Good morning, welcome to countdown. I am caroline hyde. I will bring you immediately what we are missing in terms of training trade this morning. Can seetle bit we currently at the moment, we seeing the shanghai composite up more than 3 in current trading. Of course, perhaps not as exuberant as many were expecting. Member, since mainland stocks have been close, the hang seng has gone up 11 . Why not the flurry to face significant catch ups . Stocks,comes to chinese the all country world index is up for six straight days. We saw it up in the biggest rally since 2011 on the all country word index. We are certainly seeing risk aversion, pointing lower. I want to get straight to hong kong now, as we know, the markets open. Lets get up to shery ahn in hong kong. A little less Risk Appetite looking at japan. Shery good morning. A bit of a mixed picture in asia, but at least the Chinese Markets coming back rising. They are catching up to the global rally. We had investors speculating that there may be more steps by the government here in order to boost the economy. Seng downd, the hang 7 10 of a percent. Stocks are vulnerable to some profits, even the recent gains. Between gainsing and losses today after that data showing that we are seeing one of the biggest slumps and machine orders in august. It dropped 3. 5 . They were expected to rise that much. Week,0 of a percent this it is gaining 3 10 of a percent. Despite some Energy Players seeing some downward pressure. The Australian Dollar as well as the kiwi dollar, they are falling today. A reversing that the weeklong rally that we have seen for both currencies, the aussie dollar is rising half a percent. Remember the aussie and the kiwi have been the best performers among 10 developed nations, after Commodity Prices recovered leslie. Risingnese currency is to a twomonth high, that is after the government fixed and changed it by 1. 7 . It is currently weakening slightly, back to you caroline. Caroline thank you very much, indeed. Is ain hong kong and that market update. Here is the rest of what you have to keep your eye on. It is a big day with announcements from the ecb and the fed. First up, we get a Rate Decision any minute from the bank of england. Then at 12 30, the European CentralBank Releases its account from the september meeting. We last but no way least, get the minutes from the Federal Reserves. A little bit outdated potentially since the very poor job report that cannot last week. What will we see in terms of what janet yellen and the rest of the Federal Reserve feel about a rate hike as soon as this year . Lets talk corporate, banking the Biggest Investment Bank in europe. They are bracing for the biggest quarterly loss in a decade. Deutsche bank could stop dividends, after ranking the two largest divisions down. Ryan chilcote is here with the details. Walk us through this. Where are these writedowns coming down . Times what it was four or five years ago. 5. 8 billion from the investment, a right down in goodwill, being set aside additional legal fees and provisions for more. Hit,ividend getting hugely last year it was . 75. Deutsche bank has paid a dividend since 1957. The last time they cut the dividend was 2008. Yesterday, the ceo said we will either cut or eliminate the dividend altogether. . 75 a share is whether the last you. Finally, the ceo said if we are going to take eight writedown, we will have to dig into the dividend, then we are going to have to have some pain ourselves. Saying that basically compensation is going to go down this year. He said he wants to write a fair balance between what share our holds are having to take. Shareholders and the employees her. Trying to clean the slate to a certain extent. But we have seen a massive reaction in the United States. Ryan new arc was down as much as 6. 7 . But this is definitely Deutsche Bank definitely to be watch this morning. A huge reaction in new york shares. Has been inohn power as the ceo, shares have been down about 7. 5 . What he is trying to do, you alluded to this, try to clean the slate. Quite possibly set himself up for good comparatives Going Forward. This year will a good compared to last. The only came in in july, and that is compared to last year. That is what he is gambling on you. What they are saying effectively is that the Investment Bank is worth a lot less than they were booking it at. The postbank he said in a memo yesterday, when that was acquired, it was booked at more than the value of the net assets. And of course, one problem is bank has, like most have had, the legal costs keep coming in at a higher rate. It is being aggressive in setting aside more money for that. Caroline it looks like they cannot catch a break right now. Thank you very much, everything with Deutsche Bank with ryan chilcote. Were sticking in germany and the corporate woes. The head of volkswagen, the head of u. S. Division, he said he knew there were problems with diesel emissions for 18 months. It may affect the size of the fine the epa will levy on the german automaker. Now lets get to berlin. Our International Correspondent hans nichols has more. What did the top u. S. Executive actually know, when did he know it more importantly . Hans caroline, you are getting all involved in the watergate terminology. What did you know, when did he know it . Not quite the same level. But what we do have is michael moore, head of the u. S. Division, he was made aware in the spring of 2014 of a possible emissions noncompliance issue. Here is what he will tell lawmakers j. Testimony came less than. He said later in 2014, i was informed that the technical teams had a specific plan for remedies to bring the vehicles into compliance and they were engaged with the agencies about the process. The spokesman said later in the afternoon yesterday that he did not know that the device was installed on the volkswagen diesel engine. The software that is the thing that is in question. Just as importantly today, we will also hear from the epa. And they are going to indicate that the potential finds that volkswagen could face want to be directly proportional to the kind of economic benefit that they gained by selling these engine. They will say that the agency attends to assess the economic benefit of noncompliance and pursue appropriate penalties. They are inspected look at how much economic and environmental damage there was, as well. How much pollution, the overall cost of that. And we look at some figures out there, for the economic benefit to volkswagen, one class action lawyer saying it was a 2 billion economic benefit. From a class action lawsuit, that seems to be on the high end. They have a lot of interest in high bawling this. It may not be the eyepopping figures. But remember, this is just one area this is the epa fine. Another announcement says it is 7,000 per vehicle which was the economic benefit. One quick note on the u. S. Side, volkswagen has decided not to even certify their 2016 vehicles. They are pulling out of the market. Wow, sticking with volkswagen in the u. S. , there might be even more lack of transparency going on. Because injury reporting regularities, that seems to be being highlighted now. What we know about those numbers, they remain resolutely low for volkswagen. Hans one way to put it, caroline. Than thes lower industry average. This is a report put out at the Financial Consultancy group. They look at all of the injury and death reporting across all the 11 major brands in the u. S. Volkswagen is the lowest. I have not said anything if they will reinstate, but honda has their reporting. Volkswagen came in lower than honda. The number is just a little quirky, we will see if theres much more to that. Caroline we will see how the shares reacted, how they perform on this latest set of news. Thank you very much indeed, hans. Plenty more coming up, including why the fed should wait. The imf director urges the u. S. Central bank to hold back on the rate hike. I do not agree. The fed needs to do what is right when it is right. When you look at the United States, in terms of wage and price inflation, you will see that the conditions are there now for the fed to increase Interest Rates. In fact, our recommendation is for the fed to wait until there are tangible signs that inflation is really rising to the objective. Caroline we will have plenty more from that imf and World Bank Meeting. Managingwith the imf director, christine lagarde. After an hour later, we speak with the World Bank President jim yong kim. P. M. , we speak with the eu commissioner for economic affairs. That is at 7 p. M. We are on the ground in lima. I have been very clear. I think that there is no reason to raise rates until you see the w whites of inflations eyes. Id look at the data. I look and dont see it as close to the horizon. Treasury former secretary makes it very clear. We will discuss inflation, coming up next. Caroline welcome back. 6 15 in london. Here are the top stories you need to know this morning. Deutsche bank is bracing for its worst results in at least a decade. The Biggest Investment Bank in europe expects a 6. 2 billion euro loss in the Third Quarter, after writing down the biggest section. They are boosting litigation reserves and say they may cut or even scrap the dividend this year. Upnese mainland stocks are after holiday. Shanghai composite is headed for its steepest advance in four weeks. It comes after . 29 in the First Quarter. Volkswagens top u. S. Official will tell us that he was aware of the emissions in 2014. He was alerted after the publication of West Virginia universitys study that found that diesel models admitted far more during driving conditions than allowed during federal standards. Now earlier, we heard from the imf director of market. His message to the u. S. Federal reserve, there is no shame in waiting to hike rates. For the latest minutes released today, former treasury secretary Larry Summers has said that holding off on a rate rise is exactly the right thing to do. Larry i have been very clear. Reason that there is no to raise rates. Until you see the whites of inflations eye. I look at the data out there. I do not see inflation as close to the horizon. I think we have to be focused on making sure that were doing everything we can to grow this economy. I talked before about public investment. There is also a lot we can do to spur private investment. I think government does the to recognize that confidence is the cheapest form of stimulus. Wages are not going up because the power is with the employers. There are basically more people looking then there are jobs. So the power is with employers. They do not have to pay more. I dont see how you can look at thirdquarter growth forecasts that are running at about 1. 5 . That is pretty close to stall spped. Eed. And when you slow down, it is not good what happens next. Caroline on the back of that, we continue to monitor the feds mom movement. And we went for the european bank. Whitesuss inflation, the of inflations eye. That is what Larry Summers want to see. We are nowhere near to seeing any inflation. You have zero in the u. K. And eurozone. In zero in the u. S. You think we are obsessed at the moment . That is definitely the case at this point in time. That is correct. You have low or no inflation, that is a commodity story. If you look at core inflation, a more important indicator, it is still under 1 for most countries. I think the main point to remember is that you have had the worst recession in 80 years, since the great depression. But you did not really see deflation. Monetary policy was able to keep it positive, below the target. But it is still positive. It is why we do think that over the next couple of years, we will be stuck in low inflation targets. But on a more mediumterm horizon, i think people need to look at a wider range of options going back to target is the most likely outcome. Caroline before we get into the factors driving the outcome, you agree with Larry Summers that we need to see Central Banks remain easy. We need to see the boe hold. We need to see the fed wait. We do still have deflation in the u. S. Hur our view has always been that they have to be cautious. And in fact, one of the big risks is the mistake that they do hike too quickly. As the economy slows down very sharply, the biggest view to go back to target is the fact that the economy could fall back into some sort of recession. From here, you only have inflation at 1 core inflation. It makes it much harder for fiscal policy to really boost inflation. So it is a big risk. We have always expected very gradual, very modest it is only 1 . So much lower than the 5. 5 we saw during the last tightening cycle. Clearly, that is a view we are taking. The central bank will learn from policy mistakes. We will learn from the fact that you have to keep Monetary Policy accommodating in the absence of fiscal policy to push inflation back to its target. Caroline for the moment, you see four different factors driving inflation. Give, china, investment, us a sense of where you see china for example . How will that drive us Going Forward . Inflationary an force, there is a capacity in china over the next couple of years. We will see investment having slow down. It rise, and as a result, you will see the impact. You have had a very minor devaluation, but it is small. That is this inflationary. They have lots of ammunition to stabilize the economy. The fiscal policies are being used. We also expect more of our custom through, and in the absence of that, you could see the economy to continue to stabilize. From there on, dividing support to the global story. Basis, ormediumterm china, we do expect that as you move to more consumptionbased economy, you are going to see the savings rate and china really is the biggest global saver in the world, about 7 of global savings come from china that is going to start coming down. Corporate savings will be hit. The government will invest more. It will come down, and be more confident as they get Social Security to go and consume, rather than to save money. Caroline again, that should be more inflationary. On. As been great having you our senior global economist, thank you very much indeed. When will the fed hike . Crisis . Heading for a those are questions we are asking ourselves. In we put jose to the test lima. Jose i dont think the china is in for a financial crisis anytime soon. That is certainly not part of our scenario. , is about 25 of gdp. And it needs to engage in a process of leveraging. And do this at a time where growth is slowing, naturally. There are more and more firms which are in a weaker position because the possibility of coming down, and the debts are a capacity that are lower. All of the leveraging will in thealso some default corporate, the exit of some rival firms and banishment to have significant structural formula lows may emerge. The officials do not manage this risk greg, is that the number one disaster scenario . E we think the authorities are aware of what is at stake. Therefore, they are already on top of the banks making them more provisional. So that they can get ready for what is coming, which would be an increase in nonperforming stock. Strengthen andto the nonperforming lows down the road. How concerned are you about the fed hike . The famous window, we keep talking about . Jose the window was not there. Strategyagree with the in the fed. They need to do what is right when it is right. If you look at the United States, and price inflation, you do not see the conditions are there now for the fed to increase Interest Rates. In fact, my recommendation is for the fed to wait until there are tangible signs that inflation is really rising towards the objective. Which could be in a year . Jose; i do not know. It could be sooner. It is datadependent. What i am telling you is that last time in september, not raising rates, i thought it was right. Caroline coming up on countdown, hot money chasing headlines. The global head of commodity researchers take on oil. This is a repeat of what happened last spring, chasing usdlines where we had very data last week. At the end of the week, we had a recount that said it was bullish. And the market responded. If that goes down, production will follow immediately. And we should have learned from last bring that that doesnt happen. Caroline banking on what is moving the markets, that is coming up next. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Welcome back, it is 6 30 here in london. Stories ise top morning. Deutsche bank is bracing for its worst result in at least a decade. Europes Biggest Investment Bank is expecting a loss in the Third Quarter, after writing down the value of its two biggest division. The company is keeping litigation reserves, saying it may cut or even scrap this years dividend. Chinese mainland stocks are up at the markets were shut for the weeklong holiday. The shanghai composite is reaching the highest in three weeks. 29 in the Third Quarter. Volkswagens top u. S. Official will tell lawmakers it was first made aware of the emissions problem in 2014. Michael horn will say he was alerted after the publication of a West VirginiaUniversity Study that found it admitted far more pollution and driving then allowed in federal standards. As a were just saying, chinese equities are trading a bit higher today,