jobsine: fridays numbers. the fed chair speaks this afternoon. the pound feels the pain. polls show britain favoring a leave vote. ate brexit with nigel lawson and stephen kinnock. and, we speak to former nigerian president goodluck jonathan. welcome to "the pulse" live from bloomberg european headquarters

in london. it is 9:00 so we have to look at the markets. we have quite a move overnight in asia. currently our top story is the pound. pound-dollar, 1.4425, the pound tumbling after that jobs report in the u.s. everything is linked back to what janet yellen can or cannot do this summer. the european stoxx 600 almost flat. at 49.2.r in new york let's get to the bloomberg first word news with caroline hyde. caroline: the pound has fallen to a three-week low after goals suggest britain's favor leaving the union. surveyg weekend after a found 45% of voters would choose to leave. 41% said they would vote remain.

another poll shows the leave campaign ahead. the race has tightened in the past week, spooking some investors. china must improve monetary policy communication as it takes on a larger role in the global economy, so says u.s. treasury secretary jack lew. >> i think when you talk to the economic policy, there's no question that they understand what they need to do in terms of having market forces become much ourcedeterminative of resear allocation, in terms of excess capacity. the reason the jury is out is these decisions are not always made by economic policy advisors. caroline: german factory orders declined in april as demand slumped. orders adjusted for inflation

fell 2% from the prior month when they rose 2.6%. the reading compares with the economist forecast of a drop of 0.5%. hillary clinton has won puerto rico's democratic primary, leaving her just a few delegates short of clinching her party's nomination. she could clinch tomorrow when voters go to the polls in california. dayal news 24 hours a powered by 2400 journalists in more than 150 news bureaus around the world. find more stories on the bloomberg at top . francine: friday's u.s. jobs number all but killed the june rate hike in the u.s. worst in sixhe years, drove the dollar down and took with it the hike that policymakers had talked up. can the fed rebuild the momentum

for a hike? vincent chaigneau at societe generale, thank you for coming on. it is quite a big day, a big week. we hope to hear from janet yellen about what her intentions are. from your point of view, should she stick to normalizing? vincent: that is going to be difficult. i think a june hike is gone for sure. francine: was it always unlikely because of the brexit vote? vincent: yes. that was a drag that made it unlikely. the probability of the hike was never more than one third but now it is gone. july is really in doubt. it would take surprisingly strong numbers from the u.s. for the fed to hike in july. there was a consensus out there that the u.s. economy would

after q4 and q1. in the election, the condemned economy continued to disappoint. francine: will they be able to get at least one hike this year? vincent: our call has been that the fed will hike only in december. francine: why did we hear fed presidents saying, summer is here? are they trying to reprice the markets? if we see the beginning of a rally, that is almost tightening monetary policy. vincent: i think they needed to signal to the market that they were too complacent. the fed wants to normalize if they can. the problem is, is the u.s. economy going to be strong enough to allow them to hike? i think on the first point, the

u.s. economy i think is still underwhelming. francine: is there a concern that it will take it back one or two years, that once domestically it is strong enough, there will be something in china for emerging markets and janet yellen get stuck and doesn't have the tools to combat that? vincent: the fed would say that they have tools still to act if necessary. francine: helicopter money? vincent: that is one option. i agree. i think the fed really wanted to bring rates higher in this cycle. we think the cycle is going to end in 2018. there's not that much time left for the fed to normalize. the want to normalize, but u.s. conditions, but also the international conditions,

especially china, is my biggest concern. what exactly is your concern on china? i've always been told that even if they have a lot of debt, they can roll it off. are you concerned about a credit crunch? vincent: i'm concerned about the surge in the debt in china. if you look at nonfinancial debt , that ratio has exploded in china since 2009. if you look at the debt to gdp ratio, nonfinancial debt, the increase in china actually dwarfs what we had in the u.s. before the crisis. there is room for china to move that debt around in the books, but that would only delay the cleanup. francine: thank you so much for now. vincent chaigneau at societe

generale stays with us and we will be talking about japan. we haven't even touched on euro yet. stay with "the pulse." nigeria teeters on recession. as the country looks to raise debt on the international markets, we speak to former president goodluck jonathan. that is coming up on "the pulse ." ♪

francine: welcome back. let's get straight to the bloomberg business flash with caroline hyde. caroline: china's shares may have taken a beating over the last year. valuations are still three times more expensive than any major market worldwide. the median price is 59, higher than u.s. technology shares in 2000, even after a 40% tumble over the past 12 months. nestle is expanding its online offerings in china as it gets on e-commerce. the food company has unveiled 67 products new to the china market. not available are in shops. bentley carser of in the uae is closer to an initial public offering that has

works since 2000. the ceo spoke exclusively to bloomberg tv. >> we spoke about it a few weeks ago. all that we need to do is update the information. some of the projects that we had are not finished and today have to be finished and ready. that will be a plus for investors. today, they are looking at the finished, generating revenue, project. caroline: the singapore listed commodities trader noble group has suffered its biggest decline in 4.5 years after the company restructured. half $1 moving to raise billion. the ceo quit last week. the chairman says he will step

down within a year. francine: caroline, thank you so much. caroline hyde with some of the top stories. let's get to our chart of the hour. this is the picture for pound. this is what you see in white. we had some polls over the weekend. they agitated investors as they were not only close. it was the leave campaign that was stronger. you can see volatility going up. let's bring back vincent chaigneau. if you look at this chart and affects in general, it seems that it is going to be a much more volatile, much more emotional market. everything does seem to be played out in currencies because of monetary policy being left, right, and center. vincent: with the fed hike becoming less likely, the dollar is going to be soft.

we saw the dollar underperforming against most e.m. currencies. on sterling, i think we are going to stay very nervous into the finish line, the 23rd of june. the polls are suggesting that the brexit momentum is gaining. sterling is going to stay week very much into the front, which probably is going to be tight. francine: is bound going to be week whatever happens? are you looking at possible scenarios, or is it so difficult to predict that people have to take it with a pinch of salt? vincent: right now, brexit is not completely priced in. bute's a lot of uncertainty it is not fully priced in. i believe if we get a brexit, there will still be a surprise and cable will trade much lower

on the aftermath of a leave vote. not fully priced in. francine: are we going to see much more weakness? are we going to see much more softness? vincent: i'm not saying it is over for good. i'm saying that after the sharp rise that we had in 2014 and 2015, the dollar is going to be far less exciting as a currency. we are still looking for a slightly stronger dollar into the end of the year, assuming one fed hike. near term, i think you will see a little bit of followthrough in those week u.s. numbers, but probably not enough to bring euro-dollar out of a trench. euro-dollar peaked at 1.15.

we might go back there. francine: what about emerging-market currencies? if you were to choose your top pairing, would it be something with aussie dollar? staynt: overall, i would cautious with currencies linked to china. i think the aussie dollar is linked to china. we are going to get a lot of news out of china. industrial production should be ok. numbers,les, export lending numbers should be all softer. i think that is going to be the focus over the coming week. to the currencies linked china, probably a bit more defensive. some of the e.m. currencies probably will do better. we saw strong performance from the south african rand after they retained their rating.

we are seeing quite a strong ruble that of the will continue assuming oil prices stay sustained. probably you will see a little trade, but again, watch china. there could be some negative news. chaigneau,incent global head of rates and foreign exchange and strategy at societe generale. cindy coming up, including sterling slumps after voters favor a leave vote. we talk brexit with nigel lawson and stephen kinnock. then, the eurosceptic movement is poised to become the italian capital's first female mayor. weakest job saw the numbers in almost six years. will the fed chair trying to rebuild momentum when she speaks later today? ♪

francine: let's bring back vincent chaigneau. more talk on central banks. the plate of politicians and the plate of some of the world central banks. thank you for sticking around. let's move to japan. this is the graphic. this is a circle where governor kuroda decided to going to negative rates.

what ensued was the realization from the markets that there are so many side effects. in blue is the 30-year. really, they've just been going under and under in terms of that yield. this is a similar picture to what happened in treasuries. are we in a bubble for bonds in general? i would not call it a bubble. this is something we discussed in our fixed income outlook on friday. in the new normal environment, it is not a bubble. japan's jgb whether might be a bubble. i think the collapsing yields started late last year when the boj extended and cut rates, forcing investors further up the curve. our understanding is that they are now looking at fiscal policy to provide support to the economy.

they tightened fiscal policy and the economy is suffering badly. francine: this is a consumption tax you are talking about. vincent: also, they will probably deliver fiscal stimulus on top of that. that is a u-turn on the fiscal side. the tighter fiscal policy, looser monetary policy, was positive for jgb's. i think that had a global impact on bonds. if you see a looser fiscal policy and nothing more from the jgb side, rate cut or potentially that becomes less positive. we are a bit concerned. francine: are you concerned that europe becomes japan? they have a problem that we might start having here in europe. they have a currency problem

that we may start to have the same. are we looking at 20 years of secular stagnation? vincent: i was in japan and that is pretty much what they say out there. they say, we have seen it all. it is not exactly the same thing. europe actually is a bright spot in terms of growth. not that the economy is brilliant, but it is strong enough. francine: not in all countries. the problem is you have a three-speed europe and deflation is a real coern. vincent: that is true. overall, i'm say -- i would say economic conditions in europe are stronger. the question is for how long. the political situation is where reading. on that matter, i believe the u.k. referendum will be very

important. that will be probably creating some tensions within europe. i'm talking about -- [indiscernible] the political situation is a matter of concern. the low potential growth, the lack of reforms, that is a concern. near-term, i would say europe he's a bright spot in terms of growth. francine: so you are more worried about japan than on europe as a whole. who has the most to lose? vincent: on the political front, europe is clearly most exposed to shock. on the policy front, i think japan is exposed. in terms of the results of abenomics, i think people are questioning how effective that is.

people are questioning how much more the boj can do. now they are going to use fiscal policy. near-term, potentially a positive impact on the economy. longer-term, when debt already gdp, high, about 240% of and the government wants to spend more, somebody will have to pay for that. that tends to make consumers and corporations cautious. francine: are we going to see negative rates in the u.s. or helicopter money in japan first? is not our call that we will see negative rates in the u.s. we see the end of that cycle coming in late 2018. there's another two years before the fed reverses policy. helicopter money in japan is a distinct possibility.

what we will see is fiscal expansion. expenses arerate lower than expected. they have some cash reserves. i don't think we need helicopter money just get in japan, but in the coming 18 months, this is a possibility. chaigneau,incent global head of rates and foreign exchange strategy at societe generale. pound cominge under pressure as the latest polls show voters backing a brexit. we debate the pros and cons with nigel lawson and stephen kinnock. then we have to look at the markets. we see oil on the rise. we see commodities driven higher. raw materials stocks leading the advance after the u.s. jobs data on friday crushed speculation that the fed and jen in yemen will raise -- and janet yellen will raise interest rates by july. that is all coming up on "the pulse" next.

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francine: welcome back to "the " live from bloomberg's european headquarters in london. the pound fell to a three-week low after polls suggested more britain's favorite a brexit. sterling weekend against all major peers after a survey found voters would choose to leave the european union. 41% said they would vote remain. the race has tightened in the past weeks. primeile, former british

minister john major and london mayor boris johnson traded blows. >> i think what they have done now, is to feed to the british people a whole galaxy of inaccurate and untrue information. what they have not done is tell us what would be the position if we were to vote to leave. i think it would be chaotic and damaging and let people who would suffer the most would be the everyday man and woman in the street. >> many aspects of our life are now controlled from abroad, from brussels, in a way that i think is anti-democratic. campaign,rt of this coming to the second big charge against us, that we are talking too much about immigration, for question ofa democracy. at the moment, we have no power

to control our immigration. francine: let's debate this further. with us is labor mp stephen kinnock, and nigel lawson joining us from westminster. thank you so much for joining us. lord lawson, why is there a sudden gain in momentum for the leave campaign? nigel: i have no idea. i think it is going to be very close. we shall see. certainly, i very much hope the people of britain will vote on to leave theune european union. it is right that we should become a self governing democracy. it is also the best thing for the economy. francine: state your case, stephen kinnock. mr. jonathan: i -- stephen: i think it is disappointing that there is this focus on the blue on blue war.

one would be better is if we had a proper discussion about what a post brexit u.k. would look like. doneeave campaign has nothing to help us understand that. the 2 millionith british people living outside the u.k.? it has become a little bit of a false debate. i call it only half a referendum. francine: do you rebuke accusations that the problem with your side is that everything is negative? stephen: i think there's a great opportunity for us to win on the 23rd of june. presidency british coming in 2017. let's set up a positive view. the u.k. has been 114, 1 foot out. let's make a positive and

engaged place. i'm not one of those who sort of stands up and says, you have is done to us. not at all. we are at the negotiating table. let's win on the 23rd, but then let's have a complete re-imagination of our relationship with the eu. turkeye: lord lawson, could join the eu, but it is not joining the eu. the propensity of the british government is that turkey should join the european union. that is the position of the european union. you, i haven't put up any posters. of the leaven until march, and then i took on a temporary period until the cabinet ministers could come out

publicly, which they are doing. economy, i do have the advantage of having been a years,y minister for most of them as chancellor of the exchequer. i have no doubt the economy would do better outside the european union. this is a question of whether you want this country to be a self-governing democracy or whether you want to be part of the united states of europe. francine: lord lawson, can i come back to this poster, i don't understand why you would put something out. nigel: i didn't set out. francine: it is a lie, isn't it? nigel: it is not a lie. it would be a lie to deny it. the policy of the european union, which is strongly supported by the united kingdom david cameron, the prime

minister, says he's going to pave the way to brussels. the policy is that turkey should join the european union. that is absolutely clear. to deny it is untrue. francine: i guess when you speak to brussels, you just don't know. there are things that have to be attached to it. it seems to be like something which is just not true. lord lawson -- nigel: it is true. i'm sorry, i'm not accustomed to being called a liar. truth. nothing but the it is the policy of the european union that turkey should become a member. francine: with a lot of if's attached if you don't mind me saying. stephen kinnock, there is an argument about democracy and whether you think the solution is that even if there is a brexit vote, the u.k. cannot go ahead with it. stephen: one of the points on

p, weeignty, i've been an m voted on dozens of different issues. absolutely none of that is coming from brussels. the u.k. has a sovereign parliament. we deal with legislation from the british government. there is legislation that deals with brussels, but i have not had to deal with a single piece of primary legislation coming from brussels. that would be my first point. toncine: what i was relating was that there seems to be some to keepin mps trying britain inside the eu will matter what the vote is. that seems impossible. stephen: i think if there's a vote to leave, we have to respect that in parliament. but we've got no clarity as to what leave actually looks like. i think the constitutional

if we takeentially, the norway model of staying inside the single market, we stay in the single market, but that means you can't do anything about immigration. francine: what you're saying is that if brexit happens, mps will not try to block it. we have to respect the vote to leave, but there has to be a debate about what kind of model we have. i would find it difficult to support a model where we leave the single market. the steel industry, ready much every job in the constituency depends on it. if we leave the single market, the steel industry is finished. the referendum is on inside or outside the eu. eu, there arehe lots of different models for leaving. there are some models that i would find difficult to support. francine: lord lawson, does a

vote for brexit mean that we automatically leave the single market? nigel: it doesn't automatically, but it should. most of the world is not in the single market and most of the world is doing far better economically than most of the single market countries. the idea that the single market is a ticket to prosperity is baloney. the trouble is this little european view. i believe we will do far better outside the single market to control our own borders which we can undo. we will do very well. i don't know whether stephen kinnock ever goes shopping, but if he does, he will see goods from all over the world, from countries which are nowhere near the single market. it is absurd to pretend that unless you are in the single market, you cannot trade in the

single market. baloney. have a relationship that we have that means we can trade steel, cars, whatever it may be, without having to pay tariffs. if we are going to use the word baloney, quite frankly the idea that you could untangle yourself from that relationship without a massive shock to the british economy is for the birds. we can trade with the rest of the world. i'm happy. let's trade with every country that we can. but when you've got a 500 million consumers on your doorstep and you are prepared to walk away from that, i think that is rolling the dice. deeply irresponsible. francine: lord lawson, you just refute basically everything that has come out in terms of the impact on the economy. you think we can be in a

stronger position. nigel: as i said, most of the world is outside the single market. most of the world is doing better economically. as far as the united kingdom is concerned, we do far more trade with the rest of the world than we do with the rest of the european union. nonsense tote suppose that there's any benefit to us from remaining in the single market, given that we would lose control of our borders. lord nigel lawson, thank you so much. stephen kinnock here in the studio. thank you both for joining us for what will be an exciting couple of weeks. up next, a roman protest or sign of the times? she is poised to become the italian capital's first female mayor. we will go live to rome.

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francine: let's get straight to the bloomberg first word news with caroline hyde. caroline: china must improve monetary policy communication to take on a larger role in the global economy. so says u.s. treasury secretary jack lew. talk to thehen you economic policy, there's no question that they understand what they need to do in terms of

having market forces become much more determinative of resource allocation, opening areas to competition internationally as well as domestically. i think the reason the jury is out is, these decisions are not always made by economic policy advisors. caroline: german factory orders declined. demand outside the eurozone slumped. orders are just into seasonal swings and inflation. reading, which is typically volatile, compares with the economist forecast of a drop of 0.5%. hillary clinton has won puerto rico's democratic primary. it leaves her just a few delegates short of clinching her party's nomination, which could be clinched tomorrow, when voters go to the polls in california. global news 24 hours a day

powered by 2400 journalists in more than 150 news bureaus around the world. francine: thank you so much. let's head to the bloomberg with mark barton for your asset check. we had a very busy friday. mark: leaned in. flat, literally, 0.00%. friday, what a shocker. that nonfarm payrolls report showing an increase of 38,000 jobs, the weakest in almost six years. resort companies are top of the leaderboard. the dollar weakened on friday. if the fed doesn't hike rates, that could further weaken the dollar. the big news today in the u.k. is a number of polls showing the remain camp is falling behind. the brexit camp is coming up on ahead in a couple polls.

that is impacting the pound against the dollar, which is falling to a six-week low today. more favor leaving the eu. for itv found 45% would choose to leave compared with 41% picking remain. a separate survey showing 43% for leave versus 41% for remain. the pound has been the barometer throughout this referendum debate. this is sterling implied volatility assessing the implications for movement. this is going back to 2011. we've reached the highest level in six years. volatility is picking up against the hand of the referendum on june 23. the pound is the only currency

falling against the dollar in 2016. this is the function we love to tell you about. lp function, world interest rate probability. june after the weaker than forecast jobs report is at a mere 4%. november 44%,, and december is the first month where we are seeing a probability greater than 50%. i want to change the date. 22% was thethat figure for june. interesting comments from eric rosengren today. he was speaking in helsinki. he's the federal reserve bank of boston president.

he expects conditions to continue improving, making further rate increases appropriate. he says it will be important to forwhether a weak report may proves to be an anomaly. today.ellen speaks the prospects of the weaker dollar are boosting commodities to the highest level since october. speculationng amid that supply cuts will lead to a worsening deficit. it is all about the fed and all about those brexit goals. francine: thank you, mark barton. is ahead in a push to become roams first female mayor. she is leading her closest rival, a member of matteo renzi's democratic party. the two will likely fight a runoff. a victory would hand eurosceptics their biggest blow to date.

let's get to our reporter in rome. the significance of this election is huge. it points to a more extremist way of thinking about europe. >> yes indeed. i think it speaks to the populist surge. movements we've seen in austria and spain and france. for the italians, virginia raggi has been described as a revelation by they usually sober newspaper. francine: 1-wood a rongji raggil -- what would a mayoral administration look like? >> it is a bit of a poisoned chalice and me backfire if she fails to deliver. basically, she is leading in these partial results.

because there say is such a movement against anybody who has been in power, left or right, in rome. francine: and we will find out on june 19. matteo renzi was meant to revitalize. what does this result mean for the prime minister? >> there is speculation that he's losing his magic touch. his candidates of the democratic party are going to be in some runoffs in the leading cities. losing rome, which was led by the democratic party until a short time ago when the mayor had to resign, that is a big blow for renzi nationally. he's looking on to the next big test, which will not be until october. it is a referendum on his plan to try and speed up italian with aent, stabilize it

reform of the upper house of the senate, and the problem is that a negative be pointer toward renzi in that referendum. francine: thank you so much. up next, waiting for janet yellen. the fed chair is going to speak for the first time since that jobs report all but killed the chance of a u.s. read hike. we go to that speech, next. ♪

francine: after friday's jobs report, janet yellen is due to speak in philadelphia today. the low payroll numbers have pushed back the possibility of a rate hike to december. michael mckee joins us from new york. great to have you on the program. how likely is it that janet yellen could surprise the markets? >> there's probably a good chance for people that think it is off the table until december. the fed does want to raise rates. we've heard from a couple members of the fed over the weekend. just this morning, saying they still believe a couple rate increases are appropriate in a gradual way. is question for the fed whether they think it was a bit of a blip in the numbers or

whether this is some new trend for the u.s. economy, slowing down and taking rate hikes off the table. francine: michael, where does the jobs report leaves the hawkish members of the fed? >> they are still out there. just a few minutes ago saying it would still be appropriate to raise rates. they have to make the case that it is a blip and they can point to the fact that wages went up and hours worked did not go down. maybe there is an anomaly in the numbers. francine: michael, thank you so much. michael mckee, our u.s. economics editor live from new york. we will bring you full coverage. you can see the event on the bloomberg with analysis. stay with bloomberg. "surveillance" is next. tom keene joins me from new

york. we will bring you an exclusive interview with former nigerian president goodluck jonathan. that is coming up later on "surveillance." ♪

francine: your move, yellen. the friday move drives down numbers. can she get away with a summer hike? the pound feels the pain. the sterling tumbles and volatility jumps. china must improve monetary policy communication, says jack lew. this is "bloomberg surveillance." tom, look at the u.s. jobs report on friday.