>> tsipras a surprise. the breakdown of the greek financial system. a stronger than expected mandate. carmaker plunge as the cheated air pollution tests. facts as a newhe survey suggests that the china slowdown has been massively overhyped. ♪ welcome to the polls, live from your -- live from bloomberg's

london headquarters. i am francine lacqua. decision not to hike interest rates last thursday. morning that the euro may fall. let's get some quick reaction from andrew parry, he is head of equities. he manages 29 billion pounds in assets. thank you for joining us. andrew, your first quick thoughts. we disappointed that the fed did not take that window to hike rates? andrew: you can see in the markets reaction that everybody disappointed, even though it was expecting them to raise rates. how the markets reacted was a clear statement. that was the frustration. is the message

that they are sending in the dumbest comment. is it the conditions that are worrying? francine: are you worried about china? a focus on m&a for example. andrew: we try to focus on the bottom up. statement,ays a economic start to admit as statistic. -- statistic. a broad direction of travel is important. that's what the market is reacting to with the fed. did they leave us hanging? thats been a long period we have been anticipating this brave move. francine: andrew parry is our guest host.

-- after winning 35.5% of yesterday's vote which had a record low turnout. to thankade a speech his supporters. >> i want to thank the young people who gave a fight. to think desk to thank the people from the neighborhoods of athens. to have a very close ties to the working classes. francine: our reporter joins us from athens. marcus, alexis tsipras seems to have retained his popularity? showed his popularity he he is one of the parties big assets. get intod to parliament. much of theirhow

rise is due to him. more than that, this is a rejection of many of the other party's alternatives. if you go back to the january election, tsipras campaigned on the bailout platform. also on the particular out with the old. around, he campaigned , thewhat he had left platform of rejecting the old political party that govern greece before. voters sent aday message that they did not want new democracy.

francine: market, thank you so much. for more, let's bring back in andrew parry. hermess matt -- air manages more than 29 billion pounds. a euro.a problem with andrew: in europe it is split into two stories. a strong domestic recovery. the economic recovery statistics continue to confirm that. sales are improving. unemployment is falling. it is always the second derivative that is important. crediteeing signs of expansion. the negative side is the external conditions. the things that janet yellen highlighted as a concern to hers. that's as concern to her.

-- as a concern to her. external growth is moderate -- external growth is moderated quite rapidly. looks like gdp could slow into 2016. view, domestic point of this feeling of constant crisis in europe is helping some form of rehabilitation. francine: how do you look at greece at the moment? they have reelected a man who for months ago was calling the imf criminals. andrew: it reflects the common trend that we have seen across the region. we've had lots of criticism of politicians and policies. when you get to a vote, people who generally vote for what they know. when you've gone through a lot

of crisis, it is typical that people go that way. that comfort in knowing politicians and what they stand for. i know greece has seen a lot of uncertainty. probleme to tackle this . they have to deal with the eu. it was always going to be the eu who set the agenda. francine: greece possibly, but spain is going a lot better. andrew: spain has been a different calls for a long time. not because we are making a top-down call, because we were making a bottom-up realization. classic example of where it is not about the level, it is about the rate of change. unemployment is still very high. the rate of change has been positive. unemployment has been falling.

that has allowed consumer confidence to rise. the economy has been doing rather well. it has been one of the bright spots for the last 12 months in europe. francine: andrew parry stays with us. his a look at what else is on our radar. volkswagen shares have punched since it was revealed the company has been cheating on its air emissions test for years. the ceo says he is personally sorry for breaking the trust of customers. they face up to $18 billion in fines. -- after zurich insurance abandon -- the company is expecting a loss in its own business. the proposed takeover would value rsa at 5.6 billion pounds.

the secretary of state john kerry says america will admit 10,000 over the next year. he stressed that the president because of the country's four year civil war. malcolm turnbull making sweeping changes. enforced a-old hard-line refugee policy. he has never held a finance folio before. up next, things are not so bad as they seem in china, so says a survey. we hear from the state counselor afr the break. ♪

francine: local back to the polls. where laugh from bloomberg's european headquarters -- we are live from bloomberg's european headquarters. the decision to devalue the yuan. china's reforms will benefit the rest of the world in the long run. he says the stock market rout is not reflective of the china economy. of problemsnot free on the economic front. downs ine been ups and the stock exchange markets. given china's economic

developments, given the fact that china is a developing country, some movements on the stock exchange in china should not equal the whole picture of the chinese economy. demandsupply and determine the value of imb. . think imb is quite steady continue to reform in china, in various chapters, including the financial sector. when people look back 10 years from now, they will see the good, not onlyy for china but for the rest of the world. francine: george osborne is visiting china and pushed

cultural ties with britain. he says he wants a golden decade in relation between the two countries. david, what is osborne's main message? itid coke desk david: it is -- david: it is a message of integration. it is a fast-growing part of the world. the u.k. wants to be part of it. they want to be the best partner in the west. that's where the u.k. wants to position itself. ist is really interesting the five-day trip he is undertaking. it is not just beijing, or shanghai, he is going wide into the interior. thousands of miles in china, going to various other cities. them aaking with

different sort of delegation. there are business leaders, but there also leaders of the the unitedties of kingdom. along with cultural institutions as well, the head of the british museum is going. it really does show the push coming from osborne is to integrate into china and be able to get a piece of that growth. a bit of news out of beijing, we see the u.k. and china are going -- betweent a study shanghai and hong kong. that means investors would be up to direct by the london market. francine? francine: david, the president is headed to the u.s..

david: one ofant? the things that week -- they came out is he mentioned something three times. the new model of major country relations. he wants to head off to washington. he wants to be received as the leader of asia's most powerful economy. most powerful nation. and where you try and look, this is about the recognition of an influential major player. this is what he is looking for. there are going to be issues. there's going to be cyber security. there's going to be tension in the south china sea. the underlying message that he wants is the recognition of him

as the leader of the strong nation which is why they are going to have a 21 gun salute. that is why the state banquet is important to him. francine? mes investment manager, andrew parry, is still with us. what is your main concern about china? it seems they need an adjustment. even if it is messy in the short-term, a longer-term -- -- andrew: -- longer-term optimistic. the biggest concern has to be, not growth, recalibrating growth to where it always was from false expectations of two higher growth.

it is stepping back from the reform program. china is going through a process of structural change. many countries are moving from high-intensity low valued manufacturing with a lot of capital formation. 12 much go people were criticizing china four. -- of months ago people were criticizing china for that. it is something they have to do as long as they put in place the government structures, the packages. area, but we think they will do it. francine: the policymakers came under scrutiny. they intervene too much. they didn't intervene enough. thatu have a confidence the pboc is on top of it? naivety on thes

part of the authorities when it comes to intervening in markets. let's step back. we criticize the chinese authorities in 2009. how much money went into the western financial systems echo how much money it in to support markets in the economy? it is a good thing that they intervened. you can couple about the way they intervened. i was last on your show three weeks ago. i come back to find markets where the art. there has been a lot of volatility. they are not going down. we talked about greece earlier. kris is up over the last three months, despite the uncertainty. up over the last three months, despite the uncertainty. francine: equities still think it's a party. equities doesn't think

it is a party anymore. markets are down 10% to 50%. 15%.% to volatility in corrections is a good thing. expectationsple too far more realistic levels. eyed optimistsry with no evidence coming through. it from the bottom up. you can be optimistic about the economy in europe, but there is still plenty of profit warnings around. there is not enough pitching power. not enough demand generally. -- not enough pricing power. not enough demand generally. francine: andrew, thank you so

much for all of that. be the $18it could billion mistake. after the break, we look at how cheating on and omissions test could prove -- on an emissions test could prove very expensive for volkswagen.

francine: welcome back to the pulse. streaming on your tablet, your phone and bloomberg.com.

volkswagen has admitted to cheating on air pollution's test for cars. the company has apologized but it is vulnerable to billions of dollars in fines and criminal prosecution. nichols forhans more on the story. what did the w try to get away with? -- what did the w try to get away with? this is basically software that override it the way emissions was emitted from the vehicle. that ended up having 10 to 40 times the allowable amount of certain oxides. story. remarkable we had an apology from the ceo. this came out yesterday. i will read it to you in full, because it gives you a sense of how serious the situation is. "i am deeply sorry that we have

broken the trust of our public. we will cooperate fully with the agencies with transparency and allncy to clearly establish of the facts of this case. volkswagen has ordered and it -- and external investigation. francine when you do this to a car you have a lot more torque. these are the diesel step in selling the states. they made up for 20% of their sales. 482,000 vehicles affected. ox wagon is no longer selling these. that's volkswagen is no longer selling these in the states. if you go to a volkswagen dealership,r audi try to buy in a three, you will be turned away. recalls: we are facing especially in a market where they had single-digit growth. you interviewed martin

winterkorn at the auto show. did anyone hint? betrayhey did not anything. volkswagen hass not gone electric fast enough. they don't have an answer to the hybrids, the prius is of the world.- the prius of the mr. venter corn has a contract extension. he is the helm of volkswagen europe through 2018. 324,000 up the math, vehicles. of $18d she to a total billion. that gets you to a total of $18 billion.

the epa says they referred the case to the justice department. a lot of commentary in germany on this. it is been focused on if volkswagen has been doing this in the states, had they been doing similar things within the european union? francine? francine: hans nichols, thank you very much. trust --w when back win back trust? andrew, this seems crazy that this was bound to happen. they now have to regain the trust of the u.s. consumer. ?ow do you read into this is this going to set them back years? andrew: it is a failure of governance. it is something we will be engaging in with the management on. to doey felt the need

something like this. of more concern is what is going to happen in europe? because in europe diesel sales are far higher. they tend to dominate sales. haveood thing is that they then honest. is this a u.s. issue? or european issue? there will be some management changes. has been ahere powerful -- a power struggle. are they doing the right thing for consumers? shares forou owned porsche, that is why you are exposed to vw. andrew: it is down to how he handles the situation as to how

the extent of the fallout will be. all shareholders will be trying to get more information from the company. on behalf -- i am sure that our clients will be engaging. francine: i want to intimate anything, if volkswagen does it do have 10 million cars. do you have questions about other carmakers? if you read the auto press, there's a lot of comments about the official statistics. light onhine a bright the veracity of some of those numbers. maybe get some of those

statistics to be much more reflective of the real world rather than the laboratory situation where you can be an efficient driver on the rolling road. francine: andrew, thank you very much. here are bloomberg's top headlines. shares have fallen sharply after zurich's -- the swiss company is expecting its insurance the proposed takeover would have valued rsa at 5.6 billion pounds. alexis tsipras is back in party. its a result party won the election. he will enter a coalition with the same party that helped him rule before. china's economy isn't as week as it may appear according to a private survey. the report from china's describes a mixed picture. its capital expenditure

rebounded slightly in the first quarter and the services sector showed strength. it's 9:30 u.k. time. let's check on the market with mark barton. mark: the federal reserve actions still casting somewhat of a cloud across global equity markets. the shanghai composite in china somehow escaping the downward trend being felt elsewhere in asia. this is the equity benchmark in china, the shanghai composite, over the last six months. what's important today is we are still witnessing this volatility in china, the index swinging between a loss of 1.2%, a gain of 2%. don't forget, last week we saw the biggest price swing since 1997. the president heads to the u.s. today for his first state visit. this private survey saying the gloomy assessment of the world

second biggest economy is overdone. the third quarter beige book says it's a miss. the nation slowdown is intensifying. this is the stock market peak on june 12. since then, the shanghai composite has fallen by 39%. in greece today, stocks lecture waiting after tsipras and syriza swept back to power. the electorate embracing the man who came to power in january pledging to end austerity. spending andsh increase taxes. syriza won 36% of the vote, roughly equal to its share of the vote in january. since the 24th of august, when markets sunk across the world, biggest decline in four years, the ase has rebounded by almost

24%. that part the second best performing global stock market. i can't talk about stocks without this one. biggest decline in volkswagen stock in six years. 20%,er, it felt as much as its biggest decline since 1999 after it admitted to cheating on u.s. air pollution tests. that equates to 15 billion euros of value. francine: mark, thank you so much. police say almost 30,000 refugees have entered the country since a surge started several days ago after hungary shut its borders with serbia, forcing people west. the u.s. secretary of state says there can be no solution to the problem as long as syrian president bashar al-assad remains in power, but he pledged that america would do more to help. > >> the united states will

significantly increase our numbers for refugee resettlement in the course of this next year and the year after. last year, we were at 70,000. we are going to go up to 85,000, with at least, it is not a ceiling, of 10,000 over the next year from syria specifically even as we receive more refugees from other areas, and in the next fiscal year, we will target 100,000. francine: with syria civil war sending tens of thousands of refugees towards europe, it is easy to forget a vast majority of them are being hosted by neighboring countries. jordan says it is home to about 1.5 million syrians. to mark international day of peace, the kingdom's prince spoke exclusively to our middle east editor, elliott gotkine, about how jordan is coping. >> there's only so much

jordan can do. the international community has helped shoulder part of that burden, but as you might be aware, with donor fatigue and other issues, we are now five years into the crisis, we are having to shoulder the burden more and more on our own. elliott: to a european, they see syrians being a similar culture, similar religion by and large, same language, and that integrating them in a country like jordan should be easy, but it is not as straightforward, is it? >> people think a common language and common religion is enough to make people fully integrated. culture does have its role to play. there are differences. slight differences. but it is not so much that

that's the real issue. the real issue for us is when you're looking at integration of communities, you've got an influx. as i said, when you look at , priorructure, schooling to the crisis, we gone across the country into one shift program for schools. now we have to do double-shift to deal with the number of students that are going to schools. atn you look at housing, trying to find infrastructure, even health services, all of these put a burden and you will have some jordanians who say, what about us? why are we spending so much ?oney on refugees shouldn't we be looking after ourselves? you do get those type of tensions. it's primarily because we have

limited resources. francine: now let's get more on the greek election results and find out what it means for business and investment. alexis tsipras maintaining his position of power. could this be a new chapter of stability for greek politics? let's join the president of the athens chamber of commerce and industry life in our athens bureau. thank you for joining us. just talk me through your reaction. is this a more stable government? moderate thanre they were a couple months ago. does it give you the confidence they will push the tough reforms needed through? >> well, this is a coalition government, a two-party coalition government. we were hoping since it was deemed necessary to go into this third election within nine months that it would have been a wider coalition government with a participation of other political parties.

this is an extremely difficult period, a national crisis, and we should have used national criteria so that the message that would be transmitted to our european partners and lenders, but primarily to potential foreign investors in this country in terms of the political stability factor, would be stronger. we will be having a government sworn in later tomorrow morning. it's the two-party coalition that is being formed. we hope they get their skates on and move very quickly, because the first review needs to be completed by november. the recapitalization of the banking system is very much attached to this review that will be taking place. that's of paramount importance for the market. francine: what are the 2, 3 crucial reforms that need to be

put in place in the next six months, or even by the end of the year, to make sure foreign investment comes back to greece? >> first, the recapitalization process. secondly, privatization, in order to bridge this credibility gap that's been created over the last few months. we need to entice prospective investors with the privatization plan that has been set out. we do hope this will move ahead without any hurdles that may be put up by either the left wing part of the syriza party or other political parties. i think that's of paramount importance in order to transmit the necessary messages to the international community as far as investors are concerned. francine: give us a sense what your members are saying.

the capital controls are still in place. how much of a concern is that to your members? >> it's almost impossible to operate under this capital controls system. just imagine that we've had in july alone 32% drop in imports. the market is stagnant. mode ofto change this daily transaction as soon as possible. this is -- unfortunately, the greek economy is an import-dependent economy to the tune of 65% of our trade transactions. transferring funds abroad either for raw materials or finished products being so difficult, it is going to be extremely difficult to have the existing businesses surviving. just imagine a small factory that needs raw materials, not

being able to do so, it is rendered useless. therefore, if we don't record by -- rectify the situation, then i fear by the end of the year, we will be looking at more lockups. francine: we heard from the former finance minister, saying that free flow of investment will return by january. what you are telling me is your members can't wait that long. >> absolutely. we're already late. we indicated there was no necessity to move into this third election which has ended up with exactly the same party coalition as the previous government. everyday, from now on hour, that is lost does cause us damages. francine: thank you so much. president of the athens chamber of commerce and industry. still to come, the

fastest-growing major economy over the next two years, india is on the up. we will bring you an exclusive interview with the country's finance minister. keep it right here. ♪

francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. volkswagen shares are dropping from 17% after the carmaker

admitted that they cheated on diesel emissions. basically, they dropped the most in seven years, the share price, after admitting to cheating on u.s. air pollution tests. they risk billions and potential clients and huge backlash from consumers. the u.s. was where volkswagen really wanted to make a dent, because their growth is only single digits and they needed that market to be strong to compete with toyota. the oecd expects india to be the fastest-growing of major economies over the next two years. the group lowered its forecast for indian growth last week. investors remain worried. bloomberg's stephen engle sat down with the country's finance minister to discuss growth, investment, and the challenges india currently faces. >> we are not in a utopian world.

if we are doing better internally, there will be challenges. i think india's growing and growing well. with a little more help from the external environment and a little more domestic private investment, we could move much faster. we had a 7.3% growth rate last year. i hope we will be able to improve on that this year. stephen: what are you hearing most from potential foreign investors? there have been longtime concerns about infrastructure, about foreign investment barriers. broadhink there is a sense of satisfaction. appreciation about the direction in which india is moving. there is a desire that india must move faster. and investors are looking for a parallel to their earlier

investment in china because they want to source products from other markets also. india's manufacturing sector is now going to grow quite fast. india's infrastructure -- stephen: how are you going to get the consumer more active in the economy? >> india has a very large middle class. this is going to grow. therefore, the size of the consuming class in india is growing. wages are going up. government wages will go up the beginning of next year. themoney in the hands of consumers is going to be more. stephen: how aggressive does the reserve bank of india need to be in its decision next week whether to cut? 25 basis points seems to be already built in. do they need to be more

aggressive? >> i think the reserve bank's sense of judgment needs to be trusted. after all, it's a very experienced institution with a lot of talent and potential. cuts,obviously does need but to what extent i think is the prerogative of the bank. thaten: so aside from decision, from the government's first active, how much room is there? >> indian inflation is under control. i, plus three wp point something cpi. by indian standards, inflation is under control. we've been used to double digit inflation just two years ago. i think consistent control of inflation, at least inflationary

pressures are out there. francine: that was the indian finance minister. here are some more of bloomberg's top headlines. pope francis has met fidel castro on his cuba trip. the vatican says the pair exchanged books and discussed the biggest issues facing humanity. the pope took a subtle jab at the communist system by urging cubans to serve one another, not an ideology. homes atices for u.k. an all-time high this month reflecting the continuing shortage of property for sale. values rose 2.2% to 620,000 pounds according to the property website. 0.9%,onally, they climbed just under 295,000 pounds. amazon has won its first major any award for the show "transparent." hbo took home the most trophies at last night's ceremony.

viola davis became the first african-american woman to win the best actress in a drama series award. next, we explore the ghost towns being created by japan's population problem. ♪

francine: welcome back to "the

pulse" live on bloomberg tv and radio. population decline is such a serious problem in japan that in some cases entire neighborhoods are being left abandoned. 8 million homes have been left unclaimed and unwanted across the country. that number could rise to more than 20 million by 2023. as shery ahn reports, that's one third of the country's total housing stock. shery: now we are outside tokyo. this part of the city is a microcosm of the japanese housing market and the problems it's facing. about one in every five homes here is empty and unused as a result of japan's rapidly aging population. young people have moved on, searching for a better life in the big city. the city decided to fight back, launching an initiative to offer vacant homes a . >> since we started in april, we managed to arrange four rentals

and one sale. the interest in the program is massive. we're going to expand the initiative and hopefully make progress. shery: easier said than done in japan, where only 15% of home sales occur on the secondary market. that's partly because of tax regulations. the value of a wooden home depreciates to nothing after 22 years. concrete buildings lose all their value after 47. homes aren't built to last because there's almost no resale value. >> the issue of abandoned houses cannot be solved without appropriate tax reform. shery: a key part of prime minister shinzo abe's recovery plan was to encourage new building, a plan that many say ignores the realities of japan's demographics. every year since 2008, more than half a million homes have been left empty or abandoned. while many aren't in the best shape, at least they're available for use and

affordable. >> it is only ¥10,000 a month. i wanted to live somewhere i can afford with my part-time job. shery: a rare bright note in this tale. but it will take more than a few students to give japan's secondary properties the boost they need. shery ahn, bloomberg. it's all about london this week as the capital plays host to fashion week. one of the main projects of the design festival is an 80 meter tall structure embedded with more than 600 swarovski crystals. you can't miss the piece when you enter the victoria albert hall. we have an executive board member of the company for an exclusive conversation. >> at swarovski, we make that crystal perfectly. creativeuly need the intuition of the designers to

implement the beauty in a relevant creation for the consumer. to be active in the fashion industry's or the design festival's here in london and shanghai and miami is crucial. was nadiathat swarovski. let's also check on vw and the share price. it fell as much as 20%. this is our biggest corporate story in europe, volkswagen dropping the most in almost seven years after it admitted to cheating on u.s. air pollution tests. the company has received billions in potential fines and is facing a backlash from consumers in the world second biggest car market. a reminder, you can follow me on twitter. that's it for the first hour of "the pulse." for those listening on bloomberg radio, it is "bloomberg: the first word."

for our viewers, it is a second hour of "the pulse." we will be talking about volkswagen, the fed, and repercussions for the bank of england. ♪

francine: shares plungevw as the carmaker admits to systematically cheating u.s. air pollution tests. tsipras surprised. despite broken promises and a near breakdown of the financial system, the greek people return alexis tsipras to power. and, divorced from facts. a new survey suggests that china slowdown has been massively overhyped. we hear from the country's state counselor. good morning to our viewers in europe.

good evening to those in asia. welcome to those just waking up in the united states. i'm francine lacqua. this is "the pulse." coming up, we will be talking greece, volkswagen, m&a as well. first, we are starting a new week after the fed's decision not to hike interest rates last thursday. goldman sachs this morning morning that the euro may fall up to 10 u.s. cents as the european central bank increases currencies. that is weakening stimulus to meet its inflation target. let's get some quick reaction from carson. he's with us for our guest host slot for the first half hour. great to have you on the program. pleasure to have you in the studio. we're going to talk about m&a and volkswagen in a second. what worries you the most on the macro economy? is it china? carson: i think central banks. i'm still chewing on the fed.

maybe central banks have lost touch with inflation. can they really steer inflation? the answer is probably no. central banks are more and more pushing forward to steer growth and forget about inflation. francine: was it a mistake not to hike and will it mean they won't be able to hike before next year? carsten: i would refrain from saying it was a mistake. you could say the markets were ready for it. you could say domestically speaking the labor market was ready for it. apparently the fed is more concerned about the international environment. china is probably not so bad as some people said it was. francine: it makes you wonder. thank you so much for that. volkswagen shares have plunged after it admitted to systematically cheating on u.s. air pollution test for diesel cars. the company apologized but is vulnerable to billions in fines and possible criminal

prosecution. let's go to hans nichols in berlin. what did vw try to get away with? in 2009, they had something that epa is calling a defeat the vice installed in their cars, a software that changes the kinds of missions when it is being tested or out on the road. torque witht of those diesels. out on the road, it had 10 to 40 times the amount of air pollutants that are allowed according to the epa. volkswagen has pledged to cooperate with the investigation. they pronounced their own internal instigation -- investigation. here's a statement put out yesterday. i'm personally deeply sorry that we've broken the trust of our customers and the public. we will cooperate fully with the responsible urgencies --

francine, some of the vehicles affected, the beetle, the jetta, the audi, all diesel vehicles. they've been a crucial part of volkswagen's north america strategy. you look at their july sales, 26% were in the diesel space. most recently, they basically said, we're not going to the selling diesel in the states. they suspended 2015 models as well as certified preowned. the numbers we're talking about, potentially 482,000 vehicles. this is a difficult, massive challenge for volkswagen. i suspect they are in crisis mode. francine: i bet they are. you interviewed martin winterkorn at the frankfurt auto show. they didn't hint at this bombshell at all. this is damaging in terms of

what we think of volkswagen. this is also recalls. are going toalls be an important part of this story. how they rectify this not just in the states, but also elsewhere. there's been a lot of commentary in the german press on what my smokes like an have been doing in other jurisdictions. when you look at the potential fines for the u.s., you arrive at 18 billion u.s. dollars. we are doing that math based on what the epa said. they said $37,500 per vehicle. you have some 482,000 vehicles. this is a company that in 2014 at overall sales of $200 billion. but they haven't been making the same sort of legal provisions that we often report on with deutsche bank or the other banks that have been bracing for charges. so we will see how they handle this from a corporate finance

side as well. francine: hans, thank you so much. macro policies and the central bank policies, we are joined by ing german chief economist carsten brzeski. great to have you on the program. we were talking about what the fed did, or actually didn't do, and whether that pushes back expectations of rate hikes here in the u k you were saying they almost lost their eye on inflation and are focusing more on growth. should we suspend the inflation mandate? it makes sense for central banks to focus on growth. carsten: of course it does. as long as inflation is determined by commodity prices, it makes more sense to focus on growth. that is i think what the bank of england and also the ecb is doing. i think the ecb will do even more qe. the risk is there. francine: it is almost now a

given, if you look at market sentiment, that they will do qe. the basis of this would be a higher euro. >> of course. the ecb will also have to use inflation. knows that the ecb inflation is only a derivative of the growth mandate. francine: what does it mean for the bank of england? mark carney is saying we will decide by the turn of the year whether we hike interest rates or not. if it's being delayed in the u.s., it's likely it will be delayed here as well. carsten: looks like it. no one wants to be the first. the bank of england wants to wait for the fed to wake up its mind and come with the first rate hike. francine: what does that mean overall for growth? where are you more optimistic? carsten: i'm optimistic about the u.s. i think the domestic story is a strong one.

the u.k. is doing well. everyone is afraid of these famous external circumstances and what is happening in emerging markets. i think no one has the answer but everyone is concerned. the growth story in europe remains a week one. francine: what's your take on the athens election? we have alexis tsipras, almost like a lesson in history. he was calling the imf criminals five months ago. he was saying this is the bad guy in the eyes of that european commission. he seems like he's moderate and politics will be more stable and he will push the reforms through. carsten: it is a fantastic u-turn. now he is the one implementing the reforms. i really think the greeks trust tsipras. at least he had the guts to fight for us. if he cannot make it, no one

else can do it. francine: interesting, carsten brzeski, thank you for joining us. we will be talking about china next. here's a look at what else is on our radar. shares in rsa have fallen sharply after zurich insurance abandoned its takeover offer because the swiss company is expecting a loss in its own insurance business. the proposed takeover valued rsa at about 5.6 billion pounds. the u.s. will taken more syrian refugees. john said america will admit at least 10,000 over the next year. he stressed that president bashar al-assad must go for there to be a lasting settlement. australia's new cabinet has been sworn in. the prime minister making sweeping changes from the tony abbott era. scott morrison becomes treasurer. the 41 euro -- 47-year-old enforced a hard-line policy.

up next, things aren't as bad as they may seem in china. so says a new survey. we hear exclusively from the country's state counselor after the break. ♪

"rancine: welcome to "the pulse live from bloomberg's european headquarters in london. china steakhouse has addressed

concerns about the slowdown. speaking exclusively to bloomberg, yang said china's reforms will benefit the world in the long term. he says the recent stock market rout is not reflective of the state of the chinese economy. china is not free from its own set of challenges and problems on the economic front. of course, they're having some ups and downs in stock exchange markets, but given china's economic development, given the fact that china is a developing country, some movements on the stock exchange in china should picture ofhe whole the chinese economy. we let supply and demand determine the value of rmb. i think rmb generally speaking

is quite steady in value. we will of course continue to do reform in china in various sectors, including the financial sector. when people look back 10 years or 15 years from now, they will see that the market reform is really good not only for china, but for the rest of the world. meanwhile, the u.k. chancellor george osborne is visiting china in a push to boost economic and cultural ties with britain. he says he wants a golden decade in relations between the two countries. david tweed is standing by with the latest. what is osborne's main message? reflectionink it's a of what we just heard from yang, that china is still going to be a major growth area for the world economy. it's the sort of message that's

not really surprising. the new secretary to the treasury has penned an article with osborne talking about the importance of integrating with china. that's why when you look at the makeup of this delegation, it's also pretty fascinating. it got no less than six ministers a company osborne -- accompanying osborne. you see there are the leaders of sheffield, northern cities of the u.k. they want them to integrate into some of the interior cities of china, where the growth is coming from. this visit is going to cover thousands of kilometers. it is not just beijing and shanghai. it is more about integrating u.k. business and culture into the chinese economy. you can see that the head of the british museum is part of the delegation.

they are trying to do sort of a deep integration to take advantage of what they perceive a vast part of the world growth engine. that pretty much explains the message. it's all about bonding. francine: and also, david, it seems that officials who study the feasibility of setting up a london-shanghai stock trading like. david: that is an interesting thing that has just come out of beijing. there's a shanghai-hong kong stock trading link which allows hong kong investors to invest into the shanghai market, and also the other way around. they're going to study the feasibility of it. there are going to be obstacles. there's a time difference. there's the question of what currency any trades might be denominated in. there's a lot of hurdles to get over. , but ite even hurdles

goes back to that message of integration. there was another announcement that the people's bank of china is going to issue short-term yuan-denominated bonds in the united kingdom. that is something george osborne said could help london he come a yuan trading center. he wants to become a trading hub. there is some competition from frankfurt. london looks as if it's getting the leg up. francine: thanks so much, david tweed. for more on the china story, we are joined by ing germany chief economist carsten brzeski. we talked about qe in europe area and we talked about the fed. how do you read into this? are we panicked too much over the turmoil in china? carsten: if you look at the chinese economy, it is slowing down. we do see a transition into consumption. i think the e-commerce market in china is already bigger than the

u.s. services are growing. at the current growth pace, i think china is still on the side of switzerland. it's an enormous economic power which has slowed down, but which will not go down. francine: how do you explain the market turmoil? is it because investors and markets didn't have faith in the pboc, or were they worried that the numbers were cooked? carsten: the link between the stock market in china and the real economy is not as strong as we know it in the u.k., u.s., or europe. people are concerned the numbers could be cooked. we cannot prove it. there is panic because we have been seeing that china was slowing last year. if something slows down, there comes the panic. it's an economy which is about to become a majority economy. francine: what's your main

concern for the world economy? we talked about inflation, central banks, possibly getting it wrong. we are still growing. carsten: i think the concern is still that i'm wrong on china and that china is really going down the drain. that would be the big concern. the other is that we are in secular stagnation, a long period of lower growth rates which will have a negative impact on health care systems and on pensions. these are the biggest. it is not a hit, not a big, imminent blow, but just a slow blow, a slow risk of lower growth over a couple years. francine: and deflation? i spoke to someone last week. he said even if we get a specter of deflation, we shouldn't worry about it so much. japan isn't doing great. for the last 15 years, japan was stable. carsten: i remember the words of mario draghi.

with low inflation, you can buy more stuff. that is the case right now. low inflation is good for consumption. especially in europe. we are a commodity-importing region. francine: if we enter this period of stagnation, which we very well could, are you concerned that the markets are getting ahead of themselves? the markets are still partying in some sense. we're not seeing that much growth. carsten: the biggest risk for markets is they still have to realize there might be something up like secular stagnation. normally, we trade in extremes. either a big boom or a big bust. secular stagnation would be something in the middle. francine: thank you so much for joining us today. carsten brzeski from ing germany. next, tsipras surprise. the greek leader is back after securing a surprisingly strong win. we will have the latest from

athens. ♪

francine: welcome back to "the pulse" live on bloomberg tv and streaming on the ipad and bloomberg.com. alexis tsipras has secured a surprisingly strong win in the greek elections. his syriza party will form a coalition government after winning 35.5% of yesterday's

vote which at a record low turnout. mr. tsipras made a speech to thank his supporters. >> i want to thank the young people, the people from the popular neighborhoods of athens and other regions. syriza proved to be too hard to die. when everyone put us on the firing line. francine: our reporter, tom mackenzie, joins us live from athens. tsipras appears to have retained his popularity. tom: amazing, isn't it? the former prime minister and soon to be sworn in as prime minister was given a strong mandate by the electorate despite taking the country to the brink of a euro exit, despite seeing the banks close. the greek people have given alexis tsipras a second chance. and he needs a strong mandate because the challenges facing this new government are immense. growth here is reducing.

it is expected to reduce by 1.4% this year. capital controls and recapitalization of the banks is going to be key. he got a strong mandate, but there was no enthusiasm. his supporters last night outside the hq of syriza looked more relieved than anything else. there's a tight rope balance that he's going to have to walk now between pleasing the creditors and giving something back to these voters who want a softer edge to these reforms. you -- europe breathes a sigh of relief. i'm fascinated because alexis tsipras seems to have such a personality that six months ago, he was considered a bad choice for greece, and now everybody supports him. even the imf and the european commission. tom: absolutely. when he announced his

we hadtion on august 20, sounds out from the creditors saying, we're not actually that concerned about this. we wouldn't be too displays it alexis tsipras comes back as prime minister, which is exactly what's happened. we heard from jeroen dijsselbloem saying that he looks forward to working with the new government. we heard from analysts that banks like socgen say this takes out some of the sting from the risk in greece. roomeforms in the little that alexis tsipras and the syriza party have is very narrow. they say they can work on things like debt restructuring. they're unlikely to get a complete cut in debt, but they may get an extension of maturity. that depends on the review that comes up in october. 50 billion euros, which seems to many an unrealistic target. a lot of expectations they need to meet, which may prove a

challenge going forward. for now, he's got the mandate. francine: tom, thank you so much. tom mackenzie in athens. john kerry pledges more u.s. health for refugees plaguing -- fleeing syria. we have an exclusive interview. ♪

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for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. francine: welcome back to "the pulse," live from the european headquarters in london. here are our top headlines. shares plunged after a company admits to cheating on air pollution tests. vw admitted to lying on admissions tests. the ceo apologized to customers. shares in rsa have also fallen sharply after it suspended a takeover offer.

a swiss company is expecting a loss in its insurance business in the third quarter. at 4.6 billionsa pounds. alexis tsipras is back in power. the syriza party won a second election in eight months. he will enter a coalition with the small party that helped it before. 10:30 london time, let's check in on the markets. jonathan: good to see you. the chinese facebook says that pessimism is divorced from the facts and things aren't that bad. in many equity markets, there were gains on the periphery. here in london, just about in the green. what you see here is a significant underperformance and germany's dax. let me show you why. what you will see is the biggest falling stock in the shape of volkswagen. it fell 20%, the biggest one-day

drop in over six years. they have admitted to systematically cheating u.s. air pollution tests. this could cost them in a fine up to billions of dollars. that is why the stock is underperforming. the stock 600 is getting absolutely hammered. what this could mean, not just for volkswagen, is a big question. the euro-dollar is 12.84. the ecb will have to increase acuity. $.10,ould drop another going toward their corporate parity. this is a big week for this one because janet yellen speaks thursday. mario draghi speaks wednesday. a busy, busy week ahead. francine: thank you so much. now,bout 25 minutes from "surveillance." tom, i know you were looking at

greece, and also at what is happening on the bond market. tom: well, we are looking at a different markets. far, and weome so will touch on that. we will also go to tom mckenzie, at the top of both hours. the shock of the word being used, the stunning result of mr. tsipras. adam those in will join us from the pearson institute, and he has great experience with monetary policy in the united states and also working with the bank of england. adam posen will join us for both hours and brian belski as well. also joining us is a very important guest -- francine locke what will join us -- francine lockacqua will join us. i think you are overworked. francine: i am not over works --

i have to convince you that volkswagen is an important story. i'm estimated that market move jonathan faro spoke of his stunning. 20% speaks volumes. francine: and the currency story will play out. we are definitely expecting more qe from the ecb. tom: francine will join us in the next hour. back to you. francine: looking forward to it. thank you. croatian police are saying that 30,000 refugees have entered the country since the surge started several days ago. the influx began after hungary shut its borders, forcing people into croatia. the u.s. secretary of state says there can be no solution to the problem as long as bashar al-assad remains in power. he pledged that america would do more to help. >> i am pleased to announce that today, the united states will

significantly increase our numbers for refugee resettlement in the course of this next year and year after. last year we were at 70000 and we will go up to 85,000, with at least -- that is a ceiling, not a floor. year fromr the next syria specifically, even as we receive more refugees from other areas, and in the next fiscal year, we will target 100,000. with syria's civil war sending tens of thousands of refugees a straining towards europe, it is easy to forget that the vast majority are being hosted by neighboring countries. jordan says it is now home to about 1.5 million syrians, a quarter of its population. peaceternational day of as tomorrow and the prensa spoke exclusively with our elliott goc and. >> there is only so much.

it is limited capabilities. the international community has helped shoulder part of that burden, but as you might be aware, with donor fatigue and other issues, we're now five years into this crisis. we are having to shoulder the burden's more and more on our own. liott: similar culture, similar religion, same language, and integrating them in jordan should be pretty easy, but it is not as straightforward as that. >> people think that a common language and religion is enough to make people fully integrated. culture does have its role to play, but there are differences. but it is not so much that that

is the issue. the issue for us is when you are looking at the integration of communities, you have an influx. as i said, when you look at infrastructure, schooling, prior to the crisis it was across the country in one shift. now we are having to do double shifts to be able to deal with the number of students that are going to schools. when you look at housing, when you are looking at trying to find infrastructure, even the health services -- all these put a burden, and you will have some jordanians who sit there and say, what about us? why are we spending so much money on refugees. should we be looking after ourselves? you do get those type of tensions that build, and it is primarily because we have limited resources.

amazone: coming up, takes home its first emmy award -- but how are they shaking up the media landscape? we discussed that after the break. ♪

francine: welcome back to "the pulse," here are some more of bloomberg's top headlines. pope francis has met fidel

castro on the first day of his cuba trip. the vatican says they exchanged books and discussed big issues facing humanity. earlier, he took a subtle jab at the communist system by urging cubans to serve one another and not an ideology. u.k. home prices are at an all-time high, reflecting a continuing shortage of property for sale in strong demand for buyers. values in the capital rose 2.2% from august. that is according to the property website. nationally, they climbed 0.9% to just under 295,000 pounds. won its first major any award for the show "transparent," competing with hbo, which took on the most trophies at last night's ceremony. becamele, the only davis the first african-american woman to win best actress in a drama. as amazon wins its first emmy, are streaming

video companies changing the landscape of traditional tv? for more, we are joined by the senior media analyst. how significant is this? we talk about content -- this is the first time amazon has won an emmy. sarah: you need to put it into context. last year we were talking about netflix winning emmys as well. i think it is a continuation of is and, but obviously it new player entering the market. francine: and it is significant because amazon is a retailer. netflix had one purpose -- then i had "house of cards." but amazon is just a retailer. do you think we will have many more entrants? sarah: clearly this is a very expensive business. if you are trying to do it on a global scale, it is limited. we have thousands of local players.

many, many companies doing streaming on an individual basis. of course, the main entertainment companies are ofmselves going over the top their content to go directly to consumers. it is a pretty crowded marketplace, but i think it is limited in terms of how many people are going to do it on that kind of skill. francine: because it is very, very expensive. will we see consolidation? we heard about aaa trying to enter the market. sarah: consolidation among streaming players? i suspect not. consolidation among the players who are affected by all of this? yes, quite possibly. this is putting strain on various business models. we have already seen some consolidation of the new guys putting pressure on big traditional guys. it is also the high and the sky europe consolidation. francine: what about content providers?

we were talking about amazon taking one any away from hbo. we also have the big hollywood studios. are they still far behind the new entrants? or are they really getting the big guys a run for their money? sarah: they are still quite far behind, i would say. the content industry is consolidating all the time, but it tends to be reasonably small deals. if you look at things like itv, those would generally be in the low hundreds of millions, if that. i don't think you should rule at the big companies as being very significant scale and power. they are producing content not necessarily or direct distribution, so it is a slightly different model, that i would expect you will definitely see more m&a in thisbecause there are some stretches emerging. francine: what role will china play to all of this?

impossible" was made by a chinese company. sarah: alibaba is entering the world of entertainment, streaming and so one. -- so on. they reach a huge portion of the population and are well-positioned if they want to go into the market. they have a big balance sheet to do it from. it is different kinds of content that asia will consume relative to western europe, but i think this is becoming a much more global industry, content production, particularly with various technology-centric elements. you will definitely see more asian involvement. francine: in the last 2, 3 years abby,"s downto"downton u.k. productions i've done so well. what does the you can play? sarah: it is a big content

and they are increasing investment in original production significantly. they are all doing it for the same reason -- commoditized content, you need something to differentiate. if it is good, you try to put it into other markets. the u.k. is a significant player. itv is a significant player on the global market. that said, a lot of the content is not the same kind of level of production value or global appeal as the emmys. but a lot ofy" is, content they produces different. francine: thank you so much for joining us today. decline is no such a serious problem in japan that in some cases entire neighborhoods are being left abandoned. 8 million homes have been left unclaimed and unwanted across the country, and that number could rise to more than 20 million by 2033. as sherry and reports, that is one fear of the country.

tokyo, andre outside this part of the city is a microcosm of the japanese housing market and the problems it is a sing. -- it is facing. about one in five homes is empty and unused as a result of the rapidly aging population. young people have moved on, searching for a better life in the big city. ka decided to fight back, launching an initiative to offer vacant homes a new life. >> since we started in april, we have managed to arrange four rentals and one sale although the number of deals is quite small. the interest is massive. we will expand the initiative and hopefully make progress. shery: easier said than done in japan, where only 15% of home sales occur on the secondary market. that is partly because of past regulations. the value of a wooden home depreciates and nothing after 22 years.

concrete buildings lose all their value after 47. . homes aren't built to last because there is almost no resale value. >> of the issue with abandoned houses cannot be solved without appropriate tax reform. minister's plan was to revive the housing market and encourage new building. says a plan that many ignores the realities of japan's demographics. half year since 2008, a million homes have been left empty or abandoned. while many aren't in the best shape, there are available -- they are available for use and affordable. >> it is only ¥10,000 per month. i don't want to disturb my parents and i wanted to live somewhere i could afford. shery: a rare bright note in the tale, but it will take more than a few students to give secondary properties the boost it so desperately needs. sherry ann, bloomberg. francine:, we will be looking

ahead at what we should be keeping an ion for the rest of the week, including the chinese president's trip to the usa. ♪

francine: welcome back to "the pulse." we are streaming on bloomberg.com. indio is the fastest-growing of all the major economies over the next two years, but it was

lowered its forecast last week and investors were concerned over the prime minister's ability to push for financial reform. down for aneside exclusive interview with his finance minister to discuss growth, and the challenges india faces. the concerns will always be there. betterare doing internally, there will be challenges externally. i think india is doing well. with a little more help from the external environment and a little more domestic-private investment, we can go much faster. inhave a 7.3% growth rate, the hope we will be able to improve on that this year. stephen: what are you hearing most from the potential foreign investors? there have been longtime concerns about infrastructure, about foreign investment barriers, about tax investment.

is a broadthere sense of satisfaction. there is an appreciation about the reform direction in which india is moving. there is a desire that india move faster. investors are looking for markets parallel to earlier investment in china. they want to invest in other markets. they are still not positively inclined, and it will grow quite fast. there is infrastructure, which means a lot. stephen: how are you going to get the consumer more active in the economy? >> india has a very large class. -- large middle class. if this is going to grow. -- and this is going to grow. governmentoing up,

wages will go up at the beginning of next year, and therefore the money in the hands of the consumers. stephen: how aggressive is the reserve bank of india future. 25s decision next week, basis points seems to be arty building. do they need to be more aggressive? >> the reserve banks need to be trusted. they are an experienced institution with a lot of talent and potential, and i have no doubt they will take a view of the situation. india obviously does need cuts, but to what extent i think is a problem for the bank, factoring in all these concerns. stephen: aside from the decision from the government's perspective, how much room is there? there has already been a 75 basis point cut on the benchmark rate. >> inflation is under control. i,u have a minor 4.95 up

cpi, andnt-something this is inflation under control. we are on the path to a double-digit inflation. i think a consistent control of inflation -- at least the inflationary pressure is off. francine: for a lookout but we are watching for the rest of the week, we are joined by hans nichols. we just listen to that great exclusive interview. but we are also watching central-bank action around the world. hans: we have central-bank action around the world, a big meeting -- a state visit from --na heading to washington but before he shows up, he will be making a stop in seattle. he did the same thing in 2006 and now it is xi jinping's turn. it is interesting when you look at the tech titans that will be

assembled. you could potentially have bill gates, warren buffett, jeff bezos, jack yaw. remarkable story about how important trade is to the west coast of the state and the tech story. they make a stop in seattle before heading to washington. francine: thank you so much. we will hear from janet yellen a little letter, then we have some gross figures. you can follow hans and i on twitter. coming up, it is "surveillance." tom keene will be joined by adam posen. shares are down 20% -- an incredible story. here in europe we are very familiar with the brand. outs almost like finding mostangela merkel, the reliable and trustworthy european politician, has been

cheating on taxes. that was his reaction when he found out volkswagen have been trying to fudge figures so they looks more environment friendly than there were. the share price is down 20% and we are back in two minutes. ♪

announcer: this is "bloomberg surveillance." tom: tsipras shocks and wins big in greece. he will form an austere coalition. the bank of england and the fed -- they blank. now what for markets?

adam posen joins us this morning. and german engineering in the house? yeah, right. allegations on outright fraud. this is "bloomberg surveillance ," live from our world headquarters in new york. it is monday, september 21. i'm tom keene. joining me, from london, francine lacqua. the physicist, the metal engineer who made audi and is now running vw. from your reporting, it's his job in danger? be that: his job cannot secure, but he has apologized. it always depends on the deal. this is years of cheating. trustedof the most brands in the u.k. and in europe. this is a brand that is trying also to enter the u.s. market, which they are not doing very well. he has admitted to cheating the pollution