Aug 11, 2015|
Heather Long (CNNMoney, China's Currency) 8.11.15 by The Financial Exchange
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
We're talking about trying to endear devaluation of their currency were joined by Heather long she's the stock market. And economy editor at CNN money hi Heather Oreo. Take MR name that aired first serve. It is big news in you know it's the headline China devalues their economy. First impulse I think from a lot of our audience would be how does a country do that. Yeah uncertainty. And there's a lot of mechanics that are going aren't bad basically. That is Central Bank in China were most people know China. Yankee to pretty tight rein on them a lot of factors and its economy and China has long that it's it's and exchange rate. In an effort to keep its economy and let like export a lot of good on cute. Keep its good very competitive on the markets and a lot of people have been arguing our alarm time that China is. Basically type thing it's good that it super big discounts and last night they went for any other Q percent discount. And why did they do say exploit has. A lot I look at it and I say OK that's got to be very difficult. On Chinese citizens the billion people that live there. They don't benefit from us other than I suppose it indeed they might be able to get more work. Yet have a blood but it occurred situation anybody who's been following to have wind out of China now that they are in a bad spot. We've been writing and talking about how impaired stock market has been crunching the numbers than hashed next China and melt down has been trending on Twitter all summer and their economy while it's still growing and growing. Much more than the United States it's been swelling down that the people living in China things feel a lot more. The government of China has been taking an extraordinary measures to try to prop this economy and the stock market. And though what what they did but the currency devaluation. Is he got a good bet if I'm a regular Chinese person I go to that store to buy something particularly of sport trying to god forbid an Apple iPhone. It's gonna be more expensive it's gonna feel like that there are the price increase there however much I don't try to do is. Ultimately they like that what we're doing here it's going to be better for you in a couple of months or a couple of years because. It was gonna help jumpstart our economy again and hopefully prevent that from being an even worse that you waste and and that and the main driver here at got a classic economic policy of the United States have attempted to do this in the past period that went. When your current baseball here hoping to serve restart your manufacturing sector restart your export sectors alike is that and hopefully get them worked out there or at least keep people's jobs. Right at a what do you think this does for China and the international political scene. Yet it very interesting point because well but the real surprise here that people by China but quite weighed in do something like that. In the ball. China has been arguing look we are a big market player we hero alongside the United States in great Britain and all these other makeup players. Our current Indy lions should be. Designated by but the caught in a reserve currency kind of like the dollar and the Euro and the British pound Japanese yen we should be up there at the big player that's laughable. Yeah outlook that doesn't know about the current time is that everyone thought that they were gonna wait public got bad designation probably sometime in the fall and winter. And then they would manipulate their currency with a big. But the critics when he last night and that actually. You know every devaluing weird the dialing because. And our economy is struggling didn't read them market actually. Our currency should be. What they did admit they put out their statement announcement that the valuation they all understand that going forward. They record to be a lot more transparent and I think that their currency and at a record speak quote more market oriented and yeah. Now and that's interesting bought and why would anybody believe. Well hopefully have a good track record will be handled it pretty evident there is no bay continued to manipulator not. But you know and it they kind of back everybody thought the basic grain of their current deep dive for many years and that they sort of an appointment or weaker and had you back. You value an art that they planned by the global growth now. Mean let's talk about the Federal Reserve this has got to have an impact on Janet Yellen. In on Stanley Fischer in terms of their desire. These Janet's desire. To raise interest rates in September does this push back the rate hike to December. And any sort I'm gonna think now that sped her Federal Reserve they have yet this network aware paid attention to international factors both Greece in the corner in Europe also but going on China but the reality is. That's and other real credibility problem that they don't start racing industry is in or getting in the boy who cried wolf problem they're also in a situation where. They know the economy we beat you stated give it good but not great and it. If they keep these engines rated B route they have very little powder. If we do get into a worse situation that they really wanted to start raising your grade lot of people have argued exhibitor in awhile ago. In order to give them out some of the U way that they any aired here I think they'll pick out more. To be able to have been cut those rates in an effort to stimulate down a proud that they they have they I item that argued that they need to. Acted September they're gonna lead and made major state now what it might change and an airport in Tibet. Quietly and like people have been OK if they make that first cut a token move in September maybe a quarter point raise maybe last. You know after about I think an act again in December for instance that this may begin to play into their thinking on. But let's get another read here and the team just more of the global economy is bad and whether it's pulling the US economy back Q. While not only that had a unit stand Fisher yesterday talking about we're not hitting our inflation targets right so I'm Heidi and right it's in the it's contrary to what Janet Yellen said. Right EU that stand Fisher who's the vice chair suggesting that hey we're we're nowhere near our inflation target yet we're talking about raising interest rates it is just. It it's. Counter intuitive you think of the first mandate on the part of the Federal Reserve. To be to manage inflation would there is no inflation are arguably deeply. Yes certainly because of what's going climate and energy prices that right now I've been so wild but even if you'd explode that there's not a whole lot of it as simply that it doubled of the 2% target that's for sure. Heather what does this do to our mania factory sector like the good thing that struck me as I'm thinking to myself. If you're competing with the Chinese manufacturers say you're an electronics her. You know equipment automobiles. I've got to believe this is gonna cost American jobs. It can really interesting point of we've been looking at that the sporting Q I think guy in the market as it usually the stock traders are usually a pretty good thing gauge of what's going on they try to give you the first green and I think it's fascinating that if you look at a company. And you know you let companies like caterpillar they have big manufacture equipment. Third down about 2% right now they have been made mention before that they've been having problems in China are ready for their bail. Another one had a lot of microchips yeah actually do a lot of business there are some and the cup because Micron Technology that got about 2.5 percent right now. And there's been some impact but I think 2% yes certainly down the they're not they're not getting killed us about a seven to 10% drops I think. Think people asserted Spain they were expecting that that the that the price move that was the war on billboard when they are dissipating may be a bit bigger at the Q percent. Devaluations but I think people are holding off aimed at that that some cataclysmic event yet. USC is stock getting crushed take a look at the Chinese airlines. Because they buy their air lock their planes from Boeing. But they buy them in US dollars right so did it there they're gonna get killed the those near their stock prices are how dramatically. Today and that's because. Yet they we'd blow Boeing Smart enough to loan them the money and say I will loan the money to buy these planes but it's going to be in US dollars because we do not trust you. Is that about it I'd go out and yes Heather we got to run thank you very much appreciate your time Heather long CNN money.