yields in japan, hileany and the u.k. -- w bill gross warns the supernova will explode in the debt universe. council member says a cycle of fiscal and monetary policy is needed to fix the euro area. stress test says european stocks could lose a quarter of their value in the case of brexit. welcome to "the pulse" live here in london.

i'm francine lacqua. it's 9:00 in london. time to check your markets. this is the picture. we are seeing pressure on the index headed for its biggest two-day decline in three weeks. financial companies are down. europe is also down. i wanted to show you the 10-year bond yields at a record low. the same thing for the u.k. gilt yesterday. and then brent crude slightly down today at $51.38. let's get straight to bloomberg first word news. nejra: the ecb does not need new stimulus to reach its inflation goal, according to the governor of the slovenian central bank. at the current juncture, i thed firmly confirm that measures work and that we can only look forward to responding

everything what might come on our table in the future. nejra: barack obama has formally endorsed hillary clinton to succeed him as the next u.s. president. met withafter obama bernie sanders. i want those of you who have been with me to be the first know i am with her. i cannot wait to get out there and campaign for hillary. speaking to bloomberg politics, clinton said the endorsement was a treat. the leader of the brexit campaign has been accused of putting his own future ahead of that of british workers. force johnson was debating the upcoming e.u. referendum. opponentss in the remain cam says he is using the issue to

enhance his political credentials. a favorite ton as the current prime minister if david cameron loses the vote and is forced to step down. take a seem to want to huge risk with the employment prospects of millions of people up. and this country. boris, you do not seem to care about the millions of jobs that would be at risk if we leave the e.u. i think you only care about one job and that is yours. nejra: global news 24 hours a day powered by 2400 journalists in 150 news bureaus around the world. you can find more stories on the bloomberg at top go. francine: thank you so much. later on, russia's central bank is scheduled to announce in interest-rate decision after six consecutive meetings with no change to its rate at 11%, economy are split on whether they'll hold fire. ryan chilcote is here to talk us

through some of the issues facing policy numbers. you're also one of the very few that has spoken to a central bank governor many times. ryan: look, today is going to be an interesting one. the central bank may cut rates. the governor has made it very clear that her first priority is cutting inflation. forif you look at the, example, derivatives market. that rates betting are going to fall by 69 basis points over the next three months. that does not have to happen at this meeting. there are going to be more meetings. but clearly what we've seen is the derivatives market pricingin in a much larger likelihood of a cut. in addition, you look at the bond market, bond yields near the low as they have been at any point this year because people are piling in, foreigners piling in, trying to get those bonds before what they anticipate will be a rate cut whether it comes now or later. we've surveyed 42 economists. a said we are going to ge

50 basis point cut. 20 said not so sure. a slim majority. over time, a lot more economists said they will start forecasting a cut. francine: what are we expecting in terms of inflation? the cut -- they have huge imbalances to deal with, the price of oil. because of the volatility in the ruble as well. for thee big issue russian central bank has been fighting inflation. it is the big issue for the kremlin. big a are putin your support base our pensioners. if you cannot index pensioners' inflation,money to which russia cannot afford to do right now, then you need to make sure that inflation is under control, even if it is at the expense of the economy. so, you look over the last several months what we have seen his inflation fall. it has fallen to fold to 7%. that means real rates, because the key rate has stayed at 11%, has gone up. they were negative as of a few months ago.

now they are 4%. traders are saying if the central-bank is serious about helping the economy, if they are serious about easing, they need because doing nothing means tightening for the market. with russia in recession for the second year, and yesterday we learned that sanctions are likely to be there for another six months, they are saying that will be catastrophic. francine: ryan chilcote with everything you need to know about russia and that rate rate decision is 11:30 u.k. time. plenty coming up. including the number of analysts raising their profit estimates is greater than the number cutting. plus, it is all about trump as company bosses discuss what might happen in november's election. we will talk political risk. ♪

francine: welcome back to "the pulse." let's get straight to the bloomberg business flash. nejra: bp has agreed to merge createwegian unit -- to one of norway's leading offshore production companies. an industrial investment firm or hold a 40% stake in the new company while bp will own 30%. the business will be renamed aka bp. a whistleblowers helping the

u.s. securities regulator in its investigation of deutsche bank's mortgage trading business. sec received insider information alleging deutsche inflated the value of lossese bonds and masked in 2013. the bank declined to comment but referred to a statement given to bloomberg last month that says it is cooperating. uber has vowed to cause that customers be allowed to book rides up to 30 days in advance. it has plans to expand to other cities. the ride sharing company's biggest rival lyft started testingt it months ago. the uber ceo dismissed the idea of booking a car in advance. now, beware the explosive supernova. that is the wording from bill gross. " global yields lowest in 500

years of history. this is a supernova that will exploit one -- explode one day." bond yields have hit record lows in japan, germany and switzerland and the u.k. edmund chang is with me today. ed, thanks for coming on. when you look at negative yields, and when you look at record low yields, can they only go one way which is further down? ed: it depends what time period you are looking at. if you look longer-term, you say are some point they have to go back up. i think when we look at bill gross's face the key point to focus on is one day. he did not try to time it. and that is a problem. it is easy to make this pronouncements. but if you're not putting a time on it, what would he do for the next five years? francine: is there something

fundamentally flawed? are we mispricing risk? at some point this experiment will go wrong. ed: that is the suspicion i would have. it is certainly an experiment because we have never been here in recorded history so we do not know how this pans out. the real question comes back to the same thing. after all this q.e. we have had in the u.s. and europe and japan, how do central banks extricate themselves or do they? or do basically say our balance sheets have ballooned out. they will stay this big forever more. francine: and possibly even bigger. have the cut into further negative territory. what is the limit of central-bank policy? ed: if you look at denmark, -0.75%. they are in negative territory. i think there is a question of anyhe effectiveness monetary policy. the further along you go, the less effective it becomes. with negative rates, the

question u.s. gusoff, what effects will it have on the real economy? my suspicion is probably nothing. we are close to the limits. if you say japan, we are extremely close to limiting the effectiveness of a negative interest rate policy. francine: so, what does it mean for investor and markets? are we in the world where we reach the limit we are going to correct at some point. do people realize or is it steady as she goes? ed: it could be steady as she goes. what you have to say is that the emphasis must move from just monetary policy to fiscal policy. you need to stimulate the economy, and you cannot do with interest rates or q.e., you also need government to maybe start encouraging people in businesses to spend money and that is the challenge, particularly japan. francine: but we hear about this every day. what will it take?the problem that japan has, if it could puter, pressure on earnings which puts pressure on companies not to raise wages. ed: for instance, japan have

already started down this path. they were going to raise the vat on consumption. they preferred to delay that. that would have been a negative that they would move. they need to go further than that. what governments across the world need to do is try to spur investment, because if you look at the u.s. or europe or japan, one area which is known to be lacking his investment. we have too much investment in china. too little and the rest of the world. i think this is something that countries and regions need to address at a government level. francine: -- valuations in european stocks fell to their lowest level relative to global peers since july 2015 yesterday. but analysts are getting more optimistic about profits. this is our chart of the hour. the number of analysts raising their profit estimates has exceeded those lowering them for the first time in a year. myis the orange line on terminal, it is red where it goes back up.

corporate earnings will be three 3.1% lower. this is my shing graph. companies and earnings forecasts o? are on track we for modest growth. if you look at this graph, a lot will depend on the commodity sectors. if you look at the big dip, the biggest dip is future energy and money. the rebound would be due to energy and mining. francine: is that a supply demand issue or linked to global growth? ed: that is linked to global growth. if you look at energy, i would say of course there is a question of the demand-supply balance. that being positive for the oil price at these levels because supply and demand looks like it is going to come back into balance faster than expected, first point. but going forwards, you have to argue so the supply side has been constrained in the u.s.

but still demand is going up. if you look at the u.s. in terms of gasoline, they are using more gasoline than ever before in history. francine: and india and china. ed: and that is huge. you have a lot of demand growth -- 1.2 million barrels for day next year. ok? that is not as good as it was in the past but it is still growth at a time when supply has been constrained. to me, that has got something to do with global growth. francine: i have another chart for you. this is in the blue line. you have the bloomberg commodity index going up. a bit of a correction, this is the dollar spot in next. surprises the markets, is there a concern that there is a very strong dollar rally which would therefore jeopardize the stability of china? ed: i think that is the risk. although, in many ways, a strong dollar would also help china,

because they also want to depreciate their currency. r problem is of the dollar gets weaker, who are they going to depreciate against? francine: can they be seen to devalue actually? ed: no. behind the scenes quietly. what has been helping about has been the japanese yen. it has strengthened. the euro relative to the renminbi, you can argue that there is some modest evaluation but they could do with more. so, i think this story for me with the dollar is about the yen and is about commodities. clearly the negative correlation is very high. the dollar gets weaker, these two asset classes can continue to recover after what has been a horrible for five years. i think that is the keypad the key question is, is the long dollar bull rally over? my personal feeling it is. i think it is over. as the currency gap widens, because domestic u.s. production of oil is going to fall.

they will have to import more oil. in theory, that is bad for the dollar. aat the same time, what i see is dp growth- i see g slowing in the u.s. and that is not good for the dollar. less reason for the fed to raise rates. francine: we have to go back and very quickly one interest rate rise, december? ed: not even. we are waiting for 2017. francine: what a tease. we will be back, and of course, we will talk fed. up next, can he be president? we break down the trump ris that has ceo's talking. ♪

francine: let's talk about political risk. there is a great story on the bloomberg about how european and asian ceo's are obsessed with donald trump. stephanie baker co-wrote the story. stephanie, great story. so, people are obsessed because we still can't quite believe he is a republican candidate. stephanie: this story grew out of anecdotal comments we have gone from people along the way saying when they travel abroad, all of their getting is bombarded with questions about trump. and so, i think there is now a

dawning realization that yes, he could win it. so, the questions are coming fast and furious. and i think that american ceo's when they travel are having to diplomatically answer this question without getting themselves into hot water. in europe asia and they are getting equal number of questions. francine: for some of the responses are on the humorist excited. they say it is colorful or kisses entertained. -- keeps us entertained. there are an asia, lot of questions. they do not think he can win. in europe the response has been they are concerned about rising, a symptom of rising populism and nationalism select what we've seen in some parts of europe. and i think the response has been a mix of diplomatic answers as well as let's wait and see,

it is early days. and so far, a lot of the questions they are getting are not policy specific. so they haven't barrel down and looked at exactly what he wants to do on say energy. bob dudley said he is getting a lot of questions about trump but it is not about his energy policy. francine: it is early days, and at the same time cut, remember i had a guest on the show i give her ago saying it would never happen. how do you -- again, he flip-flops quite foregoing on fiscal spending, on what he will do. he talked about bondholders. how difficult is this -- what a trump win would mean for the economy? ed: when you talk about politicians my view is very simple. the best thing that could happen for the economy is benign neglect. the less they meddle in the economy, the better chance economy has because when governments and politicians meddle with little political

experience, you tend to get poor results. francine: that he is the president, so he will have to meddle. stephanie: there is anxiety because of the uncertainty. with hillary clinton, if she was up against a more conventional candidate, people would know what to expect. in this case they really don't, because he has flip-flopped on so many issues. francine: what does it mean for janet yellen? how does she look at this? this could not have come at a worse time where she is trying to raise interest rates. moment, july the is off the table. the september hike is the one that is probably live in the minds of janet yellen and the fed. after that, it cannot be until the summer because he have to leave the hiatus around the election period. francine: do we know how they look at political risk in the u.s.? ed: not really. i think what they do is they look at financial market indicators and look -- interestingly, if you look at

basic equity market volatility or bond market volatility, -- at this moment, you would argue financial markets are not pricing any particular political risk. i think you could see that if trump or to become a more credible candidate you would see the u.s. dollar selling off more because of the uncertainty, because of the potential damage he might do to the economy and to trade. francine: this is the problem is are suggesting he is externally popular in the markets do not seem to believe that. stephanie: if you look at the polls he seems to have close the gap with hillary clinton. some averages have a with -- have him within two percentage points. i don't think they are pricing it in. i wonder i september, is that too close for the election for janet yellen to move? ed: i think personally she will not move. i think the data will not be strong enough to support that because you are right, i think

she would need incredibly strong data to say we are data-driven but the data leaves us no choice. it has to be as strong as that. my feeling is we are not going to get it. in which case, december is the earliest she could possibly be thinking about. francine: how important is the choice of vp? i think extremely important. he hinted at it in a bloomberg interview yesterday. that he'd narrowed it down to four candidates, one of whom was in the running against him in the primary. i think it may do something to reassure people about some of his more brazen policies, if he picks candidate that is seen as someone who might be able to rein him in. likewise with hillary clinton it will be important if she picks someone that can unify the democratic party and bring in bernie sanders supporters. francine: stephanie baker, our global business correspondent. and edmund shing at bnp paribas.

reapuro 2016 is set to record revenues despite the threats of terror attacks cleverly distracts and flooding. we are live in paris next. ♪

francine: welcome to the pulse," live from bloomberg headquarters in london. nejra: the ecb doesn't need new stimulus to reach its inflation goal according to the governor of the slovenian central-bank, speaking exclusively to bloomberg at the brussels economic forum. confirm thatrmly the measures work in that we can respondingorward to

to what might, on our table in the future. obama has formally endorsed hillary clinton to succeed him as the next u.s. president. it comes after obama met with bernie sanders at the white house. >> i want those of you who are been with me through this incredible journey are the first to know that i am with her, i am fired up, and i cannot wait to get out there and campaign for hillary. nejra: the leader of the brexit campaign has been accused of putting his own future before that of workers. opponents said he tousing the initiative bolster his personal position. they seem to want to take a huge risk with the employment process

of millions of people. boris, you do not seem to care about the millions of jobs that will be at risk if we leave the eu. i think you only care about one job, that is yours. nejra: global 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 . francine: thank you so much. markets low this morning. let's head to the bloomberg with mark barton. the stoxx 600 is down by 1.25%. every single industry group is falling today, falling for the second consecutive week after three weeks of decline, and we are following for the third consecutive day, the longest losing stretch in a month. european equities could lose a quarter of their value in the aftermath of a u.s. succession

-- u.k. succession from the union. a study found that stocks would take the hardest hits when it simulated the effect of a leave vote on a portfolio. investmentsnated would slump 10% more than those in euros. consider, less than a few weeks away from the referendum which leads me to sterling volatility, implied volatility in the pound and dollar. it has risen to the highest levels since 2009. implied volatility, expectations for volatility, has risen for the six consecutive week, the longest gaining stretch since february. look what happened in just the last month or so. this is a chart going back to

2011, sterling against the dollar is down for a second consecutive week as we close in on the june 23 referendum. big news elsewhere. in the bond market, record lows on the u.k. tenure and the german 10 year -- the u.k. 10 year and the german 10 year has come down to 1.24%. it is literally on the cusp of going negative. earlier today falling to 0.02%. if we go below zero in teens below zero it means that all bonds up to 10 years will be negative. that has happened in japan and is happening in switzerland. japan, the 10 year yield has fallen to a new record low. bond yield record lows everywhere. thecine: yields really is

story of the week and maybe the story of the month. it will be016 began the biggest in history with more teams, wargames, and more hosts -- more games, and more goes -- posts. talk us through the risks. at looks beautiful on this opening day but the changes are many, first on the security side. we are just seven months after the terrorist attacks in november and there will be as many as 100,000 security officers patrolling around any soldierscluding 10,000 from the military. a couple of weeks ago there was france at the stade de and they had a security test but it failed because some were able

to bring in firecrackers. continuing, air france striking from tomorrow until tuesday. suburbans, these two train lines are striking today and the u.s. travel advisor is advising -- the travel advisor is advising fans to advise three the soccer game. pariseatment centers and have been on strike for about 10 days, at the same time the river seine is receding after the terrible flood, leaving behind mud and debris. francine: how will all of this impact the president's approval rating, which is already very

low? caroline: it is very low. the latest poll shows his lowestity at 16%, the since his elections in 2012 so he needs this competition to be a success. he needs to try not to ruin the party. of course there is also the danger of the rise of the far right wing like we have seen elsewhere in europe, and austria. the polls in france, and we are just a year before the french presidential election. a france makes it to the finals or wins this tournament, it could be a boost in popularity. in 1998, france won the world cup and that was a boost for they president at the time just for the president at the time.

thank you so much. -- carolyns in paris is in paris. let's turn from the preparations for the european cup to another question -- who should you bet on to win? parkes, equity analyst at a just ec joins us and still ebh us, edmund shing from -- robert,hurry the what you are looking at its you are trying to tell us who is going to win the tournament. robert: right. we have applied our framework to the world tournament and found out some interesting results.

it is very much a relative concept so we are intentionally looking for things like surprises. francine: so you think turkey will win. i am looking at a chart. turkey is number one. poland is number two. robert: we do not think turkey is necessarily going to win but we think they will have a surprise. we have countries such as france, the host nation as winners. the last time they hosted the tournament they won it. they also won the euro in 2000 as well so i think france is the one to watch in terms of potentially winning the tournament. francine: when you look at the positive dynamics here, and edmund, also i have some questions for you, positive dynamics is looking at the team or the country? robert: ed is looking at the

form of the team going into the tournament, is that team being re-rated or d rated. goody has had very momentum going into the tournament and yet investors are cautious. francine: this is like the movies of the euro 2016. ed: what i find very interesting is that germany is overpriced. robert: that is correct. i think if you are looking for a potential downside to the prize, we would highlight germany. if you think about their form in previous tournaments they do tend to peak at the right time, but their form going into this tournament has been particularly bad. optimism on germany and yet we are seeing the momentum is being a negative. francine: i love these

correlations, because i do not really know if they work out but it is an interesting way of looking at economies and the strength of the football team. ed: i think france has some serious upside because we know from an economic standpoint -- francine: it is a mess. a france were to win, i think we could get a wave of optimism like in 1998 and boosting consumption. francine: you live in france. if they pull this off in a great way. will it actually boost the president's popularity? robert: i think temporarily, yes, but ultimately it will not make a difference since election is too far away. francine: with a 16% approval rating, that is pretty much a given. ed: i think the populist really

want to dump him and i think there are a number of good candidates which have good public approval. edmund and robert, thank you very much. i know we will be talking a lot more on this. robert parkes from hsbc, edmund shing stays with us. plenty to talk about, including brexit and the netherlands is said to have its second biggest quarter of ipos in seven years. how the brexit debate is affecting markets across europe. ♪

francine: welcome back. the figurehead of the brexit campaign has been accused of putting his own political future ahead of british workers. boris johnson was taking part in a tv debate last night and his opponents said he is using the issue to enhance his political credentials. they seem to want to take a huge risk with the employment prospects of millions of people up and down this country. to careou do not seem about the millions of jobs that will be at risk if we leave the eu. i think you only care about one job, that is yours. inclineduthority i am to trust is our prime minister

david cameron who only a few months ago before the logic kicked in, it was very clear that britain could prosper for an florist outside -- and flourish outside of the eu. francine: the brexit risk is one of the factors that has been pushing european countries to it has pushed its netherlands towards their .iggest ipo announcement this ipo values the company at 2.9 3 billion euros. i'm pleased to welcome the ceo of asr who joins us on the phone. congratulations on the ipl. i know it was very important to you and some of your immediate competitors to get this done before brexit. you see brexit as the biggest risk? >> we are happy we succeeded and

market that stock could become volatile due to the brexit, it is important to be upfront that the final round in the u.k. companyowever, a dutch solely focused on the dutch market so the final outcome may us,he that important for but for a volatility market point of view we are happy we succeeded before brexit. francine: you take this as a serious threat or are you concerned that brexit can happen? jos: looking at the polls in the u.k., theoretically it can on the road of the last two weeks, i feel the sentiment starts to turn a

little bit, and hopefully at the ,nd of the day u.k. will be take a wise decision and stay in the eu because otherwise they become isolated. i think from a european point of view that would not be a good outcome. how does asr compared to other european insurers and are you seeing the weight of negative rate? jos: we run a fully hedged book. we are very well capitalized. one of the strongest positions in the netherlands and europe, and our focus is on capital generation. that resonated quite well when we were in the u.k. and also in new york and boston. others, asr is a well-capitalized company that generates capital. , we are able to

distribute it to our shareholders. is the mainat concern you have for your company over the next 12 months? jos: the netherlands is a challenging market in competition terms, so remaining strict on pricing so we can keep on delivering the good results and returns as we have done over the last few years, that will be a challenge. but we are very strict and we will succeed. francine: thank you so much, the ceo of asr now m who just -- asr netherlands who just ipo'ed today. the fact that brexit is concerning ceos because it a ad volatility to the market but for insurance companies in general, the insurance market is a mess. ed: if you look at different inkets, the pension market

holland is most affected by negative bond yields. according to my colleagues the 10 to 30 year spread is important to them, and the more it flattens the more important it is for such pension funds. companies, and this is also true in france, when bonds get lower and lower it gets more difficult to propose sensible savings products. historically they have always been based on bond yields of zero. how do i give the consumer something that actually want to buy? francine: you also have to take so much more on. regulation has increased twofold. ed: the problem is it really puts insurers off investing in high risk assets because it is a higher cost. it is going to cost you in terms of capital. insurers are in this

are in this place where bond yields are not helping them out they do not want a huge risk. francine: 13 days until we have the referendum, are we going to see a lot more volatility, are we going to see a lot more guild to yields until en? robert: i think the spread will remain between guilt, yields, and bones. it is -- bunds. it is more likely the markets will continue in a wait and see mode. francine: what happens if brexit quiz goes -- what happens if brexit goes through? our official view as we do not have a view for clear reason, which is fine. francine: it is impossible to know. ed: i think it is impossible to know because it is a very complicated issue. francine: if brexit does not

happen, does sterling go back up , do have an increase in interest rates soon? ed: i really cannot tell you. i think generally politicians will be relieved and i think the electorate around europe will also be relieved. francine: and the markets, 13 days to go. 13 days of many more debates and entertaining thoughts. head ofhing, global equities at bmp parable. ♪

francine: welcome back. let's get straight to the bloomberg business flash. nejra: leptons the shares are trading lower this morning after they announced a surprise departure of their cheap financial officer does chief financial officer -- chief financial officer. bp has agreed to merge its norwegian unit with that norsk, -- i care will while bp willke oh 30's -- 30%. a whistleblower is helping the u.s. security regulator about

the borate -- deutsche bank trading. -- the bank has declined to comment but referred to a statement given to bloomberg last month that says it is cooperating with the sec. that is the bloomberg business flash. francine: let's have market checks and's we are about does go hours into the trading session. we are seeing a little bit of dollar strength. you can see overall probably the story of the day and the week is a lot of these yields under pressure. we have a new negative record low for the 10 year japanese bond yield. stay with bloomberg, "surveillance" is next. that is not in negative territory, but it is that 0.02. we have an interview with a

former ecb president and we will be asking him about negative rate and corporate bond buying. i will be joined by tom keene from new york. ♪

francine: the big bond theory. yields hit record lows. the 10 year bond makes headlines. of monetary policy is needed to fix the euro area. european stocks could lose a quarter of their value in case of a brexit. this is "bloomberg surveillance." i'm francine la