Good day to you. Chinas stocks have slumped from the highest level in three weeks. The benchmark index sank6 following concerns that the government will pare back efforts to prop up the equity market. After a drop in Interest Rates and removal of property restrictions. Economics chief asia correspondent is in hong kong. Mini rout . Ket is this the rerun of a big run . Enda it is early days to tell whether we are going for another. Its certainly a correction. It has come about because we had some good numbers today. We had some data. That is interesting when you consider the big stock markets we had in june. It kind of illustrates perhaps the net effect on wealthy Consumer Confidence with what was much less than people anticipated. We will need to see more durable prices before calling a turn in the housing sector and before calling a turn in the economy. Francine what does it mean for the wider economy . How much can we read into this . Enda one of the recent stocks fell today was people were supporton less from the government for stock prices but also less stimulus from the central bank. It is too early to make that call because, away from real estate, the economy still remains fragile. The stock market crash has taken a view of stability away. We have exports that remain slow. If real estate sector, even prices are picking up, there are a lot of houses that have not been sold. Going forward, the chances are according to economist that we may see more Interest Rate cuts and more steps by the government on the fiscal side to try and get credit flowing through the economy to rev up growth. Manus are we going to see more measures to boost the Housing Market . Because that, in essence, would support growth at the margins, wouldnt it . Enda you cannot rule out any more measures. If anything, they might encourage authorities. Because they have taken steps on the mortgage site to boost lending. Now, you could argue the central bank has not had too much bang for its buck on the monetary side. To any, they will cling positive data they can get. This shows that may be on the housing side, the real estate side, those rate cuts are starting to help. I guess we could not rule out rate cuts before the yearend. Francine think you so much. The latest on china. Discuss allus to the elements in china is our chief investment strategist frankel impaired a very good morning to you. Welcome to the show. Ut. Ther mini ro0 down 6 . To pull really wanted out all the stops, had they done so so far . Michael i do not think they have but they certainly have a lot of firepower. This latest intervention cost them 60 billion. That was the figure i saw this morning. They have got trillions. But then, of course, you have the knock on effect because they. Ave gotten money in the u. S dollar if they start having to that, you some of would then get the ripples spreading out from this. Francine are you concerned about the ripples . , down 5 , dohis not exactly know the reasons behind the devaluation. Quitel markets are cautious at the moment. We are in this limbo phase as we run up to the rise in Interest Rates. No one knows what that is going to mean. There is going to be a psychological impact from that. But i think there are times when you just have to take a longerterm view and look through the situations. As you know, i tend to monitor the site the technical side as well. And there you are looking for the dominant trend over time. And what we are seeing coming out of shanghai at the moment, to some extent there is some noise. And we are having to assume the government is making the right calls. It is interesting in the situations because you can react one of two ways. Gosh, they have done something about a weakening economy. If they recognized it right, and the measures a start to impact then itomy positively, is grounds for optimism. I think they may need to make some changes with what is going on in the property sector. You have to bear in mind there is a lot of money on the move in asia with the prospect with the taper tantrum. Money was drifting. Money was drifting back out of asia. So we could see more of that. Manus it is interesting. Est that said that he did not believe the markets was extremely positioned. Wheres your biggest exposure in e. M. . Do you think another big lay lower in currencies is in the cards . It may well be. We monitor. Our main focus is the u. K. For investors here and elsewhere. But inevitably, you look at the4 index components and you have exposure to emerging markets whether you like it or not. People will follow through on their view is emerging markets by going through particular stocks. Have aean, we may well bit further comeback. Overall come i think i mentioned before, that the indications are that we are now forming a top i n the s p in the ftse 100 which 2007. Parable to that sounds bearish. It is not going to happen overnight. But even if we see it over the next year, it will be an adjustment. Interest rates are going up third and the loss of economics say if the cost goes up, you expect things to adjust. Francine what is your take on commodities . Is there anything you would like owning . Glencore closely. Activist investors want to get in. Would you be interested in any of the commodity play because you think they happen over and . Interesting. Is it is difficult to get a handle on where the balance point is for the price. It is under some pressure. The indications are that supply is adequate, and that where there will be more. The chart for brent is suggesting we are about to see a golden cross, which could imply that the oil price might start to rally. It might not be a big rally, but it may be the beginning of consolidation. So, that could be interesting. Francine manus beginning of the bottom. You will stay with us a little time longer. That brings us nicely to our twitter question was his francine are stocks due a correction . Thepulse. A lot of people saying, they are starting to correct. It depends on how big that correction is. Tweet us. Manus ok, the shockwaves are spreading from yesterdays bomb blast in bangkok. Aat has weekend. All of this can only hurt a slumping economy. Francine lets get the latest with caroline hyde. D state ofsad, sa affairs. This is a tragic human event, tragedy that has occurred in thailand but also it is hitting hard the economy, which is coming under stress. Fallen by thai baht half a percentage point. It is the lowest levels ins april, 2009. This is what stocks have done. Trading about 2 at the moment. At one point, falling the most in eight months in terms of the exchange. Severe repercussions happening in the economic markets. Certain stocks off by 6 . We are seeing thai airways been hit. One of the key Hotels Falling significantly in trading today, because the tourism hit is hard because this is where the bomb was felt. Where the bomb exploded in bangkok surrounded by hotels. Ine frequented shr by tourists and locals, the bla st included the chinese and filipino tourists. Hitting hard to terms of emotional tragedy, but the was aimed tost hurt foreigners could already you have the government coming out and saying dissidents should delay their nonessential travel to bangkok. Is going to be hurting insignificantly when you said cancellations are happening from high end Chinese Tourists. Francine how much does tourism in tribute to the economy . Any thought about the impact on gdp further down the line . If you dign fact, through the numbers, this is going to have significant tourism, 10 of the national economy. 25 million tourists visited thailand in 2014. A quarter of them coming from southeast asia. They have even managed to peg a number to how much they thought this revenue would bring in this year. The government expected thailand to bring and 51 billion just through tourism. The problem is, the rest of the economy is hurting. You have been speaking about the emerging market rout. We know what this thread of a federal rate reserve hike would do. The weakness is being felt in foreign currencies. That this is an economy that is seeing weak local demand and wheat exports that being hurt by d valuation in the yuan. By dev valuation and the yuan. You have the finance Ministry Just last month downgrading for the third time. Downgrading gdp growth for a third time. This is just reconnecting the specter of what was the violence we have seen in this country. We have seen political unrest and the 2014 coup where we saw the government to post. So this is a key concern. Could we see this sort of volatility, this political unrest returned to the thai market when they are so dependent on tourism . The tragic event clearly being felt throughout the markets. Manus thank you very much. Heres a look at what else is on our radar this tuesday money. The german finance minister Wolfgang Schaeuble has akssked mps to back greeces bailout. Even though the imf is not committed to footing part of the bill. Wolfgang schaeubles letter comes as the lower house prepares to vote tomorrow. Francine Royal Dutch Shell has confirmation to drill oil off of alaska. The company halted drilling in n agroundr a rig ra helping prompt the Obama Administration to revisit u. S. Rules for exploration in the region. Manus Jeremy Corbett has spoken out on u. K. Banking crisis. The hard lined left wing mp has been a strong critic of british banks. Corbyn i think we have to examine what happens when the banking crisis came about, examine who was responsible for the banking crisis, and then work out how we take things forward in the future. Get u. K. Inflation data and under half an hour. The report for july will show a big fat zero. We will bring you that figure as it drops at 9 30. Manus given the goahead. We have more on the shell news on its drilling adventure. What does it mean . Francine welcome back to the pulse live on bloomberg tv and radio and streaming on your tablet the phone. Won permissionaas to drill for oil in the arctic waters of alaska. U. S. Government has granted the permit for the well. Francine this is the first time drilling has been allowed in the region and three years after a rig ran aground in 2012. Our bloomberg chief Energy Correspondent joins us and we have michael frankel. How significant is this . Shell has been waiting for the final permit. Until now, it was able to drill but it had to stop before reaching the area before it believes where it believes there is oil. 7 billion, 10 Year Experience that shell is putting together is for real or not. I think this is a momentous time for the company. If they are able to finish the well on time before the winter arrives. Manus nothing would be produced out of this if they tap an oil well. 10 yearse are five to away from production but because shell has been spending so much money and time in this well, it is important that this year they show results. Francine at the same time, and i want to get michaels thoughts on this, Infrastructure Spending must be going down because when you look at the oil price, it keeps on sliding. Will put too much pressure on infrastructure . Javier i think that is a very important question. Shell is one of the few areas where shell is saying we are going to continue spending. This is strategic for the company. This is not for the next two or three years, but for the next 10, 25 years of the company. The key question is if that is going to happen. Oil. Need to discover manus you hold shell, but you are holding it for a different set of reasons. Es saying is h that the companies are looking longerterm. This is about management decisions. This is the sort of decision that tests management and have got to get it right. Yes, were interested in the yield an indication are it would competitive and attractive. It is a solid company. The resources, if you go through this cycle, we see recovery per oilre still going to want unless green energy really does make big inroads. Francine this is not the only company you will look at. If you are in the oil majors, you have to give more to make sure the people stick around when the Oil Price Goes down. Michael thats right. Who knows if they would need to raise money somewhere along the line as well . From our point of view, shell is a main exposure but we are looking to spread client risk as well. Briefly, is there anything at all that gives you a reason that opec could beginning closer to an emergency meeting . Javier i dont see any indication whatsoever. To waitfor opec we need for december when the next ordinary meeting is scheduled. Francine thank you so much for joining us. Next, u. K. Inflation is due in just under 10 minutes time. Will it be a big fat zero . We preview the numbers up next. Francine welcome back to the pulse, streaming on your tablet, phone and bloomberg. Com. Eroflation, that is what we are likely to see when we get the u. K. Inflation data. Figure that will be closely watched by mark carney. Carney our objective is to have inflation not at zero percent. Bringated objective is to information input inflation back. The inflation can be explained by the prices of commodities and imported goods since last year. This temporary period of below target inflation has provided a wealth boost to real incomes. The nearterm outlook is muted. It would not be surprising if we have another month or two of negative inflation. Given the very substantial moves in oil prices and the changes to some utility prices as well. We have seen big moves in oil, but also changes to utility prices. Francine lets bring in the chief investment strategist Michael Franklin and january. Thanks so much for sticking around. Lets kick off with you. What are we expecting and how to oil . Owing nto jamie the Bloomberg Survey is putting prices at 0 inflation. And that is where we are internally. Theory does tend a surprise. You can get plus. 1 or. 2, but it tends not to be related to domestic cost pressures. This time the uncertainty is over the timing of clothing and footwear sales. How much that will push up and down. A little on diesel and petrol prices. The underlying picture is if Service Inflation is it 2 and that is what really matters. Manus a lot of the exposure is u. K. Zeroflation, how do you factor that in . How do you take advantage of it . Michael slightly perverse because we heard with woods that they are cutting back because of the problems in the oil sector. In very, we can enjoy the benefits of lower oil prices, but if you go to the fuel pump, how many times do you have to take advantage of the lower price . It is nice to get that boost. You can spend the money somewhere else. In terms of the companies we are looking at, you have to see the other side of the coin. So, it is a bit surprising, given the way the oil price has fallen so far, that there has not been a acre feelgood factor. A bigger feelgood factor. Francine of course, the short livedness of this. How long will it stay solo . Our estimates suggest you get the peak impact at the end of this year and it will start to drop out at the beginning of 2016. The bank of england is looking a year ahead come in two years, setting policy. So it needs to start think about lifting rates fairly soon. Manus thank you very much. Chiefmurray is our european economist from bloomberg intelligence. We will break that data after this next break. Bringne coming up, we you those u. K. Inflation numbers. A reminder, you can follow us on twitter. There. Ie murray is also it was key what he said about the rate of Interest Rate rises. That is what we are looking for. Francine welcome back to the pulse, live in london. Manus we have cpi data, inflation data breaking now. Year on year, we have cpi comes in at a rise of. 1 . We get a slight rise and it is because of the core cpi coming in at 1. 2 . Up she goes. Francine a look at the pound. 1. 5639. Lets kick it off with you. A surprise to the upside. This means that actually mr. C arneys job is easier. These are good numbers. 1. 2 . The consensus was 0. 9 . The underlying inflation pressure is picking up faster than we expected. Manus you have done a look at the oil prices. They are near sixyear low. This was the big drag on the Inflation Numbers. Oil prices and sterling. Jamie we think there will be more of an effect on the headline Inflation Numbers from the oil over the next couple courses quarters. It will not be in till 2016 that that begins to dissipate. 017, we expect that to have entirely disappeared. The same with the Exchange Rate. This is how the bank of england is thinking about the economy. At thect the rates beginning of the year. Piecene we had a nice saying that the markets probably focusing on the wrong things, because if you look at economists expectations, they are expecting Interest Rates to rise quicker than the market is pricing in. Is that fair . That view asre well. When you think about how fast rates might lift, you have to think about what the theory underneath is. And we think that things like credit spreads will ease further. We expect the temporary growth,es like trend we expect that to dissipate over time. Some of these factors explain that disconnect between Market Expectations and economists expectations. Manus just reflecting on those limited andarney, gradual. This difference between what the Economist Committee think and the traders, what have you penciled in in terms of rate hikes . Core inflation data which is higher than the market had anticipated. Can that shift the thinking in terms of the timing . Because the market thought it was august at the earliest. E essential for you that we have a rate rise stays in place. It is a clear story as to why that will happen. Generating some wage inflation. For the rest of the year, will we will see a slight improvement in the rate of unemployment. At will surprise in 2015 th unemployment sat around 5. 5 , but this is due to q1 weakness. We will see them higher again in order to increase production. So, throughout the rest of the year, we will see further tightness prompting more increases in wages. Francine pound rising to 1. 5643. At what level does it start to become very and comfortable . Jamie i do not think that that is their primary concern. It will focus on the Inflation Numbers primarily. Im looking at the terminal and i can see quite a big contribution a bit on food. I