Word of the day for traders. Chinese stocks extended the worst fiveday drop since 1996. The marx apparently unconvinced by the peoples bank of china decision to cut markets rate the apparently unconvinced. Stoxx 60019 indices are down here lets cross to our chief asia correspondent. Enda, a very good day to you. Markets simply unconvinced is the word. Enda unconvinced is exactly right. What the Global Markets wanted out of china was a Circuit Breaker. There is a feeling this crisis began in china. Dona needed to intervene, to something. It does not look like what they have done has been enough. The central bank will need to cut rates further. That the government will need to do more to shore up the chinese economy and turn sentiment around. The positive thing is that china has monday of more ammunition in its arsenal if needed china has plenty more ammunition in its arsenal if needed. Francine what is next . I guess the question is how much will they intervene . Enda well, so this is one of their key strengths. They have an arsenal that other Central Banks would envy. They can cut Interest Rates further. More steps to get money into the real economy, to juice up commercial banks to get them landing lending. And, of course, if push came to shove, they could roll at the big fiscal stimulus plan. One thing we do know is that the authority seem to be stepping away from intervening in the stock market now. They seem to shine away from that. Hying away from that. They are relying on the old levers of the central bank. Whether or not it will work, time will tell. Manus that famous statement that time will tell. Thank you very much. That brings us to todays twitter question. Which central bank has the Circuit Breaker . We are talking pboc, we are talking fed. Who was the role of Circuit Breaker . Manus could the ecb be any part of the story . Lets bring in stephen gallo. Equity markets remain unconvinced in terms of the first major selfless of the chinese. What do you make of the current state of play . Stephen not so much about what equity marks are doing as it is about what is happening structurally in china. I know we have said before we talked which is that china is ina pace of rapid economic reform and liberalization. And this is as much about growth ischina, while that reform taking place, as it is about what policymakers are doing while they are basically feeling in the dark and learning themselves. Francine we knew this, right . I almost grew up knowing that it some point this was the moment where china was going to, as a big oil supertanker, try to do an 180 degree turn. They always we always knew it was messy. Stephen i think that the turning of the oil tanker has been happening for years now. This is just one step in that direction. The movement in the currency has not been significant. The renminbi is only down 4 versus the dollar. Over the next six months, we are expecting the change to only be u. S. D 5 lower versus the dollar. The move in the currency is more about liberalization in our view, than it is about trying to juice up the economy. A variety ofhad move by peoples bank of china. Reserve rate requirement, a lending cut yesterday. Enda says that they have an arsenal that most of the globe would envy. Is this their problem, and for them to solve . Do they have the arsenal of Circuit Breakers to stop what is a very, very aggressive response in terms of emerging markets, equities, and developed Market Equities and currencies . Stephen the overall impact on growth in china is a lot more limited than it would be if those types of moves happened in the developed market. When you look at market capitalization as a share of national income, it is relatively low. Involvement in the to muster market is low. Does have a significant market involvement in the domestic market is low. They are stimulating more consumption in china. More additional Interest Rate reform. That has a significant arsenal in that respect. Has a significant arsenal in terms of what it can do to ease policy further. It has macro prudential tools. So the arsenal is significant, but again, it is more about theys its less about what are doing to actually ease policy and more about what they are doing on the pace of reform. Ultimately, that will dictate flows into and out of the renminbi over the coming year. Francine what is your favorite place . Fx volatility is not really out of control. Stephen our favorite play in fx. In the next three months, we like your ohio and sterling lo eurosterling lower. Manus the jpmorgan volatility index i think it puts it in perspective. Are 11. 9 . 2813. 4 . So we are nowhere near as volatile 3. 4 . 3, is aroundolatility its 10 year average. That is a good thing for policymakers. The volatility we have seen this week and aggregate in fx has been nowhere near what you would classify is extreme levels. And that is a good thing for policymakers to have some volatility but not extreme volatility, because when volatility is excessively low, imbalances are created. And that makes it harder for Central Banks to do their job. For example, excessive imbalances resulting from low volatility could make it harder normalize policy. We look at volatility so far in 2015 as normalizing. Francine they do so much. Stephen gallo, bmo capital markets. We come back to stephen in a short while. And we will talk about the fed. Manus what else is on our radar. Atomic enemy chiefs have hailed the nuclear deal with iran, saying it is an historic opportunity to resolve longstanding issues. Says that tehran has addressed allegations it has been working on Nuclear Weapons but declined to be specific. Supporters of the washington deal see the momentum growing for acceptance. Francine paddy power and befair have agreed to merge. If the deal goes ahead, paddy power shareholders would receive a special dividend of 80 million euros. Share prices of both prices have led. Thes warner bros. Is latest hollywood firm to turn its attention to china. The studio is an talk with Investment House china Media Capital to make films on the mainland. China is the worlds fastestgrowing moving market. Movie market. Francine and japan has admitted guarantee the main stadium for the 2020 games will be ready by january. Now, the Prime Minister abe scrapped the original plan after Construction Costs ballooned to 2 billion. Tokyo is expected to come up with a new plan by the end of this month. Manus up next, wpp. It is the Worlds LargestAdvertising Company. Soar. Ts first half sales we will delve into the figures straight after the break. Francine welcome back to the pulse live on bloomberg tv and radio and streaming on bloomberg. Com, your tablet info. Manus wpp has reported a 7 increase in first half sales, but concerns remain about the business exposure to the emerging markets. Caroline . Caroline lets dig deep into the first half of wpp. That of a bellwether. The biggest player in the advertising market. Half a trillion dollar market, i might add. The numbers did pretty well. Sales up very profit up. Sales of 7 . Profit up to a similar degree. The dividend beating expectations. Ftseest paid boss in the 100 paying out to the investor, upping the dividend 37 . This is where things get interesting. North america. Straight of the dollar helps, outperforming strength of the dollar helped. Western europe not looking so pretty. Down 8. 5 . Of course, concerns about greece rocking businesss appetite to splash the cash. This is where the pain is being felt china and russia. Came under pressure overall. What is really interesting is what they talk about socalled International Currency wars. Always want to speak out. Never afraid to share his opinion and really has been speaking about the International Currency wars that have not been helpful. Black or grey swans overall. Lets look at what is happening in terms of their exposure to emerging markets. Overall, it is 30 . The growth area for the world 30 percent. That is middle east, africa and overall. If you looking at the brics, brazil, russia, india china, 12 in revenue last year. And Southeast Asia was where the pain was. Central and Eastern Europe as well slowing. Surprising when you have got not surprising when you have russia and ukraine causing political instability. Largest wpps third market. That is bigger than its peers. Lets dig into china. How is this economy faring when it comes to wpp . They do talk about concerns, because it is the worlds secondlargest ad market. They have been fueling people, moving 15,000 people now working for them in china. Largest exposure. Think of on the come. Omnicom. Wpp is the biggest exposed to china. But they remain resolute in their optimism concerning this particular country. Yes, they say concerns have been aggravated by the recent devaluation in the renminbi. The stock market decline. They are worried about that, and they say this will have a big apact on world gdp if you see significant slowdown in china, but they remain unabashed bulls. In brazil and in china. They talk about a geographically superior submit position in the new market. Overall, they are talking about swansf the blackgrey remaining out there, some of the eurozone instability. It seems as though he remains committed to where he is piling in the cash. Francine thank you. The latest on wpp. Investors and traders have said for months that the fed will raise rates in either september or december. The odds of a move in october are shortening. Manus some people think september may be too soon given the recent volatility. And december could be problematic because of liquidity and it tends to dry up towards the end of the year. Yale University Professor and Nobel LaureateRobert Shiller daviss thoughts. Gave us his thoughts. Shiller we could see more aftershocks. Those aftershocks can shake confidence. They can get people into a panic mode. At that point, it will be emergency time i am not saying it will, but it could happen. The fed will have to take action and keep rates as low as possible. This point, anything can happen. Lets discuss this further with capitalgallo, bmo markets. Thank you so much for sticking around. When you look at all the market chatter, how do you because we are talking about a possible rate rise,a possible q. E. We are not saying september or december, but october. Is this all noise . Stephen it is. In fact, yes. You look at the housing market. There has been improvement in the housing markets over the last 10 months. Real personal consumption expenditures grew at a 3 annualized rate in q2. That will be confirmed this week. The jobless rate is falling ds perceptiblefed range. Things are fundamentally good. It is the moving parts in the thernational scene or International Stage which has secondguessing what the fed is going to do later this year. On coursehe fed is to tighten policy later this year. 20 odds for september. We think that is a bit too low. Manus what you make a very summers saidarry it is about fighting deflation. This is the biggest challenge for the fed, and that raising rates could be a serious error. Everybody is trying to fight deflation. It is what killed is at the start of the year. Is saying ifmers they go for hike, this is the biggest risk. Stephen right. But equally the risks they take by not doing anything and by taking markets off the focus on eventual tightening is that it leads to a further buildup of an balances, not just imbalances, not just a mastic week but internationally as well. If volatility drops too low because of another round of fed spurs risktaking. And then it makes the normalization process even harder. In combinationat with chinese growth anxiety, which has impacted markets recently, one of the things the market thats already contributed to more two way flow and increased volatility is the fact that chinese growth anxiety is happening as were getting closer to fed normalization. But that is good, because some of the feds tightening are already having an impact on markets and preventing that excessive risktaking. You do not want to get into a situation were centralbank policy feeds the symptoms it was trying to avoid in the first place. And we have seen that. You can blame to a degree centralbank policy on the glut in global commodities. You can blame it on sharp falls in asset prices. In a way, the excess policy continues to the symptoms it was trying to avoid. Francine so, in a way, china is a victim here, if you follow the argument. They are fighting back fed policy . Stephen i see where you are trying to go. I would say that, yes, there is significant, a impact from developed market policy but also, a lot of what happens in developed markets is structural and relates to the pace of reform and the type of policies in place when that capital enters the economy. Manus if we take what you are suggesting is the way we go for the next couple months, our question to you is have emergency market emerging markets seen and done their rou ts . Are we overextended . What are your models telling you about emerging market currency at the moment . Stephen the broad traded to the dollar is up 7 year to date. We think that will rally 3 to 5 over the next six months. Some of that strength and the dollar will impact emerging markets. Some worse than others. But the bulk of the occurrences trade the feds broad rated index have seen a significant chunk of their rally. W think in terms of where thee oas curve is headed in the united states, is it will continue to price and effective funds rate by 1 by the end of next year. That is on par with expectations for how the dollar is going to perform over the next six months. Value of to 5 in the the dollar, as the fed confirms what the market was pricing and prior to this week, which is about francine they do so much for joining us. Stephen gallo. Manus that brings us full circle to our twitter question of the day. It depends what you think, really, whether Central Banks can break the circuit or not. Central banks which one has the Circuit Breaker . We are both there. Francine lets add ecb. Running out of gas. How are chinas oil majors being hit by the crude prices rout . We discussed that next. Francine welcome back to the ande live on bloomberg tv radio and streaming on your tablet and your phone and bloomberg. Com. Manus china is not only battling an economic slowdown, statebaked oil majors reported. Cnooc just reported now. Firsthalf numbers. 14. 7 billion yuan. The sales did miss on estimates. 89. 6 billion yuan. We were looking for a number of 95. 9. Francine overall, that profit dropped 56 in the first half. Lets bring in bloombergs managing editor for energy. In terms of the earnings, they are better than expected. A huge price drop. Different,oks a bit because it only produces oil and gas. It does not refine or sell fuel. Youre seeing that here. What is interesting is that maybe they have beat a bit, itause they had been suggest that process is going well. Manus if we look at them, tell me this we know and understand western companies very well. Shell, bp, exxon. We know when understand what makes them. What makes these Chinese Companies different . Many ways, they are the same but the key differences that ultimately they are still owned by the chinese government. They have to play a political game in a way that shell and bp dozen. As the economy slows, will come please like petro china do the things they need to do, cut cap ex, or are they going to feel pressure to keep the whole economy going . Francine they are saying is everyone elses that oil prices expected to remain low. Can you, looking at these rigures, actually bette understand the state of the chinese economy . These massivee refining operations. They are selling millions of liters of fuel every day. What has been interesting is, despite of the talk of slowdown, fulel in china has held up very well so far. You need to be looking for signs of that starting to change. Francine think you so much. Our managing editor for energy and commodities. Thank you so much. Manus we will talk wpp wpp. And the iphone battery. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Francine welcome back to the pulse live from bloombergs European Headquarters in london. Manus here are the top headlines. After a volatility of trading, chinese stocks finished in negative territory. The markets were unconvinced by the peoples bank of chinas decision yesterday to cut Interest Rates for the fifth time since november. The shanghai composite has lost half its value since midjune. Francine meanwhile, the odds on the fed rate rising in october are shortening. Investors and traders have said for months that janet yellen will move in september or december. Some think that september may be too soon. December could be problematic because liquidity tends to dry up at the end the year. The worldspp, largest Advertising Company says that firsthalf sales reached 6. 8 . As business from existing clients picked up in north america. Sales rose 5. 8 billion pounds, beating estimates. Meanwhile, profit before interest in tax rose 7. 6 . Francine now, stay with us. We will speak with an a head of security. Lorna, talk to us about what we learned from wpp. The world is not so ugly at the moment. Lorna gdp has been growing slightly below trend, but has been fueling advertising. Their topline growth is almost equally matched by organic growth. And it has actually been well over 5 , which in my book is a really good performance. Manus china is never far from our headlines. It is important part of wpps business be a china represents 10 of the global ad make it market. How concerned are you . Irna it is concerning, but have have to say that wh