Joins the chorus of Central Bank Officials calling for the eventual end of the feds massive Bond Buying Program. If things go as the committee expected, i would expect us to dial back. Well have to see what the data and the feeling is between now and the time we next meet in september. All right. Warm welcome to you. The last Worldwide Exchange of the week. And we kick off with the iea. Oil, latest oil report. Wti futures narrowing the gap with brent amid surging u. S. Refining runs and crude draws. They say Global Oil Demand will accelerate in 2014 to 1. 1 Million Barrels a day. That compares with. 9 in 2014. The forecast of demand growth been trimmed slightly from previous estimates. Global supply, they think will also increase just a little bit, led by higher nonopec production, dropped stronger in north america expected to lift its second half total average of 1. 4 Million Barrels a day. Opec crude supplies edged down in july, global refinery crude demand surging in june. It is by 3. 1 Million Barrels per day, highest monthly increase on record. Ahead of the autumn maintenance. Thats the latest iea report. Nymex trading at 10404. Jason joins us now. Good to see you. The monthly increase on record in global refinery crude demand, 3. 1 Million Barrels per day in june. Where do we go now . Well, essentially if were looking at just one month number, you can get some distortions. Essentially asia was going through the heaviest refinery Maintenance Period on record in may. That monthly surnl were not concerned about. The numbers to rightly focus on are demand growth, which has been actually reasonably robust given the economic backdrop and supply growth out of the united states. We think that demand growth is going to be still reasonably robust and going to support prices that will move up into the range of probably 115 brent. The strange thing, of course, jason, with oil is how strong it has been when you compare it to Metals Commodities as well. How do you explain relative strength of oil against the relative weakness of the last two years of the Global Economy . There is really one word and thats china. China accounts for an important amount of oil demand. About 10 of the Global Market. But on many of those other base metals accounting for well over 50 . When china slows down, it affects all commodities but affects metals significantly more proportionally than oil. Which is a fair point. They talk about oil demand expecting to sell rate a little bit led by higher nonopec production. How much sort of is there much Spare Capacity in opec or not . There is to the tune of 3 Million Barrels a day, 3 of Global Demand. There is some there. It is not a huge cushion. Yeah. And meanwhile, what are the supply risks . Well, the supply risks are multiple. Right now we focus on amina, libya had a lot of interruptions to their supply, egypt is a concern, but not a big producer, yemen same thing, political issues and nigeria is a big wild card here. There is quite a bit going on in nigeria in terms of theft. Political situation there is also pretty precarious. Yeah, just one other thing were looking at as well, iraqs oil resurgence, sort of faltering a little bit. Have they underdelivered compared to our expectations . They have underdelivered compared to the expectations they have given to the market. I think the market has been rightly fairly skeptical about how fast they can ramp up. Youve seen big up months and big down months. The issue with iraq is twofold. Can you get the infrastructure in place in the south, thats probably most important. And there have been some issues there, and then second, will you be able to export from the north and most particularly kurdistan and thats going pretty slowly. Yeah. Meanwhile, what kind of political premium do we keep, jason, in the oil price . Well, there is a lot of different ways of measuring it. We look at the backwardation and you get 5 or 6 a barrel in price right now. Thats a premium that is going to persist indefinitely. Because a lot of the issues i talked about in terms of risk dont seem to be going away anytime soon. Jason, good to see you. Thank you very much for that. Jason gammel at macquarie group. We had one of the biggest investors returning. 1 on portfolio in the Second Quarter, beating its own benchmark by. 3 , essentially funded by oil. And they say equity markets boosted by strong market in the u. S. And japan. 760 billion oil fund increasing its bet on equities, slightly better returns. Dont forget, thoughts or comments, email us, worldwide cnbc. Com. Another story were looking at, another voice joined the chorus calling for a september start to tapering fed asset purchases. The Dallas Federal Reserve bank Richard Fisher told Maria Bartiromo if Current Conditions remained, he believes the central bank would begin winding down its bond buying plan next month. Were all singing from the same song book, so it is the same message, maria, which is it if things go as the committee expected, i would expect us to dial back. Well have to see what the data and the feeling is between now and the time we next meet in september. If 6. 5 was the feds marker in terms of where employment should be, can they begin im glad you said, you know, begin to wind down and just so it is not a tremendous move, because thats important, because i think the way they exit here is very important in terms of the market impact, right . If you really look at what we have said in print and in everybodys statements, including the chairman, and that is that we would hope to end those asset purchases as we approach 7 unemployment, the base rate, which is a fed funds rate, which anchors the yield curve, would be kept low and we would look at the 6. 5 mark. We expected it to continue to stay low and anchor near zero for a very long time frame. So thats where the 6. 5 works in. I see. The other 7 mark, i think it is very important for people to understand. But well see how things develop. The ism numbers have been very good. Even if you look at the numbers in terms of the weekly unemployment claims reports, this last number, people look at it week by week, were back to the levels that obtained before the session. So there is improvement in the economy. If it keeps moving in this direction, i personally will be advocating as i have advocated, but a minority, that we begin to dial this program back. What are Business People saying about how the economy looks to them . Theyre starting to put cash to work, but theyre waiting for some clarity. The clarity is not i dont hear a single business person complain about monetary policy. They have restructured their Balance Sheets, maria, their liability side of the Balance Sheet. If youre a business man or businesswoman who hasnt cleaned up your Balance Sheet, you shouldnt be in business. Everybody has done this. What they want is some clarity from the fiscal and regulatory authorities. They dont understand what their tax structure is going to be, how federal spending will be amended or adjusted that will impact them or their clients and very, very importantly, they all, to a person, from the biggest company, exxon, to my dry cleaner, they feel that they are suffering under a of regulation. Why do you think the powers that be in washington are not doing their part in terms of fiscal policy . You make all the right points, tax reform, burdensome regulation. I dont know. I dont know. Because whether youre a democrat or a republican, your objective should be to put people back to work, to put the American People back to work. Exactly. One thing that is very clear, you cant count on the Monetary Authority to do more than we have done. We filled the gas tank, streaming in the engine, but no one is stepping on the gas pedal to the full extent to accelerate job creation and thats because of all of the uncertainty. I dont understand this. If youre a d or r, democrat or republican, you should want to have more job creation and we can reboot tax policy and reboot the spending and readjust globalization and become much more competitive. I can tell you this, american businesses are more muscular, more lean, more fit and ready to roll if they would just let them out of the starting gate. And who controls the starting gate, it is the congress of the united states. Mr. Fisher talking to maria. Here we are, just over an hour and ten minutes into trading day in europe. To the upside, not much, 5 to 4 advancers outpacing decliners. One standout right out here, best performing stock out of 600, kpn up 17 at the moment. This after America Movil said it plans to make a buyout offer for the dutch carrier. The Mexican Telecom giant owned by carlos slim has a stake of 30 of kpn and hopes to increase its holding with a bid of 2. 4 euros a share. As far as other markets are concerned, ftse 100 outperforming today. Basic resources, mining stocks doing okay. Thats on the back of Chinese Industrial output up by 9. 7 in july. Above expectations. Retail sales increasing by 13. 2 . Consumer unflation steady. Xetra dax flat, ibex down around. 2. Bond markets, treasury yields, 2. 59 , dominated by fed taper talk at the moment. Gilt yields 2. 5 , still higher than where we were before the quarterly inflation report. Mr. Carney coming out with Forward Guidance. On the currency markets, dollar down to a sevenweek low. China data not helping. Fragile, the dollar offers five straight losing sessions. Dollar yen 96. 73. Aussie dollar rebounding from its threeyar lows as well, gaining on that china output and the news from mr. Weathers. Mostly just below 133. Thats where we stand right now here in the european session. Lets recap the last session of the week out of asia. Sixuan is with us as ever out of singapore. Hi, sixuan. On the back of the much better than expected industrial output numbers, steady inflation data. Chinese markets reversed early losses to end in positive territory today. Property developers trimmed early losses after latest data showed Property Investment jumped by about 20 in first of seven months on year. For the rest of asia, south koreas kospi eased. 2 . The nikkei 225 a touch higher but down nearly 6 on the week, hurt by the strong yen. In china, resources plays let the gains. Higher Commodity Prices in yesterdays upbeat trade data continued to let support to the sector. Shares of rare earth jumped up by 10 . This on expectations of more industry consolidation down the road. Over in hong kong, strong rally for the second session, up almost zijin mining jumped 3. 7 today. In japan, nikon was the comfort performer, plunging over 14 , after its q1 profit came in 72 lower than last year. But technology plays shocked up some decent gains in south korea. Samsung electronics rebounded 1 after Standard Poors upgraded it by one notch to a plus. While fitch also said the u. S. Rolling favoring apple wont affect the credit quality. Lg electronics also gained ground, up almost 3 after new smartphone launch yesterday. Back to you. All right, sixuan. Thanks for that. On todays show, we head to beijing to discuss the improving picture in china. We talked about it and find out if todays flurry of data can ease concerns about the economy. Dallas fed president saying france isnt worried, but is he right to point the finger with bigger problems closer to home. A look at paris and the risk to the French Economy. Retailers hoping to get us back into back to school mode. We look at the rising sums of money changing hands and the implications with raymond vega. Hell be joining us. [ male announcer ] these days, a Small Business can save by sharing. Like carpools. Polly wants to know if we can pick her up. Yeah, we can make room. Yeah. [ male announcer ]. Office space. Yes, were loving this communal seating. Its great. [ male announcer ] the best thing to share . A data plan. At t mobile share for business. One bucket of data for everyone on the plan, unlimited talk and text on smart phones. Now, everyones in the spirit of sharing. Hey, can i borrow your boat this weekend . No. [ male announcer ] share more. Save more. At t mobile share for business. [ male nouncer ] share more. Save more. Strong showing by manufacturers in july having to push chinese growth concerns towards the back burner. Industrial output up close to 10 on the year. July retail sales fixed Asset Investment in line with estimates. And steady cpi, steady inflation, slight easing of deflation, factory gate showing signs of stability. What does this all mean in the round for our thoughts about china . Eunice is in beijing with her thoughts. Hi, eunice. How has the data been received today . Well, a lot of people have been talking about how these figures really are positive, because were seeing some signs of stabilization in the chinese economy. Of course, there was a lot of expectation and hope that we would see some better numbers today, based on what we saw out of the trade data yesterday. The export figures and especially the import numbers really were raising expectations, people were really excited about them, especially on the import side, they thought, okay, this means that chinas domestic economy is looking, you know, at least somewhat robust and on the export side, people were saying it looks like were seeing some sign of life in the u. S. Economy, in the european economy and thats flowing over here into the chinese economy. Of course, the big question, though, is whether or not this is sustainable, and at this stage, there is a lot of people who keep saying over and over, this is only one set of numbers, it is only for one month, we really have to wait and see exactly what happens next. Ross . Yeah. So how are policymakers likely to react . They sort of have been careful not to want to do too much. Right. And thats probably what is going to continue to happen. I mean, were expecting that the policymakers are in this wait and see mode, lets see exactly how things pan out. There is a lot of discussion about how maybe because of the pricing pressure isnt really there, especially on the consumer inflation figures coming in relatively flat and then the Producer Price numbers coming in a little bit better in the fact that the, you know, the declines arent as strong, but, you know, were not seeing a lot of pricing pressure now so people are saying, well, okay, that kind of gives you license as a policymaker here to do more coming in with some stimulus, but at the same time, a lot of the noise that we have been hearing from the government here has been, you know, we want to make sure that inflation is in place. We dont really want to stimulate the economy. We want to actually be more comfortable with the idea of a slower chinese economy. And so thats at this stage, what a lot of people are expecting. You could talk to a lot of different brokers who say, okay, we really should see the chinese economy doing something more, especially if you want to hit that 7. 5 of growth target for the year. But at this stage, were all just kind of, you know, waiting and seeing what exactly happens. All right, eunice, good stuff for now. Thanks very much. Thats the latest from beijing, less smoggy there today. That makes everybody happy. Joining us from hong kong, chief china strategist at macquarie. Thank you for joining us. Are we having a cyclical rebound in china at the moment . We dont believe thats the case. As you said on the program earlier, most of the numbers released today, cpi, and consumption growth, were more or less in line with expectation. And the surprise came in in the Industrial Production side, particularly driven by electricity growth. But we dont know how much of that growth of that was due to the particular hot weather in the month of july. So the big picture we are seeing is that china is in a secular slowdown and perhaps were just seeing a stabilization from the recent decline in growth, recent periods. Yeah, okay. You think we shouldnt read too much into that because it may be just for oneoff factors . Absolutely. And lets remember, a lot of the recent strength in some of the commodity areas was partially driven by the end of the the restocking and there is some seasonal factors in those numbers as well. As you mentioned earlier in the trend number which were released yesterday, the import was up, i think, 10. 7 and the export was up about 3 . 5 . But if you adjust for the seasonality, the growth was a lot less than what what is interesting is mining stocks here in london have bounced. There is a knee jerk reaction because theyre reassured by the data. What would your strategy be right now . We have been advising our clients to basically focus on two areas. One is defensive, seeing such as consumer staple, food and beverage, but then the other area is with a very good visibility of secular growth. For example, some of the green energy areas, the gas area, the wind power area and the buying a car is basically part of a chinese dream. So thats why you continue to see very strong sales growth of all those sales in china, either in this slowing macro environment. Yeah. Kind of interesting that that breakdown. Is there any impact from sort of been a shift away from conspicuous consumption, the government trying to get local authorities to buy locally made or chinese products rather than european products. Is that having any impact . We are not seeing that much impact yet in the grand scheme of things, but we are seeing Chinese Government that has so far failed to do really stimulate the domestic consumption, to steal away the Economic Growth from the investments