2014 we saw a drop to the lowest level. has been inching back upwards as the chinese are buying less german goods. already for the first six months of this year, it is above where it was last year so we are outpacing and it looks like there will be another trade deficit with china. jonathan: tell me what i should
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be looking for going forward. i look at the german business confidence. when do i start to see the hard numbers take a hit? are we seeing that now? hans: the numbers have been inconsistent. we have had pmi. they are broadly in line but there has been some diversions. the german government is concerned enough about what is happening in china that she felt she had to weigh in. listen to what she said last night about how she is confident that the chinese authorities will try to rectify the situation. i am convinced that china will do everything possible to stabilize its economic situation. china is an important partner of the european union and we are in close contact with them. top, i talked about the auto industry. audi is the most exposed to china of the luxury brands. they have reduced their forecast. they had talked about selling 600,000 vehicles. mercedes for july had a strong
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month in china. their sales were up from 42% for the month of july. they sold almost 30,000 cars. we will take a look at the global numbers. a big impact on the auto makers. we will get the july readings how few and audi on sales they have made in china. that's the situation in germany. the fallout from china to the biggest economy in europe. south africa released its second quarter gdp and about two hours time. this on a day after the rant tumbled to record lows and stocks sink.and vernon joins us from johannesburg. expect the gdp
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numbers to come out at .6% for the second quarter. that would be the lowest pace of growth since the three months in 2014. that underlines that the president's struggle to reignite growth in the economy which has been hampered by a lack of electricity supply and also strikes in labor disputes in berries industries. at then: when i look rant, it is a brutal chart. exporters in south africa, when do i start to see that become a benefit? appreciated 4% against the dollar in the last five years and we have not seen that translate in manufacturing or export gains. what that means is that the economy is struggling to grow. with the rant at these levels, it pushes the risk of interest
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rates going up. ratesill make interest the highest since 2010. and companies are already struggling with high levels of debt. at the same time, it increases the dollar interest payments that the national treasury has to make risking a higher budget deficit. jonathan: great to have you with us this morning. we will be looking out for the south african gdp numbers. china not just hitting south africa in germany. the market route has also hit the billionaires. the richest person in asia lost $3.6 billion yesterday. the most among all billionaires worldwide. devon pendleton joins us now for more. what has caused this dramatic loss? one equity holdings. >> it is a big portfolio and a
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big stake in big companies. commercial properties fell 17%. the exchange in post limit. together, that results in a huge loss. jonathan: how do they stack up? >> everyone was down a lot in asia. since friday, when the route began, they have lost billions of dollars. jonathan: a huge reversal in fortune. is it just the equity market at play? >> the equity market. it has seasoned everything. privately held companies as well. valued.mpanies are what happens in the public market will impact these as well. jonathan: let's talk about some
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other billionaires. donald trump. has his closely held and nothing is publicly held. you would not people to look at it closely on a day-to-day basis. you could say his real estate properties have possibly lost some value because it is a scared market right now. still to come, we talk mega m&a. -- haso is making increased its offer for syngenta. turnaround tuesday for european equity. no such thing in asia. japan down by 4%. the shanghai composite was hammered for the fourth straight day. we are back after this short break. ♪
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jonathan: good morning. this is bloomberg tv. we are 43 minutes after the hour. european equities are bouncing back this morning. ftse shares back after the biggest slump. china extended its deepest four-day route since 1996 on concern the government is abandoning markets. the shanghai composite closed down another 7.6%. bhp billiton has reported that
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profits are down by 52%. down from $13.3 billion a year earlier. rsa insurance group shares rose urich insurance offered. they have given until december 22 to make a firm offer. here to make a merger, maybe. monsanto has reportedly increased its takeover offer for syngenta. the deal could be worth $47 billion. we have more on this latest offer. i said maybe because it is not necessarily a done deal. >> it is not a done deal. the board of syngenta will have
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to give monsanto a response quite soon. probably this week. this is an interesting situation we have here. some analysts saying they do not expect syngenta management to accept this offer saying that syngenta would like to see something more like 600 francs. 650 even. however, we have many syngenta shareholders saying come to the table. you have a big offer on their and you should at least see if there is a deal to be done. jonathan: when i look at that stock price on the screen right now. is it not just because of the offer? we are seeing how determined monsanto is to get this deal done? why are they so determined to get this deal done? >> those are good questions. monsanto has settled in for a long siege. this kicked off in may. that is quite long as european takeover battles tend to do. they tend to be shorter than
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these endless u.s. situations very monsanto has determined it will not go away. we do not know if this will go hostile. this is about monsanto becoming more global and bigger in crop chemicals as opposed to see. -- seed. it is also about taxes. conversions are a little bit out of fashion right now but monsanto has not worried about public opinion and they are willing to entertain that notion. jonathan: every time you come on the show, it means m&a activity is picking up. every time you sit in front of a, we talk about regulation and regulators. where do they fit in to this deal? does geteal if it agreed to come would face a huge number of challenges in europe and u.s. there are a number of surveys that show that monsanto is one
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of america's least likes company. it has been a big promoter of genetically modified organism -- organisms. many american farmers do not like the prices they are charged for seed. you could get regulators, environmentalist, lobbyist groups, politicians -- everyone weighing in which could make a deal difficult to execute. environment around it. typically, you pick up the pieces and get a cheap deal. these guys are offering. how does the market route fit into this deal? >> this is a long-term that. monsanto seeds this as strategy for the next 10 years. a couple of weeks or months or year of market turmoil do not affect this logic. monsanto shares are losing value along with many other companies
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right now. this is something that has to be noted. finding a valuation that makes sense given where the markets are going. next, it has been a huge tuesday for markets. we will hear from some of our biggest gaffe and wrap up our guests.-- biggest ♪
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>> and certainly would not be a wired today. >> it is a short-term, painful correction. >> people had a genuinely hard time sleeping that night. -- last night. usually, these things occur at the end of a bear market. this has occurred at the beginning. this is a signal that something is very wrong. >> the fundamentals do not warrant this. prices areanges in not matched by the changing in the underlying value. has beenntral bank pumping up commodity prices and equity values. you keep pushing them up high enough and they get into thin air and they are bound to correct. >> no correction is healthy.
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>> we have not had a correction since 2012 and we were due for one. >> unless you believe the chinese economy is so bad that it will pull the global economy than iother recession, do not think it is likely we will see a 20% correction on the s&p 500. >> given the rate of change of price, it is more of a buying opportunity for us than anything else. >> the people that say they will buy, i wonder if they will still have money or if they have to use leverage. >> you need resilience. second, you need well-managed areas. you need to be a forward-looking industry. they will get excited once the smoke settles that there is a lot of value being created. jonathan: those are some of the
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views. let's check in with today's trading session. caroline: value being created. 220 billion euros added to the stoxx 600. valuations going back to. we still need another 300 billion euros to make up for the route yesterday. up by 2.2%. we were being pulled into a bear market yesterday. everything is up by about 2%. looking across each city in london. we are up 2%, pounds trading flat against the dollar. let's have a look at what is happening in germany. the euro is trading lower. the euro was seen as a haven in this route. the euro is coming up a little bit against the dollar. the dax is up by 2.2% the yield on the bond -- a last look at france before i take you to asia.
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paris is currently up by 2.2% and the euro is having a similar effect. continuing to see the eye of the storm happening there. we sell the nikkei dropped 30% and close lower in japan and china. the day was just as brutal. off by 7.6%. the concern about chinese growth and the lack of stimulus coming from the chinese government. let's have a look at industry groups. opposite picture from this time yesterday. everything is gaining. minors are trading that much higher. the hp billiton remaining resolute to its dividend. remaining strong. even the metals, despite the you arealling by half, seeing a little bit of an uptick in copper. even oil is up by 2.2% this morning. an ugly route
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yesterday. a little bit of a rebound so far in the session today. the pulse is coming up next. we are joined by manus cranny. here is the headline for you. the german dax did not catch the sharp falling knife. a rebound today but a sharp falling knife according to these guys. if you look at what bank of america is saying i raise you.and it is a buying opportunity coming soon. the market still needs a central bank to act as a catalyst. it is a tough market. we went on to get trumped. the kind of volatility that you saw in the u.s. -- 1000 points at the opening.
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what volume traded in those opening five minutes. that is a critical issue. you saw the precipitous drop. tot brings us full circle our twitter question of the day. jonathan: a great twitter question. cranny: we made it better. qe4 or as first -- u.s. rate hike? we are both there. join us. jonathan: they will join you after the break on the other side of this show. to talk about the slight rebound we have today. that is it from me. you can follow me on twitter. best of luck with the rest of your day. ♪
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francine: the great fall of china continues. the shanghai composite plunges 7%. $2.7 trillion are wiped off all equities yesterday, european markets go for a rebound. ceasene: bhp village and its full-year profit plunge 52% -- bhp billiton sees its full-year profit plunge 52%. welcome to "the pulse" live in london. i am francine lacqua. manus: breaking ne


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