Transcripts For BLOOMBERG The Pulse 20150914

I am francine lacqua. Out of china, the top desk the economy is growing slower. Industrial outputs also missed forecasts. The shanghai composite index dropped the most in three weeks. It is raised the perspective of more stimulus from chinese authorities as they try to push and the slowdown. As they try to cushion the slowdown. Malcolm, what can we expect next from policymakers. We are likely to see a response on numerous fronts. Weve heard from the government last week that plans are to boost the fiscal response to the slowdown. Today there were some tweaks around that. They are going to lower the Capital Requirements and some new Infrastructure Projects that will allow less of a down payment. Roads, rail, projects. More monetary easing that can come in various forms. Banks for reduction of rrr ratios. The downside on the deposit by inflation is picking up because of rising pork prices. That may limits go that may. Imit scope it will be ongoing. Effort to keep the yuan stable and support the stock market. A multipronged approach from china. Francine it seems to be a juggling act between keeping the economy growing and reform. Malcolm there are two things going on. The cyclical slowdown. Moves to tryclical and cushion that slowdown. There is evidence of a structural slowdown. Aging workforce is becoming a factor. Efforts to rein in corruption, pollution. They are putting a break on growth. Thats where the reforms come through. The movement on the weekend and today, a little more color. It is an ongoing factor of chinas Development Since the economy started droving up in the 70s. Whats nextitty of in the us and we process. There is interest rate, liberalization good small as they tryps and keep that yuan stable. A dual effort, this balancing act is keeping housing makers in china very busy. Just keeping policymakers in china keeping policymakers in china very busy. Francine Portfolio Manager at j. P. Morgan. 8 trillion in assets. Great to have you on the program. How do you read into china . There is a lot of volatility. They are shifting. This is only a correction or something much worse. Finde of the key things we is the idea china is in transition. Opening up a capital account is the last step of that liberalization. It is come quicker than the market expected. It has come quicker than the market expected. The problems are well known and understood. The market is debating about have they Gone International . Are they losing control . Weve said they chinese we boy said the chinese policymakers had the tools at their control. But we saw months ago really raise questions. Facing an uptick francine you think they lost control . There waiting around . I think the risk has increased. We saw over a month ago when they liberalized devalued. Hat did not ease conditions we saw a rates increase. That is to offset the drain of liquidity from the capital outflow. That is the thing we worry about most. The 120 billion that matters. Its the on short liquidity conditions at a time when they want them to be more easy. Francine do you worry about a correction overall. Have we been in a bubble . Is it bursting . Talib weve been a very emerging markets. When we look at Something Like the u. S. , and out bridge rice for u. S. Stocks. We can get earning growths about 6 . Within developed markets, it is difficult to say were looking at a bear market. Where cautious. We are paid to be a hero at the moment. We are really not to change tactical at the start of a new bear market. Francine what is your best call echo where would you put your money . Looking to bite it. That is concentrated in europe and the cyclical market. U. S. Pan and a bulk is the where we argue where those violations dont look to certain. When you look at sectors in the u. S. , the u. S. Financial is offering an attractive on a buying basis. Look really far so the curb can stay steep. That is going to stay positive for u. S. Financials. Francine your base assumption is a rate hike from a fed in september, october . Talib it is becoming a coin flip. The key question is is a volatility uncertainty. The idea we will get to friday morning and it will become clear. It looks overly optimistic. The reality is the u. S. Economy looks ok. They are going to start raising Interest Rates, whether its september or december, it doesnt matter. Francine we got a call from citigroup last week, 55 chance of recession because of china. 55 seems extremely high less you are worried about deflation. Trade is contained. The finance liquidity is higher. People are uncertain. It takes any type of shock to knock confidence. Shock stops people from investing, hiring. That means expectations are taken lower. For a recession looks a little bit high. Its worth looking at those linkages other than trading. Francine thank you for staying with us. In the meantime, heres a look at what else is on our radar. Germany has reinstated controls on its borders with austria for the first time in 20 years. They try to cope with the influx of tens of thousands of refugees. This enables people to travel through European Companies European Countries without checks. Meanwhile, u. K. Prime minister David Cameron is in lebanon where he visited a refugee camp earlier. E is holding a News Conference airbus is opening its first jet production site on boeing. Theplaymaker is unveiling plant in alabama. It is expected to spur job growth. The u. K. Labour party leader, Jeremy Corbyn has finalized details of his team. John mcdonald has been appointed. Andy burnhams shadow home secretary. That brings us to todays twitter question. Threat to theal u. K. Economy . You can tweak me. You can tweak me. We will be expecting that next. Francine welcome back to the polls. Where live on bloomberg tv. Streaming on bloomberg. Com, your tablet and your phone. The u. K. Opposition labor party elected its new leader on saturday. Jeremy corbyn received 60 of the vote. In his victory speech, he underscored his Campaign Promises of more equality. [no audio] in the spirit of hope and optimism. I say to the new members of the read r those who have who have joined and as registered supporters, welcome. Welcome to our party. Welcome to our movement. More, thenere with you old donald. What happens now . Weve had a formation of a shadow cabinet. The new shadow chancellor, John Mcdonald, makes some of corbyns policies look moderate. Someone whohe is has publicly declared who he wants to remove rate hiking powers from the bank of england. Veryde comments controversial figure indeed. Francine there is going to be a rethinking. Cameron put a tweet out saying this is dangerous. , could itbour party implode . Is it too soon to tell . Centerleft,or any this is very bad news. There are a few centerleft burnham,such as andy on the bench. They were not confident on the handling of the economy. What is this saying to them now . We have a situation where the party has gone completely left. You have very controversial figures appointed. This is not good news for labor. Francine thank you so much for sticking around. What does it mean for the ftse . You look at it two ways. They will get nowhere near politics or you think this underlines and bigger concern, that this country which is very procapitalist or proamerican could turn. Accounthas a current deficit. It depends on foreign accounts. It raises risk premiums. We are a long way from coming to that final decision. It could mean that labor fragments. That would be seen as probusiness. The reality is no one saw this coming three months ago. If one week is a long time in politics, i am sure five years is. What is the story . Went to see how it develops. Francine something more close to home is the referendum. How you describe Jeremy Corbyns position to europe . We have yet to hear him to express his views. Hes let hillary been backtrack. Wooden thats emy corbyn wooden support francine how do you do with this as a Portfolio Manager . Dangerous. A yearandahalf ahead of a big referendum on the eu. Talib we seem backtracking on whether or not they want to be in nato. Thed of the the fikes fights you want to fight. The u. K. Looks uncertain. We have been pretty neutral across our business. I guess sterling will be the place where you might see some weakness. It is still too early to see the referendum. I was looking at opinion polls. Some people saying 40 of a brexit. Risk him him was be priced into the market. From j. P. Talib sheikh morgan asset management. That brings us to todays twitter question. Is corbyn a threat to the u. K. Economy . Germany has reinstated controls on its borders with austria for the first time in 20 years. As it tries to cope with the influx of asylumseekers. Agreement, the agreement that allows people to travel through European Countries. The news comes as ministers meets thats ministers meet in brussels later today. One of them is the proposal put forward by jeanclaude juncker. The European Commission has made ambitious plans to tackle europes refugee crisis by calling on governments to relocate 160 thousand people an increase of 200 . Relocation will apply to those with a clear and urgent need of protection. Currently that applies to syrians, and iraqis. Taken into consideration is unemployed level and how many assignment levels thats how many germany will take the most. While malta would take the least. Under the plans, receiving willr states will risk receive 6000 euros for each refugee they take. Germany and hungary will be excluded. For each get 500 euros person relocated. Three countries are able to opt out. They can participate if they want to hear it for those opposing the quotas like czech republic, the penalty will be enforced belted to this size relative to the size of the companys economy. Here. Ne keep it right more on the pulse. Francine welcome back to the pulse. Live on bloomberg tv and radio. Streaming on your tablet, phone revising the number of refugees expected to arrive in the border town. Meanwhile, germany has restored controls on the order of austria, suspending the schengen agreement which allows Free Movement between nations. Ministers spoke and an emergency meeting on sunday. At this moment, germany is introducing temporary boardchecks again at the internal front tears. The focus will be at the border with austria. The aim is to limit the current influx to germany and come back to an order. This is necessary for safety. Francine lets get more on this. Right, it does look like the picture of successful management of a refugee crisis. It is not going well. What we are seeing today is individual countries responding in an ad hoc fashion. Moving east and west, you have hungary announcing as of tomorrow, refugees that come across their border, that are not going through official border checks, which is difficult to understand, because it is supposed to be a free travel zone, those people will be effectively carrying out illegal acts. Theres been a grace. Theres been a grace period in place. Whereby people if they were caught by the police would not be incarcerated. Tomorrow, it will become illegal. That is what hungary is doing. Moving to the west, you have austria closing a highway that it shares with hungary. Thats because they expect 20,000 refugees to be to come across their border from hungary alone. Seven times the number they were expecting just yesterday. It gives you a sense of how fluid this crisis is. Terday, greece announcing germany announcing they are introducing temporary controls on their border with austria. Built,e fences being even if metaphorically, as you travel east to west. What you dont have is a unified approach. Good luck, because there is a lot of division. Francine David Cameron is in lebanon. Ryan he is doing two things. He is saying we care. We are at a refugee camp. He is propping up the u. K. Plan which is dont accept refugees who are moving through europe illegally. They come from the camps. Met with the family of one at the same time he is taking a jab at other eu countries who are not supporting the u. K. Approach which is to fund the refugee camp. Pointing out that the u. K. Is the second largest funder of the u. K. Of the refugee camps. Boats, it isthose too dangerous. And secondly, thanks to the other eu countries, we got a plan. We are on it. We are doing more than anyone else. Francine ryan, thank you very much. The most critical policy decision in years. How are the markets behaving . The last few days, a possible hike. Examining that. The fed meets on wednesday and thursday. Well have that decision whether or not to hike rates. You can join us on twitter. Francine welcome back to the pulse live from london, im francine lacqua. New concerns the economic slowdown is deepening in china and they raised the industrial stimulus. Output missed forecasts while investments increased at the closest slowest pace since 2000. But the slump has raised more stimulus from the chinese authorities as they try to cushion the slowdown in the worlds second biggest economy. The u. K. Elected party leader Jeremy Corbyn finalized his team. John mcdonnell has been appointed chancellor while angela eagle is the secretary and defeated leadership candidate vernon is shadow home secretary. And germany reinstated control with the borders of austria for the first time in 20 years as it tries to cope with the influx of asylum seekers. Theyre testing the socalled shanghai deprement that enables people to travel through 26 European Countries without border checks or visas. European leaders meet in brussels to discuss e. U. Proposals for accepting refugees. Lets get more on all of this with the managing director of the International Think tank redefined, hes sony kapur. Thanks for coming in. Im not sure where to start. We have talked about china and the refugee crisis and jeremy corbin. Which worries you the most out of these three . Sony politically speaking the refugee situation. The European Response has been highly inadequate and politically charged and very polarizing and in particular what one is seeing from some of the eastern European Countries knows this has been criticized in the press but reminds ones self of responses past where europe got it horribly wrong. And this tone is getting evermore polarized and hard to see any solution that is not a european solution. And given the polarization across countries, given also the very poor state of the debate in the u. K. , its very hard to see how a proper european solution can be had. Francine does it spill over to a economic crisis . This is a tragedy, a human story. At what point does it cross the borders into being something that actually shakes the foundations of europe, be it either because you have more polarization or more votes to the right or it actually shakes up the economic fundamentals of a country . Sony what weve experienced since 2009 in europe is as much a political crisis as economic crisis. In fact, what weve seen is even as the economic problems grew, political Space Available to attack those problems shrunk and theres only so much Political Capital that every leader has domestically that were elected on political platforms and my worry is the Political Capital necessary to attack the refugee problem, the Political Capital being lost in the polarization because of the refugee problem will have massive repercussion and spillovers into whatever Political Capital is left to tackle the euro crisis which is still very much with us and even less Political Capital that is left to take forward the structurally sound Solutions Moving to its further integration, the banking unit and others that europe needs. Francine this will pull europe apart. Sony absolutely. The combination of factors hitting us right now, the political polarization, the refugee problem and the continuing economic crisis, the biggest political challenge the european project has seen since i remember. Francine how do we tackle that . Are you more worried about a e. U. Referendum in the u. K. And actually the fact that sometimes everything gets muddled though the two arent linked, the more refugees or the more this crisis hits the headlines, the more theres a danger that the u. K. Citizens will recoil and actually vote to leave the e. U. And how worried are you this will lead o far right, exokse, another person comes in the presidency of france . Sony the direction of movement, despite the reaction from citizens, the pro refugee marches have been really, really heartening. But the idea that brussels and european leaders can somehow force a country to make choices, this is the whole discussion on the refugee quota, is quite negative in terms of the potential far left or far right response within a country and polarization. And it will definitely not be helpful with the u. K. Referendum vote next year. And again, the election of corbyn there. Hes not a committed european in particular. And its hard to see who the committed european is going to be when the referendum comes our way. Francine i want to ask you that. Im puzzled and not sure how to read it. Does it mean labor fragments and we have something more credible in the eyes of the market and Business Community around the world. Do the conservativings stay in power and is it a danger for the referendum because hes lukewarm to europe and we havent heard his views . The conservatives have through hyperbole Prime Minister cameron indulged in when he said corbyns election interferes with National Security but highlights the strategy theyll have which is discredit labor altogether and might work. They definitely can see doubt in the minds of the voters. The fragmentation of the party itself is not precedented and is a threat, especially given how poorly he is supported within the Parliamentary Party itself and how much of the support lies outside. That having been set, it might just be an opportunity particularly if corbyn himself knows and agrees to this that he will not stay on until leader until next election but is simply there to offer an opportunity for the younger guard, to come in and revitalize some very fundamental debates. Theres a reason he was elected. Inequality has been a major rising issue. There has been the u. K. s response to globalization which people havent particularly agreed with the attitude to the e. U. Within the citizens is also lukewarm. Many of the issues he has championed are real issues. Francine right. And theres all the other things that go with it. I have to get you back on and have a halfhour show on Jeremy Corbyn. Sony kapoor, director of International Think tank redefined. Now ahead of the most critical policy in years and wall street leaders are divided on what the move may be and if even a rate rise will happen. How are the markets behaving ahead of the big day. Lets check in with mark. Mark the fed is the big event of the week but china is still dictating the mood of markets today. Weak Industrial Production data, fixed Asset Investment the first eight months and have been weaker since 2000. Have a look at the shanghai composite which of course last week rose for the first week in four, finishing down by 2. 7 , was down by 4. 7 . Its down 21 since china devalued the yuan five weeks ago and equates to 1 trillion in value and since the record high on june 12, the shanghai composite is down by 40 . Some moved down with todays data confirming the Economic Outlook for the worlds second biggest economy is deteriorating. Lets look at the euro and come back to the Federal Reserve meeting on wednesday and thursday. The euro is rising for a seventh consecutive day against the dollar. What a great stat, best run for 21 months, best run since december 13. Futures contracts putting the chance of a rate hike at 28 on thursday. Now, those are weighing on the dollar against most of the 16 major peers today, unlike traders, though, economists are divided over whether or not the fed will raise Interest Rates this week. This week, by the way, ahead of the fed meeting we have Consumer Price data which may show a decrease of. 1 in august. The first negative reading since january. And such a reading, francine, will provide further evidence for some fed officials who want to see a lift of inflation before they start to tighten policy. Very quickly, wanted to show you the price of copper, weak data pushing down all six Industrial Metals today. Get in here close because copper is falling after that weak chinese data today. The country of course is the biggest consumer of base metals, coppers decline comes after a 5 gain last week. That was the biggest since may and still has dropped for seven weeks. Look at that circle there. That was the may high. Since then its down by 18 . The prospects of high u. S. Rates is a big worry. Such an eventuality of course could boost the dollar and make copper more expensive for overseas buyers. On the one hand you have china and on the other, francine, you have the fed. Two biggest views today. Francine thank you so much. Mark barton with the latest on the market. C. E. Pierson who sells the Financial Times says he intends to hold on to Penguin Random house until at least 2017. Pearson has the option to sell its 27 stake in the Worlds Largest book publisher as early next month with germanys bertlsman who owns the rest but unlikely theyll pull the trigger just yet. Penguin random house is performing well, at 47 of the business, our joint venture partner there is burtlesman and we have a established process in the Shareholder Agreement whereby we can put our shares to puttlesman. Francine and they said theyre interested . I think were at points where we have plenty of capital to deploy at the moment. Penguin random house is performing well. Were still in the process of combining the two separations, particularly in areas like warehousing, distribution, the finance and Technology Systems and the like. Were probably a year away from achieving the peak sin earnies. Peak cinergies. So while its something i wouldnt rule out, its not an immediate priority. Francine not 2015 and possibly not 2016 . John probably not 2015 and probably not 2016 either, no. Francine what will it take for you to decide to sell . John i think were very happy with the performance of the business. Its doing well. I think the decision we would make would be based on a few of what we saw the earnings potential and future growth of that defense realizing the capital and being able to redeploy it to grow our education business. I think it will be a view of whats best likely to deliver the highest returns to our shareholders and grow the business sustainably over the next 35 years. Francine up next, how are Business Leaders reacting to the labor party electing its most socialist in three decades. Well be asking the chair of the institute of directors, barbara judge for a bloomberg exclusive. Coming up in two minutes. Francine welcome back to the pulse live from londons headquarterss. Nintendo has named a new currently is ahead of human resources. The first project will be the launch of the phone Service Later this year as well as preparing for a new console named n. X. Novak djokovic has won the u. S. Open defeating Roger Federer in four sets to repeat the results of their wimbledon final clash earlier this year. He won his second title at flushing meadows. Djokovic made all four grand slam finals this year for the first time in his career, winning three. And while that final was going on, some of the worlds top Money Managers played in the first finals cup. Big agoman and Goldman Sachs each won their respected double events. The u. S. Team beat the european squad in 89 matches. Next years match will be held in london during wimbledon. The u. K. Party leader Jeremy Corbyn has finalized the details of his front bench team while the fellow hard left winger John Mcdonald has been appointed shadow chancellor and angela eagle is the shadow business secretary and the defeated candidate is the shadow home secretary. Are the Business Leaders reacting to or how are Business Leaders reactioning to labor party electing its most socialist in at least three decades . Were joined by the chair of institute of directors barbara judge for a bloomberg exclusive. Thank so you much for joining us here on the pulse. Its an honor to have you here. Bash barbara, how worried are you . We have a e. U. Referendum coming up and we dont know what Jeremy Corbyn thinks at the moment. Barbara our members are thoughtful about europe. Only 7 of them would leave no matter what happens. 14 would stay no matter what happens. And the rest, really the majority, are thoughtful. They know they do a lot of International Trading and understand europe is a good thing and generally would vote to stay in but they want to see the reforms. They want to see reforms in employment, particularly employment, red tape, they want to see the reforms making europe more competitive. Theyre looking for competitiveness and if europe can bring more competitiveness, they want to stay there. As far as how theyre feeling about the new leadership of the labor party, we have to wait. Really we dont know what will happen. Our business is to engage with business. We want Business Leaders to be heard in the quarters of power and will try to bring truth to the new labor leader as we try to bring to the leadership the view of our members to always look at competitiveness of the u. K. Francine have you medical Jeremy Corbyn yet . Barbara i havent met him. Francine the concern Business Leaders weve spoken to is the u. K. Has seen, first of all, as an ally to the u. S. , a very pro business, very market friendly, very open, and some of the policies that weve heard about seem to go are going, actually, dont seem to go but are going completely the other direction to this. Barbara of course youre right about that but that was in the rubup runup to election and people say a lot of things to be elected. When hes in power and his shadow cabinet is in power, well see how he reacts to real World Problems because he has a goal, like we all do, to make us more competitive, to make life better for everybody in the u. K. And well try to work with him in order to meet those goals. Francine what worries you when you look at the state of the worlds economy . Is it china . Well talk about japan in a couple minutes but seems that Foreign Exchange currency wars is something on everyones minds at the moment. Barbara lots of things worry me and worry us. For me personally id like to see Interest Rates slightly rise. Thats the position of the i. D. , slightly rise and very small but in order to give direction and in order to give us an opportunity if something bad happens later on to have an opportunity to wait. I also worry about old workers. You didnt ask me this but i worry about the fact that we work as ep people in long as possible and worry about the pension problems in this country that we wont have enough money to pay the pensions so we need to keep them working longer and saving more. My reaction is work longer, save more and expect less. I think about old people and work and keeping them in work more than anything else. Francine in the interest rate, weve had turmoil from china. Is it the right time to have a rate hike from the fed. People are saying we need to normalize and had so cheap money, at some point we need to give a clear message that guys, this is it, the partys over . Barbara in my opinion the small rate rise, its just my opinion and the i. D. s position is we ought to start doing it now because if we dont start now when there is growth, theres growth in the u. S. And u. K. , if we dont start doing it now, we wont have the opportunity to lower them later. Thats been so successful. We dont want to give up that opportunity by making this the new normal. It should be exceptional, not the new normal. Francine i was very curious to see, what you said on pensions is even more resonate if youre from Central Europe or from europe, countries like france, german by, need reforms that are too slow to take. Do you worry that europe is behind because of the cheap money weve had from the fed and other Central Banks around the world . Actually the markets arent a balance in check and so reforms that the politicians said will go through are not going through. Barbara i cant comment on whats happening in the other cups. I was looking at the pensions issue from the point of view of being the chairman of the Pension Protection Fund which is also my other job so im looking at it from the u. K. Situation where weve done a lot in this recent government to help pensioners and give a lot more freedoms but i continue, really its about people working. I really want to see people in work. I have another little worry which is it we dont keep people in work, were missing more alzheimers and we men shall because people need dementia because people need to keep their brain in gear. Im worried to keep people in work and understand dementia and alzheimers are a part of that problem and also to keep the u. K. Growing. Were wasting a lot of talent and resources if we dont keep people in work as long as we can. Francine barbara journal, thanks so much today. Barbara judge the chair of the institute of directors. Up next, more and more people are falling victim to keyless car hacking. We hear from one man who had his range rover stolen from right outside his house as he slept. Stay with us. Francine welcome back to the pulse streaming on your phone and bloomberg. Com. According to metropolitan police some 6,000 cars and vans were stolen using key louisiana lacking. Bloomberg spoke to one range rover customer who had his pidged from outside his house. It was in the morning around 2 50 a. M. , i received a call from my tracking company that my car was under drive and i looked out the window and it was gone and immediately called the police. The next move was to check my home. To my horror discovered a man approached my vehicle and within seconds had unlocked it and within 30 seconds had driven away. I am aware of hacking of range rovers going on but never expected it to happen to me. When the police attended, they asked what vehicle and i said range rover and they said nothing otherwise. I dont think theres much they can do. I know theyve increased patrol with range rovers. But that presence hasnt materialized in this area which is a suburb of north london. Francine we can read more on the website at bloomberg. Com. For those listening on bloomberg radio, the first word is up next. For our viewers, the second hour of the pulse is coming up and what well talk about. We speak to the lord mayor of the city of london. Well ask him will about the volatility out of asia and his thoughts on labors newly elected leader Jeremy Corbyn. Plus an interview of the c. E. O. Of view entertainment tim richards with netflixs surging success and can traditional cinemas compete . As a reminder, follow me on twitter, the twitter question of the day has to do with corbynonomics. The most hard line left in two decade leading the labor party, what does it mean for the u. K. Economy and what does it mean for bonds and yields . In the back of his appointments, they rallied a bit with investors saying it wont have an impact on the elections because hes so far to the left. Lets see. Back in two. Francine chinese stocks drop the most in three weeks as it has been confirmed the second largest economy is slowing down but ahead of this weeks fed rate decision. Now europes Free Movement deal comes under pressure as germany reintroduces controls along its border with austria. Ministers meet in brussels today to discuss the refugee crisis. Newly elected u. K. Labor leader Jeremy Corbyn appoints fellow hard left winger John Mcdonnell as shadow chancellor. How will business react . Francine good morning to our viewers in europe and africa and good evening to those just waking up in asia and welcome to those just waking up in the United States. Im francine lacqua. This the pulse at bloombergs headquarters. Were getting particulars on production from the month of july, rising 1. 9 in a year. We should check, actually, on eurodollar if we can. July Industrial Production, this is quarter for the second quarter, again, 0. 2 versus minus 0. 1 . This is a quarter on quarter figure. You can see 1. 1336. Points to slightly better than expected figure than what we were expecting but slightly above the median forecast but nothing major, nothing to write home about. I guess we have to keep on watching the level for euro and see what happens, whether more q. E. Is announced or whether hell talk down the euro. Fresh data out of china raise further fear about slowdown as output misses forecasts. The news caused the shanghai index to drop the most in three weeks and raised the prospect of more stimulus from chinese authorities as they try to cushion the slowdown in the worlds second biggest economy. W the chief asia economist joins us. China has done so much to stimulate, why hasnt it gained more traction . , a couple of reasons, really. One is the pressures on growth re really quite intense. Weve large amounts of overbuilding in the real estate sector and large ranges of overcapacity in the industrial sector. China is already the Worlds Largest exporter so there is diminished growth to sell more sport shoes or flat screen televisions to the world consumers. All that means even if you cut rates mull time and inject funds to reserve cuts, it will be tough to incentivize firms to start borrowing and investing more. Francine what are the next steps for chinas policymakers, tom . Tom theyve done a lot on the domestic front and weve had cuts on Interest Rates and multiple cuts on the reserve requirement rareo and a two million yuan for cash strapped governments. My view is that will start feeding through into stabilizing growth in the months ahead. Were already seeing stabilization in the credit data. Thats an optimistic sign that the government could succeed in putting a floor under growth. The big question really is could they do more on the external front. Weve seen the central bank take a baby step towards devaluing the yuan with that surprise in august. The big question Going Forward, will they do more and will there be a substantial depreciation restoring life to exports. Francine thanks so much, our chief economist in bay jining, tom orlik. Lets bring in the chief Investment Officer and thanks for coming in. How do you read china and play it on the markets . China has had a disconnect from the markets and economy and weve seen that this year and the last couple years. The chinese p. M. I. Number has been below 50 three years and been flat lining and weve seen that disconnect. We dont want people to see into it but one of the big overhang is what it has on the emerging markets. China was trying to get every resource as possible and youre seeing it trickle through to the consumer staple sector where its trading at a high p. E. Especially in the United States and where growth was for those Companies Like colgate and cocacola so the consumer in the emerging markets is getting hit hard and were seeing the price of copper is showing that. China has been slowing down. Francine markets in general have been hit really hard. Does it mean were looking at a recession . Is this a heartlanding for china or just a blip because theyre transitioning and policymakers dont know how to deal with it . Kevin theyre trying to digest, this is growing pains and theyre still an emerging economy and still trying to figure it out. What weve seen come out of beijing is actually not it hasnt been working. Theyve been throwing a lot of policies and procedures at the markets. And its just not working. So its got to just play out and go through the system. This is going to happen for a while Going Forward. We dont know whats going to happen. Francine are we getting a fed rate hike and because of china and the trouble in the emerging markets, if you were the fed, youd wait. I would. Kevin i dont think well get a fed rate hike and one is because of the stronger dollar. We actually saw beijing lower the yuan and the reserve requirements against it because they thought it would be raised in september and why they got in front of it and we saw the repercussions of that action as well as American Companies dont want a stronger dollar. Number two is it they actually start to raise rates. That could affect their inflation target and one of the reasons why is because import goods are actually going to be lower and will take a year to trickle through the system. It will hurt them on those two fronts and i think theyll be nervous about that. Francine your top sectors, tech and health care. Health care i get. Tech im surprised because valuations are so high. Kevin if you start looking into top tier large tech cap companies, theyre on the lower side and actually you can rely on consistent earnings from them or more reliable earnings. So as we got back to consumer staples, we dont know where that will be because were relying on asia, the emerging markets and may be unstable as well as the stronger dollar may impact that. With tech youre seeing a Large Tech Companies trading at lower p e multiples and can expand their multiples and with refreshed cycles and consistent earnings you see that Going Forward. Facebook may seem expensive but theyre legitimately the one social media company. Theyve got instagram and theyll get the vast majority of those ad dollars where people are pushing that to work. Francine not in a bubble, papple apple, facebook, theyre not in a bubble. Kevin theyre not. And if you look at the tech i. P. O. s that came over the last year, 18 months, a lot of them are below their i. P. O. Price, making Tech Companies that are at lofty valuations scared to come to market because the market is pricing them appropriately. Look at twitter and box and youre seeing the market actually be a great mechanism for pricing. Francine give me a sense of what you would completely stay away from . Is it the oil majors . If were looking at an uncertain china, i guess if you invest in commodities in a the lo of these oil majors and consumer goods, this probably would not be a right time to go in if were expecting a further correction. Kevin oil is it goes boom, it goes bust. They always do that. But the problem with whats happening with oil right now is that theres going to be another shoe to drop because youre going to start seeing a lot more Companies Going in default. You may even see some of the majors do a dividend decrease. So we havent seen that. Theyve got the stability where they can keep the dividend maybe stable and they may decrease it so wed stay away from the oil majors and the staples because theyre trading at high multiples. The oil industry may have to revise their earnings down and need to trade at a higher multiple now. Francine thanks so much for all of that, kevin kelley from recon capital partners. Here what is else on the radar as the newly elected leader Jeremy Corbyn has finalized the details of his front bench team. Fellow hard left winger John Mcdonnell has been appointed and angela eagle is the secretary and the defeated leadership candidate is shadow home secretary. Airbus is opening its first jet protection site on the home turf of its american rivals boeing. The french based planemaker is today officially unveiling the 600 million plant in alabama. The facility is expected to spur job growth and attract Aerospace Suppliers to the southeastern u. S. Where boeing and brazil also have footholds. Germany has reinstated control on its worther with austria for the first time in 20 years as t tries to cope with the asylum leads. Testing the schengen agreement allowing people to travel through countries without border checks or visas. That news comes as european ministers meet in brussels later today to discuss new proposal for resettling refugees. One of them is the proposal put forward by the European Commission president john claude unger. Here are the details. The European Commission has made ambitious plans to tackle the refugee crisis by calling on governments to relocate 160,000 people, an increase of 200 since proposals were first made in may. Relocation will only apply to those with a clear and urgent need of protection. Currently that applies to syrians and iraqis. Proposals taken in consideration the countrys size and perceived economic might in terms of g. D. P. And asylum applications its had in the past four years. Diving into the details, germany would take the most, an extra 31,000 refugees while malta would take the least, just 133. Under the plans receiving Member States will get 6,000 euros for every refugee they take. Germany, hungary and italy are excluded from the plans because of the number of refugees already there and will get 500 euros for each person relocated. Three countries can opt out, denmark, ireland and the u. K. But can participate if they want to. For those opposing the quotas like the czech republic, a penalty would be enforced relative to the size of the countrys economy. Francine well be discussing that and germanys decision to reinstate controls on the borders with austria for the first time in 20 years after the break. Stay with us. Francine welcome to the pulse live from bloombergs headquarters in london. Austria reopened its highway from hungary. After a brief closure, they expect 20,000 refugees to arrive in the border town. A figure to rise up from less than 5,000. Germany has restored controls along the border to austria, effectively suspending the schengen agreement which allows Free Movement between nations. The interior minister spoke in a emergency meeting on sunday. At this moment, germany is introducing temporary border checks again at the internal frontiers. The focus in the first instance will be at the border with austria. The aim of this measure is limit the current influx to germany and a comeback to order proceeding of the entry again. This is necessary also for safety reasons. Francine lets get more with ryan. Is the e. U. Managing this risis correctly . Ryan what we have at this point is individual countries acting in a ad hock fashion to keep up with the crisis. You move from east to west and start in hungary who announced as of tomorrow if you come across the border into hungary and dont have your papers and you are at an official checkpoint which is hard to get your head around because there is supposed to be Free Movement within the schengen countries then that will be an illegal act. There was a grace period they were turning their eyes away from that. Now theyre saying that you could go to jail, in addition, of course to the government there saying that theyre going to build this fence and the continuation of the construction of that fence. Then you have austria to the west, reopening that road between vienna and budapest, the a4 but saying in a statement an hour ago that even as they reopen the road and this is a major highway between two major european capitals, they may have to close it again. Why . Because they were literally thousands of refugees moving on that road overnight and earlier today. Austria of course this morning said they now expect to receive 20,000 refugees by the end of today. That is seven fold, more than what they were predicting yesterday. Clearly things are very fluid and getting a bit out of hand. Then if you look at germany and the border between germany and austria, the germans are saying theyre working together with the austrians and the chancellor just made comments at a press conference saying were working with them. The austrians saying theyll use their police at the border. But even there is a lot of disruption. Most of the services have been reinstoried but the line between sauceburg and munich for one has not because people are on the tracks. Its just a health and safety issue like with the highway, like with the a4, there are literally refugees surging across the border at any kind of channel they can go down. Francine we also have David Cameron in lebanon. Ryan ice trying to find a way to solve the crisis, the british way, well give money to the refugee camps and well take the refugees from the camps and what the European Countries should join us in doing is funding those refugee camps as opposed to focusing on these stopgap measures and is a way of speaking to its own electorate and also telling refugees dont come from europe because you wont get in the u. K. That way. Francine thank you for the latest on the refugee crisis. C. E. O. Pearson who agreed to sell the Financial Times told bloomberg he intends to hold on to the companys final asset penguin and am house until 2017. Pearson has the option to sell its 47 stake in the Worlds Largest book publisher as early as next month with germany burtlesman which owns the rest but he tells me its unlikely theyll pull the trigger just yet. John Penguin Random house is performing exceptionally well and were at 47 of the business, our joint venture partner there is burtlesman. We do have a established process in the Shareholder Agreement whereby we can put ur shares to puttlesman. John were at points we have plenty of capital to deploy. Penguin random house is performing well. Were still in the process of combining the two operations, particularly in areas like warehousing distribution and Financial Systems and the like. Were probably a year away from receiving the peak cinergies, so while its something i look at and wouldnt rule out sometime in the future, i dont think you should think its an immediate priority first. Francine not 2015 and possibly not 2016 . John not 2015 and probably not 2016 either, no. Francine what will it take for you to decide to sell . John as i say, i think were very happy with the performance of the business. Its doing well. I think the decision wed make would be the earnings potential and future growth against realizing the capital and being able to redeploy it to grow our education business and it will be a view of whats best likely to deliver the highest returns to our shareholders and grow the business sustainably over the next 35 years. Francine up next, how will British Business react to Jeremy Corbyns labor leadership victory . Well be discussing that next. Francine welcome back to the pulse. On the ipad and bloomberg. Com. The Opposition Labor Party announced its new leader and was a landslide victory for Jeremy Corbyn who received almost 60 of the vote. In his victory speech mr. Corbyn underscored his Campaign Promises for more equality for the u. K. During this amazing three months, our party has changed. Weve grown enormously. Weve grown enormously because of the hopes of so many ordinary people for a different britain, a better britain, a more equal britain, a more decent britain. Theyre fed up with the inequality, the injustice, the unnecessary poverty, all those issues have brought people in in a spirit of hope and optimism. So i say to the new members of the party, for those that have joined in as registered supporters or affiliated supporters, welcome, welcome to our party, welcome to our movement. Francine here more is our political correspondent. Great to have you on the program. It happened in a unfortunate time because its a year before the referendum. Can the labor party remain united or will it fragment . Guest i think its likely to fragment given the figures at the front bench. We have some figures with burnham and eagle. But John Mcdonnell is a hard left activist and controversial figure and makes corbyn look like a moderate and there are a lot of unhappy labor m. P. s right now and a lot of rumbling the party goes Going Forward. This is a party that lost the last election because they didnt trust the economy. Many labor m. P. s came out to say indeed it was a problem and hard to see how this front bench will solve the issue. Francine Jeremy Corbyn, its clear if you look at his policies theyre antiamerican, antinato and not business friendly. How much support will he actually do . The election is five years away and a little risk at the moment. But the risk is what, this he includes the left, that what happens . Guest the risk is really that we have no opposition because of a fragmented party. For british politics, its important to have a functioning opposition. Of course, one way you can look at it is this gives the tourists a free rain to capture the middle ground but really more likely the story is that labor will fragment and that well have either a new election in one or two years or whatever time or wed have a new front bench so well have a lot of rumbles and unrest and never is a good thing. Francine we dont know his feelings towards europe, what that is. Guest thats the thing. We know he has had talks and a member decided not to join his bench because he could not get an assurance for him to campaign to stay in the e. U. Since then, hillary benf has come out and said no, thats not true. He will come into the e. U. We have yet to hear from Jeremy Corbyn himself and what we need at this point is a clear direction, clear leadership, a clear statement from the party leader who seems to be shunning the press rather than addressing it. Francine you were talking about this most controversial appointment for shadow hancellor. And he said we should strip the b. O. E. Out of powers. Guest he said that and said we should nationalize the banks and renationalize the railways and very controversial comments made, as he made comments, aapologist comments at the i. R. A. , about 10 years ago. These were likely land him in hot water. This is not a moderate. He has come out this morning and said he would push for a more prosperous economy but again, we need to know exactly how they think theyll do this. Francine all right. Thanks so much. Bloombergs political correspondent, svenja odonnell. The pounds didnt budge much and the ftse was gaining after that appointment. Some people may point to the fact that look, this means the conservatives get a free reign. Who knows . The next couple weeks well have an idea where mr. Corbyn wants to take this. Coming up we speak to the lord mayor of the city of london who will join us in a couple of minutes. Sure, tv has evolved over the years. Its gotten squarer. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Great time for a shiny floor wax, no . Not if you just put the finishing touches on your latest masterpiece. Timings important. Comcast business knows that. Thats why you can schedule an installation at a time that works for you. Even late at night, or on the weekend, if thats what you need. Because you have enough to worry about. I did not see that coming. Dont deal with disruptions. Get Better Internet installed on your schedule. Comcast business. Built for business. Francine welcome back to the pulse from the headquarters in london, im francine lacqua. Here are the stories you need to know about. Germany reinstated controls on the borders with austria for the first time in 20 years as it tries to cope with the influx of asylum seekers. The move risks testing the socalled schengen agreement enabling people to travel through 26 European Countries without border checks or visas. The european ministers meet later to discuss proposals for resettling refugees. The newly elected u. K. Party leader Jeremy Corbyn finalized the details of his front bench team. Fellow hard left winger John Mcdonnell has been appointed shadow chancellor and angela eagle is the shadow business secretary while the defeated candidate andy burnham is shadow home secretary. New data out of china added to concerns the economic slowdown is deapening and raise prospects for additional stimulus. Will industrial output miss forecasts and investments increased at the slowest pace since the year 2000. Now lets check in on the markets with Johnathan Farrow who has the latest. John raising much of the gains for european stocks. The dax in germany up 1. 4 and spain grew. Our points we want to begin with. The forecast for the stock 600, the average forecast suggesting a 13 upside for the rest of the year. So stocks in mainland europe in the green on the ftse 100 as well by. 8 . And led by the minors, and that is a note of indication of whats happening in the Global Markets and not an indicator of the global story but the data out of china was weak output and investment, disappointing, the shanghai composite down by 2. 67 and this is into the other asset classes, commodities specifically, crude lower down by. 6 . And drop below 48 a barrel. Weakness in metals. Copper is lower, down by a half of 1 and. 7 this morning. The remarkable thing about copper, almost half of where it was in 201 1. The bank of International Settlements warning again about global fragility. The growth figures out of china speak to the theme. The movements in the Commodity Markets do as well. If the f. X. Market, a euro on a sixday winning streak and snap that. Were weaker down by. 10 to 1. 1330. Goldman sachs says forget about the strengths and next year going to 95 cents because the e. C. B. Needs to receive the s. P. I. Target and to do that need to boost their q. E. Program. The majority of the economists see the e. C. B. Expanding the program and its been a stronger euro coming into the all important fed meeting on thursday. Back to you. Francine john, thanks so much. In 25 minutes with surveillance with tom keen, he joins us. I know youre looking at corbynonomics and the impact it will have. Tom im thrilled youll give us a u. K. Perspective and this is the story that gets the attention of america, off the weekend and this morning. And well look at your stunning news within your labor party. Well be joined by citigroup and a perfect day to speak to bowder and well talk about corbyn and the unsettled parts of europe. And well talk about him on his recession call that made a lot of news last week. We will look at fashion week in new york. Francine, i know this is of fashion ortance, the designer niem kahn and with robert burke as well, consultant worldwide on luxury goods. Its an exciting time to have robert burke on with whats going on in new york city and francine, channel platform, shoes are really front and center this fashion week. The channel shoes. Francine looking forward to the program. Tom im sure you are. Francine well be talking fashion, corbyn onomics and the fed. Tom what youre wearing is ery niam kahn. Francine youre perfect in the fashion commentating. Almost european. Tom kean with surveillance in a few minutes. D china is going have hard time meeting the growth goal. And our guest is leading a city delegation to the country later this week, joined by the lord mayor of london, alan yarro. Youre headed to china tomorrow. Exciting times but what do you make of the turmoil . Do you expect much of the conversations actually, the chinese trying to explain to you what happened on the markets that have lost three weeks instead of you pitching for business . Alan its a young market, a young market economy effectively. And when you have a young market they go through volatility and theres nothing surprising what happened. There was a bubble and it burst and now we look to see how they recover from that position. Just remember china hasnt gotten to the mature Financial Institutions there which should be there normally as shock will be part of he what was news was the speed of the collapse and actually the question then was how they recovered from it. And im not going out there to tell them what theyve got right or what they got wrong. Im going out to say how can we support them in the changes of their economy . Francine businessmen that have come on the show said they are very keen to get into china but at the same time are a little weary because of the economy being a little bit less transparent, that other emerging markets, the fact that you have to do maybe deals that you couldnt do in our countries. Whats your number one concern or what is the number one advice you give to businessmen traveling with you there . Alan again, if you look to see the size of the economy, 1. 4 billion people, the extraordinary amount of change that has taken place in the course of 10 years. Neveably there will be inevitably there will be growth problems and to be fair, its about moving away from centralized control and much more individual control and Market Economics and i remember when i went there four years ago, i remember being told by people dont apologize for what has happened, because they know, but what are you doing about it to stop it from happening and what are you learning from your mistakes . Its the same thing with china. China has been through a terrible bit of volatility. We all will. Were going through volatility at the moment. Its not just china but the whole world is going through a volatile period and we want to go there and see how we can support them and recover from what was a volatile period. The appointment of jeremy francine what do you make of corbyn as head of the labor party . Of course we talked about the policies extensively in the program. Were talking about renationalizing banks and he appointed someone who wants to strip away the power from the bank of england to set Interest Rates . Alan hes not in power and hasnt been elected but just happened to win the labor nomination effective to become a leader. Good luck to him. I think its an interesting breath of fresh air and a bit of excitement and has focused peoples attention on the various issues. Actually, i think its very good thing to have the great and reconfirm what the right model is Going Forward for the economy. Francine it doesnt spook investors . The u. K. Has been a very open, american like freestyle capitalistic country. If you take away that or if theres a spector of it actually reversing, then investors and Big Companies may be freaked out. Alan if you looked at the previous labor party it wasnt that different from supporting the markets from the conservatives and might be a slight difference in tone but this is very radically different. Of course there will be a middle ground thats moved towards the left. But the reality is that its up to the capitalist side of the economy to reconfirm to the electorate why were in the right position, why were doing so much better than our colleagues in europe because we are pursuing an entrepreneurial industrial approach and i think and Services Best approach. This is all good news in my mind because people had to refocus on the debate why were repursuing these things and are doing well compared to our competitors and i suspect well continue to do well. So on the face of it, even not describing or discussing defense and the trident zone, or these issues will be for the electorate to decide but our job in the city of london is to work with whom so ever is in power, whatever color, to make sure the channels of communication between business and politicians is kept wide open. Francine lord mayor, thanks so much for joining us today. Alan yarrow, lord mayor of london. Up next how much pressure is put on cinemas by the rise of netflix and will ask the c. E. O. Of vue international, one of the top cinema groups. Keep it here, were right on the pulse. Francine welcome back to the pulse. Live here on bloomberg tv. Here are some more of bloombergs top headlines. Nintendo named a new president to succeed. He is currently head of human resources. His first major task will be the launch of nintendos first smart phone Service Later this year as well as preparing for a new console named n. X. Djokovic defeated Roger Federer and is a repeat of their wimbledon clash. He won his second title at flushing meadows. Djokovic made all four grand slam finals this year for the first time in his career, winning three. And while that final was going on, some of the worlds top Money Managers played in the First Finance cup. Hedge fund titan bill ackman and bill selani won their events. The european teams beat the u. S. Squad and next years match will be held in london during wimbledon. To the world of big screen entertainment. Vue Entertainment International is one of the top five cinema groups in the world by Box Office Revenue spanning 10 country with over 200 sites and recently acquired the second largest cinema chain in the netherlands. How much pressure is being put on cinemas by the rise of net flex and the like . Vue r. C. E. O. Tim richards is with us. Your biggest concern as you look at the next two years, is people are spending a little less because we look at the market turmoil, is it the rise of netflix and the like where people stay at home and watch it or consolidation . Tim i look at it differently. 2014 was a tough year and people jumped on the bandwagon predicting the demise of our industry which happens when theres a cyclical downturn but what happened is hollywood doesnt always get it right because last year there was a combination of fast and furious and a pixar film pulled and movies that didnt perform and happens every five or six years. This year has been a phenomenal year and this year were already up. Our bottom line is up 50 year on year. Were having a great year and the back end of this year should be a recordbreaking time. Weve got the perfect three, we have hunger games, bond and star wars. And certainly with star wars, by every metric that films are analyzed in terms of performance, it should be the biggest film of all time. The downloads, the hits, the inquiries, phenomenal. So it will be a huge year end. Francine in december, right . Tim in december. Francine in which areas will you grow . You looked at growth worldwide and just spotted something in the netherlands. Are you going for more acquisitions and if you look at europe and also globally, where do you see the market being better . Tim weve been growing the last 15 years by organic growth and supplementing that growth through acquisitions. We look at everything thats come up in the last 15 years and were now after our acquisition in holland three weeks ago. Were now the fourth largest in the world by box office. Were the largest in the world inside of the u. S. When we look at the markets right now, i had originally thought that european consolidation was going to be taking place the next couple years and i think really what were seeing now is a beginning international consolidation. Hich and we see in asia as well and a couple big players in central and south america as well and people are looking at opportunities offshore. The european consolidation right now, theres a lot of work to be done here but i know for us were now for the first starting to look outside tim and we try to get customers who want to leave their home to come to a cinema and not going to a theme park or a pub or restaurant. Francine there are more releases that happen at the same time, right . To hat a threat, again, vue . It seems that more hollywood films say now that it makes more sense because we look at mobiles to have everything released at once, either d. V. D. Or online . Tim theres a lot of press that happens when a movie goes day and day but theres actually very, very view. If you look at the u. S. Experience, the average is three months which really has not changed in years. In europe it tends to range between 46 months. Its stache tore in statutory in france where there is a fourmonth window which is the law and in the u. K. Its been under four months and hasnt changed in years. Were not seeing any difference. Whats happened the last few years is the studios are recognizing the value of the window. Do you want to release your movie with the average viewing of 34 people at home and charge them 4 for that . Or do you want to have them earn twice that at the box office for a single ticket . You know, its just pure economics. The studios are now supporting the windows more than they ever have. Francine there was a bit of a flipflop because they were trying to figure out the way we look at entertainment in the future, i guess. Tim everyone has been testing Different Things but the testing the films tends to be at the other end of the market where films theres always been films that were made for tv and there have always been films that didnt quite make the big screen and those are the films right now that i think are the ones that are subject to the test. Theyre not really good enough for the big screen so lets test and see if theres some other way of getting them some exposure, limited exposure on the big screen and then get them out digitally on the internet. Francine are you a james bond or star wars kind of guy . Tim im both. I mean, it is i mean, star wars, j. J. Abrams coming in and rebooting the franchise, its the dream team coming through. And its the first of three. I mean, its phenomenal. And bond, one of most successful film franchises in the country, and daniel craig does an incredible job with it. Francine how do you space them out, one gets released first . Tim bond is coming out mid october. We dont have to wait too much longer for him but its looking really good. It will absolutely deliver. Francine were so excited. Tim, thanks so much. Come back on to tell us more. Tim richards, the c. E. O. Of vue entertainment. We head to frankfurt for a look at the hottest cars at the motor show. Nd later, bloomberg talks to about vocs wagen with martin winterkorn. Francine welcome back to the pulse live on bloomberg tv and streaming on the ipad and bloomberg. Com. The 66th frankfurt motor show gets underway opening the doors to the world press tomorrow. The most eagerly anticipated car show debut this is year including a lightning fast bentley s. U. V. And a rolls royce. Were joined with more with richard. Is it all about luxury cars this year . Richard well, northern hemisphere, its coming to an end and what a better time than buy a convertible, spend 300,000 euros, what other people buy apartment or houses for on a roof, and a top car. Of course these are not the cars that sell in mass but these are the cars that draw the masses to an auto show like frankfurt and its a big one. Were expecting about 900,000 visitors here, more than 1,100 exhibitors and these cars, you mentioned from rolls and bentley, they are the magnets of the people and why people come here and why little boys and girls dream of becoming engineers and people work hard to say they want to be be able to afford one of those cars. Its the crowd pleaser so to say its not necessarily what everybody on the street drive there is but its a showpiece of manufacturing, what the industry can do, where its headed and what it wants to do and thats whats drawing the crowd. Francine what about slightly more luxury vehicles . Richard talking about 1 10 of the euro cars and you get, for example the new audi a4 sedan, an important car, audi with a Volkswagen Group selling about 400,000 at the peak, an estimate were getting for the new car, competing with the likes of the c class of mercedes, b. M. W. s three class and the smaller rivals like alpha roam ayeo, part of the fit group and throwing in a new car to nibble on the sales of the big cars and maybe get to 10 or 12 of the sales of an a4. But again a important car for someone like sergio marciono who wants to sell millions of cars to the wider fiat grume and alpha romeo wants to pitch in and sell 400,000 a year by then. Its four times as many as hes selling now. So apart from the models that you see at the exhibit stands there, there is strategy behind and the big guys going head to head and will be an interesting show. You mentioned one of the biggest heads in the industry well have on air later on, martin winterkorn, the volkswagen c. E. O. Francine for more on that story stay with us ahead of the frankfurt motor show, as richard was saying, bloomberg talks exclusively to volkswagens martin winterkorn. Keep it here and stay tuned for the surveillance team, live from new york. Announcer this is bloomberg surveillance. Tom janet yellen and the fed are uncertain as they moved to thursday pods said meeting. Two thursdays fed meeting. The United Kingdom is an political crisis as germany korten he is not tony blair or gordon brown. It is fashion week in new york. Will drapeeem khan human silk that beyonce would die for. This is bloomberg surveillance , live from new york. It is monday, september 14. Im tom keene joining me, brendan greeley. Overview missed overnight, china. We have not even talked about it, but china markets are weak. I saw the shanghai was down. You hear that sound in the distant . Distance . That is the sound of sobs as William Jefferson clinton and tony blair pouring them scotch and saying what happened to our parties . Tom the stunning results in the United Kingdom over the weekend. Lets get to our top headlines with brendan