from london. i'm francine lacqua. the chinese president begins a visit to the united states today. it is his first as china's leader and comes with growing tensions over cyber hacking. new data from their most used suggests that the world's second-largest economy is stabilizing. we will have more on that in a moment, but first let's get the latest on president xi's trip to the states. cyber security seems to be a big problem. they will talk about the economy as well. >> they certainly well. the whole issue of cyber security, francine, and cyber espionage will probably overshadow this meeting as one of the most contentious issues they will be discussing in washington. between problem lies the way that you define what is acceptable as espionage. the u.s. thinks if you do best be large, cyber espionage, for the purpose of military information or political information, that is acceptable, as it has been when we have seen governments in states spying on each other in order to get a leg up in military and political affairs. the u.s. seems to think that is ok, but they say what is not ok is cyber espionage for industrial purposes. that is when you have maybe a state actor, perhaps an army, th means toing cyber vacuum up information and distribute that to their own companies so that the companies can get a commercial advantage. this is what obama wants to talk about. when he says is that the u.s. is preparing measures to take, if they can't find some sort of agreement and get china to desist from its alleged industrial cyber espionage. francine: interesting. despite the turmoil we have seen in china, we are expecting more espionage than the actual turmoil. what will president xi jinping's message to u.s. business be? david: he will be landing in seattle tomorrow, or later today, depending on the time zone. wholel be talking to a range of business leaders and what you want to do is give them the message that the u.s. and chinese markets. are open to u.s. business but the problem is -- and this is associated with the whole fiber issue -- ever since edwards noted revealed in 2013 that the u.s. has been involved in some espionage, military the chinese have been trying to cut back on the access that many u.s. technology companies have two chinese military and government agencies, to the banking system. they have been trying to cut back on that, and this is an issue for the u.s. business. it will be discussed under the forum of the bilateral investment treaty, the area that will be talked about. we will be looking carefully to see what are the details of access to the chinese markets, and access for chinese technology companies into the u.s. market. they have also been getting limitations on theim. francine: thank you so much. for more, let's bring in the managing director at camignac. thank you so much for joining us. we talk about china day in, day out. it caused panic on the market. we talk about the spectrum of deflation -- janet yellen didn't do anything last week when a lot of the markets -- a big target investors -- were expecting her to do. what worries you -- growth, central-bank action, or market volatility? concerning, it suspect, is the fact that the markets are only now discovering the unfortunate conjunction. on the one hand, central banks have to continue extremely easy monetary policy. clearly the decision of janet yellen is an indication of that. but at the same time, markets are starting to realize that these extremely easy monetary policies have been ineffective. they have been very ineffective in economic growth, bringing inflation toward targets. when you have more of the same that has proven ineffective, as markets, you start being worried. francine: they seem great for the markets. they seem great for equities because of thesis cash. didier: it has managed to support risk assets by pushing down yields. it has done its course. they are yielding extremely low returns, and equity markets are quite expensive, so doing more qe won't take you very far. but conversely, as we saw last week, they are quick to get out of qe or interest-rate policy. it is sort of like twitching the issue of returns. doing more qe would lead to less thaand less results. the markets are right to be that the by the fact solutions have been tried it haven't worked, and therefore it is quite concerning for the future. also, president obama is meeting with the chinese president, xi jinping. what would be your first question to him? they are talking about espionage, but do you have a firm handle on the economic situation? would you ask about the pboc? do you feel comfortable that we understand enough about china? didier: clearly, we don't know enough about china. it is extremely difficult to really know what is going on. we have beenn, investing in china for over 20 years, our impression is that the economy is not collapsing. what is happening is that this rebalancing is probably faster than people think, and therefore for the outside world, for us, it does feel like they are hobbling. manufacturing is going under, but the services are improving quite steadily. look at e-commerce, retail. this is going well in china. it is the extent to which china can manage its economy. without having the support from liquidity that has been provided for so many years by other countries. today you are getting outflows from china because the u.s. qe is over. trayst all these carried coming back, which is happening at quite an unfortunate time because that is when china would like to open its capital accounts, let the outflows take place. way, aoday is, in a victim, which is not politically correct. they are a victim of fed policy. if it wants to take its currency to the dollar, it means basically it needs to follow the same monetary policy is the u.s., which of course is not at all what the chinese economy needs. francine: peggy so much. retail sales in china. from the biggest bank card network, saying that the country may not be in the state of turmoil many think. malcom scott has the story in hong kong. andre looking at baidu alibaba, and what do these tell us about the state of the economy? malcom: they tell us that the rebalancing that is occurring means that some things are doing better and stabilizing, whereas the manufacturing areas where we are traditionally focused on our weakening. these frequency reports give us that feel. firstly the baidu one, the google of china, the searches on small and medium-sized businesses are up in september, which is a good sign. he alibaba indicator, prices are up by 7.4%. the official cpi is still below 2%. maybe some pricing power at the consumer level is coming back, and its union pay indicator showed that this is a gauge of that this isards, stabilization in the all-important property purchases section, key for their economy. why is therecolm, such a difference between official data from the the gloomyand picture we have been pretrade in the market? the official figures and what we have seen from baidu and alibaba? malcolm: a lot of it is to do with these rebalancings. china, they in official data hasn't kept up with the changes sweeping across the economy. some of the old yardsticks focused on things that were more driven by industrial production. x, cargo and rail cargo, electricity used, that is showing very weak conditions in china. but then these services indicators like the official services pmi remain well above the expansion zone, suggesting those areas of the economy are helping offset the weakness we are seeing in the export, lowering manufacturing areas. francine: welcome, thank you so much. today'sngs us to twitter question -- are you less worried about china after the baiduibaba and figures. you would probably say yes, didier. didier: i would say that i didn't need those numbers. it is a fact that this rebalancing is a very difficult asked to perform. francine: we knew that, right? didier: that's right. and it is turning, which is why ,ife is incredibly difficult why brazil is getting into a war, precisely because it is a prime victim of this rebalancing. francine: you are intimating that the fed hasn't helped and hasn't sorted through the real economy, but it has created asset bubbles. are you concerned we will have a huge correction inequities? equities? didier: i am always concerned about -- it is quite possible. there is a sentiment today whereby support from central banks is something you can't get out of, but it is not effective anymore. i get the question sometimes -- what should janet yellen have done less thursday? there is no good answer. there was no good decision. when there is no good decision, it is telling you that you're hitting a dead-end, and the adjustment factor has to be valuations. francine: we talked a lot about it here, that whatever she was going to do was -- is there a danger that she missed a window? that it will take longer to normalize? didier: i don't think there was a window. i think it will take verio, very long time to normalize. investors are still quite optimistic and that is good news. we will have qe2 infinity or zero rates to infinity, and the only point i'm trying to make is that it is legitimate to consider a good news because the world's upside is irrespective of the economy. the fact that the central banks are telling us, no, we should raise interest rates, because as a central banker that is our credibility at stake. we cannot keep the fed balance sheet lost forever. but we can't, because the economy is too fragile. inflation pressure, deflation is too high. that is telling us that -- francine: they are stock. didier -- are stuck. do you think they should focus on inflation? they don't have any power over inflation -- didier: what they need, what we need, what every private or public sector entity needs, is nominal growth. growth plus inflation. we are failing on both sides. but surely the oil price is not helping, and you can build an optimistic case saying that this is temporary and the oil price will go back up, and this deflationary scare will disappear. they could will happen in a few years. after all, u.s. production has remained very strong, which is kept oil prices low, but investments have been cut. two years down the line, it is likely that oil price will come down, and supply and demand balancw will be bettere. -- balance will be better. i suspect that the central banks will have a very tough time convincing markets that they can do that much. francine: what does it mean for your investments? his currency the safer or more interesting way to play? didier: it's a couple things -- number one, reduce equity exposure. that is the asset class that has risks. second, with inequities, realize that the real issue is in zero inflation or deflationary pressure. the little equity exposure you keep, you want to have a real focus on those stocks that have pricing power. that is the key. it is not -- pricing power becomes the golden rule. focus on these, which you can find in lots of different sectors. the second thing is -- i would manage the payer risk of further deflationary scare by holding some u.s. treasuries. after all, you have 10 year rates in germany, and you have 220 points in the u.s. there is an asset which could still benefit from a deflationary scare. francine: thank you so much. it was great to have you on the program. here's a look at what else is on our radar this tuesday morning. israel and russia say they have worked out a way to avoid potential crashes between their troops, should they come across each other in syria. russia is considering sending soldiers to aid president bashar al-assad, and israel says it may take action to stop arms shipments from around and syria -- from iran and syria. alexis tsipras has been sworn in as prime minister all owning his surprise victory sunday. the syriza party and the independents will have 355 seats in the parliament. a huge group of republican presidential contenders have gotten a little smaller. says he wants to thin the field so the party can find an alternative to the current front-runner. well he didn't mention trumped by name, he urged others to pull out for the same reason. i tweet from hillary clinton has sent by a technology stocks lower. it tumbled 4.5% yesterday. stocks are down in europe this morning. tweeted,after clinton "price gouging is outrageous," and said she would release a plan to combat the high cost of prescription drugs. between came during the defense of the decision to boost the decades old antibiotic by 54, saying it is a bargain. the u.s. justice department is investigating vw after it admitted to cheating on air pollution tests, according to officials familiar with the inquiry. berlin with is in the latest. ceo.ocus is now on the chris: definitely. he has a reputation for being very detailed and so far he hasn't come out and said what he knew and when he knew it. the focus is still on him and we are still waiting for answers. francine: what happens next, chris? what are the chances of him losing his place? are we going to see changes at the top? well, that still remains to be seen. the next step is tomorrow evening. there is a meeting with the supervisory board, the top figures that really call the shots. it will be interesting to see what happens, what comes out of that meeting. it remains to be seen what happens in the next coming hours and days, and how volkswagen responds. they haven't had much of a response besides the statement on sunday. the head of the u.s. came out and apologized again and said they screwed up. step, and weext are waiting to hear from the board meeting tomorrow. we will see what happens. chris, might there be a criminal investigation? news from other automakers? the reputation has to be protected -- they need to come out to say something. chris: right, right. daimler is being very cagey, saying they are not the subject of any probe. bmw says it is not aware of anything right now. the french carmakers are also being a bit more proactive. one had a statement recently. but the scandal is really focused on volkswagen. they could be made a poster child. it is not as if carmakers don't do as much as they can to up their admissions are fuel economy ratings. it is incredibly important for the industry. so the industry does what it can. the problem is that volkswagen crossed the line and did something illegal. that is why they are in the firing line right now. the scandal is widening. we had a report today that south korea is also probing their vehicles. germany wants clarification. the white house also said it was watching this closely. the scandals are pretty significant and it is pretty serious for volkswagen. francine: thank you so much for that. chris reiter. up next, and emergency meeting on the refugee crisis as the oecd publishes its latest migration report. we will have the latest after the break. ♪ francine: the european justices european ministers meet today about how to tackle the refugee crisis. the oecd releases its latest report within the next hour. let's go to hunt nichols in berlin. how is angela merkel preparing? hans: it seems apparent that she is downplaying expectations. trips really trying to down this idea that you will have a comprehensive solution coming out of this on it tomorrow. here is what she said -- "there will be a solution overnight. these deliberations will be important, but they surely won't allow us to set aside the problem. we will need patience and stamina." her vice chancellor is in jordan on a two-day visit. he is calling on the u.s. as well as other states to accept or refugees. had aday, the ambassadors meeting and they didn't get anywhere on approving this for000 redistribution plan, syrian and other refugees that are already in the eu. today, the interior ministers will take a crack at it. if they don't get there, you will have the actual heads of state discuss it. in some ways, the dangers if they do get it through -- it will be almost steamrolled by germany. there is opposition from eastern states. plan,y ar oppose this then we are going to be talking about potentially withholding funds to eastern eu countries that are not taking what was their share of the redistribution of refugees. that will further split the east-west within the eu. i think we should take a look at what is happening right now between syria, croatia, slovenia, and hungary -- a war of words. parliament has authorized the use of nonlethal force, so we have seen teargas deployed along the hungarian-serbian border. then we have some pretty hot rhetoric from the serbian foreign minister. here's what he said yesterday, warning of a potential concentration camp. "serbia cannot allow itself to become a concentration camp, surrounded by wires with traffic close to." way the, in some getan approach is to 130,000 redistributed but no one thinks those numbers will be final. francine: hans, thank you so much for the update. like davidke it beckham. actinginjured his hand for a bike brand. we speak to the ceo after the break. we will be talking about brand recognition and demand around the world, growth in china, and here in europe. you can follow me on twitter. i will see you shortly. ♪ the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. francine: welcome back to "the pulse," live from london. i'm francine lacqua, and here are bloomberg's top headlines. xi jinping begins his visit to the united states today. it is his first as china's leader and comes amid growing tensions over cyber hacking. he will participate in the meeting tomorrow with top major techof companies, addressing the united nations general assembly. there is much handwringing about the state of the chinese economy, but data from an alternative set of indicators suggest things may not be all that bad after all. information called from their search engine, biggest online shopping network, and bank outlet suggests that a destabilizing. the findings tie in with the conclusion of the chinese workers released earlier this week. the u.s. justice department is said to be conducting criminal investigations in the volkswagen after the carmaker admitted to cheating on air pollution tests. the company is already facing calls to buy back cars from unhappy customers. vw's top u.s. executive has apologized profusely for the scandal, saying "we totally screwed up." it is not: 30 and let's check in on the markets. mark: confusion reigns after after five days -- reigns and suggested that rates will rise in 2015. traders aren't so certain. there is less than a 50% shot of the tightening in borrowing in 2015. european stock market has been a day of decline. the euro 600 index in the last three days -- you can see it is down. miners our the worst-performing industry group today. the indexes on track for its second weekly decline, the longest run since july last year. the g gauge rebounded almost 20%. below april's record high. this comes from the u.s. head of sayinggen, michael horn, "we totally screwed up after volkswagen admitted to cheating on your pollution tests." this is the share price in the last few days. it is down by 21%. scandal sent the stock plunging as much as 21% lower on monday, the biggest fall since 2008. 13 billion euros of value was wiped away, another 5% decline today. the u.s. department of justice is conducting a criminal investigation. bloomberg intelligence says that volkswagen could face fines of up to 20 billion euros. shareholder lawsuits, consumer lawsuits, fines as well. price of show you the zinc, which has fallen to its lowest level since 2010. concerns about china slumped rising stockpiles, also slumping demand. have a close look at the chart. think is at its lowest level in five years, plummeting 32% since closing at a 10 month high in may. francine: mark, thank you so much. footballer, model, businessman, now actor. david beckham is starring in a new short film called "outlaws." it also features harvey keitel and catherine watterson. it premiered last week during london fashion week. n that, we are joined by the bell staff ceo. thank you for joining us. when you look at worldwide growth and talk about the headlines hitting the luxury, you have to stand out. you have to give the consumers the story. absolutely. we have the building the brand over the last couple years and we are getting our message around the world. we want to do it in a very unexpected way. we talked with david and a great , motorcycles, epic adventures, write a story, make a great film. francine: does david beckham like motorcycles? or did you just think he would look great? gavin: david beckham love the bell staff. he had a vintage jacket he bought ain l.a. he has been a brand ambassador for the last two years. it went live last night on facebook. it was evolutionary with david. francine: is the luxury space over crowded at the moment? gavin: definitely. if you look at the world economics, it is a tough place to be for some luxury brands. i think it is about standing out, do things differently. belsaf is very much a challenger ff isaff -- belsta very much a challenger brand. francine: how much do you actually think about the supply rights,etting the basic all that business stuff? gavin: it starts, really, with the product. great communication, great ambassadors, but it starts with the product. yesterday at the london fashion week was an example of how you can have an exciting offer. it really starts there. then it comes down to the communication -- stand up, exciting, in gauging, doing it differently. the world of economics in the market out there influences us, but if you have a product that is differentiated, authentic, true to the brand, you can stand out. francine: we have seen turmoil in the market, sanctions against russia, all the concern about china. have you been affected in terms of demand? gavin: we have been affected with tourists travel. russians, a less few less chinese. fortunately, we have very strong u.k. franchise and that is growing fast to compensate. we are not exposed to china. we are not in mainland china yet. we are opening up in asia next year. we opened up in korea only last year. we are entering into asia, but deliberately, we didn't chase the chinese. we need to be ready -- it is very big. we want to target markets that have a real affinity. francine: when you talk about your brand, how mature is belstaff? i have no this company for years. it makes me think outdoorsy -- you have a story to tell. we have a great history, back to 1924, a very solid foundation. it was originally in mo toring, very much about the spirit of adventure. if you are going down to ipo, we want to broaden our franchise. we have a spirit of freedom that has been with us for the last 90-oughdd years. outerwear, but accessories, opening up new regions. francine: are you looking at ipoing? gavin: we have dreams, and i can imagine it might be the right agenda in time. we have more on the agenda now. francine: 3, 4 years? are you concerned about being a takeover target? gavin: we are putting times on it now. we have extremely strong growth right now. my mission as a ceo's to keep it going, and i could be in the agenda further down the line. francine: in terms of targets, you want open new stores? how do you measure success? gavin: we want to go to brand equity, and "outlaws" was part of that. we want to take freedom and venture to a wider audience. 3 million views so far since midnight last night. we want to build out the offer into the new product categories as well. francine: is it very difficult to get a feminine, i guess, to capture the woman customer? you showed at london fashion week. i don't necessarily inc. that motorcycles are women, although it is very cool. back in thed right 1930's amelia ehrhardt. we had real female advocates back in time. i am very happy with the story. tyler -- we announced this morning exclusively -- she is the new face of the business. although we are better known for men's, we are very serious about building our women's franchise. working with liv is very exciting. it is shorthand for what we stand for. francine: which is what? outdoorsy? will your product so better to women than jackets for men ? gavin: it is an interpretation. women are less literal, perhaps. if i take a piece from the fashion show, absolutely a 1950's, very soft stretch to soft, andautifully interpretation of the dna. that is the root we are going for. more sophisticated, slightly softer. francine: great to have you on the program, thank you for coming in. exciting news about liv tyler. hillary is using technology partnerships to maintain a reputation for innovation. the launchede new line was a no online and we are told that such moves are vital to keep the brand moving forward. >> we worked with snapchat, and the founder. i was talking to him, and he is .asically a creative creativity and innovation is at his heart. the way we were talking about his sector in his industry, there are so many similarities with hours. it is always moving, a passion for newness. we decided to do something fun with the shell. what we did was a live snapchat show last night. the attitude of that show was very free, very easy. very relaxed. we did it in a studio with a couple models, but then the merging of that relaxed moment with today, which is a real show orchestra, aece beautiful guest list in the royal park. it is important to distinguish these worlds. but for me, what's exciting is when they merge. >> do you think the fashion industries and technology industries are coming closer? >> i think all creative industries, in the end, come together. architecture, fashion, music, social, technology. they are coming together because i think fashion and music are essentially about expressing an attitude. social is about expressing your personality. i think it is a very natural union. >> how important is entrepreneurship? how important is originality? >> so important. the originality, innovation, and creativity need to continue to thrive, to keep it all moving forward. that color for me, is the root of the brand. when he keeps staying curious, with a really open mind, it will continue to thrive. there are lots of changes going on in the world, but at the heart, they have to keep moving forward. >> talk to me about this music partnership with apple -- this is exciting. >> music has been such a big part of our dna for so many years. we launched acoustic many years ago and worked with lots of artists on some very public projects, like shows and films. things like big events. we work with artists when they are just turning out as well. again, it is that juxtaposition of those two different worlds. we started this project with ample music. we courted apple for a long time, and it is a natural union, because of everything that we do. it is a technology company, but this emergi merging has blurred. christopherat was bailey. here are some more of bloomberg's top headlines. the french music streaming service has filed for a public offering in paris. the company is said to be to challenge spotify and apple. apple is accelerating plans to build electric car. unnamed sources say the tech giant is shifting its first car by 2019 and the project has been allowed to triple its team. the u.s. justice compartment is conducting a criminal investigation after the automaker admitted to cheating air pollution tests, according to officials familiar with the inquiry. for theapologized scandal, saying that "we have totally screwed up you." let's consider the lasting damage is done to focus wagon's reputation -- volkswagen's reputation. great to have you on the program. how big of a messup has this been? it seems around us -- they cheated in the market which doesn't allow cheating. this is where they needed to grow. >> that's right. this is quite a big thing, because if the ceo has come out and apologized -- it is fairly a big issue. volkswagen has been struggling a little in the u.s. market. china,e doing well in but they have been struggling. francine: wrote this single digit in the u.s. and if they want to become number one, they have to get that market right. anjan: exactly. the number of cost sales that they do in u.s. is 6% of what they sold globally. they really have to grow, and this is a huge grower. multiplication in the u.s. and also outside. i think australia is now looking at -- francine: when you saw this in, day out-- day -- how shocked were you that this could actually happen? does it mean that others were doing it as well, other carmakers? anjan: it is quite shocking. you would not expect this from. vow. this is an isolated case. i hope this is an isolated case. but otherwise, you need to look at the other manufacturers -- they have claimed that this is only vw and not them, but it would certainly impact bmw or daimler as well, because they are the fellow, and they are pushing it as much as they can. it is not a good scenario for this business on the whole. diesel has recently been on the growth in north america. francine: do you think the only way to get this -- we had apology after apology, especially from the head of the u.s. unit. do you think that they will have to lose places for credibility to be restored? question.is a tough i think that will be decided in the coming days. friday, there has been a meeting. but i think after such a thing happens, i'm not sure if it can hold its place. it has come at the wrong time. -- things will take their own course in the coming days. we have to stay and watch, but it is definitely not good news for him. francine: after the battle. thank you so much. great to have you on. we will take a quick break. coming up, we will talk about the refugee crisis. we have a report on migration due out in just 12 minutes. we will go back to hans nichols in berlin. keep it right here. ♪ francine: welcome back to "the pulse," streaming on your tablet, phone, and bloomberg.com. as your grapples with the refugee crisis, any local initiatives are offering hope to those who have fled their home countries. in the refugee camp at calais, the school opened a couple months ago. for those who give up their dangerous attempts to cross the channel, it is the first step to getting legal status in france. caroline connan reports. caroline: england is just a few miles away, but now for some of the refugees who live in the so-called jungle in calais it is not time to cross channel,. it is time to go to school. demand is so high that not everyone can find a seat. >> we have no workplace. . . full up. caroline: it has is 300,000 refugees. for the lucky ones, the latest is around the city. their city -- calais. >> la pharmacie. is one of 30s volunteers who are teaching french and english since the school opened in july. >> they both have degrees. they have studied under the usual. school is made out of wooden pallets and plastic cupboards to keep the rain off. it has received a of books, pens, and tables, but no money. recent visit, the president promised to build rooms for 5000 people with 5 million euros from the european union. and nigerian refugee who built the school says it will be enough. >> it will be almost 4000. to improve life for now, they want to build a hospital and a second school for those more advanced and french. >> some people come to school and in a few days they can write and do anything. for this refugee, england is not the desired destination. he started to learn french long before leaving sudan. i studied french for four years before coming here -- not to play or stay home. i learned french to know how to live in france. i came to work -- that is my dream, that is my plan. caroline: between the french unemployment rate at 10%, the dreams are hard to turn into reality. man hasr -- this already tried to cross the channel five times and has tried again. >> i tried to get a job in paris, but i decided to go to the u.k. because i have relatives and they will help me. crossing the channel remains the ultimate goal for many in the jungle. caroline connan, bloomberg. francine: we are also looking at live pictures from the border, from a town near the croatian, serbian border. tensions are also escalating their. -- there. they said they would give the european commission at 2:00 p.m. deadline to respond to croatia closing the border. croatia closed the border, talking about migrants and refugees, saying they couldn't afford to be a passageway. serbia has responded saying this is a croatian attack on serbia, attending to destroy the serbian economy. if you close the borders for refugees and migrants, it also closes the borders for trade and trucks to go through. european to the commissioner and the german authorities about the unilateral border closure on the part of croatia. we are seeing live pictures. this has implications on trade and the economy and the human story first and foremost for these refugees trying to cross the line. we will have plenty more on this crisis. hans nichols is on the ground in berlin. report onve the new migration that comes out at the top of the hour. it really goes again to the forefront of the european issue, that we don't seem to have a common voice on how to tackle this crisis. it has indications for political parties on all sides of the spectrum, especially the extreme parties in the main european countries. this is your market check -- five minutes to the top of the 10. a lot of these european stocks have been sliding. they are extending a lot of their losses, volkswagen extending losses. the justice department is now investigating the german company over admissions that it cheated on federal air pollution tests. this means we may look at a criminal investigation. the share price was down 20%, now down 5.9%. we also want to bring you glencore. glencore has been touching low after low.it is now at 108.10. we are keeping a very close eye on glencore. they have been talking about closing some of their mining, but this is the biggest copper production this year and it hasn't been enough to overcome the values from china's slowdown. what has been hitting glencore so hard. just a reminder -- you can follow me on twitter. for our viewers, we will be talking about the refugee crisis and the oecd and the new report on migration. we will talk about china, the markets, and to adventure capitalists about what it means to be a leader. stay tuned. ♪ francine: east meets west. xi jinping makes his first state visit the united states. the recent market intervention is highlighted. "we totally screwed up." the u.s. executive of vw says sorry for the scandal. the u.s. department of justice is said to be launching a criminal investigation. and interior ministers get set to hold an emergency meeting on the refugee crisis. we will take a look at the new report released this hour. good morning to our viewers in europe. welcome to those just waking up in the united states. i'm francine lacqua. chinese president xi jinping begins a visit to the united states today. it is his first as china's leader and comes amid growing tension oversight or hacking and china's military moves in the south china sea. theirile, new data from most used search engine, biggest online shopping outlet suggest that the world's second largest economy is stabilizing. first, let's get to the latest on president xi jinping's trip to the states with david tweed. this is just one problem between two countries. david: and francine, we will get a little bit of an idea of how he intends to handle a lot of these issues, because he has done an interview with "the wall street journal," just released. i will give you a taste of the highlights. ofll, that is just part china trying to respond better to market supply and demand and the effects market." the stock market drop in the subsequent intervention by the chinese authorities -- that is to diffuse massive panic, something he says that other countries have done. he says it means that the chinese authorities will continue to make good use of both the invisible hand and the visible hand. as for market reforms, china will continue. an arrow shot that cannot be brought back, we will forge ahead against the odds to meet our goals of reform." this is the message he will have for the united states, the message for obama, that china has the capacity to be able to continue with medium-term economic growth, medium speed economic growth. security david, cyber is something else on the agenda. what is there? david: this is one of the issues that could really overshadow the agenda. there are big differences between the definition of what the u.s. considers to be acceptable cyber espionage -- military, political, trying to get information from another state's government about political advantage -- as opposed to what the united states is complaining about, which is cyber espionage for industrial purposes, where many a state-supported actor is hoovering up data from industrial property and spreading it around. this is something that obama, president obama, last week said that the united states is drawing up a whole list of measures, and it wouldn't hesitate to put these into place if it sees this continued alleged cyber espionage, industrial cyber espionage, from china. that will be a very sensitive issue, and it looks as though they might find some agreement on it, but whether the agreement will be meaningful, we will have to wait and see. francine: david, if you boil it down, what is his message to the u.s. and u.s. businesses? david: he is going to seattle, so he will need a lot of important business leaders. warren buffett among them, tim cook from apple. the message is that the chinese market is open, that there is going to be access for american companies. but the thing is what we are seeing on the ground is the opposite sort of story. we are seeing regulations being put into place which are limiting access to u.s. companies into china, particularly technology companies and particularly their toess to banking systems, the military, to government agencies. this is an area of extreme concern for companies like microsoft, who will be having dinner with bill gates, but also on the other hand it is concern over chinese access to the theed states, which is why fine print of progress being made on the bilateral investment treaty is so important. francine: thank you so much. david tweed in hong kong with the latest. spring in the j.p. morgan asset manager, david stabs. great to have you on the program. since we seem to have the report that china is not as bad as expected -- overall, are you feeling more optimistic? we made be accentuating certain bubbles. david: i am in the camp that the fed not moving doesn't worry me. i think we are fully aware of the risks. they pointed to some. got ak investors may be little ahead of themselves when they looked at the bubble in the chinese stock market, the devaluation of the currency, commodity prices -- put all this together and decide china was collapsing, i think that is going a bit too far. it is transforming into services and employment looks good. you can understand why janet yellen didn't hike rates. it is not an international situation -- inflation is very low in the u.s. and financial conditions have brought the currency up. and it wasn't priced in. francine: inflation is low, but they don't have to fight against inflation, because of commodities. what does it mean for the stocks that you like? glencore is at a record low. we heard that tweet from hillary clinton that's in biotech stocks down. how do you stock pick? david: i think we are entering a time in the equity market when equity is more key in the bull market. certainly in the u.s., we think that the engine is going to be domestic growth rather than relying on a stronger international economy. the housing market is picking up steam here. cycle, this point in the with consumer confidence where it is and with a stronger housing market, you can expect consumer spending to pay that in terms of composition towards nondurable goods. we can find real pockets of strength in the united states despite slightly weaker international environment. francine: what is your biggest concern? that they missed a window? you weren't worrying about that too much. david: we haven't missed a window. i think the degree that they -- i haveghten consistently said that it is below 5%, and there are many other measures from your six to the core age, which is pointing to me that there is a flat in the u.s. labor market. there is still a downside in china that worries us, because it is a very opaque place. there are signs that it is not as bad as one thinks that i think we need to see stabilization and commodity prices, the chinese currency to remain stable, the equity bubble to deflate, earnings growth to return. i think all those things will happen in the next three to six months, and that leaves me quite positive on equities next year. francine: if you are barack obama meeting xi jinping today, what would be her first question? david: first of many. what is the balance between reform and short-term economic stabilization? i think it surprised a lot of people how much it appeared to be an all out reform. there are short-term indicators that people looked at -- the big question is, how much are they willing to slow down the reform process to stabilize in the short term, and what tools are they going to use? is it going to be the currency? fiscal policy? francine: thank you so much. keep it here because we will talk about china. david was talking about numbers big companies, all signaling that the world's second-largest economy may not be in the state of turmoil that many think. we are talking about baidu and alibaba. we have the story in hong kong, to tell us about the indicators and what they tell us about the health of the chinese economy. do give signs of stabilization in september. frequency readings of areas are a little harder to read and a little bit less obvious in manufacturing and exports which has been in the doldrums. that someome hope areas of the economy are coming up. so china's google -- it showed improvement in september in searches of small and medium enterprises. that is a good sign for that part of the economy, which is incidentally usually a private enterprise. then you have the alibaba measure, prices of goods sold on that site were up 7.4% in august. that is a far cry from the 2% ppi level in the month, suggesting that domestic demand is healthier on that front. in the union pay data suggests that some recovery in some elements, including the all-important property purchase element. card,they are made by a and that is a great sign to the economy, if there is stabilization and property. francine: welcome, thank you. -- malcolm, thank you. david is still here. you are saying that if you are barack obama, you would want to know the kind of balance that china is taking longer term, in stabilizing the market. how are you looking at the emerging markets overall? it seems like there is an almost half of the agreement between the fed and china -- you do your bit, i will do my. -- do mine. david: i wouldn't call it a conspiracy. . as a broad asset class. -- we certainly recognize it as a broad asset class. trade has been stagnating, if not contracting. is very hard for another category of emerging markets to rise up, and we see a lot of domestic critics cycles look like they may have run -- domestic credit cycles looking like they may have run their course. you can understand why at a slightly problematic for merging markets. we do, however, believe that this is the time to raise a selective exposure. some of the key emerging markets which have sold up in terms of currency and equity and fixed income valuations. francine: pushing structural reform through? david: exactly. growth storiesal going forward in the next 10, 15 years if you are a german investor, india, indonesia, these places which have key demographics as well as an embedded reform agenda at the political level. right now these countries are hugely competitive. they are quality companies, available, that will make hey with a vastly growing population in the next decade. francine: so you buy equities, basically, and selloff. david: i still look at the currencies as a risk factor. it is amazing how many people want to bring up this risk factor after the currencies fell. now it is not the main interest -- you have to say, they have sold off quite a lot, now you could go down further, but it is asymmetric over the medium to long-term view. it is a risk factor that has gone away. i'm not saying by everything in india, but there are quality companies around now that are very cheap, given the perspective growth. francine: on commodities, what is going on? you have glencore, and i know you aren't a stock picker, but it has record low after record low after record low. posing problems in mining. is this just going to stay this way until investment starts? david: commodities, we believe, continue to be a supply story. we had a decade and a half of extremely high prices across the board. high prices usually bring supplying to the market through extra investment, and we saw an enormous supply glut globally into these commodities in the last 10 years or so. if you look at china's oil imports, they have risen strongly in the last few years and yet the prices collapsed. it is not about chinese demand, and if you look at the individual markets, oil and gold for example, each one of them have dynamics which are preventing supply from contracting, given the low price. it is either the high leverage in the gold market or the geopolitics in the oil market or just the fact that you have two very large producers in the oil states which want to send the rest of the industry out of business. at the moment, that is preventing the usual dips into low prices. francine: interesting. david, thank you so much. david stubbs. up next, a criminal investigation against vw. we look at the damage done to the carmakers repetition. ♪ francine: welcome to "the pulse," live from london. the u.s. justice department is investigating the volkswagen after it'd meeting to cheating on air pollution tests, according to officials familiar with the inquiry. chris reiter is in berlin. crest, the focus now on the ceo -- will he survive it? chris: good question. i think that will be answered maybe in the next few coming days -- we are still waiting for answers from volkswagen on what he did and what he knew. that is the big question. francine: what happens next, chris? caroline: well, we are still waiting on some word from volkswagen. they haven't said anything since he issued a statement, so we are waiting for more word. we aren't sure when it will come. at the very latest, on wednesday. board is meeting and will decide on the next step, i guess. we still have a ways to go on this. at the very latest, the full supervisory board meets. still some steps to come on this. francine: chris, have we heard from other automakers? do we know or is it too soon to speculate that this is a problem only related to volkswagen? or do we still need to see whether other car companies are doing the same? well, there are a lot of companies coming out and saying we are not aware of any probes. were cedi says they are not involved in probes. -- thet said, a lot industry at this point is fairly tainted. if folks like an how to rip -- volkswagen had a reputation for being a leader and if it could happen to them, it could happen to anybody. it is a fact of life that automakers do whatever they can to improve the emissions rating of their cars. it is what volkswagen did that step the line into something illegal. whether anybody else is involved, that is a wait and see, but they will be very tight on the automakers now. francine: thank you so much. chris reiter. up next, an emergency meeting of the refugee crisis. the oecd publishes its latest migration report. we will have the latest after the break. ♪ francine: welcome back to "the pulse," streaming on the ipad and bloomberg.com. breaking news on the back of that vw story. we have been covering it for the last two days. the french carmakers have back to government call for the probe. we understand that a lot of these probes have been spreading. vw's u.s. chief has apologized for the dupe, and the admissions scandal -- this admissions the scandal is spreading. the french government said they should do their own pro and that is now being backed by french carmakers. the european justices and the european ministers will meet in a summit on how to tackle the ongoing refugee crisis. this as an oecd report released this our claims that europe will have to deal with up to one million asylum applications this year, and there are no signs of the current crisis easing. let's go straight to hans nichols in berlin. hans, what have we learned from this new report and how will that affect the debate in brussels? hans: well, we have learned how dramatic the number increase has been from 2014 to 2015. these oecd numbers, francine, which have 700,000 through this year through the european union, those are still shy of a lot of the estimates, even the estimates for germany alone, which they now expect one million refugees here. we are also getting a better picture of the origin of the countries. that may be the most benefit of this report. the first half of this year, 14% of asylum applications came from syria. but an equal number came from serbia and kosovo. let me make sure i have the numbers right -- 14 and 14. 11% from afghanistan. we are getting a better makeup of the kind of refugees that are arriving. hungary,take a look at they have about 100,000 refugees who passed through. most of them are from syria, but you also have afghanistan, and you also have kosovo up there at 22%. you have a similar story in greece, where you have 59% of applicants coming from syria, a fair number from afghanistan, and 5% from pakistan. l's whole argument -- and she will be making this case to the eu later tomorrow -- is that you need to accelerate the return procedures for those refugees and migrants that aren't really from war-torn countries so you can do more for the ones that are from the syria.bad places, iraqi, we are getting a better picture of where the makeup of these new arrivals are from. that is the value of this report. it doesn't make her task any easier in brussels tomorrow, and there is a big challenge in getting everyone to agree to a redistribution plan. francine: hans nichols. in terms of the meeting, it starts later today? hans: the interior minister's -- yes -- the interior ministers later today, and eu leaders later tomorrow, i believe in the evening. yesterday, we had the ambassadors gather. talks haven't collapsed, but they haven't necessarily made any progress. everyone sort of suspects that it will come down to a late wednesday night meeting. of this magnitude would force requirements down eastern european countries. and has to take place at the leader level and the consequences have to take place at the leader level as well. francine: hans, thank you. hans nichols in berlin with the latest on this refugee crisis. next, a sports star launching a book on transformational success. we will speak with the co-author after the break. just a reminder -- you can follow me on twitter. what would you ask me to ask michael moore? ♪ the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. francine: welcome back to "the pulse." here are bloomberg's top headlines. the chinese president xi jingping begins a visit to the united states today. comes amid growing attention over cyber hacking and china's military moves in the south china sea. xi jingping will participate in a meeting with top executives. he has to new york and will address the annual meeting at the united nations general assembly. there is much handwringing about the state of the chinese economy, but data from an alternative set of indicators suggest things may not be that bad after all. the biggest online shopping outlets and main bank card network suggests the world's second-largest economy is stabilizing. the findings tie in with a conclusion released earlier this week. shares in glencore have slumped this morning by 10% to a new re cord low. that, as china's imports of refined nickel, fell to a four-month low. the u.s. justice department is conducting a criminal investigation into volkswagen after it admitted to cheating on air-quality tests. the company is facing calls to buy that cars from unhappy customers. executive has apologized saying "we have totally screwed up." jonathan ferro. let's check in with him. jonathan: there is a negative side against every single major index across europe this morning. 100 off.the ftse there are three sectors you need to get your teeth into this morning. one is health care. health care stocks weighing on 600.toxx hillary clinton talking about combating high cost of prescription drugs. those stocks are lower this morning. in frankfurt, down by 5%. the scandal spreads. the u.s. justice department said to be looking at the german automaker. here in london, there is one sector, one story that has dominated the stock market for the whole year. let me lift the lid on this index -- it is the miners. glencore last week, september 16 sold 1.3 billion shares, 125 pence apiece. if you bought into that, you're in the red. stock down by 9%. an all-time low. anglo american down by 6%. it is getting ugly for the miners. it is weighing on the stock 600. you can have those top-down macro concerns. look at the commodity markets and go to copper. down by 2.5% this morning. 50% off the highs we saw back in 2011. this one, like trying to catch a falling knife. francine: they do so much. in 25 minutes, it is "surveillance." he joins us from new york with a preview. you have a lot going on today. tom: i like what jon said about the miners. i'm going to focus on a bloomberg terminal chart. zync doing a massive right angle sell in the last number of days. peter or zach will join us. we will talk about washington and our fiscal policy in america -- it is actually pretty good. but a government shutdown may loom. we will talk to the former congressional budget officer. chris granville will join us. this is a developing story. russia with surface-to-air missiles in syria. russia in the news again. has importantlyly the ft 2000 troops reportedly deployed by russia to syria. chris granville is with trusted sources and we will speak to him on an update on putin as well as the market activity. a lot going on this morning. francine: tom, i'm looking forward to "surveillance" in 25 minutes. today sees alex ferguson's new book which that is how great leadership can create transformational success. let's walk him the man worked with sir alex on this project. ir michael morris, chairman of sequoia capital. thank you for joining us. you're not only the chairman but you are one of the few early investors in huge tech companies. great to have you here, because the art of leading is sometimes, we talk about it, but to people take it seriously? this affects the bottom line? -- board ofs directors, it is the most important single decision and will make about the future of the company is selecting a leader. and for investors like us who in the venture capital business, the most important task we have is assessing the qualities of the people who start and found companies. francine: if you have a great leader, can you put him at facebook, can you put him at hewlett-packard, can you put them in volkswagen and it will do a great job? or just the personality have to match the industry? great leaders have a profound sense of ownerships, even if they did not start a particular company. an that is what sir alex had manchester united. he acted like an owner, like somebody who had founded the company. whenever anybody selected leader, my advice always is find somebody who is going to think of your organization or company as an owner rather than as a manager and custodian. francine: that means what? unilateral decisions? troops.- rallying the this is what sir alex ferguson was great at. it means having a long-term sense for your organization without taking your i often need to h-- your eye off the need to have results. planning, preparation or all the necessary underpinnings for really consistent high performance and excelling at the highest end. francine: we all have ideals of what a great leader is. i every day i'm on the show and we hear -- european politicians are really bad at that. we do not have a true leader. the ceo's are changing what -- left, right and center. how me people have that ability to be great leaders? michael: hence, my original interest in sir alex. there are very few people. you look at the hundreds, thousands of companies that are started every year. survive, lethem alone prosper. fewer succeed for a long time. that shows you how few outstanding leaders there are really are. francine: can this be taught, or is it something you are born with? c --el: tehe really clever leader will have something innate but they will improve their skills as they have more experience and they have become more attuned to running an organization. francine: michael moritz, writing this book, what is the one thing that you absolutely cannot get wrong? can you be a great leader if communication is wrong? greatl: the hallmark of a leader is that they never, ever lose affection for the obsession that drives them. and as soon as they do that, it's the road to perdition. francine: the road to perdition. this is to be all-consuming. you are one of the early investors in the company. everook, were you disappointed with decisions that you made because they were only made on the leadership quality of the person? michael: if you're running a football club or an investment organization, you make mistakes but it is rebounding from the setbacks that i think is one of the hallmarks. of sir alex. so there are plenty of times we have been disappointed, but you have to think about tomorrow's game. and the next investment. person or an a organization that makes serial mistakes. francine: who is the sir alex ferguson of the business committee? -- community? michael: so, that is a very short list of people, because ant somebodywho -- w who has run a company for a long time, has excelled, has adapted to changing conditions, has been able to reinvent themselves, has been able to great something out of nothing. and jeff bezos at amazon who started his company in the early 1990's and has run it and built it successfully over the last multiple decades is certainly one example of that. but fortunately in california, there are variety of examples. mark zuckerberg of facebook. larry page. people like jack marr. but it is a very short list of spectacular, great leaders. when we talk about sir alex ferguson, and i'm curious about wondering whether you can be a great leader whether you come from a privilege upgrading -- upbringing or whether you have to make it yourself. does that impact what kind of leader you are and whether you will be successful? michael: in the technology world there are some examples of people who come from comfortable backgrounds. bill gates at microsoft, mark zuckerberg being two examples of that. but i certainly have a great affinity for people who have created themselves out of outsiders,e been have perhaps been immigrants or in america, first-generation americans or like sir alex grew up in tough circumstances. i think those sorts of people have great grit, determination, a willingness to persevere against all odds. francine: bill gates, mark zuckerberg. are they real leaders or visionaries? are they able to rally the troops? michael: i think both of them in their own ways in respective decades built, operated companies and they were the undisputed leaders of microsoft and currently facebook. francine: thank you so much. michalel moritz. we are getting breaking out of volkswagen. we have been following the company closely. they cheated on their air pollution emissions in the u.s. we have been asking about what this means for the ceo. we now understand that they will have -- they will be recognized in the third quarters. vw saying the discrepancies toate to the ago's with a -- certain engines. this is a profit warning. the share price has been under pressure, as we seem to see more probes around the world. vw currently down 7.3% after we had this latest news. so we are getting a profit warning from vw. adjusted earnings targets. or they will have to adjust their earnings targets for 2015 accordingly. that basically this provisions are for the moment -- they are setting aside provisions euros of but they say this amount may be subject to a reevaluation. of course, to recap, this is an emission scandal. we understand the probes are spreading to asia. korea said they will have a look as to whether vw had been cheating. we have apology from the u.s. chief of volkswagen saying they really "screwed up." and what this means for the broader, of course, management at volkswagen will have to be seen. we will have plenty more on volkswagen after this break. keep it right here on "the pulse ." ♪ francine: welcome back to "the pulse" live on bloomberg tv. breaking this. vw issuing a profit warning on the back of that scandal on a missions in the u.s. let's get straight to mark barton. mark: shares down a further 8%. they were 5% lower. we got this news, and shares -- this is the inter-day chart. down by a percent, which is a decline in monetary value or market value by 4.3 billion euro s. in the last two days, volkswagen ordinary shares have slumped by 24%. that is yesterday. that is today. that is the biggest two-day drop since 2009. 17 billion euros have disappeared from volkswagen's shares. fineow the u.s. epa could volkswagen up to 18 billion euro s. bloomberg intelligence says penalties could amount to 20 billion if you include lawsuits from consumers, from shareholders as well. so far, the market value loss to volkswagen, as i said, in today's is 17 billion euros. it leads to this board meeting tomorrow and on friday when it is clear the future of the deep executive is very much on the line. but following that news that the company has set aside 6.5 billion euros as a provision to be recognized in the third quarter and will adjust its earnings targets, shares are down 8.5%. it is going from bad to worse. francine: it certainly is. let's go to hans nichols who is following the story. hans, the provision. is this a big number? hans: the bigger number is not so much the provisions because in some ways, volkswagen does not know what their legal liability is. until they figure out how many jurisdictions are investigating them. we heard a couple of minutes ago that france might be starting an investigation. overnight we heard that korea was. have clarity.to the head of the transportation ministry wants to test all volkswagen vehicles. the most important number i saw in this news was they think the problem affects 11 mail -- 11 million vehicles. what we know prior to this when there was 482,000. that is a 20 fold increase. that means they have exposure outside of america. that means they have exposure potentially globally. it is very difficult to see by taking that 11 million vehicles that are affected, that has to be in several countries, multiple jurisdictions. that means that the 6.5 billion setting aside for provisions is just an estimate and is probably going to be the first of their down payments. francine: the share price is down 10%. we go back to market and a second. in terms of the timeline, we understand that they may be -- there may be a board meeting tomorrow? boardthe supervisory meeting tomorrow. the timeline had been on friday there were going to extend -- it was always pro forma -- they were going to extend a contract. that no longer appears to be a pro forma matter. he now appears to have somewhat of a more difficult task. and the board is meeting, the supervisory board is meeting tomorrow. this is not as simple as just saying there to discussing his fate. they need to figure out what their entire response is to this and if it is his fate, who might they have to replace him? what they might do to ensure that the source of deceptions -- they have been clear, these are deceptions -- do not happen again. and try to figure out why it took them so long to acknowledge, to admit wrongdoing it contacted them in july saying something is not right here. volkswagen was denying, denying until their 2016 vehicles weren't given permission to go ahead and be authorized for sale in the states. francine: thank you so much. this is huge. 18 billion dollars they could face and fines. then 6.5 billion provision which could go up. we also are finding out that volkswagen -- there is a problem with the emissions, the type of cars are the cars that have this e.a. 189 engine. there are 11 million vehicles worldwide that have this engine. they could possibly have to get back these vehicles. that is another cause. let's go straight to mark barton. as soon as we heard this news, and this is a profit warning -- they are setting aside 6.5 billion euros to deal with this -- -- this emission scandal, and the number could go higher. the share price is down 11%. mark: the share price eight minutes ago was 5% lower. now it is down by 10%. i have circled it. this is not something you see every day on the stock market or for a specific stocks. the stock was already declining. about seven minutes ago, it was 5% lower. lower after0.73% this announcement that volkswagen has set aside 6.5 billion euros. it's to adjust earnings targets accordingly. the discover these affect 11 meal -- 11 million vehicles. we were led to believe the discrepancies affected half a million vehicles in the united states, which leads us to suspect that this is not a purely u.s. led mattter. south korea investigating cars there. diesel discrepancy, at best 11 million cars worldwide. that is the red sticker on your bloomberg terminal. it brings me back to the two-day chart. things are going from bad to worse for the volkswagen share price, which, as we said yesterday sank by 17% which was the most in seven years. that was 13 billion euros. it is now down another 10% today, which brings the two-day decline to over 25%. the stock has not fallen this much since november, 2008. the loss in market value in the last two days is now 19 billion euros. now, it was thought that up to 20 billion euros in fine, doll ars in fines could be imposed on volkswagen. a, fines are related to the epa. it can impose penalties up to 37 and a half thousand thousand -- $37,500. bloomberg intelligence says if you include lawsuits, which is just getting started, the ultimate figure could be $20 billion. they have put aside 6.5 billion. makes you think of bp. is there going to be a situation where it will have to keep announcing provisions in coming quarters because we know the doj has started this investigation which could lead to executives going to jail. that itself could lead to fines. , criminal investigation could last months or could last year's. equals uncertainty for the stock and uncertainty for volkswagen. which brings us back to tomorrow. martin winterkorn, the ceo, he will meet various board members tomorrow and on friday. friday was meant to be a rubber stamp. martin, you have got another contract until 2018. the plan on friday, also, was to decentralize power. he said he was sorry. he says we promise a thorough investigation. he did not comment on his role. billionthe $18 question. what did mr. windsor core know about this device? this is the big question? the device that allowed these cars to achieve emissions tests 11 million of its diesel cars from 2009 to 2015. as i speak, as i tell you the story, shares continue to slide. they are now down by 13.7%. so, literally, in a matter of minutes, since 10:45. in a matter of minutes, it has lost 10% of its value, which leads me to the two day performance, because in the last two days, the shares have now fallen by 30%. this is incredible. 22 billion euros. this is higher than the penalties many think volkswagen could be imposed as a worst-case scenario. francine: let's also go back to hans. put this into context. 11 million vehicles have been affected. this does not mean that we will have 11 million recalls. if you look at the huge number -- so, volkswagen is neck and ne ck with toyota. this is the production for a whole entire year of volkswagen been affected. the problem started in 2009, we can back that out and say they roughly produced 55 million vehicles since 2009. that would represent 20% of the vehicles out there. i want to say something that might be a little contrary. mark made the comparison between volkswagen and bp. in this statement that volkswagen is putting out, they are almost doubling down on their defense. they are saying the software did not affect the missions. it did not affect handling, either. for volkswagen, after what they have been through, and you have to imagine they had a difficult 24-48 hours. for them to say is their gathering of fact that the software did not affect emissions, it may be the beginning of us getting volkswagen's side of the story. that will be litigated. not trustes volkswagen. they do not like what they have done. we have volkswagen saying that they have screwed up. the idea that they as saying that their software -- that is what we're talking about, this device -- they are saying this software did not affect emissions. i am having a difficult time squaring that statement out of company headquarters with what martin winterkorn said on sunday. and what the north american operations had said last night in new york saying we had lost trust. i think there is a lot more we need to know about what went on with these devices and whether or not divorce waiting -- volkswagen thought they were within the spirit of the law or the color of the law. francine: there is a lot we have to find out. but look at that -- the share price is down 12%. we now have a profit warning from volkswagen saying that 11 million vehicles, almost the exact amount of cars they produce in the year, has now been affected by these cheating motors. that is it for "the pulse." "surveillance", that team is coming up next. they will talk about the market volatility and, of course, volkswagen. ♪ announcer: this is "bloomberg surveillance." surface-to-airds missiles to syria in a "first phase." they will deploy 2000 troops. christopher granville in this hour on vladimir putin and a ssad. the bank of america holds a contentious shareholder meeting in charlotte. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. it is tuesday, september 22. i'm tom keene. joining me, vonnie quinn. vw come out and say they are not up to full speed. vonnie: they are apologizing that they "screwed up." tom: to the bloomberg terminal, you can see the intraday chart. the big move yesterday, down 20% or so, a little bit recovered. mark barton in london really showing the immediacy of this. vonnie: the optimism is pretty intense. they are setting aside 6.5 billion euros for this. $7.3 billion.