caroline: i will get to stocks and a second, first i want to show you the euro dollar trade. we saw at of course rise yesterday after we heard from mario draghi saying we need to give time before thinking about whether to increased him in this. that came after your interview. he said they needed a steady hand. is not about rushing to increased him in this. the correlation with the yen is at its highest since 2007. let's take a look at the stock market and see how they are

opening this morning. futures are flat, you can see the cut 40 pretty flat there. we're still waiting for the dax to open. investors looking ahead to the speech by janet yellen to see if we get any comment on fed policy. we've had some mixed messages there. that is how the stock markets have opened, let's look more specifically at what we're watching. we have the third-quarter earnings this morning, they were a bit of a miss. also, the gross margin at the weakest for the third quarter in 11 years. yet, we are some shares up at the moment. we might not see it there, because volkswagen, we're not seeing that react yet. that is after the ceo steps down yesterday. we will see if we can find out

who the replacement will be after the scandal. platinum,wonder why this could be affected because of the scandal at volkswagen if people turn towards gas, that means platinum demand could fall because it is used in devices which curbs commissions in diesel engines. jonathan: great work, thank you very much. we will bring you the volkswagen when we do get a stock price. japan is in focus, david inglis is there. a good morning to you, jonathan. the story, i would get to japan in just a second, mixed markets around the region. japan just reopened after a three day holiday so it is playing a bit of catch-up. that is dragging down the -- ai, vw still av er

very big story. you get a lot of reaction here. have a look at the big movers, you look at a lot of these car parts makers, more so than compared to the automakers themselves. they make things like steering systems, bearings, 60% of revenues comes from toyota. they are exposed. that being said, the story of the day is this micro investment. they're basically selling off and asking questions later. msk, that is the big parts supplier to the auto industry. that is the story here. 9%.nghai just closed up . gave thehsbc interesting note. they said the worst is likely

over for the chinese stock market because the amount of margin debt has come down 60% from the peak we saw back in june. we are now at 147 million between the two exchanges. very interesting trading day, quiet on some measures. jonathan: david, great work, thank you very much. here is what is happening throughout the next hour. first up, the road to recovery for volkswagen after losing a ceo and a third of its value. the stock is up 4.5% as a speak this morning. hike, right now, and not a moment later. bill gross says ultralow rates could crush developed economies.

one ceo, and more than $25 billion later, what is up next at volkswagen? martin winter korn stepped down. our international correspondent hans nichols is live at vw headquarters. can we quantify yet just how big a mess volkswagen is in? what happens going forward? forward there will be criminal proceedings. volkswagen will cooperate with them. we heard from the premier lower saxony, he is on the board and has a 20% stake on that voting board. he is saying there will be a swift resolution to the criminal side of things, but is also indicating this is the first step. there are a lot of estimates out there. jpmorgan is saying it will cost them $40 billion, the fact is no one knows.

no one knows the civil liability will be, or the criminal procedures. i think one question that is being asked, and we're hearing as the sun comes up, cars are coming in all morning. we got into a bit of a traffic jam because a shiftless starting at 10:00 p.m. this company lives, breathes, and plays football for volkswagen. asking,tion germany is with his just be localized on wolfsburg? or is it going to be industrywide? will this affect the entire auto industry? how was germany as a country going to process this, and what was it due to its reputation for efficiency, honesty, and proficiency. jonathan: the other question, ok, you announced a new ceo, which name will he be pulling out of the hat? focus is on one

man, currently the ceo of porche. profits, theyd had $3 billion and profits. the other one is an outside candidate, herbert diess, he spent his career at bmw, now he is here running the volkswagen brand. plant,been inside this to give you a sense of how big it is, a lot of the workers drive their volkswagen here, but then they commute by bike around the campus because it is that a big. hans nichols, thank you very much joining us live from volkswagen headquarters. frome joined byfelipe, ubs. also jim mcdonald is joining us

from nordic trust. me a classicis to example of a ceo that was dammed if he did in damped if he didn't. did he change anything? felipe: we knew from the beginning this was going to happen. go, and there was nothing unexpected there. jonathan: jim, when you have a company in crisis, is a morbid tr stunt to get rid of the chief executive? does it change anything fundamentally in terms of management going forward? jim: i think in this situation you do have to make some changes at the top. this will take a lot of time to clear out and determine what actually occurred. --e interesting angle is will this dent auto sales? will it hurt the euro? i think those fears are over exaggerated. the most for you,

bullish analyst on vw stock, what scenario gets me to your price target when -- up an of the 4% this morning. how to begin anywhere near where you are pricing? ippe: we don't know the total cost, but we have some estimates. it is important to keep in mind over what. of time -- what period of time w e have to settle those costs. we still think this is an incredibly strong business, the foundation is very strong. you have an incredible powerfully luxury business. they're trying to separate the truck business, all of these developments are underway. is aimportant today, this

crisis. it is unearthing the fact that emissions control is not been done properly in europe. this rapid change. jonathan: who do you want to see lead this company? name is valen, a great job in china, i think he has had a no fault career. i think that is the outsider who needs to be like at this point. thishan: tesla stocks, if was away from diesel, why isn't tesla stock moving? -- what a moves the stock anymore. what is the story?

jim: it can be more driven by macroeconomic concerns and market action. a volatile market is not good for those stocks. may be under some pressure, the mauve are all market pressure is more important to tesla. whether vw has to shed some assets. they asked of lamborghini would be begging -- going back to italy. philippe: the message for the past seven years, it is built up a conglomerate and spent a lot of money on acquisitions. frankly, the returns have not been there. action -- we that don't know exactly what it stops, but it will continue. i want toto wrap up, gauge how difficult it is

sitting on the south side and keeping a buy recommendation on a company you have such limited visibility for what this means. how difficult is it? ippe: it is difficult to convince investors were very scared. jonathan: what do they say back? ippe: let's do analysis, we lost 35% of the value, it seems right now the loss of value is a multiple of what this company might have to pay, especially if you adjust. i think at this stage if the business is finally broken, keep in mind this is an issue in europe but this is a company that makes 10 million cars, only 2 million are diesel. final question, if we find out that some regional contagion, this is not just the u.s.

we are no evidence of that right now, but if not -- pe: i cannot answer that question. the bigoted or has to change the way they have been operating -- the region has to change the way they have been operating. jonathan: sticking to his guns this morning, thank you very much. jim will be staying with us. coming up, we had out to japan. will the new version be successful? we discussed after the break. ♪

jonathan: let's bring you up to speed with some of the top stories. mario draghi says the ecb needs time to see if a step up in stimulus is needed. too early to judge whether expanding purchases would be appropriate. volkswagen is looking for a new chief executive after martin winterkorn steps down over emissions cheating. will discussboard a replacement tomorrow. shares are trading up today. will lower its target for

the full year. that is according to a person the matter.h there seen the price of liquid crystal displays as competition increases. good morning and welcome back to the show. 100 trading and little low coming off the biggest day of gains and some three weeks. the dax higher supported by vw stock. let's check out japan because the nikkei has been closed for three days. it is lower by 2.76%. the names on your screen missing out on the auto rout over the last few days are catching up now. mazda is down by almost 7% in today's session. abe will outline the

goals for the rest of his term as the leader of the liberal democratic party for another three-year stint. brian joins us now from tokyo. what are we likely to get from this speech? an exciting this is moment. yet -- he has wasted the last few weeks -- he has wasted -- tonight, we think he will say he is ready to get back to business. we think he may flag the aim will talk gdp, he about social welfare spending, and doing incentives for childcare in the hopes that women decide to have kids. he may talk about a supplemental budget, that has been flagged in the past.

so the light ¥3.5 trillion in extra spending. thethan: you talk about capital he is spent, is he in any political danger? when he outlines the goals, with the complete that term? a good question. he is on pace now to be the longest-serving prime minister in 40 years if he does complete the term. his biggest advantage is that he really doesn't have any rivals inside or outside of the party. he is virtually unassailable. the fact that he did spend those few weeks pushing to those security bills shows he is aware of his position. polls, suffered in the he is confident he can get that support back if he can get the economy back on track. the question is, can he do that? that is left to be seen. jonathan: the other questions, a

big factor of inflation is expectation. our voters not just -- are voters losing faith? what are the discussions that happening on the streets of tokyo right now. one of the things we were -- 2%g about was inflation. you may have missed it yesterday japan was closed but we interviewed the deputy economy minister of singapore and he said exactly what we have been saying that inflation target may have to be pushed back. we will see how he talks about that, then look for mr. kuroda to talk about that in october. jonathan: for more on japan, we strategist hebal joins us from hong kong. jim is still with us, as well.

first, you for that conversation with brian fowler, the first question you have a series of goals for this morning. the question would be, can he complete this term? is this a slow burning, or will the political crisis, around? crisis is slightly a strong word for me. i think mr. abe has a standing, i believe with your tokyo report that he has wasted and spent some capital on a very contentious issue. the point is now here is to get back to get this back on the economy. he can still do it, i'm quite excited about this signal of having a nominal gdp target. i think it should be japanese policy. i hope the central bank takes and adopts-- cue

this target. let's see what happens. i remain confident at this stage. jonathan: just to follow-up up, a nominal gdp target may be better than an inflation target, but why does that mean they can hit it? target -- inflation it consists of many unknown and movable parts which is why they are missing it. was launchedcy you had as ago, complete the different environment for the commodity and energy space. targetingnominal gdp you will be focusing much more on what is going on in the domestic economy. also, the message would be much clearer to the broader population. it is something the central bank hope they and i do

are listening. the recent academic work being done in that area recently. i think naming a nominal gdp target is a step in the right direction. frankly, if you look at the theyese nominal gdp data are doing good. last quarter, everyone said japan shrunk, but it did not. the nominal growth number was positive. of a nominal figures, it is working in japan. that is the path they have to go in order to convince more people -- the consensus is still quite a negative. stay with her skull behind what to bring -- stay with us, i want to bring jim into this. does this will the goalposts for you, jim.

jim: the stock market has done well over the last few years. the mystic consumption is down this year, exports are only up 1 %-2%. bottom line, it is better for financial market in the real economy. jonathan: let's talk about the fundamentals of the real economy. the jobs to applicant ratio, the unemployment rate, where is the wage growth coming out of the other end? this has been a theme for a long time in japan. look at theu national gdp report, there is an item called total compensation, and that is doing quite well in nominal terms. i would sibley suggest to forget for a moment as long as the real problem is reflecting the economy, it is useful to look at nominal aggregates of gdp.

whether you look at domestic demand, capital spending, all of these numbers if you just look at the nominal figures they are recovering. in some cases, even before, not everything is due to mr. abe himself, to be fair. but the first time, domestic demand is actually larger than nominal gdp which is why you a deficit in trade. that is what you would expect in a successful inflation phase, that domestic demand is stronger than overall demand. certainly, that compensates for what is going on in the international markets. i think that it is going in the right direction, you can always be unhappy about things being

even better than they are, and it is mainly a financial market story right now. i do think they are on the right track. they should not go wobbly, i hope this is the message we will hear from mr. abbe today. hopefully that is followed up soon by the bankruptcy panel. jonathan: i would give the final word to jim, the elephant in the room is china. a slowdown in china hurts japanese exports, a weaker yuan hurts japan is much as it hurt anyone else. what is this mean? jim: it does put the pressure on the third arrow, the most disappointing. they need to make much more happen there for the next leg of abenomics for it to be effective. jonathan: gentlemen, thank you very much. up next, bill gross is chasing

the doves away. he says hike and now, and not a moment later. ♪

jonathan: welcome back to "on the move." let's get a quick check of the market share. a big day of gains for the ftse 100. in is now heading back down. the dax just rollingnto negative territory. a lot of stock movers to talk about this morning. one in particular, let's get your stock movers this morning. nejra: that one stock that has been seen the limelight and is the biggest gainer is volkswagen

. there has been so much activity on this stock since the scandal toke in the company admitted cheating on u.s. emissions tests. we found out that 11 million vehicles were affected worldwide. we are talking about diesel vehicles in particular. it's a 20 billion euros wiped off since friday. it all came to a head yesterday and ceo martin winterkorn step down. the stock rallied on that news. gains cook, and other big today. for your expectations were in line with what was set in july. it is 91% sold for it to summer season, so the stock is rallying around that. &m third quarter earnings were

bit of a mess. the weakest third-quarter growth margin in 11 years. net income missed estimates, and what it talked about was the impact of a stronger dollar because it ties most of its closed at 80% in asia. vw stock still down 28% over the week or so. super mario to the rescue is the tagline. mario draghi spoke in brussels yesterday saying he needs more time to determine whether to boost stimulus. >> should some weaken the inflation outlook over the medium term more fundamentally then we project at present? we would not hesitate to act.

jonathan: what would it take for the ecb to step it up? let's ask paul gordon who joined us from frankfurt. where are we now? we spent the last couple of talking about the prospect of more qe. did he push it further down the road? l: as noted, he said time is needed to look at the data. we will perhaps get more clues tonight. to beuld expect the line we are ready to act, and willing to ask. look, the key thing will be inflation data in particular. over the coming weeks, we get the september inflation data just after the end of the month. interesting to see if that is slowing.

so, should we weaken at that point, that maybe when they say ok, let's err on the side of caution and step in. float overn trading in frankfurt, working out exactly what the ecb can and cannot buy if they want to boost stimulus. where are we on that debate? let's do the will day, and then what can they buy? paul: all options are on the table. pastan extend the program september 2016, you can broaden it to include the elastic classes, or up the monthly amount. you spoke to the austrian central bank governor yesterday, and he was cautious about extending right now. he pretty much rules out stepping into new asset classes such as corporate bonds. he also said that if you extend september, 2016

that is in effect. a real immediate impact will not happen. that debate will have to happen, and they're being very cautious about what conclusions provisionally they are jarring so far. jonathan: great to have you on the show this morning, thank you. of course, we await comments from janet yellen later today. will she join some of her colleagues have signaled that a rate hike should come this year? there is one man the mena be satisfied by anything she has to say, billionaire investor bill gross. his message to the fed is simple -- hike, and hike now. he says they cannot rise soon enough. let's bring back in jim mcdonald .

jim, get me up to speed on where bill stands on things. he is talking about business models of pension funds. this isn't new, is it? i do think there is a strong case to be made that the fed needs to make a move. the communication they had was particularly poorly received, we need better clarity around what will lead to an eventual increase in rates. focusing on market volatility is an inadequate explanation for the financial markets. jonathan: let's make it to another one of these quotes from bill gross. they are on a revolving spit being cooked alive. this decision is absolutely astounding. when we talk about the division on the central banks, whether the bank of england for the federal reserve, a split on what they should injured not do. some people are arguing for more, some for much less.

jim: what i find most interesting is that the groups that were supposed to knows -- most affected by the fed increase were calling for that. is the right.nty i hope you will find their way to an initial rate increase. jonathan: it will come kick the door down as we debate to this, so we move into a place where we start debating the low rates and up the solution. we are already in the middle of that debate, it may be a case that zero rates are no longer working to let's try doing some indifferent. they benefited the wealthy, and it made be time to see higher rates benefit savers in the middle class. jonathan: are we expecting a different janet yellen today? any developments this evening whatsoever? jim: she is an extremely careful communicator, i would

not expect to get a lot of new news out of her speech. jonathan: your point on confusion is an important one, it is called federal confusion. we can't decide if it is positive or negative for risk because they have such a pessimistic view of the global economy. that is caused somewhat of a pullback. has that added on to risk? im: we have been reducing risk steadily in the wake of the downturn of the markets. we put our first step back into the markets, increasing our recommended exposure towards europe, the u.k., and japan. backe taking a first step towards increasing risk, but we want to see more confirmation that the economy is growing for us to increase. jonathan: one thing we do know

is they hate frightening financial conditions. the question i have been asked is whether the federal reserve's concern has given investors the green light to buy credit again. is it a green light? m: we think the strength of the credit markets is that the fixed income markets have performed better from a liquidity standpoint and investors feared. it is a view that if there is an economic downturn ahead, one of the things we took as a positive out of the market turmoil was the relatively good behavior of the credit markets. jonathan: do you think it were really tested? the liquidity of these markets, with a really tested? : i think they were. we had no problem doing the kind of trading what we wanted to do. question,the final janet yellen, some would argue,

wants to hike rates. mario draghi is thinking about doing more stimulus. they're both trying to answer the same question. what is your view? thatthere is good evidence developed market economies are holding up pretty well. european data is gaining momentum. scenariorisk to that is a real hard landing in china which we don't think is the likely scenario. jonathan: jim mcdonald, we love having you on the show. thank you for joining us. coverage ofour live janet yellen's a speech later tonight. later onat's report this evening. coming up, we hear more from our exclusive interview with anna otin.een -- bitub==

>> i wanted to be the best bank in many markets. i figured some smaller countries, like portugal we are already there. we want to be there in more markets. ♪

jonathan: let's get to some of the top stories, volkswagen's ce

has steppedterkorn down. it will discuss a replacement tomorrow. shares have gained today after losing a third of it's value this week. carmakers and parts suppliers plummeted in the wake of the scandal. the prime minister will set out his plans to the economy a little more than an hour. china's president has vowed to push forward with reforms and the resilient of this country's economy. ing's comments came in seattle at a meeting of business leaders representing $3 trillion in market value. 44 minutes into the trading session, blanket red across most of europe. dax just pulled back into

positive territory. traveling north for a second straight day. euro, cable down stronger on the session but a pullback over the last month. flat.en pretty much dead the euro and the yen, those two moves against the dollar most of like since the financial crisis in 2007. take a read of that for now, but for now we talk about the strong u.s. dollar and that is hitting h&m's bottom line. is this as bad as we expected? nejra: i'm afraid it is, and it is slightly worse. let's take a look at the

numbers. a lot of analysts were looking at the gross margin, that came in at 55.9%, the weakest third-quarter growth margin in 11 years. profits,k at pretax the expectation was seven, the 37.ectation was 5. profit growth was stagnant. h&m haveenges that been facing its interesting, because they did see their sales increase, this is about cost. it is about costs that have been affected he does of a stronger dollar. they warned about this in june, now we see the impact. the reason is they get 80% of their products from asia. most of the close are priced in dollars whereas their bigger produce most of their

clothes in southern europe. ofis not seeing the impact the stronger dollar in the same way. that is why we've seen the bottom line affected. the share price says it all. , what isown about 5% the stoxx retailer index is up 4%. they rallied this year 23%. jonathan: thank you very much, h&m stock down by almost a full percent. an investor meeting at center and there -- santander for the third time this year. spoke in a first television interview since becoming chair and started by asking about global growth. >> i think global growth will be slower, it will slow down

because of the bigger economy. the important thing is that we are very balanced. are coming from developed markets, that has huge beneficiaries from what is going on. spain, germany with the biggest consumer bank in germany. we have very good business in the u.s., with good returns. we could do much better, but it is doing well. that provides a very strong buffer against all of the emerging markets. better say we tend to do when things are complicated because we are more stable. winning to doing very well, we will underperform. timeu look at any point in , we did really well january until april. i am quite confident and what we can do for the next few years in beingof emerging markets a bit volatile at the moment.

francine: your share price has come under pressure, how much do you think that is out of your control? ana: i think we should be measured since we increased capital in january. we did very well until about mid-april. in-line better than most of our peers, since then there has been -- brazilianssues banks are down, i think it is 35% since then. spanish banks are down, polish banks are down, i think what is important is we are shown very strong results. of her latest results our profits were up 25%. we have increased our capital ratio close to 10%. these are our true numbers.

byhave increased our profits 30%, we have done well, unfortunately, global growth is slowing down. emerging markets are now out of favor. that is not helping us. santanderthat was chair ana botin. up next, everything you need to know for the rest of an extremely busy day here on bloomberg tv from norway, japan, and the u.s.. we wrap it all up after the break. ♪

jonathan: welcome back to bloomberg tv, this is "on the " i am jonathan ferro. we get germany's climate coming soon. we also have a late decision from norway's central bank. event comes tonight, we await a speech from janet yellen at 10:00 p.m. u.k. time. don't miss bloomberg special report right here on bloomberg tv later on this evening. hour,s almost it for this the pulse is coming up next with a special host. johnson, the main thing for

you might not be janet yellen, it might be coming from somewhere else. : the norwegian federal bank decision, why with a cut rates when inflation is above where they should be? the reason it is there is because the euro has appreciated versus the krone. act, weesting juggling will talk to the governor later on. the message is expected to be doveish. jonathan: your favorite currency pair? side, iook at the other think the central bank policy in both norway and sweden is particularly fascinating. inflation is low, but gdp is holding up. they don't just have negative rates, they have a qe program. other any parallels between norway and sweden? guy: sweden looks for a much

like what happened to the ecb. they are clearly moving in the direction of more qe. drug yesterday said he needs more time to determine -- draghi yesterday said he needs more time to determine whether or not that is the case. so the governors have to think about whether that is the case. reverse that around, and put that against the oil price. jonathan: it is quite remarkable. the other question, you will bring the german business confidence number. can we look at that and say in a couple of months german business confidence could be hit by a whitening fallout in the auto sector -- widening fallout in the auto sector? next few days will determine that. if can settle things done quickly enough, maybe that impacts will be more limited. there would be something in there. people are talking about having

an impact on the euro. the number of people employed is massive, not just at vw and wolfsburg, it goes all the way down to the certified chain -- supply chain. you have to assume that will bleed through into investment decisions. limited visibility on the financials, what about structural issues for the financial industry? is it the beginning of the end for the diesel engine? guy: france has 80% of diesel on their roads. germany 50%, they made a massive push. will that be reversed? do we need to talk about new taxation? these are things that go through your head to quickly. jonathan: guy johnson will try to answer that question, is it the beginning of the end of the diesel engine? that is it for me, you can

follow me on to their -- twitter. ♪

vw shares continue to climb following the resignation of dr. winterkorn. a plan for japan. in one hours, prime minister shinzo they would deliver a speech. and santander chair ana botin talks banks regulation, currency and global growt in an exclusive bloomberg interview. welcome to "the pulse" live from