Starting with martin spencer, a bit of a bellwether for u. K. Retail. Talking about pretax profit. The company increased its profitability forecast. They have been cutting costs by buying more sales direct. This has been a challenge for martin spencer. This stock was called higher and is moving higher. Volkswagen is not coming in yet. This has been much lower. The company said that it found all the emissions readings for the first time in gasoline, petrol. Scandal that had centered on the diesel engines. One analyst said volkswagen is leaving us speechless. Ing, we got some mixed calls. It looks at the moment like it could be moving higher. The biggest dutch lender reporting a 14 rise. That was a beat for ing. And the eurodollar trade, you lower onhe euro moving the back of the dollar. Back to you. Jon we will bring you that data live throughout the morning. That is happening in the early part of the session. Here is what is happening in todays show. The volkswagen pile up. The scandal widens to include petrol cars. Shares surge after the biggest public offering. And the pbocs fat finger . Sparks aentral bank stock market surge by publishing fivemonthold comments. Vw scandal widens. The carmaker says an extra 800,000 vehicles may be involved in another a emissions scandal. The crisis had so far centered on diesel engines. Hans nichols has been in berlin. An incredibly busy man. Who made this latest revelation . And the price tag that can be attached to it. Nejra hans volkswagen came up with this last night. They put together a press release saying they discovered emissions regularities with Carbon Dioxide. Up to this point, we have been talking nitrogen oxide. You did mention that the petrol gasoline engines are affected, but a Spokesman Says this is a small number. We are basically talking and 1. 4 liter engine. Leader. 8, and to 2. 0 liter engines are also affected, but we dont know how many are affected on the petrol side and the diesel side. We have the volkswagen polo, the a3f, the audi, the a1, hatchback. Here is what muller said last night, when he was basically coming clean. He said, from the very beginning i set out to ensure that we mercilessly and completely clear up the situation. This is a painful process, but there is the alternative. Volkswagen is estimating 2 billion euros for these 800,000 vehicles. Volkswagen has set aside for the 11 million vehicles. There could be some overlap, so it is not necessarily their 11. 8 million vehicles affected. One thing we dont have clarity on is what is happening with porsche. Some three liter engines, which were in the Porsche Cayenne, could be affected and had some sort of software irregularities. The Volkswagen Group is denying this, but yesterday, volkswagen north america stop selling Porsche Cayenne toy 14, 2015, and 2016. Jon the stock is down by 8 as i speak. That is a significant dropoff. Later, i will be talking to you and cameron about centralbank munication. Communication. Vw vw missing this up are messing this up with their communication . Hans i wouldnt go that far. It is crisis management. They are trying to get to the bottom of what they know, and when they know, to disclose it. They are saying they have a Carbon Dioxide and nitrogen oxide irregularity. We dont know how consumers will react to Carbon Dioxide. Relationshiprect tween fuel economy and Carbon Emissions. If you have been cheating on your Carbon Emissions, will likely have inaccurate fuel economy readings. That could trigger, not only another round of lawsuits, but some sort of epa violation in the states. The epa has find automakers heavily when they have been wrong. Jon thank you very much. Volkswagen stock down 9 as i speak. Lets bring in the global chief investment strategist at blackrock, talk about timing. Blackrock and yourself put out a report. The price of Climate Change, whether you believe in it or not, it is now an investment issue. This is not going away. The way we look at it is, Climate Change is uncertain, the science is wellknown, but the timing is uncertain. For longterm investors, extreme and unexpected losss uncertain. It is a function of the japanese synonymy in 2011. Jon how do you reduce climate risk in 2011 . It is a corporate crisis that has echoes of enron. That is the view of some people. As you look at that situation, it is a call to reduce the risk in your portfolio . 85 hen you think about it, of emissions come from 35 of the stock market. If you have a process of screening or excluding, or if you are really active, you can reduce the risk of this exposure quite materially. Jon for the people watching, they say that is easy. Pullback from the biggest polluters, anyone in the canadian tar sands, energy, or coal. Is it that simple . It is a bit more complex. Those who have sinned the most and proportionally improve are among the best investments. This is all done to Corporate Governance and available technology. Available technology has become a great deal cheaper. Think about wind against other generating power. The ability of countries and companies to mitigate has increased. We tendovernance to find a strong relationship between countries with sustainable plans for the esg, and good overall Corporate Governance, and overall longterm return. Jon the reality will begin when you Cities Companies trade at a discount, for the Companies Working on these issues. As i look at the group of all majors who met in europe, going to the Climate Change conference at the end of the year, it is notable that the oil makers oil majors were mostly european. Are there people who will be better prepared . There is a different range of approaches. Some companies are saying, we need to really address this now. Others say that we have a huge install base. It will take a long time to get past this. It is not just about evaluations, it is about risk. Risk is losing a lot of money you did not expect to lose rapidly. The Insurance Industry faced years ago with hurricane andrew. They spent 20 billion in climate modeling to mitigate the worst year for climate claims in history, without losing capital. Jon on this story specifically, as they listen to your comments about risk at volkswagen, how would you price in the risk around this story . Diesel engines were meant to be the future for europe. How do you factor that in . Ight inink hans is r saying, what they are doing is crisis 101. You should not have a coverup at all, and certainly not coverup 2. 0. So what is your timeline for investing . One can be confident that in 10 or 15 years, diesel will be less important than it is now. When i think about warren if you aredvice, investing in 1900, what would you do . He said, sell the horse. Avoid the obvious loser. Ip up next, 2015s biggest o. Jon attention shifts to tokyo, posts holdings have surged at their debut in tokyo. A 12 billion ipo. Shares closed almost 26 higher. Lets get more on that story with russell ward. How important was the post ipo pop . It is very important that these shares rose on the first day of trading, because almost 80 of this ipo is solved the japanese individual investors. Not thenow, they are most courageous investors overtime. That is part of the goal to get them to invest more of their savings, so it was individuals that flocked to this ipo, and the last thing that Prime Minister abbe wanted promised her aid wanted was for these Prime Minister abe was for these shares to be tanking. Jon in an ideal world, they will invest more in stocks. It cannot make Traditional Home loans. They sit on a huge amount of assets. What happens from here . Reallyn postbank is not a bank in the classical sense. I cannot lend money because they had the government hacking overtime. Have one point 7 trillion worth of assets. About half of that is in. Apanese government bonds now they have semiprivate enterprise and they have to get more returns on those assets so they are starting to diversify them into other asset classes. The he told us the company will shift into stocks and they will get into private equity funds. They need the support of Goldman Sachs and others who have joined this company to manage the assets. Jon i want to bring back in one from like rocks. From black rock. The cultural significance of this, 10 years in the making. It is important. I think so. As russell was saying, it is important that it opens to a premium. Jon unlike rome ll. Really not sure this sets off the shareholder culture. Going back to the 1980s with british telecom, you have the same kind of narrative. 10 years later, and has not set off the shareholders. In japan, they have introduced this. It is a combination of having interesting things to invest in. Culturally, they are encouraged to go to the equity, they have the comfort that it is backed by the government, that is the cultural story. To me what is interesting is the flow story. It cannot lend in the traditional way, is that going to change . We have already seen this. It changed its allocation about a year ago. It has become a buyer of domestic equities. Years, having no sellers, yours or now have domestic buyers in jap an. That is one of the underpinnings. Making, itrs in the had a lot of pushback. At Central Banks, they wont like the prospect sitting on this amount of deposits. There is a cap on deposits. If that cap is gone, could this transform the Financial Sector . Very slowly. There is a lot of conservatism in the japanese financial system, and the attitude of individuals. I dont see this as a transformation overnight, i see this as part of a long journey. Jon the fact that it took 10 years might be an indication of that. Up next, call it muddled guidance. How the peoples bank of china unintentionally sparked a stock market rally. Jon here is a live picture of hong kong. An interesting thing happened overnight. But for now, lets get the bloombergs top stories. Another 800,000 vehicles maybe involved in the emissions scandal. Without faulty readings in petrol vehicles. The company said it could add at least 2 billion euros to the almost 7 billion set aside to dealing with the problem. Manager stand druckenmiller says he is shorting the euro. The interesting part, druckenmiller also said that stocks could be the next subject of his bearish bet. The other top story, stocks surging across hong kong after the central bank posted comments on its website about links between the shenzhen and hong kong exchanges. Fortunately, the statements in the comment in it were five months old. Emerging the asia Stock Market Index editor joins us from hong kong. The key word here, intentional or unintentional, which is it . Well, as is often with china, it is hard to know. One thing we do know, this is part of a problem. The central bank, and other agencies have a habit of dropping statements on to their website. They could have farreaching implications, late at night, on weekends. With this statement, it was admittedly a lengthy speech by the central bank governor. It mentioned in their the keywords, this shenzhen link would start by the end of the year. No communist Party Officials commented on when this link would begin. White,it in black and remarkable clarity, this is going to begin by the end of the year. We saw hong kong exchanges, gaining more than 9 . Pboc putly when the out a statement commenting that this was from five months ago. They just hadnt mentioned it. They also rectified the speech to point out, we are not sure why they would suddenly be putting out a fivemonthold speech on to the website, but that is what they did. The communication strategy at the pboc is different for the rest of the world. I was rating for the rollover. We got a little bit of one, but the stock state higher. What is behind that . This is after we sent them a faxed comment. With chinese stocks, it did not seem to stop the bullishness. As is so often with china, it is hard to pin a particular trickle on the day particular trigger on the day. Analysts were telling us they were optimistic about the details of the plan announced late yesterday. Xi jinping pledging that the onernment would be adamant 6. 5 growth over the next five years. Also, speculation that the yuan and sdr. Even a meeting between xi jinping and the taiwanese president. A lot of positive noise going on, but nothing that would immediately screen out 4. 5 gains today. Jon great to have you with us. Thank you for joining the program. A few final thoughts from ewan. A fax sent to them, the text to reply. We complain about the fed, but china is very different. It is. You have to accept that the rules are different, the disclosure is different, and the participants on short are not areitutional on shore not institutional participants. Trying to take a read from that to the economy is misleading. Jon thank you for joining us. Up next, high valuations built on weak foundations. Jon i am Jonathan Ferro at bloombergs european headquarters. A Third Straight day of gains. We are higher by 35 points. The ftse trades higher. The dax, where are we . The equity benchmark in germany down 0. 3 this morning. The cac 40 up by 0. 25 . Switch up the board very south fromeuro dollar once again. Dollar yen premuch dead flat at pretty muchryen dead flat at 121. Nejra i will start with a big one. Volkswagen is leaving us all speechless. That was one analysts reaction to the latest from the carmaker. The only Industry Group declining so far today. The latest from volkswagen is that it said it found faulty emissions readings for the first time in gasoline or petrol. Widening the scandal that has centered on the diesel engine. The company said the new finding could add at least 2 billion euros. Already up to 7 billion or so, already set aside. A lot of uncertainty over those costs. On to some of the gators, glencore, the best performer today. The company sold the share of its future silver output in a includes 900 million in an upfront payment. That as it tries to cut down its debt pile. The company said that trading was actually stronger in the third quarter, and that allowed it to maintain its fullyear profit forecast. Commodity producers are among the best performers so far today. Finally, retail is doing pretty one, and marks and spencer, of the biggest gainers this morning, first half earnings beat analyst estimates. Sales are still an issue. They were down. And thesed estimates, company has been focusing on the growth margin. Tohas actually managed increase its profitability forecast by getting more products direct from manufacturers, cutting out middlemen. Investors have been celebrating that today. Jon thank you very much. Out with a report that u. K. House fell you wish and start too high to withstand strict lending controls in the years ahead. Shares have been falling over the past week, and that downturn exacerbated yesterday. Charlie campbell, moving markets. I bet you did not expect a 5 move yesterday. Does that tell you about positioning . Reporter i think that it does. Found investors more unbalanced than i expected. I think people are wanting to pursue a negative opinion, or the bare case on some of these stocks. Jon last week, we had Deutsche Bank on the rogue ramp talking about the downturn in the London Property market. Ubs followed up with a report as well. I wonder if this is the beginning of the tide starting to turn, and what is the driver . The driver for me was valuations are pretty stretched. I think people are expecting returns and margins to keep rising. I think that is quite a difficult argument to sustain. I do think that there is a new regulator out there, who are going to keep watch on the house price to income ratios. They put in place measures already, and i think there must be more to come. They have got quite had the desired effect they wanted. Jon when you look at the politicization of the equity market, a lot of people are looking to the government. I would also look to threadneedle street and the bank of england. Are they about to tighten macro prudential again . It is very difficult to predict. We have not had one of these before so we dont have a history to look back on. But we know that the two biggest things that concern them, which have not come down very much and the level of risky lending. On their measures a lot of the risks the banks are taking are as bad as they were in 2007. Lending,iskiest 50 of that is now a forest time which is where it was in 2007. So yes they have cooled things down a bit but i think they would want to go further and over the course of the next year, i would expect them to do more had once that happens i think house inflation starts to moderate. Then returns look as if they might have peaked over the next year. Jon the key to this market, house prices specifically. Governor carney would like people to prepare for a rate hike soon, but if they dont hike them, people will not buy into them. I wonder if the expectation reset comes from the federal reserve. I think, in terms of our investors, investors have had a lot of false storms. Portfolios are not really position for a rate rise and i think people are taking the position that we will cross that bridge when we come to it. I think there is an expectation that the u. S. Rate rise will come before. So i think it is a stock Market Sentiment perspective because moving it up a little bit does not really trigger it very much meanh the stress test does if you have basis points higher than now. And that is then quite a big ask. Ic Taylor Wimpey down again this morning by 1. 4 . This isnt a blanket downgrade, is it . If i want exposure, which names to ago for . Beltway is a name we pick out. They are slowing their volume output growth to make these capital returns and that means we will offset the growth margin pressure we anticipate. So they can use volume growth as a tool to keep profits moving even if the margins are falling. Next, we will be live in dublin asking the cofounder and ceo if his company can travel the distance. Jon this is on the move, i am Jonathan Ferro. The stock 600 has climbed to a 2. 5 month high and is time for your top stories. 800,000en says an extra vehicles may be involved in the emissions scandal. They are widening a crisis centered on diesel engines. The company said that the fighting findings could add 2 billion euros of economic risk. Investors flocked to the 12 billion ipo, shares rose as much as 26 . Carmakers report of the best twomonth stretch of u. S. Sales in 15 years suggesting that the nations economy is improving. I want to stay with carmakers but head over to dublin tech summit because they are joining the race to compete in a key market. As uber and google enter the filled, bill ford spoke about a key area for growth. The world of city driving will change dramatically and we have experiments going all around the world trying different things. Whether it is fractional car to do using a social good or lots of things like that. Well precisely know where these Revenue Streams are, but we know that it will change incredibly rapidly and we want to participate in that. The Ridesharing Service now worth more than 2 billion. Caroline hyde is at the summit with the cofounder. By nicolai am joined bruson. One of the pinups of European Technology. We are at the biggest gathering in the world now. There are 40,000 people here. What does that say about European Technology . Look at these conferences like two to three years ago and it was a 10th of the size. Now you have like 40,000 people gathering and dublin. It is Pretty Amazing and you can see that from the number of investors here, investors from all over the world and asia and the u. S. It is really happening. Caroline the minute we start to see something succeeding, we worry there is a bubble. The is economy has always gotten cycles. To me the two things that are underlying about in europe is the number of talent today you find we can recruit the best people. We can teach People Consulting or banking and the level of ambition from companies has completely changed. But now they want to go all the way. It was not the case two to five years ago and it is really changing. Scalene how much can you blah blah car blablacar . If you think of that market, that is humongous. Driving the car in two cities in the world. We kept into the biggest inventor in the world. We started in france and extended over europe. Ago, we made a bet outside of europe and we have seen phenomenal traction in russia, more so than any european country and after that we decided to launch the emerging markets so we went to india and brazil and we have seen some amazing traction. So the plan now is to reach a Global Platform where anyone and the world can write share using that car. Caroline china . 2016. A is a focus for it is a story of two to three worlds. Strategy and a big seeing if we do anything and then you have Southeast Asia which is a collection of smaller countries but if you add them up it is a smaller market. Caroline are you going to need more funding rounds . We raised 200 million just a few months ago and we raised 100 million before that. That funding is the emerging market. Needthink we have what we for that strategy. Caroline do you think people are raising more money that they dont need the cash . I think it to make sure you will put the money to good use. What we see is a very strong appetite for technology. So lots of investors who might not have invested in a tech company are investing in tech companies. But if you look at us and many other companies that is where the growth is today. Doubling year on year if not more. It makes sense for these investments to shift from traditional industries. Caroline what about geography . Is it still the case that the minute you get a Bigger Company that needs to scale significantly, they have to go to the key pockets of the United States . It is partially true. I think today you can do that in europe and have some of the best in europe funding these countries. Haveyou get to our stage to do that outside of europe. Today is a system of companies and investors but you cannot get to a scale we have investors do 100 million or 200 million. As you Scale Companies like years in a few today, it doesnt matter so much. It matters like Building Companies and talent in europe. To me it is not a big issue. Global companya at you will find that what do we need to fund the system for more billionaires and exits. Nvestors is more with 6ne yesterday billion coming out of public hands. Where is your exit strategy . It is something we never think about. Vc a fewr when i was a years ago, i met a man who was always telling entre doors, entrepreneur, thats what we will do so the company to xyz, he said dont worry about the exit strategy. Go 100 and good things will happen. So that is what we do. Caroline wonderful having you. The cofounder and chief operating of us are of blablacar. One of the pinups for european tech. Jon thank you very much. Much more from caroline throw the morning from dublin. 48 minutes into the session and it is still about the autos. Porsche and volkswagen check out shares of the w this morning. 9 just coming off session lows but it looks the scandal is deepening and the accusations are widening. Vw and that debacle throughout the morning. Fromxt, we have data europes biggest economy and we look ahead to a big day. Jon welcome back to on the move. What a day we have ahead for the fed watchers. Fisher,llen, dudley, all speaking within the next 24 hours. Manus cranny coming up on the pulse, after the next break. A big day for fed watchers. If you want a clue to what is going on, these are the ones to watch. Manus the holy trinity. We know the ambition and we know the desire trying to get off the zero down level. We know more or less where yellen stands and we know they talked about december as being the meeting and that group referred to the next meeting in the discussion. We know the jumping off point is not what janet yellen says today she couldq a because be asked absolutely anything. That is what will be important. And dudley, we know that is another interesting opportunity. Fisher is possibly the man to watch because this is where the whole International Aspect of the fed, that was the whole reasoning and dynamic white Stanley Fisher was brought into the fed. Tamednce things have slightly in terms of the exterior story, there is a great story that all the world is easing while the fed is moving in a different direction. You can cut it up as the fed does nothing. Still and everybody else moving into deeper currency wars. Jon that is the Central Banks story this morning. Volkswagen front and center and the stocks getting hammered in the early part of the session. Petrol engines and porsche. Manus it is another 2 billion euros thus far to fix it. Like the periodic table did you do chemistry . Jon i used to go to that class. Manus so you have your co2 and nox. This is about Carbon Emissions and fuel efficiency. Another batch of cars, and another 2 billion euros to fix that. Where it becomes much more interesting is the expansion into the porsche family. That is where the admissions scandal is going. Three liter engine equipment. Muellere does matthias come from . Of porsche until his accession to power during this debacle. The tentacles spread. What was being done it porsche . What issues did he know his accession to power during this about . We have to take it from there. Manus professor cranny. That is a scary thought. Some breaking numbers of europes largest economy. The final readings of the pmi for october. Services pmi coming in at 54. 5. The compass it coming in at 54. 2, also slightly lower. About . People were expecting. The french reading is also a little bit lower. 52. 7. 52. 6 for the french pmi as well. Lets get to hans nichols for more. German final pmi rating has missed. The german composite number came in as you said at 54. 2. Previously it was 54. 5. The french numbers are the most interesting. They now have nine months of positive numbers. You look at where it was last year and they were solidly in the 48 range. Anything under 50 singles signals contraction, not expansion. All economies are growing, but the German Economy is growing slower than we thought. Everyone else surprised on the upside. Jon thank you very much. Much more from hans throughout the morning. For now, that is it from me. I am on twitter. From me and all of the bloomberg team, best of luck for the rest of your day. Manus volkswagen skids as the scandal even after vw says it has found 40 emissions readings in petrol power engines. A boost to abenomics. Shares surge during the Company Debut in tokyo. European stocks trade higher and the euro weakens as draghi reiterates the ecb is ready to act. Eurozone pmi breaking across the bloomberg terminal now