First, china has devalued the yuan, cutting by 1. 9 . Francine that ends a peg to the dollar. The decision led to the currencies against oneday loss in more than a decade. Run us through the Immediate Impact on markets. Absolutely. This was an abrupt move by the chinese. The yuans biggest drop in two decades and a lot of lingering questions, or questions that will spark geopolitical questions that will have to be dealt with with trading partners. Lets talk about the market impact. We begin with equities which saw a more muted impact. The hang seng index now turning negative. The shanghai composite flat. It was higher earlier. That looks like it is basically unchanged. Same thing with hong kong. The dude see optimism in chinese shares on speculation we did see optimism in chinese shares on the speculation that this would boost exports. Not market friendly to those countries that would be adversely impacted, particularly in the asiapacific because of chinas move. Countries that are being impacted, commodity currencies, we saw a move lower and commodity currencies. Many currencies in the region because of this move on the yuan seeing more than 1 drop. Check out the singapore dollar, biggest move since 2011. We saw the korean won 1 move. The kiwi down 1 earlier. It looks like it moderated some of those earlier losses. The aussie lower. We do see some retracement. The fact the chinese have taken this decision is having a global impact. The euro moving as well. And certainly this biggest emerging market, its move rippling across World Markets and world economies. The impact of chinas move to stem its struggling economic challenges. Francine thank you. Manus the peoples bank of china says the move is a one time adjustment. Lets find out more. Our China Economy reporter, kevin, choices from beijing. His raisesuation, t more questions about the timing of why they have done it. I think there are two reasons why they have done it. The first one is, as you mentioned, the export sector has been struggling. We saw exports down 8. 3 in july. There are economists who would say the yuan has become overvalued. And there has been concern by polly make policymakers that china is falling against many competitors. So this is kind of a small step in that direction. In itself it will not bring a big boost to exports. But it is a signal to the struggling export sector that they understand their problems. I think the second part is that imfa desires to join the special drawing rights currency basket. The central bank hatched this move for pressure on the currency from the markets to depreciate. If this leads to a more marketdriven Exchange Rate, then that would indeed help chinas case for joining me imf. The imf. Francine at the same time, i thought china wanted more not more exports. This smells of china going back to what it has been doing boosting growth through exports. Mean, yeah, i undoubtedly, this is a shift back towards the old Growth Drivers of helping investment. We have seen some support recently for infrastructure investment. Now we are seeing help for the export sector. I think the question really is whether it is a Transitional Development to help the economy through a rough patch or whether it really is backsliding. Jury is stillhe out. We need more evidence probably to determine. Manus thanks for the round up. Francine that brings us to todays to the question. How concerned should we be, how concerned should the markets be about chinas currency . We bring on Michael Metcalf at state street Global Markets which manages 2. 4 trillion. We wake up and yesterday we said, they will not devalued. Are you concerned that it smells of all china or a sign of desperation because growth is not doing well . Michael the one thing i would agree with kevin is that the renminbi has become a problem for china because of the devaluations elsewhere and the Real Exchange rate in china has moved a lot. This is what we monitor closely. By our estimates, the renminbi 10 overvalued. Lets take the currency like the australian dollar, which trades on chinese fundamentals. Thats currently 14 , by the same measure, by the same measure, the yesterday dollar is 14 cheap. China is a massive disadvantage because of its peg. So, what i see this as, actually, is not something to worry about. They not something to say are going backwards and anyway way. I think this is a perfectly sensible policy move. Manus based on your model, it was overvalued. Can we expect them to move again . They referred to this as being a oneoff move. Do you believe that . Or is this the beginning of a much more progressive move in currency . Has delayed the decision about inclusion in the basket. A while back, remember, the focus on china was to delay the inclusion in the indexes. I think china is responding. He currency needs to be freefloating. Lets make it freely floating. The interesting thing in terms of whether this model works, the model is simple. P basket. Rge pp think a big bank index with 10,000 it shows clearly that the renminbi is stressed against currencies like the australian dollar. Interesting thing, will they let it float completely and let it get to a level where ppp hits . It is going to get a lot cheaper. That is the question. It should move a lot more. I think the big question when Exchange Rates move a little bit, the biggest move in 20 years look, its not much bigger than sterling. The scale of it is not large. But because the currency has been some manage it looks large compared to history. The big thing in the next month or so is actually this should go a lot further. Will they allow it . Francine you suggested the Chinese Government has your confidence or the policymakers. With that be a fair something . Is tryinges, china to shift to a consumptionbased economy. However, lets be realistic. Exports are still important part of the country. Just as they are in germany. The peg the manage Exchange Rate has left been doing them at a competitive disadvantage. And this move helps to mitigate that. Francine does francine manus does it shift and if you Market Strategies . Michael there seems to be a disconnect in terms of what certain markets are pricing in. I think Commodity Markets and emerging markets markets currencies have been hit by this perfect storm of fear about china and fed tightening. They have priced in far more than the differences we had a couple years ago. And yet, the message were getting from the fed is that rates, yes, theyre going to go up but gradually. And the same for china. China is slowing but here is another measure where they are trying to mitigate the slowdown. In terms of valuation point of view, it is industriallinked assets. Emerging markets currencies. Commodity currencies that have moved so far. This move, this is an easy by china an easing by china. The reaction has been to hit commodity currencies. Na, this is easing by chi which should be supportive of assets in the mediumterm. Francine interesting. Michael mccaul fair from state street Global Markets. Manus china has released pictures of the new 100 yuan note in circulation from november. The pboc says it would be harder to forge. But easier for machines to read. The design is select to the 2005 series is similar to the 2005 series but has security features and is the largest note in chinese currency. Francine heres a look at what else is on our radar this tuesday morning. Greece and its creditors have agreed to terms for a third baailout. Manus google is reorganizing into a Company Called up about. The new strategy gives the main web operations such as its Search Engine, youtube more independence while offering investors greater visibility in a plan to expand in new businesses. Shares jumped. They are of 6 . Thecine has restarted number one sector at its Nuclear Plant making japans return to Atomic Energy for years after the fukushima disaster. Protesters outside the facility. The majority of japanese voters oppose the return of Nuclear Power. Manus sources tell us nomura is cutting jobs in london. 60 are to go. In the fixed income and credit positions. Highre said to include yield bond traders and analysts had fixed income business are being squeezed by banks needing to hold more capital. Ext, google spells out a new future. Of thek down the abcs new Company Structure and its new name alphabet. Manus welcome back to the pulse, live on bloomberg tv and streaming on bloomberg. Com, your tablet and your phone. Google is reorganizing into a holding Company Called alphabet. The new strategy gives schools main web operations such as the Search Engine and youtube independence, while offering investorsors greater visibility for the expansion of the business. Lets bring in elliott gotkine. But an interesting name, their choice of name its either, when you take at how they came up with google, an inverted name, so far whats the point . Theott the point of restructuring changes is too, i suppose, formalize the fact that google is now a conglomerate, not just about the Search Engine and the maps and videos. It is about everything from the Science Division that tells you how much glucose in your system if you got diabetes. To calico that looks at chinas longevity. Which seems like a faroff prospect. Google ventures,google x with driverless cars. They are formalizing the fact that there are all these disparate his misses. Giving greater visibility to employees and investors. In terms of the name, you have to wonder where they sitting around watching sesame street and saw alphabet . Manus i like the name, actually. Francine i was thinking of alphabet soup. You do not know what is in it. Elliott when you reach your children at night, instead of b is for ball. Francine does it make a difference for investors . Elliott in extended trading, shares were up by 6 . That seems to be a positive response to the changes. The visibility clearisibility so steer to of google. How much are they spending on these ventures. Should google be involved in these things . Much spitting out how revenues we do not know how much details we will get on these individual businesses. Revenues. Up the more of his abilities on what these companies are doing might allow them to spinoff more easily acquisitions. I suppose in the cutthroat world of Silicon Valley talent exposition talent acquisition, many people want to go to startups. There are losing people to facebook. Perhaps now that you have got types, people would be more inclined to join him. Perhaps that might make getting top talent to join the google or the alphabet family easier. Changing. Is not the company when you type this will take time. As alphabet will be in january, will come as alphabet will be still be google. Francine i love the stories. The latest on google sorry, alphabet. Manus breaking news. Prudential. The global Life Insurance business. It has first half total operating profit 1. 88 billion pounds. That is actually up on last years numbers. Were looking at the stock. It just spiked higher. Dividend remains the same. If you are a shareholder, the dividend is just over 12 pence. The asia operating profit comes in at 632 million pounds. Francine this is a company that is seen a change at the top. An american is in charge and these numbers are of the former ceo who is now a credit suisse. We will not see for a couple of months with the new ceo will do. Manus lets move on a little bit. Bring back in, actually you know what . Tech wrap. Francine a tweet sent out by twitters ceo helped the Company Stock jumped. Jack dorsey was publicizing him purchase of 870,000 of shares in the company. It comes as the Company Struggles to boost user numbers and find a permanent chief executive. Anus the american i. P Security Company is set to announces sale tof its data storage. The deal would be the largest private equity takeover of a tech company this year. Francine alibaba is buying into the oldschool world of brickandmortar retailing by purchasing a stake in a, script that will allow chinas biggest ecommerce operator to add stores. The companies will partner in logistics and online sales to target deliveries. Trying to rebel rival amazon. Manus lets bring Michael Metcalf back in. 2. 5 trillion under management. We just read about the tech business. We are looking at huge moves in this market. Where are you most focus in terms of industry . Michael we are looking for places that have some exposure to the cycle. As i said, we think the central bank is going to be very shallow. Also looking for places the perhaps are overowned and offer value. I think going back to comments we were making before, the areas that have then hit the hardest has been anything links to the commodity cycle. That, to us, seems to be discounting a major recession, which we dont see. And so, i think that is the area where there is value, potential for investors to reassess. So, its materials. Even energy. It is those kinds of areas that we would be, well be looking at. Basically on the assumption that the fed will tighten this year and that we are not going to see a huge fallout from china growth . Michael exactly. It is not just the fed tightening. The market takes on board the idea that this will be a shallow cycle. The communication from the fed all the way through and to be fair the bank of england is the same the markets are obsessed about the timing of the first move. And havent spent a lot of time thinking what comes beyond that. I think the reality and the communication is that this is going to be very shallow. If its going to be shallow, all these growth linked assets have discounted far too much of a slowdown. Francine thank you. Michael metcalf from state street Global Markets. We will talking russian next. Absolutely. Russias economy shrunk the most since 2009, contracting 4. 6 in the Second Quarter. Francine it comes after a currency crisis drove consumer demand while a selloff in oil threatens to drag the country into a deeper recession. For more, we are joined by Ryan Chilcote in moscow. Not encouraging news. Wheres the russian economy headed . Ryan it is not headed to a good place. Were abysmale numbers. A contraction of 4. 6 in the Second Quarter is more than what most economists thought they were going to see. When you consider that in the First Quarter, the russian economy contracted by 2. 2 , which was less than what most economists thought was going to happen. A lot of them have been upgrading the forecast for the russian economy and they were disappointed by yesterdays numbers. If you look at the underlying causes the investor production is down. Investment is down. Importantly, consumer demand is down. That is easy to understand, because the rule has been week heard that has been feeding into inflation the ruble has been week. That has been feeding into inflation. Importers have been passing on the cost hikes to consumers, and consumers have been both cutting back on whatever they buy in the shops and also have been pretty spooked. Tim ash from nomura has a good no doubt where he says 7. 00 drop i the price of oil equals 1 of russian economic growth. He also points out that even when the price of oil was 100 a barrel, before the crisis in ukraine, the russian economy was only growing by 1 a year. Which suggests there are much more fundamental issues with the russian economy. And the first one is perhaps that it relies on oil and gas income for 50 of the budget. Manus lets talk about the currency. It has been one of the most battered currencies of 2015. Captured the attention of the world. What are the prospects for recovery . We have a lot of debt maturing in the last quarter of the year. Big oil, again, is a factor. I remember asking the head of russias largest bank where the ruble is going to go year ago, and he tells me he says, wha ts going to happen with oil. The ruble has been hostage to the oil price. 47 . S down by not difficult to see the connection. But youre right. The russian con companies and their debts abroad is another big factor. They go 55 billion that has to be repaid they owe. Ahead of then and Russian Central Bank met yesterday to discuss the ruble. Cant do anything about the oil price. What they can do is affect hominy people are changing their rubles and depreciating the hard in ruble into currency. The central bank said that only 31 over 65 billion have to be repaid. Most of that money can be rolled over. That did help the ruble. Ultimately, this is an oil story. History tells us at least over the last six months, it is going to go down. Manus thanks for the rhino. The round up. Francine michael, in terms of value to be had in russia, you have your own inflation figures. Think. Bas ad as we michael one of the reasons the gdp was disappointing is because you the perfect storm of not just Lower Oil Prices and sanctions but high Interest Rates. The weakest the ruble has been one factor protecting preventing the central bank from lower levels. The publish Inflation Numbers in russia are very high, towards 15 . Interestingly, if you collect a lot of online prices, and the annual rate of that inflation is around 9 . Us suggest theto central bank has more room to cut and suggest that official inflation might fall. There is hope there that, ok, q3. E q2, maybe its lower rates does not help the ruble. It does suggest that russian rates could get below 10 towards the end of the year. Francine thank you. Manus up next, a deal is done. Its creditors reach an agreement over the bailout terms. What happens next . We go live to ask to discuss the implications for that greek deal. Francine welcome back to the pulse, live in london. I