Copper is trading lower once again as concerns about chinese slowing growth prop up. Similarly, trade and the u. K. Is off by half a percentage point. No end to the woes for commodities Going Forward. Interestingly, the other thing on investors minds is the fomc. We haveday meeting, seen the dollar drop off by 2 10 of a percent. We would see any sort of rate hike come september. Those futures funds tend to signal a 28 rise likelihood of the federal rate hike come september. Much more probability later in the year, but money is being taken off the table when it comes to the dollar. On the flipside that is where you were seeing most of the trading. The euro is up some 2 10 of a percent, not music to mario draghi sears. Draghis ears. We have some interesting stories out there for you. One is in focus because of talk about the strategic reviews that could be coming as soon as october. There is a rice discussion in the market about whether they could the uploading a u. S. Private banking unit. All eyes are ahead. Visuel is up 3 and we could see the private Media Companies and friends rally after a Big Government uturn. There was talk they could reintroduce evening advertising on tv. With a destabilize the Media Companies in terms of revenue flows . But they backtracked saying they would not have using television ads. Meanwhile, pearson is up 8 10 of a percent. That was after a fantastic interview that has been written up. Are selling their stake in Penguin Random house. They will probably not auction until 2017 so the ceo tells francine. But overall, pearson is driving high. Jonathan they give very much. Three minutes and 12 seconds into the session. This is the European Market open. In asia, the moves made sense. The shanghai composite slides lower. Lets get to zeb eckert in hong kong. Day in started out the the opposite direction, where it didnt make sense. We started with stocks higher on bad data, that that is not how we finish of the shanghai composite. It is down now, under 3 . It is certainly reflecting investor concern that chinas economic slowdown is deepening, and this complicates the situation for the chinese policymakers, because they are dealing with multiple issues and calibrating their policy response. It is not an easy thing to do. Some of the movers in hong kong life insurers advancing. The hang seng was leaving the asiapacific market, registering again on the regional benchmark. The casino shares are among those declining. At the end of the day, we have chinese stocks declining the most in three weeks on the slow down concern. We did see a big move in the japanese market. He nikkei 225 moving lower bothireless division are declining as the Prime Minister indicated he wants to do something about high mobile phone charges for consumers in japan, perhaps bringing them more into parity. To telecom are moving. Toshiba is posting a net loss, slipping to the lowest in 12 years. Heres how toshiba performed ahead of those numbers, the stock down 2 . This is the stock that has been beaten up year to date given the accounting issues the company has faced. It is down 40 , posting ¥11 billion First Quarter operating lost. Jonathan thank you very much. Here in europe, that is your market open. Heres what we have lined up. The fed will they go one day . Will they or wont they . The debate on whether they will raise the rates. We will bring you the latest comments from wall street. A 30, europes refugee crisis. Germany has reinstated its border controls. Later, oil bulls back . The most bullish bets since april on optimism, with the global oversupply will disappear. We will talk about that later. Lets get over to china the economy is still growing slower than the government target of 7 . Industrial output missed forecast on sunday. Investment was a much better. Bloombergs bureau cheif is standing by. Reactionis a kneejerk we ask the question whether it means more stimulus is on the way. Are we going to get more stimulus . Nick i think it is pretty inevitable at this point. There is broad expectation for another Interest Rate cut. If you look at the numbers that just came out, they are worse than they appear. At 6. 1 bututput is that is skewed upward because the number from last year, which was quite low. It looks better than expected. Inflation numbers from last week look relatively positive, but those were skewed by high pork prices and other foods. Overall, the picture is looking worse than people think, which certainly will put new pressure on policymakers. They have plenty of tools its a question of when they will use them. Jonathan that is the big question Going Forward, talk a lot about reform. Some details in the last when he four hours how significant are the changes . Nick it is pretty big. Soe reform has been a key thing the government wants to focus on. They have made no secret of their intention to reform soes. And are written with waste overcapacity and overlap between companies, so they really want to narrow this down. The tricky thing there, though, is that the government really wants to maintain the privacy of the communist party in overseeing soes, so the big challenge Going Forward is how they will maintain the balance. Role,he market a greater but also allow the party to maintain its controlling handove over soes. Jonathan great to have you with us. Time to bring you the market. We are joined by the global Asset Allocation strategies that ubs. Also the director of Asset Allocation research. Great to have you with us. I will go straight to a quote from the bearish bank of international settlements, we are seeing a release of pressure that has gradually accumulated among the major full lines. That tells me that this unwind, this shakeup, is going to continue. Do you agree . I think a lot of our clients are certainly concerned about what will happen. If we do see markets disrupted, they will step in and look for the value after the selloff. The volatility is not over i think it will continue and i think the fed will drive it further. China probably will stabilize, but over the short term, definitely this is high volatile. Jonathan we asked the question what are we pricing in . You look at a slow down, people looking at the next five chapters. Next 20 turned to the chapters. How do you model what china looks like in 10 years . We have looked at all the other asian tigers, and of course there is the famous middle income trap. China in many respects is no different. It has slowing demographics in the outlook over the next 10 i is more or less proof can get my head around the fact that people are thinking 6 growth what is growing . Where is it coming from . There are so many indicators which are at 10 , 20 . Jonathan where is the growth coming from . Ramin my concern is about the ppi inflation. Things like pork prices, vegetable prices. If you take those out, it has been fairly flat. Ppi is whats really been falling. It is the price of product produced at the factory gates which is falling very sharply. Obviously, the Manufacturing Sector is suffering in china. For not Housing Related Industries things like leisure, luxury goods. But we have been keeping well away from that market. Jonathan a pileup of debt, data that points to inflation numbers, do we just assume that the next 10 years is just a world of global disinflation . Christopher for all countries in the next 10 years, there is very little reinflation pressure. There is evidence behind that if you cast your mind back, it was one of the biggest spending splurges on record. They were borrowing record amounts. There was still no inflation, even back then. Even if you are in a world where those same entities are not spending, first inflation going to come from . Jonathan where, and what will the policy response be . The boj is meeting this week. Have reallyple penciled in saying we could get more from the boj. Is that a reason to go long on Japanese Equities . Ramin this disinflation theme is a big run for us, and we think the best place for looking for value is places where you have lowinflation combined with a positive credit impulse. Andle are borrowing more the economy is going to be fueled by that credit growth. The two places we see that is japan and europe. That is why there is fear among strategists. I think that disinflation feeling is the big one. Jonathan the nikkei 400 why that particular index . Ramin we like it because of the Corporate Governance aspect. Our asian equities strategist just came back from a trip to japan. He has confirmed that for the stocks you have identified, they certainly seem to be taking corporate governors very seriously. What does that mean . It means you focus on return on equities. In order to be part of that index, you have a kind of cap. Athan a longterm play shortterm volatility in japan is outstripping what is happening in the equity market in china. You have to have a longterm horizon to appreciate what going to happen. Christopher i think one of the issues with japan you think about the legs of the trade, a weak yen, corporate government reforms, boj action. The weak yen has stopped a depreciating. The corporate government reforms are ongoing. Boj action has settled for the time being. Only one of the three pistons is working. It is not surprising to me that the boj would start to wobble. Jonathan they will stay with us. Coming up, one of the most anticipated market events this year. We have been talking about it all year. We debate the fed, next. Plus, he may not be another majority which he one another tennis match. Details on it after the break. Jonathan good morning and welcome back. Lets get straight to your top stories. Chinese stocks fell with the benchmark index dropping the most in three weeks. The economic slowdown is deepening. Industrial output missed forecasts while investment increased at the slowest pace since 2000. Australias Prime Minister tony abbott is facing a leadership challenge, former cabinet minister. He resigned this morning, saying that mr. Abbott has failed to provide the Economic Leadership the nation needs. Place, theas taking worlds top Money Managers played in the First Finance cup. That is where the Hedge Fund Titan won a respective doubles event. They sweeps the european squadron eight of the nine matches. The next one will be held during wimbledon. Central banks have a big focus this week. The boj will announce Monetary Policy at the end of the twoday meeting in tokyo. On thursday, the Swiss National bank wil is expected to keep the rate unchanged. The only one that matters for many of you the fed. One of the most anticipated events this year. Will the fed pulled the trigger and raise rates for the First Time Since 2006 . That decision is thursday at 7 00 p. M. U. K. Time. Wall street is divided on what the fallout of any move might be or when a rate rise will happen. Here is what they have been telling us. I think the domestic case for raising rates is solid. It has been for a while. We are not in a recession yet, but the vector is in the wrong direction and that is unusual. People want to get off this zero bound. We are effectively in the end zone and these clowns are sitting there debating whether or not we can let the i have a lot of trouble with this idea. Lets do it now and then we will hold our breath and leave everyone. Of zerod year Interest Rate has and created a web economy. In a world where there is no inflation the idea that you hike Interest Rates just because they are very low in that worries us doesnt seem particularly compelling. A the domestic case remains strong with the international cases flashing yellow be careful, be careful. That you really dont know you have room to raise it for a while, why are you starting now . Lets bring back in our guests this morning. Atin of ubs and christopher, burring. Ramin, the labor market what if i want to normalize . Inflation in Consumer Prices saying wait. Communications are all about transparency for the last six years. Has something gone wrong . Ramin i think they have been very transparent you can see what their views are. Fomc the members of the say they will be a hike for the end of the year. I think if we do it in september we still have the optiona lity. It is also good to get it out of the way. Particularly emerging markets will benefit massively. If you worry about outflows, it has been brutal. That is largely driven by this uncertainty. The sooner we get it out of the way, the better the market. But i think the case for it is weakening. Some of the data we have seen has been soft. I can see it is 5050 for september. Jonathan coming into this meeting, they have had to tighten. Goldman sachs was pointing to the fact that we may have already had the equivalent of 325 aces point rate hikes. Lets bring that chart up for our viewers to show that Goldman Sachs index. You can see it pushing higher. Does that play into the fed, and how much is a problem for that for them . Every time they talk about getting on zero, the market pushes them back. Christopher there is no need for them to hike there has already been tightening for financial condition. In the at the ford curve inflation market and they will show you there is absolutely no inflation anywhere to be seen. In terms of the fed signaling that there should be a hike at some point this year, they were also expecting some wage gains to come through. The midpoint of the area estimates and there is still no wage gains to be seen. Something is wrong in their models. Jonathan so they change the models . Christopher and they drop the plots. All rates have to come down. There isnt nearly as much of inflation in the system, nearly as much likelihood for wage gains. Jonathan lets talk about markets. Why does anyone care about a 25 basis point hike . What does two or three months even matter . A lot of the big words are be on that. For thisno guidance kind of Monetary Policy anywhere in economic history. When you go into a meeting like this people say how does history not tell us anything . Ramin i dont think it is impressive compared to where we are now, but we have thought about this for so long, hike is now largely private. So one your outward forecasts will be 110. Euro strengthening versus the dollar, 5 , 6 . We lookhe cases where for weakness, where you have open markedness, exposed to this disinflationary trend. That is where the currency will take the hit. Stoxx. Extent, also the those other currencies we would sell. Jonathan i am going back to your decade outlook, your report. Look at the Federal Reserve you mentioned the imf as well consistently overestimating growth. Getting their forecast wrong. If we cant trust their inflation will growth forecast, why do we pay so much attention to the. Plot when it comes out . Christopher good question. Frankly, the Federal Reserve, the imf, many mainstream institutions have been completely overestimating. They have been taking the view that brought us back to levels above that which we saw in 2006, 2007. We saw so much spending, so much capital being put into the economy, and still no inflation. They have for some reason thought that productivity will bounce back to those levels. I dont see it. I think they are coming under political pressure. Maybe not explicit, but implicit pressure, to say things arent thatbad, to say things the trend growth will recover. There is no evidence to show it will. Jonathan of course if they dont forecast inflation targets in the mediumterm, they are failing in terms of policy. The central bank almost predicts what they are meant to do, which is a problem. That is a problem for the bond market as well. Bond markets always underestimate growth inflation. We have to take the debate we are at 2. 2 now and are we about to get the bond market wrong all over again . Ramin we have done for fairly elaborate models. All four of the models, based on theut, are telling us that terminal rate will be somewhere around 2. 9 or just below 3 . If you read into the fiveyear, that is telling us it should be somewhere around 3. 2 , plus or 60. We pay at the bottom end of that range, but that is the forecast for where we think rates should be. I think that is the key thing because you have to have an idea of where the terminal rates will be. None of the dot plots will determine rate. Jonathan lets wrap this conversation up. We have a decade outlook but lets do the here and now. Have you imagine thursday . Christopher before thursday you want to assume there is no hike, and if either there is no hike you should see a rally. Ramin . N ramin there is a very good book called invest in fear, and that is what i would be doing. Jonathan ramin, christopher, thank you for joining us. 25 minutes of the session. A bit of a rally youd think people would stay away and things would trade flat. That is not happening. The 5100 is up by 1. 2 . The shanghai composite is after somen by 2. 7 not so pretty data. Switch up the board quickly for a check on the effects market. They eurodollar is on a sevenday winning streak, the longest since december, 2013. 30 equity markets coming up in the show. Europes refugee crisis escalates drastic measures to impose control. What does this mean for the shang an agreement . That story from berlin, coming up after the break. Jonathan good morning and welcome back to on the move. I am jonathan ferro. 30 minutes into your trading day. Lets check out how the markets are shaping up. 8 . 600 up like it green across all of your this morning across all of europe this morning. Was tied by Media Companies. One of the leaders is key f1. Is tf1. Outperforming the rest of the stoxx 600 this morning. There was talk that there might be introduction of advertising in the evening on a state owned the media. How would that affect destabilizing factor from media groups. It is being unwound that decision. Driving their privately held Media Companies and france higher up 7 at the moment. Swatch up 2 this