here on bloomberg throughout the morning. we are 15 seconds away. we are pushing high. we are up by 180 points. we are going to wrap up another quarter with a big fair gain in the market open. caroline: what a way to end the quarter. after $11 trillion was wiped out of market evaluations across the world. that is according to the massive market capitalization. onenomenal move set in to moti by china. we worried about the deeply shaken -- the devaluation of the yua. the yuan -- the u.s. kept waiting to raise rates. the tax is currently up by 2%.

currently, we see the others drive higher. currently, a state of risk appetite. we wonder if it is time to get back into the market. you can see similar risk appetites when it comes to fx. 2/10 of a is rising cent today. even though the yen is currently on track to have its best quarter in three years. havens are out of the money going. the euro has been a haven in the past quarter. meanwhile, commodities trade higher. currently, the copper market is up. it looks like it is higher. we see some move in the commodities at the moment. us look at the stocks there this morning. i want to focus on autos in particular. os are driving 1.3% higher.

is cut somena slack. we see big news on autos. we see china cutting the tax on small passenger vehicles. anything is better than 1.6 10%rs, will not have to pay tax anymore. you pay 5% tax. that helps the autos currently trade up. it is set to open higher this morning. down by one point 1%. the estimate was for 1.3% decline. the profit will be moderately ahead of expectations. still, we are waiting for volkswagen to open. german stocks a little bit slower on the uptake. like and could pop higher as well on the back of the chinese market. they will see better taxes for the lower and smaller cars. they will not face environmental criminal charges. that is reported by "the

wall street journal." back to you. jonathan: you will keep on those two stocks. in the market, a couple of minutes into the open, the u.s. stock is up. the threet define months prior. what a move we have seen over the past three months. the epicenter of the , you can finally find that in asia. we are standing by in hong kong. good morning, john. have a look at all of this green on the scene. it currently does not tell the picture of the last quarter. as we going to be close in china, the shanghai market is rebounding up by .5%. too manye not been wild swings we have become accustomed to in the past three months since the global equity route. we had a rebound in glencore

shares, similar to what you saw in london. that has helped the overall mood in sentiments and we are seeing the hang seng up by 1.5% in late trade. most of the markets in the region are moving higher today. a delayedpines had start today. new zealand is closing lower. korea and japan, and australia, are coming back and rebounding following the really big selloff that we did see yesterday. and of course, it does not tell the very big picture and we are on track in asia to post the worst quarter in four years. as caroline said, it was china's fault. chinese investors have certainly been punished. look at that. the shanghai composite is down by 29%. that is over the last three months and it is the worst quarter the chinese stocks have seen in four months. it makes the shanghai composite the worst-performing global index so far of the course of this year. 14%n's nikkei index is down

over the quarter. that is also its worst drop we have seen in five years. also, japan's nikkei is on track to post its worst month in three years. the australian share market is also not spared in the quarter and is down 8% over the past three months, holding just about the psychological 5000 point level. the equity route began in china on june 12. it was the mid-peak of june when we started to see investors bail out. that we will be hoping investors will return in october. jonathan: thank you very much. investors are coming back. .w is up 60% bmw is up 5%. the dax is outperforming this morning. we will break to most market moves for you in the next hour. here's what is happening today. live intothe bulls the fourth quarter and we wrap

up the worst three months in european stocks since 2011. this could be a pivotal and for the year. and european inflation. your expectations of more easing from the cb rising. as japanese industrial production disappoints, the world's third-largest economy is going back towards recession. it is the final day of trading. set tomarkets are deliver the worst quarter since 2011. he summer saw a collapse in commodity prices. a stunning market rout in china, and a very is the caroline hyde. she has the details for you to wrap up the market action. caroline: i think this sums it up for you. this is the all country world index. it is down by 11% over the course of the last three months.

this is the biggest selloff we have seen for 2011. to put this in perspective. how much value has been lost ? $11 trillion. that is more than the entire gdp last year in china. bigger than the chinese economy. that is how much value was lost in the market valuations. we spoke about the commodity route. all of it is fueled by the chinese selloff that sparked the concerns about global rates. but have a look at how asia fared. it really took a hit when you actually look at how the shanghai composite fared. it is down by 28% over the course of the last three months. what is so fascinating is, not only was this the biggest loss across all global gauges, but interestingly, valuations remain resolutely high. if you dig into the equities of mainland industries in china, across asia, equities on the mainland industries trade at a

median 49 times earnings. that is three times with the s&p of trades that in terms evaluation. clearly, evaluations are still quite elevated when it comes to china. in shanghai, 15 times. timesnchmark is still 49 earnings. we have with to go when you are looking at market evaluations. but seven look at the winners and losers. what should you have bought, in hindsight. the winners were those who benefited from mma. snapped up by the japanese competitor. that was the best-performing stock of the last three months. the fact that these companies are joining together to make the biggest online gaming companies listed here in europe. these two stocks outperformed. if you were with these guys, you were winning. from index perspective and an industry perspective, real estate was the only industry

group in europe that managed to be slightly in the green. i mean, just slightly. the worst performance, you know it. it was miners. it was the worst-performing industry group in the stock 600. glencore was down by 69%. we have been across that story for the past few days and weeks. meanwhile, greek banks, the national bank of greece, is a volatile stock down 64%. of the on the back crisis in greece and the fact that my exit the euro, with the greek banks in effect they are still looked at an asset perspective, they underperformed. the fact the chinese are reducing tax on smaller cars is helping the office today, but any longer term, the wb is down by 54%. we know the scandal of diesel gates. back to you. you, carolinek hyde. the are joined now by stuart richardson. he is the chief investment.

extremelyyour notes, overvalued by any reasonable benchmark, even after. i try to see what you sell three months ago. not everyone has done badly. uart: we had a decent quarter. about 7% off of the asset fund. we will talk about the last earnings in the 12 months. equities are very long-term asset. we tend to look at the benchmarks over the last 10 years worth of earnings. we will try to take the earnings issues out of the equation. these things remain extremely competitive in a historical capacity. jonathan: there is a contrarian indicator. we used to look to the shoeshine boy in the 20's and 30's.

when the shoeshine boy we hitsded a stock, out. does the opposite apply? everywhere we look, it is the case. days,: over the past nine since the press conference, we have been down 7%. quarter have seen people bailing out of positions. stocksseeing some of the go up in the last couple days. as, from apear trading point of view, it fell flat in the u.s.. just perspective and expectation. seen the, you have news flow on corporate activity for glencore and vw.

it is what is happening in high-yield bonds. also, and sovereign benchmark debt. people have begun to look at risk in their portfolio. they're looking at liquidity where it is or it is not. jonathan: this was the story going into the summer. credit sales were up. as we go into the end of the year, the federal reserve, most people expect them to find credit leading equity once again. : this is confirming inequity downtrend is still. markets see some pretty vicious moves on the upside. we see general to generation in international conditions. webby were talking about global fx reserves. you can see the story on the front page of the paper.

the global a quiddity is the -- the global liquidity is the main concern for us. doesn't look like it will be helping from that point of view. decent -- we have a decent doj. it does not make a huge difference in the global perspective. jonathan: profit margins are reaching highs we have not seen before. they need some topline growth. for the equity goals, they're are looking for that now. are they going to get it in europe, stewart? stuart: you are is having a decent cyclical pickup. the are three reasons for this. they have the cheaper currency. if the cheaper oil prices will stop and three, the authorities. of course, it is also here on year. year, someinto next of that will come off quite rapidly.

we expected the ecb to be doing something more. the market is beginning to ramp up for that. e does nothing to work for the build economy. markets will have some sort of rally on the back of qe. jonathan: up next. bcb president ramp up qe to meet the mandate? that question after the break. the final day of trading in q3. up by 3.7%. n sainsbury stock, up by 12%. give senior today sales ahead of expectations. the stock is given a serious pop this morning. we will break that down, and

glencore. ♪

jonathan: 17 minutes past the hour. shares in supermarket saying saying, over 10% in london trade this morning. profits will be moderately ahead of expectations. gained ashares have much as another 8% in today's

trading. "after a strong rise in hong kong. londonked a 17% jump in yesterday. investorsill meet later today. tesla delivered its first model suvs overnight. it was originally slated to emerge in 2013. early models of the seb cost about $130,000. the car achieves new levels of safety. x is the first suv that is five stars in every category. [applause] welcome back to bloomberg tv. 18 minutes into the session. a dreadful quarter, yes.

horribly the worst quarter since 2011. the authors are leading the gains in the dax. they are higher by two percentage points. europe higher by 1.65%. possibly preparing for bad news later this morning. the eurozone inflation could will pull back to zero. this marks the latest blow to the ecb's 2% target. the last time this was experienced at that level was 2013. numerous easing measures have been implement it. will be bank boost further to encourage parties growth? -- price growth? paul, the ecb, are they interested in today's number? they know it is going to happen? is it all about the outlook. paul: they're interested in the number. the question is, to they choose to look at.

however, german data was pretty weak yesterday. -0.2%. closeget, they're running to capacity. the feeling out there is we might get a negative number for the areas. their townhanged after the german death that yesterday. the big question here is, what is really causing it and will it the way? oil prices obviously, a driver. it is worth noting they spiked up relative to recent performers in august. they had been falling in september. sure they pick up again in winter, that will help boost inflation even more. the policymakers are hoping that will happen. paul, think you very much for breaking that down for us. sticking with europe, hsbc has become the latest big bank to say the euro has more room to rally. it raises 2016 forecast to

$1.20. let's welcome dominic. he joins us now from the london headquarters. great to have you with us this morning. i want to break this down very simply. the ecb is set to embark on more qb. it is said to strengthen the high interest rates. it expects the euro to rally. reconcile those three things for me. someone an: -- dominic: everybody knows the ecb will do more ae. -- more qe. the question we are looking at his not what is next? what we're starting to say is that once the fed hikes, and we get that out of the system, what will be the process from there on. we think the timing cycle will be a lot shorter than any timing cycle in the future. the growth is not there for them to hike aggressively. that is going to start to bring back the idea that the dollar

can actually weaken somewhat. then we look at the ecb. we say, they will extend the asset purchases out from september 2016. actually do? can they are constrained with a lot of technical constraints. the p is not easy to get around. really, what can they do? he will run out of policy options. that is going to drive the euro-dollar higher from here. jonathan: just to pick up that theme. we go into the december meeting. that is the one everyone has in their diary. let -- fresh inflation with the ecb. out of the three options, an andease in the qe program, then just extending it, are they going to choose option three? leave this up in them -- with this open-ended? will extend the timeframe in which they are doing the asset presages.

-- asset purchases. they could increase the pool slightly. but in terms of making big, bold changes. they cannot weaken the currency through the qe. that is unlikely. the political challenges will remain in place. most likely option is an extension of the duration of past 2016. that will not be a major surprise to the market. we are already discussing it now, 2-3 months o ahead of when it will happen. jonathan: there is a much bigger story in play here. looking beyond to 2016 and 2017, this idea of divergent monetary policies. will develop and a potent way? what are the implications of that? the wider implications for the fx market? policy: the monetary

divergent market has played out in our view. 1.40.ro is at they said we would take the raw qe back in 2013. the ecb has said it will do more easing in the past. that has been priced and played out. indications from now is actually what will happen in our view. what drives the fed to have a softer tightening in the past. we're used to seeing cycles of basic points. we could even see 50 basic points, 75 basic points, before people start realizing the fed might not hike more from here and it might be the end of the cycle. we think that is a really challenging environment for risk for em currencies because the moment the u.s. is the key driver of growth, and if that goes away, you will start to worry about some of these currencies even more. if the fed decides to hold off,

inflation is still very low, that is a little bit more of a positive scenario for him currencies. generally speaking, we don't think it is a positive for the dollar. in that scenario, we would see the dollar weakened. depends on what drives the fed to have a shorter timing cycle. in both scenarios, think the ultimate outcome is relatively, more negative or the dollar. jonathan: the final question. we have been talking about the euro-dollar. when i draw at the theme you are discussing, if this plays out bit by bit in the way you expected, the euro-dollar would be the best bet to play that through? inic: on the policy side, if you are looking at the ecb in the u.s. story, buying the euro-dollar would not be the top trade. we do think there is further to run in the weakness. one of our positions has been the japanese yen.

we think singapore is more exposed to some of that em vulnerability. there could be a change in monetary policy in a couple weeks at the biannual meeting. we have been looking at the emd m divergent to continue. there is greater vulnerabilities with the em currencies. whether it is the euro, the yen, or in some cases, the dollar. jonathan: great to have you with us this morning. something a little bit different. someone is buying the euro-dollar, believe it or not. after the joined break, 26 minutes into the session. we have a rebound here in europe and a lot of stocks to talk about. it is not just the glencores and the autos. for percent. optimism on the final day of

trading on a very ugly quarter. ♪

jonathan: good morning. welcome back to "on the move." the stoxx 600 is up by 1.9%. we are going for the worst quarter since 2011. we're raising some of that this morning. there's been some damaged and to the past quarter. this one is going for the last quarter since 2008. they're not finished with q3 just yet. stock move this morning. let's get to some of them now with caroline hyde. caroline: i'm focusing on the

autos because that is another industry boost over the past quarter that have had issues over the own making with the diesel gates. they have also at issues with the china slowdown. today, china for once, gave a bit of a push to the autos. peugeot is up almost 7%. if you are going to buy a 1.6 aygine car, you will have to p 5%, versus 10%. beck is a boost to the autos this morning. when core is trading hike and up almost 6%. it is down almost 60% less quarter, but it is getting a push higher. we are seeing perhaps, the fact that they oversold on court once again, trying to pull the market concerns putting out a media statement this morning saying, operationally, financially, we are robust.

reducing the debt levels by some $10 million. people are listening to their moves to try and easily concern for glencore. up some 12%. this actually still down on the quarter, but it really is getting the biggest push sense 2007. is the first biggest market in the u.k.. for once, the profits are doing better than expected in the u.k. retail. the profit will be moderate ly better than expectations. thank you very much. stewart richardson is still with us. supermarkets last year where the miners. every morning, they would wake up with something negative to say.

have you changed your view in the last 12 months? has anything developed in that particular sector that takes your fancy? >> we've seen a shortcoming rally. people have had a bad quarter. lot in the past couple days because of the end of the quarter situation. there is a potential for long-term industry. we want to get long-term growth in there. where's the growth of the u.k.? numbers are better than expected, but there is no actual growth. i look at the at as a long-term potential. jonathan: there is a potential bounce. when management come out and say we will do better than , you noions

expectations were too negative. you question the expectations. as a couple hit the growth even more for these companies? : it has been a major price cap for the incumbent players here. to continuere going to squeeze margins on the big incumbents. it is not as if you pay for anrs are looking increase in their volunteer in terms of big pay rises and so on. it is nothing to really get your teeth into here. there is no new dynamic coming into the market. this is pretty tough for the retailers. jonathan: i want to move it on from the supermarkets and onto books whiten. volkswagen. shares of bmw are searching this

morning. the city of houston is suing millionke and for $100 for cheating on a mission testing. hans nichols is in berlin. we have negative news around the company and the stock pop as well. it will leave it to you to decide where we stand. hans: i'm not trading. in this morning and i am glad. i cannot quite figure out what is going on. the stock pop could be because of china. when you look at the negative side, the mass the hind the suit is really revealing. it gets to the challenge for volkswagen. just 6000 vehicles have been sold their in the crucial time period. harris county is saying we 5000 per day. the is how they arrived at 100 million dollars number. that is a highball number, who knows what is at the center of this suit. it gives you a sense of the challenge looks like and will have. he was congressional committees

are asking for documents the middle of next month, october 13. looks like a did announce that they wanted a retrofit refit of the vehicles they have. a technical solution is close at hand. it is likely to be expensive. estimates are at 6.5 billion euros. most recently, we have "manager magazine" reporting that up to the fullofficials at second group will be suspended. that is according to "manager magazine." but do a quick take on the jurisdictions. spin, sweden, italy, and denmark, all of them have volkswagen vehicles, at least the diesel models, suspended. jonathan: we get the sense this will not get any better. when you good a look at -- when you get a look at the texan lawsuit, you get the sense it is part of a bigger legal issue the company will have to deal with. in the months, and possibly years, to come. 'sns: the nice thing for bp

they can consolidate the claims. italy much more difficult for volkswagen to do that. there are already 27 state attorney general talking about suits. there are a variety of different civil claim staking palace. -- taking place. i don't have the good prosecutors in harris county arrived at this number of $25,000 per day, or 6000 vehicles. they back that out and get a nice number of $100 million. here's county is one jurisdiction that will be filing suits for folks like an. they have a technical problem and they are getting close to the solution. have a pr problem. that is difficult. have a label problem, and no one knows how that will go. jonathan: thank you very much for joining us. stuart richardson, is still with us. sector, when europe hits the blind spot, you

can arguably say there is a problem. you look to china. stocks a surgeon auto across the board. not just in europe, but asia as well. nevermind the legal applications . it'll be tough for the autos for the next couple years. arethan: the european autos still part of the whole issue of diesel. this is a potential risk for shareholders. stewart: the one thing you don't want to have in your portfolio is potential problems and issues. of just have to avoid some the pitfalls. the obvious one is, if it does obvious, youis should have figured it out. you act first and ask questions later. specifics.w that is an interesting one. he wrote that these kind of

scandals usually happen in the downturn of a bear market. stewart: it is one of those things where it is a bit of a contest. companies have been incredibly basically, financial chicanery. whole m&a is part of the story. it is a full market play for these guys. corporateing at property is coming down now. with what is happening in the bond market, that will be used to buy back the shares. it is quite a vicious circle when things turn. say, wee market, they can do this, we can't do that.

news tends to tsme out during the bare marke because of the other things that go through the cracks. jonathan: you sound very, very bearish. i want to know what stuart richardson actually buys in you for. -- in q4. we have been saying, there could be a rate rise. we don't know if it'll get to the launch pad at all. bizarrely, and this whole world of low interest rates, we see a bit of value. the biggest risk is the u.s. recession next year. will it happen? we will have to wait and find out. money atrobably make of the eurodollar contracts. don't go to the recession, the fed will raise once or twice

and that will then maybe, cause equities down the road. with an equities, you will have to follow the qe. you could probably jump in for a trade there. otherwise, we think it will be a tough market for the trade rallies. stuart richardson. not everybody is limping into the q4. coming up, we are live in tokyo as data concerns in japan arise. the were told yesterday the economy is its biggest challenge. >> the biggest challenge for me is the economics. it is economics. ♪

jonathan: data disappoints. world'sconcerns in the third largest economy may have fallen back into its second recession since the prime minister took power. he spoke yesterday at the bloomberg headquarters in new york. i have to make this country

once again fulfill its potential. i have made a power run. years, itnsecutive has gone up. thethan: let's bring in bloomberg japan editor, james. it is tough for shinzo oabe. now he faces his second recession. could this create some context for me? tell me why it is so bad and what it is a good indicator of what the general economy will do. james: the data is bad. the data for august coming up today is bad. conception is very weak and retail sales are unchanged in august for the previous month. also, the export situation is bad. what happened in august, the was in devaluation of the yuan

china. that caused a massive slump in japan exports to china. weak demand from the biggest trading partner in china. that is a huge factor that dragged down japan's output. those two things have dragged down gdp as well. jonathan: the real worry is monetary policy. there, burning down. not a lot of economic smoke and noise. when does fiscal policy step up to the plate? when does the debate go beyond talking about the doj? james: that is a good question. become more and

it is notus and say current economics. the expansion of the monetary base in japan, and any country. the government has not stepped up to do the things they promised to do. that is structural reform and changing the condition of the japanese economy. the government did ranked in in -- did bring in fiscal stability. they are saying japan will make more fiscal stimulus. the government of shinzo abe has not done what they promised to do to put the japanese economy in a good position that will have continuous growth. date is showing us the third quarter. it will be five quarters out of $.11 shinzo abe -- out of s

since shinzo abe took power. jonathan: thank you for joining us today. the french prime minister presents the country's 2016 budget today. he said budget debt would in 4017.f gdp acrosse, we see cutbacks the board. where were they the most gruesome? last normal that we will see. place in the middle of 2017. the tax cuts that we will see 42016 will be about 9 euros.-year-ol-- 9 billion

we have already seen 3 billion euros last year. the french government is coaching a lot on growth. we set up with the french finance minister and he said 2015 will be the first year of real recovery. 0% growth in the second quarter. he still expects the recovery to be at that 1% for this year and 1.5% for 2016. he is counting a lot on this growth to be able to reduce the deficit. he unveiled this morning the deficit target for 2016 will be 3.3% of gdp, after 3.8% for this year. there is a very little room of course, because the government is torn between reducing public spending, to which the deficit targets. and reducing taxes in order to increase president popularity

ahead of the next election. his popularity is slightly higher than it was one year ago. it still stands for a low around 23%. that is according to the latest poll. of course, there was a lot of emergency projects over the summer with the refugee crisis, the farmers crisis. thank you very much. breaking news coming out of russia right now. let's go over to caroline hyde. caroline: with reference to syria. the russian senate has approved in syria. force they're outlining this will be the use of force, but generally, not ground troops. this will be air force that has been approved to be used in the skies to be used against syria. not ground troops. russia will use the air force

abroad. they say russia should collectively -- proactively fight the islamic state. it is according to ria. even saying they should proactively fight against the islamic state using air force a prod. this seems to be a big move coming from russia. they are asking russia to provide military aid. it was in the relationship is becoming closer. there is no reaction terms of market reaction. but the dollar remained flat? jonathan: more on that breaking news and of course, a look ahead to german employment data. join us on bloomberg tv after the short break. ♪

jonathan: welcome back. let's recap the breaking news coming out of russia and go straight back over to caroline hyde. caroline: coming from a russian language news source, ria, russia needs to be able to act proactively to fight the islamic state. therefore proving unanimously in their government to use air force. the president of syria asked for military aid. this is cited by the chief of staff. they are clearly feeling they have two up the ante versus the islamic state. the russian federation council is approving president vladimir putin's request to use air force

in syria. it to you. jonathan: not a big market reaction if you're looking at the stoxx 600. there was a little bit of a dip lower. the dax in frankfurt, germany is also up by 1.75%. the focus of course, is on germany as we get employment data. at unemployment rates stay 6.4 percent. these are not big changes. the survey is looking for a net by 5000. instead, we rise by 2000. let's go to berlin where hans nichols stands by with more. no big change in the data hans, but this will be very sensitive in the years to come as you factor in the refugee crisis as well. hans: no big changes, but the trends in the last three sets of

numbers we have had from germany have all disappointed expectations. cpi inflation come in worse than expected, or lower than inspected. this morning, retail sales in germany disappointed a little bit. the unemployment number, even though the expectation was a drop of five -- of 5000. the drop is 2000. no big change to the unemployment rate at 6.4%. but as we look forward to the last three the datasets from germany have disappointed. the cpi number week at 10:00 your time. jonathan: thank you very much. the eurozone in flash and da -- inflation dates are coming up. dudley is scheduled to speak this afternoon. and then, janet yellen. then of course, james bullard will address at 8:00 p.m. u.k. time.

this is the worst session since 2011. that is it for me. best of luck for the rest of your day. ♪

francine: taking stock. global equity markets are poised to deliver their worst quarter since 2011. ahead to what q.4 has in store. land of the setting sun. the specter of recession looms over japan. welcome to "the pulse" live