live sunday may 22nd, 8/5 pacific, only on abc. ne live.: keeping ju markets aren't so sure. u.s. jobs data today. the selloff in global equities gathers pace. drba follows the eu in training expectations. callsngyang, kim jong-un the first congress of the ruling party since the 1980's. bloomberg is there, live.

welcome to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. today is all about the u.s. jobs data and whether it can give us an indication of what janet yellen may or may not do in june. this is a picture for the msci index. down 0.2%. we are down on the week, the biggest weekly loss since february. yen rising a touch ahead of that key american jobs data. haven,u look at yen as a we've seen it increased this week. let's get the bloomberg first word news with nejra cehic. nejra: the aussie dollar has dropped and bond yields have fallen to a record after the rba reduced its outlook for core inflation. the quarterly statement sees underlying inflation of 1% to 2% this year. disinflation will be a key challenge for incoming rba

who willphillip lowe, succeed glenn stevens in september. u.k. voters have given their first verdict on jeremy corbyn's leadership of the labour party. early results suggest sustained losses across england and in elections to the scottish parliament. the bright spot for labor may be the london mayoral race. khan has run a pro-business campaign, distancing himself from the leftism of corbyn. japan may not be able to ignore the yen's growing strength much longer. prime minister shinzo abe says he's ready to respond to excessive currency moves, saying he may raise the issue at the g7 talks. the exchange rate must be stabilized and japan would carefully watch and respond to

these movements as necessary. a weaker yen has been a linchpin of abenomics. oldman jobs is cutting jobs in cuttingrity unit, roughly 10% of workers according to people with knowledge of the situation. the dismissals in new york and london build on cuts that had targeted about 8% of fixed income personnel last month. news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . francine: jobs data in the u.s. will the number keeps the possibility of a june rate hike alive? four regional fed presidents said yesterday they are open to the increase, but investors aren't buying it. fed futures around 10%, down from 20% just a few months ago. economists predicting 220,000 workers were added last month.

can the data to what the officials can't? in terms of the projection, i think wrp has risen. we will get more on that shortly. let's bring in stuart richardson, chief investment officer and founding partner in wealth management. great to have you on the program on job stay. how much importance is the jobs when you look at janet yellen's thinking? we look at risk, china still a risk, brexit is a risk, so are they really live for the june meeting? stewart: in terms of importance, still an important number, but probably less than it was 6, 12, 18 months ago. they've pretty much meant their target. to all intents and purposes, they have met their target quite some time ago. i think what is increasing in

importance now is the inflation data coming through. with what has happened with oil in the last two or three months, i think everyone expects inflation data to pick up the -- pickup. francine: does it make june a live meeting or do you think june is off the table? stewart: i don't think they will go in june. i think what regional fed presidents are talking about is keeping the narrative. aey have to talk about positive narrative and build that narrative. with yellen, cheese on the dovish side. i think she wants to see more data across the global spectrum. the global risks, although they downgraded last time, they are still in her mind. that would be the benign narrative. the less benign narrative is the

fomc is divided and there's a much greater desire to raise rates, whereas we think galen is dovish. -- we think yellen is dovish. justine: so we should trust the markets. even the chance of one rate increase is 50% this year. a little bit less than 50%. and a 10% june live meeting. if they were to raise, what we had a huge turmoil or temper tantrum? stewart: a few days of position adjustment. i think the market is comfortable with weaker inflation. to suddenly try and exceed the market pricing, you would see an adjustment about where the fed is going. they're going to -- francine: it is only a couple of days, right, before we have the

referendum. bullard saysough he's not concerned about brexit, i'm pretty sure it is going to be on there. francine: at least look at it. stewart: they have a great excuse not to do anything in june, partly because of brexit, together with at the moment still in line cpi. as long as inflation doesn't jump in the june meeting, i think they will not move. francine: thank you so much, stuart richardson. we will be talking about some of the market volatility next. stay with "the pulse." plenty coming up. donald trump backs briggs it calls-- brexit while abe for britain to stay in the european union. plus, north korea calls a congress. we are live in pyongyang. then, turkey's turmoil.

what does political upheaval in turkey mean for europe's deal over the migrant crisis? we will bring you the very latest. ♪

francine: welcome back. let's get the bloomberg business flash with nejra cehic. monte de paschi are higher after posting first-quarter profits that beat

analyst estimates. bad loan provisions looking for a buyer to shore up its finances fell. what income fell to 92.3 million euros. that compares with the 23.4 million euro average estimate. arcelor mittal first-quarter profit dropped 33% as the world's biggest steelmaker contended with slumping prices and a decline in iron ore. the company has maintained its full-year earnings target. arcelor mittal shares are lower this morning. shares plunged as markets reacted to the doubling of its recall in the u.s. 40 million airbags will be added to the recall. will collaborate but says it is not aware of any substantial risk from the products in question. tole and sap are teaming up deliver software. it opens a new avenue for apple to reach businesses when sales

have tapered. sap will develop hundreds of apps designed for apple's operating system. the companies say the deal has the potential to attract millions of software developers and sell millions of devices. francine: thank you so much. japanese prime minister shinzo abe has come out in support of britain's staying in the eu. spoke at a bilateral meeting with prime minister david cameron. >> japan clearly would prefer britain to remain within the eu. it is better for the world that britain stays in a strong eu. we want to see britain in europe be influential on the global stage, contributing to peace and stability, including in asia. francine: presumptive republican nominee donald trump has also weighed in on the subject, saying immigration in europe is one reason the u.k. would be better off exiting the eu.

he made the comments on a fox news interview. meanwhile, a nationalist set for a third consecutive victory in scottish parliament has voters delivered mixed results in the final electoral test it for next month -- brexit referendum. assessment from rob hutton. still with us is stuart richardson. thank you so much for sticking around. rob, how much do these results tell us about brexit? that is the question everyone in the city is asking. it is hard to read too much into this. next month.brexit here's what you can read into this. the brexit would be a revolution. last night, we had the biggest vote outside the general election. 43 million people entitled to vote, lots of vote cast, and

very little change. if this is a country on the brink of revolution, there's no sign of it in these results. we just had the final scottish result. snp remains in government, has gone back slightly. the big bad news for the labour party is they have gone into third place the hind the conservatives. francine: a wider political takeaways, is it all about scotland? if they lost some states, they are still powerful enough. stewart: certainly. nationalism, independence has not gone away in scotland at all. that said, in scotland, if you are voting for a revolution, the snp had a majority. it has just edged back from that. perhaps voters want things to stay as they are. francine: does it mean anything for jeremy corbyn? rob: that is the problem.

jeremy corbyn needs voters not to want things to stay as they are. jeremy corbyn said this is a chance for voters to decide which side they're on. it is hard to explain how precedented this is. an opposition party has never lost seats. local elections are your chance to kick the government. voters always take that in britain. it looks as if the conservatives are going to gain seats. we haven't had all the results. that may change. jeremy corbyn has asked the voters, whose side are you on? francine: very quickly, then i want to look at the market implications, but what about the mayor election in london? there is one guy against it and one guy for it. rob: i think you have to say, if you thought that khan should be mayor but you also thought britain should leave the eu,

would that make you vote for zac goldsmith? maybe, but i expect the london mayor election will tell us something about london, about the candidates, but i'm not sure we should read too much about brexit. many times a day do you get asked about brexit? stewart: too many. francine: every hour? stewart: the problem is not much has changed in the last month or two. the market looks like we are going to remain in. when you look at the different polls, it is much closer. mostly still to remain in, but much closer. at the same time, we've seen the u.k. economy softening. voters aret a lot of quite confused. they are getting very mixed messages about the potential extent of the economic downturn if we come out, but we know what

europe is like and we are not sure we like that that much. i just don't think a lot of people know. arecine: if voters confused, what are investors doing? we don't even know what the boe will do. it is probably the most interesting monetary policy experiment. stewart: when they turn up in the voting booth, they kind of whatto say, just vote for we are comfortable with. our point of view would be we probably remain in. we see some relief rally in u.k. assets, including sterling. then the hard work begins. we already see the economy slowing down, which is partly u.k. and brexit, but also part of the global slowdown. global trade still remains in the doldrums. we know that the government is continuing to squeeze on

austerity. it is quite a long road out for the u.k. finances if we remain in. if we come out, then it is going to be interesting. this is a very binary outcome for the market where we just don't know what the answer is. francine: markets hate uncertainty. president obama shows up. shinzo abe shows up. then trump speaks to fox and says, you should leave. do voters take this into account? rob: the interesting thing about this referendum is a lot of voters don't even know why they are being asked the question. they don't have a particular toolkit to decide how we should be in the european union or not. that is not a question i've had to think about before. if you talk to people who study referendums, the shortcut of voters use is who is on which side. the government campaigning for in would be very happy.

they put out a poster last night. here are all the people say we should stay in, obama, both clintons, new zealand, abe, everyone. given the way trump is widely regarded in the u.k., i think they would be happy to have trump on the other side. look at people you respect. what do they say? then you can make your decision. francine: great insight. thank you so much, rob hutton and stuart richardson stays with us. up next, the country's most important political meeting in 36 years. we are in pyongyang live as the conference gets underway. ♪

global stocks are feeling a little bit of pressure. this is your market check. everything today is about u.s. jobs data and what that means for the fomc when they meeting june. stocks in europe down 0.5%. people are trying to position themselves i had of this american jobs data. the yen rising in touch. it will shape the u.s. interest rate outlook. still with me is stewart richardson, chief investment officer and founding partner at

mg wealth management. this is the s&p chart back to 2011. i think what is being debated the most is, can this continue to run, or is this it? monetary policy is coming to an end. stewart: technical point of view, to a lot of people, us included, it looks like a 2100 last ceiling on the markets. looked a couple weeks ago we would try to run through that. that was a bit of a goldilocks environment. we had the dollar softening, interest rates remaining below. the market prepared to ignore deterioration in fundamentals. got a a sudden, we've very different outlook. i think this is down to the performance of the dollar. it is broadly built on these gains with the emerging market

and commodity currencies being the weakest of the bunch. i think this is a sign that there are worries around the world despite the three months of better performance from risk assets. no change in the big picture problems around the world. francine: stewart, thank you so much for now. importanta's most political meeting in 36 years gets underway today. tom mackenzie reports on what to expect from the seventh party congress. tom: north korea's leadership is putting on a show and everyone is expected to be in lockstep, even the kids. the seventh party congress is likely to cement kim jong-un's grip on power. analysts see a new central committee will be appointed and key loyalists will be given top positions in the party. it is a chance for the leader to

present a united front to his people and the world. we hope to report on the economy, but our government minders instead took us here, pyongyang's children's palace. for them, this is proof that kim jong-un is fulfilling his promise to improve people's living standards. policy is to do that at the scene time as developing nuclear armed missiles. across town, we were driven to an old armory, a reminder of the army's central and continuing role in north korean life. we've been taken to see some military history. bys rifle apparently fired kim il-sung and his wife, and later his son, kim jong-il. they all apparently it full-size. l's-eyes.l

hitting economic targets will be harder. a new middle class has sprung up in parts of pyongyang, but much of the population remains poor and middle nourished. sanctions against north korea are the toughest in 20 years. hit commodity prices have what little the country does export and the government continues to rely on china for aid. most will have to wait for the curtains to come down on this piece of a pageantry before we get clear insight into north korea's future. fromine: we will have live tom mackenzie at pyongyang through labor day. up next, could the eu migrant agreement fall victim to the power-play in turkey? that.nalysis of our top story of the day is u.s. jobs data. stocks retreating before that data. yen gaining, aussie weakening, all about inflation. ♪

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the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. francine: welcome to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. let's get the bloomberg first word news with nejra cehic. dollar hasaussie tumbled and bond yields fall into a record low. the central bank's quarterly statement sees underlying inflation of 1% to 2% this year, down from the forecast in february. disinflation will be a key challenge for the incoming governor, who succeeds in

september with few policy weapons in his armory. u.k. voters have given their first verdict on jeremy corbyn's leadership of the labour party. early reports suggested sustained losses across england and scotland. the bright spot may be the london mayoral election where polls suggest khan is likely to defeat goldsmith. khan has run a campaign distancing himself from the leftism of corbyn. japan may not be able to ignore the yen's growing strength for much longer. prime minister shinzo abe says he's ready to respond to excessive currency moves, saying he may raise the issue at the g7 talks leader this month. abe says that japan would watch and respond to movements as necessary. a weaker yen has been a linchpin of abenomics. goldman sachs is cutting more unit,n its securities

roughly 10% of workers. that is according to people with knowledge of the situation. the dismissals in new york and london built on cuts that had targeted about 8% of fixed income personnel through last month. global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. francine: thank you so much. markets lower this morning. let's head to the bloomberg with mark barton for your asset check. falling,cks in europe on track for their second weekly decline and biggest weekly drop since february. those are the industry groups, just one trading higher, real estate. the index is down by 0.5%. we are waiting for the u.s. jobs report. this is our u.s. function telling us what economists are forecasting. this is the figure that matters

or one of them, forecasting an increase of 200,000 jobs. average in the first quarter, 200-9000. another to watch out for is the unemployment rate. this figure, 4.9%. fed is within the range officials consider consistent with full employment or level below which inflation pressures start to build. the labor force participation rate at 63%. that is the projection from today. is the highest since march 2014. that indicates improving prospects are putting people into the workforce. average hourly earnings on the month and year, 0.3% projected on the month, 2.4% projected on the year. wage advances have averaged

2.1%, probably not as fast as the fed would like. those are the big pieces to watch for today. this is our interest rate probability function which shows -- aclearly a 22% chance 10% chance, excuse me, of a fed to 22%ke in june, moving in july, 33% in september, 48% in december. only in february next year do we see the probability rise to 52%. calculation, this is a lovely function on the bloomberg as well -- are we going to get that? let's try it once more. no, we're not going to get it. francine: that's all right. mark: let's get on to the dollar. been since it has the bloomberg dollar spot index, which is a gauge of the dollar

against 10 of its major peers, rose to a record high in january. since then, down by 6%. in the last week, we've seen a big rally. it was yesterday's statements or regional fed four presidents that put the icing on the cake. they said the june meeting was live and policy is data dependent, which brings us back to today's jobs report. francine: thank you so much. i still can't figure out how you forward guide but remain data dependent. the german chancellor angela merkel and italian prime minister matteo renzi have insisted the european union's deal with turkey over migrants must be implemented. fall from power of turkey's prime minister has triggered doubts over whether the eu can

pursue an agreement. bloomberg's german government editor joins us now from berlin. departuredavutoglu's mean for the refugee deal with turkey? >> it has reached some uncertainty, but the eu is very much dependent on it, and the record of all this over the past that the eu isn willing to go to quite some lengths to get turkey to help solve its refugee problem. dealing,of the although davutoglu, the prime minister who is now on his way out, was sort of the public face of these negotiations, the person calling the shots in the background always was erdogan. merkel in germany in particular, this is so important

that it's hard to see how on the european side there would be any backing off from that agreement. francine: tony, how important is the deal for angela merkel at home? >> very important. turned, shecrisis said herself, that the refugee crisis is basically the biggest challenge of her chancellorship. she's been in power 10 years. she is facing a lot of domestic controversy. we recall this incident involving a kind of ditty written by a german comedian that is being investigated for possibly insulting erdogan. then there's reservations in the german political establishment about dealing with turkey for a range of reasons. it is very important, the linchpin of her effort to solve

the refugee crisis at this point. francine: tony, thank you so much. let's welcome david stubbs, j.p. morgan asset management global market strategist. thank you so much. i got this made up for you. this is about markets. we have a nice chart. i did medians. this is the largest exchange fund to buy junk bonds and we are seeing that it is flashing a potential warning sign that this rally we've seen over the last three months is losing steam. 's orll, we can talk etf just in general about our charts. do markets still have it in them or is it trailing at the edges because there's brexit concern, because janet yellen probably won't be able to raise rates anytime soon? markets havek moved up quite significantly in

recent weeks and months. in particular addressing the high-yield market. we do think there's further this market can go. we think a lot of the fall in prices was a function of excessive worries over the health of corporate america, liquidity concerns in the energy high-yield space, which is spilling over into the corporate market, which is why we overweighted u.s. high-yield in our portfolios for the last 12 months, buying as the prices fell. now we think it has got further to go. francine: how much further? david: if you look at the historical tightness of high-yield spreads versus investment grade, you've still got a good hundred basis points or go to take not. i think that is a fairly idiosyncratic situation, what is going on in the high-yield market. in terms of equities, we do think we are approaching a point

with earnings and a modest rebound will occur in the second half. we think you get maybe 4% or 5% earnings growth, welcome after last years decline. you throw in a dividend yield north of 2%, and it remains our target for u.s. equities. francine: you have a turkish flag behind you because we are not sure how investors should be looking at that. turkey is a proxy of the refugee crisis. it is another problem for angela merkel. if you are an investor, how do you deal with it? how does someone like you look at the political strains on europe, and the read across to brexit? david: i think there a multilayered concern over the economic and political stability of the eu and the eurozone right now. you've got the refugee crisis, probably the most important. francine: this is the problem, i don't know how you look at it.

david: the only way you would express it is by selling the euro. and by not paying an enormous multiple on some risk assets in europe. we don't think at the moment point,ese are, to your directly impinging on economic activity. obviously, if we were to see a brexit, that would be a significant market event. in the event we vote -- francine: systemically or because it would push countries to have their own referendums and quite the eu or the eurozone? david: initially, i think the market reaction would be extremely severe, both in sterling and european risk assets. , iter-term, of course brings into question the whole stability of the eu. i've often thought about sweden. sweden is often seen as a reluctant european nation.

austria is in the euro. francine: extreme politicians in charge now. david: absolutely. i think this would open the door to a range of tensions in europe. francine: how do you look at -- on brexit, when you advise your clients, what are you looking at, the polls? you infer from local elections and mayoral elections or is it too far removed? think there was a significant threat of eurosceptic sentiment in this country. we already knew that. that is why they are winning. they came second in a lot of other places. i think as you and i were discussing before, that could be seen as a vote of confidence by the pro-eu forces. maybe it is just a sign of labor's weakness for middle

england. tohink we've still got assume a very close referendum campaign, but an eventual vote to stay in. i think the risk is big enough to take certain portfolio actions to hedge this risk. buying dollars being number one, buying gilts being number two. i don't think it is too late to buy either. francine: in to second, live meeting or not in june for the fed? david: it is live but not likely. francine: we will take a break and come back to talk about that meeting. david stubbs stays with us. up next, we talk u.s. jobs day. ♪

francine: for more on the markets, david stubbs, jpmorgan strategist is with us. let's start with the chart of the hour. i cheated because i had two charts of the hour. the second one is on the s&p. a lot of debate on whether this bull run can continue. i brought it back to 2007. it has bounced back quite a bit, but it seems like it is in a trading range since 2014 between 1800 and 2200. david stubbs, want to -- what does it mean?

first of all, we have jobs data today. you believe the june meeting is live but unlikely interest rate will hike. what does that do to s&p? david: i don't think equity investors should fear rate hikes in this cycle. francine: so no temper tantrum. david: i think what we saw in january and february was part of it, the reaction to the december rate hike. after the first rate hike, equities usually selloff by 8% to 10%. what did the equity market do? it sold off. there are other concerns, oil being the main driver. absolutely, there was part of the worries about the end of cheap money. weekendany rate hikes now should be seen as a vote of confidence in the u.s. economy. as long as they don't cause the dollar to skyrocket, i think they are pro-equities. if you look back at previous

hiking cycles, beginning to the end, the equity market does very well. after initial worries -- francine: is janet yellen now the central banker to the world? and what does it mean for emerging markets? it is a sign of confidence in the u.s. economy unless we have huge outflows from emerging markets coupled with defaults. david: you've got to separate interest rates from the dollar. the dollar going much higher than it did up until january was very negative for everyone. hikes which put interest rate at the very short end of the yield curve are not the enormous draw of fund managers globally. fixed income focus is on the middle and longer end of the curve. that is very much a global market.

there are higher-yielding countries than the u.s. for example, australia. it has worked out well in the last few months. francine: are you concerned about inflation in australia? seems like they are trying their best but it is not doing as much as they were expecting. david: we certainly have had a somewhat cautious view on the australian economy. we love the bonds. we don't like the stocks. the history of shorting australian stocks is usually not a good one for most investors, but getting your duration exposure in a developed market economy, we absolutely believe australia is the place to get it. that has been our view, that interest rate are going to fall. francine: so more stimulus. what about boj?

becauseappointed markets were expecting something. in asia, monetary policy seems to -- i don't know if it is working, but they are more experimental. david: sure. given the structure japan is dealing with, i think it is being backed into a corner to utilize more aggressive policies than almost any central bank. certainly its asset purchases dwarf anyone else's compared to the size of the economy. we are seeing the market doubt the bank of japan's ability to obtain its inflation target. that is one of the reasons the yen has strengthened. if you look at real interest rates, then you see actually that the market has seen higher real interest rate into the future. for me, the big question about japan is, they've got to get away from this bipolar fiscal policy. one year they hike the consumption tax.

the next month, they passed another fiscal stimulus. whether you believe the japanese economy is about to blow up where it needs fiscal stimulus will determine which you think is a good idea. just make up your mind. the chancesi think of a debt issue are very low and fiscal policy should be supportive of growth. francine: what are you expecting from the jobs number today? if it is a blockbuster, does that change your view on the fomc doing something in june? david: it certainly helps. the key issues are not the headline numbers for me. his participation going to continue to rise? you've seen enormous labor force growth. also averaging only 60,000 the prior four years. how is work going to hold up? if they fall, that is not a good

sign. each decimal point downward sex about 50,000 jobs. driver ofry powerful the overall picture. and the perennial worry about earnings. so the guts of the report are going to be more important than the headline number. francine: david stubbs from jpmorgan. up next, jobs day in the u.s. can the number really shift market sentiment? we will talk about the possibility of a june fed hike live with our economic editor, michael mckee. ♪

markets have so far ignored the fed, but will jobs data convince investors the u.s. economy can handle a hike? futures only predict a 10% chance of a june rate rise. michael mckee joins us live from new york. he's our economics editor. what is the most important jobs number to markets today? michael: i disagree with david. i say the headline number. with the economy slowing over the first quarter, said officials want to be sure the labor market remains on the same path a dance. 200,000 is the forecast. any number for unemployment between 4.9% and 5.1% will convince them they have at least

not seen the economy fall off the rails. that is what matters at this point. francine: what about participation rate or wage growth? michael: wage growth is very interesting. jobsed's theory is that as grow more scarce, employers have to pay more to find workers. with productivity so low, maybe don't have to pay as much as thought. there is a debate in the u.s. as to whether that is an accurate signal of how tight the labor markets are. maybe they are tight without companies having to pay a lot more. francine: michael, thank you so much for that. michael mckee joins us in "surveillance" with tom keene. we also kickoff a conversation with goldman sachs. we will be talking about bonds and treasuries. later in the program, we speak to citigroup's chief economist.

in terms of what the stocks are doing, a little pressure. european stocks are down some 0.3%. double stocks dropping, the young rising, so it is clearly risk off. ♪

francine: keeping june live, four fed chiefs say a hike at next month's fomc meeting is an option, but markets aren't sure. that's ahead of u.s. jobs at that time atoday. the selloff in global equities gather pace, data highlights the franl i will state of the world economy. the r.b.a. follows trimming inflation projections. and the parting gathers in pyongyang, north korea's leader calls the first congress of the ruling party since the 19 0's, and we're live on the ground. this is