♪ chief, the board is set to name a new ceo after the fall out of the commission's scandal widens. an investigation into volkswagen. still on track, janet yellen gives the dollar of boost as she confirms the fed still sees interest rates rising this year. japan's inflation gauge falls into negative territory, despite the governors unprecedented monetary spending. welcome to countdown, i am anna edwards. just about six a lot here in
london. let us talk about janet yellen, the message she had to give to the market yesterday. i have here a dollar index, we have a bit of a bounce going on in terms of the reaction we are seeing. the big message from janet yellen last night, along with the hawkish voices heard in recent days, she was confirming the 2015 is when the majority think we will see a liftoff and interest rates. barring any big surprises, of course. that gave the dollar of those. it did not post expectations of a rate rise, if you look at what the fed fund futures are saying, they're talking about the 47.5% chance of an increase in december. it did move some of the yields, though. if you look at two-year treasuries, a muted reaction -- a big drop you see was last week around the fed rate decision. can we just see the muted reaction? as well as talking
about the 2015, not being a can of liftoff, she was also talking about gradualism -- how important it was to be gradual to allow the markets to heal. let us put that into context, we have the voices talking to us about the subject as we go to the program. we're going to talk to xmpc member willem. he will speak him later. how are the asian market reacting to do this? good morning to you, david. we have janet yellen a factor in here, and that cpi number from japan earlier. david: good morning to you, as well. the story here in asia, if you look at the fx markets, it is very much a strong u.s. dollar story, not surprising given our guest's very hawkish comments. that being said, the other big story as well here, as you mentioned, the inflation data
out of japan. -.1%, yes, below zero for the first time since 2013. i think it is very important at this point in time to put that number into context, within the governor'sthe boj comments to expect inflation to drop below zero. there is another measure in japan which also strips away the energy prices. take a look at that one, that was in positive territory. said, soy equity markets -- put all those together, we are poised for a weekly drop. a fairly sharp one, up about 3.5%. not a lot of risk appetite in the market, next week we have a series of data across hong kong, it is closed on monday. i would imagine more than a handful of traders and people here in the financial center of
have taken a long weekend off already. the other story i want to mention, as well. you also have hong kong, and you look at the hensing index. it is thes down, first chance traders are getting to react to the export numbers that cannot yesterday. and it sort of almost completes the very weak external demand story across the region. exports here felt north of 6%. and of course taiwan cut the benchmark's for the first time in six years. it is very much still a slow growth story, and mixed picture across asia. but it is friday. so kind of quite out there. back to you. ♪ anna: the advisory board is expected to announce a new ceo in a meeting later today. as the carmaker attempts to
repair its tattered reputation after a committed to cheating on emissions test. we are joined now by hans nichols who is at volkswagen's headquarters. whoe also joined by ryan, is covering the story and the widening of the story here in the u k. hans, let's start with you. is it clear he is good to lead? hans: it appears to be so. even if you think it is the cover-up, the actual idea that some company's were fudging diesel emissions, they don't really have that many diesel vehicles. i suppose if you went to pan american, you could get that four-door sedan. they were not making this clean energy put. that said, matthias looks like sche.s lost porch
they have been a profit center for the volkswagen. muehlleroke with mr. lastly, i suspected regular leaders could go too far on mission control. here is what he said last week. first of all, it is a big challenge to reduce the co2 to 25 grams per kilometer. they should be careful to keep the new orders at 25 at that time. because it is a huge challenge for the target for 2020. hans: there is a regulator danger that they go too far. heardlin yesterday, we from the transportation ministry. they will do spot checks on all diesel vehicles across france. we heard something similar and france. the eu is urging all member states to check diesel him at to
see whether or not they are compliant. a quick note on that x three report yesterday. this was a report they clarified, it sent the stock down 6% at one point. i think it closed down 5%, they clarified that saying it was actually not. they somehow missed read it, and it was 11 times the legal limit. anna: important to clarify that one. let us talk about the investigations that vw faces. various states like california, texas, illinois -- among 27 states investigate. what is the latest? hans: yeah, this is an indication to what extent this will become a political football in the united states. all of these attorneys general gathering together, there may be more. they are when to figure out how they will go after volkswagen. at the same time, there are 60 class action suits in the
states. and the numbers in the states, remember, if we take what we know publicly -- 482,000 vehicles were there. vehiclesl globally were 11 million. one quick look at porsche. no one has ever said the following sentence. i am buying a porsche because it is environmentally friendly. you buy it because you are going through a midlife crisis. you want a smart, sexy car. it was the tainted by diesel. i know what you will buy the next time you are shopping. i will not say it on air. you and i know what you like. anna: that sounds mysterious. we will leave that hanging. you might not buy it for fuel efficiency, but you buy it thing you can drive it into city centers. if that were to come at a threat, that the change thing. but i take your point entirely,
hans. join us there from volkswagen. let us talk about the expansion of this inquiry. ryan is standing by with some analysis of what the u.k. is doing. ryan, the u.k. is also announcing investigation. vw dealership i understand? ryan: i think we know what kind of car hans once the byron up. that is ok. the u.k. as announced and wants to retest some cars in this country. i want to make sure that the issue we see with volkswagen is not an industry-wide issue. on the eu toling have an eu investigation. we heard this from other countries overnight, we also heard from italy saying they will retest 1000 cars. germany, on the other hand, is saying that the tests that are being used in the eu right now
and in germany just are not good enough. many of those tests are conducted in a laboratories with prototypes. they are a little bit like self-certified mortgages, or the regulator relies on the manufacturer to give them the data. and germany, the environment minister they're saying the test needs to change. but you are exactly right. the eu has thrown their hat in the ring, joining the other countries saying that in this country, too, they will look at whether these devices were used to cheat. i listen to someone who monitors the secondhand value of volkswagen. he says he is not seen much fall off yet in those resale values. what are dealerships saying about the impact on their business? ryan: dealerships are very concerned. they have been getting many phone calls. at this point, there is not much clarity. so in the united states, we know that volkswagen is going to
recall some models. but that is not the case yet in the u.k. a lot of people want to know first and foremost is her car going to be recalled? but obvious the the dealerships are recalled, particularly in a place like the u.k. where up to half of sales can be diesel sales/ .in the united states it is miniscule. the other thing going on in the u.s., we are seeing the association of dealers in the united states are presenting more than 600 dealers -- they say that in the process of getting to the bottom of this, and firing vw executives, do not north american ceo because he is great. and that would cause as they put it catastrophic damage to the u.s. market for volkswagen. unless there is any direct executive --t that and he is one of the three that has sort of been leaked as a getting fired today,
unless there is direct knowledge the company has that he was somehow complicit in the cheating, do not fire him. needing the that is a. the u.s. is an incredibly important market. remember, vw was to hold on to the global lead as the largest car manufacturer. they sold more than 5 million cars, that is just 20,000 more cars than toyota. you lose the u.s., they lose portions and the u.k., they could lose that lead. morgan stanley said they could lose as it is as many as 400,000 car sales this year. anna: ryan joining us from london. hans nichols at the headquarters. we saw him earlier on. that brings us to our twitter question today. is the auto sector now ripe? we heard from the chief executive of chrysler, he talks about m&a needing to happen in
this industry to drive higher margin. he thinks that everyone's attempts to innovate and feel efficiency -- innovate in fuel efficiency. janet yellen has confirmed that the u.s. is still on track to raise interest rates if you. but which factors are weighing on the central bank? bloomberg reports from new york. joe: we heard from fed chair janet yellen reiterated her call that a fed rate hike is likely in the cards in 2015. but it was certainly not a guaranteed thing, not a hawkish statement. the markets did not move too much after the news. she continued to say there was no reason to wait until inflation hit 2%. but obviously, she is still paying attention to all of the things that are concerning everyone -- global markets, financial volatility, the situation in china. and obviously, the domestic economy. janet yellen felt unwell
due to dehydration towards the end of her speech. and she sought medical attention. before she left, she went into key challenges the fed faces. here are the top yellen let's and under one minute. janet: most of my colleagues and i anticipate that will likely be appropriate to raise the target range for the federal fund rate sometime later this year. and to continue to boosting short-term rates at a gradual pace thereafter. policy were to delay the to normalization process for too long, we would likely end up tighteno policy relatively abruptly to keep the economy for significantly overshooting. the united states is experiencing very low inflation on average since the financial crisis. reflecting persistent
economic weakness that is proving difficult to fully counter with monetary honesty. anna: she also says that janet yellen sought medical attention. she felt much better and was able to continue with her activities for the rest of the day. let us get analysis from last night. we are joined for our next guest for the next hour, steve, great to see you. a bit of a dollar bounce in relation to janet yellen. what is your take away? u.k. going to 2015 is still on the table? is that on the table? steven: this is the guidance we were seeking after the meeting last week that we cannot really get. but now she is making it very clear, we are still on track for we think it is a december hike. that would be the best case scenario. from that perspective, two points. if you look at the market, the
u.s. bond market, it is probably around 50% -- anna: 47% chance of a rate hike in december. they do not want to surprise the markets. steven: that needs to become priced in. two takes, the dollar will follow the high. this is the key take away we would say of two-year high yields. anna: that is the introduction of sorts. steven stays with us on the program. coming up, less than zero. we look at the progress of the japanese economy. we will have analysis, after the break.
they have been discussing the economic situation in the world's third-largest economy. the come as japan once again enters deflation. main consumer price gauge fell to 0.1% in august from a year earlier. that is the first decline since april of 2013. but as the two brett miller who joins us now from tokyo. great to see you. can we expect to pick up anytime soon? they are fighting against all of the drillers in saudi arabia in texas, aren't they? brett: that is true. the energy market really is creating havoc with the inflation of governor kuroda here in japan. if you look at the market, the skepticism about the inflation speak to the governor, and he will tell you he remains confident of 2% targets. that of course is his job to talk of inflation expectations decades ofknow, two
inflation in japan. but really the public's patience is starring to wear a little thin. so is the market. he started this program more than two years ago and we're still waiting for inflation. fit into the figures we heard about the three arrows -- maybe more than now. i lost count of how many arrows we had. brett: depending on how you count, we still have three arrows -- or may have six. the primus to held a press conference last night, setting out some new economic objectives. he is seeking a 20% increase on the economy, which is really quite an astounding target you consider that we had the economy actually contract last quarter. last year, we had a recession. we will be looking for a lot more from the trimester when he speaks later tonight. he will meet the press again, and that is when he will be grilled on some of the details
of how he expects to meet this 20% target. and a little more on these three arrows, or six euros. anna: thank you very much. joining us from tokyo. let's get back to stephen say ven. nose apprise their based on the inflation number or other metrics? point: i think the key that is like the misguided, we should be looking at the labor market. they had this unusual situation at the moment in that it has reached full and one in. many industries are struggling to hire. particularly the construction industry, we have the tokyo olympics in 2020. without an increase in the labor market, say for example guestworkers coming in from abroad, it will be very difficult for the japanese economy to grow. for us, that is the key problem in japan. anna: does that take precedent
over qe. in october, a third of economists say we would see an increase in qe from the boj. steven: we don't believe there will be further qe. particularly, the key point we would say is in the government's view of the weaker yen and actually changed. there is less pressure from the government on the boj. anna: steven stays with us a little bit longer on the program. almost 200 nations will discuss climate change at the 21 summit in paris in december. global warming history to have a visible impact. visited theberg mountains and the alps where it is most evident. ♪ mountain, iiful have not been there a long time.
there is a giant glacier underneath, and a part of it is called -- you arrive to see waves of ice. >> wow. >> while 27 years ago, my family and my two brothers came on the same train to go of the glacier. there was a lot of ice. you could almost touch it. i was kind of nervous, i am not sure about what i will find it now. ♪ my mom to this really cute picture of us in 1988. it was me, my brother, and some friends. the glacier was behind us. this is exactly where i was seated with my brothers and friends. behind us, the scenery has changed dramatically. i met frank pollard, he has been
back every two years since then. he really witnessed quite a change. frank: innocently been accelerating in the last 10 years. when you get on the glacier, it is covered with gravel because of all of the stuff falling off. helene: used to be able to take a cable car that would bring you directly to the glacier. this time it was really shocking, all of a sudden, i had to take a huge staircase to go 100 meters down to the glacier. when i came here for the first time, you took three steps and you are at the glacier. down the steps. nearly 400 today to reach the ice gauge. here, we middle 80's, would have been completely under ice. the difference is much more important in the past 15 years,
rather than the 15 years before. helene: it took us a good 10 minutes to finally reach the ice. there is nothing. the manager told me that many visitors come each year. i wonder for how long? >> honestly, if we do not move the ice skate hire on the glacier," tro or five years, it will be gone. helene: like most people, i came to seem the glacier. but now, most will come to witness climate change. coming up on climate change as we count down to the paris later in this month. coming up, 90 it's a bounce as its profits the expectation. we will dig into their earnings after the break. did that mean anything for the sportswear manufacturers and retailers here in europe? but he more to come during
anna: welcome back, 6:30 in london. here are the stories you need to know this morning. japan has fallen back into deflation. the bank of japan's main inflation gauge, consumer prices excluding fresh food, fell 0.1% from august. it is the first decline since april 2013. a comes in the same month that governor roda embarked on asset purchases. volkswagens board is expected to name a successor to the former ceo today. meanwhile, 27 u.s. states have begun a joint investigation into volkswagen after the world's biggest carmaker admitted to cheating over in missions tests.
janet yellen confirmed that the federal reserve is still on track to raise interest rates is you. in a speech at the university of massachusetts, she placed herself firmly in the camp of committee members favoring a 2015 increase. but she also stressed tightening would be gradual, to allow the labor market with appropriate the fed's next decision comes october 28. with janet yellen delaying the timing, bloomberg caught up with yield fellow and former morgan stanley chair. he told us why china would be in headlines. because is important they cannot afford more than double the share of global growth in all the advanced economies. the problem, though, the recoveries in the advanced world are anemic. that is why china gets a seat at the meeting. if i were covering the states, it was not as strong as we were being told. china would be a blip.
anna: steven global head of strategy is still with us, china gets a seat at the table is a line there from stephen roach. steven: clearly what he is referring to here is the impact of chinese growth on global growth, to be specific. issue iscrux of this how much china is going. whether there will be a significant slowdown. the janets not, yellen is clearly signaling she will go ahead and height in december. anna: you feel like you have a firm handle on how much it is slowing? as we look at the official pmis and the contraction, and we hear anecdotally from others that the measures are not enough for the activity really is in the chinese economy. it is not as bad as you thought. what is your sense? couple ofoking at a
indicators, it shows a pretty serious decline. gdp, retail sales, they are falling significantly. the other key points to focus on here is commodity prices. these are real. and there is also significant deficiency or for other economies and other currencies. the fact that commodity prices, oil in particular, is coming off so much -- it's certain to suggest slowing global demand. led by china for commodities. flow intooes that: commodity currency, what we see from central banks? a number already cutting interest rates, and now norway yesterday giving us more evidence of that rate cutting. steven: this is where it gets interesting. we think it will continue to weaken. that tends to undermine commodity-linked currencies. we have a surprise rate cut yesterday. we think there is another one to come. we are calling for another one from the region's in november. we do not think it stops with
norway. canada,view we have is and economy lead to oil. we think they will cut at the meeting in october. that will weaken the canadian dollar. australia will be quite weak, too. the asian currency weakens and commodity prices they relatively weak. anna: and how long we remain in a world where the feds and the bank of england are looking like or acting upon rate hikes? in other parts of business against economies are loosening monetary policy, how long does that picture last for? steven: it seems to be going on pretty nicely. yellend from jennanet last night, unemployment has fallen. that is the key driver for them to start hiking. anna: but she thinks unappointed
needs to far further. she wants to run it a little bit hot for a while, risk taking unappointed down even more. ingesting more people need to return to the labor market, more people want to take full-time jobs. security feels there is more to play for in the labor market. steven: you can argue that is artie happening. made it clear that the net rate is 4.9%. anna: that is on climate or you don't get too much inflation. steven: currently it is 5.1%. but it is interesting, the fed's rate keep falling to. janet yellen is saying it is good for a default load further. and that will mend some of the structural damage we have seen to the u.s. economy. anna: she was really emphasizing the healing of the labor market needs to undergo, was and she/ that was?
2015 is still on the table for a rate rise, we start hiking rates, it will be gradual. there is mending me to be happening. steven: that is the case. they do not have a crystal ball. janet yellenlear, has been and is likely to continue to allow the economy to run hot. she is allowing interest rates below are than they would otherwise be at this point in the cycle. the clocky point is, is ticking. she needs to start hiking at some point, and we think december is that. anna: stephen stays with us. let us get back to our top story, our top corporate story. the scandal engulfing volkswagen. bloomberg caught up with some of the biggest carmakers to get their reaction to the emissions cheating. more for every
carbon detector. >> ford is proud of being named annually. >> we are confident and we know for a fact that they perform in the lab like they do on the road. clear insue was very the releases that it may. about the fact that it has no relations with the industry. >> every single member of the association, is up to them to make their own statement about what they are practicing and what kind of, you know, devices they had. what kind of technologies. >> you do have applications on the karzai. for trucks, those who need these obama they want the soul. andverybody has her own, have to adapt to this. >> the european union and other countries, they make very clear that they are working on different standards to be able to measure. >> as an industry, we have to work with the epa and the
government around the world to make sure our tests match what happens in the real world. >> we are very confident that this will happen. >> we were together to do that. that is something that is in our interest, as well as the consumer's. anna: we also brought you coverage of course from the vw's had coverage. you anita go far to see the impact that the scandal i having. more than half of the population works for the company. hans nichols to visit to find out more. on a widettle town waterway, built for one company -- volkswagen. everywhere you look you see a v and a w. with an average income of 92,000 euros per person, this is one of germany's richest cities. 70,000 of the 100,000 residents.
more than half, and that is why the scandal and the share price drop is more than just a passing headline. build by the not sees in the 1930's to make the original peoples car, it is the biggest in europe today. with its own power plant. the company owns and brands the local soccer club, which climbed to the top and won this year. the city's modern art museum was opened in 1984, finest by the volkswagen foundation. thethe main attraction is 28 hectare park. within an opponent rate far below the national average, the question for the city is whether or not this main entrance will continue to be a to i play street. for just an exit for people driving volkswagen. hans nichols, bloomberg. anna: another corporate story we are watching today, we have
first quarter earnings are last night. profits beat estimates. the sportswear maker's share jumped 80%. caroline, the morning. nike just didn't. 23%, sales up 5%. it really didn't smash expectations when it came to the numbers they managed to post.. futures numbers as well, up 70%. that is basically a proxy the growth we will see next quarter. looking very strong, as well. people liking what they're hearing. you mentioned it is the higher prices that will boost profitability. but i lower tax rate that came below expectations. looking strong, no wonder the shares popped somewhat. have a look at the after hours rise you're talking about. up from 8% we can bring you that
particular graph at the moment. we are seeing the market valuation of nike rising. this will bring the market capitalization of nike to in excess of $105 billion. they're adding $8 billion if they hold on to these after hours numbers. that makes it seven times the size of its rival. it is front and center of the market. let us have a look at the standout, the emerging markets. brief a sigh of relief, it seems to do much better. many are saying they are talking tremendous growth potential. up, they sayd china is the brand and the marketplace -- never stronger or healthier. numbers they are pulling up, up 30% in the last quarter. future orders up 27%. this sort of growth will be maintained, although if you look at currency tuition, of course,
yuan weakening. and you will see orders down some 3%. if you strip out foreign currency issues, it really is a strong business. 27%, also theup rest of the emerging markets will continue to grow up 6%. western europe looking good, central and eastern europe looking good, the only area that they signaling concern was brazil. that they say is a challenge. let us look at what they have been doing so well. why hasn't managed to keep on stealing market share of adidas? their focus on women, in particular. click on line, the first pictures you see are women in sports gear. it is working well. online and direct to consumer, the online platform and their shops as well, ceo mark parker very much believes he will replace the chairman in 2016. anna: we will see what impact that has on adidas at the start
anna: welcome back. time in london is 6:46. here are the stories need to know. toh wagons board is expected name the successor to former ceo today. states have7 u.s. begun a joint investigation into vw after the world's biggest carmaker admitted to cheating over commissions test. janet yellen confirms the federal reserve is on track to raise rates is your. at a speech at the university massachusetts, she plays herself
firmly in the camp of committee 2015rs favoring a increase. she wanted to be gradual. the fed's next decision comes october 28. billion left1 china in august, record in capital outflows. in the asian country. the capital slides came as the people bank of china shocked global markets by devaluing last month. the director said on thursday that the outflows are short-term. now.s talk about adtech as they seek to track and monetize online video content, they appear to simplify the contest. unruly media was acquired by news corp. we are joined by the cofounder, sarah woods. it is her first interview since the acquisition. congratulations on the deal. tell me why you decided that the
steel was right for you. newbe bought by ne corp? trends,ll these hot when we spoke to the team at news corporation, we just saw the potential. they have incredible media brands and our role as advertisers is to help place them across the world. they approached us and we said absolutely, this is a fantastic opportunity to stay unruly but really scale up the opportunity. anna: you say you will stay unruly, but you're not worried about culture clash -- reporting to rebecca brooks. you are used to running this in the been delayed, but now you have to report to someone. sarah: they have a real track record of buying companies and them run autonomously.
helping them to turbo boost and giving them the scale of the global platform but really helping recent acquisitions retainer values and vision. that is definitely what we plan to do. anna: you are definitely excited by the street i don't like to pour cold water on it. but there is disappointment the london tech scene. why could they not listed on the stock exchange, do you see any merit to that view? sarah: it is a great example of multimillion dollar unruly's, but also past and present -- a quarter is owned by previous staff. this is great news for the economy. anna: what will you be able to corp.h new that you cannot do now? sarah: access to premium plans
across the planet. global global climates, conversations that will be really help. also the key to invest in the technology roadmap, the exhilaration of the roadmap of the features. we can deliver for our clients and do that faster. anna: adtech is such a hot industry at the moment. i was researching for this conversation, and i saw stories with titles like "top 30 businesses to watch." there are so many businesses playing. is it right for consolidation? sarah: it absolutely is. we will see more that activity in the coming month. for just the reason you say, it is very cluttered. many startups reckon i see opportunity in creating niche businesses. there are not many that scale. we are proud to scale unruly. and we hope we see lot more here
in london over the coming years. : talk to me about ad blockers. is it a threat? sarah: we are fascinated. in something we haven't looking at. anna: i don't like them. i can block them out. sarah: it is always been possible on desktop. but this is becoming a big issue as people are consuming ads on the mobile. anna: doesn't sound good for you. sarah: the challenges for advertisers to create consumer expenses they want to watch. raising those ads in social, not antisocial video units. this is where we come into our own. unruly is all about helping brands create content they want to share. loading pages politely, letting the content load before the ad.
withinasing great videos social performance, or the user is in control. a lot of publishers respect that contract and treat the user with respect. the situation will resolve itself. anna: every time you talk to you we have to ask about the latest viral videos, the ones that are taking your interest. what has been the secret most recently to getting your video to go viral? cats, small children? [laughter] sarah: it is not about the cats. [laughter] lots of social good videos proving very popular. lots of brands calling them selves to good causes. we see brands trying to become part of a movement, getting a real connection to viewers. that trend is going strong. anna: thank for joining us. congratulations. the cofounder of unruly, sarah
woods, great to see you. steven is still with us. any of your cap videos gone viral recently? steven: i cannot say they have. anna: we're still working on that. we talked earlier on about your views on china. before we spoke to sarah there are the amount of money leaving china at the moment, these capital outflows, faster than ever. what thetflows, chinese central bank did in devaluing currency on august 11. is this something that will you getting bigger, or view an end in sight? steven: this is the big question. the trend is very clear. thinkthe free reign, we that will likely be the trend going forward. for example, our view is that the dollar moves higher to around 650 over the next you
must read and 12 months, we had that around 670. clearly what is interesting here is the chinese have the largest holding of foreign exchange reserves in the world -- $3.6 trillion. they has been about 400 billion over the last 12 months. it gives them huge power to really drive this exchange rate. this is what they have been doing. anna: i wonder if the key exchange rate will have any effect on the number of apple iphones sold in china or america. i say this as a segue to our next block. steven, thank you. us will go on sale today. it has a lot to live up to. let us get the lowdown from bloomberg's nate and studio. he is playing with one eye can see. through the corner of my eye. what is new and improved?
nate: one of the key things that apple talks about in this phone is the ability of the device to actually know how hard the screen is being pressed. dull,ounds relatively perhaps to some people. but one of the things that has allowed the phone to start doing, act in three dimensions. : this is 3-d touch technology. nate: that is what apple is going to. if you want to make a call, in the past, you have to go into your contacts and select a person. what you can do now for your ts ifimportant contac you like, press and hold the phone and it will give you a quick list of people to contact. the same is true if you want to take a photograph. physically press hard on the screen. anna: apple was not first to market with this, samsung is very competitive in the market. they have their features they
think sell well. nate: this is very much something that is a market for apple. it was actually technology introduced with the watch. but this is sort of new invitation. and the other important thing is that the phone's camera has been genetically improved as well. we usually talk about high-definition hd, it will now shoot in 4k. even higher resolution still. that is opening up huge potential for the video and photo sharing market. the iphone is pretty much the most popular camera in the world. cameraition to the technology and features gives everyone a run for their money. and certainly sets the stage for the next year or so at least in the phone world. anna: nate, thank you very much. joining us with the latest on apple in the smart phone market. it is 6:56 here in london. coming up the next hour, we are live at the home of volkswagen,
anna: choosing a cheap. the volkswagen board is set to name a new ceo as the fallout in the omissions scandal widens. the majority of u.s. states open investigation into bw. -- into vw. janet yellen gives the dollar of boost as they see interest rates rising this year. japan's made inflation gauge falls into negative territory despite central-bank's unprecedented monetary stimulus. welcome to the program. 7:00 here in london, on anna edwards.
we are waiting for the fed chair to give us some kind of guidance on where we are going to go on interest rates this year. we are still live in terms of where the interest rate could go a. -- go up. there was a bit of the dollar bounce on the back of janet yellen's comments yesterday. it didn't really move the markets expectations, though. it didn't move those around in terms of where the markets are factoring in. it did move some parts of the yield curve. we saw a bit of a bounce in the two-year yields. but that big fall off you see was last week around the interest rate decision. reaction andeal of part of the reason that is that on the one hand she said we could see a rate rise, but on the other hand she is to finding
gradualism, suggesting that the labor market still needs to heal, and things could take+++ of analysis on this subject and the world of central banking more generally. later on this hour, the chief economist over at citigroup. no doubt he will have something to say on that subject. folks like an'-- full swavolkswn is attempting to repair its 10 reputation after admitting to cheating oil omissions test. we are joined by hans nichols. ryan chilcote is also standing by, added vw dealership in london. hans, let's come to you first. mueller could be that man behind the steering wheel -- izzy clear from the scandal?
-- is he clear from this scandal? hans: in some ways he is because vw doesn't have a big diesel suite, but diesel is a very big on the porsche side. pass this scandal mushrooms, we have had a couple important new developments moments ago. there was just a bit of a traffic accident out here. you may have heard some honking -- i don't know of that is a metaphor for how the day will go. what we heard from newspapers in spain is that some 720,000 diesel vehicles by volkswagen are going to be recalled. we also heard from authorities in south africa that they could have an investigation there. in some ways, the spanish development is the most important we have heard in 24 hours, because we know they say there are 11 million vehicles that could potentially have this problem but this is the first time we have heard from european country. it is the first time we have
heard recall talk. that gives you an indication that this could balloon, could get bigger. yesterday, the european union called on all 28 member states to conduct their own investigation. here in germany, they will be diesel.ot tests for all anna: a number of u.s. states have now decided that they are going to launch criminal investigation, so what started in california is now spreading nationwide. hans: yeah. and, attorneys general potentially the district of columbia are thinking about how they will proceed, in top of 60 class-action suits that are growing. big is going to be a litigation issue, and we still don't know exactly what sort of internal proceedings the u.s. department of justice is going to take. there have been some changes within. volkswagen.
a portion of the development from audi -- they have left the to draw a they want line on this and cooperate with authorities and they are doing that with prosecutors and lower saxony, then they want to move on. anna: thank you very much. let's get to ryan chilcote. the eu has announced an investigation and you are monitoring that. whatever the details? -- what are the details? ryan: the u.k. has followed suit after other countries saying it will retest some of the cars, because it wants to make sure that this isn't an industrywide problem. the u.k. has said that they want an eu-wide solution. car siles are -- car sales are important oin the u.k. -- they make quite a lot. the most since 2008 this year.
saying, look, we are concerned because we aren't getting enough information from volkswagen. his full story on the began on friday. that they don't know whether there will be a recall. the u.s. and vw have said that they will recall cars. is mentioning that the probe will affect 720,000 cars. what does it mean for vw owners in this country, in the future? one of the interesting things is what has come out of vw dealerships in the united states overnight, where they wrote a letter to vw saying, whatever ceo fordon't can the vw north america. he was installed in january, 2014. he is one of three executives after martin winterkorn that has been suggested will get fired, possibly as early as today. what these dealerships are saying is prior to his arrival, vw was selling an outdated,
overpriced product in the united states, and he made it right. if you get rid of him just because you want to try and make the situation right politically and don't have any evidence that he was directly complicit in this cheating scandal, than that will cause catastrophic damage to the u.s. market. keep in mind, diesel sales in the nine states are miniscule. put that back in the european perspective -- half of all car sales this year were diesel. the dealerships here are very concerned about the direction the story is moving. anna: ryan, thank you. hans nichols. that brings us to our twitter question of the day. is the auto sector right for m&a? will that be one of the fallouts? you can find me on twitter if you want to join the conversation, #volkswagen.
hashtags available. we have heard from fiat chrysler about the need for m&a. theicularly around environment -- what do you think? let's take it to asia now and look at global equities. david ingles is standing by. david, good morning. it seems asian markets took a little while to work out how they felt about what janet yellen had to say, and how they feel about the cpi number. put it all together for us. david: absolutely. it did take a while. what is ironic is that -- it is 2:00 p.m. here in 3:00 p.m. in japan, so japan is closing up shop, and within the last 30 minutes we finally saw some gains. benchmark is up about one third of 1%. at these levels, we will have
another weekly drop. is what happened today -- a very strong finish, 80% of shares in japan finishing the day higher. that is about 300 points in gain. back to the inflation story out if youn -- it was -.1%, strip out the effects of energy, a metric that is higher. what analysts are saying -- it may push the boj to expand the scope of stimulus, because the current scope is nearing its limit of efficacy right now, and what ubs and jpmorgan are saying, they can fund government projects. that is how asia looks. back to you. anna: david, thank you. david ingles in hong kong.
janet yellen has confirmed by the u.s. federal reserve is still on track to raise interest rates this year, but what factors are weighing on the central bank? most of my colleagues and i anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year, and to continue boosting short-term rates at a gradual pace thereafter. if the fomc were to delay the start of the policy normalization process for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting the bulk of articles. the united states has experienced very low inflation on average since the financial crisis. reflecting persistent economic weakness that has
proven difficult to only counter with monetary policy. unwellanet yellen felt toward the end of her speech. she was given medical attention, and was ok by the end of it and was able to return. you just heard some of the key messages that she had to deliver. it will take a short break here and will get further analysis from citigroup about what this all means, and will try to bring you that report from the u.s. as well about how this is being seen. embroiled volkswagen in a scandal and its ceo at the door -- could it be good news for another auto company? fiatnock on effect for fea chrysler. ♪
here are the stories you need to know this morning. volkswagen's board is expected to name its successor to the former ceo today. meanwhile, 27 u.s. states have begun a joint investigation into vw after it admitted to cheating over engine tests. that yellen has confirmed the u.s. federal reserve is still on track to raise interest rates this year. in his speech at the university of massachusetts she plays herself firmly in the camp of ammittee members favoring 2015 increase, but she also said it would be gradual. the next decision comes on october 28. japan has phoned back into deflation. its main inflation gauge, excluding fresh food, fell in august from a year earlier. it is the biggest the kleins of -- the biggest decline since april, 2013.
catalans head to the polls in an election seen by many as a de facto independence ballot. we spoke to one of the region's leading winemakers about his and why heit alone, is prepared to risk a slump in sales to split from spain. >> that is my flag. that is my country. leave us alone. take spain. best wishes for you, what we are cap atalnan. i work with my brother in a winery. it is like marmalade. it is really on the point. good.
we had the opportunity in generations and generations to build for this country, build a new country with new rules, with a new constitution, which is now very strong for the cattlalan. we have the opportunity to do everything new. that is from germany. that is from catalonia. that is from france. we select the best machines from all over the world. really, we can lose a little bit of market if spain is doing something. but also we can win market in catalonia. the world is so big. when i go to a fair in london, in new york, in frankfurt, everywhere, i pay for the fair. and in front of me is the spanish winery.
they don't pay anything. it's all prepaid by the government. that is an example of the disconnection we suffer. we are tired of this. we have been tired. i feel a deep in the market every day. we look at the color to know if it is ripe. we also look at how a stringent the skin is. then we extract. now we fill. wine is passion. -- passion. it is not just water or coca-cola. and ifreated by people, people feel energy and feel positive, that is good for the company. i think we must talk with spain. now they are showing they have power.
when things ruin, they must rise to negotiation. we, too. like the roman imperial'ss , huh? anna: i think i learned about spanish politics and wine. let's talk to ben fills, who joins us now from madrid. great to see you. as catalonia really about to break away from spain? let's cut to the chase. ben: probably not this weekend. is vote this weekend officially original election, but the separatist parties who are in charge of it are framing it as a referendum. the two or three parties who are in favor of a secession, they have come together to form a platform. the idea is about where they can bring together all of the
separatist votes under one umbrella and send a clear signal to madrid to say look, this is how strong sentiment is in catalonia. that said, the polls suggest that they will probably fall just short of a majority on sunday. the way forward may be somewhat complicated for the separatists. anna: how have the markets reacted, been reacting, to this developing story in the run-up to the vote? ben: well, the markets are clearly watching this. we saw in august when the regional president formally called the vote, government bonds jumped 100 basis points. debt is nothe trading at crisis levels.
we are probably invested in thinking this is an issue to watch, but they aren't yet secessiono fear that could become a reality. anna: thank you for joining us. ben sills. it is 7:21 in london. let's work our way up to the start of the final trading day on the european equity markets. a quick look at futures suggests we will be going higher. the picture after yellen spoke last night was a little unclear. it seems that the european markets have found something to get excited about. euro stocks crawled up by 1.7% this morning. as the crisis in volkswagen deepens, talk of mergers and acquisitions as become louder. sergio marchionne has made no secret of his desire to see more consolidation in the auto industry. consolidation that he has
been very clear about is very rational, and it remains rational. doubt that the force of building cars is increasing, and for an industry which has difficulty in being able to have good returns for its investment, consolidation is definitely a very effective solution to , which ise problem what has been saying publicly. the reasoning, the rationale of every argument remains. anna: the chairman of fiat chrysler echoing his thoughts. let's get bored on this story. we are joined now from milan. great to see you. how does this vw scandal help
marchionne? >> one of the main reasons he said the auto industry needs consolidation is because there will be rising costs. a few months ago, he made a presentation, citing higher costs of emissions controls as one of the reasons automakers have to consolidate. and now, essentially, other competitors may be much more open to discuss. vw is showing they will probably be a title control, which means higher costs, cleaner powertrain. anna: what are investors expecting in terms of m&a? tommaso: we spoke with several investors. some told us that they are expecting that there will be consequences to the vw scandal,
that there could be a reshuffle of assets in the auto industry that could lead to mergers. others are saying that this could be a good moment or so she are marchione -- for sergio marchionne to get out there. investor, i expect that this situation could lead us to a new ways of mergers and acquisitions. we know marchionne has targeted gm, they said no, so let's see how we will go. anna: thank you very much for joining us. vw, where 27th u.s. states have begun a joint investigation into the company. where with the crisis turn next, and what will it mean for the global auto industry? joining us now is richard gain. great to have you on the program. thanks for giving us your thoughts. you monitor the supply chain. how big is the impact of the
scandal? richard: potentially, it could be enormous. it depends on how the consumers react, but i think the prospect of people forsaking diesel cars and looking to other alternative powertrains will be more petrol hybrids ande electric cars as well. what does that mean for companies that supply the auto industry? there are those that are very close to the diesel story, and some are exposed equally. richard: there is some of that. those people who are supplying diesel components, like the common rail equipment, have probably got capacity to make petrol injectors, that they do need to switch their production to do that, and that is not necessarily a simple thing. they need to change the investment capacity and so on. they could see some changes
there, and some disruption. there are other folks involved entirely in diesel componentry, who are making things like filters, particulate filters, and they could see a significant impact on their business. anna: this is a very international sector. but as far as europe is concerned, where are those businesses the most exposed? as the knock on effect going to be in germany, the u.k.? richard: i think it is largely continental european. most of the european tier one urctor is contracted as o brands in the u.k. have contracted. the main impact will be in continental europe. anna: are their businesses in germany -- richard: in germany, and in france. anna: richard, thank you. he stays with us to talk about the supply chain impact. we are going to take a short break. 7:26.
anna: welcome back. you are watching "countdown." here are the stories you need to know this morning. volkswagen's board is expected to name a successor to the former ceo today. meanwhile, 27 u.s. states have begun a joint investigation into vw after it admitted to cheating over emissions tests. confirmed theas u.s. federal reserve is still on track to raise interest rates this year. in a speech in massachusetts, she plays herself firmly in the camp of favoring a 2015 increase, and said that the tightening would be gradual to allow the labor market to improve. the next decision comes october 28. china's prime minister arrived
at the white house on thursday for a dinner with president barack obama. on a formal summit starting on friday, he is expected to unveil a series of commitments on climate change, one of obama's second term top priorities. hour toess than half an the european equity trading -- let's talk about what is going to happen in tt session. 29 minutes until the start of the european equities session, but it could be a positive start. the euro stocks are currently up by 1.7%. futures suggest it will be up at the start of our trading day. the picture that came through from asia was a pretty flat, mixed one. we saw a mixed picture coming through, asian markets taking time to figure out where they will work out. david ingles joins us from hong kong with a look. i guess the markets are taking their time to figure out what janet yellen said, into digestive the cpi number, and
what it means in terms of qe4 the japanese. david: right. i think the broad agreement right now, speaking of japan, which has already been closed, and you can see this strong finish toward the close leading into the momentum you could see in the futures market, the cpi number, or the lack of it, simply bolsters the case for the boj. even before the numbers came in, the talk this week was certain that the boj will either expand or adjust or increase the scope of the current bond buying program. -- likes of jpmorgan and ups and you can read this on the bloomberg.com website -- that it may push the boj to buy up, to get issued by a local government, to get notes to fund government projects. you take a look at the bond buying program now, and certainly the efficacy of that
policy seems to be waning at this point. that being said, you talk about the japanese markets -- the strategists seem unfazed at this point. they still see on average about a 17% return toward the end of this year. i think we are looking at an average of about 1669. that is about a 17% up. while in japan -- i wanted to bring up the shares of shark. this is one of our big stories. these shares were down 6%. we have written down as much as 10% at one point. did sayings -- sharp they would miss the first-half profit target. point, they cede no need to adjust their full-year profit target.
that being said, there is also the big news on its lcd business. people familiar with the matter are telling bloomberg that the company that makes the iphones and ipads may be nearing a deal. a record low here, back to you. anna: thank you very much. david ingles with the latest in the asian session. things that seem to be a little more positive. story.eturn to the vw 27 u.s. states have begun a joint investigation into it. where will this crisis go next? still with us, director richard gane. how common are these devices, the devices that detect whether a car is being tested or not, in change the performance of the car accordingly? richard: it is clearly a software installation that we are talking about here. i would be surprised if they are not more common than is
currently apparent. i think this smoking gun in all of this is the difference between real world emissions that are being detected and what is coming out of the lab and the so-called epa. lost those big disparities are iere, sometimes 10 times, think we have got to suspect that it is much more commonplace and there will be other revelations yet to come. anna: that is interesting. it seems that there are two separate issues here. there is the issue of whether a device can deliberately cheat the test, and there is the question of how it is that cars produced so different results on the road and in a testing environment. they are not quite the same thing, are they? one is deliberately deceiving in the other is the fault of the test. richard: indeed. what is a generally appreciated is how complex some of these tests have to be. if you put these tests on the road, you have a whole range of
calibration to do, because the air the car is breathing will be different in different locations. if you have dirtier going in, you will have worse omissions coming out. you have to normalize the situation for those circumstances, and that is why it is difficult to do on road tests. the equipment is large and bulky and needs to go through another generation of development of oranges really suitable for doing comparative tests on the road. that is the big issue for normalizing test results. anna: do businesses benefit from this, perhaps around electric cars, petrol engines, businesses that end up merging, businesses that supply a lot of testing equipment? so many might benefit. richard: i think this is something of a watershed in the industry. this has been a massive push on diesels, and i think everyone is questioning it. they are questioning whether the co2 conditions, the major
diesel,or pushing thes where you get that advantage. i think that will percolate through to the consumers, and they will start to wonder whether it makes sense. i think that will knock on changes in the industry. i think it will give a boost to electric cars, and i think we can see some move back to petrol. anna: richard, thank you for joining us. richard ganes. 23 minutes to go till the start of the european equity trading. caroline hyde is watching the markets for us. caroline: hi, anna. because he quite a pop on the futures market. we have seen significant market disruption this week, billions the stoxx 600 so far this week. we are looking at futures climbing up 1.7%. you are looking at the cac 40.
dax close lowest year today. a couple german stocks to keep an eye on -- of course, volkswagen looking for a new ceo, they are thinking about porsche, but many think that is not really clean. potential heswagen could continue on its upward trajectory. let's have a look at bmw. second likely pop on the open. they sold off yesterday significantly, as many felt that it, too, could be engulfed in this scandal tainting volkswagen . "autobuildited by " as failing to test its suv, releasing far more pollution than is allowed. many thought it could be manipulating its pollution -- no, it seems. there was clarification
overnight saying that they were not trying to hit that bmw had been trying to manipulate its output of pollution. we will watch bmw and -- this is just a chart over the last 12 months -- this could be selling off assets, which is what is being reported in recent days. the fact that it too could be selling assets. anna: thank you very much. caroline hyde. as janet yellen ways the timing of the next rate hike from the federal reserve, the first of many years, bloomberg caught up with a yale fellow and forgan morgan stanley chair. he tells us why china will be on her mind. >> china is important because china can't afford more than double the share of global growth and all the advanced economies in the world over the last decade. that theem is recoveries in the advanced world are anemic.
that is why china gets a c at the fomc meeting. if it is as strong as we are being told, and china would be a blip. anna: let's bring in our next guest into the conversation. he is quite pessimistic about the global growth story. joining us now from citigroup, the chief global economist. thank you for coming in. we heard stephen roach talking about the importance of china, and you have to take that into account when you are making your conclusions. but you are quite gloomy about global growth. you were talking about recession -- what do you mean? it is not a recession more traditional language. i mean that global growth at market exchange rate is likely to decline by the middle of next year to below 2%. that means that in the emerging markets where most of this is concentrated -- brazil, russia,
itot of other countries --, is the impacts on these economies, but not to the point butrriving recession, certainly it could drive 3.4% in euro area growth. a that less for the u.s. nasty deceleration of growth that, without pushing into recession, has already pushed a number of important emerging markets in recession, and looks likely now to -- anna: it looks as if, from what you just said -- you believe we can be in this strange world for a while, where we see a lot of
momentum in those emerging markets, and yet the u.k. economy and the u.s. economy, the central banks in those parts of the world heading toward tightening rates. you think that imbalance can continue. willem: well, i think that tightening in the advanced to bey is likely postponed as a result of this emerging markets led and. -- emerging market slow down. i think the evidence as it comes in will show us that further. growth coming from emerging markets and super monetary prices, which are being driving down further to do the chinese slowdown, we will see also downward pressure on the important component of inflation. i really think it is unlikely that either the u.k. or the u.s. will raise it soon, and the rest
not for years. anna: so despite what janet yellen said about thinking a rate rise in 2015, you don't think so. the market doesn't seem to think so. willem: anything is possible but not everything is likely, as the saying goes. for the nextlikely three months. mistake ormade a they will wait until they have convinced the evidence that the slowdown in emerging markets is either a big deal or not so big a deal. anna: if they do want to raise, do they need to prepare the markets more? willem: the markets are always going to overreact whatever happens. i don't think it is a huge issue, but yes. markets of the surprise no
anna: welcome back. 7:47 in london. here are the stories you need to know this morning. janet yellen has confirmed that the u.s. federal reserve is still on track to raise interest rates this year. in a speech in massachusetts, she placed herself firmly in the camp of those favoring a 2015 increase. she also stressed tightening would be gradual to allow the labor markets to improve. the next decision comes october 28. japan has fallen back into
deflation. its main inflation gauge, excluding fresh food, fell 1%. it is the first decline in prices since april, 2013 and thats in the same month o governor kuroda passed on asset personages. -- asset purchases. todayw iphone 6s stores but sales are a bit low. this raises question on the success of previous releases. more than 700 pilgrims in a stampede killed on thursday. the disaster happened two weeks after a prayer. pictures coming to us from the holy city.
back to the business news now. volkswagen's woes deep in. the supervisory board will appoint a new ceo later today. let's bring in hans nichols at their headquarters. hans, what are we expecting? we seem to have heard a lot from makers around the story but not a great deal from vw. hans: vw has been pretty quiet. but we know from people familiar is that mattias mueller will likely be the next chairman. crucially, he has support from the partial family -- from the porsche family, and also from the labor unions. may have a powerful representation on the board. we are expecting them to meet in the morning. they will likely sort through a lot of their issues and we are expecting some sort of announced, a press conference,
and after that it gets into cleanup mode for volkswagen. this morning we are reporting that another 720,000 cars, according to a spanish newspaper, could have diesel problems in spain. that gives us an indication that he is not just the 482,000 cars that had been recalled in the states, but it is part of the 11 million that volkswagen has been talking about. getting bigger. the yield is encouraging all countries to conduct their own test. here in germany they will be doing spot tests. the test meal or has a big job ahead, repairing public -- matteo's mueller has a big job ahead. anna: thank you very much. 20 to watch at volkswagen's headquarters. still with us is the chief global economist at citigroup. talking about that volkswagen scandal, is this a material matter for the euro zone economy?
or could it become one? it is a big diesel producing subcontinent, and it will definitely hurt. not just in the countries where the diesels are produced, by component manufacturers. catastrophet be a eurozone-wide, but the sector will definitely be hurt, and will hurt for quite a while. anna: there are plenty of other things -- mario draghi, the ecb. what will be more front and center? will they be thinking about extending quantitive easing? it didn't sound this week that mario draghi was in a hurry. richard: well, he has still got until september, 2016 before he really has to make up his mind. but i would have thought that just as likely as a further
increase of quantitive easing would be further rate cuts. after all, deposits are only at -20. the danes and the swedes can do -75. -50.inly the ecb can do if -50 is the floor, it doesn't mean that they can't break those commitments. anna: i was going to say -- what is the effect he would hope to achieve? richard: currency, not following the dollar on its merry way up. anna: as the currency gone out of fashion? i was reading yesterday about, perhaps a lack of breakdown in the relationship between a weaker currency and boosting exports out of the eurozone. richard: there are volumes of effects on exchange rate depreciation. marginsertainly helps
for exports and imports in competing industries. stock market valuations. if it doesn't help much, it certainly doesn't hurt. it should also be more effective than another 100 billion or so of qe. doubt you watch very carefully what happens at the mpc and the bank of england. where do you think that central-bank goes? you suggested that the fed will not hike until 2016, because of your concerns about global growth and what back into to the developed markets. does the chinese slowdown take enough of u.k. growth to stop the bank of england from hiking? richard: it seems to already be doing so. u.s. manufacturing really got hit over the summer. i think generally the tradable sectors are still outperforming the eurozone, outperforming the u.s.
-- we have seen a slowdown of some 2.5%, and our u.k. economist now expects the first rate increased to be 2017. i certainly think it will be becauseot anytime soon, while earnings are going a bit faster, labor costs are still very tame because productivity is finally crawling up. anna: is there a risk that central banks on both sides of the atlantic missed this rate tightening cycle? richard: not really. they may be a bit late. when they start moving, they will move very slowly and gradually, and not to a very high level. the timing is the second order issue, maybe not for the market but for the real economy. anna: thank you very much for joining us.
the chief global economist at citigroup, with his thoughts. watching what of is happening in the u.k., stay with bloomberg. we will be speaking to two other bank of england watchers throughout the morning. charles goodhart and kate barker. both of those individuals will be appearing on the program. nextlet me tell you that week we start the labour party conference here in the u.k. weekly bringing you live -- we will be bringing you live coverage, and i will be hosting a europe debate, talking about grexit. stay with us. ♪
jonathan: good morning and justme to "on the move," moments away from the start of european trading. janet yellen confirms the central bank is still on course to raise rates at some point this year. gauges main inflation faulted in negative territory. who is in the driving seat, volkswagen's advisory board is expected to name their new ceo. open,onds away from the this is what futures are -- they by 180 dax futures up
points. jonathan, what a brutal week. we've had almost 400 billion euros wiped off the value of the stocks. futures looking very green indeed. appetite?sk doesll see a rate hike, that bode well about global growth? or is it that the shorts are just coming off? low.ax hit a year to date is it time to ease back on your negative bets? someup, we are getting