Skip to main content

tv   Countdown  Bloomberg  September 22, 2015 1:00am-3:01am EDT

1:00 am
vwwe have totally screwed up top executive apologizes for cheating on admissions testing. the company is said to face a criminal investigation. >> the chinese leader makes his thirst -- first statement in the united states with aging's recent market intervention high on the agenda. >> the latest fmo the member points to a rate rise this year. ♪ guy: welcome to countdown.
1:01 am
6:00 this tuesday morning. vw is that the center of emisin missions -- scandalsion. anna: now they say they will investigate. guy: the share price is heading down. that has been the last year, you can see how their share prices come down. it is here the damage has been done. if you look at the stock today,ay compared to moving down into the one 30's -- 100 30's. anna: addressing to see where this goes next.
1:02 am
affect them. this ons hasstion of emissi been around for a long time. guy: let's wrap up the overnight news from the u.s., including a tweet from hillary clinton. of theor the release apple car certainly making headlines. --ie has always the details all of the details. julie: u.s. stocks finished mixed. health care shares held back the average's overall. the dow and s&p finishing higher, the nasdaq could not quite make it better. 18 of the past 23 sessions we have seen triple digit moves on the dow. this new normal of volatility or in back in the u.s. stocks.
1:03 am
technology and financial stocks doing well, health care shares declining. that was after hillary clinton tweeted that she is going to introduce a new plan to try and curb prescription drug prices. on the technology side, facebook notable, it has risen for 11 straight sessions. that is the longest winning streak ever since 20. microsoft rising on positive analyst comments. apple is on the rise after the wall street journal reported they planned to ship an electric car by 2019. looking at some of the other markets, we saw oil prices rise. there is a continued decline in the number of oil rigs in the united states. we had a number of fed officials speaking during the day, saying that there is a likelihood that the fed will raise rates before the end of the year. it also sent rate higher, the 10
1:04 am
year yield rebounding from the decline that we saw last week. guy: julie, bringing us the details. this move is fascinating, we always knew there would be a counter move from what yellen oc members out, they feel there will be a hike this year. hocksit shows what these -- hawks have been up to. speaks late in the day on friday. year is thethis much used phrase. operators -- operative. let's go to the asian equity session.
1:05 am
david: yes, good morning. it is after 1:00 p.m. here. we are in the middle of the asian trading session. japan is still close in the session. ,f you look at the futures 18,000 is the level last i checked. it is really more risk on compared to the 1.8% drop to recite yesterday. -- drop that we saw yesterday. the hurdle that would put us above that would be about 405. that being said, it is not the best. , let mereak this down break it down further and give you the winners as far as segments are concerned.
1:06 am
if you how asia looks slice and dice it across the sector groups. you are looking at oil and gas, julie mentioned the decline come up when we woke up this morning, oil prices were substantially higher when we went to sleep. telcos are also doing well. perhaps this is fitting together vw story. -- with the ,he south korean carmakers hyundai and kia were up 2% that they might be of benefit from this mess that vw five itself in. -- finds itself in. strongerr was much compared to when we went to bed. is doing ainggit
1:07 am
stance -- doing its dance. it is falling against the u.s. dollar. -- theg kong dollar pick,cy regime is if they this has been pushing towards a lower limit. when it does that, you have the monetary authority intervening in the market. injecting 250 million -- 2.4 billion hong kong dollars. let's how -- let's see how this plays out. overall, that is heavy trading session is shaping. -- that is heavy trading day is shaping. anna: thank you. guy: u.k. chancellor george osborne is in china and will be speaking at the shanghai stock exchange at 7:00 a.m..
1:08 am
he is leading a trade delegation in the country. yesterday the announced a series of deals, including financing for chinese construction of a new u.k. nuclear plant, possibly linking the u.k. and shanghai stock markets. make no doubt about it, i want the ut k -- i want the u.k. to be the western hub for r&b trading. package can announce a of agreements that will firmly established london as china's bridge into western financial markets. dateshere are some of the , tomorrow we get preliminary pmi readings for the euro area. on thursday we hear from the chinese prime interest or, he will have his goals for the rest of his term. janet yellen also speaks on thursday in amherst where she may elaborate on a central bank. on friday we get second quarter
1:09 am
gdp from the united states. guy: mario draghi will be speaking out as well. let's turn back to the story of vw. they could be facing a criminal investigation by the u.s. department of justice and further probes at home and abroad. admitting -- admitting to cheating on in ions testsest -- emiss , let's go to hans nichols. give us the latest, the story continues to develop. peopleccording to two familiar, the department of justice is launching a criminal investigation into whether or kswagen systematically tried to deceive regulators. other news organizations have
1:10 am
matched this news manus. late last night, the head of the company gave a statement where he seemed to indicate the gravity of the situation. and this iser, common sense is the first priority for him personally, and the entire board of management. let's be clear about this, our company was dishonest with the epa and the california air resources board and all of the -- you. in my german words, we have totally screwed up. hans: with run through all of the known investigations. in the u.s. congress both the house energy and subcommittee on investigation have said that in the coming weeks they will be looking for -- into this, potentially holding hearings. you'll hear very public airings of the line -- laundry.
1:11 am
here in germany, they have said they may be investigating. also the financial regulator in germany also talking about their concerns. the european commission, while they have not formally launched an investigation, they are taking these allegations seriously. there are also reports in korea where they said they are looking into it regularity raise -- irregular series in the testing on. when you look at the market share, they have dominated the diesel technology. you look at diesel sales in the state, 56% is sold by audi or ball flight in -- vw. the other brands are all sort of milling around at about 10%. the epa is testing other diesel models on the road. -- a jointation collaboration between a european environmental group and west virginia were -- university
1:12 am
bmw next five diesel version and said it was fine. for a long time. said -- for a long time vw they do not have a problem. it was not until the epa said they would not give normal clearance for the 2016 models that they admitted they had been using this so-called deceit device. one final note on this criminal prosecution -- desiccation, excuse me, it is serious because liability is found, that would open them up to civil litigation. there is already talk of an class action suit -- a class-action suit in california. jacqueline it will be interesting to see whether or
1:13 am
not european testing is redone. they sell a lot of diesels over here, i think that will be fascinating. we have this board finishing -- meeting coming up. is he going to be able to keep his job? hansbrough -- hans: what we know is that the premier has expressed his concern. we do have the supervisory board meeting on wednesday. when i spoke to him last week and asked him about his contract friday,n he said, no, meaning this friday is when my contract is actually extended. that was a formality -- that's what we thought of the time. it turns out it might have a interesting vote on what the board decides to do with vendor corn. he is a cardiac. -- cars guy.
1:14 am
it will be interesting to see just how and what he knew about this entire program. that might be a question the board asks on wednesday. guy: hans nichols from berlin. anna: coming up, china's resident says -- president says he makes his first visit to u.s. since he came to power. right,acking and human things could get awkward, find out more after the break. ♪
1:15 am
1:16 am
1:17 am
guy: it is 6:17 in london. good morning, these are the stories you need to know. anna: the u.s. justice department is said to be making a criminal investigation into volkswagen. that is after the automaker admitted to cheating on air emissions tests.
1:18 am
u.s.hile their top executive has apologized previously for the scandal saying we have totally screwed up. guy: chinese president xi jinping makes his first visit to the states today. china's military moves into the south china sea. will participate in a meeting with top executives. he will address the annual meeting of the yuan -- u.n. generally jenna -- general is a boy. -- assembly. of atlanta chief, remainsockhart said he confident that policy will be tightened this year.
1:19 am
guy: once returned to the state the chinese premier. he has there today for his first visit since he became president. david is in hong kong. his message for the u.s. businesses he will be meeting? seattle. will go to washington state exports more than any of the other state to china -- states to china. microsoft and boeing are there. his message will be a message to try to reassure business leaders that they can have access to chinese market. -- markets. the chinese have apps -- actively been trying to reduce the access to u.s. tech companies to parts of the chinese markets. agencies -- also the banking system -- there are some
1:20 am
concerns by the chinese that technology products put into their software will allow the backdoorctually use a to get access to information from chinese companies. that is what we are hearing from the chinese. that comes after revelations edward snowden that the nsa was involved in spying in china. this is obviously an issue for u.s. companies. it should be addressed by a the bilateral investment treaty. that is the part that we will look at this see if there is change on either side about giving access to technology companies from china into the u.s. and vice versa. we will be watching that particular treaty. cyber security seems to be a big problem between these two countries. spell out the differences.
1:21 am
david: it is all about what is acceptable and not. under the u.s. definition of cyber espionage, espionage like the ones i described the nsa activities looking into government agencies and trying to get military and political information, that is ok. what is not ok according to the espionageate backed privateey go and target companies, vacuum information, and then distribute the information to their own companies, chinese companies so they can benefit. we know that the u.s. is concerned because they accused five people's liberation army officers of engaging in this. and say clearly that the u.s. is preparing some responses to their perceptions of chinese alleged hacking attacks, which will show that the u.s. is externally concerned. anna: david, thank you.
1:22 am
guy: we will keep an eye on --ing waiter on because later on because we see the premier visiting the factory. anna: let's get more on his visit to the u.s.. we are joined by the head of asia at risk. we have been through a couple of things that might overshadow the visit, what about the currency devaluation? will that be one of the criticisms that ends up sticking to the chinese delegation as they visit bs -- the u.s.? >> there are two sides of this question -- on one hand the currency devaluation definitely has some ripple effect to the global market. given the size of the economy,
1:23 am
it is a clear indicator that ofing the short-term outlook china's economy and the slowdown. it also shows that beijing is more responsive effective and willing to let the market forces determine a greater role in determining the exchange rate of yen.nd -- that is something i think is welcomed by the international community. guy: wall street has been critical of the way the chinese authority has handled the economy over the last few weeks and months. you think there is an awareness in beijing as he goes to the united states about that feeling. in the past, the fx rate was front and center. you think they are aware of the criticism they could face?
1:24 am
, ithey are definitely aware think it is more important to recognize the understanding between the two parties as to why beijing to that decision -- took that decision. they argued that it is a necessary corrective adjustment. china as a picture, the bilateral ties have been going well. neither side will want to discuss something or bring something to overshadow the potential for more political engagement. only by doing that can the two countries work together and try way to improve the economy.
1:25 am
anna: it's interesting, we have not only china -- the chinese delegation bringing big business -- we have the alibaba ceo traveling for example. is that a new thing, this kind of visit? clearly we often get deals announced -- it seems washington is involved, but there is an emphasis on business. usually this visit usually brings business deals. brought a xi jinping whole lot of high-tech ceos come about without china is looking for -- the whole trip started in seattle -- that points out that china is looking for investment
1:26 am
opportunities in these industries and trying to bring the economy out of manufacturing. guy: do think the levee concern in washington about beijing and their reserves? what message does beijing need to deliver to washington to calm nerves about the fact they could be selling more? message ismeshes -- that beijing will remain committed to manage the slowdown. the chinese economy will not collapse, that is dumping no one something that no one wants to say. guy: it is against the qqq model -- qqq model. >> china's economy is entering the charter, beijing is still
1:27 am
finding a way of doing the reform. the currency is being stabilized. guy: thank you ray much. -- thank you very much, we will take a break. ♪
1:28 am
1:29 am
1:30 am
anna: welcome back, you are watching "countdown." here are the stories you need. the u.s. justice department is said to be conducting a criminal investigation into volkswagen. according to officials familiar with this inquiry, the company is exciting calls to buy that cars from unhappy customers. said quote we totally screwed up. visits the u.s. today.
1:31 am
he will participate in a meeting tomorrow with top u.s. executives that may include apple. he then heads to new york later this week and will address the annual meeting of the united nations general assembly. guy: the dollar has risen to its strongest level in a few weeks. economy ise u.s. strong enough to withstand a federal increase. there have been concerns over turmoil in global market. anna: caroline hyde has details on the market. before officials from the federal reserve seem to be saying these issues are temporary to do with global growth, we can sustain and maintain a rate rise to this year. -- we do this year.
1:32 am
that seemed to drive stocks higher in the united states. higher, aboutded .5%. with all the dow jones trade higher. -- saul the dow jones trade higher. it seems asian stocks are moving higher as well. we will likely see europe play catch-up. fxeresting though to note volatility at the moment, elevated. this is what is going to come out, the fact that the federal reserve held rates at their record low last week, postponing be potentially inevitable, means that every single point will drive volatility. everyone will be moving and reacting to every single global point of data. morgan stanley sa and we are entering a new era for currency volatility.
1:33 am
we are showing you that elevated level of volatility, the highest since 2011 when you're looking at foreign currencies overall we are the highest in four years for fx volatility. the dollar is near the strongest level in on this two weeks. emerging market print -- foreign currency is selling off today. now with much talk coming from fed officials themselves saying we will see a rate rise later this year. i will finish with commodities, oil is holding its rally at the moment. market iscommodity shifting attention slightly to what is happening with iran, we start to see the oil process from iran as they may process. metals are selling off, zinc is the lowest in five years.
1:34 am
the asian development bank has reduced its growth forecast for china and is saying the commodity exporters will be like indonesia. anna: thank you. guy: was continued the conversation on china. economic data points to a slowdown in the world's biggest -- second-biggest economy. news from their biggest networks is giving us something else. we have the story in hong kong. to look atople tend other indicators when it comes to china -- what do these indicators tell us about what is going on? malcolm: as caroline was saying, people are scouring the data for the fed, china is scouring it for a more detailed look at what is happening with the economy. -- reale of indicators snapshots show that things might
1:35 am
be stabilizing. the search engine shows more interest in small and medium sized firms. andaba, more like an amazon ebay wrapped into one, it's showing price gains of about 7.4% in august. this union pay measure which gauges transactions across many of the banks, it is also used for property dealings showed a rebound on certain scores like luxury hotels and property spending. signs of stabilization in the world second-biggest economy. anna: why do these indicators contrast with what the official government data is telling us? are they looking at different things? >> that is part of it. the official data has not kept up with the pace of change in
1:36 am
china's economy. there are economy is changing to innovation lead, consumer led growth models. it's moving away from things that were easier to count like international shipments, new home construction, all of that is easier to count and service industries. the case in point is the two pmi the official pmi for manufacturing has been in the doldrums for the last month it was a three-year low. services one, which accounts for a larger portion of the economy is showing strength. this is very important for employment because it takes forr inputs of people manufacturing, services you need more people. you can have the sustained robust employment situation, which we are seeing in china even with a slower pace of growth. guy: thank you very much. malcom scott, joining us from
1:37 am
hong kong. turkey,t's turn to turkey's lira has been a second worst-performing this year. gained antral bank has reputation for being unpredictable, what are investors looking for from today's decision? >> minister. -- that is true. investors are thinking it could be very predictable, because they have indexed their method next move to the fed. they said as the fed normalizes brian terry -- monetary policies, so will they. guy: in terms of the fed and the central bank and the government, which one do you think that the central bank listens to? the ministration has put pressure on his institution of the last two years. -- few years. >> minister.
1:38 am
-- that is true. we had elections in june, we will have them again in november. there is a feeling that the central bank, because it has had pressure to keep interest rates low, it probably will not raise them before the election -- elections. keeped allows them to rates on hold, the other is government pressure which might influence it not to raise. you. benjamin, thank guy: we will bring you that rate decision later. , goodbring in our guest morning. we have had said officials out for the last few days now, the hawks talking, driving the dollar higher. could we believe -- who'd we believe?
1:39 am
>> it should have happened in september. i think she held back because she was worried about the impact on emerging markets. part of the visit with xi jinping is saying look, this is not an isolated incident. you have to be careful how you hike rates. the counter pressure you are there is enough strength in the u.s. economy, i have been saying this on this program for some time, to actually justified to tighten. the u.s. has decoupled from the rest of the world in terms of economics. anna: a lot of people may be point after the interest rate decision that this looked like a fed that was increasingly connected with the rest of the world, in terms of considerations, time spent talking about emerging markets. do you think this visit by the chinese to the u.s. is linked? -- one ofartly linked
1:40 am
the things that she will be discussing is, look, you are links to the rest of the world. keep in mind, you cannot hike interest rates because this might have a deflation impacts on emerging markets. in general, the emerging market is weaker than it was before. if the states or to increase their interest rate, that would put strain on it. guy: if you listen to people on wall street and washington, they are critical of how the chinese have handled it. clumsy is a word i use on -- i hear used on a daily basis. how much criticism will they get? they have a lot of reserves, they could sell those. the possibility of further depreciation definitely exist, how will be conversation to? business allmy
1:41 am
think we are better than people in government. are more southern europeans. -- so then europeans. i think -- i take a different as a i see xi jinping political president. i think they have slowed the economy in a political manner. they do not mind some damage to some rich investors, as long as they stabilize it in a manner that it benefits the majority of the population of china. they want to make sure they have enough growth to pay for their investment of the future. if people accuse them of being clumsy, they will say, so what, it is work. they listen to the criticism, but they are not as -- sentence it -- sensitive as a westerner. they're not as dependent on market.
1:42 am
the key question for investors is to what extent is the u.s. economy strong enough to extend whatever weakness comes from china. your take is that the u.s. economy is strong. >> it is, and the chinese economy has stabilized. we have to get things into context. are we really upset that the chinese economy will grow 4% a year from your own -- here on. it will not grow at seven or 8%, that is stabilization. it is not as bad as people think. guy: there are some that are speculating the chinese are making sure that we have not seen devaluation because of this trip. they say after trip we might see devaluation. how important is this trip in the kind of choreography of how this process happens? we are trying to figure out what
1:43 am
the fed does, what the chinese do, the politics comes into the next -- mix. >> those are two separate things , as far as evaluation, they will have to devalue some more. we think in the region of 7%. that is a reasonable devaluation. are the choreography with us? yes, this is a dance between the two markets. the south china sea which we have not mentioned as much, the chinese military, this is about politics. it, they say we have a lot more and caught -- in common which is economic. we are a lot more connected -- please take that into
1:44 am
account when you hike the interest rate. by the way, we want you to come over and invest. it is a political discussion. seems to beping trying to get ahead of that conversation. in the wall street journal they were talking about how there is no basis for sustained growth. >> a little bit more, let them come out, it will stabilize. anna: thanks for staying with us. the ceo for investment management. guy: the eu meets tomorrow to discuss the refugee crisis. we will have more on the latest migration stories when we come back. ♪
1:45 am
1:46 am
1:47 am
anna: welcome back it is 7:47 if you're watching in paris.
1:48 am
guy: the u.s. justice department is conducting a criminal investigation into volkswagen after the automaker admitted to cheating on air pollution tests. cost toany is facing buy that cars from unhappy customers. the ceo has apologized saying quote we have totally screwed up. anna: chinese president xi jinping begins his visit to the u.s. today. it comes after beijing's recent market intervention and growing tension over cyber hacking. he will participate in a meeting tomorrow with top u.s. executives that may include apple. he then heads to new york later this week and will address the annual meeting of the united nations general assembly. their dollar rose to its strongest level in almost two weeks against the euro. federal officials say the u.s. economy is strong enough to withstand a interest rate increase this year.
1:49 am
dennis lockhart joined presidents in san francisco saying he remains confident that policy will be tightened this year. anna: andrea merkel is warning eu counterparts that they face a long battle to help refugees coming in. she spoke with david cameron ahead of a summit as eu leaders in brussels on wednesday. let's go to hans nichols. erkel preparing? chancellor merkel appears to be downplaying expectations. it is clear she does not want to have everything writing on this onmit in brussels -- riding this summit in brussels. she says these deliberations will be important, but they
1:50 am
surely will not allow us to set aside the problem, we need patience and stamina. she might get an update on the situation in jordan. her vice chancellor is on the ground. he has been deploring conditions there calling on states to be more. -- do more. john kerry talked about increasing another 10,000 syrian refugees. meanwhile there is a war of words between slovenia, and hungry -- hungary. lots of finger-pointing, we also a warning from the serbian about a concentration type situation. anna: thank you. about volkswagen
1:51 am
. tim coulter joins us. it is front and center on her website -- our website. tim, we were kicking this around, the level of problems that volkswagen now faces, so many angles to pursue. taking it back to its grassroots, they had admitted to cheating effectively on air pollution tests, judging by what the u.s. boss said yesterday, we totally screwed up. give us a sense of what that means and how you are covering it? tim: we made a chimeric -- comparison to avp moment -- bp moment. they did not intentionally set about to circumvent regulations. that really is what makes the case so earth shattering.
1:52 am
anna: you have another nice story centered around how volkswagen is advertising ,tself, particularly audi primetime sunday night television, after the company had made these announcements and had admitted certain things surrounding this, the way it has been dealing with the testing authorities, how does this add campaign go? tim: it rendering the emmys. andeatures kermit the frog the tagline is it is not easy being green, of course it is called truth in engineering. you can imagine what twitter did with that. in, diesel bring you is a european technology. we have embraced it here in europe, a lot of cars are sold
1:53 am
here. the u.s. has yet to embrace it. volkswagen has tried to make that happen in the state. -- states. could happen, the u.s. tries to go for diesel, the other is volkswagen and everyone else sale a lot of diesel cars here, how damaging could this be for the european sales? >> i am shocked. kermit the frog? he stands for truth and justice. tim: maybe kermit will soon as well -- sue as well. >> the answer is yes, do go -- diesel is a net -- a european technology. we no longer heat houses with diesel, we run correspondent -- cars on it.
1:54 am
we have worked out it is not bad for you, american car manufacturers could see this as an opportunity to go for diesel. , and we havened had indications that the regulator was to check these emissions. that might be an attack. anna: it was kind of surprising the way that the story gathered such momentum. it is not a new concept that the performance of cars in a testing environment can be markedly different from their performance on the road. in 2013 we have a european union environment commission cracking down on diesel fueled cars. the international council on clean transportation was talking about it, it has been in the ether for a long time.
1:55 am
we had a fascinating story about how this whole scheme was uncovered. it was an outside group of engineers who decided to do their own testing. they were just testing the real world results from what came in the lab. they said, there is something that does not add up. maybe the real winner becomes elon musk. everyone realizes it is not petrol or diesel. anna: we might have a date for apple and when they enter the car market. guy: diesel is cheaper than petrol at the mid--- moment. diesel, andlut of not a glut of petrol in the market. it is interesting, i wonder if that story -- >> the key is the guy that runs volkswagen in the state admitted publicly that they screwed up. he is admitting that they live. -- lied.
1:56 am
guy: they got hammered. the tests scandal is down here, if you look at it in comparison, they have fallen. -- more morty price and do you price and? -- in? >> they can be prosecuted. they could be forced to buy back cars. they are in california so they could have a class-action suit. anna: all of the other regulators are looking into this. -- itnot going to just might be the most damaging development, we will have to wait and see. tim: there is also collateral damage. who wants to buy a volkswagen now? guy: it becomes uncool. >> you worry because you made
1:57 am
the choice where you thought diesel was green, maybe it is not true. anna: thank you. guy: we will talk about what is happening in china. we will see you in a moment. ♪ ♪
1:58 am
1:59 am
(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store.
2:00 am
>> we have totally screwed up. apologizes.ve the company is set to face a criminal investigation. the chinese leader makes his first state visit to the u.s. with beijing's recently marketed intervention high on the agenda. to point tot effort a rate rise this year. welcome to "countdown." a.m. here in
2:01 am
london. it did not take long after the feds meeting for the hawks to provide it -- us with a counter view. we showed you this chart. this is the dollar index and this is the hawks getting into gear and demonstrating their power to move the greenback around. ellen speaks again. we will wait to hear exactly what she has to say. i think it will be fascinating. let's get you an earlier indication as to what will happen. this is a fair value story here. ,robably .2 of 1% move higher similar to what we were saying. possibly even a little bit more. the dax could open more strongly. need are the numbers you
2:02 am
to look at the head of the european open. overnights wrap up news including a treat that -- a tweet that moved the market. and hawkish comments from the fit's dennis lockhart. julie: the dow and the s&p finishing higher. the nasdaq could not quite make it there. in 18 of the past 23 sessions we have seen triple digit moves on the dow. this new normal of volatility rolling back. we had push poll in the market. technology and financial stocks doing well. hillary clinton tweeted she will introduce a new plan to try to curb restriction drug prices.
2:03 am
on the technology side, it has risen for 11 straight sessions. on somet rising positive analyst comments and apple on the rise after the wall street journal reported that it plans to ship an electric car by 2019. looking at some of the other markets, we saw oil prices rising as well after the weekly count on friday showed continued decline in the number of rigs in the united states. raising hopes that we are starting to seeing supplied and demand coming into alignment. a number of fed officials saying that the fed will raise rates before the end of the year. the 10 year yield rising and .ebounding that to you.
2:04 am
guy: what is happening in asian markets? standing by with the details. >> we are a few hours before the close. certainly much better compared to that horrible session we had monday which we saw 2% declines. still closed. of 1% down. half that being said, over the past 30 minutes or so, we're hitting a lot of these highs for most of the indices across the region. two hours to the close. that one is also on the way up. we enter magic hour, when
2:05 am
this reading gets warmed up so we will see how that plays out. about -- 5000s is . 5100 off the highs of the day. as julie mentioned earlier you're looking at the rate count. energyshed up the counters across australia. if you had to pick the big asia, oiloss producers getting a lift. that is how asia looks today. the developed market looking better than what you had across southeast asia. not a lot of people are convinced that the rally may have legs. shanghai composite, i should do the level earlier. 1.2% higher. volumes are 50%. half the three-month average. a lot of these retail investors which make up the bulk of that
2:06 am
market not convinced that now is the time to get back in the markets. that is up the third straight day. back to you. harrison of the data we are expecting. some events that are on the agenda for this week. we get pmi readings for the euro area. on thursday we hear from shinzo abe. he will lay out his goals for the rest of his term. janet yellen also speaks on thursday in amherst where she may elaborate on the central banks thinking. on friday we get second-quarter gdp for the united states. guy: mario draghi will be speaking. we have this matter of the bw supervising -- bw supervising meeting. anna: volkswagen could be facing a criminal investigation by the department of justice.
2:07 am
after admitting to cheating on admissions -- emissions tests. in theppliers caught downdraft. let's go to our international correspondent hans nichols for more in berlin. talk us through the latest. the story keeps developing. hans: the u.s. department of justice is having a criminal investigation into the matter. that does not mean they will bring charges. this is very serious. volkswagen seems to appreciate how serious it is. michael horn, the head of volkswagen's north american operations conceded that volkswagen had made some mistakes. >> we stated that this matter and this is common sense, now is the first fire ready for him personally and the board of management. let's be clear about this. our company was dishonest.
2:08 am
with the epa and the california air resources board and with all of you. and in my german words, we have totally screwed up. >> let's take a two or the violations it may be facing. they have indicated they will be holding hearings and -- in the coming weeks. a very public airing of alleged misdeeds. the traffic and transport ministry and the environmental ministry are saying they want answers. the financial -- they are indicating that if there are irregularities they may be looking into things that the european commission says they have not formally launched an investigation. they are taking the matter seriously. as far as korea, there are reports that korean authorities are looking into whether or not volkswagen has modified their test results. if you take a look at the effect
2:09 am
in the u.s. when you see who has market share in the diesel space, some of this is clean diesel, some as old diesel. at 56% of diesel sales are volkswagen or audi. they share a lot of technology. at 19% yet chrysler are of 20%. we have daimler, bmw, and under 10%.ors here's the issue going forward at least in germany. one out of seven jobs are reported here to be somehow connected with autos. you saw all the transportation stocks, at least those that feed in the big suppliers for volkswagen. six of the eight point down yesterday. it gives you a sense of how this is broader than volkswagen. this is the entire car industry. one final note on that, no investigation in the states. if criminal liabilities found against volkswagen and we are still -- we have no idea how big this could be either from the epa or the department of justice. if -- that makes it much easier
2:10 am
for civil liabilities, civil suits. there is talk of a class-action lawsuit in california which has strict diesel standards and a lot of volkswagen customers. guy: i wanted to get a sense of what happened since ferrari. this is since february. this is a 48% drop. the stock was already heading down south at a rapid rate. have seen a drop in the stock value. how do you hang on to your job at that point? his challengeays was inappropriate. he did it in an underhanded -- in an unorthodox way. the fact that his challenge came that we may have convinced the board they wanted to rally around the process on him you do things the right way. some of that is china and the
2:11 am
stock price. a lot of it is the volkswagen brand. they want to increase profitability at their namesake brand. .hey have invested a lot they have five different ways to swap out vehicles. we will see whether or not the grandson turn it around at least in europe. volkswagen sales around 6% or 7%. the husband one of the criticisms. not competinglly because they have not got highbred or electric fast enough. they have not rolled out a lot of new models. the sought -- passat, the jetta, they are not fresh models. this is something we expect to be a formality. i suspect that is no longer a mere formality. it seems the lack of
2:12 am
exposure is the problem. thank you. whati want to know happened. what kind of discount will they give you? we will take a break. china's president makes the first u.s. state visit but with tensions growing oversight or hacking and the governments market intervention over the summer, things could get a little tense. we will talk about ♪ that when we come back. ♪
2:13 am
2:14 am
2:15 am
guy: it is 7:15 a.m. and london. 8:15 a.m. in frankfurt. here are the stories you need to know. anna: the u.s. justice department is conducting a criminal investigation into volkswagen after they admit to emissions tests.
2:16 am
they are facing to buy back cars from unhappy customers. executives. apologized saying, "we have totally screwed up." federal reserve officials said the u.s. economy is expand -- strong enough to expand. lockhart remains confident policy will be tightened this year. concerns over tomorrow and global market's proved temporary. filing for ae ipo. challenging spotify and apple. guy: the president of china heads to the u.s. for an official visit. david tweed has more.
2:17 am
what is he going to say to u.s. business? are worried about the access it has been getting to the chinese market. ever since edward snowden revealed the nsa had been involved in some espionage in china. china has been cracking down on the access to government agencies, to the banking system of some american providers of technology. this is a big issue. especially in washington state. it exports more value goods to china than any other u.s. state. it is an extremely important state. he will be visiting boeing there. he has all these concerns about access and also china's concern about access to the u.s. market. one of the things they will be talking about is the bilateral investment treaty. this is a treaty where some of these concerns could be sorted out. later today.
2:18 am
he is -- he has meetings with the likes of bill gates, he will meet a whole range of business leaders and then he heads over to visit obama where the investment treaty will be part of the agenda. guy: thank you very much indeed. , our guest.with us let's talk about china. we discussed earlier on your thoughts. you're not overly concerned about the slowdown or you think some have overestimated it. guest: it is beginning to stabilize at this stage. you can expect it to slow down or grow forever. it is a huge economy. as investors we think there is opportunity there. we must not forget it is a huge economy. it is controlled pretty much
2:19 am
technology. lot of this bilateral trade agreement is important for them. it does have -- ramifications for the rest of the world. nice to see you. we have learned the fed pays attention to china. when -- we now know that. janet yellen has made that clear. what do you think u.s. authorities will want to hear from him? guest: the keys to understand what kind of stents china has to beast aggregate demand sufficiently to reach the target. and from what we understand policymakers in beijing have put in place sufficient measures to stabilize growth, probably by the fourth quarter of this year.
2:20 am
third quarter will see a slowdown. but there has been stimulus put in place. xi jinping will be expected to explain the programs. and theyoing to happen can focus on their domestic economy and start raising rates in the fourth quarter of this year. anna: if he is trying to reassure the americans as to the policy measures that the chinese are going to introduce, will that include discussion around the currency? do the chinese plan to further devalue the currency and how will that conversation go down in the u.s.? >> i am sorry i lost audio. chinese going to devalue currency further and how will this go down during this visit to the u.s.? guest: it will not go down well.
2:21 am
xi jinping has given an interview saying that there is no need to depreciate the currency much further. i think that depreciation, would not call a devaluation. the depreciation that china has allowed in august by about 3% has been sufficient to achieve their it sexist and make it easier [indiscernible] i think it is they are not planning to boost their growth to exports but through domestic demand. further significance causes -- that is not on the cards. we think the next year, another year of more than gains, banks will be protesting the chinese currency, diversifying their reserve. once the renminbi becomes part of the basket. guy: the onshore rates have
2:22 am
they diddiverts since this. any sense of what we will learn about the treasury holdings that beijing has of the moment, if they were to start selling those you could classify this as an antique kiwi. any message is likely to be delivered on that front? u.s. policy makers will be sensitive to that because they do not want treasuries to rise to much and they will come under upward pressure regardless of what china does. from what we understand, u.s. treasury holdings credit -- account for one third of the reserve. if china needs to intervene to support and get rid of some of the reserves, only part of that from liquidation of their portfolio. i don't think that china's actions going forward will be a major driver of treasury.
2:23 am
they could add to their rebels at the margin but they will not lose them in a dramatic fashion. the u.s. does not have major reasons for concern at this point. guy: thank you for your analysis. anna: still with us in the , our guest. a lot of conversation around the currency potentially. darius did not seem to think that there was reason for depreciation. guest: he said there was not a need for sustained depreciation. it will not depreciate now but it is a conversation he is having and we will have to see what mario draghi says. guy: he must be watching the fed mynking you guys are making life difficult. the hawks are making it slightly easier. if the fed is paying attention to china how much is mario
2:24 am
draghi paying? guest: probably a lot and he has a problem. he knows that cost of government and because of the cost for paying for all the migration that is happening. when he is going to say when he speaks later on, we never put a limit on the time frame. we will extend this item. where -- it is the easiest one. it's not like quantum increase. >> because of slowdown in china or the challenges? guest: there is a slowdown in china and there are challenges here. they want to give governments the maximum they can have. guy: i have seen the dollar rising overnight. for $.10all out devaluation of the euro on the back of the extension to the duration of the qa program you're talking about.
2:25 am
tent is about right. let's wait and see whether he announces that. --will -- what you are asked witnessing, you did have different blocks running at different speeds and currency was very important. it sounds like he is throwing french automakers under a bus. he is trying to say we are clean, don't worry about this. we need to get our guys checked --i know that everything anna: this is another clear direction of the story. regulators have said they are looking. it can widen to other carmakers. guy: vw has a problem. we don't.
2:26 am
anna: we will see who does well in the u.s. locks -- lots of talks about japanese automakers. guest: this could eat a hit on diesel as a whole. this is not good. it would be worried about whether you could drive the car in big cities in the future. you walk into a dealer and say i want to buy a diesel golf, what are they going to say to you? what is the depreciation, what kind of discount will i get us to mark you wonder what the ice-t isis is going to be as a result. >> you say yesterday we heard from apple about the date they are going to release their car. this might fall very differently. thank you. ceo guy: we will talk about the
2:27 am
volkswagen story more when we come back. ♪
2:28 am
2:29 am
2:30 am
guy: welcome back. "ou are watching "countdown. the justice department is conducting a criminal investigation into volkswagen. they admitted they cheated on emission test. the company is facing unhappy customers. the top u.s. executive heads said, "we have totally screwed up." anna: chinese president shooting will participate in a
2:31 am
meeting tomorrow with top u.s. executives. that may include apple. then he heads to new york later this week and will address the annual meeting of the u.n. general assembly. guy: fed reserve officials said the economy is strong enough to withstand an interest rate increase this year. joins those in san francisco saying he remains confident that policy will be tightened this year. anna: let's see what is moving asian markets this morning. david: we were just talking to you 30 minutes back and since then we have seen a lot of strength come through to the
2:32 am
hong kong session. let me show you the hang sang -- hang seng index. 22,070. we are seeing a rally here when it comes to these mobile phone operators. china telecom, china mobile and so forth. a rally there, 1.5% higher. shanghai composite similar gains. 3200 as of now. it is important to qualify that. 1.7% higher. we're talking about volumes being very in on the shanghai composite on the whole. 50 to 55%e or less at three-month averages. nowhere near the levels in may when we were at the peak of the rally and all these interventions into the market has turned off a lot of retailing investors and just sitting this one out. since we're talking about these asian markets, let me get you an
2:33 am
overall picture of what is happening. and also the device session. most of these markets are doing it well. the asia development release their latest assessment and forecast for economic growth in the region. theasically downgraded growth forecast for the entire region. they are saying 2015 growth, 5.8%, 6% for next year. theirn mind that is below march forecast of 6% growth for this year and next. it is the second time they have brought down those forecast mainly because of weakness in china and in india. a peaceful recovery. like where you guys are and in the u.s. 30 minutes into the lows for the shanghai composite, we are doing quite well. i will be back at the top of the hour to give you an update of how things are going. matt to you. anna: joining us there from hong kong. guy: we are 26 minutes away from
2:34 am
the european market open. let me give you a sense of how we anticipate european stocks will open. a little bit of green. stocks.he euro .- euro stocks germany will have to outperform. the dax is going to be a little bit of an outperform her. a little bit of an underperformer yesterday because of one particular stock. leading the carmakers down, having a pretty tough day. anna: the company had to admit to cheating on federal air pollution test according to two u.s. officials familiar. the doj is investigating. good to see you. the focus is on the ceo. what he knew, when he knew it and how he managed to lay this week.
2:35 am
he has to go in front of the supervisory board, doesn't he? >> there are a series of meetings tomorrow. they will discuss the issue and on friday, the old board meets. -- old board meets. the extentduled to of his contract so it will be a tense time for the ceo and see how this plays out for him. it is difficult for him because he is such a hands-on guy. he is private himself in swaggy and vehicles and knowing the details of your cards. -- their cars. a lot of people are asked about what he knew and when he knew it. if he did not know how come he did not know because this is what he is about. stock is down nearly 50% since february. many ceo's will be having a tough time hanging onto their jobs.
2:36 am
what happens next how does the process work? give us a sense of the understanding of how this will evolve from here. chris: there was a lot of pressure that team out in the european union, not just germany. the pressure is building. it has to come out and say something quite clearly. the difficult thing about this crisis compared to when you were in april, there is a problem -- a power struggle that humanity is to survive. this is not an internal company issue but it is an external company official. what will happen is that we will see what happens, how volkswagen responds today. if they responded all. it was on sunday the statement from the ceo where he said he was deeply sorry and promised a thorough investigation. he did not respond directly to his role in the issue. it is going to the question of
2:37 am
how he response, how volkswagen response in the coming days, today and tomorrow. there is probably no clear -- clarification of the point. secure board will have to make a statement about how the proceed with this issue. volkswagen has been quiet, probably too quiet for a lot of people. anna: thank you very much. and more with technical innovation at volkswagen. well.nteresting as the french finance minister saying automakers should be tested. he believes that french are clean and they take the competitive advantage. sharks areeted, the definitely circling on this story.
2:38 am
anna: that's talk to lucy mcdonald. someone who does not buy car stocks. why had he stayed away from the sector, blows around china even before any of this story. there might have been something that kept you awake. >> longer-term it is a very significant industry. it is very competitive. there are barriers in the national companies that want to protect their margins. which hasition, china had a lot of growth, you are seeing the corruption crackdown and you have negative from an economics standpoint. it all ways in. -- weighs. there is value there. generate outperformance
2:39 am
by having some cyclicality at the right moment in your portfolio. >> that is true. if you can find in a -- a company that you want to invest in, it is a next boost. this particular industry has been through a lot of cycles. and how it performs in downturns. it does see a lot of [inaudible] anna: you invest even if something look like it cyclically might provide you with something positive in the short-term. you are not interested. guest: we always prefer long-term and sustainable, good growth and good margins. that is utter are then something moving up and down every five minutes. aviation stocks, consumer goods? guest: luxury cars, yes.
2:40 am
surprisingly a good luxury. they can have her a stable returns. that is a reflection of the money that is spent [indiscernible] look long-term, lvmh included, they have very stable returns underneath. china has been the big impact and they had a big boost. saying a classic slowdown. that feels more predictable than a lot of the other reports which seem to depict it as something that is different to the rest of the world. how else -- how do you think we have a handle on what you're seeing in china? guest: good question.
2:41 am
no one has a really good idea. when i say classic, if you look at all the elements of a cyclical slowdown, you can see that there is an inventory buildup. you have momentum coming into manufacturing. imports being affected. so far, retail has held up relatively well. even that is likely to be employmentter as begins to be effected. it looks like you would expect. that issue there. that is the biggest issue for all the economies is how do you work through that. what is different about china is it is in transition. that is what is making everything more difficult for
2:42 am
them to management also to judge what is happening. the numbers they have been confusing many of the companies operating. when you look at the underlying not anything like that. that is what the companies are experiencing. we are getting closer between that number and reality. that has been a major problem. thank you. stay with us. we will see what this means for the market open. see you in a moment. ♪
2:43 am
2:44 am
2:45 am
2:46 am
guy: 8:45 a.m. in paris. volkswagenutomaker admitted to cheating on pollution tests. the company is facing calls to buy that cars from unhappy customers. executive said "we have totally screwed up serco guy: chinese president as you shipping begins his visit. jinping. he will address the annual meeting of the u.n. general it assembly and meets president obama. federal reserve officials at the u.s. -- said the u.s.
2:47 am
economy is strong enough to withstand an interest rate increase. fedis lockhart joins president saying he remains confident policy will be tightened this year on concerns that turmoil in goal markets should prove temporary. guy: european stocks this the dax.vw may help greenures coming into the ever so slightly. already down by .1 of 1%. it could be a second day of rally. let's have a look at some of the stocks. you will be talking much more about volkswagen in a moment. some concerns today. i am looking at rsa. it was a big seller. down by 20%. being called today higher once again. this as the chief executive,
2:48 am
stephen hester, is saying there could be more bids on the table coming from rsa insurance group going forward. keep an eye on rsa. keep an eye on mlse. concerns about a sales collapsed. this is to do about the market route we saw in china. chinayer was going to be securities. i guess listed security. could it collapse because of the plunge of the stock market since its? -- since june billion deal. that could be a concern for the london stock exchange. ig index and client activity got higher in the second half of august admitted the stock market route.
2:49 am
they managed to bring in new clients overall. first-quarter revenue up 24%. much.thank you very caroline hyde with some of the stocks to keep an eye on this morning. .uy: let's go to berlin hans nichols is there. yesterday was a difficult day for vw. what does today bring? i feel looking for official germany's response. can't orfer minister saying that he wants to check all diesel vehicles in germany. volkswagen would be included. inderkorn indicated he will cooperate fully but the idea that this could be diesel-wide at least in germany is an interesting development and one that we should watch for
2:50 am
the other auto companies, not just volkswagen. anna: we have heard from the french finance minister that the french carmaker should be tested. latesttching the developments on the migrant crisis. important meetings for the eu in terms of managing this migrant crisis taking place today. what is coming up? hans: we have the interior -- interior ministers meeting in brussels. some ways, you look at what is happening in the war of words between croatia, slovenia, hungry, and serbia. the onesntries not -- that are members of a eu, they will be a potential block to what comes out out of the eu in brussels on wednesday. 120,000 resettling
2:51 am
plans. may find themselves as allies as they oppose their resettlement plans which all their language indicates they will do. i will look at how those countries interact or how it helps the western side of the equation. you will accept your share of the close that brussels deems necessary. hyde sent me a note saying that vw is at the lowest point. dax looks like it will outperform. it is up 5.4 of 1%. goes.l see which way vw lot fromhave heard a fed officials coming up with more hawkish commentary then we
2:52 am
gathered. how does fallen to place for you? -- does that fall into place for you? the u.s. is stronger and on the base of that alone would be justification for raising, ri ght? the judgment was not good. they are probably thinking much more domestically about the justification. there is no this agreement about that. the question is, what is the impact on financial conditions outside the u.s. from what is happening in china? guy: market -- mario draghi speaks on wednesday. how will that affect your decisions? the dollar goes up or down, with that change your thinking? guest: most of the companies that invest are internally hedged. we do not buy a company because
2:53 am
of company exposure. we do not think we can forecast currencies particularly well. especially at this volatile time. thet is much more of background in which we make our investment decisions. anna: if you could see longer-term that the currency is in that direction that that might boost exports on that one country, is that ever something that shows up in your investment strategy? guest: when we see how company earnings are developing the currency can have an impact on those earnings. that happened this year. and others had big impact from currency. they need to do something about their pricing? luxury companies had to amend pricing in hong kong because of the changes in the frank this
2:54 am
year. it is a bigger part of the analysis we are doing, picking what impact it is having. they're having to do it as well. guy: thank you very much. anna: just a few minutes away from the start of equity trading. jon ferro is next. n: dropping after the vw scandal. the u.s. justice department is investigating the german carmaker. are investors going to hear, a big fine from the u.s. or regional contagion, something much bigger. we will be talking trouble for vw. and dennis lockhart joining a chorus of regional federal reserve president still talking up a rate hike for this year. have we learned anything new out
2:55 am
of some of those speeches and statements from regional fed presidents? their president visiting for the first time. we will break down that agenda. guy: taking us toward the european market open which we think will be flat to slightly positive. it will bek like -- interesting to see how big of vw will do. isa: "on the move" next.have a good day, everybody. ♪
2:56 am
2:57 am
2:58 am
2:59 am
jon: good morning and welcome to "on the move." just moments away from the start of european trading. we have totally screwed up. chief executive up apologizes for cheating on emissions. team 2015. federal reserve official dennis lockhart giant -- joins a chorus of officials maintaining that rates will rise this year. beijing's recent market intervention high up on the agenda. are down a little
3:00 am
bit lower. decks futures in for a little bit of a rebound. one stock that everyone will be watching as the w. -- is vw. caroline: in europe, it could be a flat day. we saw a rally yesterday and a rally in the u.s.. asia stocks are generally approving today. are now saying the economy is strong enough to late rate height in the year. capital group are saying this morning that the market will remain listless. we will see how the dax opens and whether or not that is related by volkswagen. volatility in fx.

14 Views

info Stream Only

Uploaded by TV Archive on