tv Countdown Bloomberg August 14, 2015 1:00am-3:01am EDT
a three-dayalt slide after the chinese central banks moves rose to the third time. hsbc, and rbs agreed to settle u.s. investment lawsuit tied to the currency rigging scandal bringing settlement to more than $2 billion across nine banks. economies biggest attested by the greek economy. we bring you gdp growth figure as they break. welcome to "countdown" i am
caroline hyde. happy friday. the markets closed yesterday. it was a bit of a down day. they were looking at whether the in will raise rates september. china has destabilized things ringing around deflation and u.s. stocks closed lower as retail sales pointed to the federal reserve indeed raising rates as soon as september. we are also looking ahead to french, german, and italian eurozone gdp. we have it all. starting at 6:30 a.m. gdp quarter comes out in the u.k. at 8:00 a.m. moves we areig currently seeing in turkey. we are seeing some any things affecting the turkish lira at the moment. record low if you're looking at
it. phenomenal drops versus the dollar. the dollar rising and the turkish lira falling. are getting set for a second general election this year. coalition talks between the ak party and the opposition party have collapsed and the prime minister which it lost the parliamentary majority back in june now looking towards yet another election. let's look at the commodity space right now. oil heading for its seventh weekly drop at the moment. but let continues. continues.- the glut oil continues to decline below that 15 -- $50 level. we are talking about it once again on friday. the malaysian ringgit. we are again at the lowest level since 1998. plunging the most since 1998. china helped spark this. the yuan divvy up -- evaluation.
this is political instability crisis. the prime minister is dealing with allegations of financial irregularities. more,l bring you so much but let's focus on the chinese central bank daily fixing of the yuan. it transformed into potentially a global market moving event after the devaluation on tuesday took almost everyone by surprise. let's join david for our market report from hong kong. now, we are starting to see that yuan stabilize. that is the first time since that that is the first time we have seen that reference rate rise a little bit. david: it sent a strong signal to the market. in the u.s., investors and traders were heating these calls for instability. they do not want to be on the other side.
it wants a stable currency. do not that against the pboc on that one. they fixed it a little bit stronger today so we are seeing a little more stable compared to tuesday, wednesday, and even early on thursday. as far as equity market are concerned, it looks like a normal day. looking at these measures that , yields for volatility are back up, gold traded lower in asia. there is more calm in the market today. this is your spot rate coming it closed at 6980 yesterday. price yesterday was significant. the first time since november that it closed stronger than the daily fix. that is the long -- lull that you have in today's trait.
it helps that the pboc is coming out to emphasize that point. we are seeing a substantial, further decline. we are seeing a volatile currency come keep in mind that policymakers very much want to be under control. that is the story here for the remnant be. they do have ample reserves. does seem to be behind us at this point. we are starting to understand this better, what they want to do when it comes to currency reform. that brings me to my other story. this is the big story in asia. the malaysian ringgit. it is the only asian country that is actually negatively explores -- exposed to oil. there is a political mess as well that you have to consider. if you want to see a currency
collapse, look at this. at one point of the day, this fournge rate was at about point 0985. we are still at levels in 1998. we are still looking at the worst single they drop since 1998. at that time, they shorted the currency. there are a lot of other things to consider. at all the emerging markets in asia, looking at the currency things are looking a little bit better if you look at the indonesian currency and the philippine currency. it is friday. equity markets are mixed. flat, or a bit -- but a bit more calm.
caroline: let's check in on the yuan now, in the past week, this is what you are seeing. a little bit of stability as david was saying that we have seen such a selloff. biggest drops that we have seen. the biggest move to devalue since 1894. since 1994. this is the dollar appreciating. 3%.yuan losing some staying in asia, my next guest thinks that the maximum depreciation of the yuan compared to the u.s. dollar will be still a further 3% to 5%. thank you very much indeed for joining us this morning. give us a sense of what you are seeing today. the fact that you are seeing the reference rate being raised ever so slightly higher the first time.
thingshe markets hand in , or is this the government trying to give some stability? that -- it is important to see what is the intention of the central bank. as we all know, the u.s. for a number of years wanted to reduce the value in currency between 2009 and 2013. the ecb and the bank of japan reducing the value of its currency between 2012 and 2015 right now. i think that indicates, in the case of china, what the market was surprised about was how stable and strong the currency has been alongside with the u.s. dollar. i think it is up to the adjustment made by the chinese authorities -- it is not a surprising move.
caroline: why do you think that it could lose another 3% to 5%? is that the market acting? wanted for it to remain strong against the dollar when otheragency that -- when asian currencies did not. why will it depreciate more? will that be the government talking or the market talking? >> i don't think that the government is sending that signal. what we are saying is that so thethe depreciation -- falling value to 4%, if we look versus therrencies u.s. dollar, over the last 12 months, they have only averaged best it has fallen about 12% or 50%. -- 15%. i don'tre to weaken,
think that is a significant move relative to the rest of the region or the euro. we think it is plausible scenario that it could weaken a little bit more. i don't think that it is really a big danger to any other nation around the world because we have seen a lot of currency moves over the last one year or two years. again in the euro and the emerging currencies falling by a long way. and then you talk about the ringgit falling quite substantially. many currencies have fallen against the u.s. dollar. if this currency is up falling by 6% or 8% against the u.s. dollar, i do not think that it is such a significant event in the big scheme of things. caroline: you say it is not a danger to the other economies, talking about the malaysian ringgit, the lowest since 1998.
china has not helped. i think you are right. the sentiment is not very positive in the region right now as far as asian currencies are concerned. factor todditional weaken the sentiment of foreign investors towards asian currencies. the ringgit has been falling quite dramatically over the last 12 months already. is in the final leg of its fall. caroline: is it time to buy? as far as asian equities are concerned, there are some very cheap markets. china is cheap, korea is cheap. as you know, unfortunately, global investors are not buying cheapness.
if anything, they are buying safety, growth, and quality. we need some drivers, some positive drivers in order to make sure that the value market can be exploited. i think that the driver has to be some very big cuts in interest rates in china or cuts in the reserve requirement ratio in china which will flesh out the liquidity of the banking system for china as well as the region. i think if that happens, perhaps these values -- value opportunities will stay dormant in the short time. caroline: thank you very much. that brings us nicely to our twitter question of the day. how much will the yuan devaluation affect growth here? european growth.
we get a second quarter snapshot will chinaermany, affect us in the third quarter? tweet me. corporate news. barclay, and three other u.s. banks have reached a settlement with u.s. investors. we have more on this story. $2 billion have been paid out from nine banks. >> there were already four banks that had little. jp morgan, bank of america, ubs, and citigroup. settlement, that includes hsbc, barclays, goldman sachs, the royal bank of as part of the deal that they have done with the lead lawyers of the lawsuit, they have now agreed to cooperate with them in their
percent of -- in their pursuit of seven other banks. they can hopefully come up on your screen. european banks in the thick of things there. the accusations in terms of foreign exchange rigging. we're talking about allegations that they manipulated benchmarks -- benchmark rates. it was to help them make more money or lose less money. this is part of a crackdown against financial miscreants who fromccused from everything rigging benchmarks, to cross-border money flows. caroline: $5.3 trillion a day market. wide sweeping effects. ist is even more concerning $2 billion is at the end of it. >> for the start, you are the other seven banks. some will perhaps settle and there will be damages.
in addition, you up the potential for other cases to emerge. in this particular rigging case, the lawyers are now saying that this is just the u.s. customers. we are now approaching investors in asia and europe and potential he the settlements there could be even greater because we are talking about the global foreign currency market here. it is not just affecting u.s. investors. the total, $2 billion right now, could be just the start which is what the lawyers are hoping. the banks in question declined to comment on the settlement from yesterday. no doubt, this story has not ended. caroline: it is fascinating to watch the stock market reaction. a love the update on the banking "ues, coming up on "countdown.
caroline: welcome back to ." it is 6:19 a.m. here in london. here the top stories. the yuan halted a three-day slide after the central banks reference rate rose for the first time since china devalued its currency in tuesday. it dropped the most in two decades. since moderated those declines. the central bank intervened and signal it support for the currency. five banks could reach a settlement with the u.s. investors over claims they
conspired to rig the global currency market. that includes hsbc, berkeley, and the royal bank of scotland. the settlement now brings the total currency agreement to more than $2 billion across nine firms. greek lawmakers are expected to vote this morning on legislation the opportunity to unlock about 3 billion euros of aid. they need to come to a political agreement on this rescue passage -- package. there were live pictures from parliament in greece. they still appear to be pretty jovial after their all-night slog. let's get more on this story. rebecca christie is in london at the moment. you are about to jet back to brussels because the finance ministers are gathering. what do we think will be prominent in their minds? rebecca: today in principle is the day that they would feel the
three-day deal for greece to access the 3 billion euros in aid. that would allow greece to show that it had done the milestones necessary to earn the money. this day has a lot of significance. the greek parliament probably needs to vote before the finance ministers get together. caroline: what time are we expecting? rebecca: meeting begins at 3:00 p.m. we will see how long it goes. caroline: we do know that tsipras has already been on the phone. paving the way. what is greece having to do here? what does the bailout look like? there is so much else involved. rebecca: the imf put out a supportive statement last night. even though they are not prepared to give greece more
that, that is something will be discussed later in the year once people can look at how greece is doing under the new package. the imf has said that it does support greece and thinks it is moving in the right direction. the tough sell right now is the german parliament. every vote takes place after all of the others. first greece both, then the finance ministers, then the germans will consider next week. if they can make the case to their taxpayers that greece is doing the tough things needed to earn the eight, things could move forward. -- that question is still unanswered. rebecca christie joins us. let's continue the conversation. fellow.t is a research it is very good to see you this
morning. they are still going. what do we think. can tsiprasjority bring with him to get the spoke past? -- passed? >> it is more complicated this time. -- this willyriza definitely be a consideration , thelso this official leader of the left platform, has already come out with his proposal of a wide movement. there is another problem in the opposition in that quite a few mps are willing to rebel because they feel that they do not want to take the political costs for
this program given how mr. have acted his party in this position. the national consensus that we saw during the two previous voting, might change a little bit. caroline: do you think it will eventually pass? >> it will pass. with the majority. but i think it will have to look very carefully at the size of the majority. the eurogroup is probably being how theeful noticing great political personnel is behaving overall. has a serious credibility deficit and it has a serious ownership deficit with regard to the program because, as you know, the prime minister has repeatedly said that he does
not believe in this program. and so has a couple of his ministers. heng to the eurogroup today, may -- he will need the biggest majority that he can get. there are the obstacles that i spoke about earlier. these andthere are splits. the left platform, there could be a new political movement being formed. what then in terms of election? how will tsipras gain back the vote and look like he is back in charge and able to push through this program? does it call for elections quite soon? managed tohas maintain has political capital which is quite amazing. especially given the fact that he has made a complete u-turn. this is probably the harshest memorandum that the country has to implement. he will either move to have elections in september so that felt the fullt
effect of the memoranda. they haverporation -- not felt the full effect of the new taxes and the new sense of insecurity. that the left platform will not have the time to organize at the country level. but then, there is the october option. for theras would wait first review of the program, hoping that he showed and heible governance, would get back some sort of debt relief. however, he should be very careful with that. there is little appetite for the kind of debt relief that he is looking for. and we should see a lot more severe conditionality this time around. caroline: thank you very much.
caroline: welcome back. news now getting breaking on the second quarter gdp figures. they are coming in less than expected. no growth whatsoever in the second quarter for france. quarter onng 0% quarter gdp growth for france. you are also think just 1% growth if you are looking at a year on year basis. this is a poor reflection of the quarter on quarter levels and certainly a slowdown from the first quarter. french economy is stagnating. powell,o bring in david our bloomberg intelligence viewpoint and our guest host for the next hour.
all, let us get your opinion. stagnant. we knew france what the thorn in eurozone side, it continues to show that. >> already, france is forecasting to be the weakest economy. there had been some signs of that. industrial production in the eurozone as a whole was going to be a drag on the number. saw invergence that we the indicators of industrial production coming in negative and business surveys indicating -- it seems like we now have some clarity that the numbers are weaker than expected. this has implications for the eurozone as a whole as the second-largest economy there. caroline: are we expecting the eurozone numbers at kennecott p.m. to be lower?
it could come in a bit lower. points ofstill some strength in the eurozone including spain, accelerated 1% in the second quarter, we know already and of course germany, throughout this crisis has diverted from france. the german mean numbers will be poor but it does not provide a good start for the eurozone figures. caroline: what is your point of view. a french national living in amsterdam. did you feel the french economy was dragging its heels? >> in the summertime, everything looks great but the numbers, they don't look good, there is a form of silver lining. may -- the second quarter in the u.s. and in the global trade, there will be some
potential upside in the quarters to come. a caveat to that is that all of the third quarter, we have the holiday. risk ofis a undershooting the target for france in terms of gdp. isnk goodness this surrounded by countries that are growing including italy and spain and also germany. it can provide some elements of euro, and the rest of the and let us keep in mind that consumption remains a good element into the french economy. is on theal element negative side but the consumer remains good. caroline: the euro not reacting in the slightest to this news. what is driving this? is that the lack of reforms we are seeing an france? why do we see such a sluggish growth here versus germany?
>> consumption has been strong in france. it is been helped by the slight decline in unemployment. what is missing in the puzzle for french growth is investment. that is the same case in the eurozone as a whole. as mrs. have been reluctant to invest in the last few years and that has been the major point of weakness. i suspect that was once again week. caroline: i've a more nor -- more nervous -- are they more nervous because of political questions? >> i don't think the greece situation has an impact on the domestic situation in france. it has raised major questions on the policy elements meaning that the french are afraid to go down the drain with greece because in terms of reform they have to go ahead with quite a few things to free the market, for instance. tohas also led to a debate bring reforms. caroline: we also have tsipras
speaking right now. they are still in parliament. he is talking about the first phase of government closing today. he is speaking of parliament about the debate regarding the bailout. we had greek numbers come out yesterday. they posted growth in the second quarter much to everyone's shock. you think this was just a blip? >> we had growth in the real numbers, but the nominal numbers fell. at the end of the day, what is important for paying your bills is nominal gdp. fallen, it does not matter the volumes because all of the greek debt have to be paid in nominal euros which are still negative. the numbers are still not as positive as those numbers had implied. caroline: what is the secret --toe to reenter i
re-energizing growth in europe? because investment has been the weakest link, that is really what needs to be spurred at this stage in order for the economy to take off. if we look at measures of the business confidence, they remain weak. in theed more confident sustainability of the recovery. you are not worried about this sluggish growth, this stagnant growth that we are seeing in france? thatthink we take the view what we do not see as investment from the corporate, we may see that from the consumer perspective and the residential business. incentives to buy houses.
what the companies may not do, the individual will have the firepower to do. let's keep in mind that oil prices are coming down which is freeing some purchasing power. if you add up the pent-up demand from the consumer plus the inventory, we may have a chance in the second part of the year to recover some ground. caroline: the consumer doing the heavy lifting. withe going to be sticking our guest. we have those live pictures of course coming from the parliament in greece. alexis tsipras continuing to say that the decision he had to take was a necessary one. the third deal for the greek bailout. reality, he had to make tough choices. this is an all-night discussion. they have been added all right.
how many of his own parliamentarians and party members -- how many of the opposition party will he carry to get through this particular vote. will then see finance ministers gather later in brussels to vote on whether they will begin to an act this bailout package. turning to turkey. it looks set for its second political election. that is after the coalition talks. -- after the coalition talks collapsed. let's go to our middle east editor. he is in london with us now. will the new vote lead to a different result, will it help pay the way to some stability? the definition of insanity is doing the same thing over and over and expecting a different result. the short answer is no. opinion polls suggest that if
there is another election, and the earliest it could happen is november 22, then broadly speaking, we would get a similar result. the ruling party would win the election, falling short of an outright majority. 258 out ofnt it has the 560 seats in the turkish parliament. following that, you would have the main opposition coming in second. in third and fourth places, the nationalist and the pro-kurdish parties. if you think about it now, you probably have three months of uncertainty in the run-up to the next elections, at least the official deadline is august the 23rd for fresh elections to be called if coalition talks have not resulted in a new government. after that, assuming you get corporation, you could have a similar amount of uncertainty. it is possible that when parties realize that we have to sort
this out because otherwise we will be doing this forever, then perhaps they could because entreaty. investors are very concerned about what is going on. they have been concerned about the ongoing violence going on. your three months of uncertainty for investors and another extended amount of uncertainty after that. that is why we have seen the turkish lira plumbing new debt and hitting new lows. they expect it could decline to three against the u.s. dollar. this is in addition to the fallout that turkey received from the chinese yuan's devaluation as well. caroline: this is the last thing that the market needs. the last thing that the turkish lira needs. the laughing that politically they need. we have seen the terrible bombing incident there earlier in the week in istanbul. the new election must be causing new uncertainty. >> we've seen an upsurge in violence in turkey and one would
assume unfortunately that there is the possibility that that could increase in the run-up to the elections. as some groups try to sway the vote. possibilityfor the that the government or the authorities and turkey could be fighting on two france, against , and then at the same time they have joined the attack against the islamic state over the border in syria. it is possible that perhaps if there is an upsurge in a text by the pkk, that their sympathizers in terms of their gold rather than their methods, that perhaps the pro-kurdish party could find itself gaining some votes which would not displease the president or his ruling party. there are a lot of concerns going on in turkey right now in terms of violence and now the
political uncertainty is exacerbating concerns about what is happening in turkey and what is likely to happen in the months ahead. caroline: external and internal forces at work. a brief reminder of what the greek prime minister has been telling us. he has been standing a parliament and he said the government did not have a mandate to take the country out of the euro. when faced with reality, he's at, they had to make tough choices. the greek bailout deal, the third one, they hope was a necessary choice. were -- economy -- we we just brought you those economies. we have more gdp numbers from the eurozone. stay with bloomberg. 7:00 a.m. u.k. time. 8:00 a.m. is when we get german data. ♪
caroline: welcome back. it is 6:45 a.m. here in london. the hear the stories you need to know. about 85 billion euros. the parliamentary action will pay the way for euro area finance ministers to come to a political agreement on the rescue package. the finance ministers are meeting today in brussels. goldman sachs agreed to acquire an online banking unit from general electric. the unit has about $60 million worth of deposits in the wall street firm. the terms have not been disclosed for the purchase. delay a has been set to tv service until next year. license programming from tv networks have progressed slowly. apple also does not have the computer network capability in place.
it has been a turbulent week for the chinese currency. , were watching the people's bank of china -- here are some clips from experts on bloomberg tv in case you missed it. >> these crises are coming right after one another. they are too close for beijing to control. we are going to see the end of the chinese economy as we know it. >> china says we will weaken the currency a little bit. going forward, we will let the market forces have a vigorous way in it. this is a step closer to be accepted by the imf. this decision will not be made until later this year, october, or november. >> perhaps, what we should expect going forward, may not be as optimistic as some people thought. >> what this is is china admitting that they have a growth problem that may be a band-aid getting ripped off, but
in reality, this is just acknowledging what we have already no. get your let's thoughts on that. do we think that this is an admission that there economy is not growing as fast as they thought? >> the pattern is clear. we are in a soft landing. growth -- we go under this. this is not new news. they want to achieve a soft landing. they want to avoid the hearts accurate coming back to the yuan. this is a logical step for them. they are trying to liberalize the currency at the international level. what is at stake is liberalizing the capital accounts and to make sure that they can really target the inclusion because that would mean the central bank would
start to head up the reserve and the cooperation would have more currency deposit. caroline: rather fortuitously it coincided with the fact that their exports needed a bit of a boost as well. you areingly, overweight china. is china worried about further volatility? >> it is a very dynamic environment, what we have in china. -- they are under a lot of strange to have policy measures, including , but this is a progressive environment as well. we can find opportunities in the current environment, thanks to that $160 billion that they put
into the infrastructure. this is having money. you can find opportunity and infrastructure right now. the overall market has been deflated in terms of valley, and that is probably a good entry point. the lowest point was in the mid-july area. so far, volatility is coming down. is at about 40% if we look at bloomberg data. if we continue to come down because the rate will provide stability internal he. caroline: what about the ratifications in europe? will this be hurting the eurozone -- that is our twitter question. germany has a big exposure. do you worry for the third or fourth quarter in the eurozone about these effects from china? >> not so much. the key story is domestic. volkswagen, they
are selling more cars in europe than they are selling cars in china. bmw was hit hard. >> the premium segment is at risk but the mass segment, which is counting for the gdp, is probably more solid. the story line for europe, to make the connection, is more about the domestic demand more than the export. was thert sector faithg element in the that we left. now, we have to see all of the consumer fact that the is strong, they can buy houses, and by discretionary items, and this is something that will drive the consumer demand in europe were then in china. element is that they are not totally -- to make sure that the domestic aspect is the
first priority. they want to create a balance. the harmony society. caroline: time to be getting into china stocks. he is our guest all morning. weekend, ready for the football is back across europe and it is financially as well. tom gibson looks at the european league. tom cole: it is that time of year again. europe's football season kicks off and so does the business around it. showing that the european leagues are seeing record revenues in three successive years. which is the richest? england versus spain versus germany. all three leagues have huge tv deals. -- theyo -- la liga
expect to make another 600 million euros selling the rights globally. the english are merely has by far the biggest tv deal. it paid 7.1 billion euros for three seasons. test coming in, allows the teams to pay their players extraordinary amounts in wages. the english club spent the most at 2.3 billion. the spanish side spent 2.1 billion. the german team spent the least. while germany's leak may have the lowest paid players, or people turn up to watch it. aboute attendance is 43,000 although germany does have the cheapest tickets. there can only be one winner. the leak making the most money is the epl. 3.9 billion euros. that is up a huge 32% thanks in no small part to that massive tv deal. another, the game is
getting bigger. that was football for you. let's get you up-to-date. competition in the smartphone arena has does heated up again. samsung has unveiled its latest device with a bigger screen a month earlier as it fights to reclaim market share against apple. the world's biggest smartphone maker just revealed a new product. it has enhanced multimedia capabilities such as the camera. the new devices were also -- will also include samsung pay which will debut in south korea on august 20 and in the u.s. in september. the launch kicked off in new york. to an official, a deputy president.
i'm going to talk to him about the new phones and he promised this time there will be no issues with production of the three sided screens which is sales of the ethics models back in april. the s-ethics was very -- 6 was very successful. we suffered a little bit from production capacity. since the third quarter of this year, the demand, the supply issue is solved and we are certain we can now supply everything that is needed by the theet for both the s-6 and s-6 plus. what about the smartphone strategy? >> there has been a slowdown in
the growth of this interesting -- industry. when we look at the behavior of the consumers around the world, there is a lot of demand for innovation, for new technology, for anything that can enrich people's lives. this is what we do believe in samsung. our role is to bring meaningful innovation to all people around level.ld at every with its new devices, samsung is hoping it can reclaim its share of the market. a niche they feel they invented. in europe, we still have to wait to get our hands on these devices until later in the year. you have to hold your horses. wenwhile, a brief reminder, have live pictures coming from the greek prime minister talking to parliament. it has been an all nighter. they have been throughout the night discussing the bailout deal and whether it was a
♪ caroline: france's economy stagnated in the second quarter. we get an update on germany now. china'sday slide after rate rose for the first time. others agreed and to settle investment lawsuits stemming from the rigging scandal. ♪ welcome to "countdown" i'm caroline hyde and that's reevaluate what we have seen on the economic data.
the french economy, we know, has stagnated. the euro barely reacted from the news, but it seems as though we in still seeing the minister france saying they can get 1% of growth for 2015. it will be hard given that they faltered in the second quarter. germany, again, a miss. it is still growth, but the expectations were for more. they were expecting to see futures opening up now, and it was start to trade on the back of this worse than had been expected. see for growth any second quarter. actually, the first quarter was revised. on a quarter by quarter, it is slower than had been anticipated. here is china's future, we are opening on the lower side. .2% if you currently see, also
lower by .3%. after that rather strong day yesterday, let's have a look at how the u.s. performed yesterday. we saw a trade lower. many recalibrating wondering if we will see a fed rate rise in september. of course, china started to calm . we saw a little bit of a selloff on the s&p 500. oil headed for its seventh weekly drop. we are still seeing that supply go up. back to china,it because china central bank fix the yuan and is trying to transform into a global market. it took almost everyone by surprise. let's join david inglis in hong kong for the latest. the move played out throughout the week, the yuan off by about
3%. but today it found some stability. david: it is falling asleep. i think that is the best way to describe it. we are in the mid point. whatever you want to call it, it has really become an session across global markets. theythat tells you, do accept stronger levels compared to the closing? the message of the pboc is to determine just how the currency trades. yesterday, let me show you what is happening here. that is your today chart, it started on thursday when the closing price was stronger than the reference rate in the morning. what we see today is the reference was actually set a little bit stronger. we weakened very slightly, if you can call that a move. but we're still below the 640 levels. the result, the market -- there is some calm in the market.
onee was no fear for the --yuan to false and difficult lower. so, that is the story at least across the onshore spot market, here is the offshore rate. that is trending lower as well. to some extent, you are seeing a convergence between these two spot prices. this is the big story, the malaysian currency. drop itn another weekly is really weighing on the prospects of the malaysian economy. it is a big oil exporter. there is the for out over the course of two days, above for texas back to levels
last seen them in 1998. what we have seen, that was about 3% lower, a little bit better now. mostly, that is still the biggest single day drop going back to 1998. you don't see a move that much very often. i mentioned oil, it was also political instability there as well. you also have china in the mix that really pushed a lot of money out of emerging markets. they're getting picked apart as of today. the stock market falling to a three-year low. overall, this is how asian markets are looking. live turned the lower over the past 30 minutes. these losses, we are poised for a weekly drop has taken the
levels of the asia-pacific all the way back to the start of the year. we are the seven or eight month low right now. it is friday, we of book ended a tomorrow to his week in the global financial market, things look a bit calmer than the to 36 hours ago. you see a lot of these measures that we follow in asia to measure risk appetites and volatility, like the fix for example. for have been trading lower today. gold prices, that is also a measure of risk aversion version or risk appetite, if you will. the two-year and china is back in positive. losses we're back to levels of january, it is a bit calmer/ stockne: we saw that
engage in the index here in europe. david inglis, thank you very much. athens vote today on a third bailout package. a brussels based policy reporter reports. rebecca, first of all give us your take on what you are expecting today. greece we expect will go with a majority, it depends how big the majority is. the finance ministers will gather at about me :00 p.m. this afternoon. able discuss whether to finally allow a three-year, 85 million euro bailout. it will pave the way for germany's parliament to consider the bailout package next week, then as soon as wednesday actual money to start changing hands so greece can pay its bills. caroline: august the 20th is with a big payment comes out of
the ecb. how is the greek bailout package progressing? there is been much debate as to whether or not the imf will be part of it, or if it will be debt haircuts. at the end, it does seem to be having a struggle in germany. rebecca: german lawmakers a very concerned about setting president that any might change hands without very strong accountability. one of the things that will happen this afternoon's finance ministers going around to make sure they can go back to their capitals and tell their taxpayers that the greeks are doing what is required to get the money and will be following through. caroline: do you care about greece? how much does this bother you as an asset manager? >> we care for greece because it is an important thorn in the shoes. tt, it has lost it's power this -- to disrupt.
it is not a potential black swan in europe. not -- this is not a solution that is need to probably come with elements in order to make it more sustainable and mak e the the possibilities of decreasing the debt level more practical and pragmatic. the good thing about the plan is that it leaves the sum time for them to have the reform having an effect. that is the good element in the deal. a half -- have a challenge.
it is expected at the very end of the contract. it is not sure if they will be able to achieve it. europe has to have a community to do with the long-term problems. that is a very important element. rebecca, they keep having immediate crisis. public with the long-term governance issues -- rebecca: there are competing pressures on all involved. for any of these long-term changes made the needs to be a stable framework for everyone to work and. there is a real feeling that if political approvals aren't handed out in an a commando
factor, it might weaken the pressure to follow through. when you are coming back every two weeks to reconsider things, you have that short-term pressure, but not the long-term pressure. on the debt relief front, expectation is that the first review of this greek program will happen in the autumn in october. canhat point, that relief enter into the equation. caroline: dop you want to see a nod to greece? is this something you think has to happen? >> in every debt problem, you have to be structure. i agree it is very important to get rid of the trust because many has been broken. first of all, i think they need
to install some form of a trust in order to come up with something workable. you can always come back to the table. that is the purpose of diplomacy. caroline: give me a cent on the reaction to what we are seeing out of germany, in terms of the year on year number we are seeing it up a 1.6%. what's number are you looking at? think it is probably better to look on the year on year. you don't gave the annual effect. in the u.s. and always looks better because of the math. 1.6 is a trend growth. you want it back into the trend growth. and important element is the
, it gdp plus the inflation is stabilizing, so that is a good element. the overall nominal gdp is on a good track. that is something the ecb should like. we don't believe the commodity is a single test signal for deflation. it is not the signal for deflation. i think europe is on a good this is 1.6 is a decent number. caroline: should the bank of england not be worrying as much? didier: there was good inflation
and bad inflation, now be of the bad deflation. if the core inflation rate that is creeping up in europe and in the u.s.. the headline inflation coming down. it is creating a round of purchasing power. that is feeding in the consumer demand. caroline: you are an optimist. she is going back to brussels. a reminder, france missed, stagnating on a quarter on quarter basis. still slightly lower than had been expected. looks onoming in, he the your on your number which is 1.6%. u.k. labourhe
and signaled support for the currency. greek lawmakers are expected to vote on the third bailout. it would pave the way for finance ministers to come to a political agreement on the rest of the packages. finance ministers a meeting today in brussels. for politics, this time from the u.k.. labor parties leadership race kicks off in earnest today. the antiauthority -- anti-austerity candidate jeremy corbin could escher -- usher in a new era of corbinomics. this is really trying to work out how the label party can we galvanize itself. >> what is at stake is the next election. we have seen a number of labor heavy hitters coming out and
saying if you elect jeremy corbin this could kill the labour party for the next hundred years. he is seen at unelectable. he is a socialist hardliner. caroline: we had that before. t: he is a big supporter of syriza. it is a trend the of seen across europe. we know this doesn't always work. caroline: how one earth did this come about? corbyn got how has to where he is? guest: you have to look at this as the reasons behind the catastrophic loss in the election. you have a labour party that lost its way, people of know what it stands for. you have to know that corbyn himself is a rebel.
he is seen as someone who speaks from the heart, but not someone labour united behind, he speaks his mind. this makes great headlines, but this could lead to infighting and chaos. caroline: he has come up with a novel idea of quantitative easing. guest: he came up with this idea called people's qe. , but would be issued invested in smaller infrastructure projects. a great idea, very catchy, most economists say it is been called everything from economic amateurism. the problem is inflation. you can't just issue of this new
money. they can use it to build hospitals, schools. caroline: could be doing this forever? this: the main backing is money plucked from tax avoidance. actually, only 20 billion of that figure is a realistic some that could be recoverable. we are starting from a slightly shaky promise. caroline: the math doesn't quite add up. it is interesting the trend we a re seeing. >> i think this notion of peoples qe is a strange concept. see -- it is a finance concept, people are maybe not familiar to this idea. it is a ming to please the city
-- it is something to please the city. we have seen it in other countries like spain, or france, where the position is very divided. also in line with the means we have to achieve this policy. i think the positioning is very hard. caroline: what about the people the power? the conservatives, they must be rubbing their hands in glee? think that may be slightly false, i think labour joboing a good combusting on its own. secure.ooks more
it is even sparked rumors that cameron 80 willing to stay on. whether that is true, we will have to wait and see. caroline: thank you very much indeed. in on ae, weighing conversation reminding us of similarities around the rest of the euro zone. let's look at turkey, which is another political story. it second general election of the year could be upon us. tumbled to lira record low, our middle east editor is also moonlighting here. you were in turkey for the last election. polls point to the same result. the ruling party winning the elections, just short of getting an overall majority. that would present further talks
with the likely second-place the third the chp and and fourth place parties. in other words, you have the same result and a similar situation to the one we find o urselves in now. the ruling party unable to form a government. of course, the concern now is when this official deadline of when parties were supposed to one reached an agreement august 23, there will be three months to the next election, that is three months of uncertainty. then you have the election, and perhaps more uncertainty. seeingt is why we are the lira, already under pressure
for various reasons, because of emerging markets, and as a result the lira is falling. not going great for turkey this morning. caroline: check out that graph to your left. a record low versus the dollar. speed onou up to greece we now know the greek lawmakers, after debating all , they started voting on the bailout package. the question is, how much of the syriza party can alexis tsipras deliver? that will help dictate where germany feels they want to empower greece to move forward with reforms. and how much help they will give them with debt write-offs. we leave you on these live pictures.
♪ caroline: welcome back to "countdown." here are some of the stories you need to keep an eye on. apple's it to delay live tv services until next year. peoples a talks to licensed programming are progressing slowly. apple does not have a computer network to ensure a good viewing experience. hour away from the market opening. we want to have a look at what is happening in futures. ng a flats day when it comes to euro stoxx 50. not moving one inch.
but in the cap 40, we are trading a little bit lower. dax trading up by almost .2%. a very mixed today, everyone trying to recalibrate what happened in china. is in reference rates rise a little bit to some stability in the asian markets. let's have a little look at the commodity spaces. it's the longest weekly run of drops we have seen in a year for oil. were up byght drops, 22% over the course of six months. overall, the reseller the concern about supply glut. fifth opec saying they are continuing to climb. back onhe iaea wednesday saying the market will continue through 2016. no end to that selloff in oil. that is been playing into the overall deflation story.
that will happen even more by china, of course. a turbulent week on the chinese currency. the people's bank of china over concernedn authorities are struggling to combat a slowdown. without we would bring you some clips across bloomberg tv in case you missed them. >> these crises a coming one after another. they're too close for beijing to control. we will see the end of the chinese economy as we know it. >> china said we will we get it a little bit, and have a bigger swing. what they did is a step closer to being accepted. that decision will not be made later this year. >> what we should expect on a going forward basis in terms of growth dynamic may not be as optimistic as some people thought. >> china finally admitted that they had a growth problem. that may be a band-aid getting
ripped off a little bit. in reality, this is just acknowledging what we already know. let's talk much more about what is happening in china . the yuan down 3% over the week. we can also talk about what is happening in turkey as well. is the head of global asset allocation, thank you for joining us. first of all, your reaction to what is happening in china. many people saying this should not be a surprise with the way the market was happening, to way the economy was thumping down. but it did seem to shock the market. >> isn't it. i think mark -- oh yes it idid. i think the market loss perspective. it was competing massively against its trade partners. inre is a bit more to it,
one respect to can argue it is a move to free up a regime. that is something, but i would interpret it as a warning shot begins as regional trading partners that have been devaluing. caroline: look at the malaysian currency, down the most since 1998. is just leaving malaysia because of political scandals and oil. i think it is more the likes of moves, and theig euro. china wants to make a stand. that is part of the reason for the move is a kind of warning shot against more competitive evaluations elsewhere. caroline: rather than starting a currency war it is joining it. an element ofs that, they will not put up with much more of this. i would see it that way. the new regime is also part of the story. caroline: will it help china's
economy? tapan: the sides of the move is unlikely to. it is hard to make a big difference. caroline: versus the euro, the euro is still depreciating -- tapan: it may be getting worse. because we know that chinese exports have been hurt by this rapid depreciation. it is unlikely to make a big difference. caroline: ahead of global asset allocation, are you putting more money in china are leaving it where it is? tapan: china is looking at a better value. offshoreok at marekts, -- markets china is a better value. you can regard it as part of the global emerging markets opportunities. that is how which is look at it.
caroline: where are the other opportunities? apan: so, the issue is that lot of big markets have slightly disconcerting domestic stories. scandal in malaysia, russia, turkey -- unfortunately, with some exceptions, the domestic stories in the key markets have gone wrong. that is part of the perfect storm that has been brewing in emerging markets. i would call that a china commodity complex, you had this collapse there. theof these things do make ingredients for the perfect storm. caroline: so, wait. tapan: i don't think the bottom is quite there. but when emerging markets underperformed so much, value
emerge, you might be bottom fishing. and probably isn't too far away from the bottom. you should be looking to increase, particularly if you have a low allocation. caroline: talk to us about turkey. we are seeing political instability feet into the lira today. look good.oesn't turkey has major economic vulnerability. their deficit was particularly large. the good news is, the policy looks very edgy, and the xl deficit is been a real pain for turkey, that is shrinking. 40% devaluation you have seen over a few years is starting to have some positive effects. market share is starting to grow, so there is some good that is come from the devaluation. the oil price fall is a boost, because turkey is a big net oil
importer. selections doesn't suggest a much easier ride. investors will be suspicious and wary. enough to keep some perspective, and think some good things are starting to happen. caroline: brace yourself for bottom taking in turkey, as well. great insight there into the emerging markets. course, our twitter question of the day. actuallywill the yuan affect growth in europe? we already have numbers out of france. and germany missing estimates/ will china influence the third quarter? tweet me. barclaysorate news, and three other banks have over claimslements
they conspired to rig global markets. now we are billion dollars when it comes to this to give a settlement? right.: that's therefore banks that already reach an agreement the plaintiffs. these were jpmorgan, bank of america, citigroup, now the settlement from these five additional banks it brings the total to $2 billion. you can see barclays, goldman sachs, and royal bank of scotland that makes it $1.2 billion. as part of the agreement, they now have to cooperate with the authorities, with the lawyers, in trying to win their cases against seven other banks that remain defendants in this fx rigging case. i won't read out all the names, but the payoff on your screen. more banks in the firing line eventually. yet position here is that -- the
accusation here is a help to manipulate the foreign exchange market. they were fixing prices, and even exchanging confidential customer information. this is probably the broader crackdown against banks terms of financial misdemeanors. we talk about the attempt to rig libor, and mortgages. for amounts of issues lawyers and authorities to go after. inevitably, they will not stop at $2 billion. -- that: debt figure figure is what we're looking at now. it seems to be never ending, but there is that u.s. investors are the only ones to be settled with. elliott: the settlements needs to be approved by a judge. that is likely to be a formality, as well as other banks potentially settling these cases.
there is, of course, the potential for other banks to come in. this is just for u.s. investors. foreign exchange benchmarks are global. it's a $5.3 trillion market. that are investors in asia and europe who lost out. quite possibly, more than there were in the united states. that $2 billion figure cannot only go up, it could go up by several orders of magnitude, once investors in asia and europe are factored in. caroline: all over that story, thank you. growthup on countdown, numbers in from france and germany. y's chance. is ital before that, we head out to rome with a preview. stay with us. before we had to break, some live pictures from the athens parliament as they vote on the
caroline: ultimate "countdown." here are the stories you need to know. germany thesing, common expanded less than expected. halted a three-day slide after the central bank rose for the first time since china devalued its currency. the yuan dropped the most in three decades when it the valley to its currency -- devalued its currency. forvote paves the way
finance ministers to come to a political agreement. gdp day in europe. david, france below, and france slightly misses. what numbers should you be looking at? guest: the weakness was due to the same source in france and germany, that was investment spending. that has been with us throughout the recovery. the external sector was able to make up for the weakness of investment spending. that is likely to be a boost in the third quarter because the full effect of the weak euro will be felt in the second half
of the year. in france, the consumer did not come to the rescue. once again, that may change in the third quarter. oil prices are now lower than at the beginning of the year. there up -- there are some reasons for optimism. caroline: how do they infuse the business is with optimism? the consumer could do a lot of the hard work, but what about businesses? david: have to be more short but the state of aggregate demand. one way to do that with the lesson -- would be to lesson the austerity right now. that is been due to the fiscal austerity. one way to kickstart that would ofto delay the of limitation the most stringent aspects of the fiscal come back. unfortunately, that doesn't in to be an option at this late stage. caroline: at the moment, the
euro into the unperturbed by these issues. give us a view from your perspective on where europe plays into global asset allocation? is it the story of growth? tapan: europe's main claim to fame is that it looks less expensive as a market in the u.s. that is not saying very much. the fact of the matter is, although europe's economy looks better than it did a year ago, this is a very moderate, lackluster recovery. it has no real investment followthrough, and of long-term drags with weak investment and products are still with us. there is a danger of being carried away in its evaluations of the european markets. they are not anything to be excited about. caroline: are there any particular sectors you have been looking at? tapan: it really depends on the direction of yields, and where
you think interest rates are headed. yes, banks potentially would he an area to look at. but then there are other areas that are more cyclically driven. euro has given a boost to exporters. but it looks like that is starting to wear a little bit then. caroline: could china play into that? tapan: i don't think it is of the magnitude that it really hinder european exports. the weakness in chinese growth, which is been a multi-feature of the world economy, is the bigger concern. caroline: what will the ecb is looking at right now? when they see these growth figures come in, does this change with the ecb feels qualitative -- quantitative easing is working or not? ecb has think the already been pretty clear about that. ecb intends to
implement the qe as fully as planned. ananything, the risks lie in extension at this stage. is a slowdown in emerging markets. that would be a bad effect if we saw that, likely sell of the domestic weakness being offset by demand the outside world. the ecb is keeping a close eye a broad, especially in china. caroline: always great to have your perspective. we will be sticking with tapan. let's carry on the gdb conversation. we heard from france, and germany, next up is italy. let's head over to rome for a preview. give us a sense of what we're anticipating. with it look any brighter?
guest: we are hoping. analysts are seeing an increase which may seem small but it is good for italy. was .3% thister it time it keeps that, if it does, we watch that. the prime minister has been promising some hefty tax cuts would analysts are wondering if he will be able to pull off. they wonder if he will be able to remain in power, or will be challenged by his allies. caroline: give us a sense of where the growth is happening. throughout the eurozone, this is a city led growth. other areas are left behind. give us some idea of the competitiveness between rome and milan, even. growth, and a small
but for the by the weak euro. lots of made in italy is exported abroad. that is certainly helping. most industries are in the north, that is why the city of milan is benefiting greatly from this issue with the euro. the south of italy, which is not developed, are not seeing the same advantages. unemployment is much higher in the south and in the north. caroline: wonderful having a view, thank you very much. minutesare just a few away from the european markets opening. jonathan ferro is here. what are you watching? they're not pointing to anything. there is a lot to talk about. the recovery stumbles, the number one and two economies in europe disappointing.
we look ahead to italian gdp which have to be a big surprise to get euro zone gdp to come in line. a lot to talk about, then china. as if just to say they can, a strengthen. a bit of stabilization for the chinese currency, nothing like that for the malaysian currency. sinceal decline, the most 1998. and we talk about political risk as greek votes on another bailout. a look at turkey's political risk, what government, we may have to have another election. dashedkish lira getting for the second day straight. caroline: jonathan, thank you very much. so many things to keep an eye on. some phenomenally selloffs we continue, men in a politically driven rather than just the fallout from the yuan
evaluation. attempted look at equity futures as we head into the open. we expect a mixed picture across the board. euro stocks not doing anything at all. the dax completely flat as well. day, a falt da -- flats everyone trying to see what is going on. lawmakers after all my discussion and now currently voting. the get some live pictures of the parliament. they must be exhausted. tsipras haslexis been talking in but how the inevitable is a tough decision. there is no such thing as a good memorandum. he says the upfront reforms will strengthen the bailout. know that the
greek parliament begins its vote for the third bailout agreement. let's check in on the euro. yesterday we got surprised growth in greece if he looked at the nominal figures. not nearly as bad as the board thinking for a two second quarter. the france stagnating, germany coming in lower than expected. not much of a movie. but have a move ahead of what is still to come. next, then portugal, then the euro zone. stick with us. ♪
jonathan: good morning, happy friday, and welcome to "on the move." i'm jonathan ferro in london. just moments away from the start of european trading and one big red headline. greek lawmakers approve a third bailout. some dissent, but they approved the third bailout package according to the vote tally. that gets approved by greece. now every other national parliament needs to approve it. that is a big story for us going forward. let's get straight to your morning brief area -- brief. growth in germany expands less than forecast. it is gdp day for the eurozone.
yuan stabilization. the people's bank of china strengthens its reference right. crude crash. does the global supply glut continue? the beauty i drops to a 6 --- wti drops to a six-year low. a lot to discuss ahead of the open. the dax futures higher. ftse futures higher as well. could we get higher in the european open? let's get straight to caroline hyde. caroline: greece voting for that third bailout package. we are seeing the open basically flat in france. ftse up 0.1%. the interesting figures will be the devil in the detail when it comes to greece. how many people did alexis tsipras manage to bring with him from his own syriza party and the opposition? how much can they woo germany to show they have the guts, the
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