Anna welcome to countdown. It is just now 6 00. , letsgen is a big story think about what is happening in the markets. That hasr index, but been doing since the Federal Reserve met, you can see it bounces up since the post fed fall from the dollar. We see it heading steadily upwards since last week. We have seen a number of hawkish comments coming through from the fmo say. Fmo see. Still on the table at the time when the Federal Reserve could increase Interest Rates . Janet yellen will be speaking later today, 10 00 london time. Anna lets talk about volkswagen. They are looking for a new chief executive after Martin Winterkorn step down. Stepped down. They will meet tomorrow to select his successor. Hans nichols is live on location at volkswagens headquarters. Said he did not know about the cheating, why did he leave . Transport the pressure the pressure was mounting. Among statements we had last night, most interesting is that volkswagen has pledged and referred this matter for criminal prosecution to the state of lower saxony. That is a company that wants to put that behind them. They also went out of their way to say that dr. Winterkorn didnt know that he was not culpable in any way. Here is what dr. Winterkorn said. Except forpect responsibility for the irregular terrys andrregular Supervisory Board to agree on determining my function as ceo of the volkswagen group. That was 24 hours after he said he wanted a technical fix. This was an injury an engineer who apparently thought he could find a solution. He obviously had a political and Public Relations problem. Now they are trying to figure out who will replace him. Candidates are herbertof porsche and deese. 40 billion could be the total price tag for volkswagen. That they might downgrade credit of wolfsburg volkswagen. They noted the damage to the brand is significant. We have seen workers come in all morning, it looks like a shift is still just starting. Has a denies, volkswagen difficult road ahead. Anna can we begin to quantify just how big a problem this is for volkswagen as it tries to turn the corner . Chancellor hans in some ways we dont know because we dont know all of the legal costs. We dont know if they will be facing something in korea, germany, france. The u. S. Is really the only place that has given us a hint. That is just on the government rules. We do not know about civil litigation. All of these suits that could be filed could be a huge headache for volkswagen. That is what the jpmorgan report focused on. They sold those cars as premium vehicles. You sell something as a premium vehicle, you make it a premium fine. Anna thank you very much. That brings us on to our twitter question of the day. Which corporate scandal do you think volkswagen looks like . Do you see parallels between that and any other scandals, toyota, bp . Tbmad someone talk about lc yesterday. At anna edwards news is where you will find be on twitter. From this scandal is beginning to engulf other jurisdiction. Lets bring Ryan Chilcote and in. He is focusing on the broadening out. Ryan it is now a global story affecting all call carmakers. You look at the japan market, mazda is down 7. 7 this morning. They just had a threeday Public Holiday in japan. This is the first reaction to what happened with volkswagen after the friday close in japan. Getting hit, honda getting hit, even toyota, which has been moving away from diesel is getting hit. It was down 1. 7 . Investors are looking at these carmakers and saying, what is the risk factor . The more they have invested into diesel engines, the more they are concerned. Generally some people in the market think, the more they move towards hybrid cars and electric , for example, toyota, the more they are likely to recover, maybe in the future be beneficiaries. Right now the japanese are getting punished because they have in trying to keep up with a european counterparts trying to keep up here. Nearly half of the car market in europe is diesel. In the United States it is 1 . Japanese want to compete with european carmakers in europe. Example five suv for comes with a diesel, they are suffering as a result. Anna the extensions are manyfold. You could go geographically, you could look at different jurisdictions to see what volkswagen has been doing elsewhere. You can talk about other carmakers in relation to rules, no doubt we will continue to hear about that. The probes are being launched. It depends on how this will affect the trading environment. There is also a currency impact. They say this is already undermining dragging down the euro. Some people would say that is far for oner too company to drag down an entire currency, particularly one as much as the euro. 21 countries are in the eurozone, but volkswagen is no ordinary company. 600,000 employees, 18 of germanys exports come from overseas car sales. Volkswagen makes up the lions share. The idea is simple, if confident carmakers, in german ismakers, in volkswagen undermined, if we see a slowdown as a result in volkswagen sales, then are all its ifs, that could drag down the euro in the future. Yesterday you wouldnt see it, yesterday we had mario draghi eking speaking. Expected mario draghi would be more dovish, there could be a second thing. You look atat volkswagen shares, they got killed on monday and tuesday, maybe some of it euro recovery yesterday was actually because people thought that the punishment to the euro had already been done. The fact that the euro has taken on this carry trade properties all of that weighing in. It is an interesting angle. We talked to an equity strategist recently who said it is not extreme to think that this will Dent International investors appetite to pick up european stocks. Ryan, thank you ray much. Thank you very much. Website about how the asian markets are playing out this morning. David is standing by in hong kong. More broadly we have the japanese market play catchup. David yes, out of the gates this morning, we did see an immediate drop in japanese equity markets, we were down 2 at one point. Staying in japan, lets talk about shares of sharp, down 4. 3 . Thattually broke the news sharks, according to people familiar with the matter, is poised to report first half earnings that would miss their abstinence miss their estimates. It could push the company to cut and reduce their 2016 target shares. We are down 4. 3 . That is the debt in the last few minutes. Japan, it is in not only be japanese carmakers, the suppliers are also getting sold off in japan. We are talking losses of about 8 11 across the suppliers to volkswagen. Hear some of those names a scenario like this when it happens, japan is getting the first chance to react, it is selling off. At some point when the dust settles, value emerges. A lot of the suppliers do have business with volkswagen, perhaps 5 10 of revenue. I think if we see anything remotely related, it is getting sold off. I will leave it there for now. Anna thank you. 12 minutes past 6 00 here in london. Here are some of the events and data releases that will be watching. At 9 00 u. K. Time we get that iphone number, the key gauge around the german economy. The Central Bank Rates decision is due later on. The japanese Prime Minister will be speaking at 10 00 london time. He will be laying out his goals for the rest of his term after being reappointed as leader of his party for another three years. We will have analysis of that coming up. With the debt, later today, he will be saying what we reconfirmed as japans Prime Minister. We will look at the economic challenges he faces. Anna welcome back, you are watching countdown. Here are the stories that you need to know. Volkswagen is looking for a new chief executive after Martin Winterkorn steps down after the deepening scandal ofemissions cheating. Possible ceos include portions ceo and herbert deese. In a new report, the Janus Capital funds manager argues that if a zero rate coming norm, the economy will soon run on empty. President is out to push ahead with reforms to expand trade ties. Comments came after a meeting in seattle attended by a group of u. S. And Chinese Business leaders, representing three jillion dollars in market value 3 trillion in market i am. Tv caught, bloomberg up with the former chairman of Morgan Stanley asia, Stephen Roach on that subject. He told us that strengthening trade ties between me two biggest economies is a step in the right direction. Steven Market Access is key as china simulates domestic demand, especially consumption demand and grows the largest middle class in the world. U. S. Companies certainly want a piece of that. A bilateral investment treaty is a very important device to enable that to incur occur. ,nna Stephen Roach there warning that china and the u. S. Have a long way to go to build trust. He continues xi jinping continues his u. S. Tour today. David joins us from hong kong with analysis. Seemsorning, xi jinping to be on a charm offensive, yesterday he was citing, house of cards and hemingway. David i think what Stephen Roach said is important, Market Access is key for u. S. Companies looking to china. They have restricted access, here is an example, they are king at ciscos market ss access into china. China started their Company Campaign to Purchase Network year from local providers after the Edward Snowden espionage allegations. During the 20122014. 20122014 time, the shares fell. The thing is, this is absolutely real. It is a real issue for u. S. Buddies wanting to get access into the chinese market. It works both ways, which is why Stephen Roach was talking about why the bilateral investment treaty is so important. That is something we will be looking at at the end of the summer summit. We will be a lessee progress be able to see progress. Anna he keeps talking on this trip about this new model of great country relations. Foreign policy a concept, it is the idea that a rising power will always clash up against an existing power. That is something that the chinese have a vote because they say they want to avoid that as to lets say super power status, they do not want to come up against the United States. So xi jinping talks about a new model of great power relations, that has been toned down a bit in the past few years. It is the idea that the u. S. Has to give grounds to china in certain areas. That area actually boils down in the asiapacific to be military primacy of the u. S. Led level order global order has to make way for china. That is what he means by that , new model of great country relations. Youll hear that over and over again in his speeches. And a girl david, thank you anna david, thank you. Will formally abe start his reign as Prime Minister in a ceremony today. From tokyo ise the chief economist at japan macro advisers. Shinzo abe. Bout is the only measure of success growth or inflation . What is your measure of success . Growth and inflation are certainly major point, another thing i would point out is the rising,rket, wages unemployment is low enough for japan, and on those measures, they are making success. It is a longterm future where he is making no progress. Anna does this ring in the third arrow, the structural reform that the japanese government wanted to put in place. We heard a great deal on the fiscal and monetary front, do you remain unimpressed by the third arrow . You wait to see it be released . Third arrow, i would give a two. There are some tiny reforms that he has been putting out, but i would say none of the reforms merit the structure. Even worse, looking in the next 10 months, i think it is quite unlikely that he will be able to produce any progress. With the election coming up, it is for the ruling party to lose, i do not think the prime redard boe be to come up with reform. Our politicians not quite as sure about shinzo abe as they were to start . Yes indeed. There were three arrows, the first was monetary easing, that seems to be working so far. If you look at japanese exporters, they are making so much money. That part is ok. Is thesaid that, longterm prospects of japanese exporters assured . I dont think so. I think they are still unsure if they should keep building factories in japan so they can produce more. I think any longterm aspects of think shinzoomy, i abe is still failing to deliver. Anna is it worth the cost . You have given us data on a percentage we have seen data on the percentage of japanese debt that the boj owns. It is quite substantial. Now it is threatening to push up to 50 by 2018. Why does that matter in itself . Boj is not alone in being a central bank that has a great deal of its countries owing debt. Yes, indeed. Quantum easing has been fashionable among central banks. Ecb is doing it, u. S. Has done it. Japan is doing more. However, i would say the fed made quite successful ends to that. Now they are about to raise rates. However, in japans case we had some success pardon . Anna carry on, i apologize. No worries. Positive aspect was that yen but the costeak, is a rising percentage. Owns moreank of japan than half of its debt with Rating Companies continuously cutting down its credit rating, i think the longterm credit ability of japanese yen and Government Debt will be increasingly in question. That will gradually and eventually undermine the ability of the japanese public policies. Anna do you think more quantitative easing is coming . That seems to be the only way. In an ideal world, there would be more structural reform, extending retirement, there would be more opposition competition, perhaps immigration into japan. Then, unless japanese government becames becomes bold enough to tackle these issues, i think they will keep using Monetary Policy, raising the market for the bank of japan, buying more jgbs. Anna thank you for joining us. We look ahead to what shinzo abe will say later today. We are getting comments from lower saxony Prime Minister commenting on volkswagen. He says you cannot punish all of the staff with the same brush. He wants to see a swift results coming through from the pro. More on volkswagen when we return. Anna welcome back, you are watching countdown. Here of the stories you need to know. Volkswagen is looking for a new chief executive after Martin Winterkorn stepped down after the deepening scandal over emis sions cheating. Potential successors include the porsche chief and volkswagen new brand chief. Get off zero, get off now, that is the advice that bill gross is giving to Federal Reserve officials. In a new report he argues that if zero rates become the norm, the economy will soon run on empty. Chinas president is pushing ahead with pushing ahead with trade ties. Xi jinping, came at a meeting in seattle attended by a group of u. S. And Chinese Business leaders representing 3 trillion in market value. U. K. Chancellor will use his trip to china to open the bidding process for the first stage of britains highspeed rail link to. Companies will be able to bid on at least seven new contracts valued at almost 12 billion pounds. Construction of the first part is scheduled to start in 2000 2017. At 6 00 u. K. Time on monday we will bring you a special debate on the u. K. And europe. That is in partnership with the city of london corporation. We will be bringing that to you on monday. That is part of some programming i will be doing from the labor party conference. That takes place in the early part of next week. Lets get an update on what is moving in the markets. We have been talking a lot about volkswagen all of the pain they are dealing with. I want to talk about a particular commodity that could be affected eye this. It is platinum. Bank,ts from deutsche mitsubishi, have been saying it is at less demand for diesel cars because of this scandal. People start turning more towards gasoline, that could impact platinum. You might think that most platinum demand accounts for jewelry, but that is only 34 . 44 of platinum demand is that curveom devices harmful gases for cars, particularly the diesel types. That is why you did the platinum demand affected. This comes after platinum has had a bad year. Slow Economic Growth has been curbing demand. Supply increases after South African mine strikes last year is also impacting it. If you look at the price graph here for you, you can see the price of platinum has slumped in the past year. It is down almost 30 . Guess what . You can see this drop here through tuesday, of course we know that these handle with volkswagen wes sent off last friday was set off last friday. That was the biggest drop in two years for platinum. Analysts are saying this might increase demand for palladium. That is used more in gasoline vehicles. Anna 6 33 here in london, mario draghi address lawmakers in brussels yesterday. He said the European Central bank needs time to consider whether the risk and Economic Outlook were not a step up its stimulus. Grants for the recovery to transform itself from being cyclical to being structural, when countries one, countries need to take on structural reform. We are closely monitoring greece towards financial stability. We do not see that materializing at the moment. , macrothis be the case policy, not Monetary Policy would be the tool of choice to address these risks. Wordd some of the down risks weaken the inflation outlook over the mediumterm immediate term more fun of italy then we project, we will not hesitate to act. That was mario draghi on needing more time to make a decision about boosting ellis. Stimulus. Lets get to james foley. Thank you for coming in. Did he found that a man in a hurry . He did not. Surely that is right. Have, wesider w