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 reserve bank

says it may do more. is china next? referendum two weeks away, the u.k. housing demand drops at its fastest pace since 2008. threatsbrexit undermining the foundation? we are around 30 minutes away from the european oaken but we also have this coming up in brussels by mario draghi. what are we listening for? asking the vice president of the european commission what he expected to and heom mario draghi says he thinks the ecb will urge structural reform, especially in the southern mediterranean countries well urging more fiscal stimulus from northern governments. what was a surprise to me this morning was that the director general said they have no contingency plan here at the

european commission for annex it from the european union. i thought it was quite amazing so optimisticll that this vote will go over for the remain cap that they do not seem to have -- they do not seem to want to let on that they are even thinking about the possibility of an exit. guy: i'm sure that they are but nevertheless europe's plan is never admit anything until you absolutely have to and when you have to you muggle through with a cobble together plan. 's "whatever it takes" is symptomatic of that. we will find a way we will figure it out we will get around the corner and we will make it happen. does it work? i don't know. that will come back to you

throughout the morning. we will talk a lot about what is happening in brussels. mario draghi at 8:00 a.m. london time just after the market open is when we will be talking to him. let's talk about where we think european equity markets are going to go. you look at the dollar and you figure out where the assets are going. let's take a look at what we think is happening here. the ftse 100 is down by 0.3%. it is a thursday and i need to check the ftse 100. it is a similar story across the continent. there are a number of interesting trades out there this morning. i do not often look at the crossroads between the kiwi dollar and the korean won at my producer insisted i did this morning. let's look at the kiwi versus the u.s. dollar up by nearly 2%

this morning. koreans surprising us the other way. not a massive move in the way you would've thought given the size of the surprise. gold is trading fairly flat and brent is ticking ever upward. it continues to move to the upside and again this is the dollar story that we continue to focus on. you.morning to what should draghi say today? >> draghi will tell us that is doingm the economy fine. and he will tell us about the need for structural and fiscal reform. he will say that the ecb can help with a business cycle but it cannot help the on that in

terms of longer-term growth. >> global growth is really about the fed right now. but you wake up in the morning you check the dollar and you can make it up from that. >> i agree with you entirely it is about the currency. >> where do we go from here. >> you have draghi almost on the edge of buying junk. some of what he thought yesterday some agencies were junk and some were eiji. is he testing the limits? monetary policy has shown itself to be ever more imaginative as we go to the cycle but it comes with an increasing cost and declining benefits. think this is why we are getting the siren song from the central bank. notticians would rather confront these issues and leave it to the central banks to do the heavy lifting.

there's nothing new in that. so what is going to change? what's going to change is the sense that this declining benefit -- we have seen this in europe with the protest for the banking system and the increase in cost. >> are we reaching the limits? we are now hearing that certain banks are considering stacking money up in their box. are we getting to the limits where negative rates are no longer going to have the desired effect? >> negative rates have brought down long-term yields. that is what corporate bonds are trying to do. of itself does it encourage people to borrow? i think there is some sort of nascent size of capital spending in europe but that is probably more to do with the number of years of not having spent anything in the stimulus will signal from here on out. guy: at what assist mean for s it stimulus? one is working

around the suction they will not go up but very much. 10 to 20 daysst it is clear the fed of had a row back from a july rise. this slight recovery on wall street. i think there is a lot of tape watching going on here and not enough profit watching. that is the real problem. bit.ts are leveling off a profits in the commodities patch are beginning to rebound from a low level so that is helpful. credit stresses are down. ultimately you have to have some growth in corporate profits because you cannot continue just to push back. >> we will investigate that theme a little bit more later. but are we insane to keep buying treasuries. you look at these fines, other

central banks and mutual funds. the term premium is in levels we have been seen since the 60's yet everybody is very comfortable. whether you don't have any other option but to hold 10 year's. >> you seen the considerable outperformance this year of dividend growth strategies in the equity market. as manus was talking about on the previous show you seen an interest in emerging-market debt. some of the pressure in the high yield space from oil companies going into default, easing a little bit. when we look at the money in incomewe still see seeking at the core of it. disqualify the question you started with. money substitutes, regulatory capital but they are used as a momentum trade and there is clearly an element of that right now.

us fromnd karen joining the blackrock institute. you'll be back throughout the whole program. the south korean central bank unexpected the cuts its benchmark rate. only one of 18 economist we saw saw this move coming. details next. ♪

guy: welcome back. you are watching "on the move."

it is the city that never sleeps so i'm sure they are paying attention to what european futures are doing right now. they are pointing a little bit negatively and it is a similar story in the european space right now. the ftse 100 down 0.4%. remember that vodafone and others are both going dividend today. here is the first word news with stephen engle. >> china's consumer prices rose less than expected in may climbing just 2% from one year earlier but factory deflation from april. even so the deflationary trend has continued for 51 straight months. dung energy has become one of europe's biggest initial public offerings this year. the offshore wind farm operator sold 17 point -- 70% of its shares which gives the danish

utility a value of $15.1 billion. have killedian men four is really's after opening shoppinghe tel aviv area. it's the first major terror attack in the city since january. the gunmen have been arrested with one in serious condition. they say they will step up their presence in tel aviv in the wake of the shooting. ubs is a limiting some management positions in the wealth unit in delivering tunable of advisors recruited from competitors. the bank says the headcount production will mostly hit middle and senior managers 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 stories on bloomberg's top .

guy: south korea's central bank unexpected we cut the benchmark to a new record low overnight. the move was predicted by just one of the 18 economists surveyed by bloomberg. we are joined now by the bloomberg news reporter ji young lee. why so unexpected? cut was a surprise to the markets in that it came earlier than expected. quite a lot of than forecast the cuts in july and august. von deals have fallen to record lows and investors were coming earlier than analysts had. still it moves the market forward a lot today. and the central bank explained the move as a primitive cut to prepare for further downside risks facing the economy for the second half of this year.

in the risk would eventually pressure the economy which relies heavily on exports for almost half of its gdp. also it cited risks on corporate structuring. they're trying to reduce that from companies that would eventually lead to high and a planet rates. >> given the fact that this was a preemptive move but came earlier than anticipated, what is the outlook? are we going to see more or is that it? becauseems that government bond yields in europe today -- investor are expecting another cut can come later this year. because when they cut rates in the past they never stopped. such as in 2014 and 2015 they cut twice that year only a few months apart. central bank

the government signal there are significant downside risks to the economy. that is why some analysts predict another cut within the year. -- ewan's get you to speak on all of this. this china next? >> china will cut its reserve ratio. but whaton this path they are trying to avoid is cutting too fast and creating excess liquidity which tries to exit through the exchange rate. they do have this extremely strong real estate trend. wouldured stance is how i put it. >> part of the reason why the koreans did they did is because

they are going to a significant restructuring. that is some thing china needs to go through as well. of beinghas a career between japan and italy geographically. the middle classes in korea are highly leveraged so their consumption side is very hard. you would be astonished by the number of discounting signs and sales that run off of their. it is a profoundly deflationary economy. >> central bankers around the world do seem to have one playbook at the moment. arethink about where they and the space we are in economically and where we have taken ourselves from a theoretical point of view. when you kick this stuff around madea think we are bumping up against the edges? >> there are banks in europe we are seriously talking about. think it was commerce bank.

they are thinking of sticking money and faults and giving it to the ecb. cost them the benefit that you get in the increasing unconventional space. >> how far to the process are we? realistically we cannot expect central banks to give up and say there is no point to what we've been doing for you for ages and we will let it be a freefall. instabilityo much that you then create the financial stress you are trying to avoid. it is a prisoner's dilemma? >> had we get out of that question mark >> one should be realistic and say there is a reason why central banks are saying and white marriott draghi will i guess say later this morning we can do some of this but we do need to have restructuring in the economy and we do need to have structural reform and he must be looking at what is happening in france at

the moment and metaphorically rolling his eyes. -- we are in a slow growth economy. >> we are an economy with debt overhang. there is structure in italy and spain, it takes many years to get this done. we cannot afford to have interest rates rise because we put back economic momentum to such an extent it would offset the fragile stuff going on at the moment. the eu andk about how it is getting on with its operations. we are minutes away from the european open. up next we will look at some of the central corporate movers. rebounding sales of cognac. mario draghiident

speaks in brussels at the top of the hour. we will take that life. ♪

guy: we are counting you down to the european market open. let's talk about the stocks we need to take -- we need to pay attention to. george soros is convinced we are seeing shifts in the sand of global investing as a result of what he is going defensive.

he is investing in gold and the mining sector as well. keep an eye on some of those miners today and also what is happening with remi. these are cognac sales rebounding. a were damaged by china and the corruption probes there. the company says they were top managers at this u.s. unit. this is part and parcel of the trend that has been going on for a while. still witheron watts us. the investing world right now does seem to be continuing to go through a seismic shift. invested in it as well. environmentgrowth you are describing, how much more change will be see? i'm not talking about the app you invented but the way that you do it.

>> the big story recently has been from active to passive. there has been a material concentration of minimum volatility and dividend growth which is shorthand for high-quality businesses. there has been a search for diversification through alternatives, some of which has worked in some of which hasn't. there is a real problem that people have. cash on $50 trillion of the sideline. other, the thought that everything is correlated to each other and central banks are holding up, the u.s. on the shoulders has to dissipate. otherwise people are never going to make the investments they need for their retirement. >> if it is the case, does it favor consolidation. all ofulatory process

these processes for a regulatory point of view, from a asset management point of view they all point toward consolidation. >> i think that's right. i think the fees are rightly under pressure. these are in proportion of the return. if they come under pressure in the flows continue to move there is bound to be consolidation. >> guy: one thing that he talks about his people are paralyzed with fear. next this exactly what we see. people are doing nothing and getting increasingly nothing and you wonder at one point the cash drag really changes. this is why there is this very strong focus on yield. probably, one of the most interesting signs of the insanity was he amount of money put out a month ago or so for

argentina. country has defaulted three times in 25 years. >> once bitten, three times bitten. from mario'll hear draghi and we will get the market open. ♪

a

guy: welcome. you are watching "on the move." i'm guy johnson, in the city of london, moments away from the start of european trading. the countdown to draghi. the ecb president is about to speak after he started incorporating bonds around europe. career cuts. the global easing fire as the bank of korea surprises with a rate deduction. new zealand says it may do more . is china next? the referendum two weeks away, housing demand dropping. tax changes undermining the market foundation.

let's take a look at where markets are going to be. wpp, both stocks going down. we're looking at a fairly soft open. whether we think it will take us down -- let's find out. the markets are beginning to open and weekend siee on the wei, we have a london market trading down fractionally, cac opening, beginning to look like it is moving around. london now down. let's see how some of these other markets open up. dax -- weng down, will wait. let's find out the details of caroline hyde. caroline: two days of losses on the stoxx 600 -- this is the imap, already down 2/10 of 1%. digging into the industry groups

we will see that it is a little bit lackluster. byecommunications are buoyed the fact that the death of some of these companies are down by more than a percentage point. utilities up. a little bit of recalibration after yesterday's exuberance from mary drug you waiting into corporate bonds. down 3/10 of a percent on the stoxx 600. woeful warnings coming from big hitters today. george soros concerned about the outlook of the global economy and a risk to the large market shift. , he looks at government bonds. let's look at u.k. 10 year yield, diving today. money is going into german debt once again, close to the record low. 1.23%, so clearly

money is moving into the debt markets overall. let's have a look at the stocks to watch. mario draghi is about to take the stage, so i want to dig into the numbers that are down. the opposite from many calls i have seen, forecasting a higher profit. earnings rose by the fastest pace in three years, of 6% from the 12 months through march. cognac sales are wearing off in china. this is a company focusing on the higher end -- are they affected by china today? glencore off, the u.k.-based trader of commodities and miners agreeing to sell a 10% stake in its agricultural unit. a canadian company bought it for $623 million in cash. essentra unlikely to achieve anticipated trading levels.

we could see an open 50% lower. guy: thank you very much. these are some of the other movers we are watching. offtrading lower, vodafone because of its dividend. no real surprise in terms of the losers. we are waiting for mario draghi to take to the stage and deliver his lecture out in brussels. in terms of what he is saying, i think there will be no real shocks. we have a copy of the speech. he is saying the cost of delaying reforms is too high, talking about the fact that european governments need to do more for structural reform. he is talking about the fact that central banks can always fulfill their mandate. you've got to remember what the ecb mandate is, though. it is one needle in the compass.

we haven't been there for a while. duration,bout the that he has never really defined with medium term actually means. we are getting into playing around with the mandate a little bit and he says the ecb goal always fulfill its mandate. this e-mail of blackrock investment is still with us. do you think he is a filling his mandate? >> i think he characterized it unfairly -- the mandate is priced and yes, there is an it,ation target links to and there are reasonable expectations and you can look forward to reasonable confidence. by the end of the year, with the dynamics of what's happening, we could be looking at inflation in europe.

will we be quite so down on the ecb and that's page -- that's the question. i think price stability is the real issue. real wages are rising and we have seen this quite strong for new car sales in italy, private consumption in germany. i don't think the pictures entirely bleak. it's not outstandingly good. if web's position will be hadn't done what we've done, can you imagine how terrible that would be? a central bank should not be taking risks in the sense of letting something happened and then trying to catch up after .he event i am sympathetic to the stands they have taken -- the costs are mounting and people are doing the same thing. guy: they say there's a critical need for clarity on the eurozone set up -- with you think he means? >> i think that is shorthand for

brexit. eurozone, sorry. about the's more financial fragmentation of europe. this is something he's been all about for a long time. why should corporate yields be different other than on a specific corporate credit basis? do youtation --guy: think he is referring to the germans, that they have an issue with the idea -- be they direct transfers are -- collects the germans have already agreed to a chancellor and the greek situation is very clearly that the greeks give up sovereignty and the germans with extreme reluctance are coming to recognize that what they thought was alone was a grant. thee is a form of transfer

fiscal level already in place. it is all about keeping the banking system is stable as possible and there's a recapitalization need. lifting a lot of heavy but the last asset policy review was pretty comprehensive and i think it has proven to be ok. the business models that are weak in europe are self-inflicted wounds in many cases. as opposed to know structural dj. decay. to restoreal confidence in eu institutions -- we will talk about brexit, about the eurozone, when we come back. we are still waiting for draghi to take the stage in brussels. but we already have an idea of what is going to say. , tony blair has told the u.k.

brexit vote has size the consequences. we will bring you the conversation, next. ♪

guy: welcome back. 10 minutes into the trade session -- looking like a look at how markets are performing a negative picture across the markets. pftse is not doing too

badly -- i want to show you the stoxx 600 and show you which ones are on the move. is trading down by 2.66%, vodafone down as well. some of the u.k. housing stocks in their. it was significantly more negative than we were anticipating, so let me quickly show you where the dollar is trading. wind company listing after so much trading, 258.7. mario draghi, the president of the ecb, is speaking in brussels . let's take a listen. independentlytrue of the stands of other macroeconomic policies. but monetary policy does not exist in a vacuum.

situation is better described as independence and interdependence. since other policies that are great deal. thoroughly the effects of our policy. they can slow down or speed up the return to stability. whether can determine stability is accompanied by prosperity, which is directly relevant to the social cohesion of the euro area. it is these interactions and why they matter that i would like to talk about today. the objective of the ecb is defined as delivering a rate of inflation below but close to 2% over the medium-term. but the medium-term is not a fixed period of time.

shocks,ed with adverse the pace at which monetary policy can bring inflation back to objective depends on two factors. the nature of the shock itself in the conditions in which monetary policy operate. disturbance will and evidently inflation for longer than others and to make their return to the objective slower. the reason the succession of global oil supply shocks is a prime example. context, the job of monetary policy is not to fight short-term shocks to prices, but to prevent skin from feeding into longer-term inflation dynamics or put another way, it is to make sure that the effect of shocks on inflation are no more persistent than it needs to

be. so when we talk about returning inflation to our objectives without undue delay, this is what we mean. the return to price stability should take no longer than implied by the nature of the shocks. but this is not entirely dependent on our action due to the second factor -- the conditions in which we operate. policy cannot support demand to stabilize inflation expectations and to avert second round of fact on wages and prices. which is exactly what the ecb has done over the past two years. but the orientation of other policies also influences the speed with which output returns to potential.

if other policies are not aligned with monetary policy, inflation risks return into our objectives at a slower pace. there are a number of policy areas that matter in this regard -- first, for monetary policy to stop demand inflation, it matters crucially whether the financial system is able to relay our policy analysis efficiently to the economy. in the euro area, that transmission mechanism has been impeded repeatedly in the past. initially by rising risk premiums linked to unwarranted fears about the survival of the byo area and later widespread bank deleveraging. that has diluted the effectiveness of our stimulus

and landed long and variable lags over which monetary. byhave compensated for this designing out measures to remove transmission blockages and include a quality review in the comprehensiveness estimate that we launched in 2013. both measures have helped the financial conditions, as we can see in our bank lending surveys for the bank balance sheets have not yet been fully repaired, as illustrated by the high stock of nonperforming loans in some parts of the euro area. so poor work out of these nonperforming assets will have and must take place in the condition for that will have to put in place by the right

policies and authorities. well are other factors of is whetherond one fiscal policy is scaring aggregate demand the same direction and how strongly. contractuallywas for several years in the euro area following the loss of confidence in sovereign credit in 2010 the negative effect on by thewas exacerbated fact that consolidation in some countries was implemented mainly through tax rises rather than current spending cuts. buildinge, the first policyburden on monetary and in the context that has led

to a slower return of potential then fiscal policy have been more supportive. why the ecb has said many times that fiscal policy should work with, not against, monetary policy, and the aggregate fiscal stance is now slightly expansionary. but supporting demand is not just a question of budget balance, but also of its composition, especially for tax burden in the share of public investment. we should then see fiscal policy as solely of macroeconomic tool, which is only available for countries with strong public finances, we should also see this in microeconomic policy growth,t can enhance even when public finances need to be consolidated.

barrett, it matters for monetary policy whether the right structural policies are in place. structural reforms can help limit the day and duration of shocks, which in turn support the anchoring of inflation expectations and keeps the real rates low. also reuse then transmission longer varnishes into more flexible, more sensitive economies and trends monetary policy impulses faster. and they produce higher potential growth, which leads to and createstment higher equilibrium interest rates. that creates the conditions for the central bank to return to conventional interest rate policy is that means to deliver price stability. area, many

structural reforms have been implemented in recent years and especially in this country worst hit by the crisis. seen,nefits can now be that there are many more benefits still to aim for, and much more needs to be done. there is one final element that interacts with monetary policy, and that is the uncertainty over the institutional stability of the euro area. this can slow down the transmission of monetary policy. firms that lack sufficient visibility over there operating environment over years to come they understandably choose to deter or even abandoned investment plans. guy: mario draghi speaking in brussels. let's take ourselves away from that conversation and look at

the market moving. we all have a lot to think about. let's bring in the chief investment strategist with blackrock. he could have written that speech two years ago. and you and i were listening to him and you said -- do you think renzi will listen to him? the french? form, great, but imperative is different. >> politicians would love to do what he is describing because he will tell you that's what they seeing thatt we are he has some very strong ideas about how to deal with some of these problems with the constitutional referendum in the autumn, which is make or break. we have a frozen government in spain, a situation in france where the government is trying to do something quite minor -- it's difficult to get it done. guy: one thing that is a bit

more positive, analysts get optimistic about profit of the earnings upgrades and downgrades are now up north of zero for the first time in the year. we have been in his period of low earnings growth for a long time now -- on the reversion basis it has to start -- is that true? >> so that has been very case , but you can't forever say it's a special case that is holding it back. it is important for europe and for markets generally that profit expectations rise. they are way below profit share and with those domestic conditions there are the rising of wheel rages -- of real wages.

those are going to buy corporate margins. but yes, that's a good sign to see from the point of view of an asset class which has seen substantial outflows over the last few months -- it looks saidmely cheap but as i there is a little bit of investor fatigue. guy: let's talk about another special situation that may come into play -- we are two weeks away from britain's referendum on the european union membership. tony blair says he expects the country to vote to stay in the eu. he spoke to bloomberg's editor-in-chief. there will be a big turn out and i think people do understand that the decision has says the consequences and i can't believe that people will shuffle this one off. will get a substantially higher turnout of the general election. guy: tony blair.

i read your note this morning and what tickled me close a slight sense of nervousness, which i'm sure is not necessarily fair, but you look at both sides of the argument. do you have a reason to be nervous? >> it depends on the outcome. leave, thenvotes to some of the trends that we have , theover the short-term freezing of the commercial property market, it will probably be extended. if the u.k. chooses to remain, a lot of the decisions will be activated reasonably quickly. there is a slightly violent outcome here. guy: but it's asymmetric. >> i guess what i would say is that you kind of know what the asymmetry is. what we don't know looking forward is the asymmetry of the

american presidential election outcome. so here's the brexit outcome where it has been pretty well discussed on both sides and they have valid arguments. then when we get past that, we start thinking about what other is going to happen in the fall. guy: let's stay with short-term. do we understand what happens? andhe u.k. decides to leave we wake of the next morning and markets are volatile, do we understand the implications of what will happen? we know what a known unknowns are? do we have an understood -- all this stuff? how nervous should investors be. >> let's look at what's happening. we have a fellow in the u.k.

who talked about the natural crisis. we have had stolen volatility going up and down. we have had many cap and slow cap and some of that is to do with the global recovery and resources. what will change after june 22? think a month or two months in advance. , you will a brexiter say it's ok. the remaining side will say no. and most of the economic evidence suggests that will be the case. guy: thank you for spending so much time with us. the chief investment strategist at blackrock. , brexit and mortar. u.k. housing demand has fallen. we will discuss why, next. ♪

know that the euro area faces a long-term drag from his unfavorable demographics. it even accounting for the, see substantial leeway to lift output in the euro area. ♪\

>> with the right structural policies. for example, we have seen participation rates of all the workers grows stronger during the crisis, due in part to reforms adopted. guy: president mario draghi speaking in brussels -- you are listening to him live. has been the reading european governments for the lack of structural reforms and why that is making him for killing his mandate a little bit harder. 30 minutes into the trading day -- let's give you a picture for the markets are. trading down now, a tenths of 1% , the dax is down by 9/10 of 1%.

in terms of the losers, a few dividends in there, rolls-royce down by half, the whole of the housing index in the u.k. is really suffering on the back of the numbers we have seen -- vodafone has a dividend as well and some utilities are also seeing signs of weakness as well. we are seeing some stuff being generated. let's get more details on the stocks we need to be watching with caroline hyde. caroline: on a down day i start with your worst performer -- this is down some 27%. has ak. listed company speciality in plastics and fibers on the outlook doesn't , unlikely to achieve anticipated trading levels due to more challenging markets. the profit warnings ring of the investors here, the worst today

for the stock on record. wellouse builders are as -- there's a great index that shows you all the u.k. house builders. pain onems to be the announcement,is saying that for the first time since 2012 because it u.k. house prices dip. it could spread to the rest of the united kingdom, this being a concern of the eu referendum and putting people off on the uk's capital. we will talk about how it is coming up but i will leave you with auto trader, up 2.2%, the best performer on the stoxx 600. it looks as if there for your numbers are pretty good. they also appear confident in terms of outlook -- many people

piling into buying new cars because of auto finance. now we will dig and more to housing. guy: lets the foundations of what's happening. 2008 duept pace since to a number of factors. we also have a significant .hange in the fiscal approach meanwhile, another house builders as market conditions robust and demand remains positive, but its shares are trading lower on a more broad selloff. joining us on set from the world institution of chartered charlies, simon -- covers the sector as well. what is going on? is this just a blip? this is just the short-term, because of changes with second homes? change in ato couple weeks? that has had a fantastic read

in the market, from a price point of you. the markets moved up very slightly and we know it is profitable. it has broadened out. we have run up against a number of issues which are clearly reflecting the feedback, constantly talking about uncertainty and obviously the referendum is a big story. the tax changes you mentioned are also having an impact -- you saw the run-up in the first quarter. both have further to run. 2017, more changes coming that,h but on top of affordability is also beginning to eat away at the market and i think we have got significant changes coming through the housing and planning bill. that initiative could have a bearing on how the secondhand marketplace out and that is creating uncertainty as we go through the backend.

guy: that's definitely the pervasive factor, uncertainty. but they sounded very positive. repeated their guidance, expecting operation profits to grow 30%. that's a big improvement with volumes up and margins up. feeling very confident about life, celebrated better this and the eust year referendum is saying they really are seeing much with cancellation rates increasing marginally. guy: so uncertainty here, confidence here. explain the spread. >> the new house bill is helped bills andgives new and iage at the moment, think that is one of the main reasons why house builders

have been performing stronger. with's also uncertainty the forward-looking things, more about will happen in the next few months versus what happened in may and clearly things -- >> i don't think that's right. if you look at the price balance by region, within the london area, they are seeing near-term pains. theou look beyond that pictures that many parts of the country are still seeing prices going up and it's about the forward-looking numbers -- even then it's the london in the southeast. guy: it's always about the rest of the country. >> it is. london has different dynamics, different here from where they are in the midlands and northeast. very different dynamics at play in the investment market, the changes are more impactful in

london. guy: when you look at the limiting factors, one has been an issue of labor. when you talk to the housing bill -- are they concerned that the brexit story, maybe it's not showing up in their sales number, but it may show up in their late numbers. is there concern around input costs? >> working under the assumption that we stay in -- that has been those likely outcome for a long time. there must be sensitive contingency plan in place but these things revolve quite slowly. it's probably fair to say that there has been reliance on european labor. there is a shortage of construction labor -- guy: cost pressure already in that space. >> absolutely. it has largely been driven by lots of other bits of construction coming to life at the same time as housing -- lots

of offices ilt, putting pressure on a finite workforce. clearly if you were to change availability of european labor on top of that, i would exacerbate a problem but perhaps population growth is slower. guy: absolutely. storyr sense that the tax is going to continue evolving? we talked about more changes coming through next year, but is there a sense that the u.k. increasingly grapples with the housing shortage and the issues that surround it? the fiscal policy will be increasingly used to be a big part of that equation. >> one of the real challenges here is the way that government policy is evolving. if we look at the market, there isn't going to be enough of this --so much new development

there is almost certainly going to be some spillover. people who would have looked at stock market rent are going to have to look at shared ownership, which is a step up for many of them -- or look at the private rental market. i think the private rental market will see increasing pressure. i will fiscal measures play out in terms of supply? it is going to be critical. the feedback we are getting in terms of the five-year view is grow by ais likely to 25%,er 20% to outperforming the sales market in terms of pricing and in both cases they are suggesting increases well ahead of gains and wages. is going to be even more intense, but particularly in the rental sector. guy: thank you, gentlemen. , we are live in brussels.

-- next, we are live in brussels. mario draghi is still speaking at the event. let's quickly listen to what he is saying. >> let me conclude. there are many understandable political reasons to delay structural reforms, but there are a few good economic ones. because delay is simply too high. given the interactions between policies that i have described, is in everyone's interest that they buttress each other, if only because that would shorten the time it takes for each to produce its effects. and that would mean that we can bring growth back to potential before potential itself becomes damaged. accelerate the realization --

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guy: welcome back. 43 minutes into the equity market session here in europe and we have been listening to mario draghi, who has been putting the pressure back on european politicians -- his desires structural reform and there is no reason not to do it. let's get the bloomberg business flash. >> thanks. shares in dong energy are trading higher after one of the

biggest public offerings this year. world's largest offshore wind farm operator sold 70% of it ahares at $36, giving value of $16.1 billion. remy cointreau has upgraded its profit outlook after earnings rose at the fastest pace in three in the slump in cognac sales ended. distillers full-year operating profit rose 6% on organic basis. two of japan's leading carmakers have announced more than one million recalls this morning. honda has recalled another 783,000 vehicles due to the airbags. nissan is recalling almost 300,000 including skyline models over engine and steering defects. that's your bloomberg business flash. guy: thank you.

i want to check out what's happening -- breaking news coming through with the fixed income market as we continue to ,et information coming out continuing to buy corporate bonds for second day. 10 year guilt has now dropped to a record low. we have more bond market action -- yesterday it was about the germans and now it seems that we are seeing a coming through from the u.k. despite was happening with brexit. earlier, matt miller spoke to the commission about the risks facing europe, including the brexit. he started by asking about the health of the european economy. >> economically speaking, we can see that the economy is we areing to recover and starting what needs to be done to strengthen the recovery, but factors -- number of

the british referendum, the information is much more positive from economics in a political point of view. of course the information has made this preliminary assessment and as the conclusions are writing. now that choice is with the british people. we hope for positive result and are willing to continue to work with the u.k. within the eu. guy: the european commission is hosting its annual economic forum in brussels today. matt miller is there. a fairly important fellow -- president yunker. over to you. matt: thanks very much. i am here with a financial advisor to the president and the

commission. appreciate your joining us. let me ask you about your outlook for the european economy. dombrowskiard from -- he was fairly optimistic about the recovery of the european union and even of greece returning. >> good morning. we published our forecast a couple weeks ago -- it's clear that the recovery is there. it is moderate but we still have a good outlook. of course we live in a global world which means there are always uncertainties and we can do nothing but focus on the returns, which is working on the markets and helping the banking union. we have an issue in terms of unemployment. a lot ofat in general

speakers are going to come down below 10% -- but what is curious is that the recent challenge is coming slower than we would have hoped and there is still work to be done. matt: where do you see those figures, and what are your forecasts? >> i don't have any specific figure. what we know is that if employment is over 20%, this is too much. sureed to do more to make we retrain people, reintegrate people, and make sure that young people get an education in to get retrained. matt: you are specifically responsible for advising on jobs and competitiveness, working with the european investment bank. they just made a big investment , the first $50 million

investment in greece. what are you doing there to improve the competitiveness situation and the unemployment situation? >> they are doing a lot themselves in terms of implementing the reforms. clearly we need to get young people back to work and have growth so the economy can get going. you need for people to have the right skills, you need for profitability to expand further. our hope is very much that these are projects that are innovative, and help the young people. >> clear listening to mario draghi upstairs talk about the importance of completion of the single market to competitiveness of the euro.

improve the when you haves the uncertainty of, for example, the possibility of britain leaving? how do you deal with that kind of uncertainty? i think it's clear -- we know they want to do and some of these issues are not new. they are taking away obstacles to services, making it easier for companies to expand, getting these opportunities. these are not new issues and we has made this our first priority as it will take action to make sure it happened. matt: why not focus on the european monetary union? a country that use the euro. when that scene to make more sense in terms of strength -- 2018 ande a market for

that is the core of the european union, we are very attached to that market developing. then there was a separate discussion, with the european economic and monetary union, where we have launched a lot of reflection in terms of how it can be integrated further. the reflection process going on -- i think they are perfectly compatible. you have integration certain areas. matt: thank you very much, the financial advisor to president yunker. guy: thank you. we will carry on digesting this comments for mario draghi and look at happening in the guild market. ♪

guy: welcome back. 54 minutes into the equity market trading session. first i think the focus is elsewhere. it's in the fixed income market. the u.k. 10 year is heading lower this morning and now in record territory. we have never been here before. let's get the take from richard jones. we get trained it out later and my suspicion it has less to do with the traded and more to do with bond markets. we are seeing it -- this slide

into the keys sovereign thnets. the demand the primary issuance is massive. richard: and i think we have a federal reserve note that looks like it or not be as aggressive as some were thinking not so long ago. if you want at the price action it, sayinghe nailed that we are in a little growth environment and rates will stay at and therefore if you look 122, 123, that yield pickup is something that will make the deal attractive. guy: there are all kinds of strange things but the u.k. curve is inverted at the back and there's obviously a lot of duration that the pension fund industry can screw around with to make the numbers work. what is the long-term signal?

is it just that things are in a slow growth environment -- richard: i would add that there .s no pickup in inflation not necessarily deflation but strong disinflation forces are here to stay. it's about technology and a lot of the things that are making things more efficient. i think a low-inflation environment will do reasonably well in addition to low growth. guy: you want to find what medium-term means -- he will struggle to get there in the short-term. richard: very much so and the last time around he didn't upgrade those forecasts for the wrapped and that is making investors think about fixed income. guy: thank you very much. richard jones. stay with bloomberg television. coming up, we will continue to monitor what's happening with mario draghi. markets are on the move, the bond market once again the focus

, equity markets at the selloff. we are continuing the theme -- stay with bloomberg television. ♪

>> supermario needs help. draghi says he is doing his part the day after the ecb starts buying corporate bonds. the bank of korea suppresses with a late cut. markets valley and guilt struck to record lows. we discussed the brexit.