I am francine lacqua. Out of china, the top desk the economy is growing slower. Industrial outputs also missed forecasts. The shanghai composite index dropped the most in three weeks. It is raised the perspective of more stimulus from chinese authorities as they try to push and the slowdown. As they try to cushion the slowdown. Malcolm, what can we expect next from policymakers. We are likely to see a response on numerous fronts. Weve heard from the government last week that plans are to boost the fiscal response to the slowdown. Today there were some tweaks around that. They are going to lower the Capital Requirements and some new Infrastructure Projects that will allow less of a down payment. Roads, rail, projects. More monetary easing that can come in various forms. Banks for reduction of rrr ratios. The downside on the deposit by inflation is picking up because of rising pork prices. That may limits go that may. Imit scope it will be ongoing. Effort to keep the yuan stable and support the stock market. A multipronged approach from china. Francine it seems to be a juggling act between keeping the economy growing and reform. Malcolm there are two things going on. The cyclical slowdown. Moves to tryclical and cushion that slowdown. There is evidence of a structural slowdown. Aging workforce is becoming a factor. Efforts to rein in corruption, pollution. They are putting a break on growth. Thats where the reforms come through. The movement on the weekend and today, a little more color. It is an ongoing factor of chinas Development Since the economy started droving up in the 70s. Whats nextitty of in the us and we process. There is interest rate, liberalization good small as they tryps and keep that yuan stable. A dual effort, this balancing act is keeping housing makers in china very busy. Just keeping policymakers in china keeping policymakers in china very busy. Francine Portfolio Manager at j. P. Morgan. 8 trillion in assets. Great to have you on the program. How do you read into china . There is a lot of volatility. They are shifting. This is only a correction or something much worse. Finde of the key things we is the idea china is in transition. Opening up a capital account is the last step of that liberalization. It is come quicker than the market expected. It has come quicker than the market expected. The problems are well known and understood. The market is debating about have they Gone International . Are they losing control . Weve said they chinese we boy said the chinese policymakers had the tools at their control. But we saw months ago really raise questions. Facing an uptick francine you think they lost control . There waiting around . I think the risk has increased. We saw over a month ago when they liberalized devalued. Hat did not ease conditions we saw a rates increase. That is to offset the drain of liquidity from the capital outflow. That is the thing we worry about most. The 120 billion that matters. Its the on short liquidity conditions at a time when they want them to be more easy. Francine do you worry about a correction overall. Have we been in a bubble . Is it bursting . Talib weve been a very emerging markets. When we look at Something Like the u. S. , and out bridge rice for u. S. Stocks. We can get earning growths about 6 . Within developed markets, it is difficult to say were looking at a bear market. Where cautious. We are paid to be a hero at the moment. We are really not to change tactical at the start of a new bear market. Francine what is your best call echo where would you put your money . Looking to bite it. That is concentrated in europe and the cyclical market. U. S. Pan and a bulk is the where we argue where those violations dont look to certain. When you look at sectors in the u. S. , the u. S. Financial is offering an attractive on a buying basis. Look really far so the curb can stay steep. That is going to stay positive for u. S. Financials. Francine your base assumption is a rate hike from a fed in september, october . Talib it is becoming a coin flip. The key question is is a volatility uncertainty. The idea we will get to friday morning and it will become clear. It looks overly optimistic. The reality is the u. S. Economy looks ok. They are going to start raising Interest Rates, whether its september or december, it doesnt matter. Francine we got a call from citigroup last week, 55 chance of recession because of china. 55 seems extremely high less you are worried about deflation. Trade is contained. The finance liquidity is higher. People are uncertain. It takes any type of shock to knock confidence. Shock stops people from investing, hiring. That means expectations are taken lower. For a recession looks a little bit high. Its worth looking at those linkages other than trading. Francine thank you for staying with us. In the meantime, heres a look at what else is on our radar. Germany has reinstated controls on its borders with austria for the first time in 20 years. They try to cope with the influx of tens of thousands of refugees. This enables people to travel through European CompaniesEuropean Countries without checks. Meanwhile, u. K. Prime minister David Cameron is in lebanon where he visited a refugee camp earlier. E is holding a News Conference airbus is opening its first jet production site on boeing. Theplaymaker is unveiling plant in alabama. It is expected to spur job growth. The u. K. Labour party leader, Jeremy Corbyn has finalized details of his team. John mcdonald has been appointed. Andy burnhams shadow home secretary. That brings us to todays twitter question. Threat to theal u. K. Economy . You can tweak me. You can tweak me. We will be expecting that next. Francine welcome back to the polls. Where live on bloomberg tv. Streaming on bloomberg. Com, your tablet and your phone. The u. K. Opposition labor party elected its new leader on saturday. Jeremy corbyn received 60 of the vote. In his victory speech, he underscored his Campaign Promises of more equality. [no audio] in the spirit of hope and optimism. I say to the new members of the read r those who have who have joined and as registered supporters, welcome. Welcome to our party. Welcome to our movement. More, thenere with you old donald. What happens now . Weve had a formation of a shadow cabinet. The new shadow chancellor, John Mcdonald, makes some of corbyns policies look moderate. Someone whohe is has publicly declared who he wants to remove rate hiking powers from the bank of england. Veryde comments controversial figure indeed. Francine there is going to be a rethinking. Cameron put a tweet out saying this is dangerous. , could itbour party implode . Is it too soon to tell . Centerleft,or any this is very bad news. There are a few centerleft burnham,such as andy on the bench. They were not confident on the handling of the economy. What is this saying to them now . We have a situation where the party has gone completely left. You have very controversial figures appointed. This is not good news for labor. Francine thank you so much for sticking around. What does it mean for the ftse . You look at it two ways. They will get nowhere near politics or you think this underlines and bigger concern, that this country which is very procapitalist or proamerican could turn. Accounthas a current deficit. It depends on foreign accounts. It raises risk premiums. We are a long way from coming to that final decision. It could mean that labor fragments. That would be seen as probusiness. The reality is no one saw this coming three months ago. If one week is a long time in politics, i am sure five years is. What is the story . Went to see how it develops. Francine something more close to home is the referendum. How you describe Jeremy Corbyns position to europe . We have yet to hear him to express his views. Hes let hillary been backtrack. Wooden thats emy corbyn wooden support francine how do you do with this as a Portfolio Manager . Dangerous. A yearandahalf ahead of a big referendum on the eu. Talib we seem backtracking on whether or not they want to be in nato. Thed of the the fikes fights you want to fight. The u. K. Looks uncertain. We have been pretty neutral across our business. I guess sterling will be the place where you might see some weakness. It is still too early to see the referendum. I was looking at opinion polls. Some people saying 40 of a brexit. Risk him him was be priced into the market. From j. P. Talib sheikh morgan asset management. That brings us to todays twitter question. Is corbyn a threat to the u. K. Economy . Germany has reinstated controls on its borders with austria for the first time in 20 years. As it tries to cope with the influx of asylumseekers. Agreement, the agreement that allows people to travel through European Countries. The news comes as ministers meets thats ministers meet in brussels later today. One of them is the proposal put forward by jeanclaude juncker. The European Commission has made ambitious plans to tackle europes refugee crisis by calling on governments to relocate 160 thousand people an increase of 200 . Relocation will apply to those with a clear and urgent need of protection. Currently that applies to syrians, and iraqis. Taken into consideration is unemployed level and how many assignment levels thats how many germany will take the most. While malta would take the least. Under the plans, receiving willr states will risk receive 6000 euros for each refugee they take. Germany and hungary will be excluded. For each get 500 euros person relocated. Three countries are able to opt out. They can participate if they want to hear it for those opposing the quotas like czech republic, the penalty will be enforced belted to this size relative to the size of the companys economy. Here. Ne keep it right more on the pulse. Francine welcome back to the pulse. Live on bloomberg tv and radio. Streaming on your tablet, phone revising the number of refugees expected to arrive in the border town. Meanwhile, germany has restored controls on the order of austria, suspending the schengen agreement which allows Free Movement between nations. Ministers spoke and an emergency meeting on sunday. At this moment, germany is introducing temporary boardchecks again at the internal front tears. The focus will be at the border with austria. The aim is to limit the current influx to germany and come back to an order. This is necessary for safety. Francine lets get more on this. Right, it does look like the picture of successful management of a refugee crisis. It is not going well. What we are seeing today is individual countries responding in an ad hoc fashion. Moving east and west, you have hungary announcing as of tomorrow, refugees that come across their border, that are not going through official border checks, which is difficult to understand, because it is supposed to be a free travel zone, those people will be effectively carrying out illegal acts. Theres been a grace. Theres been a grace period in place. Whereby people if they were caught by the police would not be incarcerated. Tomorrow, it will become illegal. That is what hungary is doing. Moving to the west, you have austria closing a highway that it shares with hungary. Thats because they expect 20,000 refugees to be to come across their border from hungary alone. Seven times the number they were expecting just yesterday. It gives you a sense of how fluid this crisis is. Terday, greece announcing germany announcing they are introducing temporary controls on their border with austria. Built,e fences being even if metaphorically, as you travel east to west. What you dont have is a unified approach. Good luck, because there is a lot of division. Francine David Cameron is in lebanon. Ryan he is doing two things. He is saying we care. We are at a refugee camp. He is propping up the u. K. Plan which is dont accept refugees who are moving through europe illegally. They come from the camps. Met with the family of one at the same time he is taking a jab at other eu countries who are not supporting the u. K. Approach which is to fund the refugee camp. Pointing out that the u. K. Is the second largest funder of the u. K. Of the refugee camps. Boats, it isthose too dangerous. And secondly, thanks to the other eu countries, we got a plan. We are on it. We are doing more than anyone else. Francine ryan, thank you very much. The most critical policy decision in years. How are the markets behaving . The last few days, a possible hike. Examining that. The fed meets on wednesday and thursday. Well have that decision whether or not to hike rates. You can join us on twitter. Francine welcome back to the pulse live from london, im francine lacqua. New concerns the economic slowdown is deepening in china and they raised the industrial stimulus. Output missed forecasts while investments increased at the closest slowest pace since 2000. But the slump has raised more stimulus from the chinese authorities as they try to cushion the slowdown in the worlds second biggest economy. The u. K. Elected party leader Jeremy Corbyn finalized his team. John mcdonnell has been appointed chancellor while angela eagle is the secretary and defeated leadership candidate vernon is shadow home secretary. And germany reinstated control with the borders of austria for the first time in 20 years as it tries to cope with the influx of asylum seekers. Theyre testing the socalled shanghai deprement that enables people to travel through 26 European Countries without border checks or visas. European leaders meet in brussels to discuss e. U. Proposals for accepting refugees. Lets get more on all of this with the managing director of the International Think tank redefined, hes sony kapur. Thanks for coming in. Im not sure where to start. We have talked about china and the refugee crisis and jeremy corbin. Which worries you the most out of these three . Sony politically speaking the refugee situation. The European Response has been highly inadequate and politically charged and very polarizing and in particular what one is seeing from some of the eastern European Countries knows this has been criticized in the press but reminds ones self of responses past where europe got it horribly wrong. And this tone is getting evermore polarized and hard to see any solution that is not a european solution. And given the polarization across countries, given also the very poor state of the debate in the u. K. , its very hard to see how a proper european solution can be had. Francine does it spill over to a economic crisis . This is a tragedy, a human story. At what point does it cross the borders into being something that actually shakes the foundations of europe, be it either because you have more polarization or more votes to the right or it actually shakes up the economic fundamentals of a country . Sony what weve experienced since 2009 in europe is as much a political crisis as economic crisis. In fact, what weve seen is even as the economic problems grew, political Space Available to attack those problems shrunk and theres only so much Political Capital that every leader has domestically that were elected on political platforms and my worry is the Political Capital necessary to attack the refugee problem, the Political Capital being lost in the polarization because of the refugee problem will have massive repercussion and spillovers into whatever Political Capital is left to tackle the euro crisis which is still very much with us and even less Political Capital that is left to take forward the structurally sound Solutions Moving to its further integration, the banking unit and others that europe needs. Francine this will pull europe apart. Sony absolutely. The combination of factors hitting us right now, the political polarization, the refugee problem and the continuing economic crisis, the biggest political challenge the european project has seen since i remember. Francine how do we tackle that . Are you more worried about a e. U. Referendum in the u. K. And actually the fact that sometimes everything gets muddled though the two arent linked, the more refugees or the more this crisis hits the headlines, the more theres a danger that the u. K. Citizens will recoil and actually vote to leave the e. U. And how worried are you this will lead o far right, exokse, another person comes in the presidency of france . Sony the direction of movement, despite the reaction from citizens, the pro refugee marches have been really, really heartening. But the idea that brussels and european leaders can somehow force a country to make choices, this is the whole discussion on the refugee quota, is quite negative in terms of the potential far left or far right response within a country and polarization. And it will definitely not be helpful with the u. K. Referendum vote next year. And again, the election of corbyn there. Hes not a committed european in particular. And its hard to see who the committed european is going to be when the referendum comes our way. Francine i want to ask you that. Im puzzled and not sure how to read it. Does it mean labor fragments and we have something more credible in the eyes of the market and Business Community around the world. Do the conservativings stay in power and is it a danger for the referendum because hes lukewarm to europe and we havent heard his views . The conservatives have through hyperbole Prime Minister cameron indulged in when he said corbyns election interferes with National Security but highlights the strategy theyll have which is discredit labor altogether and might work. They definitely can see doubt in the minds of the voters. The fragmentation of the party itself is not precedented and is a threat, especially given how poorly he is supported within the Parliamentary Party itself and how