francine: terror in florida, the u.s. warns -- moran's a shooting. risk.ndum we are 10 days to go, markets are rattled. aerling slumps and they tend -- the 10 year yield hits a low. the 2016 bond rally market is not over yet but good men disagrees. i am francine lacqua in london with tom keene in new york. we awoke to the fake news we had

yesterday so of course we have to keep an eye -- the fed news yesterday so of course we have to keep an i am what happened in florida, and central banks. tom: it has pretty much become routine. is the exhaustion of how many times we have seen this before. it was a maze -- amazing in new york city to see the various shades of shock about this tragedy. this was different than the ones we have seen before. francine: it is different and i know that it may also have political ramifications so let's head to the bloomberg first word news with nejra cehic. interviewed the fbi but each timeller they closed the investigation for lack of evidence. he is blamed for the worst mass shooting in u.s. history.

if -- 50 people were killed and 53 wounded. he was killed in a shootout with police and before the shooting he called 911 to proclaim his allegiance to islamic's eight. david cameron is turning to his rivals in the labour party to stop the u.k. from leaving the eu. gordon brown today will make the case to stay in the eu. labor support is crucial if cameron's government is to avoid a brexit in the referendum. france says it is able to get about 80% of its flights in the air despite a strike from pilots. they now have to work longer hours without more pay. collectors,ge railway workers, and energy employees have also walked out. bernie sanders will meet with his democratic residential rival hillary clinton tomorrow night.

clinton is their presumptive nominee and tomorrow is the last primary, in washington, and d.c.. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world, i am nejra cehic. an exceptionally busy week, not only the tragedy in orlando but across all of economics. markets have moved over what we saw thursday and friday. let's go to equities, bonds, securities, commodities. closing 17 865. on the yields, they come in again. we revisit 1.62% right now. euro churning a little stronger, oil week off of the late friday weakness. nice segue.

18.25 on the vix becoming elevated and to the francine lacqua statistics, sterling absolutely crushed on friday and francine, you are more of to speed on this as we see continued weakness. francine: i also had the vix on my data check. i will probably leave it for the next hour and look at it again because yen is rising to its strongest level since 2014 as the 10 year bond yield is dropping to record in the u.k. there is growi anxiety over the possibility of the brexit from the u.k.. german government 10 year 0.00. tom: i'm glad you brought up the german. we still have the yields down there as francia notes on the 10 year german, really getting down to the zero demarcation. let's get over to the bloomberg and look at what the pros look at.

is a20 years, here stronger yen, weaker euro. this.e did not like benomics.n francine: global yields, i want to go back on the global 10 year and this is my chart of the hour. when you look at the blue line, it is the german 10 year. could gotouch zero, it into negative territory, and in white is the negative forecast. tom: to begin our perspective on orlando away from the headlines by thetinued news flow government and fbi, yesterday

some international perspective. ihs jane's acclaimed terrorism and insurgency research center, we are thrilled to bring in the doctor this morning. and i look at this moment i think of what the british had in the 30's dust in the 1930's and into the 1940's -- in the 1930's and into the 1940's they had a guy named churchill. where is our churchill? i do not see it. four mass shootings and we are looking for someone to the rescue. where is that person? difficult really issue and as you say, we have seen these tragedies over and over again. the president in the u.s., for example, has attempted to tackle

this problem through pushing gun legislation, but these are really difficult issues and it is not necessarily something thisyou can solve through type of top letter -- top level leadership. tom: how do you rationalize the fancy guns that these people use in the united states? if i look at a simple wikipedia on the ar-15, it reads like a military gun from germany. i do not mean to pick on germany. what is your prescription to take certain firearms away from the public? they do that in other nations, don't they? absolutely, and while taking them away from the public has not entirely gotten rid of cool shootings or mass shootings in europe, we have seen these

issues in germany and finland and other places. , the widey is good availability of these type of military grade weapons does contribute to the potential impact of these types of loan --or attacks and the use of tom: the distinction of the ar-15 which is pretty much the same as the m-16, is it can be modified. i have no idea what the modification was in orlando, but as the information comes out it will be once again military weapons being used by somebody the fbi had already identified as somebody quite dangerous to six i. -- society. francine: this massacre hit a nerve on several hot topics at the moment. the approach to gun control, global terrorism, and also immigration. how does this play into the u.s.

presidential race? otso: it is really very difficult to say at this stage. the elections are still quite far away and i think what this the do is it will bring questions and debate about gun , andback into the picture donald trump in particular is likely to really have to defend his position on gun laws in the face of this kind of tragedy. that might be difficult. tom: thank you so much, greatly appreciated on short notice. givee next hour we will you domestic and international perspective on the events in orlando. on short notice, richard haass kind enough to come in. looking forward to speaking to ambassador hoss on terrorism. stay with us.

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francine: welcome back to "surveillance." francine lacqua in london, tom keene in new york. nejra: and south korea, latte group has put the biggest ipo of the year on hold. they had to raise as much as foreign a half billion dollars for its hotel unit but korean investigators are widening their investigation. agreed to by blue coat systems for about $4.7 billion in cash, a deal that will add to their cyber defense tech elegy and fill a vacant chief executive position.

greg clark will be in charge of the combined corporation, the fourth ceo in four years. cracking down on what he considers above the lawbreakers. memos,ng to members -- bill winter is concerned with employees' financial dealings. a number of standard chartered senior bankers have been fired. that is the bloomberg business flash. francine: we are joined by's even king, senior economic executive with hsbc. -- stephen king. we have u.k. yield in blue, germany in white, and we have the u.k. a are -- an article that came yieldsay, it means that have dipped below zero. germany maybe next. what does it mean

psychologically? stephen: what we are seeing is kind of a convergence towards japanese-style behavior. we used to think japan was a unique and peculiar country but the rest of the world is delivering outcomes that are very similar over the last 25 years. very low growth and very low inflation, not much in the way of policy stimulus and continuing yields falling. francine: what is the prescription to avoid that? stephen: if only we know, because japan is been stuck like this for 25 years. it is difficult to escape from this trap that has come through. what is interesting in europe and the u.s., nominal geeking dominic at -- common economic thenity has come in lower people forecast, and this is what we saw in japan over the last quarter of a century.

we can do more in terms of quantitative easing, we can do helicopter money, we can do fiscal expansion, but in all of those cases japan has tried all of those things but it has not worked. exactly thethat right thing with regard to qe, the yen falls along way but despite all of those things we should normally think of, japan is still pretty weak. tom: stephen king with us. japan that dr. king is talking about. we have showed this a million times, the bank of japan acts. they wanted to go here, it failed, and here's the rollover we have seen with the yen ever stronger through 105. stephen king, as you can --

synthesize markets, are we setting ourselves up for a jump situation where things destabilize or can we set up wide paths as we adjust -- glide paths as we just -- i just to what is new? stephen: as we saw in 1985 with an attempt by different countries around the world to try to kickstart their own economies and in the process, perhaps triggering some recovery in world trade which has been weak over the last two or three years. the three countries that really stand out as possibly having the chineseto do this, the have a hugely high domestic household savings level so they could reduce that perhaps with expansion of consumer credit, and the germans who can pay their workers higher wages.

critically good news for the rest of europe so there are things that could be done. the chances of that happening are low because of the uncertainty over the american presidential election. germany, -- a large account surps. maybeynthesize formate, francine you can help, stephen king, you are the great synthesizer. help me into how you go into a meeting with steve major. he looks like a genius over the yes -- last year and a half. we are getting to an edge of steve major. what will that mean for your synthesized world? stephen: we will have to bow to steve major. he is extraordinary. day, the viewthe that he has is similar to the at

view that i have. tom: a grade. -- agreed. stephen: when we get to that point, the question is what happens next? one possibility we would be discussing is that you and up with some kind of attempt to helicopter money, the idea that you print money to fund larger and larger budget deficits in the hope that you create more inflation to get people to spend rather than save. there are some big problems with that, which is if you are creating higher inflation you wipe out people's savings. francine: i want to bring your attention to an article written in bloomberg views, where he talks about duration. there is a limit on how central -- ability to enact comprehensive policies that ease

the overreliance on central banks for growth, it will be hard to validate axis thing asset prices and push them higher. stephen: when you have a world you cannominal growth typically expect to see as a price is not doing really well, particularly equities and property. the consequence of qe is that equities have done well indeed. they are decoupling the equity markets that have been priced to something beyond perfection, and the underlying economies which has done a lot worse. profit shares in gdp have risen quite a way but i think on its own that is not enough. we have a decoupling of financial help from economic reality and that means that something has to give. policymakers are hoping that economic value to get better but it has not done so so far.

tom: stephen king with us with hsbc. we will helicopter the surveillance team into london and join francine next week for a complete week of coverage focused on the key british vote. in the next hour on these most interesting market, on inflation, disinflation, and deflation. we will go five years forward. good morning. ♪

tom: good morning.

francine lacqua, i am tom keene with you this morning. let me get to my morning must-read from the telegraph, they have a brexit feel. mr. johnson, known on the remain he has called for britain to join in building europe or in creating a european identity. that is because they know that this ideology, their dominant in brussels, would be viewed with alarm by francine lacqua. i thought you would get that going this morning. francine: it certainly points to anxiety or this acrimonious fight that we have seen play out 10 days prior to the referendum. if you look at the next future position on the pound, growing anxiety is spooking investors.

what do you look at? do you look at polls? stephen: the polls in previous referenda have not been 100% reliable. people have been moving more towards the brexit side but the ones are leaning on the side of remaining. in part, the u.k. relies on funding from other countries to becausetheir deficit other countries invest in the u.k. to be part of the single market. if the u.k. leaves, the question is what happens to the funding. francine: is the sterling moore susceptible and a euro? stephen: the u.k. still is looking -- living well beyond its means.

funding that post eu could be a major difficulty. acrimony,no political tom keene will be joining me the week of that referendum. we will bring you live coverage from london. stick with us for the latest insights. unimportant interview coming up in about an hour from now, we talked to george osborne about brexit and the current account deficit. we are looking at st. paul's. gorgeous -- tom: gorgeous. francine: but it is not sunny. ♪

tom: good morning, everyone. markets on the move this morning. we will continue the discussion and of course the ramifications of the vote next week.

there is a simple thing, the tragedy of orlando. arguably the worst terrorist .vent since september 2001 right now, and update from monday. >> the man blamed in the orlando shooting is a member of a british security fund. he pledged allegiance to the islamic state in a 911 call. 50 people were killed, 53 others were wounded. he was killed in a shootout with police. he had been employed for nine years. he had interviewed twice over potential ties to terrorism, but the cases were closed due to evidence. paul ryan says he does not agree with donald trump's plan to undocumentedns of

immigrants. the government of singapore is warning the u.s., do not tinker with a giant pacific trade deal. they say that any move by congress to amend the agreement would risk the deal collapsing. the transpacific partnership has not been rectified by the u.s. at the tony awards, hamilton was the big winner. the privacy about the first u.s. 11asury secretary won awards. they were donated to the orlando shooting victims. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. francine: thank you some much. the economy in china grew at steady pace last month. the monthly tracker showed a 6.9% increase in gdp. within the target of the

leadership, they have set the target for this year. with us, stephen king joining us china somaticd of research. when you look at china, it seems that the economy is growing. how much is it officially stabilizing and how much is it real? where he saw the stronger investment was in power, water, and transportation. that is offsetting the other part of the equation. you sell investments down almost is and actually production falling.

that is a sector where the economy has been the worst. francine: how should we look at and worry about debt? we have the warning about corporate debt. manageable if they get the authorities to go ahead. getsom the platforms, it transferred gradually to the bond market. you are not going to get a big crash. where the concert is is in the private sector. reasons that they are

slowing down is that people are going bankrupt. that is where you don't see the headline numbers. take stephen king's view of a slower global economy and the andc idea of disinflation deflation. you know the rate in china is much higher than anywhere else. it or are theyt so messed up in the system that they are immune to the ability to adjust? i mean,g is you have -- just dipping into its own credits apply. what you are saying is china pushing more credit into the market but having an extra effect on the economy. what we are expecting is the shanghai economist think that

inflation could be a very big stress as we head into h2. it limits what the chinese authorities can do til loose in the supply if they need a stimulus. stephen king, i want you to jump in on this. this is a chart without banners. this is the china real rate. there is no other chart like this in the world. the idea here that china has to adapt and adjust to their adjacencies whether it is japan or germany. are they able to do that with a nonnormal microstructure? thate of the problems china has is it has been hit a lot harder by vince and the rest of the world. i can go back to the global financial crisis and the biggest

driver, from a demand point of view, are experts. incredible gains in exports. that has all fallen away post financial crisis. it is growing is returns on infrastructure investment are little less than might have been thought some years ago. your basic scenario is that they will get through this. they were actually transition to a more consumer led economy in 5-10 years. >> in 5-10 years, but we could get some bumps along the way. in june, we are facing a squeeze. the big issue comes down to the healthy and and

balances in the growth profile changes. you have a $2 million money supply in china. significant.s how that comes out has to come out in the security market. over 50 been built up years. it is not going to disappear overnight. we're talking about a 5-10 year drive on china's growth, which they have to offset with some other stimulus elsewhere. tom: thank you so much. morning.his let me do a data check. there is a lot going on. asis as subtle and nuanced thursday and friday. continued sterling weakness. bloomberg surveillance. ♪

francine: welcome back. this is bloomberg surveillance. we have to look a little bit deeper into yields and the risks out there. stephen king is still with us. i know we talked a little bit about yields before and how you mispriced, or how certain things are mispriced or possibly distorted. since we started the program, yields on the 10 year german have gone lower. you were at levels not dissimilar to this one year ago. will retest this every 12 months? >> part of the story here is whether the ecb will come along

with something that is truly transformational. last year, you have the ecb doing lots of stuff including experimental policies. orbe they can do something change the rules of the game. what we discovered is a years.ous over two what they promised they will do and what they end up doing are two different things. francine: they are buying corporate bonds across the spectrum. do we need to get some months to see if they reinvest or have an impact on the economy? withat is interesting asset purchases in general is it has simply lifted the value of the assets. what we have not seen is the has that the rise in values

a pickup in capital spending. capital spending is much weaker than we expect. one should not lose sight of the fact that what are you trying to do with that? a simply trying to push ,nflation up to 1.5-2 percent which would be ideal? the integrity,e decently find that inflation does not jump to 2%? tom: you have a brilliant note out on unhappy families. whether it is a family across the dining room table or recapitulating to another time and place. if i look at my bloomberg screen, it screams policy coordination. >> it is not there at all.

which we both had a veryll -- you strong agreement. the dollar was massively overvalued. had incredible strength of the dollar and the yen. it seems obvious to the japanese, the germans, it was something they could all agree upon an act upon. the currencies are not as misaligned as was the case. what you have instead is a shortfall in nominal growth. tom: i will go with that, but what if we get the currency adjustment, the pair adjustment that you are talking about? they say that you see some elements of a plaza like environment now.

are we moving in that direction with the yen? 138, and on and on. >> i think at the moment the evidence is much more limited than in the mid-1880's. had reald-1880's, you interest rates driving up. it led to a very strong dollar. you have not got the same things coming through today. what you have instead is ak growth. wee the chinese will say it requires stimulus from the germans. the germans will say stimulus is bad,. francine: how to make out of the boat growth environment? do we need to restart straight out? low think we will see a

growth environment for the next 4-5 years, the reality that we are in. recession.ange is a i think the other big question over the next 4-5 years is what has happened to productivity growth. ?hy is it so weak does it require a rethink of how economies work. it is all about what is going on in the engine room of the economy. >> that is what we will be asking next. maybe it goes back to the big companies that are putting deflationary pressure on wages. stephen king stays with us on bloomberg markets. and the exclusive interview with president bill clinton. that is at 11:00 in new york. ♪

good morning, everyone. e in new york.

german yields at a new low. this was 20 year down to new lows. interesting markets. now, the bloomberg business flash. >> thank you. no home sales in china rose last month at the slowest pace for this year. they were up in may from one year ago, a little more than sincef the increase april. the chinese government had taken steps to cool off the government. according to the wall street journal, and airline known for its service is now training employees to be nicer. they are spending hundreds of millions of dollars to return to their glory days. a company thatom became the shareholder in 2014. the largest equity manager is buyoutg for the biggest

this month. the fund will target companies that are larger and less risky than other buyout markets. francine: thank you so much. this is what we are watching for the week ahead. the busy week ahead. busy action. meet tomorrow, the apple worldwide developers conference kicks off. of course tomorrow and wednesday, all eyes on the fed which begins its tuesday policy meeting. and, doj. we try to find out the risk around the world and how banks can be ready to act. tom: absolutely. our typical fed coverage, we will do that this afternoon with some wonderful guests lined up.

joining us now, as we consider and i, again, francine will be together for the entire week next week in london. we are joined by a member of asia group. we spoke about brexit earlier. what did they need to do to be capture momentum? what is the rhetoric you would look for? probability is 60-40 for remain, but obviously, people are worried. i think what remain has been doing is making an emotional, economic case to stay in, which works, but only to a certain degree. people go out to vote more. tom: you have taken three degrees in columbia. what is the modern european

thought that will keep united kingdom in the fold? >> it is the idea that britain's participation in the continent has been enormously important and anonymously stabilizing. i think that is an argument that they are trying to make. one of the things that they have done is brought corrine brown out more. this helps a lot because brown has a great deal of credibility. joinld tony player not to europe. in that context, brown, being someone against participation in the euro, but making a strong case for remain is a strong economic case. baber, therey from has not been a real campaign to get women voters on board. 10 days left, what is the prescription to get those voters to vote to remain? >> that is an interesting

question. i honestly have not thought that much about it. context,, in the u.s. we are used to thinking about the gender gap. over here, it has to be the case for security, for economic security or the case that you are making things worse by leaving. tom: i was up all nigh rooting for the st stanley cup champions. let's bring up a chart. it does something different. you see the parallel paths of growth. peak.ed them at their if i am the united kingdom, i have outperformed france as a proxy. what does your need to do to enthuse people of the united kingdom to join them with weaker nominal gdp? >> it is illogical. > one of the issues is the

factors that contributed to french nominal growth -- they were able to run more activist fiscal policy than france was able to. they ran acontext, relatively easy policy because they cut away with it. that is clearly a sense attempted onen growth. it does not apply to the u.k. case because they have their own currency. >> can i make an extra point on that with regards to britain? you say why should they be in the state when everyone else has been weak. they have done very well being in this thing. in other words, they have outperformed in europe. you look at the economy since

1980 and compared to the other big companies. they have seen a big increase in living standards since then. couldght say that they head perfectly well with the evidence. stall withgration people moving from the united kingdom? question,ot catch the sorry. tom: will people stop moving to the united kingdom if they vote for brexit? to the u.k.ve moved already in a big way over last 10-15 years. ofy have had a huge amount immigration, partly because they are number of the eu. i suppose it would slow down if brexit were able to impose tougher migration policies that we have seen so far. francine: would actually implode

something -- they are even more france andc in germany than they are in the u.k. >> they would have to leave and too well. under those circumstances, it makes it harder to leave altogether. tom: thank you so much. we will continue our coverage on economic finance investment in the tear in orlando. york, stay and new with us. bloomberg surveillance. ♪

21, 20 three, then 27 children.

then, 32, now, 50. america has no answer to mass shootings. richard haas on terror, fears, and unsafe america. it is a june of di discontent as the united kingdom independence.wed disinflation and deflation. we see new record lows in german kn yields. good morning. e.am tom keen with me, francine lacqua in london. i will jun join you next week for the entire week in london. francine: you have to look at the polls. they'ret know if reliable or not, but there is a lot of momentum for the pro-brexit side. that is putting a strain on

markets. tom: the sterling weaker. i can almost afford for you and me, lunch. now, first word news. >> thank you. twice, the fbi interviewed the suspected killer in the orlando mass murder because of possible ties to terrorism. each time they closed the investigation for lack of evidence. he is blamed for the worst mass shooting in u.s. history. 50 people were killed and 53 gayded at an attack at a nightclub. before the shooting, he had called 911 to pledge his allegiance to the islamic state. david cameron is turning to his rivals in the labour party to stop the u.k. from leaving think european union. the former prime minister, gordon brown, today will make the case to stay in the eu. labor support is crucial if cameron's government is to avoid

a brexit in the referendum on june 23. the economy in china grew at a steady pace last month. increase in6.9% gdp, little change from april. private investment keeps falling, but that has been .ffset by government spending air france says they are able to get about 80% of flights in the pilots.ite a strike by about one fourth of pilots have walked out because they have to work longer hours without more pay. garbage workers and energy walked out. also bernie sanders meet with hillary clinton tomorrow night. clinton is the presumptive nominee and tomorrow is the last primary in washington, d.c. geters is hoping to some of his positions in the party platform. global news 24 hours a day,

powered by our 2400 journalists in more than 150 news bureaus around the world. tom? tom: thank you so much. let's do a data check here. we will drop in on the debate and discussion in orlando, and then come back to the markets on the move. compressing lower. the euro is stronger this sterlingith huge dynamics. on to the next screen here. very quickly. the euro sterling going the other way. the euro-yen, this is strong again, weak euro. francine: what i am watching out .or is the german bond again, this is extremely important. lackluster global growth, negative interest rates, and banksrdinary buying from

have affected demands. you see the risk is pushing the yield lower. tom: barclays capital joining us in a moment. he is a rhodes scholar. we have spoken with richard haas before the mystery of why america is different. once again, thank you so much ior coming in after this -- guess tragedy barely describes it. can we impinge our democracy if we hit stricter about automatic weapons or surveying people? the fbi saw the sky twice. what is our risk to limiting our liberty in our democracy? always aboutis trade-offs. in this case, there always trade-offs between individual rights and security. the question is where you want the pendulum to be.

ofiously there are issues .urveillance it will shift into a different approach. tom: is there a nation that we can emulate? >> it is difficult with the traditions of the united states. tom: i just watched "stagecoach" with john wayne. the logic here goes back to "stagecoach." the pendulum has swung back in the direction of individual rights. it has to be greater capacity for surveillance. tom: i would point out that what we witnessed this week, and i believe, the most killed since september 2001. francine: it is the biggest massacre in the u.s. since

september 2001. you were saying that this touches a lot of nerves. loss of life, can control, terrorism, and immigration. how did these tight together? thee just discussed trade-off between individual rights and collective security. this is not really about immigration. this is not someone who came in one week ago. this is someone who was born here, his parents are here. i do not know about this individual in terms of his own psychological and emotional makeup. there is a larger argument here. no matter what we do in terms of surveillance, gun control, immigration, we can prevent the so-called loader attacks. we have a country of 300 million people. nominally are successful in everything you

could think of and we shut our borders for years, there is no way we can preclude the possibility that a tiny percent of the 320 million people will do that awful thing that just happened in orlando. this is part of what comes with living in an open society. francine: at the same time if this is an isis inspired attack, there are ways to combat ideology from the west. it, but youombat have to assume that sometimes the other side will win. it is much easier when it is in ice is directed attack here that is something that all enforcement and intelligence can track. when it is inspired, how can we not know that someone watching what is happening will not to a copycat. tom: the fbi did their job. i think they should almost take a victory lap in that they identified this clown twice, yet, the limits of our democracy

did not allow the fbi to say something more. will be get to that -- we get to that? i see note debate of allowing people to protect us to do more. , if you will,do blanket protection. two surveillance if you have a specific cause. we are talking about scale of investigation that the fbi cannot follow or track every individual that may be on a suspect list. that is simply beyond the capacity. other nations,f and when they look at this. >> look at israel. israel, for years, had to deal with these sorts of things. what it means is a greater capacity for surveillance. it also has to do with point defense. tom: what you mean by that? >> it is not difficult to get

into buildings. we are talking about having security, perhaps arm security, at places. searches before you go into nightclubs and movie theaters. we are more likely than not to have the experience you have going into an airport, going into many other buildings in this country. francine: you talk about stricter controls on security. what about stricter controls on who can purchase guns in the u.s.? debate in a powerful this country. i believe there is an argument for it. i don't understand why the issue is so often all or nothing. why we cannot say it is perfectly fine to have certain types of weaponry essential for hunting or self protection, but have certain clips -- why don't we make a

distinction. i don't understand why the and seems to oppose any sort of control and the idea that it is a slippery slope. that is what we need, a much more refined debate about protecting individual liberties but also protecting individual security. tom: richard haas with us this morning. we will come back and look at present show politics as well. as you know, markets on the move. what an interesting thursday and friday. we are watching particularly the german 10 year. it is a wonderful time to speak of barclays.pond he lives, eats, and breathe things that are inflating. next. s♪

francine: this is surveillance. tom is in new york. let's get to the bloomberg business flash. >> and south korea, what has biggestave been the ipo of the year put on hold. korean prosecutors are widening investigations into the corruption. over walgreen says they have terminated the relationship with the company and will close testing centers in 40 stores. that leaves the company with few outlets where they can get tests . reputation was

damaged. according to the most bloomberg news has seen, bill winters is concerned about employees' outside business interest and .usiness dealings a number of senior officials have been fired. tom: thank you very much. richard haas is with us. we are pleased to introduce michael pond of barclays capital . in hispers deflation sleep. so wonderful to have you back. let me bring up the single best chart. this is the michael pond chart. this is the gaming of disinflation. sub 2% right now with recent rollover. what are we doing? if you look at domestic produced inflation. or at least service sector

inflation, it is around 3%. cpi. tom: elevating cpi up there. >> if you look at court goods prices inflation, it is flat or in deflation territory. tom: when you sit around the effect is are in a bad direction. can policy makers change those sectors? how do you stop a german 10 year from going negative. >> they think the policy makers going in the same direction of the deflationary pressures. the fed talks about tightening, despite the fact that global risks seem quite high. francine: i want to bring you to the bloomberg terminal. the yield keep going lower. looking at the 10 year, german

youd -- overall, there are on wa yields. aobal growth nowhere near negative interest rate. when will it end? >> it is not clear when it will end. right now, we see yields move lower on risk factors rather than fundamentals. fundamentals are not strong. the latest move is about brexit and concern about global risk factors driving a flight to safety intake u.s. yields. inflation has picked up in the u.s. recently. policymakers again continue to put downward pressure on longer term yield because the market is concerned about policy errors. francine: this is the longer end of the curve. when you look at the german 10,

e touchogically if w below zero, what does it mean for the rest of the world and the state we live in? >> policymakers are in a tough spot. the economy is improving in the u.s. but weakening in europe, the u.k., even in japan. bank of japan to take new steps as early as july. you are aour study -- great student of economics and inflation dynamics -- has there ever been a successful reflation? there was that famous speech 10 years ago or so. can we reflate? >> we think we can. we think that policymakers have the tools, but they do not work as effectively as they had in the past. they need to do more, and it takes longer time.

in the u.s., we think we are there. the unemployment rate has dropped to 4.7% and we are starting to see a bit of wage growth. core cpi is largely normal in the u.s. tom: this goes back to the spirit of the country. it goes back to levels of austerity. >> it also reinforces the case more resilient. there are reasons we should be doing more in infrastructure. tom: this is michael pond fault, what i see here. francine? there is definitely also a clear turn in how people are seeing brexit, the risks. stocks sliding with the british pound. coming up later on bloomberg , the secretary general for the oecd.

he will weigh in on brexit and the risks surrounding the european union. ♪

tom: good morning, everyone. bloomberg surveillance in new york and london. the chancellor speaks now. what is the significance that he moves to liverpool? francine: we have heard from the chancellor quite a lot in recent weeks. it is significant because they is saying that labor, which

meant to be pro-remain, have not done much out there. there are so many questions. first of all, the polls clearly shifting. people are asking why there has been no messaging towards women. it was the first time yesterday that we heard of an article by samantha cameron, the wife of the prime minister, and also criticism of the pro-remain campaign saying that europe is not in a great state, but we have no choice. accentuating the negative, rather than the positive. fromit is 144 miles liverpool to belfast. experience with other parts of the united kingdom. >> right. if this goes through, my fear kingdom.the disunited

if this happens, in scotland, you will have of replay with a different outcome. they will take the high road and say, we want to stay in europe, we will take the highway. you will have an entire debate i ut whether northern ireland stays a grade. this could bring to the for all of the troubles that have been simmering. tom: the counterfactual focus of edinburgh or belfast. people within england saying, if you want to leave, fine. do you perceive that tone? >> i don't know if there is that , but people are not looking at it that way. they are not sitting back and saying, what are the pros and cons? it is the latest men

manifestation of venting. you are unhappy with the government, with the prime minister. there was a poll that showed people did not have the basic facts about immigration -- anything to do with the vote. this is not a vote about the merits. it is a by election with incomparably greater consequences. francine: that is a very fair point. is verylook at it -- clear to me, anecdotally that they are not very sure what they are voting on. there are mixed messages. at the end of the day, in the referendum, what will focus on? sovereignty or jobs? >> i think sovereignty is a powerful emotional issue. that will attract some people. they will also focus on jobs. the pro-remain site has been politically anemic. this has been the case of political malpractice from the get go. the fact that we are having this

referendum, the fact that government industries have been free to depart from support for the prime minister. that the current head of labor has done virtually nothing to support this. the establishment has not made the case that britain has enjoyed unprecedented stability. the tragedy is not just for britain. it is for europe. i think it threatens the entire european project. it is also bad for the united states. francine: thank you so much. tom will be joining the all of next week to bring live coverage from london and the latest insights and perspectives on the referendum, june 23. ♪

>> the man blamed him the

orlando mass shooting was employed by a british security firm whose clients included the u.s. government. was a u.s. citizen who declared allegiance to the islamic state. 53 were wounded and he was killed in a shootout with police. he was an employee with the form g4 s -- the firm g4 s. house speaker paul ryan says he doesn't agree with donald trump's call to deport millions of undocumented immigrants but he is still standing by his endorsement. ryan dismissed the idea of anyone mounting a challenge to trump in next month's convention. in south africa, oscar pistorius faces up to 15 years in present -- in prison for killing his girlfriend. the judge who convicted him of

manslaughter has been ordered to sentence him for murder instead. vladimir putin and the european commission president may discuss a controversial natural gas pipeline project this week. petersburg to st. discuss ways russia can in -- can expand its gas output to europe. in hockey, pittsburgh penguins have won their fourth stanley cup. 3-1.enguins beat san jose global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. and a huge winter here summer for our winter sports and basketball and hockey. it has been extraordinary.

ons team was down on arrival 12-31-15. this team was going absolutely nowhere. it is one of the great resurrections in the history of modern sports. with the council of foreign relations, michael pond of inclays, the only glimmer orlando is it took us away from our absolutely insane presidential discussion for 24 hours while we focused on the tragedy in orlando. how does mr. trump reconnect with the republican ?stablishment after last week even with what he said yesterday on orlando? >> he is going to shift the focus of lesson an attack on hillary clinton and more to try .o reprise some of these issues

going to try to do is take the attention off himself andhis alleged shortcomings put it back on certain issues that he believes have resonance with the public. tom: the residents has to be with independent voters. how does he attract those people and keep a core constituency? security is a powerful issue, fear is a powerful motive in politics. he is going to playoff of orlando. can -- shows how defense how events can take over politics. >> matches in the u.k. but here. five months is a long time. francine: how should each candidate deal with this will end a massacre? we have hillary clinton calling

for tougher gun laws and donald trump pushing for a muslim ban. >> hillary clinton will talk about the need for greater and more defined gun control. this does not argue for a muslim ban, it would not have prevented what happened and the last thing you want to do is alienate the 3 million american muslims. you don't want to feel more people alienated and moving in this direction. trump will argue about the lack of success against isis and he will argue it has something to do with what is in this country with immigration and he is going to argue. this is going to be one of the defining issues where the candidates are going to take extraordinarily different paths. francine: what will play out better? >> my hunches they are going to be risk-taking -- be speaking to

their respective bases. the good news for donald trump is it gets the issue a little bit off of a recommend him -- a referendum on him. allows him to be talking about issues rather than trump university. is this a discreet and separate discussion or can you bring this into your world? >> terrorism impacts markets from a risk perspective because it hits the globe, not just the u.s.. -- impactmpact rex it brexit as well. where the elections can go certainly can impact the markets. populism can feed into markets as well as protectionism. part of the global inflationary story opening up chief labor markets has been a reversal of

attention is him. we start bringing walls and we start importing inflation again. walls isou look at nothing more than a diminishment of gdp? walls?l walls or jfk lax does that mean a lesser growth? >> immigration has been one of the real sources of this country's strength. look how much trade and investment has done. we've got to be safe and secure in the age of globalization are simply a fools errand. we talked about fiscal spending, we talked about fiscal spending day in-day out. how difficult is it at the moment to actually understand what a donald trump presidency will mean for the market economy? >> it is not clear where his

policies will end up. he is often saying one thing one day and others differencing. voters are looking for whether there will be an infrastructure package from government. limiter been a growth in many countries. the lack of structural reform has the past several years authority stepping on the gas, limiting the impact that stimulus has had. we are going to need a change in structural reforms from the fiscal side. tom: 10 years ago, the opportunity -- where is our opportunity? book years ago, i wrote a called "the opportunity" and the

next was called "the world in disarray." there is still opportunity out there in the world. if you look at the united states, advantages have in no way disappeared whether it is financial markets or rule of law or stability and quality of our universities. all of that is still there. the real question is if our policy can get there. inside the beltway it is holding us back. tom: thank you for coming in this morning. the foreign affairs magazine. their next issue is a wonderful treatment on the future of israel. briefing to get your week started -- mark halperin and john heilemann. we begin with michael pond on bloomberg surveillance.

francine: welcome back to bloomberg surveillance. tom keene is in new york. but get to the business flash. >> new-home sales in china rose last month at the slowest pace this year, up 33% in may. more than half of the increase in april. the chinese government has taken steps to cool off the market. alitalia is going on a charm offensive. an airline known for its serving service is training its employees to get nicer. fromf this is coming

alitalia's controlling shareholder in 2014. the world's largest private equity managers expects to finish raising its largest eye out call yet. blackstone group's buy and hold strategy of warren buffett. will target companies that are larger and less risky than most eye out targets. that is the business flash. opec -- itut of the kept estimating for supply and demand and 14. markets will be more balanced. this is keith in new york. research happier blast joining us in london.

great to have you on the program. this comes ahead of that all-important iea report for 2017. giving the final preview of how this year is looking, the farmers market is more neutral to opec. the key is going to be tomorrow when the international sees a 9:00 logo time. 2017 is probably what we're going to see full opportunity this year. opecook at the report that has been looking at non-opec suppliers for everyone else the united states -- in 2015, both areas increase production by 1.5 million.

that is the impact of low oil prices and that is the key why opec sees a more balanced market. tom: the history of the opec estimates is a little shady. our markets clearing? >> the markets are not clearing. opec actually has a good track record because usually they are very concerned. they forecast something lower than actually happens. if they feel the market is going blocks, there is more that opec is happening. we need at some point high growing price because demand is a fair amount in the united states that also india. we are not going to create enough supply to meet the demand in 2019. >> critically, if we sustain the

average of $47 a barrel for the next six months, is it all clear for debt workouts oil companies? what a difference between 30 and 47. is it all clear? >> no. it is not nearly enough for survival. this could be the bed. texas, because of production relatively lower than other areas, $50 is not all clear from their blue nile industry. -- from the oil industry. francine: we are seeing stronger demands of the emerging markets. , you area real growth mentioning in nearly. thehe best example of how demand is very strong, india is

joined by a moment of china. combination is a and also a better judy chu number. ,t does make a big difference even myself i go to the petrol station when i don't have to spend 50 or 60 pounds when they may have to spend maybe only 45. before we get back to your real oil into critical is the nominal gdp? when oil went from 100 to 75, it was seen as a good thing, a tax cut for consumers. below 50.ing got there was a concern about what that would do to the energy sector are, particularly in high-yield and yet equity -- and equities.

tom: what about where we are right now? >> the balance is healthy. it has been a leave about that down search. markets are calm because of that. futures at negative eight, dow futures that -66, the yield 1.61. the pound is gaining a touch. thanks so much with a great insight into oil. tomorrow, david westin will sit down with president though american.d the annual that is for an exclusive interview at 11:00 a.m. in new york.

>> looking at volatility and yields. andrrow, david westin jonathan ferro. look at that german 10 year yield. >> it is approaching zero and it is fascinating. brexit dominating the market, rick severs -- risk aversion dominating. the polls have gotten too close to call. later, we will bring you that interview with the chancellor. for me, the bond market just fascinating. global yields grinding down to new lows. the bond market could be in a bubble. we will be talking with undress goober later. er later. schoov

tom: we are thrilled to have michael pond of barclays. michael, you know this chart. the two year yield, we have shown it many times. disappointment and now back to standard deviations of this trend. how does janet yellen provide discourse and rhetoric to push against the disappointment of low yields. talkinged has been about hiking since 2012, so they have been talking tough but when it comes to acting, they have been relatively stub-ish. they won't hike but they will continue that rhetoric of "but we might in the coming meetings." whether it might be july or not until september is another matter. tom: what is in that, and this

is critical. i took the major slack to look and julyta up to june and the september meeting. after that, they are weighted to the data and they should be. that is normal. the problem we have with the fed is they keep trying to be data dependent at the same time they talk in a date dependent manner. throughout may, most of the fed speeches are "we need to hike in june or july." rather than data will support it. now they have to change the date. francine: when do you think they will hike? is not priced in, so it could really hurt markets. is july too soon? >> after the market meeting, we

changed to one hike. the week payroll report increases the chance that they don't hike at all this year but we do expect hike rates in september. francine: will it be the resumption of the dollar rally? >> it depends on whether the market sees policy error. if they are hiking for the right reason, then data is fine and we don't get big moves in markets. if they are hiking despite the fact that risks are strong, the markets will price an apology and you will likely get a decent rally in yields. tom: john herman over at mitsubishi marked down his terminal to a shockingly sub 2% number. year, see 1.60% on the 10 where should that be now? tom: higher but not much higher.

>> part of the reason why we are at a 160 is because of fear. low term premiums right now. even if premiums normalize, the fed is expected to hike the neutral rate over time that that neutral has come down and keeps coming down. >> what is in that is financial repression for so many of our viewers and listeners. to writeany hope ourselves so the sabres get a get a real-- savers yield. potential gdp has come down. that is why the long-term rate has come down. we need productivity to pick up. until that happens, rates are likely to stay low. tom: thank you so much.

francine, really looking forward to being with you in london. we will get through this week and move on to an amazing week of british history. it will be. i can't imagine where we will be on friday alone. onomberg is next television. an important conversation with the champion -- the chancellor. inrge osborne speaking liverpool as he tries to remain in the european fold. all this in the next hour from a beautiful new york city. this is bloomberg surveillance.

>> the pound falls to an eight-week low. too close to call. 7 a once calm market is somehow behaving erratically.

>> terror in orlando. a gun man is responsible for the deadliest mass shooting in modern u.s. history. we will discuss what the tragedy means for presumptive candidates trump and clinton. >> a very warm welcome to bloomberg . i am jonathan ferro alongside david westin. for the next days, events on the table. guests thatve some we will be marching -- watching closely. >> we will have interviews with george osborne. brexit weigh in on