anna: china's factory gauge inflation slows, but consumer price gains remain subdued, leaving the central bank going for more easing. a lot to be scared about. george osborne on the brexit threat, exactly two weeks away from the referendum. draghi president mario speaks at the brussels for him. we are there live talking to the european commission vice president, that is later in this program. ♪ a very warm welcome everybody.

6:00from london, just past in the morning here this thursday. the markets taking a pause, perhaps on the global stock rally we talked about in recent sessions. let us focus in on the data coming up of the region over in asia, despite the fact that a number of markets are closed. this is the chinese number, declining of course for four still negative. that is what the uptick on the chinese ppi chart shows. overnight showing the deflationary threat from china is substantially diminished. we will talk to our guests about that. let us turn up the risk radar and talk about the broad foreign exchange story. really about dollar weakness, but today is little different. we have a new zealand dollar up why one went for a percent, surging to the highest level in a year. no change interest rates, but an upbeat commentary from the central bank to delay further

monetary easing. the korean juan in there we saw a big move, currently flat against the move. an unexpected rate hike, despite trade concerned. we have the u.s. 10 year yield note, we hit a two-month low on the 10 year yield in the last 24 hours. record demand from in direct auctions. we talked about term premium. manus will be back to talk about that. up by 4/10 ofe, 1%. we have a longest run of gains in some six weeks. we see more fires in canada taking the price higher, u.s. prices decreasing the moving things around for us. let us in the bloomberg first word news. stephen engle joins us. stephen: good morning. china's consumer prices rose less than expected in may, climbing just 2% in may from a year earlier.

factory deflation falls from april, even seeing deflationary trend now continuing in china for 51 straight months. the bank of korea has unexpectedly cut the benchmark interest rates to a new record low. and lowered the seven-day repurchase rate i-25 basis points to 1.25%. seeing increased downside risks to growth. only one of 18 analysts bloomberg survey predicted a cut today. earlier the kiwi jumped to a 12 month high as new zealand central banks held steady, but further easing may be required to keep inflation within the middle of the target range. u.k. chancellor has hit back at claims he is scaremongering in his campaign to keep britain and the european union. george osborne said there is a lot to be scared about if a brexit takes place. he told the bbc that if we vote to leave, then we lose control. if we lose control of the

economy, we lose control of everything. people should be under no illusions. two palestinian men have been four israelised after opening fire in tel aviv. it is the first major terrorist attack since january. two gunmen have been arrested with one in serious condition in hospital. they will step up presence in tel aviv in the wake of the shooting. donald trump has distanced himself from his own fundraising refusingof $1 billion, to commit to collecting even half that amount. he now says his campaign does not need much money to win the white house. instead, he says he will rely on his own star power to earn free media exposure. ubs is a limiting some management positions in the u.s. wealth unit, reducing the number of financial advisors recruiting from competitors. the bank says the headcount reduction will mostly hit middle

and senior managers, including some at the offices in new jersey and new york. ubs declined to provide a specific number of job cuts. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more on the bloomberg tocco. top . anna: david english in hong kong standing by with what the markets are doing. some of them are closed. david: yes, here in hong kong we are close. china and taiwan has dragon boat day. but the story today, chances are, and we have a few hours left in the trade, that today will be the end to the recent rally. near session lows down 1/5 of 1%. momentum never quite picked up from where the u.s. left off. s&p closing short of an all-time high.

and a lot of and investors a bit wary, looking at the group of stocks in southeast asia, emerging asia and other words, and evaluations here across the bridge at 17.2 times, one of the favorites parts for investors, seeing a lot of foreign money getting into the market. especially after the abhorrent jobs number on friday. even then, we are seeing this either little bit. dollar-yen is the big story, near session lows, the index fell further to a five-week low now. we are into asian trade for the most part. and that is really the story here. we have bits and pieces of data. machine orders were disappointing in japan. talking about inflation numbers out of china. but that is another way of looking at. emerging markets little bit higher, but i just showed you they are basically have. 225 driving everything

lower, first time in three days we see substantial decline there on the japanese stock. usa: david english joining from hong kong. let us join the conversation with jim mccaughan, great to have you on the program. i want to start with the chinese data we have had. my new show of the data -- the new show of the data of the inflationary forces in china. many people talk about the pricing number out of china, which has been of course -451 months now. they say this is one of the big headaches they are dealing with. because they have been exporting deflation. we had this chart that shows we are still in deflation, the factory gate. but not as much as we were. is this a good news story for global central banks and investors? jim: i think we have to get used to a bit of deflation because of technology. that is the reason why prices are coming down. production, a lot

of good reasons why in the supply side of the economy. also on the demand side, the products that we are now buying have much better product quality and more functionality than before. and a lot of price erosion going on in the world economy. anna: it was not all about oil, just a temporary thing associated with oil prices. this is something that will be a headache, dealing with this new challenge trying to create central banks to come. should give up on it. i don't think inflation is something easy to create in the technological environment we are in. the sort of thing that is going on at the micro level, you know if you have a car that you get now, compared to 10 years ago, there are all kinds of systems to stop damage, whether it is backing into things in the supermarket carpark or keeping on the highway. the systems will do those things, with prevent damage,

which means there are less repairs, which is nominal gdp. that is not necessarily bad. just reducing the cost of ownership, which is classic deflation beard i think the world economy has systemic deflation because of the of limitation of digital technology. if i were a central banker, i would try not to worry about this graph. i would try to look at real measures of what real economic activity actually is. and perhaps focus a bit on nominal gdp, as well as on rl. anna: a lot of central banks have the inflation target. is it time to rethink? jim: i think so. part of the problem for the central banks is that they have all been given too much to do with monetary policy. if you think about the successful recipe for improving an economy right now, what the u.s. did after the financial crisis included structural reforms on bank capital, for example. it included a fiscal stimulus, as well as a monetary stimulus. japan and europe are trying to

do it all with only one tool, only monetary stimulus. and that actually is the fundamental problem, i believe. rather than necessarily you get the systemic deflation or not. anna: where does that leave you or investments than? we have this fascinating set of circumstances in the last couple of months or so, where it seems that everything is a buy,. . gold rallying because people are nervous about central banks, at the same time stocks rallying. it is not the looking at the assets that are down, we have a great chart that shows how this has been brought into the stark relief over recent days. in particular, around the weakness in u.s. data. jim: that is true. there has been a huge liquidity whom really since the bottom in february. that think that indiscriminate movement of markets is basically annoying, making a rational investment strategy have to loan out and

really look at the relative valuation. if i am investing for the next five years, what happened the last two months does not really matter to me that much. whereas what really does matter is all the relative movements over a year or two in the major markets. and i would suggest for example that the u.s. recovery is not over, in spite of last week's jobs data. and i would suggest that it is still worth buying u.s. equities, if they have setbacks. maybe today is not the day. but there will be opportunities. nothing the u.s. equities remain my preferred market on the setbacks. memberscebook board saying they see the government bonds, are you still getting into that market? i have a chart here that shows what he is talking about. billionaire investor peter seale, are you staying away? jim: i would be a little bit more nuanced than that. i would suggest that the technology deflation argument i

suggested, together with demographics, means you will continue to have a structural excess of savings over investment in the world economy. that will tend to keep equilibrium interest rates, regardless of central banks, at very low lows. i suspect the one and a half 2% 10 year is probably here for a while, i suspect a good number of years. it has been your five or six years already. i think we ought to get used to it. bubble ise may be a the third or so of developed market government bonds that are on negative rates. that may very well be somewhat unsustainable. and that is because of the policy imbalance i mentioned earlier. because they are trying to do too much with monetary policy. anna: it is not the new normal. not that new anymore. thank you very much. jim state with us on the program. here are some your highlights for the day ahead. 8:00 u.k. time, mario draghi speaks at the brussels economic forum.

and there will be trade data out from the u.k. shocking payroll numbers, initial jobless claims out of the u.s. stay with bloomberg. it is 7:00 u.k. time. we will be speaking with the u.k. prime minister, live there , next. ♪

anna: welcome back. it is 1:16 in the afternoon in hong kong. in asiathe markets closed today. be aware of that for the asian equity session. let us get your bloomberg is the/. here is stephen. stephen: thanks, anna. chinese regulars could be about to drop the last potential obstacle to the ab inbev sab

miller acquisition. people familiar with the matter say the ministry of commerce is close to approving the deal, after the company agreed to divest the maker of the world's top-selling brand. local sellers reportedly told the ministry they do not object to the takeover. approval for the transactions could come before the end of the month. nike says it is sticking with maria sharapova despite her being given, a two-year ban for a performance-enhancing substance. they had suspended ties with the star after failing a drug test. they say she has been using a drug for years, and did not notice it was on the banned list in january. nike said she did not intentionally break the rules, and is appealing the ban, resuming the relationship. tesla make it batteries for the energy unit from samsung. ceo elon musk revealed on twitter that the shares rose on

the news. home energy provides for utilities and homes. george soros has become more involved in the family office, according to a person familiar with the matter, they say the billionaire investor is concern about the outlook for the global economy. and the risk that a large market shifts that may be at hand. a spokesman for george soros declined to comment. the film adaptation for the world of warcraft game is raking it in at the box office in china. the movie took in almost $40 million on opening day, making it the biggest debut on the mainland this year. the billionaires legendary entertainment produced the film, based on online game with a devoted fan base in china, but it may not generate the same buzz in the u.s. some are predicting it will only make about $22 million on it stateside debut. and that is your bloomberg business flash. anna? anna: thanks very much, stephen.

joining us from hong kong. back to europe, the european commission meets at the economic forum in brussels. mario draghi addresses the forum a day after the central bank started its corporate bond buying program. matt miller is in brussels with more details. good to see you there. what can we expect to hear from the commissioners, two weeks ahead of the crucial brexit vote? matt: that is definitely the first line of questioning i will have for a number of the commissioners. we are going to talk to multiple commissioners and the director today., marco buti, they have to make an argument for britain to stay in. they have to hold of the european union together. a lot of these commissioners were responsible for the enlargement in the first place. so it will be very interesting two-year what they think about the vote, the most recent polls, and what they think that the

european union should be doing about this. but i am also going to be asking them a number of other questions, involving policy around europe. there is a lot going on right now that is really going to be an historic summit. anna: and greece still on the agenda, matt? matt: yeah, absolutely. greece is a crucial moment right now. many of the commissioners have made statement in the past few days that they are confident that the next step in greece's bailout rescue will be completed. but it has not yet. greece still has to approve some key measures before he gets the next 10 billion euro bailout. and a lot of these commissioners that we are going to be talking ,o today, valdis dombrovskis has been responsible for negotiating together with the imf and greek leaders. interesting to know when this will happen. anna: what are we expected to

hear from mario draghi? will he be surprised or not the amount of his ability he had here at bloomberg about what the ecb and the banks around europe were buying yesterday? matt: well, i doubt he will be surprised, because he knows that we are connected to traders in the bond market, first and foremost. that is bloomberg's job. we will hear out in the m open market. we will hear how interesting commissioners react to what mario draghi says. buying investment-grade, or at least not rated investment-grade by all of the credit rating agencies. traded as junk by s&p and moody's. and the deutsche bank note, and economist saying that deutsche bank is not supporting the

european union enough, not supporting britain's staying in. and that he is actually lost something there. a lot of controversy surrounding this move, and of course negative interest rates. and that is one of the lines of questioning's i will have for the commissioners today. anna: matt miller, a busy day ahead for him and everybody in brussels. jim mccaughan is still with us in the studio. jim, it was fascinating watching the ecb, rather than national central banks out there buying corporate bonds, everybody wondering what they will buy. wideninghope you have, qe to really deliver benefits to the european economy? jim: i think it is marginal. i think you're at the benefit, gone from diminishing returns to perhaps close to zero returns. and that is because of the imbalance in policy. i think, as i talked to european

political commentators and politicians, to me the interesting thing is structural reform is what the germans want to do. it is what the northern europeans fall in line with, things like improving the working of the labor market, improving the working of the labor system through capital infusions. and the spaniards have done quite well in this. they have seen a pickup in the economy. and i think that is the gl. if you do a bit of structural reform along the lines, that the germans in particular are urging in europe, perhaps following that, ease up on fiscal policy a bit, which the germans are less prepared to do. but perhaps the germans, french, and italian want to do. if you had a bit of both, you have a better policy. i feel about pessimistic until you get that. anna: the data has been perhaps moving in the right direction out of europe, particularly in the first quarter of this year. but you still think the recession to be looming?

jim: unless they can get the policy straight. and of course with brexit, that would be a lot of uncertainty on trade. and a trade is the driver of much of economic growth. if you saw a brexit leading to impediments to trade in the year or so after the vote, if that happens, that is what could tip into recession. europe-wide, not just in the u.k.. anna: we will talk more the next part of the show about that subject, about the eu referendum. i want to show you this chart, which we were looking at during the break, analysts getting optimistic on european profit. what you make of this, earning upgrades over taking downgrades for the first time in a year? some positive sentiment and vibes coming around european corporate's. jim: it is definitely a bottoming out of sentiment. look at the way the graph was in the earlier months. at the beginning of the year,

that was a very big preponderance of downgrade over upgrade. and all this is saying to me that the endless collectively think they are not pessimistic enough. and i do not see this as a very bullish indicator yet. ifould prove to be wrong, you do not get the disruption to trade i am afraid of, if you get more of a balance policy. that is what needs to be watched. signs of structural reform, fiscal easing, a remain vote, that will be very positive for europe, relative to others. but unless all of those things happen, i suspect european equities remain on strength. anna: but you're are not giving up on european equity holdings? jim: not at all. one of the things about the european market, it is a very interesting market. companies globally and strong industries, very strong export machines, particularly the german economy.

france with luxury goods as well. it is a great market for stock selection beard but i suspect the equities will not pay off well, unless policy aligns a very positive step. anna: we will keep watching the macro and the policy change. are you buying in europe? what interests you? jim: we have a number of different equity groups, and the process, i would just summarize it by saying that opportunities in some of these attractive european companies. and i mentioned some of them, the exporters, the global firms based in europe. that is where we are releasing some pretty good value around our different things. anna: jim mccaughan, stays with us on the program. up next, a lot to be scared about. that is what the u.k. chancellor had to say. back at claims he is scaremongering in the remain campaign. what he has to say yesterday.

the deadline to register to vote in the eu referendum as actually been extended. this is a vote for remain. might we see that surrounding the vote of june 23? we will talk brexit, when we come back. ♪

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welcome back. x: 30 in london. manus: just after 9:30 in dubai. welcome back to countdown. let us get straight to stephen engle with the first word news. stephen: thanks, manus. china's consumer prices rose less than expected in may, climbing just 2% from a year earlier. factory deflation narrowed, as producer prices falling from april. even so, the deflationary trend has now continued 451 consecutive months. the bank of korea has unexpectedly cut benchmark

interest rates to a new record low. it lowered the seven-date 5%.urchase rate to 2. only one of 18 analysts bloomberg surveyed predicted a cut today. earlier, the key we dropped to a 12 month high, as the central bank held a study. but further easing may be required to keep inflation within the middle of the target range. the u.k. chancellor has hit back at claims he is scaremongering in his campaign to keep britain in the european union. george osborne said there is a lot to be scared about if a brexit takes place. he told the bbc's andrew neil that if we vote to leave, we lose control. if we lose control of the economy, we lose control of everything. people should be under no illusions. two palestinian men have killed four israelis after opening fire in a tel aviv shopping area.

it is the first major terrorist attack in the city since january. the gunmen have been arrested, with one in a serious condition in hospital. police say the will step up presence in tel aviv in the wake of the shooting. donald trump has distance himself from his own fundraising estimate of $1 billion, refusing to commit to collecting even half that amount. he now says his campaign does not need much money to win the white house. instead, he says he will rely on his own start b power to earn free media exposure. ubs is illuminating some management positions, reducing the number of recruiting competitors. the bank says the headcount reduction will mostly hit middle and your managers, including some at the offices in new jersey and new york. aey declined to provide specific number. global news 24 hours a day powered by 2400 journalists in

around the50 bureaus world. you can find more on the bloomberg at top . anna: stephen, in hong kong. oil and metals lead commodities higher, as the fed will hold off on a rate hike until later in the year. keeping a lid on the dollar. nejra has been pouring over the details. she joins us now. nejra: certainly a good day for commodities. we are seeing oil gaining for a fourth day, wdi rising from the highest closing in 10 months. that is after a fall after a third week, after a new wildfire in canada. oil is on the longest run of games since april. we are also seeing metals rise, i am tracking copper, but think is of the highest. some of that is on the china data, the weaker dollar certainly helping as well. looking at asian stocks, we are actually seeing these fall from a six-week high.

markets in china and hong kong and taiwan are shut for holiday. but we are seeing losses overall, particularly in japanese stocks. energy stocks one of only the industries gaining, not surprising. i want to quickly show you the s&p 500. of course it is within a whisker of the all-time high it hit back on may 23 of 2015. still at the highest in 10 months. was ll-time high of course -- and finally, just want to show you the key we. a number of things moving, not least about a retreating. but the new zealand dollar gaining the most, hitting that one year high after the central bank left a key rate unchanged. thank you very much. let us talk little bit about the u.k. back at chancellor hit claims he is scaremongering to keep the britain in the euro may cap.

george osborne said there is a lot to be scared about. he told the bbc's andrew neil that if we vote to leave, the we lose control. if we lose control of the economy, then we lose control of everything. people should be under no illusions. manus: meanwhile, the former prime minister tony blair says he expects britain to vote to stay in the european union. he spoke to bloomberg's editor in chief, john mike. tony: i do think it is a decision with seismic consequences, and i cannot believe that people will shuffle this one off. and i think that we will get a substantially higher turnout in the general election. is stillim mccaughan with us. jim, i am almost up on brexit. where do i get my tin hat, to protect myself, my portfolio, my

risk? jim: gosh, that is a tough one, manus. do what you do in any risk though, which is diversify make sure you have assets that are not particularly impacted by the risk. so if you are in europe, in the u.k., and your portfolio has a than youtry bias, might just ease up a bit on that. you have probably done it already. but if you have not, you should be looking really at diverse occasion. i think in the event of a brexit, i would expect the u.s. to be seen as the main safe harbor. i know that the u.s. trade will be impacted, by anything that impacts trade with europe. but nevertheless, i would think that you would see a bit of a shift back towards the dollar, back towards u.s. assets. it has been one of the phenomena of this year, moving against the dollar as it weakens. and i think a brexit vote, if it happens, and i still think it may not, but if you get brexit,

i think the u.s. would be the market to be in. anna: we are all of course hanging on the latest polls as they come out. jim, looking at the betting odds, a chart from bloomberg tracking the odds. average possibility of a brexit, the implied betting odds that that gives you. this showing you how to the month of may the risk of a brexit was seen as decreasing. then spiking up at the beginning of this month, then coming down again. what kind of odds, what kind of likelihood do you attach to a brexit? jim: i think 30% probability is about right. i think a lot will depend on turnout. because young people do not want to exit their european union. the young people in britain, like everywhere else, talking about 30 and under perhaps, their are global people. they relate to other societies, as rapidly as they do to their own. older people, who are a bit more thinking back to perhaps even

days of empire or days of britain on its own world power, perhaps are not. the older people are more worried about the multicultural impact of immigration. so i think the turnout will be key. because of course younger people tend not to vote if they are given the chance. and i think in this vote, hopefully they will rally. because that would be what would make that 30% not happen. anna: interesting to see how the deadline has been extended, with that very point in mind. i'm going tojim, show you a graphic. jamie dimon has 8 billion reason why his supporting. this is a graphic of the american bank. and what they earn. this is the percentage of operating income that come from the u.k. up there neare 100%. you are looking at 8 billion, dwarfing germany.

this is the risk really, isn't it? in terms of risk assets? jim: it certainly would be not so good for the banking system. but you know, this is a problem for europe, too. what that graph tells you in part, is that the wholesale credit creation in europe is very dependent on the activities of global banks based in london. london is a very dominant financial center for the whole of europe. britain votes for brexit, that would rather be like the u.s. having toronto as the dominant global center. you know, it is just not going to happen. so i think over time, the position of london would be eroded by trade restriction. and that would be bad for the banks. i think you can take that from jamie's graph. but it would be bad for wholesale credit creation in is why ahich i think brexit would be pretty negative for europe as a whole. anna: and with that in mind, help us contextualize how

negative a brexit to be taken i markets. how much volatility we might see, because we see finance ministers all over the world now citing this from indonesia, to india, south korea, u.s. fed all setting this is a risk they are watching, in a way they would not today. jim: the trouble with that is that we would not know what would happen after a brexit though. there is a lot of speculation. nobody really knows how the politics would play out. was certainly in the near term, for the reasons you just described, liquidity injections by central banks in the aftermath of the vote. but what we really have to look for is the signs of trade negotiations, about how free the british access to the single market will be. looking forward, what it will cost, and how not only tariffs might adjust, and iteris are pretty low if you're in the tw

wto, but how products might? here is a sensitive one. those are set eu-why. if they went off in a different direction, that could actually make off the exit ability of u.k. cars in europe a lot less than it was. and that could affect the jobs. and that is a sort of thing you have to watch for. but i think in the near term, the market will be not too bad because of the liquidity injection. but it would have to look for the signs as to whether the access to single market would be as unfettered as some would hope. anna: very sensible points. of principle, ceo global investments joining us in the studio. manus: anna, breaking news here. buy a stake ino super cell at $9 billion.

this is quite a sizable stake, softbank is actually pairing declines, $9 billion stake in super cell. so that is certainly having m&a back on the front. softbank in talks to sell the majority in super cell to tencent. softbank coming off the low of the day. is still down 4/10 of 1%. $9 billion deal, we like a deal. back to you. anna: let's talk emerging markets. emerging markets have rallied in the last week, as job data on the fed rate rise, and manus you have a chart on the hour on this very subject. manus: i have, indy. i'm having a bit of a technical glitch. i will hand back to you while i sort that out. you do that. you and jim -- anna: we will just chat.

jim mccaughan is still with us. while manus reaches around for his chart, we have seen a resurgence and many asset classes. but the risk of a recession in recent weeks. actually, at the time we thought the fed might hike in the summer, and since then, too. which i thought was interesting. what you make of emerging markets? jim: i think a lot of it has to do with the continuation of very low rates in the u.s. a feeling that we may not even get a rate rise this summer, that we may wait until the fall. i think that is what is leading to perhaps a bit of an improvement in sentiment. but to me, the real worry looking at europe and emerging markets is the sheer level of debt. and if you look at the debt level in the chinese economy, it has gone up in the last five years by about 100% of gdp. people was a do not worry, it is not government debt.

it is not wholesale direct. anna: and it could be. it could ben: because it is the government that owns it through state owned enterprises. the debt levels in china are quite worrying. that is true of some other emerging markets, like brazil. the debt levels are the things to look out for. he will ultimately slow the economy, as credit expansion becomes less easy. bang onim, absolutely the money. as far as the equities right of the equation, technology is now on my site. i have to tell you, $1 billion has flowed into emerging-market equities over the last two days alone. take a look at this. the volatility dropping to a low, that is the blue line at the bottom. not,er that is standing or that is still a moot point. volatility is dropping. crude is up this morning. the probability of the fed going in june is down to zero. july is at 18%. and the markets, the pe of the

index,erging-market 12.3. trading at a significant discount. and my question to you is fairly straightforward. things are usually undervalued for a very good reason. msci trading at a discount to the world, is that a proposition? and with the fed on hold, taking out a bigger exposure to equity? jim: i think if you manage large portfolios or indeed businesses, you really cannot manage according to the short-term fluctuations in the market. having said that, the graph you showed, manus, really shows the effect of improving liquidity, with the continuation of a very low dollar to debt capital. that is essentially what is going on there. oil of course is a big sentiment driver, for many emerging markets. oil, look at that chart on

and they have had kind of everything aligned for a strong oil market. you have a disruption in canada and nigeria. you had some positive numbers, in the sense that u.s. inventory of oil is run down. you have the weakening dollar. there have been a number of things going on. and like you, i just recently travel in the middle east. i was there last week. my usual context there would give me a stear in the oil price were friendly as mystified as i was why it has gone so so much of. anna: we will keep an eye on it. 53.66 on brent, as we speak. jim, great to see you. jim mccaughan, joining us on countdown this morning. up next, mario draghi doing whatever it takes. the ecb president speaks of the brussels economic forum, kicking off the corporate bond program. we talked to the belgium capital

director general at the european commission, that is coming up next. ♪

manus: it is 1:50 a.m. in new york. what a beautiful shot. futures indicated down 1/8 of 1% this thursday morning. now, let us get the brussels now. the european commission is hosting structural reform and job creation. bloomberg's matt miller joins us with the director general of economic affairs at the european commission, marcu buti. matt: thank you very much. , thankre with marco buti you for joining us this morning. such an exciting day. we will be talking about what

europe can do to improve the job situation, productivity, to improve the attractiveness to all the member states. and also, what it can do to better cope with downturn. what is your outlook for the european economy? marco: the outlook is like the weather today. it will be windy, reasonably fine, a bit of risk. we have a projection of moderate recovery, which continues this year and next year. we have good data for the first quarter. and it is surprisingly good. euro as a whole, the last quarter of last year, the situation is better. what is important i think is not i think weta for q1, had a growth of 0.6. but i think the rest will be strong, and we have seen that. and the confirmation of good

investment prospects is absolutely key for the conservation of the recovery. matt: i wouldn't talk about what you are doing at commission to improve the investment prospects. but first, the risk. first and foremost, two weeks ahead of the brexit vote, is at the biggest risk? marco: it is an important risk. we published a report two weeks ago. we identified known economic risks, as the main one for the consolidation of the recovery. so the u.k. referendum is certainly one. i think there is widespread agreement on that, prices on the migrant side is also another one. it is important that there is a strong political response. and also, a reduction in the overall policy and political uncertainty, to give the right prospects for investment. matt: it would seem that the migrant crisis and the referendum in the u.k. provide

the stormy is whether that we have had in europe, since greece. marco: i think that is correct. we hope there is something to discuss, in two week's time. and we help that the response, the union as a whole, relays on the refugee question to be correct. if that is the case, i think it is fundamental to the recovery, that it has been for quite a while. matt: do you have a contingency plan though in place, in case things do not go as you like on june 23? marco: there is no contingency plan. we look forward to the positive results of the u.k. referendum. ready to provide the policy response that is needed in the short, medium, and long-term. talk of the

positive stimulus that you are trying to encourage with your member states. would you encourage the northern states to do more fiscal stimulus, and the southern states to do more structural reforms? and how do you actually do that? what is the mechanics of doing that? start, it is a three-pronged strategy, endorsed by the g-20. so basically, the continuation of monetary stimulus. the ecb is doing his job, very well. fiscal policy, which is more competitive. and a structural reform. this is the three-pronged approach. what we are doing in europe, we are recommending to member states, and we have provided these recommendations on the 18th of may to deliver on the policy, we cannot leave mr. draghi alone. missiles in the message. policy comeiscal

from a distant direction. there is a high risk. but i think for them, they can extract more from fiscal policy, in terms of recomposition of public finance. so, prioritize public investments. do less inefficient public spending. but they cannot afford to increase the debt risk. there are others with more fiscal policies, they can and use the emphasis on public investment. but it also helps dental growth moving forward. matt: let me finally asked about mario draghi. he will be speaking coming up in about an hour. what you expect a year from mario draghi? marco: the topic of the brussels economic forum, i am expecting mario draghi to emphasize the importance of structural reform,

and the fact that there is an important domination of what i say is the monetary policy with very low interest rate environments that we have now, and the structural reform. this is the best environment to make sure it is delivered. it is providing a strong economic stimulus source, to compensate some of the cost of structural reform in the short term. members should see the opportunity of the environment year, but also apply the employment.osting i think that is the name of the game. also, to recover in europe, overall. matt: mr. director general, thank you so much. marco buti. anna: fascinating conversation there by the fiscal and structural things. do not leave mario draghi on his own. up next on the program, we are

back in brussels. this time, with the vice president of the commission, valdis dombrovskis:. brexit in asked about europe. you just heard no contingency plan for europe, in case of a brexit. we will hear what valdis dombrovskis has to say. ♪

backed inflation

slows but consumer gains rose. there is a lot to be scared about. george osborne's acceptance of the brexit threat. and ecb president mario draghi speaks of the forum this morning.

welcome to "countdown." anna: i am anna edwards in london. a warm welcome to the program. let's get straight to the european equity futures. what do they tell us? it looks as if we will have a slight weakness to the thursday morning session. byo stocks will be weaker 0.2%. the ftse could be lower by rent 0.3%. wti -- let's check out the risk radar. we have the new zealand dollar hitting one year highs. the central bank expecting inflation to accelerate.

the's almost burnishing idea of any further rate cuts to come from them. the dollar is down for the third day in a row. the new zealand yields trumping the u.s.. won in the middle of the screen there. you've also got the bank of korea cutting rates. only goldman sachs predicted that. the currency bounce. we've had the longest run of gains in six weeks. wildfires.lso new that is adding to the brent story. how are the bombs looking -- bonds looking? anna: the tenure in the u.s., germany, and japan on the screen. we're below that 1.7 level. we saw two-month lows being touched on the u.s. 10 year yield. record demand and yesterday's auction from indirect bidders.

termlked a lot about premium being at the lowest since the early 1960's. really coming as a result of that jobs report and the constant reevaluation of whether the fed will be able to hike rates anymore. stephen engle joins us with the bloomberg first word news. roseina's consumer prices less than expected in may climbing 2% from a year earlier. factory deflation narrowed with producer prices falling 2.8% from 3.4% in april. the deflationary trend has now continued for 51 consecutive months. korea hasf unexpectedly cut its benchmark interest rate to a new record low. it's lower the repurchase rate saying its points sees the increased downside risk to grow. analystsof 18

protected a cut today. earlier we jumped to a 12 month high at new zealand's central bank. but further easing may be required to keep inflation in the middle of the target range. the u.k. chancellor has hit back and claims he is scaremongering. george osborne said there is a lot to be scared about if brexit takes place. andrew neil, if we vote to leave, we lose control. if we lose control of the economy, then we lose control of everything. two palestinian men have killed four is release after opening fire in the tel aviv shopping area. it's the first major terror attack since january. the gunmen have been arrested. they say they will step up their presence in tel aviv in the wake of the shooting. news 24 hours a day

powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . anna: let's cross back to matt miller. he is in brussels at the brussels economic forum. >> it is a pleasure to talk to you. let me ask you about the stormy weather we're looking at here in europe. with two weeks to go until the referendum in the u.k. and with the immigration problems that continue to mount and with the negative interest rate policy and expanded qe, do you think this is the most difficult time for europe since the greek crisis? click certainly we face a number of challenges economically speaking. we can see the economy is

continuing to recover and we are discussing what needs to be done to strengthen the recovery but of course a number of challenges are facing us. of course we hope for a positive outcome. frommuch more positive economic and a political point of view if the u.k. stays in the eu. it's quite a challenging environment. >> everyone hoping that britain stays in the eu, at least here in brussels but it looks like from the polls that there is a one in four or one and three chance that they exit. don't you have to have a >> the european commission has made the

conclusionsnd the are quite clear. now the choice is with the british people we hope for a positive result and we are willing to continue to work with the u.k. within the eu and to implement the agreement. allow them too campaign for staying in. >> what do you expect to do if they leave. are you worried about a contagion. in thatow what happens scenario is that you start negotiations which take several years on a proper exit. so nothing changes from day one today too. geographicwitch locations and ask you about

what's going on in greece. you been incredibly involved there. how long until you are going to ok the release of the 7.5 billion euros to greece? reviewuld say the first is basically finishing some outstanding issues to be clarified within days. if not today after this they can start national procedures. case, this had to happen in the mid-months or so. >> to you feel like this agreement is a viable long-term solution, a sustainable solution for greece? 3.5% of gdpch for

with their budget? do you think it is only a short-term band-aid? review,n the first greece has adopted a series of measures which will allow greece to reach a target of 7.5% of gdp by 2018 and the european commission's assessment is that with a packet of measures already adopted by greece the target will be reis and also with the program being on track we also expect greece to return to the economic growth in the second half of the year. >> we will hear from mario draghi today. his qe measures have done a lot to push down the interest rate and help the more successful countries in the eu with their debt issues. it seems like greece would benefit the most from qe for debt purchases. ecb support that

direction? >> there are certain conditions which are set for member states. like never states having investment-grade rating and also economic adjustment programs on track. greece tost thing for be eligible is to have a program on track. this is about to happen. -- tually helpfululd surely be for the imf and the european commission if the ecb were able to purchase greek debt. wouldn't that brighten up the outlook? the first thing that greece needs to do is to have their program on track.

then we can talk about next steps. >> you think it is a likely possibility in the coming days and weeks? >> as a conclusion of the review and the reimbursement, yes. >> what are you doing to make it more tractive, to promote growth and productivity? are you encouraging states that are able to to spend more money not to leave mario draghi alone? >> to strengthen economic growth and europe we have set three economic priorities. public andilitate private investment. second to continue with structural reforms to modernize our economies and third to continue with responsible fiscal policies. on the fiscal part one can say overall the situation is

employing budget deficits and public debts on ever to going down in the euro area but there are still countries in excessive deficits which need to continue their adjustment efforts. but for those countries that , they're advised to use the fiscal space even to stimulate investments. >> are you able to bring more free market policies into place? things is one of the which we are also looking how to employ the business and how to promote -- how to develop capital markets. so indeed this is very much on our agenda. >> a really appreciate your time today.

.nna, back to you >> great interview with matt miller there. he is in brussels speaking with the european commission we just had. mario draghi's speech is in brussels at 8:00 a.m. london time with more to come.

anna: welcome back. this is "countdown. ." bitftse will be a little lower at the start of the trading day. >> thank you, anna. chinese regulators could be about to drop the last potential obstacle to the index acquisition of miller for more

than $100 billion. people familiar with the matter say the ministry of commerce is close to approving the deal. local brewers report of the told the ministry they do not object to take over. approvals for both could come before the end of the month. four has upgraded its -- quattro has upgraded its -- cointreau has upgraded its forecast for higher profit. the world's largest offshore wind farm operator sold 17.4% of its shares at $36 each which gives the data utility which is transforming itself into a renewable energy giant a value of $15.1 billion.

in a deal that may value the finished game maker at $9 billion. they operate china's most popular messaging services and have been expanding their gains business while foss bank has been selling assets to strengthen its balance sheet. two of japan's leading carmakers have announced more than a million recalls this morning. honda is recalling another 783,000 vehicles due to the to airbags.rbags -- takata our bloomberg business flash. anna: great to have you here, ewan, with us this morning.

let's start the conversation with a big picture, what are you buying story. so many asset classes have an rallying in recent weeks and it seems to have been fairly indiscriminate. you haven't seen people get into golden out of something else. you're seeing gold rally at the same time at stocks rally. what is it you are buying and not buying right now. obviously the failure of the fed to go with the program and pick rates up is big monetary stimulus to the global economy. the fed and central banks globally are really trying to influence upwards the price of the risk-free asset. massivelymashup -- expensive. it has 10 year yields at six or so basis points. of course that drives people into other assets. it's perfectly understandable

why everything is rallying together and i would express a little bit of caution as to outright relying on market data to do the job and we are focusing on being discerning. many of our propositions involve relative value strategies. rather than just buying the market and enjoying the monetary stimulus ride. manus: where is that biggest value proposition for you. by the skin of our teeth we are nearly at a record high in the u.s. but did that in eight sessions. the united rally in states the positive number has been down the past 11 sessions. where is that value proposition of the fed is so hesitant? >> it's not especially the u.s.. recently ofictims

the nonfarm payroll number. it is one number against many other metrics showing there is some self-sustaining recovery. they been on record saying they raisehe fed would help animal spirits. i think we're in a situation where failure to do anything other than provide lower interest rates and qe type programs is having perverse effects. i do think at some stage we will get a nonfarm payroll number and the fed will eventually lead local interest-rate tire. i am more in favor of euros zone assets. we been sonic to see some economic growth weather is another round of quantitative zerog to come and almost prospect of interest rates being able to go up in the medium-term future.

anna: pulled up the work function which says there is no a 0% chance of markets factoring in a rate hike in june. when the you think or how soon roughly we will see that reigniting of animal spirits from the fed? >> i'm not known for my specialism on market timing. i don't think the market is this a severally wrong in the next couple of meetings in the fed does seem to be very cautious and nervous about letting the dollar rally. everyone seems to be on a bit of a path to devaluation. it sooner than we are likely to see in europe and japan. manus: there is a wonderful story on bloomberg that the

ecb's monetary amphetamine is propelling gold to the best price since 1999. preparing for a turbulent world whether it is trump or brexit. gold, what i'm trying to get at is are you hard asset focused? is that where i should be focus in terms of gold and commodities in this turbulent world? >> i think gold and precious metals generally do offer attractions and you cannot simply print more of them to stimulate growth. i think physical and real assets are quite interesting as well. in a negative world environment we are a major commercial property owner and i cannot imagine the day where i pay tenants to stay in my property.

i think there will be a positive yield from real estate as far as i can see. so real assets with sensible income do have an appeal over the artificially expensive managed assets. anna: does that apply to my next charter? i have here been happening in government and bond markets. is there a bubbling government bond view? you'vee real assets and told us that a number of occasions. peter thiel tells us how he sees a bubble in government bonds and what this chart points to. >> government bonds are held at levels that virtually guarantee negative real yields for investors. emerging market bonds are less so. you have the prospect of a positive real yield. emerging market governments are issuing debt levels that are

flatter because of the development bubble but they have an advantage over the developed market which i think is attractive to people buying it for other purposes. >> you have read my mind. you are channeling my inner thoughts on emerging markets. $1 billion went in in the past two days. i know these markets move in volatile reaction. they are almost in sync with oil. but the assets are up for the fifth day in a row and it says these boys and girls are at a discount. pe valuations on the e.m. are at a discount to developed markets. is it a value proposition revalue trap? >> a think it is a proposition at a much more attractive proposition than many opportunities in the developed market. fear thatople have a

eventuallydollar so when they do raise rates, that will be very bad for emerging markets and that has been the dynamic that whenever every have seen recently a reduction in the expected level of interest rate hikes from the fed it is beneficial to emerging markets. that has been the correlation. but in my view that's because historically emerging markets often had excessive levels of extol -- external dollar-denominated debt. particularly in the case of china, chinese companies had a lot of dollar debt. i do not think that dynamic is necessarily in existence anymore . people are fearing a correlation that probably will not be there in the future. for: that is it "countdown."

futures are suggesting european equity markets will be a little bit weaker at the start of the european trading day. it's a little bit gloomy to start your day in london. ♪ get ready for the rio olympic games

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move." iome to "on the am guy johnson. over in brussels this morning and here is what the pair of us are watching. the countdown to draghi. the ecb president speaks. the corporate bond does whatever it inks. and the global easing by continue says the bank of korea surprises with a rate reduction and new zealand's