Thisfficial chinese pmi, is where the distinction is drawn. We can consider it grateful for a little bit of calm. Anna a little bit of stabilization preg20, better than estimates, better than the july number, but not convincing everybody. Manus it has not. Let us take it off. What we have here is the insurance against default. Every single month, every single month for the past five months the market has been adding 2 billion over the past five months, the biggest increase in 59 countries throughout the world. You can say to me , just around 152 basis points, still only 8 probability that china will default. What im trying to say there is momentum. A carriage of travel for default insurance. Anna not the people expecting the Chinese Government to default, but is very few ways to hedge chinese exposure, and if this is on the rise that is of interest to the markets, especially ahead of the g20. The risk radar, positive data that we have had out of china, released the official reading boosting the dollar today. That is up a little bit. We also had a recovery in nonmining australia, helpful for the economy. The dollar index fairly flat, down just a touch, the first time in seven days. Manus jobs day. 180,000. To invoke the september rate hike, they never behave themselves never turn the way written up. Of 6 10 of 1 . To be there it has risen by 7. 5 , and you have rising stockpiles which knocke the price lowerd. And saudi arabia, of course not boosting output to flood the market, before the opec meeting. Sort of a carrot stick with that man. Anna the analyst who said that investors keep running from one side of the boat to the other, will only or not get some kind of output deal in algeria, the in focus we already september. Let us to the bloomberg first word news. Here is Rosalind Chin. Rosalind republican president ial nominee donald trump has reiterated his pledge to build a wall on the southern border of the u. S. And is in mexico the bill. He says he plans to increase border patrols and will deport any illegal immigrants. Earlier, he met with mexican president neito, where a range of topics, including the war, were discussed. Dillman recess has become the second brazilian president to be impeached in three decades of democracy, guilty of bypassing congress, on Government Spending a charge she denies. She will be replaced by Deputy Michelle temer, to end of the worst recession in years. Recommending the Federal Reserve raised Interest Rates twice by as early as march. The market does not expect that kind of monetary tightening even by the end of 2017. The billionaire moneyman spoke to bil bloomberg. Again69 months, do it realize that capitalism, cannot really do well, it can survive and not do well with 12 Interest Rates or negative Interest Rates. Rosalind china showing further signs with the official gauge, rising the highest level since 2014. It came in at 50. 4 estimate of 49. 8 the july data suggesting temporary weakness due to flooding the country, according to production cuts over the summer. Is promising not to flood of upcoming opec talks, the minister says market is saturated and although the kingdom has ruled the need to do so, he does not see the need to. Saudi arabia is pumping near record levels as it tries to preserve market share. And a singapore as reported the first case of a pregnant woman with the zika virus. Health and environment Officials Say 24 new cases were identified yesterday, taking the total to more than 100. The Health Minister says more are expected to emerge, and the government has urged all pregnant women to undergo tests for zika. Global news 24 hours a day in more than 120 countries, you can find more stories on the bloomberg at top. I am Rosalind Chin. Anna Rosalind Chin, thank you for the update. David ingles is standing by. How is it looking . David well, little bit less sluggish, very sluggish at the start of the day, not exactly a full riskon. How do you describe it . Meandering around, if you will. What we have seen this week , fairly consistent on thursday, you have 12 developed markets keeping them from going off a cliff. Mostly japan today, hong kong. But one thing consistent as well, if you look at emerging markets across asia, that has consistently been let go ahead of the jobs report, just showing you the amount of caution that no one is taking any risk ahead of the jobs number. Obviously, if the fed does hike rates of course that will be the first bunch to go. A lot of people telling us that. That is the story. On a quantitative note, you guys were talking about pmi data out of china, south korea imp reported. Hardly a bellwether for any economy but macau, but a surprise increase there of 1. 1 . Fx market, nothing of note. Have a look at dollaryen, where we have been trading the last 103, very critical level. The red line at the level moment for dollaryen. Let me just bring up chinese currency ahead of the 20, the meeting happening this weekend, a lot of people saying this chart let me bring it up this is where we will be before sunday. 658, 670 might be the limit here, before the chinese would hardly want this to be the topic of conversation during that meeting. Very quickly, what is happening in the bond markets, the long end of the curve in japan selling off. We are getting yields, 10year negative. Highest level on the 30 year since august or april. Manus, anna . Anna david ingles in hong kong. Let us talk about the official factory gates numbers, rising last month to the highest level in two years. Kevin hamlin joins us from beijing with analysis. What do the numbers tell us . Can we say anything about how the economy is stabilizing . We have the official data and the other data as well . Yeah, i mean it is good news for china. And new orders and output were strong, which bodes well for the month ahead. The problem is that that stabilization was driven by the property sector, by infrastructure and buying more credit, and is so that is kind of building a potential problem for the future with regards to the burden of debt. The export orders and unemployment were both still weak, and i think that points to the underlying struggle of the economy is facing, with weak external demand and anemic external demand caused by the burden of debt. Everybody in these remaining three months of the year going to debate how the economy will do, how it will grow, the target . Are we any closer to that debate between the hard landing, soft landing, what kind of numbers we are going to get . Kevin i think it is difficult to say. I mean, the government is already dialing back support, new measures announced recently to regulate shadow finance online lending. And big cities are rolling out new measures, some to reign property speculation, so these have been big drivers of the recent stabilization, and given that those will face more headwinds Going Forward, i think the path Going Forward looks a little bit on the bumpy volatile side, i dont think many are seeing a hard landing on the term, does the grinding down of these forces. Anna kevin hamlin joining us. Head of as ah, strategy at canadian bank, good morning to you. Talk about the chinese story, caught in limbo. Might mean Less Government support, and the bad it might say the government will help rond. Going round and this question about how the chinese authorities manage this very tricky scenario. We we d have a relative weaknes, causing international concern. Of course with the g20 upcoming, something at the back of the chinese policymakers mind. I think we have to remember of course that the economy is planned to decelerate. Just a question of maintaining that slow and gradual path down to a more stable trajectory, that is a real balance in action. Looking at the pmi indicator, around the 50 level, still moderate growth and consistent with that glide path the decelerating economy, but probably still relying on the currency cheapening up over the course the next 36 months. Manus what is the scenario is that . Saying various stories there is intervention ahead of the g20, is the jobs report, talking more of the fed later on, is that were the risk is on dollaryuan . Is strong support on jobs with sort of accelerate the movie just do not want . There are always concerns when we have events, particularly in china where they want to maintain a very firm public face, they dont want to be seen facilitating external criticism, and we see that in terms of the chinese authorities managing the g20 itself, the physical elements. I think there is a risk into the g20 over the weekend, if we were to see an outside fund relief, that could added to the burden of pressure on the chinese authority, but one would suspect that the visible hand will make sure that the chinese currency does not move to significantly until the leaders have left comfortably next week. Anna the invisible hand. Do you spend your time looking at the chinese basket of currency, as the authorities would like the International Currency investor or International Currency analyst to do, or do you look at dollaryen . This is the contrasting opinion coming out of washington yesterday, praise for the chinese but also others giving words we will hold china to account. Is that the focus in the basket . Jeremy the chinese authorities tried to steer us away looking purely of the dollar, but the bulk of people looking at a particular relationship, as of course we move towards the president torres coming to a conclusion of course, dollar yuan very concerned about the argument from the u. S. Side of the equation. Could become a little more relevant. I think there is that dollar cross that is most relevant. But i think it is the case that you can look at a basket of currency just to see how the currency is trading on a competitive basis, looking at china versus the regional matters as well, to get a gauge of competitiveness. Manus a couple of different articles at play in terms of the pcob qe by stealth adding credit facilities, etc. This is the credit default for china, nobody talking about the fault in china, but that overcapacity people are adding default insurance at a fairly rapid click. Is that part of the conversation about overcapacity in china . Jeremy it is. And i think it is interesting that chart you pulled up, using that as a sign of concern, but if you look at the axis levels you say yes, we are seeing default insurance being added to but we are in the danger zone, just making sure the investors are putting on a little bit of a rainy day manus increasing in 59 countries, i think that is probably the more stable point if you look over the past five years, still not anywhere where it needs to be. Jeremy we look at things in a very sort of microcosm perspective, and we sometimes need to just row backwards and look at things and a broad historical theme and say yes, we are seeing default insurance the cup and there are issues in china, but i think those issues will create uncertainty over the short to medium term. We know the issues about the nonperforming loans, the Banking Sector for example, these are concerns that you continue to Impact Market thinking, but they are not something which is causing markets to be very nervous about the situation really blowing in the shortterm. Anna interesting that default and china can flag up as people have a concern, because of the size of the economy, however comes a systemic risk. Manus everybody goes into these microcosm modes with china, currency, stock market, it is systemic. Jeremy absolutely true. In the context we have the pretext of 20082009 in the back of our mind, we are looking for risk, and china is an obvious one. If you are looking at a glass full, that is a key component. But it does have those systemic risks that are at the edge of market thinking. Anna jeremy stretch stays with us on the program. Here are some highlights for your day ahead. Manus manufacturing across the mainland in europe, collating whole. E eurozone as a at 9 a. M. U. K. Take time. Followed by figures from the u. K. And payroll. Anna u. S. Initial jobless claims also at 1 30 p. M. U. K. Time. And an hour and a quarter after that, u. S. Manufacturing pmi. Manus the rate debate bill gross calls for two rate hikes as soon as march. We have more from the bloomberg interview, coming up next. Anna and the red line on brexit negotiation, theresa may spells out her limits on immigration. Anna have an hour later, we speak with the finance director about the earnings outlook at the u. K. Approaches brexit discussions. This is bloomberg. Anna welcome back everybody. This is countdown on bloomberg television. 1 20 in hong kong, hang seng outperforming the broader market. Let us get the Bloomberg Business flash. Here is Rosalind Chin. In electronicss have fallen after the company said shipments of the note seven smartphone will be delayed in korea. For further testing and quality checks they have been catching firewall charging. 3. 9onic has raised billion. In the at ain fiveyear notes yield of 0. 9 and the rest in sevenyear securities. Mitsubishi is the only issue or to sell more than 4 billion worth of bonds and a single deal this year in japan. Cofounderped after Evan Williams says he will have to weigh all options concerning the future. His comments come as twitter comes in acquisition target, growing more slowly than expected and the stock is down more than 70 this year. Leaders in the Banking Industry blocking people from lower income backgrounds, that is according to a report by a government advisory body. The social Mobility Commission says half of the city of londons bankers are educated, even the less than 7 of pupils to private schools. And that is your Bloomberg Business flash. Manus Rosalind Chin, thank you very much. Bill gross says negative Interest Rates are turning assets into liability, citing the capitalist system. Gross also says the policies will failed to produce sustainable economic growth. He spoke to bloomberg. Bill lota negative Interest Rates are a hindrance, as opposed the policy, and i will continue to believe in that. And i think that is the heart of the problem, the other part is that it is true fiscal responsibility has been advocated by many governments, and we need some good old keynesian stimulus. Anna bill gross is also recommending that the Federal Reserve raise Interest Rates twice by march. Bill by 25 basis points in september, 69 months from now let us do it again, come one. Let us realize the capitalism cannot really do well, they can survive a not do well, with 0 Interest Rates, or negative Interest Rates. Manus jeremy stretch is the head of fx at canadian interest bank. Do you think that is a provocative thought . The market take two hikes . Jeremy going back to we had the last rate hike from the fed, back at the end of 2015, of course the fed had a prescription of four. That has been conveniently blown off the table over the intervening months, now that to assuming well, we could see one hike before the end of the year, waiting for the idea that it is more likely to be september than december, but nevertheless one hike is coming. But what how much of the trajectory . I think we can see a slow trajectory toward degree of monetary tightening because in the context of what bill gross said, effectively zero Interest Rate policy. And of course we are about a labor market essentially at full employment if you listen to some of the speakers a look at the data points, and of course we have become accustomed to the equity markets being continually stimulated by ongoing liquidity. And i think that is a drug that perhaps has been rather overdone. Anna making the point that gdp is 3 , and if we get employment job growths number of 150,000, if you cannot hike rates in that environment, when can we . Inflation is a thing he did not mention i suppose, holding the fed back . Jeremy obviously, the fed does have a twin mandate. And when you listen to some of those comments from boston yesterday, talking about the twin goals of the fed, and rather more on the double cap, now also coming around to the idea of some of those unintended consequences of having ultralow rates for too long a period. But i think that is a scenario the markets need to be considering. We have seen obviously the fed finding external reasons not to hike rates, when perhaps they should have been moving a little i would say faster but moving more preemptively. Anna to see capitalism cannot function well at the zero bound or minus rate, is their sympathy of the fed for that view . Jeremy in a sense, looking at Central Banks and we are purely datadependent, of course the need to see data. But there is some degree of sympathy, but we are seeing a great Monetary Policy experiment conducted a number of experiments, boj or wherever. The negative rate story will actually be the panacea of the capitalist system. Manus going back to the speech, he warned of the commercial property bubble. And if you think about this time last year were worried about oil market and the impact on balance sheets, here we are with the fed governor warning again, back to the property bubble of 20072008. Jeremy that is sometimes the problem is that we dont necessarily learn from history, we think we learn them but we them. T part of in a certain sense we have seen unintended consequences of the flow rate scenarios in terms of bubbles once again being built up, and of course investors who are looking to generate returns, and if you cannot generate returns from purchasing those riskthree assets in terms of you have toonds, look at other asset classes. That does make additional bubbles. Anna jeremy stretch stays with us. Up next, looking to algiers. Saudis cedi will not flood the market ahead of the opec meeting later in the market. Manys, we had a big group, down 6 yesterday. Up little bit this morning, half a percent. This is bloomberg. Manus it is