Ripped up. The are checking the biggest gain in u. S. Equities in four years. Francine yes they are. That rally came after a selloff. Overnight, chinas benchmark index posted a 5 index 5 gain. Lets get context. Mark barton is back in the house. Things are wrapping higher. The feds magic discussion did the job. Fedo the mark u. S. Caused the big rally in the united states. He spoke yesterday. In an unexpected comment, you have to say, he said from my perspective the decision to begin the normalization process seems less compelling. The keywords sit is desperate keywords less compelling. Getting close. Is the six days that preceded this rally. Yesterday, prior to the s p 500 fell by 11 . Its sunk by 11 yesterday. It rose by 3. 9 , biggest 2011ase since november 30, all because of his comments. Trade reducing the probability the fed will raise rates to 24 . 18th, the odds were 28 . We are going to have technical fun here. Look at the emerging markets index, this is a oneyear chart. I want to look at the 50 Day Moving Average and the 200 Day Moving Average. The purple line is 50 day. The green line is the 200 day. Above for line should be the green line. This is not a good trend we are seeing. The trend is very much a downward one. Ive looked at the rsi, the relative strength index. Means anabove 17, it below. S the trend is negative. We are no longer undersold. The index has written for the second day index has risen for the second day. A little bit of technical fun. Mark barton with the charts. Manus lets get to output a question. When do violations really start to matter when do you asians start to matter when do valuations start to matter . Us. When do they start to matter echo francine he says investors need to keep the volatility in perspective here at this perspective. In perspective. David, welcome to the polls. Call things have been cheaper than they were. You buy great i dont think valuations tell us very much. Ofwant to have the drivers corporate strength. The anchor for Equity Investments right now. Manus the other thing we are seeing is the correlation between the Chinese Markets and developed markets. That has been flipped on its head. If you look the moves in yen and copper. That relationship, is it an incorrect assumption . To we looking for a reason settle in these the developed markets . Daily i dont think the chinese equity market tells us anything about equity growth. It is a bubble on the way up and down. Now its bursting in their face. We need to get past this. We need, if were going to see a sustainable rally, we need to get past the crash in the Chinese Market. I hope they let it go. I think we need to find a bottom in commodities. Both things are pointed desperate things are pointing to a weakness in chinese economy. It is not as pronounced as it appears. Francine you think that the market route has nothing to do with some type of global recession. What about commodities . I know it is a supply problem. Do not have any doubt in your mind there could be something more ugly out there . David i think chinas Industrial Base is slowing dramatically. If you look at your industrial production. The consumption of things like cement. If you look at rail carloads, electricity production, absolutely. The old china is going away. The new china is emerging. It is about services, higher tech development. For a long time, your weakness and commodity demand from china has been a part of our narrow view of commodities that we have expressed through the Australian Dollar and canadian dollar. It didnt just happen overnight. Commodities have been in the bear market for three years. Now we are seeing a capitulation of them which signals the beginning of stabilization. I wouldnt be surprised if most of these commodities find stability here at very low levels and stay there. I am not calling a rebound. These massive dramatic falls is likely. It could be an improvement to sentiment that will help drive a positive view on equities that we will see next year. Manus the euro. Im looking on a weighted basis. Over the past month, where up to. 3 . We are up 2. 3 . I didnt want to get it actually. Trong actually wrong there is a certain amount of irony. It capitulated and we find a bottom. David my belief is there is not a safe haven trade. Pushing the fed back. Secondly, hedge funds use weak currencies as funding currencies. They borrow and euro and yen and invest in places like malaysia. If malaysia is making a lot of money, you have to close the trade. Under extreme market stress conditions, it was a short squeeze on both of these currencies. I think they weaken again by the end of the year. Below 1. 10 one the eurodollar. Jp morgan Global Market strategist. We will be talking about the fed next. Hundreds of french politicians are gathering. Francis lobby that represents more than 750,000 french firms. It comes at a time when frances economy is saying zero growth. Onombergs caroling going joins us. Great to have young program. What is the mood like. There is some concern that china, although many executives say the concern with china is only for the shortterm. It does not effect shortterm decisions. You have as many as 9000 French Companies with a big presence in china. I spoke to one big executive who is exposed to china. Just a month ago, they had their ,nnual forecast for revenues because of less demand from chinese builders. I spoke with him and asked whether he was concerned about what we are seeing on the market. Ours when theyke look get different matter. China is ai think , and thatat will grow will use a lot of our technology. If you look shortterm, depends on the market. Caroline schneider electrics doesnt think it will have further impact. Hink we are not leaving were not living with a new normal in china. In china. Ation driven that is normal. In the short term, we are seeing some adjustment. France had zero growth in the second quarter. Stagnation. Way behind the others. Our executive are executives getting impatient . Are gettingey impatient. We had slightly good numbers this morning. Mrs. Confidence slightly raising. Business confidence slightly raising. This improvements are very small. It declined by 0. 1 . 3. 50 5 million jobless people in france. 3. 50 5 million jobless people in france. The new, young very dynamic expect her. When you later one year later, [indiscernible] triedhink the Government Movement in terms of reforms. They are try to push some new reforms. We have seen that this year. It is insufficient . I believe not. We have to reduce public spending, as i told you last year. I think we have to continue to do that and go faster. I think france needs to continue to make some clear reforms. Caroline labor reforms. These are the things that executives want to see in france today. Inside the Prime Ministers house, he has promised he will start cutting taxes for businesses. That may not happen before 2017. Could that be too late . 2017 is the year of the next president ial elections in france. Manus lots of potential surprises. Thank you. Francine stay with us for more on the french story. He speaks to us exclusively about the state of the european nation. His hopes for frances future. We bring that exclusive interview tomorrow. Manus what else is on our radar this thursday morning. The Federal Reserve dialing back. Says china was copycatting the outlook. In the unscheduled statement, williams said the case for an early rise is becoming less convincing. Way has lost 5 on its investment. It follows the biggest selloff in chinese stocks in two decades. Manus greek Prime Minister has ruled out leaving the coalition with opposition parties. If he goes month Alexis Tsipras says he will not combined the parties that she will not combine the parties. Own party youhis need over a third bailout. Party mu own tinied over a third bailout. For 137,0004 raise employees. The companys biggest and more than a decade. It takes the standard rate of pay from seven pounds eight pence to seven pounds 86 pence per hour. Manus belichick says he would tax himself more if he became trump says donald he would tax himself more if you became president. Targeted Hedge Fund Profit which currently hangs at a lower rate than regular income. Yet seen my statements. I have done very well. The middle class build this country. Not the hedge fund guys. Funds people in hedge they pay almost nothing. It is ridiculous. Francine i dont know if hes my friend, but i am obsessed with his interviews. You gets more interviews on the website. P next, central bankers monetary policies. How will recent events sway the conversation . That is what we are discussing next. Francine welcome back to the pulse. Were a lot were streaming live on bloomberg. Com, your ipad and your phone. China slowdown is complicating. From my perspective at this moment, the decision to begin the normalization process at the september meeting seems less compelling to me than it was a few weeks ago. Normalization could become more compelling by the time of the meeting. Francine as the market moves, to wyomingre heading to talk inflation and monetary policy. Janet yellen will not be there, but expectations will shed some light on the timing of and should rate of Interest Rate increase. Manus david stubbs is to with us. It is all about inflation. America does not have that problem. A disinflation environment we are going into. David inflation has been the biggest hole in the bank of england. As we near production of rate we the core inflation get an update on friday. It is very low. Uptrendt signaling an that would conceal the deal on a rate hike, especially with these Market Conditions. Francine i want to show you a chart of inflation. I think we have that for you. Well have a look at that, but basically, i want to go back to china. If youre at the fed, youre looking at inflation. David it is a measure of Market Expectations of future inflation. This is telling the fed youre going to miss your inflation target right now. It is screaming at the feds there is no reason to raise rates. There are no arguments to get into stability, the need for measures. On the inflation site, the market is being what it expects. The china turmoil does make a difference. It manipulates Interest Rates in the market. Conditions in the market matter a lot to the Federal Reserve. China is a big source of the worlds goods. Deflation there and a slightly weaker currency may matter somewhat. The message inflation when it the feds to raise Interest Rates did i think it is coming. We need to be patient. Francine bullis up to mystic on china, because you saw this coming. When you look at chinese land, looking at some of the state owned companies, they were quick to say think gasoline demand would peak. Figures below expectation. It gives us insight into refining. If you are fed, how do you read into this . They are changing course. It is going to be painful. Is there anything that says we should wait six months to see what it goes, because of turmoil . David to clarify, i believe china is slowing sharply. Traditional investors are careful Research Driven active management can say can play an active role did consumption, services. Even the Housing Market which is stabilizing. Fed and oilo the and gasoline, absolutely. I think we are on the cusp of spending andxtra confidence come through from the low oil prices. On friday, that report could thatfurther production consumers are finally spending. That is right on schedule. These things take six months to a year. Yet to convince the consumers. They have to be able to see that it is not just temporary. My personal view is it is lower on oil. Tot is going to feed through consumers and businesses in the united states. It is proequity, promargins, proearnings. That if i i would think just wait one month. I think what you need is that kind of stability. This is the most essential desk this is the most important central bank this is the most important such a bank in the world. Manus thank you. Francine later we speak to kansas city reserve resident in jackson hole. That is at 11 30 london time. Trump says he would tax himself more. You have a whole interview coming up. Saysepublican frontrunner he would simplify americas tax law and target Hedge Fund Profits which are taxed at a lower rate. It is answer is yes, tremendous burden of the country. Im saying for the good of the country. None of them are going to support me. I dont want their support. Speaking of that, Hillary Clinton has many Hedge Fund People supporting her. In the end, i would say the Hedge Fund People are making a lot of money and pay very little tax. I want the middle class to be thriving again. Were losing our middle class. Cut . Uld you change the tax i would change it. I would take interest out. Who makeake people hundreds of millions of dollars pay some tax. I want to lower taxes for the middle class. I would to lower taxes for people who are making a lot of money but need incentives. That would affect people and you wouldal estate like to raise in taxes on yourself . Thats right. I do very well. Dont mind pay some taxes the middle class is getting clobbered in this country. Funds,people in hedge they pay almost nothing. It is we did kilis, ok . Ok . T is ridiculous, more politics is interesting than economics. David i think this is fascinating. Attacking hedge issues. Americas tax load needs reforming and simple vacation. He is certainly bringing an energy. We would discussing whether he can get through the primaries. Houthi the how would he go headtohead with hillary. How would he attack the issues that affect the middle class. He lives a very middleclass lifestyle, does the . Francine i cant get enough of this. How do you model a dollar if he becomes president . David what a question. I think it will probably be stronger. It will be probusiness. It will be a nationalistic tone. Francine all right you heard it here first. Francine the pulse. Welcome back to welcome back to the pulse. I am francine lacqua. Manus i am manus cranny. European stocks started the day strongly. 5 at theosing up end. The Federal Reserve is dialing back expectations of a rate hike next month. Dennis daugaard says chinas work work obligating obligating the outlook. Statement,eduled William Dudley says the case for arly rise is becoming Alexis Tsipras says the party would not put together the government. They were at some parties they were the parties that support him. He did not rule out a government of national unity, just that he would not be Prime Minister. Despite stronger sales in china. Caroline hyde is here to break down numbers. Where was the disappointment . A look at the line but the lineup. Maybe you are a cognac drinker. Overall, focusing away from the actual booze and the profits they make. 2 rise overall. That was below estimates. Many looking for 2. 6 overall. And pull down. China, sales are falling. Last year, sales plummeted 20 . Now just down 2 . It is a thorn in their side. Vodka that brand absolute. Challenging markets means they have taken charge of 104 million euros. U. S. A bit of concern. Russia dragged down europe. Asia hurting because of china. Number one brand in china. Approximately 50 of their profits. 40 of sales in 2014. It is crucial, but they get there makes right. No real light at the end of the tunnel. The investor challenging a volatile economic environment. They dont let us know what they think of the route in the stock market. But they think of the devaluation. Compare that to debbie bp who gave us their view. Instead, we are having to analyze. , the french rival, this is why they are hurting the very extravagant scotch whiskey. Perhaps some of the higher end scotch whiskey. Cognac is doing so well. When theyre clamping down on giftgiving. Areaare refocusing on an of the emerging middle class. Slightly less expensive tricks that they produce. Could that be an area of growth . What about locally produced alcohol . Certainly, the scots a make locally in india is reaping rewards. They have seen Significant Growth in india get could they make that work for china as well . By with Still Standing their confidence. The third quarter, they were confident in their pricing makes. Thee hearing they stick by growth in markets. They say it is improving. So far, were not getting any bang for our buck. Back to you. Francine caroline, thank you. The very latest on liquor. Economice annual compose him kicks off today. Will topglobal selloff that agenda. We are joined by our chief International Economic correspondent, simon kennedy. Been six or seven times to jackson hole. Is a great gathering. Yellen is not going to be there. Simon they are extremely important. They are in the middle of in the shadows of the teton mountains. It once there,rk youre in this large facility with other taurus. Taurus. Other monetaryiscussing policy issues. They do so behind closed doors and in a way that allows them to discuss the end up epidemic side of monetary policy. Discuss the epidemic side of monetary policy. They hope for a nice discuss of atmosphere. They will talk about markets. They would talk by china. We are hoping to get a clue on whether they will still hike this year. September looks unlikely. It is not completely off the table . Compelling was the comment from bill dudley. What everyone is going to be watching is saturday morning. Janet yellen is not there. Stanley fischer is a member of the fed. He is pretty close to janet yellen. If they want to communicate a message on september, saturday would be a good time to communicated. Manus he said that every indicator that the fed looks at, inflation is not their problem as long as the fed reserve members are alive. They are fighting deflation every single central banker that is gathered there is fighting deflation. This is the risk, they can go for a 25 basis point hike in the u. S. , that would be a replica of a mistake. It woul