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.

that is what we will be talking about for the next day and the next week. on: absolutely extraordinary friday. i don't know a single person who captured the shock and all before hand.- awe then you go on to the brexit update this weekend. we have a lot to talk about. francine: the markets were surprised a lot in the last 72 hours. >> president g jinping -- she's the chinese president jack lew and john kerry said the countries do not -- >> china and the u.s. need to be in increased communication.

should be acific stage for inclusive cooperation, not an ariz that -- an arena for competition. >> the annual dialogue is taking place today and tomorrow. revelation from the panama papers. set up at least 2800 companies. that is according to the "new york times." exporter's biggest oil is raising prices on most of its deliveries to asia and the u.s. wasofficial selling price increased by $.35 per barrel to $.60 above the regional benchmark. rates are the highest

group rate since 2014. the latest polls suggest more britons favor leaving the european union. 45% say theyd would choose to leave the block. 41% say they would remain. 43%leave campaign is ahead to 41%. the race has tightened in the last week. our -- news 24 hours per day powered by our 2400 journalists around the world. tom: we are going to touch on brexit at length in our next block. data, thethe nuanced changes we have seen? the yields are in.

, stronger euro, weaker dollar. crude, 49.14. on to the next screen, if you would. the durable markets that we saw on friday. yen is 1.0724. stronger yen. weaker sterling against stronger euro. i'm watching the german yields more than anything. the german 10 year yield was stunning. the real threat to go under 0% at some point. francine: actually, on the back of those german yields, we did have some german factory orders declining. this is one of the biggest concerns. declined in april

unexpectedly. this is my data board. favorund -- britain's may exiting the eu -- that is not yet priced in. i want to show you basic resources. ron material stocks -- raw material stocks. ore with it did. gold is up about $30 off the jobs bond. let's go into the bloomberg and try to capture -- we will do this through "surveillance" today. onget out charts on radio bloomberg radio plus. where are we after friday? this is a chart we have shown a bit jillion times -- bajillion times. no rate increase. increase, norate

rate increase, no rate increase. you can see the enthusiasm of the last number of weeks and rollover. i think what is so great about this is the tracking of the belief of finally higher interest rates. we just can't get there. we need more evidence, i would suggest, not only in the u.s., but also in europe. we need more evidence of a little spark and spunk. i know mike mckee is going to come out here later. we have a lot to work on today. yellen at 12:30 new york time today -- arguably, the speech of the month. i hate to say that was brexit, but i'm going to go there. think you arei right. i think she will mention the risks outside. a couple of months ago, the fed was talking about china. now you also have to deal with one of the worst jobs numbers we

have had a net long time. i want to briefly mention something. , andes back to the emotion also what is and what isn't priced in. the pound being hammered as brexit gains traction in the weekend polls. the pound is making an ugly start. blue is thee in one-month implied volatility for sterling and the white is the british pound spot. i want to show you the emotion out there on the markets. markets are reacting to the weaker than expected u.s. jobs report from friday. larry hathaway is with us for the hour. great to have you on the program , as always. that u.s. jobs number was a shocker on friday. what does it mean for the future hike path? larry: this really was. no one expected it. the number was well below even. what it means is that janet

yellen has to address it. the fed has tried to shift the debate of the domestic fundamentals to be data dependent other than focus on things like china or the markets. this is definitely an aberration for them. --blematic is that it is that employment was also weak. my sense is that shortly june is off and the prospect of a july doubtful. we are looking at autumn. francine: autumn, or december? autumn is the u.s. presidential election. larry: if the fed feels the conditions are appropriate, they will move. tom: i want to bring everybody's attention to one of the research notes. rarely do this. this is jpmorgan's research.

this is what you get from robert i'm going to say this is from 5:00 p.m. on friday. ,hey reaffirm a july rate hike but they do it everybody else has said. we are data dependent. why are we so surprised that chair yellen, dennis lockhart are going to wait to see what the data is? what is wrong with that? larry: there is nothing wrong with waiting. inflation remains below the target. there is no reason for the fed to be aggressive, to be in a rush to normalize rate. people fret too much about credibility. their credibility rests on doing the right thing, not on doing things when they are expected to act. it is more likely than not that they will syria information.

they will move later this year and not in july. tom: with the expectation of moves and the gaming and the parlor game, how do you reset as an investor? equity market,nt yields across the board lower. what is your to do list monday after the carnage friday? larry: as an investor, you have to step back. things seem to be in train. inflation expectations moving higher. surprise in the area where market participants will have to watch most closely, the lack of an equity market move. bonds not only downgraded the , butsment of rate hikes they suggest that the economy is weaker than previously thought.

from that perspective, the onus after a very strong rally is on the equity market to try to maintain its position against concerns that global growth may be slowing again. tom: well said. continue with lawrence hathaway. i'm thrilled you are with bloomberg this morning. you stay with us through the morning. atet yellen will speak 12:30. this is the world affairs council in philadelphia. without question, her most important speech of the year. dennis lockhart with michael before that. good morning. ♪

francine: welcome back. ownersgerman factory sought demand for -- saw demand exports -- factory orders decline. 0.5% from a year earlier. retail group is half of the italian food club for $306 million. it is a rare purchase and which will own aompany majority of a football club.

people familiar with the $4.9 korean ipo say a south company family members are embroiled in a bribery probe. hotel lotte had plans to start meeting with investors this week. francine? francine: thank you so much. the pound tumbling this morning, hitting a three-week low. more britons favor exiting the eu. is also still with us. thank you so much for sticking around. talk us through the currency. the currencies are moving on the back of polls that were very close and it seems there is momentum from the leave campaign. >> absolutely. we saw the pound at a seven-year low when the polls were close and then things picked up for a couple of months.

clearly the rally has gone away. this has renewed efforts that brexit may be more likely. the fx market is having to price it. francine: how much do we believe the models. some are saying if brexit happens, it collapses by 50%. eshe: if brexit happens, it is definitely going lower. say it is less clear-cut. people are talking about what the bank of england might do. tom: is there a bet on the market -- off the news desk, the trading desk -- off the news desk in london, use me -- excuse me, is there a that one way or the other on what the pound is

going to do? eshe: i don't think so. people don't want to be too sure one way or the other. they were taken by surprise by the last polls. it is clearly choppy, volatility is really high. that shows the uncertainty and concern in the market about this. tom: we have neil ferguson talking to matt miller. we will do our morning must-read. , theve the ft line chart slope chart, rather. the polarities in england are remarkable. is a guy from texas, the land from polarity, will you explain to our audience how far apart the generations are? suggests the polls, it that people over the age of 65 are much more inclined to vote to leave and the younger voters are much more inclined to vote to remain. the outcome is going to depend

on voter turnout. older people tend to vote as a higher share of their cohort than younger people do. getting young people out to vote will be important if the remain campaign will be -- proves successful. is another full are. london and it's an bronze being more -- environs being pro-remain and the rest of england being anti. scotland, northern ireland, pretty strong pro-remain. wales is a bit more divided. there are a lot of demarcation lines across this. francine: in terms of markets, how do you deal with it?\ do you believe the polls? how do you position yourself? larry: pulling in the u.k. and elsewhere has been very problematic in recent elections. we saw that in the last general election here in the u k we tend to look at market variables.

we look at what betting outcomes will tell you. they tend to be more and the remain cap, but there is slippage right now. there are binary outcomes that make it difficult for traders to position for. volatility buying has been a favorite way to look at this, but even that looks rather spiky. tom: larry hathaway with us. eshe, thank you very much. nelson off our foreign exchange desk. has been most active on speaking on the equity markets and the nation. howard marks of oaktree capital. look for that this morning. howard marks on the equity markets. good morning. ♪

francine: welcome back. this is "surveillance." the conversation focuses on the markets and on monetary policy. tom, we have to talk about yields. we have janet yellen speaking later today. we have been talking about bubbles, how you price things. let's talk to larry hathaway. when you look at yields, they have been suppressed for a very long time. new is going to be the normal. are they in a bubble overall? larry: if you take it long enough time horizon, 10-year treasuries don't make a great deal of sense against economies.

getting from here to there is proving to be difficult, as friday reminded us. we do need to see steady growth of at least 2% in the u.s. economy buttressed by income formation. this is not going to be a debt driven expansion. push the yields higher. we are probably in a trading range again. we are going to be settling in around this level for a period of time. tom: are we expecting too much --francine: are we expecting too much of economies such as europe and the u.s.? economies, once they get closer to full or employment, that is true for the u.s., u.k., germany, and japan -- they will glow -- grow close to their trend. the u.s. is probably close to 2%. below 0.5%.be

we have to get used to these figures. tom: one of the great charts i saw was from standard & poor's global markets and it was on net interest margins. let's go to the chart. this is 10-year and two-year german. it is narrowed down on friday. .arry, i'm sorry this sets up for a disjointed outcome. what is going to be the outcome of we get a -10-year in germany? francine: who wants to buy bonds bondsy: who wants to buy with negative yields? the natural first answer is banks. there are investors who will do that too. you are correct in your premise over some longer horizon, these

are unsustainable levels. we also need to see a restoration of normality in the economies. inflation is too low in the eurozone. growth is too sporadic. financial stress remains relatively acute. francine: thank you so much. larry hathaway stays with us. we will be talking more. speak with the former president of nigeria, good luck jonathan. incumbent said it was his administration that basically said nigeria has no money left. what will his response be to that? ♪

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♪ get america's fastest internet. only from xfinity. tom: good morning, everyone. bloomberg surveillance from backn with francine from holiday. a new york.e

we need to get to our bloomberg first word news. shery: striking a cooperative tone at a meeting. earlier today, alongside and john, shetary says that countries should not fear the agreement. china's land reclamation work in the south china sea. tochina and the u.s. need overase communication asia-pacific affairs. the vast pacific should be a stage for inclusive cooperation, not an arena for competition. shery: the annual dialogue between the u.s. and china is taking place today and tomorrow. the presidential

elections. a 77-year-old wall street veteran and former finance minister has a 1.5 edge over fujimori with about 80% of ballots counted. the leader remains too small for him to declare victory. reiki may become rome firstrsed -- rome's female mayor. she is part of the antiestablishment five-star ultimate. a win would be a blow to the prime minister. he is trying to convince italians that he can make good on his pledge to end years of stagnation. tributes from around the world knownuring in for the man simply as the greatest. muhammad ali was a three-time heavyweight champion of the world. his 90's is transitive -- his

cendedism transi foxing. in a statement, president obama up the world,k and the world is better for it, we are all better for it. he was 74 years old. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. thank you so much. i thought bob costas was absolutely fabulous in taking a lot of people that in the absolute uproar -- it is measurable, the uproar, that muhammad ali caused in the late 1960's and early 1970's. in hindsight, it has been amended and change by a lot of people who were highly critical of him coming around in the years and decades.

think within all of the comment and perspective, for a lot of us, it was about a younger gentleman who change the debate in america. there is no question. his profound social impact was incalculable in the 1960's and 1970's. francine: i spent a lot of the weekend reading up on pieces. there was a beautiful bloomberg view piece talking about mohammed all the taking sides. i encourage all to go and find that bloomberg view piece. onay, an annual dialogue strategic issues. dialogue, of the foreign exchange. chinese intervention in currency markets has not been problematic. >> we need to make sure the commitment and moving in an

more market a determined exchange rate, will stay a firm policy, as there is up and down and then it not become a one-way policy in the future. i think compared to where we ago, wet a few years have seen real progress. bloomberg spoke with beijing.rom great to have you on the program. it was a great interview. was his tone conciliatory, or will china have to do a lot more? iti would not characterize as conciliatory. he's coming into the interview with a lot of views on how china has to get around this. he has seen them more as acting to defend the currency against

depreciation. he said if it were a one-sided attempt, that would worry him. he said the goal here is to have a floating currency and see it going up and down. he will press the counterparts to make sure to see it happen. tom: what is the significance of secretary kerry joining this trip. see toit significant to talk secretaries on this conference? >> they sat next to each other, they talked back to back. they making the point that this is the number one and number two economies of the world. i said to mr. lew, you are bullish -- not bullish, but this is a relationship of necessity. both of them rely for their needs to be constant dialogue between the two countries. secretary lew trying hard to

pass a lot of sanctions on north korea, stepping into secretary kerry space of the. >> i think the question is that the decisions are not always made by economic policy ty deciders. the decisions are highly political in each country. we have less of a sense on whether to follow through. >> a little bit of context. i asked, there has been a lot of criticism on how the chinese government has communicated. by all accounts, you have a good relationship with your counterparts, have they assured you that they have a plan for reform and are not simply acting reflectively? he said most agree on issues like capacity and the currency, but they're not necessarily economists.

francine: thank you so much. you can catch the full interview on bloomberg.com and on the terrible. let's bring in a professor of economics from the london school of economics. with a still is larry hathaway. when you look at the talks that , in thepening interview, will also struck me is a set that china takes on an increasingly large role. does that push away china in making them feel part of the family? >> i think it is actually very constructive. we have seen where the chinese are taking a more active action in the global context and reducing the overcapacity issue. i think the extra note pressure, if you will, will push some domestic reforms. this is what china is seeking to tie atten its hands in the worl.

francine: you know china intimately. what is the one thing that the market or investors, or even newsmakers, get wrong? >> get wrong? there was fears of a hard landing. as we predicted, the government has enough tools to deal with the near-term issues. i think the risk is about the isdit crisis and debt crisis there. will there be a short-term implosion? we think it is unlikely. the one thing that is missing is mounting social tensions. i don't want to under appreciate that. if we think about having to cut jobs, the government is facing restrictions because there is mounting social conflict. dollar-yengo to the chart. this is a classic chart, a long chart.

this is a recent effort by the chinese government to manage currency with a lot of pundits suggesting and strategists suggesting that we will go weaker. you talk about a nation in transition. ink about the success of transition? takethink it means it will a few years time. we're talking about structuring away from industrialization towards consumption. that is not something that the near-term can solve. the state sector is so strong dominating a model where investment went into these industries. it will take some time to reverse that. we talked about unemployment issues. cutting down the sectors will take time. we're talking about demographic issues. we are not talking about the next year or two years. restructuring, i fear, people

will be overly optimistic about how that will happen. tom: is the underpinning of the still what they call the labor arbitrage? will we still see the migration from rural to selected city sites? does that change within the transition that you see ? >> it will be hard to bet on a labor model going forward. urbanization is only really halfway done. we will continue to see both of migration. let's not forget that the chinese government is still trying to develop satellite cities around key cities. the economic model will switch away from labor to capital. francine: we understand that or trust that to be the truth? >> that they concern for the market is really around the cheap capital movement. the other form of that which is

that capital came in and is now seeking an exit. we can see that in the weakness of the currency. all of those things can be managed. the real question is whether they will be managed. the energy a capital account is not trivial. from that perspective, their concerns whether that can lead to dislocations. are the chinese working within normal economics? are they working within the template that we know? or, is it absolutely original? it is semi-original because of the dominant sector particulare and the circumstances. the traditional middle gap does not apply to china.

you have a completely new generation which is unlike anything we have seen. the spending power there in the preferences for risk, that kind of stuff is going to change china. i would be thinking about the intergenerational transfers of power. a completely open-minded generation that has studied abroad. i would focus on the new generation. tom: thank you so much. coming up in the next hour of surveillance, a conversation on cheap money. what it means for mergers and acquisitions. -- janet yellen speaks at 12:30 does morning. ♪

tom: maybe the most important speech of the year for janet yellen. 12:00 special coverage with janet yellen, her speech in philadelphia. before that, a conversation with daniel lockhart. i will call him a centrist, and always interesting guy. more interesting after what we saw on friday. if we could explain to our global audience what it was like an 8:31 we saw those numbers, it was just extraordinary. a the numbers were certainly shock. since we have seen yields and futures price the fed out until december -- tom: you go to december? >> that is what the market thinks. we are to getting pushback from bankers already.

tom: she is a hawk? >> she is a hot, and he is -- hawk, and he is a dove. they're basically saying the same thing that a rate increase is still on the table. the question is when. that is something we will put to dennis lockhart when we talked to him. a lot depends on whether you think the friday number was a blip. there are anomalies telling whether it was a blitz or not. all of those people left the labor force. take a look at the number of people who are discouraged, no longer looking for work. that number fell a lot in may. it is now down to the lowest number since 2008. what is going on with the economy? maybe what we are getting is something we have not seen in a

long time, volatility in the jobs numbers. go back to 1990. here is a snapshot. when the economy was perhaps its strongest in decades -- you can see the volatility. the blue line is the average 2000 we have been getting. jobs the next00 month, then it goes up the next month. francine: what does that mean? does that mean that overall the economy is not stable, and therefore, janet yellen will have to hold off? >> she will probably say she will hold off in june. we have not seen this kind of followed till the. maybe we have to wait and see what is going on with the economy. maybe we have to wait until july. plus, exit is coming up -- brexit is coming up. francine: she needs to adjust

this. when you look at that. plot -- the dot plot, the market only believes janet yellen? >> that is true. her weight is more than others, perhaps. what she has had to say is inconsistent with the labor .arket adp, for example, did not herald this kind of decline in employment growth. on the other hand, nonmanufacturing was much weaker than expected. it also did. from that perspective, i think the conclusion is they have to wait for validation. speak -- ak on the speech like today, she has to address what they are thinking about. tom: the granularity's of the fed, the actual data day t aks, have you ever seen

parlor game like we are in now? aren't they supposed to wait for the data to come in? >> the world is changing. we have ways of measuring how we think they are feeling. they are under a lot of pressure to drive the markets. that is another consideration. does janet yellen want to lead the impression that the fed is being led around the market? tom: exactly. we are at fault for this as well. i put the said at fault. we are all trying to game -- are they going to wait for the next jobs report? the numberntioned that came out on friday. labor reported in short supply. tom: michael mckee with dennis lockhart and the important yellen speech. this is in the 9:00 hour, the president of the atlanta fed.

janet yellen at 12:00 noon. the morning. ♪

the morning, everyone.

bloomberg surveillance from london and new york on economics and finance investment and international relations, brexit, the jobs report, janet yellen. the list goes on and on. a busy monday, picking up the pre-of what we saw on friday. now, the bloomberg is this flash. shery: russia's second-largest oil producers said that profits first quarter. lukoil said that net income for the quarter was $651 million. russian producers have an partially buffered against crude which has reduced costs. nestle is expanding the online offerings in china, wagering on e-commerce. the company has unveiled 67 products new to the chinese tmall on alibaba's

platform. that is the bloomberg business flash. francine: larry hathaway is still with us. we want to talk commodities. of course a lot of these raw material stocks are dancing because of what we think the fed will or will not do. we are talking to the nature and , how muchn president does this have to do with seller of his administration to diversify away from oil? >> there are two basic problems. oil prices did collapse. the state of alaska is making tough decisions now. the second is trying to diversify, to your question. there are very few examples of commodity producers whose economies are dominated by a single economy whose economies are able to diversify.

yes, nigeria could have done more, setting up a rainy day fund, trying to find new growth opportunities in higher ends of petroleum would be another example of trying to advance things. divers indication is very tough for oil producers for -- diversification is very tough for oil producers for a whole host of reasons. tom: with the challenges, and all the sudden, geopolitical assessmente is your of where oil could go? is $60 per barrel possible? >> $60 per barrel is not out of the question. it is highly predictable given the investment that has happened aer the past year-you and half. where there is any impairment in the world, prices jump up to

$60. it can also be a tryst if the dollar continues to strengthen. demand could push prices higher in the near term. i think $50 is about right. these are outliers when we talk about plus 60. tom: thank you so much. us a good briefing for the start of the week. we will continue on recalibrating after the friday jobs report. risk-freefor the return -- our on the new york streets searching for it. bloomberg surveillance. ♪

♪ tom: this morning, market still,

will they adapt to the jobs report? janet yellen speaks at 12:00. and, secretary kerry and secretary lew travel to beijing. it was a brexit weekend. june 23 beckons. good morning, everyone. monday, june 6. i am tom keene. francine the kwok, back from -- aqua, back from brexit. speeche: janet yellen's today may offer a bit of clarity. we don't know if june is on the table for her directly. she has no reason to put it on the table now. the june jobs report in the

first week of july as well. let's get to first word news. shery: thank you. of top u.s.eting and chinese officials. earlier today, alongside jack lew and john kerry, it was said that the two countries should not fear disagreement. you reference a major point of contention, the work in the south chinese see. >> the china and the u.s. need to increase communication. the vast pacific should we a stage of increasing cooperation, not an arena for competition. the annual dialogue between the u.s. and china is taking place today and tomorrow. the latest polls adjust that more britain's favorite leaving the european union.

block.or leaving the meanwhile, a poll shows that the leave campaign is ahead. y the stakeors cam could prevail. hillary clinton, in order record , yesterday. aways just a few delegates from clinching the nomination. meanwhile, the campaign of bernie sanders is denying claims pollingsought fewer places in puerto rico. he is also criticizing the way the island's primary was run, calling get shoddy. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus

around the world. i am shery ahn. tom: thank you. let's get to the data check with our two esteemed guests. we know they have rebounded it. oil elevated. resilient equity markets. the yen was a 106 handle. all in all, stronger again. weaker sterling is the hallmark through all of the global morning. i am watching german yield more than anything. they have ground lower since friday. francine? francine: we had a bit of disappointing numbers from germany. my pole position, this is after we had polls saying it is not a

given that they will stay in the eu. again, after the jobs data on friday that they would raise interest rates this month. that has had an impact on the stoxx 600 resources. you can see crude oil. bloombergve a headline out. 43% sayshows that remain, 40% say leave. i guess that is how you get down to a 143 handle of sterling. andill come back with bob marshall and look at that in a minute. tell me about your bloomberg screen this morning. francine: i basically benchmarked the british pound. hathaway lastvery time. if you're going to trade on pound, because of the brexit

concern, you would probably trade volatility. on the online poll that you were mentioning, showing that 43% remain and 48% leave, this is according to icm. showss a report that people have to go and vote. it is also the number of people who vote who will determine whether they stay in the eu or not. denshineshall shot i is from columbia it university. we will look at the state of wall street. has been wonderful ins and the sizing economics as well. what will you listen for from janet yellen? >> in one sense, i think this makes it a little easier for the fed. going into the employment number

last week, there was real pressure building for them to move in june. i think there will be some who argue they should not go right in front of the brexit phone. this basically gives them a breather. the weak employment number, assumesuch everyone they will go down in june. it will give them time to assess what happened in the brexit vote. for it gives further time free money. lower for longer. is your world so distorted that you begin to use the bubble word with how cheap money is? >> there is no doubt that last year had that word in the lexicon. there was a bubble. this year is different. downyear, mna is considerably. free money is not a fever passed for conviction or confidence. tom: do you agree with that? this is a huge deal. >> i think the fact that the fed

has not been able to get the numbers to justify moving rates higher does create a bit of uncertainty. he would hope that this would be a little clearer now. francine: what has exactly changed? you said that last year we were talking about the bubble, and now, no longer. you mentioned mma. central banks have been putting so much money out there, the situation should begin worse, not better. said at of all, as i moment ago, free money is a symptom of a problem. i don't mean to sound the i'm schooling. tire global economy, but we get the economy we deserve. we have become addicted to free money. it is only a matter of time that free money or cheap money has to play out. the point in has

which people no longer know they want to buy the money at that price. the other factors we have our geopolitical, political -- an uncertain world now -- antitrust is back -- you are seeing a lot of deals getting wiped out of the ledger. take for example, pfizer. it is gone. you also have some increased foreign skepticism. whole raft of a issues in addition to the problemal -- inevitable that cheap capital is a symptom, not a driver. withine: do you agree that? do we get the monetary policy that we deserve? or is it monetary policy that has been too accommodating? >> i think if there's anyone becoming lazy, it is fiscal

policy. that is such an omission in this cycle. way too dependent on monetary policy. early on, that served the global economy really well and created a bit of animal spirits, as we were talking about. that has really run its course. you are starting to hear now from the imf and other places that there has been excessive relied on monetary policy and it is time to broaden out the stimulus, yet, no one seems to be doing that. it is very difficult to see that with the brexit vote, the u.s. election coming up. we are coming to a more sluggish and uncertain u.s. economy. read every panel -- mary meeker's powerpoint this weekend.

there is one panel in there on germany, absolutely remarkable. it isis not clear that political motivation in either area to step up on the fiscal side. so much focused on budget restraint has been taking place over the last decade or so. no one really wants to step up. no one really has a plan. you don't have a plan of what could you done. tom: what does that mean for the currency markets? >> i think we are reasonably range bound. we always had a big surprise on friday. we got the dollar back down 1.5%-2%. thegs were probably 110 on euro and dollar. tom: we want to make clear, the sterling on the move after the brexit toll reaches saw at the

top of the hour. sterling.143-176 on two speakers today, janet yellen speaking at noon in philadelphia. the world will stop and finance on that speech. before that, michael mckee and dennis lockhart. that in the 9:00 hour. stay with us, bloomberg surveillance. ♪

francine: you're looking at live pictures over millennium bridge looking over st. paul's cathedral. at the moment, the pound dropping after polls showing more britons favoring leaving the eu.

is reallycampaign gaining momentum. let's get to the bloomberg news flash. factory workers fell in april after demands outside of the eurozone slumped. orders fell 2% from the previous month when they revised. the typical volatile reading compares with forecast of a drop of half a percent. -- tencent creating holdings increasing size of syndicated loan. asia's biggest internet company was said to be likely to raise as much as $4.4 billion with the

loan. another roadblock. billion ipo. people familiar with the matter say the south korean family and company arethe dev involved in an ipo. that is the bloomberg business flash. francine: thank you so much. the u.s. secretaries of state and the treasury are in beijing today meeting with chinese counterparts meeting on strategic issues. at the top of the thai law, foreign exchange. chinese intervention in the currency market has not been problematic. >> we need to make sure that the commitment to moving in an orderly way stay a firm policy as there are up-and-down pressure and that it not become

a one-way policy in the future. just ad to where we were few years ago, we have seen real progress. francine: the treasury secretary also saying that china must improve communication as it takes an increasingly larger role in the global economy. let's get back to our guests in new york. if you look at china and the relationship between the u.s. and china, it has gotten much better in recent years. will they find a good working relationship when it comes to monetary policy? >> i think there are quest from those on monetary policy is a little better dialogue on what is going on. certainly, we had a problem back in august. i think the markets are starting to calm down. i think they are starting to

look at the fact that dollar china is trading along with general movements on the dollar. what we saw on friday is the chinese currency getting much stronger as the dollar got weaker. i think the markets are coming managingthat china is a basket of currencies, not just the dollar. i think that is a healthy development. dollar are always centered. let's bring this up now. uan.yen-you a stronger yen recently. does china want to regress back to .07 or .08? exchangek that is an rate that is much more of a concern for japan the china. i think china once the currency

to come off in line with other currencies. in other words, the chinese currency had held with the dollar for a long time. suddenly, when the dollar started to appreciate, that created big problems for china. i think they are probably comfortable with the exchange rate now. what they really have to do is not let the chinese currency appreciate with the dollar if the dollar goes back up in the second half of the year. i think it will. i think the fed will be tightening. i think we will see the chinese currency weakened further against the dollar so does not lose the advantage against the yen. tom: it centers back on janet yellen, the central banker of the world. we will have a nice about here on mergers and acquisitions. i saw him down in soho, looking for the risk-free return, a great restaurant. coming up, howard marks on the

equity market. always opinionated and smart. today, later, yellen and lockhart. bloomberg surveillance.

tom: bloomberg surveillance. francine in london. eene in new york. a u.k. poll out moments ago. it is not cameron friendly. this is sterling. sterling kaizen dollar.

cable 140. down we go. remains ahead. here is the ugliness of the morning after a weekend poll weakness.w sterling we dovetail this into matt miller's wonderful interview. writing got a storm in "the times of london," all sorts of paying-- the young higher taxes and receiving less. young britons are right to oppose brexit because they, not pensioners, are the ones who will pick up the tab if the u.k. votes to leave. he will be on surveillance. marshall flying to london today. why are you going to london? >> we have business all the time

in london. it is our most important market outside the u.s. secondly, i will have dinner tonight with george searls who runs something called the institute on new economic thinking, of which i am a member. we will be talking about the brexit problem. tom: they are talking right now, are they? >> they are. i think they're talking about uncertainty. this was a very uncertain weekend between the brexit vote and the market numbers. i think they're struggling to figure out where and go from here. we think that july is still on the table for the fed. movey be nice for them to in july and get away from the notion that they can only move when there is a scheduled press conference. data, a lot depends on the going forward. tom: it is after the brexit vote. just that simple. july,ne: if you look at

there is abrexit -- huge problem, even if you are a politician, who do you believe. if you are on the sideline, how do you trust the polls? they have been so wrong in the past. >> most of the polls of the past have been saying that they will stay in the eu. the polls adjusting that they leave our new. i may be wrong about this. my sons, who are in their 20's, say i am wrong. i think that is a substantial chance that it is going to leave and i don't think diamonds comments about leaving london scare the population. they're looking at their own pocketbook. this is a momentum game. the more goes on, the more britons will say, it costs us money to be in the eu.

francine: if brexit happens, this is an antiestablishment vote which we may see across the world. happeningly, that is around the world. more of a nationalistic sense to election prophecies around the world. i think this is very nationalistic. it is the u.k. wanted to begin sovereignty over a bunch of issues. i think there is a financial issue but also an independence and sovereignty issue. they may have had enough of regulations out of vessels. i think it will be a difficult vote. tom: we will come back. coming up on bloomberg radio, richard ofn, and pimco. good morning. ♪

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-- in asian. why the u.k. about should remain in the european union. >> the upside is very clear. people need to make that judgment. we will retain our special relationship with the u.k. whichever way they go. seems fairly straightforward to me. is the economically stronger place for the u.k. to be. improve must communication as it takes on a roll in the global economy. the german president says he will stand down after one term. elections off the season early by allowing anglo merkel to name the next head of state.

this is a mainly ceremonial post. his successor will be chosen in february by a federal assembly. this makes it unlikely a populist will win the post. more revelations from the documents known as the panama papers. the law firm had at least 2400 u.s. based clients. they set up 2800 companies on their behalf. that's according to the new york times which reports the companies were established in the virgin islands, panama, and other places that specialize in hiding wealth. i am shery ahn. thanks so much. this is what we're watching for the rest of the week. janet yellen will address the world affairs council in philadelphia starting at 12:30 p.m. eastern.

tomorrow, we are following the u.s. primaries held in california, new mexico, south dakota. draghi opensmario up the brussels forum. it will be a busy week. janet will yellen will probably deliver the most important speech of the month. i don't know if she will give us any clues or the clues that markets are looking for. two-year is down to a new low, -0.54%. that's part of the great distortion that's out there. he deals with the distortion and what it means in terms of speculation. he just has to put up with it. he has decades of experience in decades and acquisitions. you can see him in season four of game of thrones.

marshall, it's wonderful to have you. the distortion is a mess. how does m&a adapt? marshall: it's not new. of what'stinuation been going on since the financial crisis. it's a new normal. it is not normal. m&a is not like other financial markets. it is illiquid and conviction driven. it's not a capital markets driven market. when you see a pullback like factor,'s not just one when you see it, that tells you that lower conviction, lower confidence about the future. tom: i will show how artificial his world is. this is the inflation-adjusted two-year act in 1977.

we have positive interest rates for a long time. we had a long amount of negative yields. when you do an xl spreadsheet for pfizer or name the transaction, do you have a clue what to use? marshall: if you can't find a risky rate today -- tom: did jack trainer just -- way, where is it? people are assuming risk-free rates somewhere near zero. it really becomes almost irrelevant. the rates that matter are more term rates where people are making their decisions, five-year rates in tenure rates and the like. is it slowingg capital flows.

i think that's an important development this year. we're just not seen the capital flow. there was some at the beginning of the year. money was flowing into the dollar. the assumption was the fed would raise rates. things of cross-border flows. it's created a currency market driven by old term factors like the current account surpluses we see in the eurozone and japan. we don't to the capital flows to offset those things. environment in which relative rates of been squeezed to such low levels that it's not driving things as much as it used to. francine: we've also seen a resurgence of these megamergers that had gone away largely in the last five or six years. i know some them have been stopped by regulators. can we make megamergers work? of course we can and

large companies will engage in them. ayer is buying up monsanto. this is a very large deal. baker hughes in halliburton may or may not happen. the government is protesting that when picking you see a fair amount of friction in the anthem merger in the health care sector. they're not getting along so well on getting through antitrust. tom: is synergy now the same as it was 10 years ago? bob: there are two types of synergy. there are sales and costs. a deal has to increase the topline and give you an opportunity to reduce costs. if that is true, you have something called synergy. when you get into companies that are so large they can become hard to manage through that process. large collections of human

beings don't believe the way we think they are going to. tom: really? he just defined children in the family. large collection of human beings. francine: we speak with the former president of nigeria. treasuryalk about his and his administration. we will talk about if the country can diverse five. we are heading for a new day low. watch for technical support. ♪

francine: welcome back to "surveillance." tom keene is in new york. we have a very special interview.

finance, nigeria's minister will be speaking in london. africa's biggest economy is on the verge of recession. they are desperate for funding. joining this is the former nigerian president. thank you so much for joining this. the economy is a very state. liable for what happened under your administration? goodluck jonathan: no. depends.my drop, itoil prices affects the economy in the country. potential government revenue , the oil prices come down and especially now because of

activities. timeis not the first government has experienced a drop in oil prices. what happened to the rainy day fund? i just want to go through numbers. it was down to $2 billion from $20 billion? goodluck jonathan: there is a misconception about the excess crude account. a number of reports said that it was up for a rainy day. when i was there, i tried to make a special fund. it will not be easy for you to take. governor fore

the governors would insist there is no place in our laws to say the federal government should take excess. they always insist that it be brought. like when there was pressure from the governors. francine: your successor says he inherited an economy with an empty treasury. goodluck jonathan: that is not true. there is no way. time, we bailed out the states. that is not possible. sometimes, we will make it look

so bad. it wasn't that bad. you regret not diverse of diversifying nigeria? --dluck jonathan: that was theagriculture, it was best. that is why my minister of agriculture is now the president of the african bank. this is because of what he did in agriculture. francine: now we're looking at

recession. goodluck jonathan: if somebody said that we did not diversify, that is not true. he did very well in the agriculture sector. that we did not , you needch investors. if somebody said we did not -- rsify, francine: let me ask you another question. you talked about perception there is a perception among nigerians that corruption is rampant. what you say to those critics? there is thethan:

collapse. there was military intervention. when this collapsed, it was because of corruption. one little parties taking power from another. that is one issue that we faced. company --y the country, that there was no corruption. yes, there has been corruption. curtailry well to corruption. i presentedis piece today.

we clean up. they areorruption -- accusing of corruption. worried youe you won't come under investigation for corruption? goodluck jonathan: no. i've been investigated. investigations are going on. francine: they won't find anything bad? i allow theathan: government to do what is supposed to do. i don't want to mix comments on that. definitely not. it is not proper. story will be

chronicled. i don't want to say this or that. it is not a good practice. i just less office -- left office. i want to help do what is good for the country. tom: thank you so much for joining us. this is the former president of nigeria. we will be right pack and we will look at the markets. ♪

tom: we would like to spend an hour on the forex report. readinga little bit of bound after the carnage on friday. 0.7 eight.ng is this is off the news of 48 minutes ago of another brexit poll. francine: coming up shortly is bloomberg with david westin. but you have a show today?

david: it's the aftermath of the stunning job numbers on friday. inare going to have people to talk about what comes next. we have two very special guests. he will give us the broader picture of where we are in the credit cycle and at 9:00, people have dennis lockhart. that is on bloomberg radio and television. tom: thank you so much. robert and marshall with us. have 200 42 years experience on wall street between them. we can bring out the single best when this is in honor of robert goodman was there. this is a fabulous chart of employment to population. anything.more than

we are not where we were a decade or two ago. bob: we are a lot older. it really speaks to the dependency ratio as we go forward. there will be more and more people dependent upon government payments, social security funded by fewer and fewer people. that's going to make the physical challenges much greater. of the it speaks to some issues we have in the economy right now. there is a difficulty in finding employees. i think that's just the function of demand. as begin into this part of the cycle, the unemployment rate is down to 4.7%. i think we are underestimating the supply side is constricting growth. tom: we saw jamie dimon on a

stage last week. i can imagine him on stage with jack lew talking to jpmorgan employees. i can't get there. but this finance do to help the two americas? the problem we have is a problem of misleading statistics. , wey this as a democrat don't have 5% unemployment except by the way we choose to talk about unemployment. we have several points less employed americans in addition to unemployment. art laffer has been making this point. we have underemployment. reale do jobs in ether capabilities and we have under compensation. the minimum wage debate is a symptom of a larger problem, people don't make enough money.

ford paid his employees so they can afford to buy his cars. we need to train political leaders to be. tom: i wonder how janet yellen will address her word slack. this is from the united kingdom. i was thinking 1952 or 1955 you wonder if she will bring up slack today. francine: that goes to this great chart. you may be looking at jobs numbers that will be much more difficult to predict like the 1990's. do we need to get used to a much more volatile environment? how do central banks look at data? bob: i do know if we are measuring things wrong. i do think that seasonality has become much more difficult. this residual weakness in gdp

growth in the first quarter, it's ironic that it showing up in employment data and other economic statistics. markets areeneral going to struggle in interpreting this data as we get closer to capacity in the economy. retirees continue to grow. that reduces the labor force. jobet this mismatch between needs and job supplies. it's a much more difficult environment as we have taken up a lot of the slack in areas where we need more employees. tom: very quickly here, bob. up we go with our latest strong dollar. want to make clear, you are suggesting when everything sorts out this dollar will advance? bob: i think we will advance

further. we have seen a lower high in the previous cycle. i think we got very extended back in the 80's. we got overextended at the end of the 90's. had major capital flow into the u.s. in real terms now, it's not just the level of dollars that has been the problem. look at the speed of that. that has been the difficulty. tom: thank you so much. i really appreciate it. continue on television. later this morning, janet yellen and dennis lockhart. good morning. ♪

e david: what clues will janet

yellen given her speech today?

financial stocks are selling off on friday. the future of low interest rates tarnished the appeal of bank stocks. the dollar's demise, job portal says the biggest dollar drop until december. other central banks around the world adjust. david: welcome to bloomberg . i am here with pimm fox and amanda lang. program sincerst the stunning jobs reports. mm: the global market has been adjusting based on that one report.