Fallout From China Eco Data to Be Dramatic: Diebel

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March 11 (Bloomberg) -- Charles Diebel of Lloyds Bank Commercial Banking talks with Francine Lacqua about the global market impact of economic data out of China on Bloomberg Television’s “On The Move.”

Enjoy and that is the risk is part with financial reform.

They pointed out that interest rates will initially rise once the ceiling is taken out.

Another comment was on the recent drop of the currency and he says it reflects a growing role of the markets in the economy.

Thank you for that update.

Now, let's go back to charles, the head of market strategy at lloyds bank.

Thank you for sticking around.

We spoke about europe and emerging markets overall.

Talk to me about china.

This is the most difficult to read across because we do not know what we are looking at.

That is right.

It is worth keeping in mind that they are the second largest economy and they are in a process of trying to carry out reforms and shape the economy for the next 10-20 years.

Having had a cheap currency and ask for driven model, they're moving a juggernaut into another direction and the fallout from that and the impact from that is going to be more dramatic than people think.

There is a lot of overcapacity in china and they have built to much to produce.

Certainly, the basis of them moving to more consumption and less production.

At the same time, things like reforming the shadow banking system and the amount of credit contraction that they are presenting is significant.

And while that may be appropriate for the longer-term, that has implications and that can be exported to the asian region.

Having seen japan weaken their currencies successfully, they are in the process of suggesting to people that we are pretty much done with appreciation of the yuan and this is about the right price.

That is what they're trying to say.

If that is the case, you could see the yuan we can -- we can -- weaken.

The other problem is credit and we saw that.

This was taken as a positive because they thought the government had a good handle on it and the markets take their course was small companies.

How do you protect yourself question mark it is difficult to do so, to be honest with you.

The reason being is that that is almost like a trial balloon and let's have a default and see what happens.

It was not of a sufficient size and scale that, you know, people right now -- there is a presumed backstopped with chinese assets and if things get too bad, the chinese will step in and ease the monetary policy and bailout levers required -- weber requires that.

-- whoever requires that.

What is the small default?

What if it signals that is not the case and the much larger credit that is more vulnerable and at risk, perhaps the government is like, "we warned you.

Show -- we warned you." we could be talking about a weaker story then anticipated.

But it is difficult to read.

What is the message?

I think china is in the process of exporting weaker growth and inflation to the region and that will have global implications.

Speak to me about japan.

We are running out of time.

It did not pan out as we thought it would.

You know.

It is few we -- qe.

Deflation is hard to break as a mentality and there is substantial demographic problems.

There is a debt to gdp ratio.

In the population that is getting old, these are people who do not like that.

They like equities.

It's hard to say that japan will grow at a massive rate when you have demographics as they do.

It will be hard for them to achieve sustained strong growth and inflation.

Quantitative easing, while it is all well, they cannot go on indefinitely.

Thank you for all of that.

The head of market strategy.

Mark carney faces his toughest challenge today.

Our markets and are joins us now from westminster with the latest.

This is the second big nonregulated market and libor

This text has been automatically generated. It may not be 100% accurate.


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