We should recap what has been a great 24 hours in the equity market world. Guy we had a decent day throughout the u. S. Yesterday. Which slightly raised the expectation of whether or not the fed is going to hike rates. We think it is going to come more likely after that number. Anna at least the chances have gone up a bit. On monday,was 28 now we are at 32 . Guy things are moving pretty fast around here. Obviously a long way to go between now and then. Two days of debate started today, what will the results the . A great deal of coverage of the next few days. Quitearkets finished strongly, a decent update. We will talk about hewlettpackard more on cutting jobs. Does,and anything the fed if that moves the dollar, that could have an impact on the large multinational businesses like the number one clothing retailer. So the numbers about the eurostes, 1. 9 7 billion wayty much in line with the they benefit from a stronger dollar. Clothes fromlot of asia, not getting a benefit from a stronger dollar. We will see the company themselves say anything this morning about currency. Guy we look forward to hearing about that later on. Lets walk you through what is happening in asia. Find out exactly what the story is there. Juliet standing by in the hong kong. Enough good morning, not points on the market in my opinion. But it is a really solid session here in asia come on the back of those gains you just mentioned coming through from the u. S. We have seen the shanghai composite fluctuate in and out of the positive territory. 1 , certainly more solid today up by 1. 2 . There has been downward pressure on the securities, chinas largest broker. Insideris investigating trading, which has seen about four executives questioned. Certainly leading the charge in asia today, there is a potential merger between samsung engineering and samsung heavy, which has seen great games from the heavy players in korea. Currently up 2 today. Paring back some of the earlier losses in the afternoon, we see the weakness coming through from japan a Machinery Company today, elsewhere a lot of bigger name consumers looking really good. In australia, all sectors hire today. Up by 1. 5 , essentially reversing the loss we did see yesterday. It is worth noting we do have the malaysian market closed today for a public holiday. However, the Malaysian Ringgit is having a very solid session as investors here awake the decision coming through from the fed. We are seeing a lot of money coming from emergent markets. They will tell you a lot about the Malaysian Ringgit, but it was slightly up against the dollar. Today it is a 1. 1 gain. Holding,back currently and the aussie dollar has Commodity Currencies getting a pickup, as we see that rise and equities and also commodities. Had astralian dollar has lot to move with, new Prime Minister in australia. Yesterday it was up slightly against the greenback. Pretty much unchanged at the two half week high during yesterday trade. Guy thank you very much. Asian markets on the front f or and pushing. A long way to go between now and then. Giantmining and trading glencore has suspended trading in hong kong, pending toormation on information shore up the Balance Sheet. Caroline hyde has all the details. Caroline glencore known from holding that wooden spoon of the worst performer so far this year. Let us take you on the details about what this is about. Share suspended, as we await confirmation details around the deal. The understand they are selling 1. 3 million new shares. That will raise, if we are looking at the current share price which netted a record low in london yesterday, it is priced near those numbers it would get about two and a half billion dollars. It puts it at a discount. According to people with familiar, we are likely to see a price about the 5 range discount. The no less than that overall. Area, this has strong demand. They are able to close the books very swiftly, by yesterday at 8 p. M. Lets look into what the managers are swallowing. They are standing behind his company, no surprise that billionaires were made to the company. He will remain a key care shareholder. Enberg two glassman will retain his 8. 4 stake. An stanley and citigroup have not agreed to buy, but theres also a book runner on the list as well. Lets remind ourselves, why are they doing that . It is shoring up the Balance Sheet. They acted so swiftly. We had the plan that they will be cutting debt by about 10 billion. Right around the third, the overwhelming debt is 30 billion. Investors are starting to get unnerved, particularly Standard Poors the standard Rating Company had the outlook needed junk. Raded to how can they sustain themselves in this commodity rout . They are not only raising capital, but they are cutting spending selling assets and holding dividends holding up to 10 billion. Theyre coming out and saying we think we have clarity on about 7 billion on this deal. The issues still remain about the selling of assets overall. They are saying tenderly be streaming agreements, the longterm reduction in loans, that is were they see transparency lacking. But we have to remind ourselves, will the start to shore up not only the Balance Sheet but the share price . Look at this. Down 62 over the course of 12 month. This is where the paint has been felt because the commodities rout and the concern about the they have beent trying to make amends for. Guy thank you very much, indeed. Caroline hyde on glencore. Number the chairman of bloomberg, he is a senior non Voting Member of glencore. We have to make that clear. Anna simon french, chief economist. The dizzy you. A few stories, about the commodity markets. Gas prices, the fed, glencore into commodities, selling off of the commodity market. Simon i dont think so. Because of the commodity story is principally a supplyside story. There is less pressure with low Interest Rates, and longer Interest Rates, for those marginal producers to have those debt margin calls to close down capacity. There is still chronic overcapacity, a hangover from the super cycle. It is not going away fast. From a commodity perspective, if we do get a rate rise of this week, that signifies higher rates going forward. That may start to move forward the marginal cost producers out of the market. It could give support to the commodity support. Guy what is the most important thing we will hear from the fed . Raising rates, the trajectory of the race . What do we need to know . Simon that is a great point. A single move up does not tell us really anything about the longer term to decorate. Points, that is unlikely to change the position regarding emerging markets regarding the commodity sector. But a more bullish sentiment about the cycle, the of cycle and whether that looks like some of the mid2000 cycles when there was aggressive tightening, or whether they are more moderate early 90 cycles, what that actually looks like is the key bit of information we will get this week. Anna youre talking about 25 basis points, as if that is the smallest unit the fed can move in. I think the research, our bloomberg hes picking up on , sisteron economists really tiny baby step. Simon we havent talking about the fed it for so long. There has to be something new, take your pick. It gives you another angle to write about. I think it is more likely for the reason that the risk of surprise in the marketplace remains there, despite this being the most taut economic event until the next one next month. And then a december. What were actually seeing is the desire from the fed to stage manage the whole thing. And therefore, i think it would be a big surprise. Guy we saw Sales Numbers out of the states, evidence that the in sumer is getting into gear after what has been a very long hiatus. Simon when i got a boost their pockets from the fallen gasoline prices, a saved it. That was responsible for the slow growth rates we saw in the back end of last year, in q1 in the u. S. But they concluded this is there for the medium term. And therefore they are spinning that. We are seeing that in the updebeat numbers. Yesterday or today, it will definitely change. Theyre going to arrive with retail sales nna but theyre big concern was around whether the turmoil in the markets related to china, and the spillover we saw into the developed equity markets as a result, whether that was going to get into the psyche of the u. S. Consumer, or was the evidence of that. Simon; no there was not. The turmoil in china, the of monetaryakening policy, it could actually mean lower prices. And if that is associated with strong labor markets, and this is where the u. S. And u. K. Standalone, that could see deflation. Which we have seen very strongly in the u. K. And at times in the u. S. Anna simon french stays with us on the program. [no audio] guy i think the risk is that they dont, that they the International Events are overtaking the fundamentals here. Especially was happening in china. I personally think if they were to hike in september, it would be a mistake. Move off right time to of zero, at a time when clearly you are closer to unemployment. But i think you can make a very reasonable argument that some slack remains. And you are quite far away on the inflation site. I do not think they should do a trickle out hike because they want to start hiking. I think it would be poor judgment to make that move. We have the dollar too strong, manufacturing down, Global Growth is just too slow away from this china. Guy those were the thoughts of our guests here on bloomberg tv. Ahead of tomorrows decision. Anna 70 minutes at 6 00 here in london. Here are the stories you need to know this morning. Guy we have been discussing the members of the open market and their crucial meeting on thursday. Tomorrow, we will find that if the federal raise Interest Rates. An aide to janet yellen says it would be a mistake to hike this month. And he thinks the central bank should hold quality study. Well into 2016. Anna hewlettpackard will cut 30,000 jobs, as Ceo Meg Whitman tries to refashion the business. Hp moved into two separate entities in december. It will supply businesses with highend technology and ink and printers. Camp isakeshift refugee growing on the serbian side of the hungarian border after hungary sealed off. People have been using the boarding crossing as an entry point into the European Union. Meanwhile, Angela Merkel has defended her decision to allow tens of thousands of refugees into germany, only to reimpose Border Controls the numbers became overwhelming. She is calling for an emergency eu Leaders Summit next week to discuss the crisis. Our a ets bring in expert, ryan. Responding to Angela Merkels calls. Ryna she made that call yesterday. It follows the meeting at the interior minister meeting, with a agreed on the distribution. Hadthing the o eu discussed before the crisis the mcgann. They failed to come up with a deal to distribute the remaining 20,000 lets take him. I think she has decided that the idea of waiting for the same interior ministers, when they meet next month october the eighth, that is pathetic. This needs to go up the food chain in anything happen now. Summit, theor the tough mandate decision to call it or not. The spokesman said he will make that decision on thursday. Now he was tweeting the same. Merkel has changed, moved on, altered her view. At the beginning of the story, she was very much we were going to let people live up to the possibility of living in the eu. He will become the migrant friend. That was public opinion. But that has now changed. It is interesting to see the compare and contrast with other nations. Ryan if you think about it from an eu perspective, she was the tough guy when it came to greece. Wasnt she . Now he is the conscience of europe, or the she was when germany said there would let the men. Now he has backtracked. To the badcomparing guys in place of her, the tough youce on the refugees, know, she is deploying, for example, the german chancellor germanmembers of the military to office duty to process the migrants they will let him. Whereby he has deployed military on hungarys border with machine guns. There is a difference there. Facing theans border. But youre absolutely right, merkel has her work cut out for her. A lot of people in her country and throughout the union are saying, how do you reconcile the fact that you will let these refugees in . And now theyre closing borders to some extent. And within her own country, there is a lot of unease amongst the regional leaders who she met with yesterday, who are saying where it is going . Anna away from humanitarian story, which of course is still at the forefront of this, the economic story is gaining momentum. You hear some voices digesting this could be a positive or various European Countries, that have unemployment and population growth. Ryan the single biggest manifestation of that is on the financial front, they came yesterday from a report from s p that said the single biggest uncertainty when it comes to the individual sovereign ratings of eu countries involves europes solution to this crisis. So greece was a threat to the cohesion of europe. And now that threat has been replaced by this one. In itself, it does not necessarily represent a fiscal or an important fiscal issue for these countries. But if they are unable to agree thatis, then s p says poses a governance issue. And that is uncertainty when it comes to ratings, because it does take into account issues of governance. Anna there was talk that some European Countries might be tempted to try and push back on some of their fiscal limits, as a result of the demand put on them by the refugee crisis. I noticed that they quickly jumped on that one. He did not want that went to gain momentum. Simon, lets bring you into the equation. Is it popping up on your radar yet . Growth . Population simon ryans point is very prescient from a management perspective. But from a pure economic effective, net migration is something europe desperately needs. If the 2013. If we look at japan, where pete in the early 1990s, do not want to take the next Economic Performance from japan and transform that. In the shortterm, the shortterm, yes, there are fiscal retirements. But everything we know about the Empirical Data is that these are upwardly mobile people who accrue skills at a fast rate. And they become positive in their countries. A pro for theh European Union, if it can attract migrants in these numbers. Guy will it accelerate the progress . What tells us how quickly we can get the net benefits of this . Language skills, getting them to work quickly simon integration is key. If there are systems they can easily assimilate into, they can enable them to find jobs, with a live, establish language skills. I think what you are looking for from european leaders, as ryan said, strategy. How are we going to manage this influx of labor . To maximize anna European Solidarity coming from germany, where unemployment rates are very low, and clearly sounds different when they are falling on the years on people where the rates are higher. That is one of the issues that perhaps is raised by this question around governance, whether europe is Strong Enough to stand this kind of challenge . Ryan if you have high unemployment, you have principally a left of Center Government or a vocal opposition that can make the electorate very difficult to garner public support for taking in migration. Clearly in germany, to a lesser extent in the u k, you can make the case that this provides employers with a real boost. It provides local communities with more consumers, more productive capacity. It really is quite a polarized debate right now. Guy when you look at europe, i degrees to get both of your takes, is it failing again . Ryan all the actions we have seen thus far have been kicking the can down the road. Guy we have seen that before. Ryan or passing the buck. It is quite easy to see. The refugees that have been piling up at the border, at serbias border at hungary, are now getting on buses and going to croatia. That is the next weighin. Problems,e solving but solving austrias and germanys problems, but he is creating problems for croatia. Maybe problems for romania. Simon underlined the European Union, the eurozone, they have common governance which prevailed in the eurozone crisis. In the greek crisis, and now prevailed in the migrant crisis. What you need to do is out of theyre trying, to forge a new way of governing. Anna simon, thank you. Guy 20 more coming up on the fed. When they come back, we will take a break. We will see you in a moment. Anna welcome back. 6 30 in london. Here are the stories you need to know. Guy members of the federal open Market Committee staff their meeting today. Tomorrow, we find out if the Federal Reserve will raise rates for the First Time Since 2006. Anna glencore is selling shares to pay down debt. The stock will be valued at 2. 75 billion based on the closing price. Performer this year. Yesterday, it touched a record low. Toncore requested a halt trading in hong kong yesterday, pending an update on the sale. Guy Jeremy Corbyn will take on for theameron First Time Since becoming the leader of the labour party in the united kingdom. Labor leader attacked the conservatives as he addressed them in brighton. They call us deficit deniers. But then they spend billions cutting taxes for the richest families. For the most profitable businesses, what they are is poverty deniers. They are ignoring the food banks, the housing crisis, theyre cutting tax credits when Child Poverty rose by half a million to over 4 million. Anna lets get thoughts from our guest host, simon french. Simon, give us your thoughts on the u. K. Very preoccupied with the Interest Rate decision. It might not be entirely unlinked from the Interest Rate vision. On thet is your take recovery at the moment . Simon i think we get a very important update at 9 30 us morning, the labor market statistics. That is the soul in Inflationary Pressure in the economy whether wages will be tied into the market. We have seen a couple of soft months, is it the reversal of a trend . There are looming clouds. We had businesses lining up to talk about the National Minimum wage going up. But also a moments into private pensions, that is adding to employ your cost. And it is affecting pensions. That is entirely what the government wanted to do. It wanted the government to pay more in wages, so they have less to pay simon it is part of deficit reduction, to reduce tax credits that would is inherent subsidy to employers. Let them pick up the slack through the National Living wage. That was designed at a time when the labor market was ahead. Is it a sustained soft patch . Is an absolutely zero case for mark and the rest of them to move into 2016 . Does Jeremy Corbyn have any impact on fiscal position . Simon no. We are four and a half years out from the election. But what he does have a Material Impact is the European Union referendum, which they are strangely silent about. But we know that he previously voted in 1974 against the u. K. Membership. So he has some eurosceptic history there. Where will he position the labour party . Change,ed the question and it is getting to the point where is to close to call. Guy you dont see him taxed to the right fiscally . Gives thecertainly conservative backed ventures who have a majority. They are feeling emboldened to try and move the leadership to the right. I think osborne, the leadership in his own party, he will try and tap into the center ground. Try and ensure the labour party guy but there is the opportunity to go to the right fiscally. They could push the welfare state, reduce the size of government, because they now have the political space to do that. Simon and he will get with your representations to do exactly that. The question is can he afford to do that from a demand management, when the economy is generally quite weak . In the u. K. Needs to grow order to release his tax revenues. That he needs to balance the budget by the department. Anna does it seem that the Labour Party Campaigns in favor hinges the loss on the negotiations that David Cameron has now between the vote and then. What they look like for unions, for working people. What does that do to the average employee in the u. K. . Simon them an interesting political environment where the right are saying europe regulates too much. A have parts of the left thumb of the left, the extreme left, saying they do not regular enough. Therefore, we do not want to get up. As Jeremy Corbyn uses it, he was to hold their feet to the fire the kind of concessions and deal he is getting from the European Union leaders. And if they are not sufficient enough, he may well just make a decision on where to campaign, how to Campaign Based on political opportunism. Guy how strongly do you think the u. K. Exit features and the problems . Aggregate altogether. Xit . Ce, the migrants, the e if you sequence that out, how high does the brexit story simonh we talked a lot for a few weeks guy just a few minutes time. Xityson the gre issue is so important, we saw the pursuit 80 . If the u. K. Were vote to leave, what other countries would look to leave . What you could broker bilaterally outside of the union without having to have the baggage . We can have a bit of that. And that will be a contagion point which may be much bigger than the greece issue. Anna simon french, chief economist. Guyl the sticky back to technology. Hewlettpackard is struggling to keep up. We understand it is cutting another 30,000 jobs. Lets get more detail on the latest restructuring, ryan has the details. We will have is a see how this fits into meg whitmans roadmap. Ryan there are really three things to know. First, jobs cutting as many as 33,000. Hp is a very large company. When meg whitman took over as ceo in 2011, they have 350,000 employees. Now they have north of 300,000. She wants to take it down to 250,000 employees am a ahead of the splitting of the two companies that will be public come november. So the news, the headline is that they will cut as many as 33,000. Many of those on the enterprise side of the business. That is a business that provides hardware, technology hightech to businesses out there. , whichsed to the pc side is creating pcs and also printers. Sort of the consumer face. The other news is that as a result of this, they will take charge of 2. 7 billion. Said they would take 2 billion, so they found them in hundred million in big picture savings. This was a Company Created in 1979 in palo alto, out of a garage, the classic Silicon Valley garage. Yet it is one of the oldest companies. And theyre trying to get more nimble, try to clean up their house before these two companies become public. Back to you. Guy thank you very much, indeed. Anna let us stay with technology. About how pounds, much google claims to add to the u. K. Connie. It is investing more in digital skills. We had exclusive tv access at the headquarters. Here is caroline. Caroline, you had been speaking to the business . Some phenomenal statistics coming up. They got deloitte to run the research. From that perspective, it is more like 11 times what they are bringing in per year. I argue it is nearly a quarter of what google makes in revenue per year. So this is six, 11 billion pounds sounds like a lot. Actually, the u. K. Is the secondbiggest market for google. Mckenna with another statistics. Export, we net export net 1 billion worth of commerce via the internet. They are trying to invest more in the u. K. And they are unveiling and showing off the entrepreneurs they backed. But also the predigital education they want to add to the community. It is called the digital garage academy. The point is just do not focus on london. They want to focus and expand this. We are looking at several other cities north of london to set up physical google garages. But we can be in every city. We have a large footprint here. 42,000 had more than entities, people registered on our campus here in london. Close to 45 Million Pounds of financing. That is all very good. London is hot. But we didnt want to bring services and training outside london. So up in birmingham, a few more cities yet to come. Of course the underlying Digital Academy announced that we will get more people included. Caroline many feeling it could became rich. Be cambridge. Pressure,are under the center of attacks, weve been watching what is been happening in ireland, the company is messaging all of those issues that we understand. Caroline this is about policy, highlighting that we will invest in digital skills. Y promised that to the eu more than a million they will train. I think you are right. It is time to show they are a force for good, as well. And many people perhaps interpret them as concerning. , think that 11 billion pounds is that going to put people off more . Will they be more worried that you have their tentacles . But no, they actually look at the entrepreneurs, the people we aging to train. This will boost their overall pr to policymakers, that they can be a force for good. Anna caroline with the google story. We will have numbers out for the luxury sector. Switzerland, the line i am interested in is what is happening in asia. You see the fivemonth topline sales, asianpacific sales down 80 . 18 . The estimate was 11 . They were consistent with the chinas slowdown. Anna and a talk about it in the comments. They say the environment remains extremely challenging. So a gloomy statement. Guy we will have more on that later. Plus the top stories we are watching here, as we are working towards the European Market opening. We would take you a we will take a break. Guy 6 46 in london. These are the stories need to know. Anna members of the federal open market will have their meeting today. Tomorrow, we will find out if the Federal Reserve will raise Interest Rates for the First Time Since 2006. Meanwhile, a former aide to janet yellen said it would be a mistake to hike. She thinks they should hold policy steady. Guy hewlettpackard will cut jobs. Meg whitman will refashion the the business. Which willse, surprise businesses, which will sell personal computers and printers. Most sincehing the 2012, after firsthalf profits beat analysts expectations. Net income fell 23 . But that was better than expected, as Luxury Brands offset the impact of falling sales in asia. We stay with fashion. Lets talk about the accessories. It has reported a 26 rise in net income. Worlds Largest Holding retailer has been a faded from a weak euro and an upturn in the market. Billionrt of a one valuation. Charles, the numbers . Charles good on every level. Up 7 , gross margin expanded a bit. And some cost leverage as well. 17 , when youup get to the bottom line, it was up 26 . A nice bit of cost leverage the whole way through. Anna and the recovery story around europe, is that coming through in the numbers we are getting through retailers . Charles yes. Broadly, it is still mix. Are stilleas that struggling. We had king fisher yesterday, Home Improvement sales barely up. Clothing should be one of the areas that a stronger. But as we have talked about, it can be a bit weatherdependent. Tex seems to have the right exposure. Is much better than h m. Who have better exposure to germany, where it was very hot in august. Guy i know you spent time crunching the numbers. Friend, butr nonetheless, is it a case of looking out the window saying it is cold, rainy, they are going to sell a lot of coats. Charles would agree, that is the way it is. Ex, youmeone like indit to make sure you are looking at 80odd windows. Just because it is cold in britain, it is cold in spain, as well. Which is just as important. 88 versions of you around the world. Impact onave a big retail. It does not play the same, depending upon the fligh supply chain. Charles inditex is big on sourcing. And as it happens, selling quite a lot into the dollarrelated currencies. This is a doubleedged sword for them. They have exposure into the middle eastern markets, and other dollarlinked country. There is a risk. H m are selling a lot into the eurozone. Anna charles allen, thank you. Guy let us stick with simon french and ask a related question. When they talk about deflation wave coming out of china as result of the devaluation of the policy being imposed at the moment, were talking about ind itex, but how quickly does that certainly felt . When we feel the china story . Simon almost immediately, because of the likely policy sponsored of the ecb later in the year. I expect them to extend qe further. Look at the eurozone recovery, as it is. It has been predicated on a weaker euro. On devaluing the terms of trade, now enabling the export powers of europe to build up. What is actually quite interesting, back when our Research Team was thinking about currency a few years ago, they were trying to assess the retailers. How they are hedged, exposed, to the asian fluctuations in isrency in that region, it actually front and center in their assessments right now. Anna we heard from mario draghi. He did not shy away from the china question at all. He was quite openly concerned about the turmoil in the markets that were so front and center, how it was going to spill over to the european story. Does that seem like a storm in a teacup next time we hear from the ecb . Or will there be slowdown in china, not as bad as people thought . Simon a 3 devaluation in the one is not a big change. If it is a forbear, however, a series of violations as a central case as a try to move yuan, that eats into the competitive game eurozone is made. And mario draghi will have to react. If you look at the eurozone, it fell off a cliff since midjune. And you have a series of Ecb Governing Council members who stood up and said we have to do more. But you also have that germanic voices saying that qe will not do it all. We have to double down on reform. It remains a challenge to what is been a good beginning to economic recovery. Guy tim is here from digital. It is almost here. The fed decision is almost upon us. I have not heard. What could go wrong . I know you have the doomsday guide to the decision. Tim there are some he thinks. I had to make a list to remember them all. First time ever. Guy with the memory of your caliber . Tim weve been waiting years for this. The markets are still not ready, indeed. Er years so where is the carnage going to play out in the event that they do . What they are looking at is the short end of the treasury market, emerging markets, corporate borrowers, the list goes on. Anna one of the doomsday scenarios, short and. End. Tim you would just see yields move up a lot and quickly. Guy let us get a shot of this. This is a twoyear note. It has been progressively moving higher. It will be everything to see how that plays out. Tim the market has evolved from a very broker lead market to electronic lead market. What happens to liquidity . Is it going to be there in the event of a severe reaction . It is interesting direction. Markets this an emerging , it screams health and puts in capital controls . Tim they are really doing great right now anyway. Right . [laughter] the last thing they need is higher rates in the u. S. It will draw capital away from the emerging markets. We are big beneficiaries of the zero rates and other countries. To emergingy markets, it is going to be drawn away in places like brazil, indonesia, turkey, the purchase people are looking at. Tim well to the list . People are looking at corporate borrowers. ,here is a lot of big deal incorporates have been big beneficiaries for long time as well. Guy simon, how to you see the lists . Simon the fact that you drew attention to the treasury chart is quite interesting. Does that reflect and anticipation of higher shortterm rates . Does that show Inflationary Pressures building, or does it in fact show the Chinese Authority is selling a lot of u. S. Treasuries to protect the yuan. Theyre trying to protect the yield curve. It is fairly challenging. If i were to put it in priority order, i would look at emerging markets front and center. Not least because you have a huge amount of dollar denominated debt. We do not know what tolerance they have to change, marginal changes. Anna in case you thought the risks were all on one side, i draw attention to one line in the store you brought us tim. Keeping rates at zero could lead to more turbulence and markets. This is so doomsday, but either way, it looks bad. Tim the worst possible outcome is a do nothing. And we have to do this all again. Anna we would just replay this interview. The september . Thank you for joining us. We will be back in a few minutes. Guy the wait is almost over. The fed starts its twoday meeting in washington. The markets remain divided on whether the fomc will hike. Anna glencore suspended. It halts trading in hong kong. Guy all tech takes a hit. Hp slashes jobs as it restructures to keep up with a rapidly changing tech market. Welcome to countdown. Anna welcome to the program. 7 00 here in london. Theres been a positive 24 hours in equity markets from the u. S. Up more than 1 on all the major u. S. Indices. Guy retail sales very strong out of the u. S. Yesterday. We are waiting to see what the Federal Reserve does. Let me give you an indication of what we think european equities are likely to do today. Let me give you some early numbers to show you whats going on here. Looks like we are going to get a half a percent upside move for the ftse, the cac, and the dax at the moment. Still showing a negative story over there, but the correction in the states getting progressively more positive. U. S. Playing catchup on the arbitrage. Anna that retail sales bounce in the u. S. Changing things just a touch in terms of expectations on whether the fed will move on Interest Rates this week. At the beginning of the week, we had a 28 chance or so. Now it has gone up to 32 . Guy simon french was telling us Larry Summers has an interesting line on whether the fed will hike. We will get to that in just a moment. In the meantime, lets get to asia. Juliette saly joins us now from hong kong. Juliette good morning. It has been a very positive session here in asia. We are finishing things up here in korea and japan. New zealand has closed higher by 0. 3 . You can see gains coming through from the region here. The kospi really leading the gains today. Samsung engineering and samsung heavy on talk of a potential merger. The nikkei looking like its going to close higher by 0. 8 . Pretty solid session there. Some gains coming through from machine ordering companies. Australias asx 200 reversing yesterday loss, up by 0 by 1. 5 . Kong, a swing in and out of positive territory today. As we head into the last hour of trading china, up by 0. 8 . You mentioned the holding of glencore. We are seeing a general positive movement on the hang seng, up by 1. 4 . Jakarta, a little weakness today. Malaysia is closed. Here are some of the key stocks weve been watching. Prada, which had that really solid session yesterday. Up 8. 9 in hong kong. Securities waiting on both the ashare index in china, the shanghai composite, and the hshare index in hong kong. Its ceo and president being probed over that investigation into alleged insider trading. Generally, it has been a positive session in asia. Back to you. , thank you very much. Guy we are waiting for news out of glencore. As soon as we get it, we will bring it to you. Lets talk about what we are going to do now. Still with us, guest host simon french. We are also joined by Goldman Sachs partner, Colin Coleman. Welcome to the program. Is,ess the place to start probably glencore. Pricing its issuance, placing the issuance at 125 pence a share. Lets get carolines take on this. Straight to Caroline Hyde and get her view on what we are getting out. Caroline we did have that news that 125 p was basically the limit if you didnt bid of of 125 or on the nose, you risk missing out. 125 pence is indeed the price they are going for. A slight discount to have a shares finished trade yesterday in london, 128 pence. Pricing at 125 pence. Proceeds therefore of 1. 6 billion pounds overall. This being used to shore up the Balance Sheet, to pay down debt. It was just last week that the head of glencore said he would be trying to knock down debt to the tune of 10 billion, by a third, to ensure they can keep their Credit Rating at triple b. Ofy are saying the result the equity raise is 125 pence per share. Very near that record low that we hit yesterday in london trade. Anna caroline, thank you. Caroline hyde with the details of glencore. Guy that gives me Something Else to talk to Colin Coleman about. That is commodity prices. An area of interest i suspect for you. We have the fed possibly hiking rates tomorrow. Weve just been talking about glencore. Walk us through the implications. What does it mean . These three interrelated storm clouds of the fed Interest Rate hikes which would suck money out of emerging markets, commodity price falling, pretty flat from here, and the fact that chinas transformation is hitting the commodity world, is having a huge implication for all growth markets. You can see brazil, russia. Africa itself has shaved 1 of growth rates. Her south africa, the mining environment has been significantly hit. The prospect for exports is looking quite good in the light of currency depreciation. Rand seethrough commodity price, gold has never been as go rand per kilogram price. Gold valuations have been significantly hit and the Mining Industry is suffering. Issues like strikes, cost of energy, reliability of electricity, have hit the Mining Sector very hard in africa. Weve seen growth shaved off of fornd 3. 2 , down to 1. 5 2015. Anna how much of a threat to the emerging story that is Subsaharan Africa is the slowdown in china . Does this risk derailing an investment story that many people have been excited about . Colin i think Goldman Sachs is more bullish on china as a whole. There are risks, but at 6. 8 forecast growth, this is not exactly a soft story. It is still adding significant absolute growth to the world. I wouldnt underplay the importance of china going forward. Africa benefits significantly. Africa is an oil and commodity player. Theres also a Demographic Dividend in africa. One billion people, very little services, starting to get those services. Telecom, banking, so forth. We see a strong story coming out of africa. Guy simon, how much do you think the fomc is thinking about the concerns that colin is raising . Simon increasingly so. It was almost inconceivable during the last cycle that International Concerns would make it to the minutes of the fomc. Weve seen them repeatedly cited as reasons for caution, reasons for a gradual increase when the cycle begins. At, fomc members are looking International Impact of dollar movers. The fact thatd domestic currency fluctuations can change that fundamental picture. But its when they are leveraged on the other side of their Balance Sheet where youve got localized problems which can really manifest themselves quickly if the fed start hitting the ball out of the park. Youve talked about your outlook for china, the goldmans outlook for china. You then have to make a call on where we are on the commodity story. If we are looking for a bottoming out, do you have any good news on that front . Colin its hard to say. Some people are saying the glencore story is part of the bottoming out of the commodity cycle, but it is hard to say. When you look at the forecast going forward, it feels like this is more of the same for the next 12 months. Guy where in africa this concern about dollardenominated debt, it talked about africa in the report that it issued. Where in africa would you have concerns about exposure to that debt . Colin we have about 10 billion out of a stock of offshore debt of 50 billion. We have low levels of hard currency offshore debt. Places like ghana have taken on other markets who have raised offshore bonds and taken on significant amounts of debt relative to their underlying fundamentals. The fiscal ratios of some of those countries are not looking as healthy as they were. Anna if we are looking at the short term and any market turbulence that might result if the fed does decide to put up Interest Rates, if it were, where would you be looking for that to the expressed in your world . In Subsaharan Africa, where are the Pressure Point . Is it the likes of ghana where we have this high level of debt in dollars . Colin on a liquidity basis, south africa is the only true liquidity, where the fed issues will play out. I think that is the story to watch, and also the currency is the most sensitive to whats going on in the United States and china. Those two markets are completely determining in the macro story. We have our own micro issues. We are scoring some goals, particularly in the energy and labor area. But the storm clouds on the macro side are more likely to impact where its liquid and it can play through, south africa being the largest African Capital market with a very liquid currency. See you dont always people selling what they want to sell, but what they can sometimes. Colin fundamentally, growing at 4. 5 , Subsaharan Africa is a positive story. Guy ok, stay with us. We are going to carry on the conversation. We are going to get into what is happening in south africa. Simon, thank you very much indeed for your analysis. We will maybe do this conversation in a months time. Anna we will just change the date. Guy plenty of coverage coming up ahead of the thanks decision. The feds decision. We will have all of that on what is going to be happening. Anna tonight, ahead of the rate decision, we will join bloomberg for an hourlong conversation. Stay up for that one. Think reason is because i the banks are overtaking [indiscernible] i personally think if they were to hike in september, i think its going to the a mistake. Is it the right time to move off of zero at a time when clearly you are closer on employment, though you can still make a reasonable argument that some slack remains, and you are quite far away on the inflation side . Think they should hike just because they want to start hiking. I think it would be poor judgment by them. The dollar has been too strong. Manufacturing is down. Global growth is just too slow. Guy those are some of the thoughts of our guests here on bloomberg tv ahead of tomorrows fed rate decision. Anna it is 17 minutes past 7 00 in london, 17 minutes past 8 00 if you are watching in frankfurt. Guy members of the fomc start their crucial september meeting today. We will find out whether the Federal Reserve will raise Interest Rates for the First Time Since 2006. Anna glencore has sold 2. 5 billion of new shares to pay down debt. The 1. 3 billion shares were priced at 125 pence each, a 2. 4 discount to yesterdays closing price. The swiss commodities trader and minor is the worst performer on the uks ftse 100 this year. Camp isakeshift refugee growing on the serbian side of the hungarian border after hungary sealed off the border with razor wire. People blame fleeing conflict in the middle east have been using it as an entry point to the European Union. Angela merkel has defended her decision to allow tens of thousands of refugees into germany am to reimpose order controls when the numbers became overwhelming. She is calling a summit to address the crisis. Anna for more, lets go to berlin. Is known for being a cautious politician, and yet we saw her in with great flourish, i guess, throw open the doors of germany to this refugee crisis. Why has she been pressing ahead with this open door policy . Good question. Many are asking themselves the same question here in berlin. When you talk to her advisers, they basically give you two arguments. On the one hand, she sees this refugee crisis as an opportunity to improve germanys image in secondly, there are some emotions involved in this for her. For example, the pictures from the hungarian border remind her of herself being from the former gdr of pictures from 1989 when gdr citizens made the Border Crossing to austria. It kind of a similar story. Deal, its a highly risky shes doing. Guy is she looking consistent . Shes throwing the doors open, then shes reimposed over the weekend Border Controls. Did she really understand the magnitude of the problem when she first took the line she did . That inny people doubt berlin. I think she underestimated the sheer number of refugees who would come here, and shes also underestimated the effect her words and also the images would have in social networks all over the world. For example, when she went to a refugee camp in berlin, there were many refugees who took selfies with her, syrian refugees, and these selfies were sent around turkey, syria, and so on. The message is syrians should come to germany. You will all get a photo with the chancellor. That is of course not the truth. Anna if we put this in the context of her leadership, could this be something that does make or break her legacy . How thisdepends on crisis will go on. Getink if she manages to this crisis under control and if germany manages to integrate the syrian refugees, i think it will be seen as a positive, as one of her main political legacies. If it goes wrong, i think we will see the rise of rightwing extremism in germany and she will be held responsible. Anna thank you, arne delfs joining us from berlin. Guy back to Colin Coleman, partner and managing director for Subsaharan Africa at Goldman Sachs. Im not going to ask you to give a Goldman Sachs line on this, but how is this story being reported in cape town . Colin with a great amount of interest and sympathy to what is going on. The refugee crisis has its roots in the north of africa, libya, syria, places like that. I think theres an affinity with the problems and a concern about the people. I think the extent that humanitarian hands are opened to the victims, theres a lot of sympathy. Goldman sachs just gave a significant amount of money to the u. K. Government refugee assistance program. Anna in terms of the South African experience, when i was last in south africa, it was a time of tension to do with migration. And the ability of the labor market in south africa to cope with that influx. I think theres an unemployment problem around the world. It has a major impact on how people experience migration. Africa was part of that story, as you point out. The tension of distribution of resources in economies where theres a sucking sound in terms of growth, less growth, less opportunity, more competition, and so it is important that we get back to a place where theres more opportunity for more people. It is a winner take all growing economy rather than a winner take all mindset. Guy that takes me kind of towards what is happening more specifically in south africa. Story,or relations particularly related to the Mining Sector, unemployment, and what is happening with labor is management, thats read your notes on this. You see this as being a major priority now. Colin yes. In terms of the overall emerging markets, theres an extremely high level of unemployment. We have basically 15 Million People employed and 8 Million People unemployed. Thats a 34 brought unemployment rate, which is far too high, and its not changed since the Mandela Administration of 1984. We have a flatlining of unemployment in south africa, notwithstanding an enormous amount of wealth creation. Driving employment is going to be a very significant issue in the next 20 years in south africa. Mining and manufacturing is a core part of growing that. The service is part of the economy is where employment has been created. Important that we work in south africa in particular breaking this unemployment problem. Anna its a structural unemployment problem, isnt it . That makes it more difficult and challenging to solve. Unemployed,lion roughly 70 under the age of 34, and 50 dont have the school matriculation certificate. Theres on employability and a youth Unemployment Crisis aggravating the situation. Its very important that we work out ways to deal with those who are marginalized, as well as growing the formal economy itself. Guy you look back to the 1980s and what happened to this country with thatcher and the deregulation of the labor market. The story still resonates here. The rise of the small and mediumsize company, the Employment Creation that developed, hasnt been experienced in economies like south africa. There is this temptation by governments to sort of hold on tight, but i guess they need to do the exact opposite. China,if they look to for example who are driving a modernization program, i think theres significant lessons for south africa from the china story. What theyve done with the Stateowned Enterprises is theyve broadened participation, theyve listed those entities, theyve brought a huge amount of reforms to bring transparency to get Good Governance in place. And while they have their own direction to travel, and matters to fix, south africa could do a lot more to modernize and liberalize their economy. What we need to do is break the cycle of Stateowned Enterprises that are underperforming. More investment in health, education, infrastructure. Literature rates have not improved. Thee inspect and see Life Expectancy rates have not improved. These factors have to be taken on. Anna and it helps if the Energy Supply is secure. Thank you very much for joining us, Colin Coleman, managing director of Subsaharan Africa at Goldman Sachs. Guy coming up, big pharmas best performer. We are talking diabetes when we come back. Guy it is 7 30 a. M. In london. Anna members of the federal open Market Committee start the crucial september meeting today. Tomorrow, we will find out where the federal if the Federal Reserve will raise rates for the First Time Since 2006. Guy 1. 3 billion shares of 2. 4 discount. The worst performer on the u. K. Ftse 100. Anna a makeshift refugee camp is growing on the serbian side of the hungarian border. People fleeing conflicts in the middle east and africa have been using the Border Crossing as an entry point to the European Union. Angela merkel has defended her decision to allow tens of thousands of refugees into germany, only to reimpose Border Control when the numbers became overwhelming. She is calling for an emergency eu Leaders Summit. Guy we are 29 minutes away from european trading. Good morning. It has been a very good wednesday in asia. We have half an hour of trade left in china and we have seen once again that big swing coming through in the last hour or so of trade. The market in china was only up slightly, but it is now up by 3. 2 . There will be a lot more speculation about whether we are seeing Government Intervention coming through. We have seen the games coming through on the hong kong hang seng index. Up by 2. 5 in late trade. The markets already closed did really well today. Good gains coming from south korea, up 2 . The nikkei adding to yesterdays gains. Saw200 reversing losses we yesterday. A little bit of weakness coming from jakarta. For aia was closed today public holiday. Here are some of the major movers. All korean stocks. Samsung engineering reported it both try again to make of those companies do very well. Samsung engineering have in its best day since 1970 1997. These were some of the losers, all japanese power companies. A very solid session, generally. Investors are awaiting that fed decision. Anna thank you. Juliet joining us from hong kong. Guy we have 27 minutes until the European Market open. Futures, it looks like pointing toward a 1 open higher. Been as well,ave looks like we are getting a negative start. Looks like a more positive start reflecting the later pickup we have seen in asian trade in the last hour. Anna europes topperforming stock this year, leapfrogging glaxosmithkline. M a frenzy. Ed the you on the program. Novo has been shunning the m a story. We have seen a record amount 250ctivity in the sector, billion dollars worth. If you look back at five years worth of deals, that number is 250 million. They have been turning their backs on the industry and saying, we do not need huge transactions to grow the company. Guy this is a company and growing is the right word. We have a growing waistline problem around the world and that is leading to growing diabetes around the world. They are already at the top of their industry, but they are not sitting back. They are creating new projects and innovating. They have products that naturally stimulate insulin production and they are working on insulin in pill form so you do not need to take in jacksons. Anna do not need to take injections. Anna are we looking for any announcements in the future . They do do Small Partnership deals. Largescale m a is not something they are looking to do. That is because they have very strong internal r d and they have a stray bolt they have really strong scientists. A bank of america report that showed they were at the top of the industry in terms of return on research. Apple, some would say. Very nice to see you. Thank you very much. Says the next guest modest rate increases in the u. S. And u. K. Will not have a major impact on growth. The chief investment officer, great to see you. Modest rate rises in the u. S. And u. K. Will not have a major impact on growth. Away from the day today conversation, that is one of your Key Takeaways . We start from a point in which Interest Rates are abnormally low. I do not think the first few increases will have an enormous impact on the structural lending rates in the market. It depends on how we they will go up. I do not think an interest ,ncrease in the states tomorrow which is quite likely, will suddenly bring the economy to a halt. Financial markets, i think they are tuned into this and it will be a good thing. The worst thing is further delay. Positioning for the decision over the next 48 hours, it would be this dovish trajectory on rates signals that it is a good thing . It is a very shortterm deal, isnt it . If they do not raise Interest Rates tomorrow, we might see some flickers of concern come through in financial markets. The market developments we have seen over the last week are telling you that people are tuned into this possibility and they are not fearing it. The fed has held back for too long. They have procrastinated. Any to be careful they do not lose the confidence they need to be careful they do not lose the confidence of financial markets. If the numbers move through the thresholds and they still do nothing, that is when they get behind the curve. Neither borrower nor a lender be. Anna what about the data we have had most recently . There were raised eyebrows around the possibility of combining a rate hike in september with the market turmoil we have seen in august. A nervous consumer in the u. S. . It seems as if perhaps the turmoil has not damaged the consumer in america. One of the problems with interpreting where the economy is in the western world is that we are used to looking at manufacturing numbers as a guide. You report on those. Them,of numbers, you love i can talk about them. Most of the economys services and we dont get so much information out on services. Service sectors in the west are growing quite nicely and services are in your being are absorbing employment at the moment. We can see that in the United States, the u. K. , and the impact on labor costs. To allow policy to be driven by a tiny part of the economy would be the wrong thing to do at the moment. Guy what do i do if im Holding Anything with a coupon right now . How do i trade through that . That looks like a more difficult story to tell. You arell Investors Holding bonds over a 10year period when you expect to return to only match or be slightly below the inflation rate. You are holding an asset which will give you no real return over a 10year period. Bond yields have to travel higher. The question is how that process happens. More likely, i think we are on the threshold of one of those on one of those steps at the moment. Anna that would be an example of the turmoil that could play out in markets. Government bond markets, they are very liquid. Corporate bond markets can be very illiquid at times. I would be more nervous about the relevance in Corporate Bond markets. Guy stay there, richard. Plenty to talk about. Anna we will take a short break. We want to talk about glencore, the worst reporter on the ftse 100 this year. We will bring you the details after the break. Anna welcome back. Here are the stories you need to know this morning. Guy members of the fam must see fmo see start their crucial the fmoc will start their crucial meeting today. Anna glencore has sold 1. 6 pounds of new shares. The 1. 3 billion shares were priced at a 2. 4 discount. It is the worst performer on the u. K. Ftse 100 this year. Yesterday, the stock touched a record low. Hp is moving into two separate entities. It will supply businesses with technology and hp will serve personal computers and printers. Lets talk about what is happening in the markets. This is what is happening as shanghai closes out its session. It is something of a rally taking place in asia. Anna something of a rally. Guy we are getting a shortterm version of that. That is a threeday chart you are looking at. We are rapidly closing in on a flat line, a big move to the upside. We are now up more than 3 . Anna 5. 7 on the shanghai composite. Guy let me show you what is happening with european futures, we are up around a percent on the dax. Futures are firming a little bit as well. Anna lets talk about glencore. Performers the worst on the ftse 100 this year. They are raising money to shore up their balancing sheet. Lets talk to Caroline Hyde. Today, we get the final closing price, 1. 3 billion shares being sold at 120 5 10, a pence, a 2 125 discount. This is 10 more equity coming into the market, 10 more capital. Clearly, they are needing to do this. They are doing it to firm up their Balance Sheet, but they have to support their own management. The chief executive who is the second biggest stockholder is set to remain so. They have been sucking up 22 of the new share sales. Several new managers all buying into this new equity. Citigroup and Morgan Stanley underwrote the rest of the deal. What is so interesting is how quickly they have put this plan and place put this plan in place. That is about a third of the overall debt they have in place. There were warning signs. Standard poors moving it to a negative outlook. Very close to junk territory. Look, theyhs says have 7 billion worth of the 10 billion they are looking to raise. Be firm that they will up the copper supply glut we are seeing. We need transparency on asset sales. So far, it looks like they are taking big action quickly. Nervous i am still about commodity markets. Chinasroblems economy is decelerating. We know it is decelerating and what the authorities are doing are telling us we are right. Anna every time you see the chinese authorities intervene, that is a bad side a bad sign for you . Forard it is a problem investors. The authorities tell us they want a more free market taste a mored they want freemarketbased economy. It is the old chinese way of trying to run a command economy. The economy is not responding to commands now. It is a problem for investors because they do not have a full understanding of the mechanisms behind the workings of the economy. Growth inve seen mainland china. Mainland china, they are starting to see a pickup. Travelople are used to to buy their goods and are no longer traveling and staying at home and maybe they are going to japan . You need to step back a little bit when you look at the luxury companies. Anna do you think other companies will try to shore up Balance Sheets . Richard one company may and one company may not. Different companies to have different characteristics and some will be better placed to whether the situation than others. Two weather the situation than others. Understanding exactly how Commodity Companies make their money, where is it made and in what part of the process is it made . When you are investing, you want to be able to identify that. You about theg valuation of the stock market. A lot of companies will look at the stock market. Anna does it tell you about a lack of interest in taking risk . Some companies will take risks on big m a deals. Weve had plenty of people bemoaning a lack of investments. Want to buyy something that is readymade. They did not want to take on the risk of an internal Investment Program which might take 5, 7, 10 years to fulfill and who knows what the landscape is going to look like. There are still quite risk adverse riskaverse in that sense. That theke the view stock market is relatively modestly valued, earnings increase in the mediumterm. Guy do you worry about the volatility we have going on in assets . Maybe it is regulatory induced. Is that something that is increasingly on your radar screen . When you are trying to make longterm decisions, those longterm decisions are difficult. Richard you have to look through the volatility and understand why the volatility is there. Sometimes it is event driven. Other times, there is Something Else behind it. Easing, initially, quantitative easing seemed to shore things up and help stabilize financial markets. It was a sign of confidence. Liquidityurse, that is still there. The additions of stocks in the u. S. And u. K. , the liquidity is still in the system and that makes asset markets more unstable and leads to greater volatility. Guy that goes back to your call that the fed needs to get on with it. Richard we could see volatility emerging from that. It leaves an environment of uncertainty. Raising rates creates greater certainty. What is the sequence going to look like . Anna richard, thank you very much. Caroline, thank you for bringing us the details. Guy we will carry on the conversation on glencore and the fed as we work our way through the morning. European equities look like they will open on the front foot in six minutes. I am watching the fed as the meeting begins in washington. You struggle to find two economies that agree on what the Federal Reserve will do tomorrow and what they should do tomorrow. That means there is a lot of uncertainty. Goldman sachs thinks they should hold off tomorrow. Goldman sachs warning the market is vulnerable due to the uncertainty. We will also be talking about glencore. Yesterday, glencore stock dropped to an alltime low of 118 pence a share. That is an incredible delivery at a time when that is the worstperforming stock on the ftse 100. The stop it the stock is expected to rise at the open. We will talk all things gold. What is going on . Are we just waiting for the fed decision . Probably. Anna thank you very much. Jonathan ferro will be back after a short break. We will be watching glencore. Lets quickly show you what has been happening with shanghai. A huge rally toward the end of trade. European futures pointing to a plus 1 open. Jon good morning and welcome to on the move. Moments away from the start of european trading. Market morning. The fomc meeting begins in washington and economists stay divided. Goldman sachs says the markets are vulnerable. The shanghai composite now facing a today losing streak. The worstperforming stock on the ftse 100 in 2015. Ahead of the open, 20 seconds away. Ftse futures are higher. A big surge in china to discuss. Lets get the European Market open first. Echoine like that rally yeley why the rally . Two months of growth in the u. S. , that seems to be tempering some of the risk taking or is it just that people are Short Covering and are getting in and trying to get out of their short bet ahead of the federal rate reserve. Are trying toy understand what is behind the rally at the moment. 40 up zero point percent. Whatever the case, volumes are lower. U. S. Equities