>> 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.

welcome to "the pulse." first things first. it is 9:00 on the dot. let's check the markets. the one i want to show you is the tenure u.k. bond yield. we of a fresh record low. lows forhave record yield. overall, european stocks are fallen, but they rally after that all-important u.s. jobs report last weekend. brent crude at $52.31. let's get to nejra. nejra: china's consumer prices have climbed 2% from a year earlier. 3.4%cer prices fell from in april.

the deflationary trend has now continued for 51 straight months. the bank o f korea has unexpectedly cut its bank interest cut rate to a new low. it needs increased downside risk to grow. the kiwi jumps to a 12 month high. but further easing might be required to keep inflation in the middle of the target range. u.k. chancellor has hit back at claims that he is scared mongering to keep britain in the european union. eil, if wedrew n vote to leave, we lose control. people should be under no illusions. two palestinian men have killed four israelis after opening fire in a tel aviv shopping area.

first terrorist attack in the area since january. 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 the bloomberg at top . francine: just a day after he fired the gun on the corporate bond buying program, maria draghi says while he is confident that the bank can meet the inflation target, they cannot do it alone. and made the case for structural reform at the brussels economic forum. >> there are many reasons to delay structural reform. but there are very few good economic ones. the cost of delay is simply too high. given the interactions between the policies i have described, it is in everybody's interest policye very strains of

continue, if only because that will shorten the time it takes for it to produce its effects. francine: draghi's words follow bond buying action. this, we areon joined from our western european bank editor out of frankfurt. that was the message from draghi ? i can't do this alone? >> yes, fire and coal from the head of the european central bank. we are going to hit our mandate. it is just going to take longer if governments do not help out through structural reforms, through targeted fiscal policies, and measures to increase two key things. one was employment participation and another was productivity. the participation is important.

if you're out of the workforce for a long time, particularly if you are young, your productivity is lower for the rest of your life. you might struggle to be efficient in the workplace and that dampens potential growth in the future. so, you need higher productivity. none of those are here in the euro area at the moment. draghi says basically, time is running out. francine: the problem also was, when it comes to productivity, it is a little bit like what we can see in the states. we don't know if it will ever come back. how to the first day of corporate bond buying go? many are saying, we are finally seeing what draghi is made of. >> that is the key thing, isn't it? we will do what ever it takes, we will get to the mandate. corporate bonds is just the latest age in that. the corporate bonds program just kicked off. there are a couple of surprises in there. one was telecom italia, which

was rated junk by s&p. it still has an investment grade rating by fitch. they are sticking to the rules they imposed themselves, but they are in some cases, playing at margins. they see this as a signal, we will hear that mandate. but again, draghi has had to go further than anyone wit thought he would have to. therefore, you have a self reinforcing problem. that has yet to be resolved. francine: we go back to the horse and the carriage. i know that was one of the arguments that deutsche bank was arguing yesterday with the chief economist. paul gordon, thank you. now let's bring in our our guest from the first half of the show, jonathan bell. great to see you here because we

have so much to talk about and all in about three and a half minutes. no, on getting. the problem is, central banks are doing more and more. how do you see that there is not a safety blanket that actually doesn't allow you -- actually, hold that thought. i give you a teaser. the ecb is also said to be buying some volkswagen bonds now. we were talking about the risk the ecb was trying to take. a quick comment on this, jonathan? the ecb is buying bonds. without they were buying -- we thought they were biting bonds that were a little bit safter. >> as long it has one credit rating as investment grade, than they can go ahead. so, with utility bonds -- francine: you are right. >> you would expect them to be

buying at the shorter end. and with the other bonds we have talked them out, going up six, seven, or eight years. they want to make an impact across the curve, if they can. that is right at the bottom of the investment grade. but they really have a problem and that is what was highlighted this morning. they have taken it as far as they can. we have interest rates at negative levels and we are finding out that actually, there is no more room to cut interest rates any further. it does not seem to have much of a benefit once you go below zero. francine: but they are buying volkswagen bonds. they can do a lot more. they could use helicopter money. >> this is a big difference from when they would buy asset security. but they did not get very far. with these corporate bonds, they

can go a very long way. we have already seen corporate bond yields fall. the problem, in my mind, is they are taking them down to very low levels already. you have got this in japan, borrowing 1% on short-term loans. you can't get lower, presumably, than zero on corporate credit. unless you are prepared to give money for nothing. francine: this goes back to what i was asking about risk, right? they are most like they need to save the world from the ugliness that it could be. in the you have chief economists, and also other politicians, may be arguing, the central banks are doing too much, which is deterring us from doing more. >> i don't think we are at that stage.

because you can look at the things you have mentioned in terms of positive growth. in the fed 18 months -- you have had 18 months of exports. they have got an economic problem they need to address. as well as cutting interest rates, what they have also done -- they have this package to help banks to alleviate some of the nonperforming loans. it is all about, can you get money into the real economy? francine: jonathan, thanks for all of that great analysis. we will be talking more also about earnings. stay with "the pulse." more is coming up. why june has proved to be a month where everything moves higher. go, tonyh two weeks to blair says britain will vote to remain in the eu. the rest of the exclusive interview. and we will look at one of the prospects for one of the world's top tech companies.

♪

francine: welcome back. this is "the pulse." look at to the bloomberg business flash. nejra: shares are trading higher this morning after becoming one of europe's biggest public offerings this year. 17.4% of its 17 fo

shares. they are transforming themselves into a renewable energy jarden with a value of $51.1 billion. discussing the purchase of softbank's majority stake in supercell. this could give the game maker $9 billion. this operates china' most popular messaging services. japan softbank has been selling assets to strengthen its balance sheet. delivery business lobby available to u.k. users in central and eastern london. this is the first on the service has been offered outside of the u.s. the billionaire investor is concerned about the outlook for the global economy and the risk of that large market shift.

a spokesperson for soros declined to comment. that is the bloomberg business flash. francine: as mario draghi makes the case for structural reform to meet inflation targets presidenthe european says he is confident he also brushed off the brexit risk. >> economically speaking, we can see the economy is recovering. what we are now discussing is what needs to be done to strengthen the economy. british referendum, of coarse we hope for a positive outcome. that is much more positive from an economic and political point of view if the u.k. stays in the eu. dombrovskisldis

will be speaking at the forum and we will bring you the headlines on the bloomberg terminal. now, let's get more from jonathan bell, the chief investment officer at stanhope capital. we spoke about political risk and we just mentioned the monetary policy risk. first of all, where do you see the bond market? >> is being pumped up by central banks across the world. that is an area where you have to be concerned about the returns you can get long-term. francine: but a bubble that will remain for five or 10 years? >> i think it is more about deflating, rather than bursting. it isn't going to burst. what it is going to do is -- german bonds on average, are giving you a negative yield. you know you are not going to make any money on german bonds. thee is the risk, of course interest rates will go up and he will make it worse returned than

that. you can say, yes but yields might go more, negative, but that is a short-term gain. longer-term, you are either going to make nothing with the risk that you could lose more. that is a deliberate double. that feeds into other high-quality assets. from japanese bonds with negative yield to investment grade bonds. and then you have to think, anything that is really high-quality has sort of fed into the same kind of bubble. yields of 2%, for example, that is not a proper yield for a commercial property investment. francine: so, this is not the monetary economic backdrop. how do you add economic risk to this. what about the brexit? >> the odd thing with the brexit havectually, the odds

increased from 18% to 28% over the last 10 days. sterling has hardly done anything. i think anyone would have said, as the chance for a brexit increases, you would expect sterling to fall. francine: that is because we don't believe the polls anymore. >> that is not a poll. and it may be that markets actually don't believe the bookie's odds either, which in the past have been a good guide. the markets of the moment are saying, the chances will remain. just looking at stirling, if you have a brexit vote to leave, you will the stirling head towards 1.30 against the dollar. if we remain, we could bounce to $1.50, but not much more than that. the impact on other assets in the u.k., for property is a bit negative. but there is a real economic impact, not only in the u.k.,

but in the eurozone as well. francine: we are two weeks away. do you need to change your portfolio or purchase gold or anything? >> you need to look at your currency exposure because that is where the biggest checks will come. what we have been doing is, we have been looking at portfolios and saying, have people got the right balance given their liability? the interesting thing of course, is what happens the day following the vote? if you vote to remain, i think there will be a bounce in the markets by a couple of percentage points. if we leave, you need to be in the dollar. that asset will bounce. that is the decision you have to make the night before. francine: thank you so much, jonathan bell. , how june has seen a rally in both save havens and risky assets. than we bring you our chart of the hour. ♪

francine: welcome back. i want to show you my chart of the hour. these are the returns on various assets over the first seven days of june, since that weak jobs numbers. you can see risky assets, and save havens, which have rallied. , for are they just

betting that central banks will bow to keep the policy loose for longer. jonathan bell is still with us. jonathan, i love that chart of the hour because it encapsulates what we have been talking about for the last 30 minutes. they are bubbles out there, but we don't see them because of the safety blanket of the central bank. what is the ideal time for people in the market to get out. >> to get out? francine: you need to get out. when there is a bubble, you think of them bursting and you have to get out. jonathan: you have to think, inre is a bubble commercial and residential property. francine: independent of the brexit? jonathan: i think independent of the brexit and that is almost on a crane count. whenever there are that many cranes in central london, that has to be a concern. that is independent of the

brexit. i don't think there is a bubble in a markets, to the same extent that there is money in the fixed income markets. if you come out of high-quality, you can look at areas and find value. in bonds, for example, sure there is high yields over investment-grade. there isn't a bubble. in equities, you want to look at perhaps, not reducing your quality exposure. it is looking relatively attractive. the markets themselves, they are not in that big a bubble. slightly expensive compared to history, but compared to where everything else is, i don't think that will be much of a problem. francine: when you look at the rates, and i have this other chart showing us for the first time in 12 months, we are seeing more analysts upgrade earnings for companies.

anything below this red line means analysts ve been downgrading the future probability of earnings. again, this is earnings on cuts. this is not based on real growth. jonathan: in europe, you have seen revenue growth, but that has not turned into profit growth. the yearts start fairly optimistic and during the year, they have had to keep cutting their forecasts. so, you see no growth by the end of the year. it is good to see some upgrades now. but it is worrying. there is still a problem with profit growth. conversationad a with a fairly large italian businessman. they say that with the ftse they can make longer-term investment. if you don't have the incentive to invest in the future, what

happens to these companies? where are we in five years? jonathan: you are seeing the returns for investors coming through cash flow. not through the companies investing to grow. but that is not surprising when you have overcapacity. when you have overcapacity, companies are going to want to invest. francine: but what does that mean for your stock picks, or the industry groups that you like? equities areyour giving you a free cash flow yield of 7% in a dividend yield of 4%, you don't need much in the way of capital growth to get a good real return. youcine: jonathan, thank for coming on. up next, the former u.k. prime minister tony blair says britain will flow to stay in the eu. we will bring you the best of that interview.

we also speak to labor imp, that mcfadden. we want to ask, where is labor? can the remain cap vote if labor does not weigh in more? that is our discussion, next. ♪

francine: welcome back to "the pulse." we're live from bloomberg's european and orders in london. we are getting u.k. train data of bloomberg terminal. the figures are a little different than we were expecting. getting april eu imports have stagnated. this is the latest. this is in the midst of this brexit debate. we've seen most economic indicators affected by this referendum on june 23. waserday, some of the data

better than expected. first quarter trained data gap at -- it is difficult to actually take these numbers too seriously at the moment. it gives us a little bit of a growing at what investor cash a glimpse -- a little bit of a glimpse. we've seen a tiny bit of an impact on this traded cap, total trade gap. markets generally lower this morning. let's head to the bloomberg with mark barton for your asset check. mark: i want to show you a lovely chart. excuse me while i click on it. this is the world exchange market capitalization index. this is basically the market capitalization of all the worlds stock markets right now. we're at $64 trillion, roughly

flat for the year since february 11. look at that. $56 trillion was the market value then. to $64lion dollars trillion. it shows how far and how fast we've come since february 11. we reached a record high a year ago on june 3 when the market cap of the world stock markets was $73 trillion. ofes you some perspective where we came from a year ago and how far we've come from those lows in february. let's get to today's news, big data out of china, inflation data, deflationary pressures eased further in may. consumer price gains continued to be subdued, offering the

central bank some scope to ease further. 8% --r prices fell to fell 2.8%. 2% consumer price index rose from a year earlier, less than the median forecast of 2.2%. this is a very clear chart showing you how both those indices have fared since 2013. the red line is zero. cpiclearly below zero, above zero. the big news on central banks today, not only korea cutting interest rates. that was a surprise. but new zealand keeping interest rates unchanged. it also said it expects inflation to accelerate. that was the surprise. maybe some were expecting a more

dovish leaning. the kiwi has risen to the highest level in a year. new zealand policymakers keeping the official cash rate at 2.25% for the second straight meeting. governor graham wheeler saying he expects inflation to reach target-of his 1% to 3% earlier than previously expected, giving him further scope to delay monetary easing. there's the kiwi dollar, i is level in a year. this is the bloomberg commodity index, which measures all the major commodities into a gauge. at its highest level since october. it is up 24% since reaching that record low in january. crude oil among its constituents rising for a fourth consecutive day. longest winning stretch since

april. highest level for wti since july. the bloomberg commodity index, highest level since october. francine: thank you so much. two weeks from britain's referendum on the european union membership, we have to look at yields. 10-year yields falling to a record low. the point we were at this morning, you can see it there, from about mid-march -- they've been claiming before the nation votes on this june 23 referendum. we had a record low bond yield for the 10-year in the u.k. former prime minister tony blair says he expects the u.k. to vote to stay in the eu. he spoke to our own bloomberg editor in chief. >> i think we will remain. of course it is a referendum. if you look at the opinion polls, it is very close. you've got to be concerned about

it. i do believe there will be a big turnout for this. it is a decision with seismic consequences. i can't believe that people will shuffle this one off. i think we will get a substantially higher turnout than in a general election. francine: john nichols late is with us now. .'m pleased great interview. great insight into tony blair's thinking. pat, you listened to the interview. he is the most prominent labor figure to speak up and get a lot of pickup. where is labor on the brexit debate? >> labor is united for a remain vote. of our mps in parliament, 215 have signed on for a remain vote. the vast member of our party are

in favor of a remain vote. we have to move up and campaign even harder to make sure that our voters know that is our position and we believe this is in the interest of the country. francine: house of labor voters don't know which side the party is taking. how can that be? >> pat is sort of half right. labor is much more united than the tories. from the top, there is a sort of sell the euro to -- not selling the euro, that would be difficult. selling the european union. jeremy corbyn has not been especially vociferous on this. there's no doubt labor is much more united than the tories. francine: we will listen to what tony blair said on jeremy corbyn in a second. is he a closet brexiteer?

>> he has a history of euro skepticism. some of that comes out in his speeches. to be fair, since he's become leader, he's made it clear time and time again that he's in favor of a remain vote. one of the problems for labor in this debate has been this huge internal divide and fight within the conservative party with big figures like boris johnson -- francine: he doesn't want to be seen as supporting the establishment? >> i think it is also genuinely difficult for labor voices to be heard when you've got a huge divide inside the conservative party. so getting the oxygen, getting the airtime, getting the space to get our message across has not been easy. listen to what he has to say about jeremy corbyn. >> there are two types of

politicians on the left and there always have been. the guy whose face is on the packard, that is me. eight that guy. you are the person in power taking difficult decisions. some people support you, some people don't. you become a figure of controversy and they protest you. that is my type of politics. jeremy is the guy with the lacquered. he is the guy doing it. one is the politics of power and the other is the politics of protest. in the end, if you want to change people's lives, you've got to be for the politics of power. francine: john, can we see a victory of remain without labor voters? >> i think it relies immensely on labor voters. you are seeking the tory heartland is the ones who vote for leave. you look at the activists within the tory party, one of the , if pat and i wanted

to become tory mps -- you are full of scruples, but if we were trying to become a tory mp in particular constituencies, you would be crazy to say you wanted to remain inside the european union. the of the activists are ones who will draw you back in. by definition, labor is the people who have to bring in as many people as possible. francine: how long do you think jeremy corbyn will stay in power? >> that is a very different question. where i agree with what tony blair just said is that the test of any party is being able to govern, being able to win elections. that is how you get change. everything labor is really proud of, from the creation of the national health service to the creation of the minimum wage,

and many other things, was done because we won elections. that is what we have to be about, even in opposition, the mentality of being a party of power is really important for us. francine: john, sometimes our global audience forgets that there is huge in fighting within the conservative party. what percentage would we need to see for david cameron to remain in power? >> interesting question. you hear some things along the lines of, unless he wins by a 53%, thenount, 55%, they will call some kind of vote to see if they can get rid of him. i think the only bit which i would probably guess is i think that if he wins, that would bring some kind of victory and recite. there is no doubt that it is like a soap opera, with so many of them personally divided. at might remember from

early days in the labour party, but it is not a good picture. francine: do you think david cameron regrets calling the referendum? >> i think some people close to him regret it. i think he probably doesn't. i have some sympathy with that. i think this is a thing welling up inside this party and within britain. 40 years without any kind of vote over something that matters enormously to a lot of people. francine: do you disagree? ironies ofone of the the prime minister's position has been, until february 19, he had to pretend he may campaign to leave the european union. once that was done, he has quite rightly said leaving the european union would be a terrible idea in terms of the impact to our economy, trade, investment, jobs, security, a

whole host of reasons. it does beg the question, if brexit is such a bad option, then why has he brought forward the possibility? francine: democracy. >> water under the bridge. he decided to promise it. he won the election on that basis. now he is desperately campaigning against the proposition whose possibility is made real through this promise. what can labor do to try to turn this around? >> we've got to get out there with every voice weekend. i've been pleased to see former leaders like gordon brown and harriet harman, every voice that labor voters know to say that we are in favor of remain because it is best for the economy, best for jobs, best for the standard of living, and best for the values that britain represents. francine: john, who is the strongest labour party person to

rally behind and that people actually believe? >> the obvious answer is that mcfadden. the truth is, it is difficult. blair was once a great messenger. gordon brown, in this particular case, a bit like on the scottish referendum, could make a difference. he has some degree of popularity differences with some of the english vote. there's also this thing which, again, less scrupulous members of labour party are enjoying it. if you're main target is trying to get rid of the conservative government, the conservative government is in such a disarray, there is some tacit level among some people in the labour party, just thinking this is a very good thing, not realizing how big this debate is. >> i think if there are people in that position, that one be an unwise thing to do.

there's a time for delivering a verdict on a government, which is general election time. this is the biggest decision this country will have taken in decades. it is much bigger than joining an internal fight within the conservative party. there is not only an opportunity for labor, but a duty on our part to get out there, communicate the message overwhelmingly is to remain. francine: thank you so much for joining us. john nichols weight and pat mcfadden. up next, the alphabet. take risk, by companies. that is our next guest's advice for google's parent company. that is coming up next. ♪

francine: let's talk tech. also that is investing in everything. the details came at the company's annual shareholder meeting, but will it be enough to sustain growth? for moore, we are joined by callum. great to have you on the program. it wasn't as explosive or maybe star-studded as people were expecting. >> no. google has to look so far in advance. 2011ions it was making in are now coming good. decisions it was making in 20

are now going bad. whenever you hear something from them, it either sounds 22nd century, self driving cars, or it seems rather banal and loki. the problem is it has to do a wide range of things. it do that is as profitable and as big and as explosive as what they've done before? francine: what can that be? is it driverless cars? >> it is an obvious area. it is in and that is their idea. software, that is there stronghold. they've been looking at other areas, robotics, probably the area they are most interested in is internet of things. that spins off their core businesses, the search environment and the android environment. i suspect that for the time being, where we are going to see

most of their attention is on , which is why there is so much interest in the next situation. francine: can they continue having this or is there a point of oversaturation? >> google has such good visibility that you know it is going to do well the next couple years. this year, operating profits are going to go from $10 billion last year to $15 billion, $16 billion, $17 billion. that is fantastic. the question that comes up is whether or not they are able to go in 2018 and still deliver 20% growth. shares are priced on them being able to. francine: what is the company that you think will come up? we talk a lot about amazon. they are starting to deliver fresh groceries in london. is this going to be a real thing

or will it be much more difficult than delivering packages? >> there was a time when it was a lot harder to deal with food because of the perishable nature. you couldn't just store it and you couldn't do the long tail trick. amazon historically made for more money on the nits that people only bought occasionally where it had 25%, 30% margins. that was its trick. it was very difficult to play the long tail in perishables. you pretty much play the fast turnaround market. it really depends on how the competition tests respond. they've chosen their time well. is caught between a rock and a hard place. they've got the threats from online but also they are suffering from the high street. will it work?

the fact they've taken so long to decide on it shows how nervous they are. francine: they seem to be committed because they've invested quite a lot. >> as good an opportunity as they could have. francine: thank you. we have to talk a little bit about gaming. purchasingdiscussing softbank's stake in a game maker. up next, the ecb is out in force with the message that monetary policy alone is not enough. debt toral bank adds vw its portfolio. we hear from president draghi next. ♪

mr. draghi: there are many understandable political reasons to delay structural reforms, but there are very few good economic ones. the cost of delay is simply too high. given the interactions between policies that i've described, it is in everyone's interest that the various trends of policy buttress each other. if only because that will shorten the time it takes for each to produce its effects. francine: that was ecb president mario draghi speaking in brussels. his comments were echoed by the

bank of france governor who said he wished france would speed up reforms. let's get to the bloomberg business flash with nejra cehic. energy arees in dong trading higher after becoming one of europe's biggest initial public offerings this year. they sold 17.4% of shares at $36 each. ,hat gives the danish utility which is transforming itself into a renewable energy giant, a value of $51 billion. deal.t is considering a that is according to people familiar with the matter. mostnt operates china's popular messaging services. softbank has been selling assets to strengthen its balance sheet. francine? francine: thanks very much. stay with bloomberg. tom keene will be joining me from new york. brexit,be talking rbs,

and the risks to the u.k. economy. we also have an exclusive interview with the disney ceo as the company prepares to open its shanghai resort. beautiful picture in new york city. ♪

francine: super mario needs help. mario says he will do his part to the ecb stopped buying corporate bonds. googler easing continues as the brink of korea surprising -- bank of korea surprises. and labor is missing from the referendum campaign is almost half of the party voters do not know the site the party takes.