Transcripts For BLOOMBERG Countdown 20151026

Influx of refugees. Lets start with breaking news. Were waiting for results to come across the bloomberg terminal. This is regarding their exposure to china. In terms of numbers, we are waiting for those the break. The separation process is on track. Here we have the thirdquarter earnings, earnings for interest and tax amateurs asian amortization. That is in line with analyst estimates at the moment, and it is indeed grow from the previous year. They say they are updating on the transaction. We will have to dig into that. Remember, in their last set of earnings when we got that update, they did warn about growing microeconomic risks, particular he russia, brazil, china, the areas of decline. China will not be growing more than 7 . Together these three countries overall 15 of phillips sales. It is a beat overall when you look at earnings. An excess of half 1 billion. Comparable sales of 2 . Come back and i will give you a deep dive into how that transaction is processing regressing. Back to you. Thanks for breaking those numbers down. You want to stay tuned to countdown. I will be speaking to the ceo of phillips. Stay with the show for that in the next 30 minutes. More earnings breaking throughout the show. Will talk about peugeot bringing those numbers as they cross the bloomberg terminal. Lets get across to asia. How the markets are faring after the chinese acted on friday. Standing by in hong kong. How is it looking . Cut by china,ate the sixth and a year, ripples across markets in asia. The shanghai composite rising half a percent. It touched a twomonth high already. It also surge to a twomonth high earlier today. The nikkei closed at 7 10 of a percent higher. It got an early boost by exporters after the yen weakened on friday. Today, strengthening slightly. The auction austrian index unchanged at the moment. A massive ipoh on taking place in japan. The government is expecting to raise 12 billion from privatizing holdings and financial units. We are hearing from a source saying that japan post shares will be priced at or near the range, ¥1100rket to ¥1400. Hearing at the moment that it was priced at the top in depth that range. That would be around ¥1400. Breaking news at the moment. Its not going to give the government 12 billion in privatizing japan post and its financial units. Other movers i want to take you through in asia, sony, toshiba. Sony is in talks with toshiba to buy their image sensor business. Both up more than 2. 5 . Shipbuilders with the biggest a kleiners today. Afterg more than 3 nippon on the foreign the koreanrkets, currency leading declines. Today falling a 10th of a percent. Won falling the most in two months. The same with malaysian ringgit. And the indonesian rupiah. Back to you. Well done. That breaking news, japan postipo coming in at top of the range at ¥1400. Ouras stimulus moves on minds. Not the mostre interesting part of fridays announcement. It wasnt too much of a surprise. We were factoring in another cut. The whole removal of the ceiling with the deposit rates is posing. Interest rates liberalization, so to speak. That makes eight massive difference. Leading to their plan of opening up capital markets. In terms of expectations Going Forward, robbie going to remain in an easing environment. They are mindful that the window of opportunity is getting smaller. Group saysing cimb the rate cut is not the end of the story. Is the economy generating enough growth to create Employment Opportunity that will be soaking up the 10 million urban jobs coming on. Can, there is a right we should be comfortable with. If not, they could do more. Isthis comes as China Gathering beijing to formulate a fiveyear plan. There is some policy continuity expected. What we are looking for is t in policy, a twea terms. Green growth, green industry, dealing with environment of challenges. That is something moving up the agenda rapidly. Still not there. Still not clear what the parties overall strategy is. Where we canea look for more detail. What the chinese great cut we might expect this week from the top level coming his Party Meeting in beijing . It begins today. By thursday, chinese economic and social policies for the next five years will be finalized. David joins us from hong kong. A good day to you. This is one of those seminal moments for the new administration. It is the first plenum, so to speak, but what exactly can we expect here . How broad ranging is a going to be . Im sure you wont mind, because there are so many numbers with the 13th fiveyear plan, this plenum, that plenum, but this will be the fifth plenum. The president of china became the general secretary of the communist party, november 2013, so there would have been five plenums since then. Theof them is on making economy more responsive to markets. The fourth plenum last year, that was on the rule of law. The fifth plenum, which were going into now, is on formulating the next fiveyear plan. That is what we are going to be looking for. Thursday, we will get the Central Committee of the communist party, which is less than 400 members, come out and give guidelines on the fiveyear plan, which will then be produced in a roundabout 10 days after that. David, what are going to be the main planks of this . That hes can a focus on growth, reallyion, new guidance for the entire population of china . I think thats a really good way of putting it, guidance is what this is about. It is a fiveyear plan. You mentioned the two areas i am focused on, wrote and socioeconomic measures. The growth is interesting, because we could potentially see china downgrading its growth up tost or goals coming 2020. At present, that is 7 . Becould between tweaked lower. Its important make sure they have 5 growth on average to be able to reach of their longterm goal, to double capital and income between 20102020. That is a good one to watch. The other one is a very big deal and china. The one child policy. It has been relaxed a little. Oryou have to Single Parents to one child parents, they are allowed to have two children. At 2013, set a goal they set a goal of 2 million babies. They did not meet the goal. That is why theyre looking to relax it or get rid of the policy altogether. Very important for longterm. We know that china has a demographic problem. They have indeed. More on we will hear the fifth plenum. Lets return to that breaking news from philips. It was a beat on the top line, one of theying transactions theyre trying to offload is delayed. Transaction,on spinning off the lighting components of business. That u. S. And regulators are not so please with this deal so far. The committee on foreign investment, a u. S. Regulator has said they have uncovered unforeseen concerns with the deal. The purchaser of the unit apparently trying to engage with them at the moment and taking what theyre calling all reasonable measures to try and address the concerns. They say the closing of the transaction is therefore uncertain. This is going to be a concern because they are trying to spin off the lighting unit in an ipo or direct sale. They are on track to do that for the first time in 2016. The cost are under control. Restructuring costs of 300 million years, the bottom end of that range, and within that range next year as well. The cost of spinning off that unit going well, but trying to sell lower margin businesses such as the lighting components business is now hitting a bit of a regular regulatory roadblock. When youre looking at the numbers in general, health care grow as they continue to invest in the area. Consumer lifestyle doing well. You have some 6 up. 3 on a sales basis for lighting. This is why theyre trying to exit the business. We will see how those regulatory roadblocks continue. Back to you. You can never have enough toothbrushes in the house. Stay with countdown. This will be hacked of a week in terms of Central Banks, the majors, all in focus on bloomberg. China gathering in beijing for the fifth plenum. That discussion is around the economic and social policies for the nest five years. The fifth plenum. Wednesday, fed great decision. Friday, policy statement from the bank of japan. As well as its semi annual outlook reported the question, will the bank of japan expand its Stimulus Program this week . On tuesday, the reporting season, this is when it kicks off. We get the numbers from apple. What are they selling in china . That will be interesting. We also get earnings from twitter. The oil, numbers from majors. Tomorrow is bp. Thursday, shell. Friday, exxon. Will the gains be it in that Global Oil Market . Up next, toyota overtakes volkswagen to reclaim its title as the worlds biggest carmaker. 6 17 a. M. Here in london. Top stories, everything you need to know to kick off your monday. Chinas leaders gather to formulate the nations fiveyear plan. The meeting comes as they confront 7 Economic Growth. In response to the slowdown, but pulls bank cut Interest Rates for the sixth time in a year. The law and Justice Party is on course for victory after tougher stance on refugees, more state control of the economy. The party won more than 39 of the vote. They rejected majority in parliament. It is the first time that any party has held a majority in poland since the reintroduction of democracy in 1989. Has put thernment Postal Services at the high end of the range, ¥1400 a share. Japan Pros Holdings will list on the Tokyo Stock Exchange. Andg with dan postbank japan post insurance. Japan closed bank, and japan post insurance. Toyota overtakes book plugin to reclaim his title is the worlds biggest carmaker. From ar backlash widening emissions cheating scandal. Lets get more. Impact do you think . Were just beginning to see the beginning of the impact. That is absolutely correct. These figures we are seeing, the january through september figures, captured less than two weeks of the fallout from this emission scandal. You really are only just starting to see the beginnings from consumers if you saw any at all in the last few days in september. Its just going to make it more difficult for volkswagen to come back in the Fourth Quarter this year. Manus does toyota have a way to fend off vw . , so you have volkswagen having its own issues going through the last three months of the year. Stop sale in many markets of the diesel models evolve involved in this emissions cheating. Toyota has an ace in the whole of its own with the new preis hybrid coming out by the end of this year. Ius hybrid coming out by the end of the year. That is a significant model for the company. A cell on off a lot in the u. S. As well. It is still kind of to be determined just how much of an impact it will have. It will wait in. Manus what if any Tactical Advantage does volkswagen have in terms of its position in china relative to toyota . Stillkswagen is substantially bigger in the china market. The early indications of the fallout on the industry for a sales tax decrease for smaller engines in the china market may get that the market a little bit of a boost from the government. It will be interesting to see if that has enough of a used for volkswagen to help carry it through the end of the year, because volkswagen after all may not be that impacted in the china market. They dont sell diesels there. It will be a test of how close volkswagen and the government in china is and to what extent their feet arent held to the fire there, because after all those engines are not in china. Manus thanks for the roundup. Our editor in hong kong. Turning back to china, where the commonest party needs for the fifth plenum to finalize social and economic plans for the next five years. A growth target cut is in the cards. To discuss the implications of what is said to come, executive director of Mitsubishi Ufj securities. Lunchtime, a cut in the reserve requirement, a cut in the Interest Rates, and a liberalizing of the deposit structure in china, how significant everyone is talking about how liberalizing the deposit market is, but what do you make of it . The rate cut itself will hardly be transformational. The liberalization measure is a small measure, but not pathbreaking. The way china will get out of this recession with huge excess capacity in the Manufacturing Sector and the construction sector is has to be through what is described as creative destruction, a big wipeout of excess capacity and a lot of market incentive and market functioning well and theyre not prepared to do that. For that reason, it will be a slow and painful adjustment. We have seen what has happened in japan after the bubble of the late 1980s. With a relatively well functioning capitalist economy, it took a long time. Manus the consequence is that you will see perhaps another move on the currency. We have had one depreciation so far. Point you the are critical of this path that they are pursuing to get special drawing rights because our substantial consequences. I would ask the question, for the currency to become an international currency, why go through this route. The swiss franc became an international money, but it wasnt by negotiating the dramatic front with the imf and other great powers. Peopleeated a money that wanted to hold, a fully convertible currency, and having monetary stability. Is being used. Its bound to be used a lot because china is the number two economy in the world. It is not becoming an investment currency that people want to hold. Itsst china is using all of fdr,macy to get into the it has blunted one of the main weapons it could have in the diplomatic game, which would be or europe forpan defying their currencies. 20 summitt imf g everybody was rounding on china for its 2 did i waste. When mario draghi devalued europe by 4 . We are in a currency war. We are. It is the worst since the 1930s. It is being camouflaged by every central bank saying they are pursuing a 2 target. They are using that as a pretext to devalue their currency as we saw in europe last week. Manus the g 20 hardly has teeth, does it . Lets talk about the plenum, the fifth plenum, in terms of what we expect. Saying made a statement they will not be held to this growth rates at any cost. What is realistically possible . Achievable for the fifth plenum . We have to hear more about particularly clawing back the state enterprises and providing more underdeveloped private sector, market economy sector, in china. When not seeing that. In a way, have the west is playing the chinese coming this party game of getting big contracts through state leaders, visiting counterparts in china, rewarding their own crony capitalist back home with contracts with china. Everyone in the west is playing this game. What would benefit that chinese economy would be the opposite this, opening up markets. Manus thank you so much. Executive director of mitsubishi ufl. Up next, a conversation with the ceo of philips. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Manus it is 6 30 a. M. In london , 7 30 a. M. In brussels. Here are the top stories. Japan has priced the nations Postal Services at ¥1400 a share. Maximum. Llion, the all those divisions will list on the Tokyo Stock Exchange on november 4. A surprise surge by the argentine opposition candidate. The first ever runoff with 80 of the vote counted, the two , each holds 35 of the vote. The Runoff Election is scheduled for november 22. Chinas leaders gathering in beijing this week to formulate the nations 13th fiveyear plan. The meeting comes as the worlds secondbiggest economy 7 ference its first sub Economic Growth since the 1970s. In response, the peoples bank of china on friday cut Interest Rates for the sixth time in a year. Are aheadter earnings of estimates from phillips this morning. Lets have a conversation with the ceo of philips, frans van houten. He joins us now from amsterdam. Elcome to countdown looking at your numbers, revenues, nice beat, but the key issue is this the late in the disposal of the lighting unit. What can you tell us . The transaction is delayed. What are the concerns . Is there a possible you can remedy this . Frans van houten yes. Thanks for that introduction. Let me talk a bit about the corridor and i will come back to your question. Carew the combined health and consumer business is growing by 4 and that was really good. Lighting grew by 24 . We had some nice wins. 5 . As up by europe was strong. Bottom line near the margin improved by 22 . Despite a heavy currency headwind of 160 basis points. The accelerated Program Continues to work, and i am pleased with the improvement this quarter. As you are asking, we did flag the led deal, facing uncertainty worky as we look through regulatory issues that were voiced in the United States. This is a confidential process. I wish i could tell more about it, but that is not possible. We remain focused together with our chinese partner towards a closing of the deal. Manus will you look at other ifsible deals in terms of this one is running against buffers. When you consider other propositions from other institutions . I think it isen best to continue to focus on this process as we work through the concerns and hopefully get to a closing. 15 is russia, brazil, and china. How concerned are you . A lot of people are trying to deal with it. How is your business in china . What are you doing to build up your business . Frans van houten lets first scope it a bit out. China is tim percent of philips, and therefore very important region. China is 10 of philips, and therefore a very important region. Philips is well known in china. We have good consumer traction. On the infrastructural side, lighting, we the economy taking its affect. There is much less construction in china. A similar thing in health care, where the level of growth has come down to a trickle. Today, for the whole of 2015, we see modest growth in china. Markets are a different story. India is resilient and doing strong. We see that economy firing on all cylinders. Russia is a difficult market, and also brazil, we saw the impact of the currency devaluation, which makes that this is a lot more difficult. I think we are very pleased in the Third Quarter with the resilience of our mature markets which compensate very much for the Slower Development of the emerging markets. Manus that is a very comprehensive rounding of the words. Majorseen some transformational deals recently. , bg shell, miller electroluxge. You still maintain that you will go after these deals. You are hitting a stumbling block in the vesting your liking business. Thatou absolutely assured these deals are the way to go and not looking for transformational deals . The separationn of lighting is a transformational deal in its own right. It will reposition phillips into two Standalone Companies, the Health Technology part, which is whats more comparable to an industry with leaders, and of course lighting as it transitions into Energy Efficient Led Lighting Solutions company. Each with its own set of shareholders better repositioned. Within the context of phillips becoming a Health Technology company, we have said that we will look at acquisitions. What we did last year is a nice example, combining the strength of our hybrid operating Room Equipment with the minimally invasive catheters that volcano makes, and it creates a seamless integration which serves doctors much better. It comes with a nice recurring revenue stream as well. We could be looking at deals like that. Wed use the health continuing to guide us as we as a company would like to keep consumers healthy, do preventative care, do definitive diagnosis, minimally evasive treatment, and of course home care for the chronically sick people. Inis uniquely positioned that as we have a strong consumer franchise as well as a professional health care business. This transformation takes some time. I dont want to run faster than we can deal with. Manus frans van houten, ceo of philips. Thank you for joining us on countdown. Lets get more on the Market Outlook for china. Our next guest worries about the slowdown being overblown. He joins us for the next hour. Simon, a lot to get through. If i read that were going to talk for the next five years in china, weve seen another move in china. Should i be more worried about growth in china. All sort of concerning when you see the ecb and bank of japan lining up to do more. Wasn your previous guest spot on. There is a currency war waging in the world. China needs to be mindful of that when it has had an exportled market for many decades. It recalibrate itself, it needs to be mindful of where it is. Should you he worried about friday . I dont so. A lot of what we saw on friday can be directly linked back to the imfs welcoming of their exchangerate move end august in august. Saying this was part of a liberalization of markets gave chinese authorities the room to play with Monetary Policy and exchangerate policy Going Forward with one eye on special drawing rights later in the year. Manus as they go to rebalance and liberalize interest waits, a nod and wink from the imf, youre going to see more capital outflow. As this currency continues to readjust, being generous with my words, a readjustment in the value of the yuan, the prospect of capital outflows could be a big disturbance for the globe. Simon it is. Manus they are rising. Simon and some of the desire amongst Institutional Investors diversification denied to them will have influences across real estate, commercial property, across the world in a way that we have seen with a lot of the sovereign wealth funds in recent years. You will see a replication of that. Valuations to levels we are not familiar with. If you look at the foreign holdings, they fell away sharply following the exchangerate policy. They stabilized in recent weeks, which gave the chinese authorities confidence they could go further with Monetary Policy without sharp capital flights. The other issue over the past 24 hours is oil. Everything that happens in china has that reverberation. , oilf the best statements at 50 is a gift to the world. At 80, that would be rather restrictive. When you look at the economics of oil, what does it say to you . Are the mostrs bearish they have been. Simon it is a gift to the world. Worldt represents for the economy is a tailwind. It will affect things differently. If we are looking for an immediate transmission of wealth from the importing countries. Hat is unrealistic it will take a while to transmit in the real economy. That is what we are seeing in recent quarters. Manus staying with us. The syrian president has told russian lawmakers that he is willing to hold elections and discuss constitutional changes. Victorioushe emerges in the countrys civil war. Elliott joins us for more. It is not easy to hold an election as we have a country in the grips of a civil war. Get the be any way to blessing from the International Community . Challenges cal ofge parts under the control rebel groups. With a be expected to take part in any kind of election. . You have the fact that a war is raging on. Quarter of aa Million People killed since the civil war began and to in 2007. You have populations displaced. Its hard to see how an election can take place just in terms of logistics. Its worth noting that there was an election held, which but sharp alassad one with 89 of the vote, and that result wasnt u. S. Or theike the gulf states or that european union. It is hard to see how new elections would have any results in any different perspective from those countries and how it would get anything from anyone allowinga and Bashar Alassad to go on the are their renewed attempts to find some kind of solution to the Syrian Crisis . There are ongoing attempts. These refugees are the worst refugee crisis since world war ii. Turkey, saudi arabia, u. S. , Russia Holding talks over the weekend. John kerry was meeting with saudi arabia. They are talking about how to resolve this civil war in syria, but there is one problem, Bashar Alassad. As long as the russians are backing him as the best way to combat islamic extremist and prevent the Islamic State from ,aining control of the country then it is hard to see how those two sides can be resolved and find an agreeable solution right now. It is hard to see how new elections would change that. Thank you very much. Our middle east editor. , japan on countdown trilliond almost ¥1. 5 in the nations biggest ipo since 1998. All the details are coming next. Manus lets get you up to speed with the top stories. China gathering in beijing to formulate the next fiveyear plan. The peoples bank of china cut Interest Rates, the sixth time in a year. The Opposition Party on course to victory with more state control of the economy, winning more than 39 of the vote in the polish election. The first time any party has had a majority in poland since the reintroduction of democracy in 1989. ,hillips has reported earnings demand rose in north america, earnings jumped 20 to 570 million years, but the planned sale of its lighting unit remains uncertain because of u. S. Regulatory concerns. Post holdingsn have been priced at the top end of the range, making it the biggest ipo for the year. Japans government raised a maximum of 1. 4 4 trillion trend 1. 4 ¥1. 44 trillion. Reporter is in tokyo. Great to see you. Afters coming to fruition a big dream, a big plan to do this. What has been the main motivation behind this . It is financial, but also historic. The primealso minister of japan earlier in the to privatizeplan it. It has been in the making for 10 years now. Before that it is japans biggest ipo and a couple of decades, but it is also japans biggest privatization in 30 years. Oblique the president is a aware that if the stock market goes bad, negative sentiment, ratings fall, so he is aware that he has to keep investors happy, the stock market happy, as well as this is a state entity, and we are selling one of our assets. So he wants to keep the public happy as well. Surprise,ewhat of a that we managed to price it at ¥1400, certainly at the top in of the guidance you have the government buying stocks, japanese Retail Investors interested, still the top end of the spectrum. It was at the top end of the range, but still a lot cheaper than its peers. The banks are still value cheaper, insurers are cheaper, and this is the Postal Service. Not only relatively cheap, but , yielding avidends lot more. You have to remember that almost 80 of this is targeted for individual investors who are income players. They want something they know will be yielding over a long time. Butooks like the top range, it is still very cheap comparatively. Manus thank you very much. Us there on the postipo in japan. Lets rejoin our guest in the studio for a little bit more. , the chiefon economist. Just listening to her running us through what they are doing, another small piece in the overall jigsaw. The question is about the bank of japan. Later this week, we are going to get the meeting. There is consensus are they going to be forced into acting because of what the ecb and the chinese have done . Simon yes. The chinese move in august change their effective exchangerate from one that had been depreciating to one that appreciates against currency partners. You have the bank of japan doing its level best. What is interesting about this ipo, it is the structural reform moving the state entities into the private sector. That is where the botched sales tax, where the bank of japan needs desperate support. They need the owners of the bank of japan to go with them on a further round and do another part of that package. Manus the whole yen position, you said there is a variety of arrows in the economics and the currency war, but the yen, we are seeing the least negative position taken by the market on the yen since 2012. There comes a declining benefit from qe, or a declining momentum , as it were, in q1, and here we are with the japanese. With the yen, it is in this laggard position. Can this have a major impact . Through currency markets, but where i think it can is the wealth effect. We are seeing the nikkei every time we get a negative sentiment, it rallies on every single occasion on the past weeks. Therein lies ultimately the will be in the boj stimulating the wealth effect in japan and hoping finally that that will trigger some inflation the government can work with two unleash its other two arrows. The other currency involved in the wars is the europe we know mario draghi is vigilant. Where are you on the negative deposit rates with the eurozone . Is that high on the agenda . Ive been reading that they have to overdeliver, but deliver in size, if you want a cliche, in december to be a factor. What is that size delivery you . Simon 25 basis points, but the problem with over delivery is the impact it will have on other ntries within the bureau neighbors,ose denmark, sweden, and the impact that will have. Mindful ofi is pacing the World Economy and the impact of going further into negative territory will have for those countries for whom that exchangerate is key to their economic prospects. Manus youve got the Vice President at the fnb talking about having to reassess everything. You got the danes at. 75 . According to every single analyst, they cant go any further. , is itrephrase that difficult for them to go more negative . There are huge pressure on everyone else. From a macro point of view, its unprecedented. Simon the anecdote from denmark is bringing for their tax bills. The effort to return tax cash to the government so youve got some real perverse incentives in the marketplace. How far negative can you go before you start to see curious behavior by retail depositors and they started with this to withdraw cash . Stick it under the sofa, mattress, and weve had the chief economist of the bank of england about abolishing hard currency, so there is that album that has materialized, and therefore you can move further into negative territory than the economic textbooks contemplate. Simon it is a whole new paradigm. Stay with me. Simon french. Theext on countdown, earnings of peugeot. Did the chinese slowdown way on their growth . Stay with us. Manus chinas challenges after fridays surprise rate cuts. Out athip gathers to lay the economic plan for the next five years and japan, the government will raise ¥1. 4 trillion from the privatization, the biggest ipo since 1998. The migrant crisis claims another political poland lurches to the right with election of the eurosceptic adjust his party. Eu leaders clash at a meeting in brussels on how to manage the influx of hundreds of thousands of refugees. Manus you are watching countdown. Ands start off with peugeot waiting for the earnings to come across. What are the details . Heroin i caroline in line with sales. 12. 4 billion euros in sales. Billions for 12. 5 euros. This also a time to pay a lot a live surface regarding dieselgate. Especially for the likes of peugeot, overall sales in europe basedugeot are diesel cards. They said the vehicles comply with emission standards and publish their fuel economy data for the main vehicles. Overall, they said they are confident about that Strategic Plan of execution. For the year, theyre raising the European Market growth from 6 to 8 , confidence with the appetite for car sales in europe at the moment. We have had 25 straight months of increasing car sales for the european sector. A lot of that driven by china and seems to be a pullback. We know there were tax changes either chinese authorities, making get more tax efficient to be selling smaller cars. Anything below 1. 6 liter cars came as opposed. Rose 6. 1 in the Third Quarter, Significant Growth, doubling from the first half of the year. Europe, strong area for peugeot. Confirming that term outcome, for Company Exposed significantly to diesel cars, these making a 60 of peugeots european sales, transited opportunity to say that comply with the emissions standards. After we saw dieselgate, the scandal that has embroiled of the jesus vw. Confidence it sounds from peugeot. Manus absolute confidence. Peugeot, as it says, never cheated on emissions. Car sales rose. In ongoing vw debacle regarding to achieving emissions. Some breaking news. The Worlds Largest advertising agency. Thirdquarter sales rising in north america and africa. From 2. 9 billion pounds a year ago. Of, comments here in terms he warned in august, he said clients were reviewing their accounts. Had no growth in the last month. The top line from wpp. Balancing act. Third quarter, up 3. 3 . The next sales operating targets as well in terms of margins. 6 . By like for like sales up 3 . In terms of breaking, 2015 headline market margin improvement act of plus 3 . North america up up by 3. 7 . Europe 4. 6 . Latin america, africa, middle east messenger europe,. 24 . Emerging markets showed strongest growth in the Third Quarter. North america stronger than the first half. A quick check on what is going on with the markets. U. S. Equity futures have been nipping on the downside throughout the trading session. What youve got is the European Market. Lets expanded out the what were talking about here. A rise in the euro stoxx 50. , let me see. You have got to the cac up. 21 11 points lower. How it shaped up. Carrying through friday. Setting ourselves up for a big weekend in terms of the fed a big earnings on the market. Twitter in apple tomorrow. We had phillips. A beat blood delayed but a delay. Shery ahn and hong kong. Shery good morning. Felt across cut asia. Chinese stocks surged to a twomonth high finishing half a percent higher. At one point, fell into negative territory but managed to regain. The hang seng is down. The nikkei finished 0. 7 higher. There was speculation is boj would boost monetary stimulus when they needed it later and a week. The kospi, durable 4 higher. The asx unchanged. Remember we saw a proxy Interest Rate hike with the three biggest banks raising the home loan rates. Which means it will help cool the Property Market and not to currency. In in the the forex space. Japanese yen strengthening lightly. Of 0. 3 . It is after it fell to the lowest level against the dollar on friday. The biggest news out of japan today, the massive ipl. Japan holdings. Pricing at the top end of that range. The government brigade and 12 billion, the biggest ipo and 2 decades and the biggest privatization project in three decades. A different story for a currencies. The korean won leading to the declines in asia. Down 0. 8 . The lowest level in two months. 0. 5 sian is falling following chinas rate cuts. Is downnesian rupiah 0. 3 . Back to you. Shery ahn, thank you. Very interesting. Raising rates of interest as they will charge to homeowners. That little bit of rest. All of the center banks are making big moves. Chinas stimulus move. Fidelity investment told bloomberg the rate cuts were not the most interesting part of fridays announcement. Not too much surprise. We were factoring in another caught. What is froms and the removal of the selling with deposit rates. Interest rate liberalization. Report event that makes different, it should do it. Guest it should make a difference. Over to the plan of opening capital markets, etc. Terms of speculation, probably going to remain in an easing environment. Pboc is mindful of opportunity is getting smaller. Manus land of opportunity is getting smaller. For rate cuts to a possible rate cut. Chinas begins. The economic and social policies for the next five years will be finalized. David is tracking all that happened. Great to see today. Give us contact. We had rate cuts, will we have more Significant Growth i am sorry. I do not know what i am calling the most. The growth target. High significance to drop . Of growth, ite will be discussed in being when the Central Committee guest together for the 4 days of discussion. What were looking at is a bit of a tweaking. The goal is 7 a year. That is probably not going to be achievable unless they pile on stimulus and they do not want to do that because there are risks associated with too much stimulus. They may tweak down the stimulus. Above 6. 5 because of that considered the minimum and they need in order to achieve another goal. That is the goal of doubling per capita income between 2010 and 2020. They went to continue with the goal. We could see a tweaking of the target. Do not hold your breath and think it will come on thursday or even an adult draft of the fiveyear plan which will come 10 days after. We know theres wanting chinese policymakers are not good at and that is communication. We might have to wait until the spring of next year to get the actual full text of growth target when it is eventually published. David, you and i have chatted a little bit about this. There are population issues for this country to consider. A very fine balancing act. The population growth is simply not meeting the target as they hoped for. Of the one and child policy has not really work. As they tried to loosen the one child policy in 2013 and had a policy of 2 million babies a year. They do not reach of the target. Another area discussed. Will they get rid of the one child policy altogether . You might wonder how you can loosen a one child policy. If you were the product of a one child family and your partner was also, you can have 2 babies. Maybe complete scrapping of that. Thats fiveyear goal, this fiveyear plan, it takes in social and social objectives. It will take and the environment. Also looking at looking at china more innovative. A lot to cover in a desperate the draft plan a lot to cover and the draft plan. In the fulltext we have to wait for all of that detail in the spring of next year. Manus david, thank you. David tweed in hong kong. Lets bring in news from credit suisse. Comments over the weekend that local swiss press investing in swiss. Also about capital. The key issue for credit suisse. Art of a sale credit suisse, 15 million shares to not existing shareholders. Oncks finish at 24. 22 friday. Of expected generate growth 6. 3 billion deficit. 3 billion swiss francs. The latest from credit suisse. 6. 3 billion swiss francs area simon french is still with me. We heard david putting and contacts from what with that from the chinese. Rate cuts and that said is meeting this week. A big week. Simon french a huge we. The fed a meeting is most likely to change the stands. A huge week. The degree to which markets start to fund their position around december and a look at the whole global environment. And if Central Banks have all of the policy rates converging in some cases below the zero lower bound, where do we go next . Wheres the evolution of global policymaking . If we see more determined downturn, do we got a rerun of 2008 when the governments came together and had a coordinated fiscal policy . And one to marks price it manus the hall i get to you. Do you expect helicopter cash. How negative can you go . Word for periphery europe. The world of most governments. Simon french that can quickly switch is Economic Conditions deteriorate. What is important, not the level, what you have in terms of projects in their present value. It does not matter if you are in debt. If you can Fund Projects that deliver positively, you could actually diminish your deck projection ring as a result. , we arehe argument seeing that the polish elections, the Winning Party had a that as a key plan to their economic doctrine. Outside of growth and stability, increasing mobile Government Spending because they see opportunities out there and the marks are not screaming at us now. Manus everything you read about global growth, china, i get it. Additions, we are trying to get used to a new paradigm from china. , or woman,n standing the United States of america. And we are getting improved growth in europe but not the level like in the u. S. Simon french no, it is not. Part of it is the post financial crisis era defined by governments trying to smooth the Business Cycle completely. What were seeing in a cyclical downturn, what was seen for a long pedal of time, the response, the one gone out to voters is to bring forward public spending. What were seeing the china with all projects and Government Spending growing 20s and percent year on year. Other countries will take the political move of following suit. Manus new policy, rehash. Thank you for being our guest host for the past 45 minutes. Simon french joining us. Next we will raise our hand. Overtaking vw. Reclaim title as the worlds biggest carmaker. Said it nevert cheated on emissions and car sells rise and we break down the news out of the car sector. Vws earnings on wednesday. Manus 7 19 a. M. In london. 19 8 19 a. M. In frankfurt. Chinas leaders gather in beijing. The fiveyear plan. The second biggest economy ofference the first era Economic Growth since the 1970s. In response to the slow down, cutting Interest Rates for the 6th time in a year. The Postal Service at the high end of the range. The government raised the maximum ¥1. 4 trillion and privatization making it the largest biggest ipo since 1998. As well as the bank and insurance divisions will lift on the tokyo exchange. Peugeot has said it has been honest on the emissions. The company promised new measures to make vehicles cleaner as a the rival, vw, reels about aftermath. The thirdquarter revenue grew by 3. 2 . Sales and the home region and pricing improved. On at their earnings from vw wednesday. The Company Loses title as the tolds biggest automaker toyota and awake all the emissions scandal. A little bit more on the story. Craig, our editor, standing by. An impact didh of vw scandal have on the sales . It is really just the start all the timepiece, isnt it . Craig absolutely. It may be the worst news that there was only a couple of weeks of this quarter that were potentially affected by this emissions scandal. All of the brunt of the impact from a volkswagen emissions that it is been cheating with the Diesel Engines will essentially come and is a recent months ahead. You are going to see an impact certainly in a markets were volkswagen has had to do a stop sales of the models with the Diesel Engines. And that is really something that is just an easy prediction to be making here that impact will of the specifically strong will be specifically strong in the markets where they cannot sell bound. Manus everybody is pursuing growth in china. Have to the does vw backend against toyota when it comes to that marketplace . Craig trudell volkswagen, as has been slowing down and china along with the rest of the industry the last few months. Theres been a little bit of an of tick and the last few weeks because of the government offered a tax cut, a purchase tax cut for small engine models. There is some early indication that is having an impact and sales are maybe taking up as a as at of the ticking up result of that move. Itll be interesting to see how much of a boost to volkswagen since they do now Diesel Engine models in the china market. To the extent china can rescue the automaker. In the u. S. Market and in europe, volkswagen has got real challenges on its hands the next few weeks because it cannot sell these diesel models that it relies on for a significant portion of sales. Manus craig, thank you from of that. Craig trudell joining us on the vw story. Craig trudell reported earnings peugeot reported earnings of sales rising. Lets get more. A Senior Consultant at frost and sullivan. And simon is also here as well. Lets get straight into these we have had a confirmation of the midterm out to look. They ever is the outlook for your 28 from 6 . 6 to 8 . Is 60 . Urope legs, one is europe and the second is china. Aheadis the first market of the french and now. I was here one year ago and i remember there were signs that china was slowing down. I said at the time they europe would go debt to grow faster than china. Thats where we are today. China was very important for psa recovery. Now that it is slowing down, decreased by 17 . Peugeot only needs to find a third leg to the team to grow. Line out ofther had this is peugeot never cheated on emissions as is car sells rise. That is the bloomberg headline. Theres going to be a the bank the brown, the theme, saying i am clean. Nicolas meilhan very important. We ran a survey and we talked to 4000 drivers some in germany and some in u. K. And 1000 in italy and we asked them, what do you think volkswagen should do. And as they are all looking as they would like to have their car fixed. Today isxpected transparency from the manufacturers. We asked the question, do you think it is only volkswagen or other manufacturers . 25 of the people said volkswagen but 14 said all the manufacturers. Peugeot said will be very transparent with you and show the really mission, they are doing the right decision. A lot of simon french the growth will sing has been a lot of the growth we have seen has been the availability, to what extent does the of tick and eurozone areas grow that peugeot is predicting, is a led by ecb . Nicolas meilhan i would say one of the driver last year was spain. Spain, a lot of people supporting and that is important. I do not think ecb has an impact on a strong impact on car sells them in europe. More recovery of the market. Sales in europe. Ecb is backk the for the time being. Manus we are seeing toyota taken the lead from vw. Will exact continue . It continue . Well, no, badn news for volkswagen. You should not forget that volkswagen sells 4 million cars per year in china. If toyota is ahead of volkswagen now, it is because of china. Not because of the scandal. As in in the Fourth Quarter and the impact of the scandal. We spoke to drivers and said after this scandal, are you still likely to buy a volkswagen. Manziel we will have to leave it there. Time has run out. Andlas meilhan at frost sullivan. Manus we will have to leave it there. I just had a horrible nightmare. My companys entire network went down, and i was home in bed, unaware. But that would never happen. Comcast business monitors my Companys Network 24 hours a day and calls and emails me if something, like this scary storm, takes it offline. So i can rest easy. What. You dont have a desk bed . Dont be left in the dark. Get proactive alerts 24 7. Comcast business. Built for business. Manus welcome back to countdown. 7 30 in london. These are the stories you need to know this morning. A law and Justice Party is on course for victory after taking a tougher stance on refugees and more control of the economy. They won more than 39 of the votes. It is the first time any party has had the majority in poland since the reintroduction of democracy in 1989. A surprise surge of the argentine opposition candidate on sunday. 80 of the vote counted, they each hold 35 . The oneoff election is scheduled for november 22. In beijing, this week is the nations 13th fiveyear plan. The meeting comes as the worlds secondbiggest economy confronts of sub 7 Economic Growth since the 1970s. On friday, the bank of china cut Interest Rates. Lets see how the market in asia they are toward the end of the day. They are beginning to wake up. Caroline hyde is standing by on the markets. Chris we could see a little bit of profit taking, or potentially a little bit of risk aversion. Looking at the european futures, i have the mark on my screen already we are seeing likely a bit of a down day and you can see that the ftse 100 is currently off by a quarter of a the daxge point clinging onto gains, but we are likely to see a little bit of taking after the biggest twoday gain in europe since july. A 2 rally on friday feeding optimism on centralbank moves. China acted before the close on friday, the sixth Interest Rate cut in a year. Lending rates, deposit rates being cut, preserver cuts. It is said the inclination that we could see a rate cut or some sort of stimulus come december. We could see the equity markets loses some of the gains we saw piled on the end of last week lets see how china is currently performing not managing to cling onto those gains the shanghai composite is currently up about half a percent and we are seeing the hang seng raising those gains erasing those gains. Why, when Goldman Sachs sees up to 110 billion being injected . Because we have already factored in this rate cut and Goldman Sachs is saying we could see another rate cut by the end of barclays is said that the fact that china is moving so quickly, the fact that china is adding the stimulus ahead of their policysetting. Lan, it is more of a concern it is highlighting, underscoring the fundamental weakness of the clearly, anomy so little bit of concern about how bad the chinese economy is and why they are seeing equities. Ower we are still seeing a boost to some foreign economies. We are up half a percentage point on the Australian Dollar this is seen as in large part a proxy for sentiment in china and that is why you see the new. Ealand dollar also benefiting a mixed reaction when it comes to assets is it because we are seeing such a pylon in the shanghai composite . Is it because so much money has already gone into equities . Why we are seeing such a big parts in the market or is it just different Asset Classes digesting the move in different ways . Looking ahead, i want to keep an eye on this this has been shares year to date, down about 2 . Phillips could move today an interestingways . Take will they move higher on the fact that results were better than expected they did managed to beat analyst estimates but then the 2. 8 billion sale of that lighting components unit is being put on ice to be slightly derailed by regulatory scrutiny that will because for concern. Manus thanks for the roundup. Setnds oppositio is to sweep the power from a tougher stance on refugees and more state control lets bring in hans nichols, standing by in berlin. Show you thes to incumbent government delivered growth they delivered stability through crisis. But this is some pretty interesting political record coming from this new power, this new government. I think we have three stories going on in poland one, the paneuropean antiestablishment story and that has been played out in other countries you can see it come to fruition in poland. Then you have the antiimmigration side this new party in power has been very clear that they want to stem the flow of migration and they are not on the same page o as counterparts. The third is economic. While poland has had remarkable growth, they did not go into recession and you still have 1 5 of workers living below the poverty level. Unemployment is 10 across the country and higher in the eastern part. They still have a lot of workers coming to the rest of europe looking for jobs and that is what this party is talking about and theyial bank taxes are also potentially talking about more money for pensioners, raising Living Standards a lot of the coverage has been this a rightwing government and while they do have some integration rhetoric in some ways they are talking about more Wealth Redistribution and more taxes against the banks and the more populous take. Manus all this comes as the european leaders have been trashed in brussels. Some of it is really quite prophetic. Knology thathas a the solutions they had at the summit on sunday, another emergency summit, they are only shortterm solutions. Spots ford to 100,000 shortterm housing, refugee housing, getting people set up in greece, but not any short of longterm solution. You look at slovenia and where the migration flows are coming from, the numbers are accelerating. President is talking about 60,000 arrivals in the last 10 days in macedonia. They confirmed that 10,000 a day, pushing you hire. International agencies saying in below the number is just 10,000 per day. What everyone is saying is that it is accelerating. More refugees are leaving turkey trying to get into greece. For the slovenian president and mr. Tsipras, and the president of hungry, you cannot have a real solution for this unless you have some sort of Border Security along the coast with turkey and greece, and there is a pheromone of criticism and disappointment that the president of turkey wasnt invited to the summit. They did invite some noneu countries macedonia and serbia were in attendance. Andno longterm Solutions Just clarity on how far away we are from any solution to this and how deep the divisions run. S, never a truer word was said of this entire story. Hans nichols in berlin, thank you very much. A big interview on the european story coming up later in the day. He Italian Foreign minister, speaks to bloomberg tv at 9 15 gmt. Stay with bloomberg. Lets bring in the head of equities at hartleys. Great to see you. What a cracking start we have had to the final quarter we are a little bit lower this morning, london down 19 points, paris up by four. It is betwixt and between. It is a cracking start. Do you believe in it . Richard if you look at the macros, what more would you like in terms of an os mitts . Announcements . We have the chinese delivering some further easing, later on this week it is unlikely the fed and deliver tightening obviously we have to pay and coming back. Underneath that you have had a fairly bearish expectation in terms of earnings in the states and it hasnt just been textiles that have outperformed we saw the likes of microsoft, amazon on friday. Even mcdonalds, which has been under pressure for some time these are prices that the market hasnt been too used to. In terms of corporate expectations and what is actually going on, notwithstanding the ongoing volatility and commodities, it has been a fairly slow day. Have and that if you , doeshestra of stimulus it matter that the earnings dont match up . Richard it matters in terms of valuations because it wont take much for people to say we are looking rich. Againstthing we are up is the ongoing chase for yield and that is the investigation destination of choice. The ftse is yielding anything between 3. 5 and 4 . Manus and that is nowhere better personified than the likes of coke. About one of the corporates we have on our screen phillips says that things are good for us in china. They are on track to divest confident. D china is richard indeed. They also have no more than 10 exposure to china. Pretty good figures a slight disappointment along u. S. Regulatory concerns but in terms of real performance it doesnt seem to be too much of a distraction. That, justflip side looking at the numbers, to show is showing to battle against admissions on one side saying that we dont have that problem. Are diving quite of it higher for the European Markets, which goes back to the ecb really working into the economy. This is a story about inward to mastech focus, the european story. They see a material slowdown in terms of china and Southeast Asia. Richard on the basis that it is a zerosum game. If vw is losing someone will gain. Hand, they have got increased costs anyway and on the other hand you have kind of got the sector as a whole tainted. They could put in some pretty and the share price hasnt necessarily reflected those numbers. In terms of outlook, it is pretty optimistic. Manus you say that we have to have a bottomup look. We are going to talk about some of those hot picks that is richard hunter. He will stay with us. The car market here in europe. That will be a part of the nday. Theyn mo should be a little bit lower. Paris is down 21 point sorry, eight points. Stay with us. Manus 7 47 here in london. 8 47 in paris. Here are the stories you need to know this morning. Japan has priced the nations Postal Service at the highend. The government raised the trillion making it the biggest ipo since 1998. Those holding the bank and its insurance divisions will bet on november 4. Itsa has reagained sales lead over volkswagen. Sales reported earlier this month. Bracing for a consumer blowback. Earnings that beat analyst estimates as medical equipment rose in north america. Thirdquarter earnings jumped 20 . The company said that the plan remains on the certain due to u. S. Regulatory concerns. The companys ceo told us why the separation is so important. The separation of lighting is a transformation in its own right it will reposition phillips into two Standalone Companies the health tech part, which is much more , andrable to an industry then lighting as a transition into energyefficient led solutions. Each has its own set of shareholders. Manus minutes to go before the European Equity markets kick off the start the trading week. Caroline hyde will run us through the top stocks to watch. Caroline hearing from the chief executive of phillips a lot of mixed calls for where this could trade. We have had a rocky share price and year to date it is down 1. 7 . Some analysts are saying that the stock could rise on the fact that its numbers did beat analyst expectations, thirdquarter earnings up 20 . Boost and ithat looks like there is notable deterioration in china. That 2. 8 billion sale is in question. Roadblocks could potentially face them in terms of u. S. Regulatory concern. Goodly that is potentially for shares falling on the back of the sale or rising. Mixed picture there. Aberdeen is being called higher this morning it is an reports that they could be looking to sell themselves, sounding out potential buyers. Bloomberg is working on whether this story does indeed have legs. Aberdeen could rise anywhere up to 5 on the backs of these reports. Morning,results this 12. 4 billion euros in terms of sales. We are seeing the stock crawled down a little bit lower. With interesting about persia is the fact that china and Southeast Asia really could see the weakness we are seeing, down 17 in terms of vehicle sales. China, Southeast Asia are low. Europe is looking strong, 6 growth from the likes of persia. It looks like the shares could be a mixed picture on the fact that it is missing in terms of revenue. The stock could be flat, maybe down some 1 and some traders are calling at this morning. Like for like sales up 3. 4 , slightly shy of compiled consensus we found. They seem to be bearing fruit from some of this tsunami of bd Investment Management reviews happening, largely in the United States. They say that major retentions limits losses of clients. But from a global basis, the u. S. Look strong, western europe up 4. 6 . Manus lets bring back and richard hunter. Itsnumbers interesting what they were fearful for, thats tsunami of revision and didnt come through. Richard rather calm water is then we were expecting. It is a good summary of exactly where we are. And it is a pretty good culture, perhaps a couple pockets of pleasant surprise in terms of what has managed in china. Wpp has geographical diversification, business diversification. Bloomberg intelligence just run some of the numbers their net sales margin is ahead of the 2015 target of 17 . Looking at some of your top picks, wpp is in there a potential, caught my eye. Richard it is a longerterm story notwithstanding the fed getting into china. There is without question the emergence of middleclass who will have their own savings, something to put in the back pocket. Needless to say, in the u. K. We are constantly be reminded about the importance of saving for our haveension, and you another thing going on in the states with the potential has exposure. Powerful three pretty longterm lines of business. Manus the bank of japan, the quantitivehere easing going on . Richard it sounds like it. Boj is one of those difficult ones to call. We know that historically they have found it difficult. The bulls would probably say we may see some sort of easing, but not to any great extent. Clearly the problem we have in japan is over the last six weeks its exposure to china. Manus richard hunter. Thank you so much. Minutes away from the start of the european trading day. Jon ferro is here. An interesting start we will open a little bit softer. Jonathan they should. Morning, economists are struggling to agree on what will happen next year. Leaders in china are going together to discuss what will happen in the next five years. We will discuss the challenges in the show as it comes up. As well ask to pan they deliver at the top of the range its biggest ipo in japan since 1988. The government may raise almost 12 billion. Investors look ahead to the bank of japan meeting later this week and we will do that as well. Then another government lurches to the right, this time it is poland. We will break down what is happening in european politics. Manus look forward to it. Jon ferro with on the move. Said, we have had euphoria from friday but to put things in context we have political change in your, equity futures indicated, 18 points lower in london. Stay with jon ferro for on the move. Jonathan good morning and welcome to on the move. Dan Jonathan Ferro in london. Moments away from the start of european trading lets get straight to the morning brief. After chinas surprise rate cuts, the communist Party Gathers to lay out its economic plan for the next five years. Japan post delivers the japanese government almost 12 billion dollars as investors flocked to the biggest ipo since 1998. The migrant crisis claims another political skeleton. Poland largest of the right with the new. Party with the new party. 15 seconds away from the open. Dax futures are pretty much flat. A big week ahead the bank of japan. Lets get your European Market open with caroline hyde. Volkswagen caroline good morning caroline good morning. Quite a muted reaction to the stimulus we saw the sixth Interest Rate cut coming with any year. Within a year. They are injecting up to 110 billion into the financial system, but the hang seng is down by 1 10 of a percent. Is it that we have already seen the market move and they have already factored in more monetary policies coming from china or is it caution ahead of the fiveyear plan, rs barclays has said, is it underscoring the fundamental weakness of the chinese economy . Shanghai posted 5 10