Transcripts For BLOOMBERG Countdown 20240622

Topsyturvy trading going on. Bit daytoday was a little weaker. I didnt think it was that horrible. Kirilenko 14 jacob guy if you 14 . Caroline guy if you cant if you really think about how we got to that number there are mitigating circumstances but the u. S. Market essentially bounced back toward the close yesterday so we did see a largely positive and to the day. 5 could see we were up by and the average was up by a 4 10. The equity markets did not feel like they got knocked but they have had some bad days. Caroline and it is easier to see such volatility when you have volume 15 below the average of the past three months. House end it was the builders that managed to fuel that resurgence. Guy chance that everybody is talking about and i have read my third article now the producer pointing another when out this morning is this chart here. Post china seems to have got everyone thinking. It is basically equity markets continuing to rise but highyield credit on the way down and it is that spread their that has people nervous. That is what is maybe pointing peoples towards this idea that equities are as ever slow to react. China is adding into that. Girl the highyield is pretty phenomenal. Seen sinceve not 2010 and thats with a nervousness is creeping in. Guy credit much better at pricing the stuff in with a much better historical record. When the credit market starts waking up should equity markets do so in short order. Beoline should they following highyield credit downward. Give us your thoughts. Guy lets take you back to one of the main stories. Shockwaves are spreading from in blonde best bomb blast bangkok. The Tourism Council says it has already seen cancellations and all of this can only hurt and already slumping economy. Zap, we have obviously seen the condemnation of the attacks and we dont know what happened but the Market Reaction is clear. It is fairly clear and we are seeing the bought trading at intraday levels we havent seen since 2009. The stock market headed for closing levels we havent seen since 2014. This amid renewed concerns about security in the thai capital and across the entire country and it comes at a time of instability in the markets in general. Chinese devaluation has had an andct on Asset Classes thailand has been struggling in recent years with Political Violence so its own economy is already feeling the pain of reduced tourism and slightest a mistake manufacturing this is all weighing on the thai baht. Interest rate hikes in the u. S. Have been looming large in the background as well so this is certainly a black eye for thailand and a lot of Unanswered Questions today given this tragic and shocking attack last evening. Involvingtragedies humankind killing at least 20 people. What are the Thai Government saying about who is responsible. How serious is it taking this bombing . Affecting not only thai nationals but chinese nationals thatand filipinos to is why many are terribly worried about this because while we have seen Political Violence in thailand for years and even isolated bomb attacks they were focused on domestic issues generally targeted at a political rival. This one happened in the most crowded populated intersection at the heart of thailands tourist epicenter by the Grand Hyatt Hotel near the former Four Seasons Hotel near the central shopping centers. These are hugely trafficked areas by tourists. And the shrine. A major hindu shrine popular among tourists as well as locals. So the thinking is that it targeted not only domestic and Political Considerations but their foreign tourists. The industry that really keeps the economy afloat. We know the Prime Minister headed into a Cabinet Meeting some sense ofhave the actors involved but had no prior warning and they cannot rule out terrorism or anything. Are the forensic investigators have been unseen for much of the day trying to gather evidence but no doubt the death toll now stands at at least 20 people. More than 100 injured and we expect many more. We know that chinese and filipino tourists in particular. We understand that a japanese man was badly injured. Nations and the united have all condemned the terrible attack and hong kong telling its citizens that they should avoid all nonessential travel to thailand as result of his latest violence and income. Thank you very much indeed for the update. Caroline and its feeding into the tight bart. If youre looking at emergingmarket currencies you have to extrapolate some of the Business Impact of this. The largest selloff we have seen an emerging market foreign currencies. So talk about Federal Reserve raising rates all of this playing into emerging markets. Guy this is the question everyone is trying to ask at the moment. Is it going to overwhelm this week recovery . That is something that is going to play into this idea that the fed delays its rate hikes in the bank of england maybe needs to do the same. We are seeing a significant downdraft in currencies equity markets. Some big big moves and does that start to represent something that represents a clear and present danger to the recovery that we are seeing. That is something people will be talking about a lot more. J. P. Morgan analyst saying maybe this is in such a negative because it might delay the rate rises have been talking about. The lets focus back on the asian markets. Youre standing by and hong kong give us a sense of outside of what is happening in china land, what has been flowing through the rest of asian trading. Were certainly seeing most of the markets here in asia in the red. They were doing a little bit better before thailand came online. We have got the shanghai composite down by 2. 1 at the moment so a much more significant drop in what we had seen earlier in the session. The hang seng index was actually in positive territory. Up thosen it come pick h shares that investors had bailed out of. You mentioned the route and emergingmarket currencies certainly sing that in none other than malaysia as well. It is coming back a little bit today up by 0. 6 of 1 with india coming online in the last hour and a half. Jakarta is down by about 1 it is another currency under pressure at its lowest level since 1998. Still definitely seeing that weaker yuan in china playing into emergingmarket currencies and we have the rest of the region lower as well despite some earlier gains. I just what a show you some of the major stocks that we are watching today in the asian region. We have had chinese property prices out for july and they were a little bit better than what the market was. We are seeing a bit of a mixed picture coming through some of the Major Property players and china. Chentoalso lower also lower. By 7 . Ralia, this one up byhas been offered brookfield for 8. 9 billion to take over that company and one of the biggest banks in australia paying out dividends today weighing in on the overall fx 200 and then in japan this is one of the best performers in the asian region today. Its a machinery operator and manufacturer and has come out and raised its fullyear forecast. A little bit of a mixed picture but we are seeing some are coming through in the late session. Heres a quick update of the thai baht which you have been no doubt following closely. 35 against the u. S. Dollar and the Malaysian Ringgit as well which is what we have been watching the past week also still very much weaker against the u. S. Dollar down 1. 5 against the gray back. Yet another volatile session here in asia. Guy thank you very much indeed. Juliet running us up with what we need to know. Before talk more about that chinese housing data, i want to get you some details on bmw. They have news related to the blast. It is affected by it and has distribution that runs through that explosion. It is seeking alternatives to import vehicles through. It does say that a Vehicle Distribution Center has been damaged in that port and that is going to affect business. The stock has already been significantly affected over the last few weeks and months i the slowdown in china. It is a china play in some ways. Caroline and the devaluation fed in. But interestingly you putting out yesterday that note from barclays. Sharing that feeling that perhaps the market had gone to go far and how much they feel that china will hurt the m w and there is an amazing line saying even if bmw makes zero the stock is still worth more than it currently is. Guy just because it is a proxy. If youre to trade china bmw is an obvious way of doing it. China is very much front and center here at bloomberg. It has reported a little bit of a rebound. Shanghai and beijing looking a little bit more positive. Our chief asian economic correspondent. A recent turnaround. Is it too early to talk about . It is certainly a surprisingly upbeat number for once. It is interesting when you consider the prices came despite a dipping selloff in the stock market which we have seen with people worried what impact Consumer Confidence and the like. I guess it does indicate that the full rate cut is helping but to go cheer your question it will take some time to channel whether this is a deeply ingrained recovery. Will need to see that in the tier three and tear for cities. Seeingose guys start sustained prices maybe then we can say the Housing Market has turned. Caroline will we see anymore boost or policies to help boost housing Going Forward . Accounts all policy options remain on the table. There is a feeling that a slope socalled stabilization we thought was taking place has kind of been reversed. But the wider economy remains which includes the real estate sector. There is an ongoing degree of demand but there is still a long hold of inventory out there as well. So they will hope that the prices may drop buyers into the market but beyond that economists say you cannot rule out the Interest Rate cuts or further steps to boost mortgage lending. Girl thank you very much indeed. Will get a breakdown of the data you need to watch and why it matters to first up, u. K. Inflation at 9 30 this morning. Kirilenko and the Turkish Central Bank decision coming out at noon. Guy on timor to bring you as well. Justst over guy in over an hour, they bloomberg first interview. Caroline the battle of the breakfast. Lets look at what russian president putin has to do with european milk deflation. Coming up after the show. Course we will be dealing with the u. K. Deflation dilemma. The data is coming out a little bit later. We have some great guests coming up for you. Senduest who says we will over that goes negative before the end of the year. What impact will that have on the outlook. Have they underestimated the inflation slowdown. We will talk about that we come back. Caroline . Here are the stories in need to know this morning. Shockwaves spreading from the dirty bomb blast in bangkok. Tourisme the time council says it has re seen cancellations. At least 20 people were killed during the blast and rushhour yesterday. Caroline in a letter to parliament, looking schaeuble asked Wolfgang Schaeuble asked lawmakers to back. Despite the lack of commitment from the International Monetary fund. German parliament will vote on the bill on wednesday. Guy this is the first time in three years this has been achieved. The company halted Arctic Drilling in 2012 after the Obama Administration was prompted to revisit u. S. Rules for activity in the region. Caroline lets turn our attention to the u. K. Zero inflation. That is what we are likely to see when we get inflation figures this morning. It is a figure that will be closely watched by mark carney. Ultimately our objective is not to have inflation at 0 . Were absolutely symmetric and our job is to bring it back in the genitive of the community is to bring it back to that 2 target within two years. The bulk of the shortfall can be explained by the sharp fall in the prices of commodities and other imported good since last year. This temporary period of below arget inflation has provided welcome boost to to real incomes. The near term outlook is muted as i said and it would not be surprising if we have another month or two of negative inflation. Given the very substantial moves and oil prices and the changes to some of the utility prices as well we have seen big moves and oil and other commodities but also changes to utility prices. Guy lets bring in jamie murray also joining us is the senior u. K. Economist at capital economics. Lets start with you, what are we expecting from the data today and what will it tell us about the impact of low Commodity Prices in real thomistic inflation . The two things that will moose the inflation around today will be some clothing and footwear prices because this time is triggered to the timing of sales and the price of oil. We knew that diesel prices fell in the month and there may still be some to come from petrol. But these things tell you a great deal about domestic demand and that is what the bank of england needs to be concerned about. So they will be looking at services, prices and their focus will be on wages and productivity. Caroline what about the british pound as well . That has been interesting in terms of importing. We had a veryme significant fall in sterling the bank of england got it completely wrong this time theyre hoping for a slightly smaller effect than last time but yes it will be a driving dynamic. We think the effect will build. Outstocks will drop beginning of next year. How strong is u. K. Domestic inflation right now . Once you strip out the effect of lower Commodity Prices and import prices you probably get an underlying inflation rate of about 1. 5 but is still not small enough to suggest were back on track. I think that is what is concerning many members. Although we have seen a substantial improvement in the laker labor market and although it is growing at a strong rate we are not sing the move just yet. Caroline when do we anticipate to see that move and see inflation coming on track near that 2 level. They will be more confident that it will return to the 2 target sometime next year. I think we will see Strong Enough wage data by then to convince them that we will see the underlying inflationary pressures pick up but the economy still faces a big fiscal squeeze. Likely to see only a very gradual tightening on Interest Rates. Were starting to see productivity improving albeit from an incredibly low level but as it starts to Gain Momentum this idea that maybe there is a little bit more slack and productivity is improving, what is that do to the equation. It push things back a long way. The more productivity there is the more it grows. Productivity would probably push back the first increase. Thertunately, i suspect increase will be shortlived. Its happened before and it fell out again. Thatfar too early to say productivity is on a sustainable half and starting to increase. Caroline how much do we think mark carney is feeding into the external factors. Hypothesizingeen whether the fed will delay its rate rising on the back of china. We are not particularly exposed in terms of the chinese evaluation but how much will Global Deflation feet into that . It takes quite a long time for import prices to be really reflected. The reasons white thinks he has more time to leave Interest Rates on hold. In the minutes of the recent meetings have suggested that they are taking into account this weakness and Global Deflationary forces but really the key thought at the moment is that in the u. K. Economy itself it still isnt Strong Enough. To you agree with that jimmy . It will be Strong Enough in a year or sos time. And that is where they are supposed to be looking. I agree. We are not that far apart and when we think the first Interest Rate hike will happen but domestic pressure will be stronger than some are suggesting. Caroline when do you think mark carney will have to stop writing letters to George Osborne . It will be sometime yet but it doesnt matter that inflation is below target it is the domestic access that is aspect that is important. Is if the fiscal squeeze still in operation we will see that carrying on for a while. When carney first came in there was this tacit agreement that we would not see very aggressive Monetary Policy because the fiscal side was doing what it was doing. Think were likely to see a tightening on Monetary Policy and certainly more gradual in the u. S. And thats primarily because we still have a huge fiscal squeeze. The u. K. Economy may see the biggest squeeze in Government Spending than any other geopolitical economy. We will all start to see the Interest Rates to verge and that will all start to play out in the exchange rates. We have the chief executive coming on a little bit later. How much can the effect of an Interest Rate rise actually impact the level of spending here in the u. K. . If you look at rates in the crisis, subsequently subsequently they fell by lesson the base rate did. So it will be a lot more limited. When Interest Rates do start to rise it will not take too much pace out of the u. K. Economy. Debt levels are down and house owners have really deleverage in the past few years. Guy thank you very much indeed. Will betake a break talking with the co little bit later on the program. Guy it is 6 30 and london. Caroline the shockwaves are spreading from yesterdays deadly bomb blast in bangkok. The stock market has fallen and the tie Tourism Council says it is already seeing cancellations. Guy chinese home prices rose and more cities than they fell in july. It comes after authorities lowered Interest Rates. New home prices rose and 31 cities. Print prices were spurred by easing of policies and the lowering of down payments for caroline thes german finance minister Wolfgang Schaeuble is still urging to back the greek bailout. The german element wrote on the bill on wednesday. Guy lets take you to the emerging markets. Valuation has hit many an emerging market currency over the past few days. For the turkish lira it piled on the pain. Fairly substantial currentaccount deficit but will it be enough to push the central bank to raise Interest Rates . Elliott gotkine joins us now and the Global Market strategist from j. P. Morgan Asset Management david stubbs. Elliott lets start with you. You have the government saying you do not want to height rake at them hike rates at the moment but the other hand you have a currency following pretty sharply. And of think you would want to be the central bank of turkey right now but it is a tough call to say which way it is going to go. Luckily it is not my call. Three out of 17 of those surveyed by bloomberg recommend there will be an increase. Guy Goldman Sachs is on that list as well. The oneweek repo currently at 75 . A lot of folks think they are not going to do it and they have set at least we had that treat for tweet from president erdogans main advisor saying the central bank should not raise Interest Rates and should not target the particular lyric rates and that the libra will only be competitive when it declines to three per dollar which it is never done. There are all of those things to factor in as well and to back up his case he tweeted a graph of the Real Effective Exchange rate which factors in inflation in turkey turkish trading partners but the last time the turkish lira was as week there was an emergency rate increase which it was suggested perhaps that there could be and we know that the climbing lire maybe a boost for exporters but at the same time it will harm the andent account deficit perhaps further inflation seems to be coming under control. So there are a lot of factors for the Central Bank Governor right now and we will see which way he goes. There may be a technical increase to that main benchmark. I want to simplify the framework but overall Goldman Sachs says even if it happens it will not change monetary conditions. Caroline before we gets david view, elliott to us a quick view on the political because this is the perfect storm at the moment. They also have a breakdown in coalition talks. It is politics probably rather than economics which is informing the views of many economists that we talked yesterday about the collapse in talks to the main opposition and there was a slim talk that the ruling party might get it together but those talks have now reached a dead end and it looks like we will get fresh elections the current round ends august 23 and than you have new elections within three months of that i suppose that Political Uncertainty is another thing weighing on the minds of investors. , what we have learned the last few days or less few weeks is that the slowdown is maybe more aggressively than we have thought. How problematic is that for this recovery that we think we are seeing in north america and parts of europe and on which quite a large pickup is based . Sure that the lack of energy is too much of an issue especially for america. Is certainly more of an issue for somewhere like the u. K. Equity market which has a more a huge exposure to commodities and trade things like global are very anemic and falling as we have seen which is one of the reason why emerging markets are in trouble than it doesnt really help u. S. Exports either. Sign that maybe the Global Environment is not as good for europe as we would have hoped. Caroline does that start to change her opinion on whether we should be looking asset based at the moment . Is,tweet of the day today is the equity market do a correction. Think everyone is worried we are modestly pro risk. Equity is ae that better place to be than fixed income. But what do companies want. They want low costs and they have them because Commodity Prices are down and growth is ok. Too good andnd not you look at credit conditions. The survey in japan and the Lending Survey in europe and the Senior Loan Officers survey in the u. S. Credit conditions for most firms are very loose they can get the money if they wanted so they have lower costs and good credit which is a recipe for high profit. Guy if you look at some of the ratios they are serving to get a little bit stretched. The chart i want to talk to you about is this one. It is highyield which has been going in one direction and equity markets which have been going in the other. It is that gap. Is that credit market a canary in the coal mine. Should we be paying more attention to the concerns the credit space has and equities largely seem to be at ignoring deco what is driving that selloff is energy. If you break it down by sectors you can see that the energy spreads have blown out enormously and the implied probability of default in the u. S. Energy markets at the moment is 20 . If you look in the investment credit it hasnt been that good of a time but that is a supply issue. Enormous supply coming down the pipe at the moment. I dont think this is the worst we have seen but if we look it other measures of Credit Availability to the wider corporate space they are actually very healthy. Supply isfueling that trying to get the cheap money while it still exists. Do think what is happening in the Global Spectrum what elliott has been talking to us but turkey and covering emerging markets will that play into the Federal Reserve at all . Not enough toinly delay the fed on its own, no disrespect to turkey but as quite a small economy globally. I think Chinas Health is an issue for everyone and in the longer term you have this deflationary impulse which they continued to devalue which will affect all Monetary Policy around the world. The knifeis is making edge even more difficult about going in september or not. I dont envy the policymakers decision but is it enough alone to stop them deco know guy how much is down to the fed and how much is domestically generated. Because the story has been going for a while. If you help run it big currentaccount deficit if you run that kind of story in this kind of environment you will find life very tough deco that is why turkey has been benefiting from these Lower Oil Prices in the currency story in turkey unlike those asian currencies has been happening for some time. I was there for the last elections a few months ago which obviously look like we will see a repeat of we are talking about the currency plumbing new debt and yet we keep hitting these new record lows as well. As far as the currency goes in turkey this is something ongoing. Lets not forget the other things going on in turkey right now we have a collapse in three years of truth and calm between turkey and the kurdistan workers party. Youve turkey joining the battle against the Islamic State and there are a lot of things to unnerve investors and i suppose the political instability is just one of them. Caroline elliott was just talking about low oil prices actually being a boon. What is interesting is people now are looking at the commodities space saying that this has continued at a large part because of the foreign currencies. They will keep pumping out supply because it is cheaper . Have debt andcers dollars it precious that Balance Sheet and forces them to continue to need income to service those debts and fortresses forces them to keep production high. Weretime i was here talking at that and the gold market. They have to keep mining even though the gold market has fallen so far. They are structurally on supplied in a have a reduction in the demand growth they were expecting so i think the bigger question for the developed world economies that are not commodity focused is how much of that benefit does come through. This has always been the belief. Get hitain upfront to on employment and equity earnings and suddenly consumers wake up and they start spending. It hasnt really happened that much. It is white there may be a much better second half and like most things in life i think you get some of it but many not all of it because consumers do like to save more than they did in the past. Guy thank you very much indeed. Turkey is front and center for us today. Todays twitter question going to the nub of what we are talking about. Caroline do you feel we should be looking at what the credit market is signaling. Guy germanys finance minister striking a soft tone on the greek bailout. Stay with countdown for that story. Guy welcome back. It is five minutes after the hour. 6 45 in london and 7 45 in paris. Caroline the shockwaves are spreading from yesterdays deadly bomb blast in bangkok. Meanwhile, the tight Tourism Council says it has already seen cancellations. At least 20 people were killed during the blast during rush hour. Guy home prices fell more than they arose in july. It comes after the authorities removed some copy code and rose Interest Rates. Beijing and shanghai both up out of interest up from the figure of twice seven in the previous month. Prices being listed by an easing of monetary policies lowering down payments for some homebuyers. Carolyn girl german caroline the german Prime Minister Wolfgang Schaeuble backed the greek bailout. The German Parliament will vote on the bill on wednesday. Guy lets talk about what is on digital. Tim coulter joins us now with a pick of some of the best in the business we have here. Still with us is david stubbs. Nice to see you. A couple of u. K. Focused stories. Both kind of focused with the real estate line. Ae first one is looking at squeeze coming from some of the luxury buyers overseas and here in london. The big problem is we are seeing andrengthening pound declining real estate values particularly for the highend. Station power redevelopment you have a Malaysian Ringgit getting killed in the luxury value that is again 10 or 12 in the last year so there are people who put deposits on these flats and all of a sudden they will be facing a big margin poll when they have to that purchase. Caroline we were just talking about the real estate were seeing in london. Is this still going to remain a haven you go it sounds like a haven . It sends like it is a hell for many buyers. Guest there is a phenomenal that of new bills and some in places which is not particularly prime. It does give me posit for concern certainly if i was making investments in london i would be going to the adage of location, location. When you see these huge developments that is in effect the new neighborhood and you dont know the character or the if itlity of the area and is dependent on foreign demand you might get these events on the other side of the world which suddenly affect the Capital Value of your home. Carolyn girl one thing that will affect real estate demand as well Going Forward is mortgages and rate rises. Talk to us about what we are expecting. We did a survey in the last week of what economists are expecting in the survey was showing that 25 basis point increase in march 2016 and a 25 basis point every three months after that and what we did was compare that with the forward rates trading in the marketplace in that survey shows that the market is probably lagging behind economists. Guy putin loves soviet era stuff. He likes a talk about banks that for 10 to work in a to hide a crisis story. Really its the in Congress Situation it is the ingruous situation going on. Is lookingnderbelly at how disposable incomes are going down and wages are going down and really what is happening is hearkening back to the soviet idea of come to work and we will pay you less are not all. Caroline is russia a country that has been in the forefront of your viewpoint . I know that there are some companies that they dont really like and russia. There are some companies which are very well run which have revenues and dollars. But sure, like a lot of emerging markets who have this unpredictable policy framework it doesnt make for the kind of conditions you wish for for longterm investment. So more than ever, selectivity is key. Buy with passive exposure because you do not know what you will get. Is something people who have the currency hedges as you say are the oil and gas producers. Its not working out so well either. Guy thank you very much for joining us. Lets move on. And talk a little bit about greece and the bailout from a german angle. Because Wolfgang Schaeuble is striking a softer tone than usual and says he will back the latest greek bailout if it goes to vote in parliament. Hans nichols is on the story. What are the takeaways from the finance minister summing we suddenly seeming to be rather prothis deal . What he is doing is seeking credibility because everyone knows he became very close to allowing greece to leave the euro and he is now using that credibility and translating it and trying to get merkels party to support the vote. He sent a letter to the party and said he thinks greece is on a sustainable path and is part of this push he had an interview last night and is still insisting that the imf will play a role in this bailout. Here is the actual quote that he gave to the broadcaster. Im also very sure that the imf will contribute to the program just as we have declared this to be indispensable. Minister that has demanded specifics throughout the entire process it is remarkable that theyre willing to go on a leap of faith that the imf will stay involved because the imf has given no formal insurances. In fact the bundestag the most they have is a letter from European Monetary Fund really declaring whether or not they will participate. It says the imfs contribution is at this stage undetermined. The math on this is likely going to work out. 60 defections out of bloc. 1 parliamentary she will get help from the coalition in power. That 50 ofote out germans do not want this to pass and only 37 do. That second order question is even more important is the you think that greece will implement the reforms. Think germans do not greece will implement those reforms. Number. T is an amazing 87 have no faith in the greek ability to deliver. Lets talk about the mask around europe. Talk us through the parliamentary story to get this twice 6 billion done . Hans boy spain doesnt have to take a vote but it looks like they are going to. You need estonia. Germany voting as well and then latvia, lithuania and some committees have already approved it. France has given the green light and we have a whole host of countries that can rubberstamp this. It looks like the biggest holdup is going to be germany and it looks like this is going to pass. So from the parliamentary angle this is going to get through. But one note on how difficult the politics are, 86 million is the headline number we have been using and there is a report out that says already greece will need another 6 billion euros. Guy bigger and bigger. Country it has a lot of money. Carolyn girl and a lot of debt. Lets check in on how the market is performing. Some phenomenal news coming from asia. The biggest selloff since july 27. Guy what youre looking at here is a threeday chart. This is the session today down here at the bottom. As he can see the shanghai, has been falling for the last couple of days. We are seeing a little bit of bounceback but nevertheless we are seeing this continuation of concern surrounding the shanghai composite being reflected in prices. Caroline taking us back to the dark days of the selloff and the chinese stocks but lets look at the u. K. Now because hit tv shows like sherlock and Downton Abbey are helping to drive growing foreign demand for bloomberg television. One u. K. Mberg visited studio to see what is behind the success story. 1. Scene 1, take we have steadily grown and have cut back largescale productions. Made by a company for sky. Weve had them for about four ears and this is the fifth series. U. K. Isndustry in the incredibly buoyant. We of really benefited from the highend Television Tax incentive that the government had for 2014 and we are certainly sing the benefit from the high number of u. S. Shares in u. K. Film. Some great things that are exported and i should not be a surprise that they are so well received like Downton Abbey, game of thrones, sherlock, x factor. With a lot of them. We should be proud of that. Think moving top gear from the bbc to amazon it was always going to have a life after the bbc. We were approached by the executive looser if we would andrtain having cars on set they were driving running crashing into things and it was a mess at the end of it. For all the people watching television i think it is fairly irrelevant. It is all about storytelling and entertaining the audience. That audience takes the information and watch as it is the most important thing. It is not whether it is going to be shown only on a terrestrial channel or a digital channel, storytelling is storytelling and if you tell the story well people will find it and they will watch it. Caroline its quite amazing the export that goes on i was alibaba say that a lot of Downton Abbey wine is particularly popular in china. Guy they have Downton Abbey wine . Caroline i think it is probably not made on site. My parents would be all over that. No one told my mum. Guy the things you learn on this show. We will take a break and move on atm bark shire wine and look what is happening with the crisis around that u. K. The seo of persimmon will be joining us. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Deadly bombing in thailand, the tourist industry is threatened. Deflation dilemma. Kingdomn in the united could drop below zero. Welcome. You are watching countdown. Caroline lets get a look at what happened in the u. S. And what is continuing to ro il asian markets, the bomb blast in thailand. Despite the number from new york, housing is more optimistic. Negatives asany the headline highlighted. The markets pounced back. ,he asian markets have sold off usually they follow what happens in the u. S. But that has not happened. We are focused on chinese policy. A number of things we need to discuss as well. U. K. Inflation, a standout story. A Rate Decision coming out of turkey. We are going to focus on that. Rick stories coming up. The asian market session interesting, highlighting different stories. Caroline shanghai composite off three percent. Asia. Lly a down day in reporter absolutely. Selling down 2. 7 in china. Also the shares in hong kong with the hang seng. Of course, it is all about this area. The thai market. If i show you into the actual thailand stock market, you can see every sector is in the red following the last in bangkok. 2. 8 ,er services down 1. 5 . Ials off every sector firmly in the red. Some of the stocks we are watching in thailand. Selloff is basically due to a lot of fear but we are seeing it in the tourism areas. Chains, the big hotel down by almost 8 . Hotell plaza, another big chain. Department stores, robinson, the major retailer, down by almost 5 . Thailand,ts of because of concerns about stocks all the airline also down. High airways down i percent. 5 . We are also seeing a weakness in emerging currencies. The thai baht falling to a sixyear low. Down more. When the show you emerging currencies we have an watching closely, the Malaysian Ringgit committed down other 0. 5 the Malaysian Ringgit. Down another 0. 5 . We are seeing the selloff continue. Aftera coming offline the holiday, down almost 1 . The major markets also in the red. Then he can japan coming back after the lunch break and sold down 0. 3 . Off 0. 5 . Ea the shockwaves not helping the overall sentiment in russia. In asia. Caroline thank you. A rather gloomy day. Guy lets talk about some of the company news. Today, we have a homes company. Breaking news. On a forward basis looking strong. Caroline profit before tax up 31 . We are getting the outline of affability. 17 this time last year. Adds to their land bank. 92,000 plots. Ceo joining us for the first interview of the day. Demand saying market remains strong. How concerned are you about potential rate rises Going Forward in the United Kingdom . Guest we hear different stories about the Interest Rate rises. We do think there will be a rise at some point over the next year. Is measured for a mortgage is checked for affordability. There is good affordability in the market place with Interest Rates good and still trending downwards. Guy lets talk about the operations of the business. We heard about the inflation wage story. What are you seeing . What is the cost story in terms of how you build homes . Jeff we are seeing inflationary impact. Skillseconomy pushes on, are proving quite challenging. We are training more people. In the short term, we are seeing our import cost rise. The majority in the labor cost which as i say is being pushed up through shortages of skilled resources. Caroline the call at the moment is for more supply. We need 200,000 homes or more per year built. Is the shortage of skills going to limit that . Or will we start to obtain the supply we need from the market as it stands . Jeff demand is good. Launched2, 1 w when we our strategic plan, we have increased our build substantially. We areume of houses building has increased by 48 since 2012. The industry is responding. It will take time to get act the levels we would hope to see Going Forward. We are working hard to meet the demand we are seeing at the moment and we will be pushing on again in the second half of the year to increase the number of houses we complete. On your website, you have developments across the whole of the u. K. Spot in termsweet of price and the geography . Is we aregood thing seeing good demand across the country. We focus on making sure we have a good source of houses for sale. We deal primarily in the first time a buyer, first time mover market. We see good demand across the u. K. Our operating companies, 26 around the u. K. , operating very efficiently. I would not single anywhere out. I think we see good demand across the country. Much of a First Time Buyer demand is driven by government incentives . If it was removed, what would that do to the market . Jeff lenders are responding and we are seeing better rates available. Buy is certainly required in the marketplace to support the First Time Buyers and movers. To bridge that gap in terms of the deposit that is required, to actually access the Interest Rates. Of can see good availability mortgages, 3 , 4 . Product of is the choice for firsttime buyers at the moment. Caroline you are one of the biggest house owners in the u. K. Buffett up by 31 . Barclays is saying there are barriers to entry when it comes to House Builders. They feel the planning regime should something changed . You want more competition . Jeff i think more competition would be healthy. There is a place for more smaller builders tackling the smaller size with a few houses. We are quite comfortable with the market at the moment. We would like to see more improvement on the planning front. With the new parliament, we expect Good Progress to be made planningtional policy framework, another five years to work well. As we see changes in the Political Climate over the years, we see the Planning System is disjointed and never gets a chance to work. Some stability would be good in that regard. Caroline thank you very much for joining us. The chief executive of persimmon. The first interview of the day. Guy lets get to reaction to that. The Housing Market seems to be in a great place. Guest that is a good thing. We need healthy House Builders because we need more houses with the concerns over the Planning System have been with us for a long time. More needs to be done there. I am worried about lenders stepping up with lower Interest Rates. Hopefully we have got past the of ever loosening credit standards to get people into the market. Help to buy is one thing, where deposit for firsttime buyers. Then there is the loosening of credit standards to a high leverage. Distinct things. The first is viable, kind of a social the second is dangerous. Caroline is it really happening . You are hearing talk about the competition in the mortgage market. The new rules put in place by the bank of england have tightened policy . David absolutely. We saw the market cool when the measures were put in place. My argument is because of the structural undersupply, prices are in a rising trend. Caroline and then to rules. How do you mean . Bend the rules. How do you mean . Theyve it financial rules should be part of the docket for policymakers here and abroad. We need more of those rules, not less. Guy we will be back if you shortly. A Market Strategist at j. P. Morgan. Whatine coming up, president putin has to do with a plunge in milk prices. Guy it is 7 16 in london. These are the stories you need to know about. Caroline the shop waves are spreading from the deadly blast in bangkok. Authorities say they have seen cancellations already. Guy the germans have asked greeces bailout. The German Parliament votes on the bill tomorrow. Caroline and shall has won permission to drill in the arctic waters off alaska. They halted drilling in 2012 after a rigor ran aground. That led the Obama Administration to revisit rules. Guy this is a Breakfast Show so lets talk about one of the most ingredients. The dairy dylann roof. Dilemma. Lows and production continues to rise. Lets bring in a commodities expert. We have been hearing about this in the u. K. Farmers upset by the drop in price. Why is the price dropping . Guest several things have come together at the same time that have made prices come down. There is a large Global Supply of milk as well as slowing demand from china. At the same time we have russia that has banned dairy imports u. S. And other russia countries with sanctions. Farmers are feeling the hit of that and losing money. Caroline the perfect storm. What are we seeing from retailers . Farmer response, you have seen protests take place, especially here in the u. K. You have seen farmers empty milk off shelves, doing these sorts of demonstrations. In response, we have seen a few retailers come in and raise the prices or say they will introduce new brands. Thats of milk and cheese have a portion going directly to farmers. At the european level, we have not seen prices come up to a level that is sustainable. Guy europe has a reputation for protecting farmers. Meeting in the next few weeks to talk about this. What sort of response could europe put together to help the farmers . Whitney another aspect of this europe are moved production. Europe removed caps off or farmers. Caps on went out of the way this april. Can produce whatever they want. At the same time, the prices have crashed so there was a problem. There was a meeting in brussels with agriculture ministers to talk about the basis. Crisis. We could see a raising of the intervention price for europe. Is not just milk prices, we are seeing it with grains. Where are the pressure points when you are looking at economies hit by this . David the first point is about milk and dairy. New zealand. Small economy, very reliant on the dairy industry. Interestis cutting rates because the economy is taking an impact from this. It is having a clear Macro Economic impact. The other point you make, almost any other commodity, the price of oil is a key input to all of those. Rippleis low, you have a effect through the rest of the commodity complex. Investor sentiment is terrible. That is why you have potentially seen additional week this. Caroline china, more of a selloff in the stock target. Shanghai composite off 5 . Growthh is china driving . You talk about the demand effects. Side,y on the dairy definitely. Dairy demand will be off a third compared to last year for china. We have seen lower prices in a lot of markets. Markets, the price is very strong. Iron is look to countries like brazil for soybeans. Buyers look to countries like brazil for soybeans. Guy lets eat breakfast event. Thank you very much. Prices coming down, not necessarily a good thing. Whitney joining us. David, let me talk to you about what is going on in the markets. Shanghai composite down 5 . Have beenew days we seeing saleem. What response are you getting from clients about these kind of price swings . David the issue with assets has always been volatility. Suffering you are from issues not there anymore. Without that, there are few places in emerging markets that work particularly well. With china in particular, the stock market, there are some open of that that are to owning on a mediumterm view. Eastern europe, a commodity importer, it is tied to the recovery story and has decent institution. It is a place where you could selectivity is absolutely key. Caroline what about in terms of volatility we were seeing yesterday . Daxu. S. Market, the trending lower versus the rest of the european market. How much is down to the trying of liquidity . David lets take this with a pinch of salt. Valuations are not cheap in global equities. You need a decent amount of confidence. We understand that. We brought the are confident about earnings in places like japan, europe. In the u. S. Differentreasons, drivers but we are happy to maintain the broad exposure. Comes to china, it is the kitchen sink that they are keeping this up. Caroline they are stabilizing the yuan and it has only depression by 3 . Organizing for spying programs for the stock market. Organizing forced buying programs for the stock market. There are the interviews done on this network and elsewhere. People in china saying, i hope the price goes up so i can sell. That is the psychology. Obviously, when you get market to locations like that, Research Driven longterm investors can find opportunities in this market and that is what we are doing. Guy we carried on a conversation when we were online, this is higher yield first equities. The different story they are telling us at the moment. The bottom bid is energy. That is causing the drop in be a symptomas as well. David you have supply and demand not where they want to be. Ng prices. A lot of that is u. S. Production. Highyield bond market. Usually when you start to see those two spreading out, david the u. S. Equity market has gone nowhere this year. Certainly if you look at the u. S. Market, overall earnings have declined this year driven in energyratering related earnings. Ex energyinvestor can out. Re taking what you are given by the market. David stops,t is Market Strategist for jp Asset Management. Guy back with the asian market story. Flat to negative. Take a break. We are back in a moment. Caroline it is 7 30 here in london. Guy the thai baht has weakened and the stock market has fallen following the deadly blast. Caroline chinas home prices rose in more cities than they tell. The first time this has happened in 16 months. It happened after authorities removed some curbs. Spurred by the easing of mortgage policy and lowering of down payments. German finance minister has asked lawmakers to back greases latest bailout. He says it offers a sustainable path to recovery. The parliament votes on the bill tomorrow. Lets look at what has been moving in the asian markets. Seems to be an acceleration in the selloff, particularly in chinese stocks. Reporter it is almost as if we are seeing what we saw in july. Happening once again in the half hour, 90 minutes of trade, we are seeing big selloffs coming through in Chinese Markets which a lot of analyst had been speculating means there could be intervention coming through, or people with margin positions unwinding their debt. We are seeing the shanghai being sold off significantly. This drop has occurred in the last 20 minutes or so in china. The market down around 2 , 2. 5 . A big assault off. Looking around the rest of the region, the hang seng down 1 . We have been focusing on thailand as well in the wake of the deadly blast in bangkok. The market down 2 . The airlines, consumer stocks, tourism stocks that are really coming under a lot of pressure. Malaysia looking better than yesterday. Ss in the the weakne ring get. Git at a 17 year low against the dollar. Australia down 1. 2 , weighing down heavily by one of its big banks. The nikkei also down. I want to take you inside the shanghai composite to understand where the selling has happened. The big sell off has occurred in the last 20 minutes or so. Aside from oil and gas which did badly yesterday on the low price, which is a defensive player up 1. 4 , all the other sectors doing poorly. Technology stocks down 8 . That is a sector that has been performing well before the plunge. Health care off why 5. 7 . Interesting to see what is occurring here in china. Looks like we are seeing manipulation we saw a couple of weeks go, a big drop coming through. 25 minutes until shanghai closes. We will see whether the cell off continues selloff continues in the next few minutes. Guy what we are looking at in europe, the story ahead of open in 26 minutes time. The fair value calculation, beginning to soften at the moment. Percent. E dax down 0. 1 put two looks like it is going looks liket ftse it is going to open flat. Open for the european space. Is. Markets opened with a the chart people are talking about, the dax. The moving average. Right on that level at the moment. It will be interesting to see whether people pay attention, the technicians get excited. That is the 200 day moving average. This represents a selling signal. Caroline lets focus more on germany, the finance minister. He is striking a softer tone than usual and says he will back the latest greek bailout. Hans nichols has the latest. What are the takeaways from the softer tone . Hans it seems like he is leveraging this deal. He is leveraging his own credibility as someone who is open to greece leaving the euro and he now supports it. He is insisting the imf will participate in that. The has been very little indication they will. Case theing the public imf will get on board. He said, i am sure the imf will contribute. For a government that is demanding specifics. Credible specifics from greece. They are acting with a leap of faith that the imf will get involved. See ifid they want to reforms are being implemented. This is a letter from the stability mechanism, giving no assurances that the imf will participate. The imf contribution is at this date undetermined, accruing to the copy of a letter we obtain. When you look at the public olling, 57 percent of germans are opposed to a third bail out package. Then you get to the question of whether greece will implement the reforms. Think they well, 84 and they will not. Not a lot of confidence here in germany that greece will follow through with their commitment to read guy i think we will call it a majority. Most germans dont think the greeks will deliver. The Parliament Still needs to vote. In spain, estonia, the netherlands, and germany. Vote ina Parliamentary Committee that has passed in latvia and finland. French lawmakers have basically endorsed it really when you come on done something similar. No votes in belgium, cyprus, ireland, italy, and slovakia. Which was the euro member i left out . A pop quiz. Guy far too early. You honestly think we are paying attention smack we are, really. Hans austria. A guy of course, austria. Caroline see later, hans. Lets get more on the story with our guest in the studio. Lisa mcdonald. Director of equities. Talk, are we worried about this greek vote . , ande led the charge western european markets doing well yesterday. The attention has focused east for china and rightly so. Looking at the dax, we saw the wobble down in july. Overdoing the whole situation. Moved to a more rational view of what the potential impact to be even in the worst case scenario. Focused on where the right direction is. Guy are we underestimating the impact this brought a slowdown broad slowdown is going to have . Negativehave seen revisions coming through throughout the earnings season. Haveand European Companies reported the biggest negative surprise was from china. We are seeing it come through. Moving, it is likely to be more. Guy the right direction but not there yet. Caroline people are focused on what is happening to the dax, but barkley saying the selloff too much. Are some countries feeling too much pain from what is happening in china . Lucy you are going to get a little more volatility because of the season. That is what we saw last week. Been a lot of concern, fear being priced in there. Equity markets have continued to be relatively stable. Hasnt gone of that much. We are on the cusp of whether that will turn into something worse for equity markets which wouldnt be surprising, or is the act that there is a lot of cash on the sidelines still and where else are you going to put the money, those things that have been holding markets up for some time, that is where we are at the moment. Guy one thing that has popped up equity markets has been qe. Do we chinese do this, get the reaction from the japanese and european authorities a will do more as well . Lucy that is certainly the biggest reason we have had the bull market. Whatever happens to look but it be the going to the biggest factor of what they do next. Big push we had from the ecb earlier this year, maybe that could go up. What happens with the fed is going to be a key. We are still expecting the fed will move in september, more likely than not. Whatever the data is now, it seems as if there is a desire to move away from zero Interest Rates whenever they can. That is still our central expectation unless we get something really unpleasant happening in market. Caroline how will markets react . Be pricedeally should in. Youd think it is priced in. Even so, we think it is a big change and therefore could cause full authority. Macdonald, Global Investor cio. Caroline pressure from all sides. What is the Turkish Central Bank to do . AndRate Decision today, what else you should be watching when we return. Guy 7 46 in london. These are the stories union to you need to know. Caroline i shockwave spreading from the deadly blast in bangkok. The Tourism Department says they have already seen cancellations. Guy home prices rose in more cities than they foul in july in china. July in china. Softeningock markets sharply. Caroline the german finance minister offered lawmakers to back greases third bail out. Parliamentar votes on the bill wednesday. A Central Bank Decision do london time. A look for what we should be checking out. The turkish lira trading at a record low. The central bank doesnt want to do anything. Guest we heard from the main advisor to the president saying the central bank should not raise tryst rates. Should not target a particular lire rate. It is already at a record low. It would need to go lower. The considerations for this are more political than economic perhaps for the central bank. There are other issues that are factoring in as well. We know a week lire is good for exports. Inflation. Ood for some of the dilemmas for the central bank, we see what is going on in china. Concerns about emerging markets. On top of that, we see pressure from the government which is an active government. Guy more on that story throughout the morning with elliott. Lets check in on what is happening head of the market, 12 minutes away from trading stocks. We are seeing a softening their. The markets turning into the red , the calculation we have here at bloomberg. The ftse and dax trading softer. Dax down by not much. Nonetheless as we approach the 200 day moving average, it makes people nervous or not about whether we see a sell off lucy, when we look at the european space, there are a number of reasons not to own certain sectors. Tothing with exposure emerging markets. The investable stocks getting smaller and smaller. Lucy the leadership within the markets to health care, some technology, although that seems to be losing its weight in some areas like media. It is narrowing down and that is whenther reason why should be a little more cautious in that environment. Caroline in terms of other Asset Classes where money could get peeled away too, we are talking about equities being the only game in town. His cash another option where they are putting it . Lucy that is where investors are slightly higher at the moment. 5 , which is pretty high. It does show weather has been resilience in the market for a lot of the macro shocks thrown. Whether currency related or price related. It is because there is cash there to buy. Eady buy from the corporate sector and m a. Guy this is the s p 500 up here. Igh credit. Is this a cause for concern . Lucy it is a cause or watching it, monitoring it. It is not a comfortable chart. Some of that is energy. We have seen where we have had these gaps before. It can be a sign for the equity markets. Atoline looking fundamentals, we have data coming out in the u. K. How much are you paying attention to the fact that this is slowing . Is this a delayed reaction to the commodities space . You see inflation picking up Going Forward . Caroline inflation is not as low as it looks but still moderate. Looking at wages and the employment picture, the pressures are going to be more on the upside. That goes for the rest of europe as well. That is one more reason why Interest Rates moving off the zero band makes sense. Caroline when will that happen in the u. K. . Lucy not long after the fed intends to. Guy we have been spending the next few years by Central Banks. When they leave zero, will that change . Lucy liquidity is the biggest driver for equity markets. Interest rates move off the zero band, will forecast where they go next. Key. Will be very at a tim you will not get a big rebound and profits. You will not get double digits. China changeld everything up . Could we see more stimulus coming in that respect . Lucy the way the markets are reading at the moment is that would be a cause alarm. Its just a lack of control over the economy it suggests a lack of control over the economy bigger than the numbers which have been printed. That would not necessarily give support to the Chinese Markets. Guy thank you for your time and your thoughts. Lucy macdonald, cio at allianz Global Investors. Caroline barton will be taking it over on on the move. Mark news from china showing prices rising in more cities than where they fell. The first time that has happened in a long time. That is causing a decline in the chinese stock market which fell 5 . What does that mean for policy Going Forward . Secondly, the Turkish Central Bank releases its latest Interest Rate decision. Interest rates to stop a decline in the turkish lira . And the latest u. K. Consumer Price Inflation data. Zero is what is expected. Can the bank of england raise Interest Rates with inflation at zero . Will be asking that we will be joinedly by our perennial favorite. Guy europe looks softer. Shanghai down by six. A busy read across asia. Caroline the data is what you need to keep a watch of today. Turkish Central Bank Decision. Guy we will get u. S. Housing starts at 13 30 u. K. Time. Asian markets front and center. Shanghai down 6 . The weather is not great outside in london either. Caroline on that a rosy note, we will handed over. Hand it over. Jonathan good morning and welcome to on the move. By mark barton. Im mark barton. Moments away from the start of european trading, lets get straight to your morning brief. Chinas selloff stocks plunge the most in three weeks, strengthening property markets may reduce the profits of the stimulus. Continue the sl ide. The turkish lira hits a record low after the Central Banks Rate Decision late today. Low oililemma prices and the strong pound could see inflation drop below zero this morning. Its inflation day here in the u k. Lets have a look at how the european markets could open today. Futures are indicating stocks might open lower after a day of gains yesterday. Lets check in with carolina the touchscreen. Good morning. Caroline good morning. We are suddenly seeing an acceleration in the downward trajectory. This is off the back of acceleration in china. The shanghai composite is in excess of 5 . We will go out to hong kong to get the latest, but we are following asia shrugging off the green, when we saw housebuilding give optimism to equity buyers. We saw a sudden resurgence in the u. S. Buying of equities. The we have to remember this is august. This is reduced overall volumes. U. S. Volumes are about 1