Also coming up, cathe pacific is hit by lawsuits. We speak to the chief executive ivan chu at 10 30 a. M. We are getting news from the Norwegian Wealth Fund following it decline. This is the biggest Sovereign Wealth Fund in the world. It has invested a lot in oil. It has tried to focus more on real estate. Falling 0. 9 . I think that is in terms of revenue. Manus cranny will have an interview, the only exclusive interview for International Media with the ceo of norgas bank later on. That will come to you on the pulse. The German Parliament is right now debating whether to approve the greek rescue package. Hans nicholsrlin has been following the developments closely. We spoke to a key Angela Merkel advisor. He was pretty confident this is the boat will not only go through but will go through with a very large majority. Our next guest says the greek house is burning. Microhe head of rbs credit in research. Thank you for coming in. Maybe a brigade is little bit too late, but in the last 24 hours Wolfgang Schaeuble hes tried to muster support in the bundestag. He seems to be a lot closer to the greeks i than in the past. There has been a definite turning point for america and for Wolfgang Schaeuble. Some sortonsidering of debt relief, some maturity extension for greece. A german newspaper earlier this week was talking about a sixyear extension which would be substantially would effectively reduce the burden of debt. Today Wolfgang Schaeuble is playing the bad cop again. But i think it is a strategy for the vote. The vote will pass. Look at germanys exports. 50 is to europe. Knowing that germany needs the rest of europe as a market. Reticular now. Is nott of the extension very high. It is basically loans. The real point is how the restructuring will be done. Yesterday, greece published its data for tax revenues. July is the biggest month for revenues. Revenues were down by 4 billion. They were 26. Spoke two weeks ago and you have been correct almost every step of the way. You were telling me we have to be more cautious than the markets are on greece. Has anything changed in the last two weeks because of what you are mentioning . Alberto we have an agreement for a kick the can renewal of loans. So we are buying time. We still have on the table some sort of debt relief, but it is not clear how strong it is going to be. The extension could be six years or lower. We think it lists 30 years are needed, extension for greece. On the other hand, we have also wasbank restructuring nice to happen. The banks are not lending to the economy, and that creates instability and lack of trust and lack of investment. So all of these things need to be decided in the coming months. The sooner the better. The budgetfrom numbers july is the biggest month in the summer the greeks get most of the revenues. Revenues have declined. What greece has done to maintain tourplus is to cut costss, delay public money that goes to firms that supply goods, milk to schools or computers to government offices. So the government has been delaying these payments. To create a surplus. It also has cut investment. 1. 4 billion investment cut. For example, European Union funds that go to greece, the government cannot put its part. All this means the gdp is going to go down in the coming months. That is why the solution is needed soon. Francine yet we had a very surprising from greece a couple with ago which i have to ask you about. I also want to go to hans nichols in berlin. Hes following the vote in the bundestag closely. The parliament beginning to debate. Were expecting a vote later the smarty. Hans, you have been following this closely were expecting a vote later this morning. Merkelhat you see from is preppinguble everyone for the idea of how and when the International Monetary fund will be involved. Mr. Vitalble just said it is that the International Monetary fund stay involved. We heard two things. One, not an insignificant amount of doubt that this plan will work. He said there is no guarantee, but the other part is that it is morally incumbent to get greece a fresh start. And this is a finance minister that seems willing to trust the greek government, willing to trust the government he opposed for much of this past year is going to implement the reforms they said they are going to do. The money will get sent out the door. You will recapitalize the greek tags. The greek banks. It is going to be a difficult path but not guaranteed path. Spain, austria and estonia all past the bailout yesterday. Three votes are left, including the netherlands. Hans the difficult thing about the netherlands is not just the seatnment it has a one majority. They have got 76 and a parliament of 150. The issue is what happened after. Netherlands share of this bailout will be 5 billion euro s. Mr. Rutter campaigned on not another bailout. E Opposition Leader plans to introduce a vote of noconfidence. That is what analysts are saying in the hague. But it gives you the sense of the political instability and to what extent this deal still needs to be able up and to be implemented stepbystep in athens. There have been numerous hint of the past three weeks there will be actions in september. The governing party will not last. It will collapse. And we have to see what government takes its place in athens. Francine think you so much. Alberto, we were talking about you expect these votes to pass. You were talking about greek gdp, and it will be quite hard because of the way the money comes in. We had an incredible gdp figure a couple weeks ago. What was your take on it . Was it because people spent money before we had the referendum, they were afraid they would not have access to their euros . Or a matter of people playing paying taxes more at that time. Was positive. P surprised everyone. It was driven by the fact that inflation is a negative. If you look at the nominal number, the figure is less positive. In part, there is a contribution to spending during the quarter from people that were afraid of the prices. So they went to the supermarket early and spent money earlier. But every other indicators suggest that we are about to see a much sharper decline in the pmi. 30s, below 50 is a contraction. We are way below 50. And duster production down 4 . Inflation is 2. 2 we are looking at a sharp contraction. Again, the government has cut 3 of revenues as a percentage of gdp declining. Has cut 1. 4 billion and investments in just the first months of the year. They need to fire some of the employees they have that have been hired in the beginning of the year. There is a we qualified from the measures. What is still very vague is this plan to invest in greece. The 35 billion plan to restart the economy. There is no detail on that. Francine that is the detail we are waiting for. We will talk about china next. It has been another volatile day of trading in asia with concern about emerging markets. Here with the latest as caroline hyde. First of all, there is a currency worry, and then volatility in chinese markets. Caroline and this is what is really concerning people at the moment. Will we see other asian, emergingmarket nations start to devalue their currency, after we saw the chinese do exactly the same to the yuan . Will they try to make them more their own exports today am going to talk about the we see weakness today. This is the dollar rising. Currency falling. This is one example of a country fueling that concern about currency wars. Here is another 1 vietnam. It devalued their currency. A 2. 4 gainow see of the dollar versus the vietnamese currency. Weakening in this picture. And widening the trading ban. They said this is because of the yuan and because of the Federal Reserve. We get minutes from the fed later today. July, of course, we saw the stock show off sell of china. The next meeting will happen in september. They have to take into account what the rest of the world is doing in terms of china and in terms of whether that delays the Federal Reserve. At the moment, a 5050 chance the Federal Reserve will raise rates come september. That is making vietnam consider that they need a third devaluation. About foreigns currency. And also about what the emergingmarket stock market is doing. It is interesting or tree suddenly saw volatility you talked about. This is the shanghai composite, staging a late rally. Caby 5 at 1 when i first came in. First tome companies coming ou saying that stack back state backed funds are buying up their shares. Policy inf monetary the government stepping in to prevent another selloff like we saw in july. Remember, we have seen twice, the 200 day moving average, the overall the shanghai composite fall below that. Each time we saw a resurgence in the shares. The exact same thing happened today. Technical indicator being hit. And we see buying of the shanghai composite. We saw a resurgence in chinese onshore shares. But take a look at what happened in hong kong. 8 shares. These are chinese stocks listed in hong kong. They are not buying it. They do not think we are going to see in and to the donalds f the downward spiral. Lower, offng trading by 1. 2 . There is volatility abounds. Are seeing the european markets be so fragile and why we are seeing cello. People do not know what is happening with china to you heard it from ivan glasenberg. He doesnt get it. It to the others traders get . Francine that brings us to todays to the question. Emerging markets is china a good longterm investment . You can treat me or our guest. The head of Macro Credit Research at rbs. That is our twitter question. Is it or not a good longterm investment . Emerging markets are china . Months, for the next 12 a bad investment. Equities have underperformed. They are cheap, but there what worries me the most on emerging markets bonds. Fixed income investors consider them as a safe haven. In reality, they are a fake haven. That is what we say. The average amount of ems in the u. K. Pension fund used to be 2 . Now it is over 10 . But when currencies depreciate by 10 , 30 , countries and corporate in emerging markets have a lot of debt and dollars or in euros, they are going to have a solvency issues. Localvenues are in currency. They fund in hard currency. So the currency issue is going to become a debt issue. Francine its unclear to me, because we had this massive rout in september of last year, and i had a lot of economist telling me emerging markets are fine. We always knew it is going to the dollar. It was my understanding we assumed the fed would hike Interest Rates. So is this why this is coming as a surprise . That we understood that china is evaluating in response to the fed . Alberto we have raised the red flag a lot. What we have seen last year and the year before in the taper tantrum is mostly currency volatility in the currency war. But we have not seen any credit crunch in emerging markets. Phase of thehird crunch. After the u. S. , there is europe, and emerging markets countries and corporate have not delivered. Delevered. We have seen in its relation a private debt growing by 20 a year since the crisis and before. It has never stopped in em. Now we are seeing china trying to control this crunch, making some of the companys default, some of the state owned enterprises restructure their debt. The problem is it is going out of control, because you try to control the credit crunch and support the economy with purchases of stocks, reserve requirement reductions, lowering Interest Rates, but at some point in the market the market takes over and the process becomes less controlled. There are spillovers to a lot of other countries and sectors. Brazil, for example, which also has a political issue. Australia, which exports 1 3 of its total exports to china to half of that is iron. Half of that is iron. German carmakers, there are spillovers. That is the number one worry. The bond markets which have been very resilient to the volatility in currencies and in other numbers. Francine it is a new phase and we are worried about the spiral. Thank is so much for now. He stays with us and we talk about oil next. Here is a look at what else is on our radar this wednesday. Oil is sliding after two opec members vowed to keep pumping. Iraq set of production boost is needed. Angolan exports are headed for level not seen since 2011. 30 from its june peak, dragging emergingmarket stocks to a fouryear low. The human cost of the devastating explosion and tiajin has risen to 114 deaths with more than 70 people missing for the economic costs may reach as much as 1. 5 billion. Fitch expects Chinese Insurance Companies to be hit hardest. Tiajin is the 10th biggest port in the world. Much of it remains close with importer seeking alternative facilities. And carlsberg shares have plunged after the worlds fourth biggest brewer missed estimates for a secondquarter profit. The company says it expects 2015 organic profiting operating profit to drop as western europe and pressure weigh on sales. Point forone onetime items is 232 million. Pacific has recorded net income that lagged behind estimates. It comes after the company suffered losses from fuel hedging. We will speak to the Cathay Pacific ceo. And Vladimir Putin is added against it again. He has taken a small submersible craft down to the bottom of the black sea to see an ancient shipwreck recently discovered off the coast of crimea. Went scuba diving and brought up ancient shards. It was discovered the items were planted for him to find. The norway which boasts worlds biggest Sovereign Wealth Fund has reported a secondquarter result. 8. 8 billion pull down by the fixed income market. Lets find out more. Manus cranny joins us from oslo. Can you break down the results for us . Fran, when you look at these numbers, this is the first loss in almost three years. I think that encapsulates the issues and the problems for any investors. The issues were in equities and fixed income. Negative returns they did the the benchmarks. The strength of the kroner. Upside is, actually in the Second Quarter, they have a little bit more money in from petroleum. The blockbuster positions remain. Nestle, apple, and n ovardis. They trimmed back their holdings in each of the top three. When they break it down on the equity side, north america is where the drag came. European equity flat. Asia, this is where the boom came. Japan good. But china with 9 return. The third quarter, the rest of the year turns out. I have to show you some of the worst and best performers. Bg, ubs and lloyds where the best returns for the. For them. A tough time in miners. The negative returns for them, and the less good returns were basf, fmw and nestle. Fixed income,to this is the challenge, the bond market. 90 billion. Their Largest Holding is in the u. S. , and that is why the negative return was. The biggest losses in terms of what they are trimming, this is interesting, they are trimming back on their bond exposures in japan, france and the u. K. , but they are adding to german, chinese in austin. A little bit of a shocker. We will have a conversation with the head of the Sovereign Wealth Fund. Shes in hes in nextdoor. This is a first for us. What is he worried about . What are the issues for the man who runs the biggest Sovereign Wealth Fund in the world . Francine thank you. Manus cranny in oslo. I cant wait to have a great interview. You can watch his interview on the pulse later this morning. Lets get more with the rbs head of Macro Credit Research. I want to take pick your brain on oil. People have been talk calling in with the bottom at 30 and 20. What is your sense . Hurt a lot ofit the airlines because they do not know what to hedge next year. Alberto we think it will stay at low levels and gradually recover next year. The point is there is a huge overcapacity held in the sector worldwide and inventories are high. Still at the beginning of a readjustment in emerging markets and in some of the ofgest consumers commodities. We need to see to what extent the credit crunch their plays out. General it, the pessimists are wrong because when there is a crisis, because they do not forecast the downturn to the full extent. So general he things to tend to arry to turn out worse in credit crisis. Francine you imaginingare to lower growth around the world. And that impacts the demand for oil. Alberto the first thing to worry about is a hard landing in china. Which has been masked from easing from the government with lower Interest Rates, lower reserve requirements for banks, and purchases of stocks in the market. Now, we see a lot of issues in the credit market in china. There are 11 shadow banks that have asked for a bailout just yesterday. To the government. There is an acumen relation of private debt. All the metrics tell you that over the last decade, credit grew by doubledigit amounts every year. And when this happens, money gets located two things that do not create profits, to ghost towns and factors that are not used. Now we need to deal with the losses. Who takes the losses . In part, some are International Bond holders. But for the most part, things are funded by the banks like in europe. A credit crunch plays out a lot quicker than you may think. Francine thank you so much for now. We also had fed minutes later today. And we will look for clues as to whether the chair janet yellen will raise rates in september. So, lets talk a little bit about that, because we kind of have a four pronged attack in terms of what we need to know. First of all, greece. Then chhinina. Oil, which is linked to china. Everything over arch is the fed. Do we care too much about when she raises rates . We need to focus on how much they raise by in the next six months. Alberto yen is my first worry. The fed is linked to that. We still think they will raise in september because of improvements in the labor market because they have committed to it. It is one of the few opportunities for them to build dry powder before a potential slowdown in the future. Elections are next year. So they cannot raise too close to elections because it undermines their independence. So, you know, we think they are going to raise but probabl