Transcripts For BLOOMBERG The Pulse 20150924

Im guy johnson. Details coming through from the norse bank. 75 . As cut rates to. We were at 1. . It is a 25 basis cutpoint. Basis points cut. This is interesting. This is a country that has an inflation rate of 2. 9 . That is about target. The reason for that has been the rise of the euro versus their own currency. 1. 71 after that rate decision. Later on, will we will talk at 10 30 with the governor of the norse bank. Governor olsen will be joining the pulse. How is the oil price impacting his thinking . What if draghi decides to push further q. E. . Plenty of questions for the government 10 30 u. K. Time is when you can tune in for that. Lets return to one of the biggest stories of the week. Vw shares on the rise again this morning following the resignation of ceo dr. Winterkorn last night. Giant is hoping to replace them by tomorrow and begin the job of repairing reciprocation following the emissions cheating scandal. Hans nichols is live on location. Hans, can we quantify, get our arms around the scale of the problem that the person that takes over will have to deal with . 40 billion is the number from jpmorgan. Know all the jurisdictions that for swaggy will be investigated in, and will they include a criminal component. There are three discussions going on. One, the confession. Two, how far up the chain of command is their culpability . Then knowledge that volkswagen was actively, knowingly trying to defeat epa testers so they could game the emissions game. Three, how big of a problem is this in the area . Is this a german industry problem . We heard from Angela Merkel repeat her commitment to lowering emissions. It is better on the carbon footprint. It is not as great and other particulate matter. Germany went with diesel. You look at the saturation, the penetration some of these Auto Companies have in the diesel market. It is well above 50 . Will there be a government policy shift towards hybrid, becauselectrics, that is what direction they could go. Last year, there was an announcement there will be subsidies for electric vehicles. That is a question i will watch for, as well as what do the other Auto Companies say . Are they concerned what happened here could metastasize to the entire industry . Guy you mentioned the replacement, the possible replacement for dr. Winterkorn. Who is on the list . Are we going to do with an interim candidate, a permanent replacement . Hans well, depends your definition of permanent and interim. You could have a candidate come in for a couple years and have somebody else be grew to take the company forward. Swo names we hear is mathia mueller, the ceo of porsche. They had 3 billion in profits last year. The other candidate would be considered the outside candidate and that is herbert diess. He spent his career at bmw. He isnt as well immersed in the volkswagen history. He does not know the porsche family all that well. Get approval from the Works Council and the government of lower saxony. Matthias mueller is the odds on favorite. What were hearing from officials, we heard from the premier of lower saxony. He made it clear that he thinks a, this needs to be dealt with swiftly. Hes talking about the criminal side of things, which volkswagen agreed to last night. Then, is it a first step of many steps . The premier was indicating he thinks it is the first up. This community, this country is bracing for a long struggle. Guy hans nichols live outside volkswagens headquarters. Were joined for more analysis by theahead of Global Automotive research and new energy finance. Let me first of all start with her. Do you favor any of those particular candidates . I think they are both, very very very good. Mueller is an excellent executor. He would probably be very well positioned at the top of the group. He knows the company very well. That is a great team coming up. Guy is that a Permanent Team . Is that the final running order we would have . Or is this a panic reaction . We need to make changes. In a couple years time you could see a more Longterm Management story developing. That is not a panic reaction. Mueller has been in the running earlier this year. He is 62 years old. You could say hes a transition very ceo until guys ve largerdiess ha stripes. I would not have a problem with that itll. Vw is the recovery of dependent on this becoming an industry problem . Yes, it is. I personally believe this is a vwspecific problem mostly in the u. S. We know that diesel does not comply with realworld driving emission, and that the tests that are required in europe which understate the emissions. That will change by 2017. It will make life much more difficult. And diesel penetration in europe is expected to fall over the coming years, but that decline might be accelerated with this scandal. Walked into a dealership today, which you buy diesel or gas car . It depends on the car. If i buy a suv, i would buy a diesel. If i buy a small car, i would buy a turbocharged gasoline engine. I would consider going for a bigger hybrid solution, but the cars are too expensive. Hybrid technology is the way forward. Guy do you think there will be a change in taxation . The government has pushed diesel onto the european roads. 80 in france. 50 in the rest of europe. Theyve done that via taxation. Does that process started to get reversed . Is that something that will get accelerated with the taxation story . The reason i question is how much is it going to cost you fill up. Whaat is my Investment Capital going to look like . I think government was will be very careful governments will be very careful forcing a quick change in Investment Capital of some of their biggest employers. Guy germany did it with nuclear, and moves very quickly. I know. But with diesel we know how much we talk about a company that has been using its software to trick the tests in the u. S. That is what we know so far. People are trying radical conclusions right here right now. Im not sure that is going to happen. Test cycles will be stricter and that itself would trigger a change in technology. Performance will go down on a diesel car. That depends. People have a choice buying diesel, buying gasoline, buying hybrid. That choice will become a bigger. Guy ok. So, tell me what kind of car you would buy . Would you buy vw stock . One company has banned his people from investing in vw for six months. The vw share price implies that there is zero value for the brand. Rsche. Alue for yothe po and zero value for the 30 billion of cash the company has. Leaving aside all the trouble and the oneof expenses and eoff expenses which might prove to be temporary. I think it is an interesting story to look at, but you have got to look through, try to look through the current painful situation. In berlinon musk is today. Is he in the right place at the right time . Atwe think electric vehicles hybridization is in the right place at the right time. You have these stringent fuel economy requirements. In the u. S. , we are expecting diesels to rise to meet those. That is out the window in terms of the u. S. Market. Those, emissions requirements in terms of corporate fuel economy are going to continue to get tighter over the next two years. Lugin hybrids, that starts to look like a better option that diesel has been on the roads for quite some time but is looking worse as a bet. Guy how does this happen . Government force diesel on us. How do they change it to electric . We go through this again . Would love to see more electric vehicles because i do think it is the right solution for individual mobility overtime. The problem is, again, most of these companies have challenged are challenged anyhow. If you think the electric vehicle through, the traditional industry would probably need 30 fewer people to manufacture these cars. That is a real problem. If you think about suppliers and people working in factories manufacturing gearboxes, engines, parts. So, elon does not have that legacy. So that is the great position he is in. He can really look through the right technology, the technology that makes sense for consumers. Others do not have that luxury. But thats only the delaying the implication of the electric powertrain. It will come. Im pretty sure. Last weekgo back to at the frankfurt auto show, they are announcing vw is announcing 20 new plugin hybrid models by 2020. So, they knew that last week how much they knew that this was going to break at the same time, probably debatable. But the bottom line is they are making that bet. They are making it on a different timeframe. If we look at the other major Auto Companies that have bet more heavily, say nissan even gm. Vw lags them. That they have recognized in the longer term that is the path they are going down. That is my they made that 20 new hybrid models by 2020. Guy when you think about investment decisions, how big a component is how far ahead a company is in e. B. . Vw looks like it made more advances and other european manufacturers. Is that part of the process . They are all pushing hard now. They probably are little bit further ahead of the game. It is a significant part of our discussions with investors. Moreso on suppliers. It is a big opportunity for suppliers. A big challenge to go through this technological transition, running with different technologies. That is seen is a challenge for oem. For Companies Like delphi. Guy where does it work best . Exposed to to be companies that have exposure to electrifying powertrains. These are delphi, conti,e even. These copies are looking to outgrow Global Production growth in the area 500 basis points. Guy real interest in stuff coming out. Thank you very much, indeed. To todays us twitter question. I guess it depends on what kind of driving youre going to be doing, but what next what would your next car be . A diesel, a petrol, or electric . What is going to your head right now . You know where to find us. Let me up. Right. Lets not about what else is on our radar. The vw scandal had a knock on effect on japanese equities. Carmakers leading to the declines. Has fallen 2 . The market reopening after a threeday holiday. The german chancellor says e. U. Leaders have pledged an additional one billion euros for International Agencies helping war refugees in lebanon, jordan and turkey. They agreed to sell off several set up several Processing Centers by the end of november to register and identify january refugees. Get off zero. That is the advice that bill gross is giving to the Federal Reserve. Has become the norm and the economy will soon run an empty. Investments not produce gains. Well talk about what is happening in japan. Shinzo abe will be reconfirmed as Prime Minister within the next hour. We look at the economic challenges he faces. Time, we will speak to the governor of the Norwegian Central Bank on a decision to cut Interest Rates by 25 basis points. Lets check out the krone versus the swedish krona. We will see you in a moment. Guy you are watching the pulse. We are streaming on bloomberg. Com. We are on your tablet, on your phone. Ecb president mariota draghi told lawmakers yesterday there were new downside risks. He is saying it is too early to hitell whether he needs to boost them in this. Mario draghi should some of the downward risks weaken the inflation outlook more fundamentally than we project at present, we would not hesitate to act. Guy our European Central bank editor paul gordon joins us from frank for. From frankfurt. How much time is he going to give it . Paul that is a big question. A lot depends on the incoming data. The key data has to be the inflation data. For several, septembers data, do we get a slowdown from august . Or do we see inflation start to pick up again . Youre going to have to wait for that to come through. In the meantime, conflicting signals. For the couple, we had germanys Business Confidence index, an unexpected gain. Consumer confidence fell. Dutch confidence rose. The signals are not pointing in one specific direction. Draghi and his policymakers saying they want a little more time. Theyll watch closely to what happens. If they have to act, they will. Guy the ratio was a little confusing when it comes to the eurozone economy carried if there was to be stimulus, do we assume it will be an extension of the q. E. Program . Paul that is the easiest thing to do because you do not have to buy any extra stuff. The Austrian Central Bank governor says that it has a signaling effect. It made up the and a fair is one of those who is very cautious. Othertion is to buy assets. He says he would not consider doing that, such as corporate bonds. The other is to get stuck in right away and increase your purchases above 60 billion euros a month. The question then is, is there enough in the market . Bloombergsordon, European Central bank editors. Lets talk about japan. The great story on the terminal today on the japanification of the euro. The single currency has become a safe haven. Abe officially starts his second term as Prime Minister today in a ceremony taking place within the next hour. What prospects are therefore success of abenomics . Lets talk to andy sharp in tokyo. What are we going to hear in the speech . Andy ok, well, local meeting has been reporting that abe wants japans economy to become the big as its ever been. State broadcast nhk said hes going to aim for a target of expanding economy to 600 trillion yen. That is 5 trillion. 20 up from where it is now. That is a big ask for japan, especially theres no time frame given. It is a big ask because the economy is chugging along. Nk last year. Projections for real growth this year 0. 7 . So, he has got a lot to do. The interesting thing he is doing. Hes really shifting the focus now back to a redistribution of the wealth. The fiscaly easing, stimulus, the deregulation. Now he is wanting to share the profits. Share the wealth of his abenomic s gains. This could be seen as a kind of fourth arrow of abenomics. Guy another arrow to think about . Wow. Andy sharp joining us out of tokyo. Now, stay tuned as santanders investor meeting, they have raised their capital ratio targets. Tackling a weakness that his weight on the stock. Dr. Winterkorn Francine Lacqua spoke exclusively to ana botin in her First Television interview since becoming chairwoman of the business. Ana i think Global Growth will be slower. Its obvious we going to slow down. China is a big economy. But he think the important thing about santander is we very balanced. 50 of our earnings are coming from develop markets. They are huge beneficiaries from what is going on. We are thegermany, biggest consumer in germany with 14 market share. We have a Good Business in the u. S. With good returns. We can do much better, but it is doing well. Strongt provides a very buffer against all the emerging markets. I would say santander tends to do better when things are obligated because we are more stable. When everything is going very well, we usually underperform. Again, if you look at any point in time, obviously, if you look at january to april, we did well. So, im quite confident on what we can do for the next two years in spite of emerging markets b eing a bit volatile at the moment. Francine your share price has come under pressure. How much do think that is out of the control . Ana i know this is a big ask, but i think we should be measured, since we increased capital. We did it big Capital Increase in january. We did very well until about midapril. Asset prices up 17 . In line or better than most of our peers. Since then, there have been a number of issues. Are down 35 ks since then. Spanish banks are down. So, its the markets. I think what is important is that we have shown very strong results. Our latest results, our profits were up 25 . We have increased our capital ratio to 10 . Cost income at 47. And return on tangible equity these are our two numbers. Our june numbers. After having increased our profits previously by 13 . We are doing well. Unfortunately, Global Growth is slowing down. And emerging markets are now out of favor. And so that is not helping us. Guy that is santanders chair ana botin speaking to Francine Lacqua. You can catch the full interview starting at 7 00 p. M. London time on friday. Looking forward to that. Looking for to hearing the whole thing. A reminder. At 10 30 we will speak alive to the governor of the norwegian centralbank. Earlier, we had a decision the bank has cut rates by 25 basis points. Let me show you what has happened to the currencies as a result. Norwegian the krone versus the swedish kr ona. We are down 2 on the session. We will find out what happened next with this centralbank. The hint is more cuts to come. Up next, threadbare. Why europes secondbiggest clothing retailer has seen its weakest corporate Profit Growth in two years. If you were buying a new car today, would be electric, diesel or petrol . Let us know what you think. Follow me on twitter. Ill see you in a moment. Guy 9 30 in london. Youre watching the pulse. Im guy johnson. Here are the top headlines. Volkswagen is looking for a new chief executive after dr. Winterkorn step down amid a deepening scandal over emissions cheating. The Supervisory Board of the worlds biggest carmaker is said to discuss his replacement tomorrow. Shares have rebounded at the close yesterday. Ways central bank has cut Interest Rates to an alltime low. Would reduce it rate further as it looks to save the economy from the drop in the oil price. Ned. Krone has weake in an hour, we will speak live to the governor of the central bank. Governor olsen will join us at 10 30. Japanese stocks have fallen after a threeday holiday as shares caught up amid concerns about the outlook of Global Growth. Carmakers and suppliers slumped. Shinzo z was set out shinzo abe will layout his plan following his reelection as Prime Minister. Listen to bill gross. Get off zero and get off now. In a new report, the capital zero ratesr says if become the norm, and this is when i produce gains. Fed chair janet yellen speaks later today. Youll be able to watch that speech live. 5 00 p. M. Eastern time in the United States. Lets take a quick look at how the markets are behaving in advance of that. Mark over to you, janet. The bibg one. Later today. Investors pause and for breath. European stocks alternating between gains and losses. Golds up. European bonds are down. China rose. Have a look at the dollar. This is a bloomberg dollar spot index. Againstcks the dollar 10 currencies across the world. It has risen for four consecutive days. Declining today. Inaction last week, they kept alive the prospects of a rate hike. Traders are not listening. Because the odds of a hike this year are 43 down from 64 last wednesday. Still, this index, the bloomberg dollar spot index is up 7. 5 . It is on track for its third year of gains, which is a record run. Want to move on to the nikkei. Japan was plain catch up after a threeday holiday. Investors giving a chance to react to the weakest chinese manufacturing data in six years. The volkswagen emission scandal. The nikkei fell by 2. 8 . Auto makers sunk. Motor honda and nissan falling. Nikkei 225, that pink circle, the high in june has sunk by 16 . On the auto scene, i thought we would take on platinum. The last thing platinum needed was this volkswagen scandal because it has been battered by chinas economic, chinas financial woes. Two days ago, the precious metal right here sank to a six year low along with other precious mels. Get in close. Now, will the volkswagen scandal ensure that consumers boycott diesel engines . If they do that that matters, because 44 of platinums demand comes from diesel cars. Platinum has plunged 21 this year. 58 below its 2008 record. Guy, the Ripple Effect from volkswagen is far reaching. Guy thank you very much. Gold didnt fall, as we saw it fall with platinum. The fed. Were watching janet yellen later on. 10 00 p. M. U. K. Time. Says, you guys have got a start raising rates soon. Do you agree . I do. Rate zero gives the fed really no scope for dealing with the next cycle. Mrs. Yellen is going to talk about inflation. She wont be taking questions. I would guess that as the European Central bankers moved. An acceptance that low inflation is not just down at commodity prices. That is what is spooking people. Could it be structural . World trade is at the lowest ebb one crisis. Euroz you continue to see disappointing numbers for exports. I think the inflation issue is the one that the fed is really focusing on more now. A structuralve problem, if we have an issue with low growth, why are you raising rates . I think their concern is they are looking at the latest side of the equation, the labor side has been a cop was. Has been accomplished. Youre seeing evidence of that. Out there is the specter of stagflation. I think that is a low probability outcome, but you could understand why youd would want to get in front of that earlier rather than later. Guy draghi talked about the fact he was considering a data and needs to give it more time to reveal the truth. How much time do you think he needs . I do not think the European Central bank is in a rush. The european economy is ok. Yes, there will be disruptions from this volkswagen business. But they have given themselves room until September September next year. Remember, the real commitment when he first made it was until september 2016. What he is saying is that are we, are the, is the sand shifting a little bitn ow . You need to think about doing more proportionally now and for longer. Guy we will talk to the governor of the norwegian centralbank later on. The rate cut, can be cut further over the coming year. Theyre in record territory. They have got inflation at 2. 9 . What hes hinting at is that the oil price is going to remain lower for longer. You have to look at the fact although u. S. Production is beginning to slow down. Its forecast to reverse for the next year. You will have iran coming back on stream next year potentially. Against a backdrop where demand is ok. There is no hiding from it. The supply site is pretty full. Shinzo abe abe on his later today. To does he, does he need rethe fiscal side of his policy framework . The monetary side has done a lot of heavy lifting thus far. Is that how we see things evolving . The frustration for abenomics, has been corrod enomics. It has not dealt with the third arrow. Its unshot. I would imagine it is going to be a lot more about fundamental reform, structural, which takes time. Guy you mentioned vw. Is it too early to understand this is germanys massive employer. The feed through effect into the supply chain, seven out of 10 jobs in germany is somehow dependent on the Auto Industry. On, do weacro hats understand how that will filter through . I suspect it is more, lets look ahead and focus perhaps on the end of the year when the cop 21 u. N. Conference in paris. That is not going to set Global Carbon prices but this kind of event coming along, is manna from heaven for the supporters of that movement. We have got to get tougher controls. We need to get stuff done by 2030. So, i think the drift away from been heavily subsidize. It adrift which may be accelerated. Electric cars. Guy do we replace one with the other . Im not a petrol head or electric head. Torques a very low problem. You get with the diesel is not as obvious with an electric car. That is a driving experience thing. There, ila is promise you. Lucky uyyou. The Better Technology process can really reduce over the next half a dozen years, then the corner is turning slowly. Guy thank you very much, indeed. From blackrock. A strong dollar is hitting h ms bottom line. It reported its weakest quarterly Profit Growth in two years. Thanks. So, this is actually even a little worse than expected. If you look at the numbers, what a lot of analysts were looking for was that Third Quarter gross margin. Came in at 55. 9 in line with estimates. But it is the weakest Third Quarter gross margin and 11 years. If we look at pretax profit that was amiss. Analysts were expecting 7. Krona. Ome, 5. 31 billion good means that h m had its weakest quarterly Profit Growth in two years. It was not all bad news to the Company Still sees 400 Net New Stores this year. Sales from september 1 two 22 to 22 did rise. Inditex has seen its sales increase but also its gross margin increase. Well, the answer is cost. The effect of a stronger dollar on costs. Because h m gets 80 of its products from asia where clothes are priced in dollars. Inditex produces most of his close in Southern Europe. Really, the share prices say at all. Because if you look at h m you today, that is down 5 . The stock 600 retail index up 5 . Inditex is up 24 . Guy think you very much, indeed. Aidext, e. U. Leaders boost for the refugee crisis but remain divided afor a plan to boundaries. Ice the key aset access is chinas stimulus to message demand, especially consumption demand and grows largest middleclass in the world, and a. S. Companies really want piece of that. A bilateral investment treaty is important to enable that to incur to occur. Guy stephen wash warning that china and the u. S. Have a long way to go to build trust. Xi continues his tour of the states today with a visit to washington, d. C. Our beijing bureau chief joins us now. This looks like a charm offensive. How much will u. S. Business leaders how much will politicians buy into the message . Nick there is still a lot of complexity that u. S. Businesses face in china. One is that Companies Like twitter and facebook are still blocks here. Another is that there are many concerns the government is basically helping hackers steal Company Secrets and then pass them on to chinese competitors. Then it is into other intellectual property concerns. China is a place where it is impossible to buy a dvd that is not pirated. The president did it knowledge the cyber concerns, an acknowledgment of the hacking issue. More broadly, we are seeing problems with Market Access and intellectual property that his visit has not resolved. Guy he is off to washingtonn now. He keeps talking about the new model of great country relations. What is that all about . Can we fit that into a model from history . Nick Hillary Clinton put it best. The u. S. Is an established power. China is a rising power. With that phrase, president xi jingping is saying, hey, we have now arrived. We want to be treated as equals. And one of the terms he use was chinas national reality. He used that when he spoke with business leaders. We will giveo hey, you access to our market but if you do something we perceive to be a threat, youre going to run into trouble. Facebook and twitter being a great example. In that new model, he is saying, we do not want to be challenged when we tell you about those national realities, whether that is human rights, censorship, blocking access to the market. We want to be treated as an equal with the United States. Guy pleasure to get your analysis. Joining us from beijing. Now, up next, pope francis makes a plea for countries to welcome and protect refugees. Is it that simple . We will have the latest on the e. U. Disagreements on the subject on the pulse in a moment. Guy you are watching the pulse live on bloomberg tv. We are on the radio, streaming on your tablet, on your phone and bloomberg. Com. Just a quick heads up here keep an eye on bmw stocks. In the meantime, lets talk about banking. As part of a wide raising us with the video, Francine Lacqua spoke with santander chair ana botin about the banks exposure to emerging markets. She asked about brazil, which accounts for 1 5 of santanders profits. Ana our brazilian business for quite a while actually was not performing as well as we would like. And that is quite clear. I big knowledge we did not do as well as we should have i have knowledge we did not do as well as we should have. Owledge we did not do as well as we should have. We made a lot of progress in terms of cost cutting. Bank,ve derisked the which is very important for the times ahead of us. We have strengthened the management, also. It is not going to be easy and i think brazil has to possibilities. One is the one we believe in. As always, brazil has taken the path of making the reforms, taking the tough decisions, which are not easy for the people, not easy for the economy. That is what is happening right now. We believe that is going to continue to be the case. Now, there is another scenario which is more negative, which would mean more years of low growth or recession. We think brazil has taken the right measure so far. Afterre confident that, maybe 15 or 2016, half of 2016, we will see growth again. Guy i promise it you wanted to into this. A special program with ana botin with francine. That is going to start airing at 19 00 on friday. Watch. She is stunningly smart. It is worthless into this conversation. Lets go to the other top headlines. As the vw emission scandal rumbles on, tokyos Taxi Companies are planning to replace 30 of their fleet with hybrid vehicles by 2020. More fuelefficient and cleaner. The longest running insurgency in the americas may be over. The colombian president has shak en hands with the leader of the farc rebel movement. As they signed in agreement to generate peace in six months. Negotiations in cuba have been deadline deadlocked for a year. It affects more than 200,000 people dead. Pope francis has declared his support for president barack obama on some of themost politically charged debates and the u. S. During a meeting on the white house, they talked about the fight of Climate Change and restoring diplomatic ties with cuba. He made a plea to welcome and protect immigrants. European leaders stay on the same subject struggling with that concept, struggling towards a joint response to tackle the refugee crisis. At a summit yesterday, more aid was promised but disagreements remain over policing borders and possible quotas. Donald tusk warns that more refugees will likely to arrive on european tours. Were likely to arrive on european shores. 9 jordan andd camps in turkey and i have only one message we are determined to get to your. The greatest tiede of refugees is yet to come. Guy fyi. Taiwan cutting Interest Rates this morning. Just had that flash across the screen. Germany bearing the brunt, taking more refugees than any other nation. Today, Angela Merkel is meeting with governors of 16 states to talk about how to manage the influx. Berlin. Or joins us from merkel promising 6 billion euros to spend an refugees but facing criticism on several fronts. How does todays meeting work . These are the states that will have to make it work if it is going to happen. Yes. That is basically right. Germany has put up a fair amount of money or i should say the federal government, merkels government, in todays meeting will be about how to distribute that. We already have what you might expect which is that the state leaders in germany germany has 16 states are complaining that is not going to tide them over. And so, there is going to be a bit of a battle over that. Speechmentioned in the department or she talked about the refugee crisis and said Something Like, i hope we can get a resolution of this tonight. So, there will have to be a resolution. How it will look in terms of the money and how it is parceled out is not quite clear yet. But that is more of a german internal matter right now. Guy is it a money thing or a parceling out thing . Money is a preeminent factor here. Tony you have to remember that merkel pledged in her campaign for reelection two years ago to balance the budget, which the German Government or federal government has since done. So, there is that constraint. On the other hand, as merkel said numerous times, germany if you like is rich enough to handle this crisis and needs to be welcoming. There is a certain amount of money on the table right now, which is 6 billion. And that will just have to somehow be distributed, which does not mean there may not be calls for more later, as the influx grows. Are to leave it there. Thank you very much, indeed. On the migrant story that is dominating german politics right now. So busy morning. The norwegians have cut rates. Now we have a rate cut from taiwan. We will hear from janet yellen later on. Plenty to talk about in the second hour of the pulse. The first word is next on bloomberg radio. If youre watching on television more of the pulse. I will see you in a moment. Guy uturn. Vw shares continue to climb following the resignation of the ceo, departing with a 32 million pension. A plan for japan. In a few minutes, the Prime Minister will deliver a major policy speech, setting out his goals for the rest of the term. And record low rates. Norways central bank slashes Interest Rates in an effort to save the economy from the low oil price. The governor joins us within the next 30 minutes. Good morning to our viewers in europe and africa, good evening to those in asia, and welcome to those just waking up in the United States. Im guy johnson and this is the pulse, live from london. The vw scandal is taking center stage. Shares are rising again this morning. They fell around 6 yesterday but are picking up again this day. The discredited ceo departs. The german car giant is now hoping to replace him by tomorrow, and for starts, rebuilding his company, its reputation very much in tatters at the moment following the cheating scandal. We know it well that we have some movement in bmws stock. It is trading significantly down. Says bmw reports that x3, the smaller of the suvs they produce, may be worse than the passat. Keep an eye on this story. Bmw share price has declined but has bounced back a little bit off earlier lows. We will keep an eye on it as a continues to develop. Let me take you to vws headquarters, where we find our International Correspondent hans nichols. Everybody must be asking this question. Volkswagen in . Is mess, and will they need lawyers to get themselves out . What is remarkable in terms of the shortterm aspects is how quickly the state of lower saxony has indicated that they own 20 of the company, that they want to proceed with criminal action. They want to find out who is criminally liable. Were from the board last night, and they seem to indicate at they were satisfied that the ceo didnt know. That he was responsible but not culpable. That is the shortterm story. The longterm side, and you just mentioned it, is how much broader is this for the entire german Auto Industry . There has been a shift in the conversational last 12 to 24 hours is this problem localized here, or is an industrywide . Association says that when they tested diesel for omissions, they want to do road testing, which is to say not in a lab. This same group that took down vw, they tested a bunch of european cars. They found that they had seven times on protesting the amount of legally allowed particulates in the air been required. Air than required. One other quick note you just mentioned the same group did test the bmw x5, and they said it meant what they were claiming. If this turns into a pandeisel story, i could be at any headquarters of any auto manufacturer across germany. Three Big Companies produce a lot of jobs. Guy im interested to find out which car you will use to drive between them, but we will get to that later. Talking of the steering will, who will be behind it . Who will replace him . Meuller is one candidate, he has been the ceo of porsche, with a remarkable record. Down,rkets are slowing but the porsche ceo didnt seem overly concerned about the situation in china. They only sell around 190,000 cars per year. Though, they have about 3 billion in profit. If you want to totally fresh blood, someone that doesnt know and is a part of the scandal, you may want to go with herbert diess. He recently came over from bmw and is now in charge of the brand, one of twelve of their group. He would be the outside candidate. It isnt clear whether he has the support of the porsche family. They control 51 of the board. Then we get into this question who was acceptable to the labor unions in the state of lower saxony . They will also have a say. A fivemember executive board that accepted the resignation of the ceo last night. They seem to say that he didnt know. So what regulators and prosecutors will try to figure out is who below him knew . Will there be criminal liability . What sort of lawsuits will that open up, not just in this jurisdiction, not just in germany, but globally . Much. Ans, thank you very hans nichols. We will come on and talk about that in a moment. I want to take you to tokyo. You were looking at live pictures of the Prime Minister, just reinstated. His policy out framework that he will be applying over the rest of his arrows. I think a lot of people are trying to figure out whether we will get into more redistribution orientated framework. They wonder where the fiscal policy will stand over the rest of the term. We could expect more from the boj. A lot to think about. We will do that a little bit later a lot of macro stuff to talk about. We will be talking to the governor of the central bank of norway. But for the meantime, lets return to our top story. Hans nichols was at vw headquarters that could be heading someonwhere else. Nigel parry joins us now. We will talk about electric vehicles and how they could make profit from this. Nigel, let me start with you. How much damage has been done . Nigel an incredible amount of damage. The key thing for a brand is to have trust amongst consumers, and this will be incredibly damaging to volkswagen. They have done the right thing by the chief executive. But i dont think pr alone consult this. It is going to become a bigger story than the consumer will be left thinking, what is this company doing . Guy is it this company or this industry . There are the possibilities of others getting caught out. Would that be something you would want, because it becomes easier to manage the process . Iw miss of the wrong way, but they will be hoping that others are caught up in it as well, because if they share the load it will be an industry problem. At the moment it is definitely a brand problem. Cancelinghave to be their plans and rethinking everything. Trust is everything within the and Car Manufacturers spend their time telling us that they are the fastest, but whitest, the best. All of a sudden, we are hearing that it has all been lies. It is a huge issue. Guy does diesel have a pr problem . Nigel i think it does now. The rumblings have been around for a while that diesel wasnt quite what we were all told. It, is going to exacerbate lead us to think well, there is more to this than meets the eye. It could mean a significant change in peoples views. Guy collin, from a branding how does heew take advantage, from a branding point of view or an electric car point of view, position himself . Collin it is easy to beat up on diesel. For aas been on the ropes little while and you have artie seen cities enact the changes to say that urban air holiday is a big issue. I wouldnt underestimate the degree to which cities can push towards the hybridization and electrification. I think a lot of the other autos who made us on this come out looking better. Have alsogm or bmw been pushing into electrification and hybridization. To benefit from this, and in many ways, diesels loss is electrifications gain. Guy from a branding point of view, how do you make that happen . Do you dwell on the fact that diesel has suffered . If you are pushing an electric car, how would you sell it to a potential customer . Nigel that will accelerate the whole process toward the electric car. The brands that are ahead of the game in that field are going to start pushing more and more. Perspective, brands like volkswagen have to change everything. Guy is that how vw does it . Is it saying, mea culpa, but look, we are investing in these electric cars, a whole range of products, that is what we will push . Nigel they will have to put a whole series of things in place, tell the consumer that everything will change, we messed up, we start from scratch, new personnel, start rebuilding from scratch. It is a big company and it will survive probably, but it has a long way to get there. The regulators dont come out of this looking good, either. Come out of it looking back they werent the ones who broke this. People look to see the regulators make a big crackdown on testing processes, on everything with how they certified vehicles. As they get or complicated, the test procedures will need to evolve. Guy how ready is the supply chain for the electric car revolution . Seven out of 10 jobs in germany are apparently in some way link to the Auto Industry. There is a big political reason, therefore, to not make this switch. How does it work, if you were to make the switch . Colin this is still a very small segment of auto sales. One thing we have been tracking is how much Battery Capacity is there. Is there enough to meet with forecasted demand . We are expecting to triple the amount of Battery Capacity over five years. The costs have come down 60 since 2010. You do have real economies started to scale up that should make this easier, but there will be pinch points into difficulties, because this is still a small portion. Guy and maybe serendipity that elon musk is in berlin today. That maybe serendipity as well that we saw apple talking about its own car. From a brand perspective, does this open a window of opportunity for nonCar Manufacturers to come in . Nigel i think it is literally going to be the catalyst for seismic change in how people view the car industry, and an opportunity for people to push forward on changing things and developing the electric technologies. It takes Something Like this to actually change things in a major way. It has all been happening in the background but now this is a big challenge. You will have to realize, and other brands will realize, that this is what you have to do to clean up the situation and to get confidence back and go forward. Guy thank you very much indeed. Mcgregor. Ie, colin but Norwegian Central Bank today cut rates by 25 basis points. Further . Rate fall remember, norway is europes andest producer of crude, oil prices are down by 50 over the last 12 months. Unemployment is near a 10 year high. Thisentral bank acting morning despite the fact that inflation is above the 2. 5 percent target. Lets get some more details. Governor ind by the his first interview of the day. Good morning, governor. 75, in record territory. How much lower could rates go . How much further are you prepared to push rates down . Could we end up, for instance, with negative rates in norway . Well, we have a according to this guidance, the board now sees it it will come out as we see it now. That it will be a further reduction in the rates. Having said that, we are still there is still quite a distance to zero. Also there is the executive board that has so far not discussed approaching the lower bond. Guy two years out, you are talking about an interest rate, cpi at 2. 25 . That number was 2 earlier. Just to relate the first question to the second, how worried are you about the inflation outlook. . How tolerant are you going to be to look through it, given the probability that the rate path is now negative . Well, i think it is we are now inat actual inflation, and it is slightly above the target. With the Weaker Exchange rates that we have seen. Domestic cost inflation has come down. Looking forward and assuming up, we willces are see it through. We are not very worried about the inflation prospects going forward. Guy the currency following is a good thing . That is your view . Well, as a central bank, we have no specific target for Exchange Rate. That was the previous regime. That it is the fact that for a small, open economy, the Exchange Rate is an important final, in both inflation prospect and for the real economy. And yes, based on the fact that we have experienced that oil prices have been cut to more than half, there is a transition going on in our economy from oil toward more weight on other industries. Krone could be seen as a buffer, and it will improve competitiveness for other industries other than oil. In that sense it is a good thing. Guy how long will that take to work . There is some expectation that oil will stay low for long. What are you building in terms of your projections of where you see the price going . Oeystein well, the oil prices uncertain. Especially now, we have to make some decisions on thefuture, which we do every time. Estimate, assume, we we base our forecast on the fact that oil prices are coming up, in accordance with a term pricing. Guy right slightly up,. Right, slightly up. Would take prices up from present level, slightly below 50, to slightly above 60. Guy when you look around the world and you look at the policy framework that is being established elsewhere, what do you see your policy decisions sitting in . You worry, as so Many Central Bank still, and we got a hint for mr. Draghi about this, that we could be structurally low growth, but that is the new norm. Well, i think it is fair to say that the situation, the financial crisis has posed significant challenges for central banks. Implication that Interest Rates remain low, inflation remain low, and in some countries negative, and i think it is correct to say that for many areas and countries, due to difficulties in fiscal policy or lack of room on fiscal isicy, Monetary Policy acting, but it is overburdened. ,hat is different in our case even though we have some solutions now to oil prices. We have a good system of managing oil wells. We have significant room of fiscal policy, which is very different from other countries, and we have a good structure in our economy in the sense that we have lower unemployment, and we already see positives for the krone. Worries, but ime dont think we should be too pessimistic. Guy governor, it has been a pleasure. Take you for your time. Governor olson, the Norwegian Central Bank governor. We are now at. 75 in terms of the main rate. The bias field still very dovish. It will probably take us up to around 60 per barrel, opec is a little bit above that but it is adjusting to see how it develops from a Norwegian Point of view. Let us stay with the macroeconomic theme. Ministerese prime started his second term and is laying out his agenda for the rest of his term. We have learned that he has three new arrows. Lets talk to bloombergs managing under in japan, brian fowler. Brian, what have we learned . Brian that is a good question about those arrows. One of the first headlines as he has three new arrows, but they sound more like targets. The arrows are stronger economy, childcare and support, and social welfare systems. That is what he is aiming for. There is no real indication of what he will do in order to get there. He has also said he wants to boost the economy to ¥600 trillion, up about 20 from where it is now, but there is no timeline. He has given himself substantial wiggle room in that sense. Guy when japanese voters watch what he is saying this morning, will they have faith in his ability to deliver . Brian i think that is a real question. One of the other things he came out saying, which surprised me a little bit, was that deflation is over. He made substantial progress on ending it is what he said. Mr. Kuroda has been saying that prices will rise, inflation of 2 buy a year from now. We know it is not going to happen. We have been waiting for him to dial it back. Yesterday we have a deputy economy minister admitting that it was a pieinthesky. We are still waiting for them to retreat, and now mr. Aid is coming out trying to sell the message to the president. They dont really believe that at this point. It, if they dont believe when he looks at his political backdrop at the moment, is he in any political danger . If he were any other politician with any charisma or leadership all of these, he would be in real trouble. Lucky for him, there are no threats from outside the party. He has no real threat from within the party. He has got and other three more years of looks like. It will probably be the longestserving japanese Prime Minister in 40 years. He has got some time to fix things up. The question is, will he really get down to the business of the Regulatory Reform we have been , the socalled third era that has not been fired yet. The doj will be watching what do you think the governor of the boj will be making of this . Brian yeah. That is a tough question. We still think that mr. Kuroda is under increasing pressure to think about using again. The fed held off on raising rates and by the same token the boj is under increasing pressure due to external pressures china to take more action. We also think mr. Kuroda will dialback on that forecast of inflation, and i think he will be listening to abe to hear what sort of fiscal stimulus is promised, somewhere between ¥3 trillion and ¥3. 5 trillion. The other question is will he by the bullet and take action on october 30, as many think, or will he wait until january . Guy brian, great to hear from you. Thank you for your analysis. Brian fowler joining us from tokyo as the Prime Minister delivers his speech. You want to take you back to europe. We have seen a significant reaction in bmws a stock, which is now down by. 2 . . By 4. 29 we are now trading at 76. 44 at the moment. On a bills report, that maybe there is an issue with the emissions testing surrounding which may be worse than the vw passat. We will continue to track that story. It is a german report at the moment. Vw is trading higher today, but is still trading down significantly. 5. 9 up. The auto sector in europe is very much front and center. The diesel story in europe very much front and center. Lets get your thoughts on this. If you are buying a new car, will it be diesel, petrol, electric . Elon musk is in berlin today. May be at the right place at the right time. Guy welcome back. You are watching the pulse. 10 30 in london. Time guy johnson and here are the Bloomberg Top headlines. Volkswagen is looking for a new chief executive admitted deepening scandal over in missions. The Supervisory Board is set to discuss his replacement tomorrow. Shares rose again, picking up after late last night and continuing to rise this morning. Half will miss its first profits. The company, which is a major supplier to apple, have seen the prices of pistols fall. Price of crystals fall. Get off zeros and get off now. That is the advice to the Federal Reserve. In the new report, the Janus Capital fund manager says that if it becomes the norm the economy will run on empty. Vw is up. European markets having an interesting session. Lets find out what else is going on. Jonathan ferro has the details. Jonathan what an interesting morning. Own, the attention as always on the dax in frankfurt, down. 5 . What week for germany. They lose a ceo and are waiting for friday to see who replaces him. They also lose a third of their value in just three days. Here is that move today a bit of a relief, the stock up 5. 5 . Is the trouble over for to vw . That stock, went to keep an eye on. 9 00 a. M. London time, the norwegian centralbank says they will cut by 0. 25 percentage points. The norwegian krone was sinking against the dollar, jumping to a 02 high, the weaker norwegian krone. The surprise is not just the rate cut but the dovish tilt, the prospect of another rate cut, the real headline is that the commodity rout is having a serious impact. The economic reality bites the centra, the central bank reacts. Mario draghi says the euro is stronger for a second day, down, yellen to calm. Here is the fundamental question the slowdown, is a temporary or permanent, and what is the feedback loop . It is whether to do less or more. Back to you. Guy 10 00 p. M. London time, 5 00 p. M. Eastern time. I guess tom keene will be paying a great deal of attention. 20 minutes to go until surveillance takes the airways. A dovish bias in norway. Tom exactly right. I of the headlines were absolutely extraordinary, and speak of what we will see worldwide in the weeks to come. You could tell there was an overt intervention last night to staunch the weakness in the real. Lian we have three terrific guests this morning on the global markets, and what it means for the American Banking system. Michael mayo will join us, and we will speak to brian moynihan, then moved to the future of too big to fail. On the Global Economy, Stephen Roach will join us, and David Goldman will join us. He has been way out front with the ramifications of deflation. He is essentially looking at a set of things that allow the Norwegian Bank to make the moves they made a few hours ago. As you said earlier, it is the most amazing time that we are in. Guy it is. What do you think yellen will say . This is what you think about a lot of the time what do you think she will give us . Tom i spoke moments ago to michael mckee. We know that the tradition, when the fed official moves to a university such as the university of massachusetts in of the 2 hours drive west of boston, when they make those trips, you dont know what the game is going to be. Is a going to be a monetary, market moving each, or is it going to be an narrow, academic, geeky speech . We dont know, and we will only know when it is released. Guy looking forward to the show and the speech. Thank you very much. Tom keene up shortly. Related the strong dollar hitting h ms bottom line. The secondbiggest clothing retail is missing profits. This is bad. It was actually a little worse than expected. Lets take a look at the numbers. A lot of analysts were looking out for this gross margin number. It came out in line with estimates, 59. 9 , but it was the weakest thirdquarter growth in 11 years. Then we had pretax profits at 6. 9 4 billion kronor, net income coming in at 5. 31 billion kronor. Amiss on both those numbers. On the plus side, we did see sales from september 1 to september 22 increased 12 . Seeingo said they are 400 and two new stores this year. Analysts have been saying that they might cut that number. The question is what is it that has been affecting profitability . Has beenst rival seeing increases in sales and widening increases in gross margin. It is all about these costs, because of the stronger dollar. H m talked about this it gets about 80 of its products from asia, and clothes there tend to be priced in dollar. The rival has production in Southern Europe and is not being that they must act. Is not seeing that same effect. Share prices tell it all. H m shareprice year to date is down about 5 . The stock has been trading lower today, too, where the stoxx 600 is up your today about 5 is up year to date about 5 . Guy thank you very much. The dollar. Givext, will janet yellen out any clues . She speaks this evening. We wont ask the u. S. Foreign treasury official after the break. Guy 10 40 in london, welcome back. We are live on bloomberg television. Let me talk to you about the top headlines this morning. As the vw admission scandal rumbles on, Taxi Companies are going green. They plan to replace 30 of their fleet with hybrids by 2020. They will be more efficient and more clean than a prius. The longestrunning insurgency may be over. The colombian president has shaken hands with the leader of the rebel movement. They agreed to sign a peace treaty in six months in the hopes of ending a conflict that has left more than 200,000 people dead. Pope francis has declared support for president barack obama on some of the most politically charged debate in the United States. The fight against Climate Change and praised the restoring of diplomatic ties in cuba. He also made a plea to welcome and protect immigrants. The Federal Reserve chair janet yellen is set to give a speech in massachusetts later on tonight, following last weeks decision by the fed to keep Interest Rates on hold. Will she reveal any clues as to when the worst hike will come . Joining us, the former deputy secretary of the u. S. Treasury. One of the number of hats he has worn. You are here to talk about economics and other things i love to talk to you about rugby. But lets stick to the economic. What would you like to hear miss yellen talk about . Bob as a former treasury official, it was hard to talk about what the fed was doing. Ten years out it is even more difficult. Tom keene had it right. She will have a very clear idea of what you want to do will it be technical, or will she want to give a broader hint . I dont know. I dont know what was said coming out of the fomc meeting, so they have indicated they are comfortable where they are, looking toward the end of the year. We might get a hint today, or could be something technical. Guy were you surprised . You travel around the world and you get a good macroeconomic story. Were you surprised that they so overtly talked about the influences from outside the United States . Robert it didnt really surprise me. One of the things i like about developments over the past think domestic economic decisionmaking is now being made more explicitly in that broader international context. I think that is a very important factor. If anything it might have been a bit understated before, so to the extent that it is now part of the thinking lets put it out in the open, make sure people understand how it affects the u. S. And vice versa. Guy do you worry when you travel that you are getting a sense that there is a structural problem with Global Growth . Robert i think the interesting thing is we failed seven years ago this week if a year before that you had asked me what are the global imbalances we would have talked about twin deficits in the u. S. And undervalued currency in china, low demand in europe and japan. I think we face the same challenges today. I think we have to go after the trade and budget deficits in the u. S. China needs to move its currency to market valuation. We need to see more demand major economies, especially europe and japan. I think the big story right now is the slowing in the emerging markets. There is a lot of talk about china, but we are also seeing slowing elsewhere. But they are slowing from high levels. As a look at this on a global basis there is still reason for optimism. We have to get back to the fundamentals of a sound Global Economy free trade, flexible Exchange Rates, open investment policies. Countries need to have the courage to take those important market opening, market liberalizing steps. Guy xi jingping says he will not devalue his currency to generate an export boost. Do you think that is correct . Do you welcome the decisions they made, a market biased orientation for the currency . Do you agree with Lloyd Blankfein when he talks about how the response has been clumsy . Robert i would say that when for the first, time committed to market valuation of its currency, that was an important step. Between 2005 and the start of the crisis, the currency appreciated 25 . It when sideways during the crisis. I think the statements that have been coming out of both peoples bank, and now the leadership, would suggest to me that they are paying close attention, perhaps too much attention, to a rate that should be set in open in a competitive market. They have agreed with longterm interest and if there is a difference it is the pace at which they will move to the market valuation. Guy you are a former ambassador to germany. What do you make of germanys role and Angela Merkels leadership of the current migration crisis . Robert i think germany is moving to a position of trying to become comfortable with its new leadership role in europe. Even the word of is a tough, historical word in germany. I think this merkel is trying i think mrs. Merkel is trying to find the right way. On the refugee crisis, what we are seeing is a symptom of a broader problem. There is no strategic approach to the middle east or to syria. Interestingly, it is the most volatile region in the world, the only one without a Regional Development bank. As a result, we have to go at the root cause of the instability. I think supporting those neighboring states lebanon, syria, and turkey will be a better way to keep those refugees were they would like to be, in their homes rather than fleeing for Economic Opportunity in europe. I would say europe needs to come together as a community, as a union, decide what it is going to do. But lets not forget the root causes the lack of strategy in the middle east. i have met some people you are here for rugby. You probably get a bit of ct. Make some predictions. It was going to win . Robert i would say overall, there are more significant groups of really capable teams this year than we have seen in past cups. I think it is going to be both a tough knockout round and it is going to be even tougher in the qualifying round. Guy im looking forward to this weekend. Nice to see you. Have a great, great neck few weeks. Robert thanks very much. Guy right. Lets talk about the future of banking. As part of a wider raging interview, Francine Lacqua asked about when banks a strategy with regards to tech and how she feels about upstarts like apple pay. Are alreadyanks transforming, becoming more digital. It would not be possible for us our cost income without the investment we have already made a digital. We are opening a third currentaccount. Its of course means that costs us a fraction of what it what if you would open a branch, but you can always go to a branch. There are 13,000 bridges and we are very much in a personal context. So that is what i call th ee bau, business as usual. We want you to be able to see, manage, and buy all of our products through all channels. You can bank with us through mobile, fixed internet, on the phone, in the bridge. We are almost there not quite, but almost and that is a very important target. Francine how much do you look at the competition . You are talking about apple pay as a service. Apple pay is not a Good Business, but it is a Good Business for my customers, and eventually it will be a great business for us. We have apple pay in the u. K. Our customers love it. Because a significant proportions of our customers have an iphone. We thought we would have to offer it as soon as we can. Appow developed a great around apple pay, which is making customers more loyal, because you can see where you spend money. It is a great tool and it is very popular. We need to continue to innovate, and that is the key thing. This, the important thing and i said this recently in frankfurt at the meeting we need a fair play market for all. The rules have to be the same for banks and entrants, and this is incredibly important. Sharing information, customer information, with new entrants, because otherwise it is very difficult to run a business. I think that is the key thing. Francine to you think they will . Do you think regulators are looking at this in understanding . They move so fast that regulators have to really understand the market. I think they are. And i think one of the things we are doing also, and many new companies which we are collaborating, working with apple and apple pay, funding circle, the first bank to team up with them. When i say no to a customer because we dont accept his credit, we send them to funding circle. I believe in collaboration with a new entrant, but not with all of them, because some of them are not ready to do that. I think we are trying very hard to work with the new entrants and to do our own, disruptive strategy. Santander,air on speaking to francine. I encourage you to watch it. A great interview, really worth listening to. The banking story may be coming out of its crisis and the Auto Industry just going in. That brings us to our twitter question. Be diesel,next car be petrol, or electric . I have seen a whole range of answers coming through. Elon musk is in berlin today. There are already special deals for electric to become cheaper. Let us know what you think. A bunch of responses coming through. Bmw share price under a little bit of pressure right now. It has had a difficult morning. Vw bouncing back with a report that seems to be affecting the share price. More on that. Guy welcome back. You are looking at live pictures coming from saudi arabia. Are watching a story developed in terms of numbers that have been killed in a stampede, being reported on. Bloomberg is reporting 220 pilgrims killed. I am seeing numbers above 310. We will try and update you on this later. Another story developing is the story we are watching out of germany the cw story, we are watching that closely. Lets take you to our International Correspondent, hans nichols. Hans, how is this going to work out . Hans well, for the next day or sue, the traffic minister has Just Announced spot tests for nonvw diesels. He will go to munich for bmw. There are going to be spot tests and that tells us two things one, the German Government thinks this is a big concern; two, they want to get out in front of it. They want to be in the lead. There is a sense that germany has been playing a bit of catch up, so how do they get in front of it . How did they insure their vehicles are in compliance . Bmw shares are down almost 5 . X3ed on a report that their didnt pass. From cleancut transport and we will be watching what they have to say. Guy hans, thank you very much. Thats it for the pulse. And commodity signal and essentially fragile emerging market. We speak with Stephen Roach and David Goldman. Presidency and crowdedt xi have a agenda in washington and pope francis addresses a joint meeting of the congress of the United States of america. This is bloomberg surveillance. I am tom keene and joining me is vonnie quinn and in london, jonathan ferro. Rate cut the norwegian we saw, it really speaks nuances in the market this morning. Jon i am in london but my head is in oslo. It really speaks to the economic reality of the commodity rout. With us in london and we will address the markets through our four hours of bloomberg surveillance. Isnie chinas president