territory for the first time ever. reserve: the federal off its today policy meeting and economist predict no change. and very warm welcome to our viewers world wide, this is "bloomberg " alongside alix steel appeared -- alix steel. get you through the asset classes, risk off. the ftse off by over one fourth of a percentage point. the fx market, a similar story. yen strength, sterling weakness.

how much more short can the market be when it comes to the pound? the risk off trade very much highlighted in sovereign bonds. the 10 year german bund in negative territory for the first time ever. move, we the flagship all waited for that move down to subzero on the german 10 year. alix: in the u.s. you have treasuries down at 2010 lows but where is that money flowing out of? russia, spain, italy. jonathan: in crude, softer session again. alix: it has been days when we have seen this risk off trade for commodities. a similar story with copper, $2.03 a pound.

money is coming out and pouring into those safe haven assets. jonathan: the brexit debate dominating the conversation. i want to bring you around the world for in-depth coverage. today it is all about rex it. london, matts in miller in berlin on subzero yields on the german 10 year first ever, and matt boesler on the fed meeting. guys begin by bringing in johnson and matt miller in london and in berlin. for paul's, three different companies showing the same thing. guy: the remains are certainly with the leave campaign and the other thing we have to factor in is that we have had this happen as well. this is the sun newspaper, the most widely read in the united kingdom and it has come out on the front page, it has backed britain leaving the eu.

i spoke with one of the leading guys in the u.k. when it comes to polling and he said he could have predicted that headline six months ago because the readers of the sun are the same people that have already made up their mind. essentially the sun is preaching to the converted. speaking of those who had already made up their mind. those polls certainly pointing to big momentum for the leave campaign. a fantastic function on the bloomberg, the odds checker. anna edwards pointed this out to me a little while ago, and that has jumped. that is the percentage probability of the u.k. leaving the eu and you have artie run through the market reaction. -- already run through the market reaction. jonathan: matt miller in berlin, i want to cross over to you, the

market reaction stunning. today, it finally went below zero. matt: an amazing move. theprofessor apparently new sun was going to go probe exit -- pro brexit so i hope he was -- they came out in support of it. i think shocked the market this morning and as a result had german bunds dropping six basis points. we were up almost three 100th of 1% and now we are down to a loss of about 21 hundredths of 1%. barnes coming below zero for the first time. if you lend money to the german government you are getting no return. a lot of investors i think are counting on everyone else running for safety.

you still can make money obviously on these bonds if they continue to rise in price and that has been the story over the past couple of months. it is not about obviously a yield. you are not buying these bonds for a return. alix: guy, what really interests me from a standpoint when it comes to sterling it's how much more short can the market actually get? i keep getting note after note that we could see 5% to 10% downside on sterling. getting down to the bottom of the range and i think that is one of the interesting things to point out. say we were to see a brexit happen and on the 24th we see maybeng dip even further, down to the 130 level on the table rate. that would take us to such an extreme position that it will be very hard to see the market move

beyond that kind of positioning. we may be getting to the outer edges. there still may be some room to maneuver on the downside. nevertheless, we are starting to get to the outer edges. this is a table rate that not that long ago was up around two level. beginning to stretch some of these positions so i think your point is well made. a much further, sure position run? berlin,: matt miller in the conversation almost exclusively around sterling denominated assets. the conversation we will have is the weakness and euro assets. the ftse has outperformed their broader european stoxx 600 over the past month, over the past three and six months and year, and that is really because

of the moves and sterling. although the pound is only down 10% against the euro over the past 12 months, if you look at the 12 months before that it was up 10% against the euro. those fluctuations have even each other out over the past two years and nevertheless, the ftse begins to outperform, trading at 45 times earnings now. this is an index that although it has moved down in the past .ew days, has not been battered it has not been sincerely bruised from a valuation perspective, and the broader stoxx 600 is trading at 26 times earnings, a five-year high as far as valuations. you see some people shorting some assets and heading for the safety of treasuries and the yen , you do not see a massive selloff in equities. jonathan, your point about

euro dominated assets is quite pertinent. barkley says there is cash on the sidelines that could flow into european equity if we have a remain vote, if we have -- if the fed does not hike. jonathan: downside protection on cable increasingly expensive. if you want the hedge,+++ debate evolves from here, nine

days into the dust before the referendum. does the debate continue or does the remain campaign have to make a pair that? guy: we're going to wait and watch. there is speculation growing and brendan that we have not heard the last from berlin. there is the possibility of offers being made in brussels and berlin to try to help out the remain campaign. the labour party, the opposition party, people like gordon brown step into the limelight and try to deliver something else. may be that while the people have been affected by globalization still have not made up their minds about what is going to happen. it is going to be fascinating to see how all parties react. jonathan: great to have you with us on the program. a question that no one has really asked, should markets ?ehave that way given that there is no region nomination risk, should markets be this nervous? alix: and what is the meaning for other countries who are posed with the same kind of issue, and what is the meeting for central banks? joining us is matt boesler. we are taking -- looking at a 15 point 7% probability of a rate hike in july.

december, we are looking under 50% as of friday -- looking under 50%. are we re-rating for a brexit risk? matt: we clearly have been giving everything that we heard from guy and matt. the interesting thing will be whether the fed rewrite itself. it out,arter they put and in march the last time they submitted a projection, they had two rate hikes in 2016 this year but still had four rate hikes penciled in for 2017 and 2018. given all the stuff going on, do they bring that pace of rate hikes this year and in the out years down as well? that would be sort of a redefining of the term "gradual" they keep using to describe the kind of rate help -- rate hike

they expect to make going forward. alix: i was also wondering, if they do not hike at this meeting , it is going to be difficult for them to do a july september hike or september december, forcing them to re-rate. matt: the interesting this year -- the interesting thing this year is in march there were nine people of 17 who thought it would be appropriate to hike twice, so the big question is not really where the median. gos -- lands, but how many from the two hike in 2016 camp to the one hike in 2016 camp? i think that is what people will be looking for, for guidance. that is going to be a big signal. the interesting thing is up until now, they have not really changed the pace of rate hikes they are predicting in the out years. ,he combination of those things

investors will became to see how that evolves. alix: matt boesler. i want to get an update on what is making headlines outside of the business world. shery: a french government spokesman says the killing of a police man and his partner was an act of terrorism. they were killed in northern france. police later killed the attacker. he had claimed allegiance to islamic state and also had been convicted of taking part in a terror cell. vigilses across america were held in memory of those killed in the orlando mass shooting, one of the largest in orlando. president obama will travel there on thursday. the u.s. has joined the investigation into the crash of that egyptair flight in the mediterranean. the issue now, time is running out to find the black box flight recorders.

it is expected to keep issuing pangs for another 10 days. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. ahn.shery alix: thank you so much. coming up, thousands of leaders meeting in d.c. to celebrate what the obama administration achieved for women in the past eight years. we will be joined by valerie johnson &ong with johnson chairman and ceo alex gorsky. more "go" up next. ♪

alix: this is "bloomberg ."

the white house is convening its first ever united states of women summit in washington. let's get to david westin and two of his special guest. david: we do have two special guest. valerie jarrett and alex gorsky. thank you both for joining us. valerie, let a start with you. it strikes me this is the first ever white house council on women. why now and why is this important? valerie: women and girls are important to society and we wanted to make sure from day one that we were focusing all of our projects and policies on ways that we could improve the quality of life for women and girls. seven and a half years in we thought it would be an important opportunity to reflect back on our progress and look at the work that lies ahead. we have six months left in the

obama administration and we want to galvanize many of the folks who have been working for us. partners been terrific , and focus on what more we can do to provide every young girl the equal opportunity to compete and achieve her dreams. david: take us back over the last seven years or so of the obama administration. what are the things you have accomplished that you think are most important and what is left to be done? in march of the president's first year in office he created the presidential council. has representatives from every federal agency charged with focusing on women and girls. signed was thehe lily ledbetter pay act to make sure women are each key -- making equal pay. women are still only earning $.79 on the dollar and we want

to focus on how to continue to close that gap working with country -- companies such as pay,on & johnson, equal raising the minimum wage, paid leave and sick days, affordable issuesre, these are all that are so important to working families so we will put this light on that. we have done an enormous amount to reduce violence against women, focusing particularly on our college campuses where one in five women are assaulted. on the world platform there is the first lady and president launched an initiative to ensure that the 62 million girls who are out of school have a chance to go to school, because we know that is the pathway to success. we will be touching on a whole range of issues that affect the lives of women and girls from

education to sexual assault to innovation, health care. obviously the affordable care act has been tremendously important for women and girls, and puts the spotlight on evidence-based practices that we know works, and the work that lies ahead. has become the most respected company in the country according to barron's. congratulations. alex: thank you, david. whyd: if you can ask alex is this issue of benefit so important to their business? valerie: david said why is this issue of benefits, investment in the working family so important to you and your company? this -- comes down to

it is good business and the right thing to do. if you think about the millennial family, 80% will say their family life is critical in maintaining balance with their job. about 70%, both parents are working so if you want to attract, retain, and get the very best you have to make sure you have progressive policies. we tried to take a hard look at work and family leave, flexible work hours, other parental benefits to make sure we are not only more innovative and productive but also more competitive. david: valerie, you mentioned the equal pay issue. what about equal pay within the administration itself, within the federal government, and specifically within the white house? valerie: we are very mindful of what we are paying.

we have equal pay for equal work in the white house and the white house pay scale is transparent. we are able to look at our pay and determine if there are any inequities. one of the stories we will tell ofay is mark benioff salesforce presumed he was paying everyone equally because he has never examined it. a couple of his workers, women, came to him and said, we talked to the guys and we are not getting the same pay. he took a look at it and determined they were right, and there was a $3 million pay gap discrepancy which he closed immediately. we have been calling on congress to pass the paycheck fairness act which would require companies to not retaliate against their employees who share compensation. had no idea for decades she was not receiving equal pay because her company prevented people from sharing pay.

we are really interested in figuring out what we can do not just at the white house but throughout the administration, and to be able to encourage the private sector or to do the same. ae department of labor has new regulation requiring companies to provide that information. were talking about why this is important to your company as a business. your company is very international. brexit is the big issue right now. what would happen to johnson & johnson if rex it occurred? -- if brexit occurred? alex: i think the whole topic of u.k.t whether it is in the or the united states, it has to do with this broader issue of what are we going to do to ensure as we have these aging demographics, increasing demands on entitlement systems and health care, how can we make sure we have a balance approach to resolve them?

to be essential for the u.k. to do this in a thoughtful manner, to think about the long-term implications. we are hopeful by working with the government in the u.k. and europe we can find a good path forward. much, thank you very valerie jarrett and alex gorsky from the white house. jonathan: david westin, thank you very much. that was david westin speaking with the white house senior adviser and johnson & johnson chairman and ceo. david westin has an exclusive interview with former president bill clinton at 11:45 eastern time. let me bring you up to speed. risk aversion dominating every single asset class. features soft in the united states, no drama may be the buzzword. the big losses piling up in europe with the ftse down by over one full percentage point.

negative on, bunds a 10 year, two basis points. yields grinding lower across the board. assets, havens in focus. euro-sterling heading toward a deep and. time to talk about our bloomberg trends. we are going to look at one of the big stories, the story of china. the msci about to make a big call on the world's worst stock market. as i say, the worst-performing stock market. as a passive investor do you want that exposure? alix: if the fed is not going to hike and you want some kind of return, maybe you do. this is a different story than we saw just a year ago where we saw so much leverage in the chinese market and we saw so

much volatility come out of that. still trading -- the yuan is still trading around a five-year low. chinaan: the focus is off with the brexit debate and the data has not been great. markets underperforming. the decision we get from msci later because it has not been a free market for the last year with discussion about assess -- access for this market. is it a free market? should they allow entry, inclusion? i think regardless of the decision later the debate will continue on either side. alix: i am looking at more stuff going on in europe, spanish and italian banks are eating up about half of the money the ecb is providing in its regular refi operations. this to me was really striking.

it is increasingly more difficult to borrow and financial markets eight years after lehman collapsed. they still need the ecb is the lifeboat. jonathan: the potential for the ecb to react should we get a brexit, that is a big discussion in the week to come. let's talk about a central-bank bonanza with the fed, boj, and boe all gathering this week. how central banks can handle another possible downturn and what the fed needs to do to keep the markets in order. ." "bloomberg ♪

jonathan: this is "bloomberg ," i am jonathan ferro. the brexit debate dominating every single asset class. risk aversion the buzzwords.

the ftse down by over one full percentage point. things are a little bit firmer than maybe they were an hour ago but thing still very soft comparatively. story,market, same stronger pound, weaker yen. the bond market the big headline generator. -- front end of the 10 year of the two-year yield in germany, down another two basis points. all time lows on the 10 year u.k.. negative in the first time. commodity soft with wti at 48 and brent south of 50. alix: let's get headlines from bloomberg first word news outside the world of business. bracing for ais

wave of demonstrations against new labor reforms. they union promises to rally more protesters. the union is the most vocal planent of the president's to make the labor market more flexible. will speaker paul ryan unveil a republic will plan to roll back government regulations. he wants to scale by the financial regulation law, expand energy production, and limit lawsuits against businesses. as part of his agenda that he is releasing to unify republicans before the election. donald trump taken away the washington post campaign credentials. they say the post has no integrity and write falsely about trump, and it is a front for amazon.com's political agenda. the newspaper rejects his accusations. global news 24 hours a day,

powered by our 2400 journalists in more than 150 news bureaus around the world. ahn.shery jonathan: thank you very much. time for our morning must-read and i will bring in tom keene. joining us from the city of london is richard jones. great to have you with us. the front page of a leaveaper is one headline " in britain." the sun backs. waynen the corner is that rooney? jonathan: that is separate from the brexit debate but significant for other reasons. is the best selling newspaper in the united kingdom and has a history of getting behind the winner. tom: this is mr. murdock, right? alix: he does, and the words were so strong. outside the european union we could become richer, safer, and

freer at last to forge our own destiny as america, canada, and new zealand already do. if we stay britain will be engulfed in a few short years by this relentlessly expanding german denominated federal state. this has historical significance. buzz was it was the sign, what has done it -- the sun, what has done it. it is not that significant that way now because the readers of the sun are probably already going to vote leave. point, and rob hutton spoke to you about it, the sun has a track record of backing the winner and clearly there is a view that leave could be the winner. tom: let me ask you this

question from a broad and from a distance -- how does the prime minister and other elite, how do they respond to the last six days? how does brussels respond or the german to nominated, dominated euro, how do they respond? jonathan: if this is a vote against the elite in europe, what good will it be them coming out? the bank of england and the treasury are in a quiet period and these polls have swung every day for a matter of weeks. we have the bank of england saying how negative it would be, the treasury doing the same thing. it is quite clearly the economic argument has been trumped by an argument over immigration and sovereignty and they have not got an answer for it. alix: when you take a look at say the currency market and the

volatility, the unbelievable volatility we have seen, does the ordinary public care about those kind of market circumstances, or is all that hatters the sun headline? >> i think we have had a lot of doom and gloom being painted for a long time. it feels to me that all of these economic arguments, the pound will weaken and britain will be much worse off outside the eu, they do not have the residence about some of the issues like immigration, sovereignty. those things are trumping the economic arguments and i think the point that tom makes is very important, what does remain do to get some traction back? the momentum is with the lead side. richard -- evans ofhard and the study economics and discourse in the united kingdom just an hour and a half ago said he will

personally vote for brexit. carry away does that from the tabloid of the sun when someone like aep and others say, this is what i'm going to do? jonathan: i just wonder which way the telegraph goes because the sun is the first major newspaper to put their weight behind one side of the campaign. market,ook at the fx downside protection increasingly expensive on cable. where are we getting the hedges, the risk we ward at an attractive valuation? richard: we have seen a lot of downside protection being bought throughout the campaign by investors. what we are starting to see now a little bit is people looking at the euro-dollar and saying that as bad as this would be for the u.k., there will be implications perhaps further down the road for the euro. theink one of the things is

brexit campaign and this whole issue could not have come at a worse time for global markets. i think we have sentiment fairly shaky and it seems like this will hasten volatility. alix: edge we -- as we see more hedging move away from sterling, what kind of downside level can we realistically look for over the next five or six days? richard: i think before the actual vote, we are defined by the ranges that we have already seen so probably psychologically in the euro versus sterling we are looking at 80, and 137 or 138 in sterling versus u.s. dollar. occur, i thinkto the common wisdom now is that we could trade 130 in the cable rate so the pound against the dollar, and close to 90 against the euro.

those scenarios are the type of uncertainty making investors extremely nervous. alix: i cannot believe we are here. to, we are two standard deviations out. way off trend. you wonder how chair yellen will react. i still do not get with the responses. there is no way they cannot respond. where is the churchill discourse now from the elite? jonathan: i think it is a million-dollar question. you are talking about response not just by the treasury. this will have global -- global implications. how does the boj react? they are going in the wrong direction for the ecb. how does the ecb react? we know how the fed is going to react, they are going to do nothing. and richardscinated

haass brought this up yesterday, how does scotland react? do they listen to former prime minister brown, onward and forward? jonathan: scotland overwhelmingly in support of remain, not leave. alix: there are other areas in europe as well. a few research poll showed there were discontent -- eight pugh research poll showed there was disconnect -- discontent. jonathan: tom keene of bloomberg "surveillance," thank you for joining us. richard johnson, a special thanks to you too. we want to move away -- if you want to move away from tv to radio, stick to bloomberg. 7:00 to 10:00, tom keene and michael mckee. alix: tom hill and in morris

join us to talk about what recourse they have to combat the economic situation. ♪

alix: this is "bloomberg ." i am alix steel. 11:45 eastern, david westin will sit down with former president will clinton in an exclusive interview. here is your bloomberg business flash. a new forecast says the global oil market will be almost balanced next year.

an energy agency predicts the demand will rise faster than production and the oil surplus in the first half of this year is about 40% smaller than estimated a month ago. china's largest e-commerce company forecasting a big jump in revenue next year. alibaba says that revenue would rise more than 48% in fiscal 2017. shares of alibaba have fallen more than 6% in the last you weeks and they are looking at data from a single state promotion. the two biggest companies in the u.s. are in talks about a merger. they are privately held and according to people with familiar -- familiar with the matter, people are pushing for draftkings and fanduel to combine. that is your bloomberg business flash. i am shery ahn.

jonathan: this week, three central banks deciding on their next monetary policy move -- the fed, boj and bank of england. tom hill, president and ceo of morris,ne and ian senior managing director wrote about this in a recent piece in foreign affairs. looking at the situation this conversations we had last time or how they respond in the event of the next downturn. i just wonder in the next couple of years with or without a downturn, are we going to see something substantial from the fed or boj without a downturn? tom: my experience with central banks is never vote against them. when you think about paul volcker when he became head of the fed, everyone was worried about inflation and then all of a sudden paul took care of

inflation and for the next 20 plus years, inflation has not been a problem. i think central banks have a lot of firepower and when you have governor kuroda who was recently at the council on foreign relations in a closed session talking about transmission mechanisms and yes, he was not able to achieve what he wanted in this particular qe. tricks up got other his sleeve i believe. alix: what you guys wind up talking about is the 2% inflation target. no matter what they do it seems we cannot get there, but you say there is extra firepower we can use. fact, the struggle to get to 2% is the struggle of us being in a liquidity trap. that is related to the

fundamentals such as slow productivity, slow demographics. a sick youular, not will -- sick you are phenomenon -- secure -- ian: as a result, the real interest rate needs to be lower than in the past and lower than where it is now. to of the tools is not just try to lower nominal interest rates further into negative territory, but at some point in the context of a next cyclical turn -- downturn, higher assets may be necessary. jonathan: you go back to that speech in the early 2000s from ben bernanke saying, we have the power of the printing press. the problem with the power of the printing press is it has not worked. what difference does it make if you cannot reach a little

higher? debt to gdplook at and the pan -- in japan, it is 250%. inflation their debt to gdp would be 230%. if they had 4% inflation rather than what they have had, deflation or very little inflation, their debt to gdp would be 80%. inflation does make a difference in terms of the debt number. -- rich i was rish would buy an island. 4% inflation is an ideal scenario but you have to actually make it get there. i feel like the markets think the central banks have run out of tools. tom: everyone talks about helicopter money. what i would like to do is change the name because it is a buzzword.

it goes back to milton freeman and the chicago school. why don't we call it physical qe? what we have got to do is start to get the fiscal element into the equation. i believe that with fiscal qb you could create additional spending. the problem now is demand. we do not have enough growth around the world and i think with fiscal qe you could actually get more demand. jonathan: apologize for mixing up my fed chairs. independence, do we really think in japan as an independent central bank when we have seen governor kuroda collude with prime minister abbe? it requires some collusion from the government. does this mean the death of the central bank independence? -- kuroda's term is

not up until 2023. do not haveou inflation picking up to 2% and do not have the fiscal stimulus kicking in, how do you know where to put the money? ian: one obvious spot is that so-called -- from a risk asset position we usually think of risk on and risk off. they go up together or they go down together. in this kind of environment you actually find a regime shift that the relationship between equities and credit changes. equities can struggle but credit spreads continue to come in and that is a result of the fact that all interest rates want to come down in a soft environment but because the risk-free rate is at zero, it is only the risky that can come in. -- whereyou feel like

are we in that circumstance? ian: it happened in japan, is happening in europe, and will happen in the u.s. if this situation persists. jonathan: credit currently in , one thing that has been a key theme of the last year is the impetus of federal --central banks tom: i would argue that qe and low interest rates has spurred spending on the part of corporations. instead of putting the money in plant and equipment they borrowed and bought in their stock. buybacks has been one of the reasons that the stock market has done so well over the last several years. jonathan: cannot let you go without a word on the brexit debate.

i think many investors did not think it was going to be this close. from the conversations you have with clients, what is their view? why should it have such an big impact on global markets? ian: the short run implications for market would be problematic and central banks may even have to step in. instance, those u.k. businesses that require a foreign workforce from the rest of europe, those people are not going to be asked to leave right away. the u.k. economy will benefit from lower sterling almost immediately and that could actually ultimately be a bit of an upside surprise within all of this pessimism. jonathan: tom hill and in morris, great to have you. thank you very much. up, the german 10 year yield dropping into

negative territory for the first time ever. investors piling into the safe haven assets. ♪

jonathan: this is "bloomberg ." i am jonathan ferro. time for off the charts with julie hyman. julie: germany has been the story people have been watching for the past couple of days and it went below zero. here is the 10 year. i have john a line at zero so we are just below zero. already it was record low but the question was will it go negative? one of the traders involved said, we are not buying it is of the yield. obviously you do not want a

negative yield. you are doing it as you feel nervous. jonathan: and the speculative money as well, they want the capital gain. you have made a tremendous amount of money if you chase the capital gains. the curve negative all the way out for the 10 year. it is japanese but it is not swiss, and the swiss curve is even more dramatic. julie: here is the swiss curve. if you look at the zero line, it is up above my head. below zero inears the next focal point, nevermind the german curve, the swiss curve, the position, the price action is phenomenal. 30 years with a potential to go negative on the yield. julie: now we have the u.s. curve and it does not look like we are going to go negative.

zero is all the way down at the bottom and there are not any forecast for it to go below zero but it is still at a very low level. the 10 year has fallen to just over one and a half percent. it is the same story we are seeing in other countries. the yield has not quite gotten to those negative levels and will not probably. jonathan: the focal point is the spread between the two year and the 10 year. flat. if it is not a representation of the u.s. economy it is certainly a representation of the global economy. we count you down to the open of the u.s. market. ♪

showsthe latest polls britain to leave the eu with nine days until the referendum. 10 year: the germany

bond yield weakens for the first time ever. finance acentral bank -- the fomc starts is meeting today with the economists expecting no change. jonathan: to our viewers worldwide, i very warm welcome. june is live is what the fed's said. one jobl it took was report in may and now you have so much risk in the u.k. how can they talk hawkish with the uncertainty? jonathan: let's bring you risk aversion. european equities are in the red.

we aretsie is lower but up 1% on the session. equities are down. a stronger japanese yen. sterling right now is one dollar 40 once ends, down by another one percentage point. in terms of s&p futures, we are off the lows of the session. in the u.s., a slight are either. -- a slight breather. is german two-year yield down and that is better than it was. it was down 5%. you have the gilt which has a huge rally and the german bund is down. jonathan: everyone was waiting for that. yield is all-time low and lows are off of this.

copper is down slightly so the risk off continues. gold is stabilizing. jonathan: not great if you are long european equities. let's write down the brexit debate. believe campaign is gaining a little bit more steam. we will also talk about the fed meaning -- meeting said to bring more. hours, the polls about leaving, it's pretty clear. withthe momentum is believe campaign at the moment. polar polls are showing this clearly. four of them are out overnight all turning to the momentum for

the leave campaign. it really is becoming awfully close. fromseems to be the story the pollsters and the politicians who are clearly reacting to all of this. the newspapers are starting to make up their minds. the other headline of the day is dominating. the sun is still britain's best selling newspaper and backed believe campaign. i spoke to one of the polling experts in the u.k.. he said this is not surprising given the fact that it's reflecting the readership of the sun. david cameron will be nervous. sun has a history of predicting the winners in some of the most closely fought political debates out there. as a result, this decision by the sun will make him very nervous. mr. murdoch has done this before. will he be on the right side of

history? the markets are reacting feverishly to all of this. jonathan: no drama in the u.s. markets but some drama in u.k. markets but the euro denominated ssets, a rally in bunds but they are slowing down. the yield in spain, italy are inching higher. if the bank of england has to do something, what will the ecb do with a potentially stronger euro and spreads going in the wrong direction. i'm surprised the ecb has not said more about this. when i was in brussels last week, mario draghi said the uncertainty makes this job harder. your gmmking at function and you only have the top markets up there. if you look at a standard view, you will see massive swings across asset classes. there are moves in portuguese

debt, up 14 basis points, romanian dad, the danish equity market is off more than 3%. there are huge swings in the periphery countries. denmark is another country that does not use the euro. they could be next. will there be enough support for portugal. great written helps to pay the bills of the eurozone or the european union along with germany. if you take it out of the mix, can they support the countries that need it most? there are such amazing swings across asset classes. if the professor was not surprised, that's great. market participants were surprised or at least moved by the sun newspaper headline. oute was just a note sent in the entire first paragraph was quoting the sun op-ed.

american investor reacting and ucsf classes swinging like crazy. not just sovereign bods i was looking at european banks today and they are near the february lows. there was a horrible selloff in the beginning of the year. we are right there again. guy: european banks will be some of the areas where you will see the biggest moves after a year -- a great britain decision. banks taking u.s. a significant hit on that as well. there are big u.s. banks not very far away that have made the egg bets on london. it allows them access to the eu and that's why they use london. they would have to make very big strategic decisions. it would not just be european banks that would have to make some moves.

u.s. banks would have to make decisions based on that. in the u.s. markets, no real drama at futures but equities in europe are off the lows. in the comingee days as increased volatility. you see it push higher. days, whatxt nine are we looking for outside of the polls? from the people you speak to, how is this the bait going to evolve? guy: you need to look at a number of things. the sun newspaper is interesting but it might be a derivative of some other things going on. you need to look carefully at what is happening with bookies. people are still saying that despite the fact that the polls have tightened, if you break them down and look at the one expert gives

the remain camp the edge. see a lot of volatility and a lot more of these polls coming through. what you will also see is may be shifts in the political tactics. i am waiting to see whether we get a reaction from some of the other european capitals. will we see the europe stepping into the fray more than it has? jonathan: thanks very much. you wonder what the central bank response will be. alix: markets were expecting the fed to be more risk-averse because of the jobs number. dona is with us.

what will the conversation at the fed the around brexit? >> it's on their radar screen but it's maybe fourth or fifth on their list of major concerns. i think they are more worried about the global growth outlook and focusing on u.s. economic momentum as you highlighted. the last jobs report was a very disappointing in terms of continued labor market progress. if we look at the last fed statement and minutes, there was a real focus on consumer spending, household income growth, and the core engine of economic activity. they were maybe willing to tolerate disappointing news elsewhere as long as the core engine held up and the may jobs report drew that into question. is just one single jobs report so we could turn on it time if we see evidence in strong retail sales this morning and on july 8, if the june jobs

report shows that may was a blip on the radar screen. alix: outside of the u.s., markets seem to be re-rating the probability of a great heart due to concerns like brexit so that widens the divergence between a hawkish fed and a more dovish market. concerns andexit the world bank downgrading global growth forecast last week. it's a whole hour a of problems. as the fed sits in the meeting today and craft a statement, it has little to gain by being but because it's just validating the market view. they hold their cards close to the vest this time around. alix: it will be an exciting 48 hours, thank you very much. let's get an update on what's making headlines outside the world of business. in france, authorities say

the man who killed two police officers had a terror background. the two were stabbed to death in france and the attacker was killed. he had a past conviction for terrorism linked to pakistan. in cities across america, overrs -- vigils were held the orlando magic shooting and one of the largest was in orlando where they mourned the 49 killed in a gay nightclub. president obama will travel there thursday. . news 24 hours a day, powered by a 2400 journalists in 150 news bureaus around the world. jonathan: coming up, how brexit is impacting england. spreads are widening as risk aversion dominates asset classes. we will talk about that next. . ♪

jonathan: this is "bloomberg .3 brexit jitters are sending the german 10 year yields into subzero for the first time ever. a discussion over the consequences of the fallout of sterling assets but not much attention to what's happening in europe. expect this to develop? >> the weakness for european equities has been present throughout the year. we cannot just limit on brexit. there have been concerns around financials to the extent of the

health of the financial sector in europe. that has been the main driver and it's a big heart of the index. it has been concerns around politics and brexit as well. the way we are positioned is we believe in the european story, specifically the eurozone growth story. we are assessing our view but i think the growth is coming through and we expect that eventually to feed into earnings and euro denominated performance. alix: there was a great charge that showed this, the outflows from the outflows from european equity funds versus other regions. the dedicated mutual funds of cut exposure by 1.5 deviations. that's pretty incredible. how much money do you think flows into europe if next week, there is no brexit. we havewould help but

to think that the political headlines will be with us and europe. it's not just brexit. we will talk about the elections in spain and france. those risks will be with us. onhink what we have to focus is if there's an improvement in the economic story and is the ecb action fueling better growth. we would argue that yes, it is. i think eventually investors will come back to europe. it has taken longer to develop this story but we are sticking with it. jonathan: there is a potential short squeeze but ahead of that, you see it happening on cable and many banks are looking to hedge against the u.s. election. as you speak to clients, how do they hedge ahead of this event risk beyond sterling? >> at has been mostly a sterling play for us and the fact that we have been underweight u.k. equities for a while.

part of it is the concern about the u.k. but part of it is the exposure to commodities. the ways we have been cautious with regard to this event next week. alix: what about earnings? headline risk is one thing but you have to grow. many analysts are calling for the trough in earnings for the first quarter. do you agree with that estimate? >> in the u.s.? alix: either one. >> we would say in the u.s. we believe the first quarter was the worst part because the dollar has fallen and we expect it to remain more stable than it has in the past. energy prices have improved. in the u.s., we believe in that improvement in earnings in the coming quarter. when it comes to europe, we have to be very selective when we talk about the opportunity. look atgh if we just switzerland and the u.k., that's

a mixed bag. we have to be able to see the better story seeing threw two eurozone earnings. i think we have seen that and will continue to see that growth in the coming quarters. jonathan: what we haven't seen is an ecb that does qe and then there is higher asset classes beyond fixed income. it has not stimulated certain markets. >> i think it's been partly the concern about the negative interest rates. that component did not play out as planned by the ecb and the bank of japan. what we need is more clarity about the actual impact of negative interest rates on financials which is a key component of a lot of european indices. that's what i think we need more clarity on. santos isiela sticking with us. we will discuss the rally in corporate credit next plus, eric

join us to find out how the portfolio manager is dealing with the low rate environment. ♪

alix: this is "bloomberg . pushing downis bond yields and leaving lots of money in corporate credit as investors reach for return. of s&p 500 have a dividend yield that's higher than their actual bond yield as the rally into corporate credit intensifies. gabriela santos is still with us. jeffries had a note before. chevron and at&t and pfizer, that was startling.

what is your take? >> we have been talking to our clients about the search for it yields to take place in fixed income which is traditional. we want to think about searching for yields in dividend yields and that's a play we have had for a long time. we are not talking about being defensive. we don't have to just look at utilities and telecom. sectors, we find a juicy dividend yield which is a great opportunity especially if you think the market will not go as high as it used to. my dividend yield can change. reason that dividend yields of been so high particularly in energy is the view that the dividend yield will be cut and that did not happen in a big way. do i want the assurance of having a fixed rate if i can find a positive one versus -- the dividend yield may look

attractive but maybe not in one year. we don't want to be trapped into thinking we will have a certain kind of dividend yield and not have it take place. especially in the u.s., companies have proven to have very stable yields. they only increase that dividend yield if they truly believe they can pay it. it's different than other markets like emerging markets. that is where it is tricky if you are looking at high dividend yields in emerging markets. they have not traditionally paid out that dividend but we feel more comfortable with the u.s. on theou have a lot of investors looking at the volatility and low yield. they say they want to buy expensive utilities because i might have a stable dividend. peoplen: more and more look at fixed income for capital gains. byy people talk about why the two-year bund that deliver

nothing in terms of yield. the kind of discussions you have with clients, as the months progressed, is there a focus on the idea that you don't hold this to maturity or lock in a capital gain? >> it depends on the asset class and the part of fixed income. one of our highest convictions because we have a generally positive view on the u.s. would be something like u.s. high-yield. we had the view we would see spreads come down so you would get that benefit and now maybe that part of the job is done and we are holding high yield for the high coupon. if youry is different look at investment grade were made in the coupon is not that attractive but maybe you get that spread compression and your total return is positive. that's where we need to be cautious in terms of how we think about fixed income. or compared to european

investment grade. there is an enormous difference. >> it's fascinating how we have seen the impact of the ecb and the boj in u.s. fixed income. it's now creeping into investment grade bonds and high-yield and that justifies some of that spread compression and the idea of total return in fixed income as well. jonathan: june 8, does the ecb start buying dad? -- debt. debt was telecom italian and people thought the ecb would step in which was a egg move. -- eight big move. -- a big move. the compression in spreads, if that continues, alix: they are buying junk.

how is that not going to support the market question mark jonathan: who wants to come on vacation with me? alix: i have a daughter, you can go with a three-year-old. gabriella, thank you for being with us. jonathan: coming up, breaking u.s. economic data comes across in a few minutes. will this show a stable economy? we will be with stephen friedman next. ♪

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x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. jonathan: this is "bloomberg . let's check in on the markets. 1/3 of are soft, down 1%.

the ftse is down. andyield is grinding lower the 10 year treasury has a yield of 1.59%. on the 10 year is not a typo, zero on the german bund. it looks like retail sales is a beat month over month. 0.3%. it's in line with the survey. gas is 0.3%. gas about automobiles and it's in line. check out the dollar index which is elevated up out 5/10 of 1%. of theaction on the back

u.s. may retail sales numbers. futures are hanging in there, low by about 1/3 of 1%. treasuries are giving up some of the gains. terrific divergence but maybe the consensus is that after the ugly payrolls report is that this will not move the dial. there is confidence that the consumer is spending even if the jobs number is week. for more reaction, let's bring in stephen friedman from the np paradigm. does this data point make the fed's job harder? >> i think this is in line with their expectations that the data has recovered nicely in the second quarter. aware there has been lots of momentum in the jobs market in recent months. in their view, the most recent data for payroll was something

of an anomaly but they want to take more time to look at other numbers. you see the loss of momentum in the retail sales numbers. everyone in the fed said june is live. now so what is the strategy at this month's meeting? do you still open the door from july? keep the doory open for july. in their mind, we have had a nice rebound in growth in q2 and they believe inflation and the labor market are moving closer to their objective. the market does not seem to want to price in anything when it comes to july. a july hikeity of is 13.7%.

we don't see a 50% rate increase at all this year or next year. ratings a staggering re- and a small amount of time. >> this points to a problem with their communication. they have been too attentive to market expert assumes and trying to -- expectations and trying to manage them. it gives the impression that they are not fully data dependent. unless their words are backed up by strong and robust economic data, the market will not pay much attention. it's a risky strategy and its test they just focus on how they see the economy evolving and how they would likely respond to economic outcomes. we got guidance from about killing the dots. >> i am not a big fan of the dot

charge. it was introduced during a market that was tightening. we are in the opposite situation now. ,he projections are time they's the number of rate increases per year, that pulls away from the idea of data dependence. do not capture the uncertainty for past policy. dot: you would not be dependent but data dependent so you have to have specific data to match up with. the fed president charlie evan said something similar about a week ago. he said the fed should not move unless you see inflation hit 2%. that's a very specific target and the fed has been unwilling to underline something so concretely. >> i wrote a note about this yesterday. when i look at the eve illusion of -- at the evolution of

inflation, the committee has not met its inflation objectives. they continue to signal they will tighten policy has left you a notable decline in inflation expectations and will make it more challenging for them to meet their inflation objectives. you ask if the fed has credibility in a couple of words from janet yellen and then they do. what is the significance of asset prices in your mind? >> i don't know if i fully agree with that. when you look at financial conditions in the u.s. in late 2014 when the fed started signaling rate increases, we saw a tightening in financial conditions. that tells me that the communication impacts asset classes. the: kill the dots, kill dots.

good to see you, thank you for joining us. i would love to see the morning meeting with stephen friedman at bnp paribas saying kill the dots. remains in the european union? it's one of those mornings with an ugly session in europe and a reach for downside protection. and they remain in the european union, how do you play the short squeeze? >> first off, thanks for having me. i think the main asset prices affected the last couple of months has been the british pound which seems to move every a. that would go up. over the past couple of weeks there has been a broader set of asset classes taking their tone from brexit polls.

i think those asset prices would reverse. priceshat other asset would be most affected in the next few days considering their are so many shorts? creditink you will see markets, other currency markets outside stirling. it started with the british pound and now it has a broader set of asset classes. at various times, all markets liketheir tone from things libor and last summer it was the chinese yuan and now it's brexit polls driving everything. beyondn: volatility is 10 in just one month. do we expect volatility to be embedded the on the next nine days to continue for months? >> there are many events like

u.s. election. if you look at the implied june 23-june 24, it's at high levels because brexit is a binary outcome. retail sales came out and economic data can had a number but the election happens or doesn't and that's why we see volatility. notes thatp getting we could see an influx of european equities and short covering when it comes to the pound if the u.k. remains in the eu. if it does, there is still so much uncertainty after that. there are calls for lots of inflows but are they overdone? outven though it's a binary come, nothing is perfectly binary. if they leave, the negotiation of how they leave and exit will be contentious. if they remain, there will be

talk of perhaps another referendum. the first thing is a liner he outcome but after that, the avila's in the details and that could affect asset markets. jonathan: looking at the fx krone, you swedish have to trade on this so explain it to me? is one of the strongest economies in europe and is doing very well. bank had been concerned over currency strength. in volatile markets, it could sell off against the euro. one of her favorite strategies is long swedish jonathan: thanks for being with us. let's get to first word

news. in iraq, u.s. helicopter gunship was used in combat. their use ind april and iraqi forces are trying to retake falluja from the islamic state. france is bracing for a wave of demonstrations against new labor reforms. to rallynion promises more protesters during a three-month campaign. the union is the most vocal opponent of the president's plan to make the labor market more flexible. what lesson two weeks to go before the election, the spanish candidates met in a two-hour debate. the acting prime minister was attacked over allegations of corruption. a vote in december failed to produce a clear winner. the popular party is expected to lose more seats.

news, 24 hours a day, powered by our 2400 journalists in 150 news bureaus around the world. alix: after a major run higher, has the oil rally finally run out of energy? could there be more downside ahead as disruptions dissipate? impact onhe brexit oil next. ♪

jonathan: this is "bloomberg ." tune into bloomberg markets at where we willtern sit down with former president bill clinton. alix: here is your bloomberg

business flash. alibaba predicts that profits will surge in the next quarter. the largest e-commerce company in china says sales should rise 48%. part of that growth comes from dealmaking. it has spent almost 19 alien dollars on acquisitions in the past year. the struggling -- it has spent almost 19 billion dollars on acquisitions in the past year. a sale could bring in $500 million for valeant. it is trying to relieve it $31 billion debt load. shows large u.s. companies have made little progress in putting women on their boards. the report comes from an organization that advocates for women in the workplace. it says women had 19.9% of board

seats at s&p 500 companies in 2015 which has barely changed from the year before. that's your bloomberg business flash. alix: equities in the fx market -- and the fx market are not the only things falling with talk of brexit. and now we are joined by our chief energy corresponded. risknd gold are the usual on/risk off assets. what is the commodity most affected by brexit? surprise andome a one of them is cocoa. it is the only commodity priced in the sterling pound. we also have a contract in new york that is traded in dollars. traders of cocoa are having a

tough time right now in the next few days because they need to trust in supply and demand but also a huge currency impact. i talked with the senior banker in commodities who said it's a difficult market to trade. alix: where is the armed trade? >> between buying cocoa futures in london priced in sterling, you are taking a view of what the sterling pound and brexit will have in the next few days. the new york contract that is priced in dollars is an arbitrage happening at the moment. as we speak with traders focusing on the cocoa supply and demand but they are also both -- focusing on what potentially could happen with brexit. pound will gohe down if england bows at -- if great britain moves out of the

european union. you blew my mind. i tend to look at oil. seems to be that the market is positioning when it comes to commodities. take a look at this chart which is brent speculative longs, about 7% longer than their all-time high. and there isrexit a huge risk off trade, what is the potential downside as investors get shaken up? >> probably oil prices could go another five dollars down. i don't think we will visit the lows we had at the beginning of the year. forre trading around $59 rent so maybe we could go another five dollars down. supply and demand is improving. morearket is getting balanced but there is a big risk off scenario.

five dollars down as a potential if the united kingdom decides to leave the european union. fundamentally, things are improving for oil but when you have that macro risk, it's hard to stay long. bighe macro risk is the downside scenario for oil. if you look at supply and demand, it's getting better. the international energy agency whatthe oversupply was they had suspected. the disruptions in canada and nigeria are improving. demand is doing better than expected. the international energy agency confirmed that demand is growing. said there is 1.6 million barrels per day and that has increased. commodity in the

news recently has been gold. this is gold prices priced in pounds. how muchet an idea of money has been moving into gold. a couple ofide, years ago, gold would have been at $1800 with this kind of macro risk. >> that's true, one problem for gold has been the supply and demand side. demand has generally been suffering everywhere. that has been one factor that has been supporting the gold market but the collective demand shows that investors are positioning themselves to have more and they are facing an uplift. willand precious metals stop in london overnight brexit on the day of which is an indication of how bankers see

potential movement if the united kingdom leaves the european union. the last commodity i have been watching has been copper which had a huge selloff last week. there was a huge build in inventories. is that something fundamentally wrong in the commodity world? is it a demand story? >> i think it is a combination of things. there was a big delivery on the lme. the fundamentals of supply and demand of copper don't look rosy. there is still too much around. adjust to tends to happens in the case of oil.

the supply side is not reacting as quickly as with the supply of oil. the macro situation is not conducive for copper. you have a big pull down and the brexit potential is driving prices down and supply and demand is not helpful. aroundprices are down to $4500. , we can test the $400 level. alix: thank you so much. that not low your mind? jonathan: i will never hear the end of this. up next, morgan stanley's warning that investors are underestimating the risk of a brexit, more on the battle of the charts next. ♪

jonathan: this is "bloomberg " and it's time for the

battle of the charts. let's start with julie hyman. alix: i am very competitive. we will see if the chart is worth it. a couple of measures of the stress in volatility in the system. you have been talking about brexit and there are many different measures of this. investors are concerned. the global financial stress in index shows a surge in late. i have put the move index was measures bond volatility and the vix which measures stock volatility in the u.s. all of these measures after being higher since february when stocks were making their low and commodities were making their lows, they were at elevated levels and have come back down and have stabilized.

now they are surging again. bond yields and reflects in the volatility measures around the globe. people are stressed. alix: i do love that. at a great morgan stanley note that came out where they said that brexit risk is underestimated and this is how they measure it. you are looking at the euro-dollar and pound-dollar three months imply volatility. theblue line is pound-dollar volatility and the white line is the euro-dollar. volatility since march, you saw the volatility for the pound jumped by 30% but only 12% for the euro-dollar. the ideas that the volatility and risk is not yet raced into the euro and they see a euro-dollar volatility around these levels headed into the brexit vote. brexit is not necessarily

reflected in the market yet. she says i cannot vote for her because she is sitting next to me. julie: you are going to vote for her because she said brexit 20 times. jonathan: my vote does go with alix. thisve an obsession in market over what happens with sterling assay did -- sterling denominated assets. theme for thehe next hour as we count down to the market open in the u.s. the s&p 500 is trying to recover from its first skit in four-month. ♪

jonathan: this is "bloomberg ." off and things are ugly in european equity markets.

stronger yen,et, weaker pound. rally is not in germany. offgerman bund is in risk mode. jonathan: we are counting you down to the market open. alix: we are 30 minutes from the opening bell in new york. david westin is on assignment. jonathan: what a session we have already had. the drama is in european equities and european bond markets. 4 new polls the last 24 hours

reveal that the u.k. is inching closer to a brexit and those concerns are making german bunds negative. ish us to discuss this thirry whitman. you had four polls out and the u.k. put the leave campaign out just nine days ahead of the vote and the countries they get selling newspaper comes out in favor of leaving the european union. all of this is pushing the pound to a two-month low. how do you hedge risk in the next seven days? >> you actually buy volatility. if we are going to see brexit and if you believe it, i believe the implied volatility will continue to rise. is a so you think brexit yes? >> not necessarily. if you don't think it's going to

happen, we will see a rally. we will see sterling appreciate and stocks rally in the u.s. and europe. anyone who takes a view over the next seven days through the referendum had better take a view on what will happen with the referendum. jonathan: talk to me about market mechanics. if we wake up and get brexit, how does a market maker gauge what is happening? i don't think there will be effective market making on the morning after a brexit referendum passes. inre have been many actors the marketplace who have been hedging already. many agents are short sterling. i think you will see a good portion of them wanting to get out. they may be coming in to make the bid but it does not mean that sterling will be higher. it will form a base. alix: the big news last night was that the sun came out and , using strongxit

words and calling the eu greedy and wasteful bullying and incompetent and we could become richer and safer if we go the way of canada and new zealand. it was a staggering support. jonathan: it is the best selling newspaper in the united kingdom and its significant in different ways. they back winners traditionally. strategist,or and you will not save the sun is behind us on this will happen but i wonder where you gauge the probability of things happening. where do you go? the polls but i will caution that the polls in the u.k. have been wrong in two important instances in the last several months or years. the first time was the scottish referendum. close butsaid it was it was not that close. the remain camp one by a lot more than the polls has suggested.

then you have the u.k. general election several months ago. clearly-status quo was ahead of the election. that did not happen. conservatives won by more than the polls suggested. when you think about credibility, there is an issue with regard to credibility in u.k. polls. he keeps people confident that the brexit move will fail. right-wing parties are taking up steam in the polls before the election but they did not deliver. pat --a similar story in in france. >> and austria recently. they thought these parties would do something crazy and we have had red herrings. you wonder if this is another one. there are concerns over the u.k. departure over the -- over the

eu seeking investors to seek out inens with the german bund negative territory for the first time ever. we have been waiting for this and it finally happened at. . do we just go deeper into negative territory? >> i think the important trend that will avoid that happening -- this is contingent on a brexit not happening. if we wake up on june 24 and we don't have brexit. the one thing we have as per's -- prospective higher inflation. we have seen inflation in the u.s. and some of the european economies come off of their lows. it's difficult to imagine yields going lower when inflation is drifting higher. i believe we might have seen the lows in some developed markets

in bonds. this does not feel like a deflation trade but a risk off trade. the spreads are wider. alix: you are seeing sovereign yields in portugal and greece and spain moving higher. withdo you think happens the spread? >> if we have brexit, they will go higher. under and he you disintegration were various countries are not willing -- under and eu , you can seen plainly how the periphery countries are more at risk. they don't have big brother to lean on. if they were to fall into they have an,

perfectly good reason to have these brides widening -- the spreads widening. in the treasury markets, how locate and yields go? inflation expectations we got last friday were really low and really painful. how do you make the case for stronger inflation? tatian year inflation at were 2.3%. expectation were 2.3%. there's probably more stability. i believe the fed likes to pin their hopes on the professional surveys. if there is going to be a shock on wednesday, the statement will

be a shock whereby the fed says they are concerned about the drift them word in inflation expectations. i don't expect that to happen but if there's going to be a shock, that will be it. and it means the fed could lose credibility. alix: our number three story has to do a good news in the markets locally with retail sales out and they rose more than forecast in may, .5%. this follows the april gain by 1.3%. how do you interpret that? it was lower than what we saw in march. >> march was an aberration. these were large figures. 1.3% as a large number. we had low consumption growth in q1 and better consumption growth now.

the implication is for gdp. 70% of all spending comes from the consumer. if you have advanced retail sales numbers this way, the u.s. will grow by 3% which is good news. the only issue is we don't see gdp until the 29th of july. the fed meets on the 27th them i may not have these good numbers so we may have to wait until september until they act. jonathan: the approach of the federal reserve -- 2 polar opposite arguments. >> i don't think the fed is behind the curve. there are reasons to have waited until now including the external environment as it pertains to the u.s. and u.s. growth. to the extent that janet yellen has moved toward data dependent

outlook and less toward time-dependent, there are good reasons. one is the election cycle in the u.s.. economic uncertainty can affect economic activity. the electionect cycle might affect things negatively in the third quarter so maybe we should wait to see before we raise rates. i don't think they are behind the curve. that's what matters now but we are counting you down to the market open in the u.s. every single industry group in the europe the in union is lower. julie: one of those that is down is the banking group. there is concern over brexit and the ripple effect it may have record low yields, sometimes negative, so banks are having a tough time making money in this environment. the stoxx 600 banks are down 1.4%.

the u.s. banks are not seeing huge percentages of losses. bank of america or wells fargo or citigroup, in europe, the asset management industry, jm holdings said profits will probably fall by half in the first six months of the year because of a drop in performance. concern in theg asset management industry in this new drive for a loaf the environment on the part of feestors -- drive for a low environment on the part of investors. bringing it back to rates, you guys were looking at it but let's look at it yen. this is the 10-year note in germany and that yield is going negative. 's yield has been

negative for quite a while. bond is unchanged and the u.s. 10 year is going south, the lowest yield going back to september of 2012. alix: unbelievable, let's check in on what's happening outside the world of business. in france, authorities say the man who killed two police officers had a terror attack. they were stabbed to death in northern france on police killed the attacker. they say he had a past conviction for terrorism. u.s. has joined the investigation into the crash of that egyptair flight in the mediterranean. the issue is that time is running out to find a black box flight recorder. forill only issue pings another 10 days. the plane's engines were made by pratt and whitney.

more andrkel says more, china is becoming germany's economic rival. the german chancellor wrapping up a three-day trip to china. she says the company's push to produce higher value exports is turning it into a competitor in global markets. global news, 24 hours a day powered by our 2400 journalists in 150 news bureaus around the world. jonathan: coming up, the microsoft deal to buy link in could set off a wave of tech deals. we will have an exclusive interview with former president bill clinton. ♪

jonathan: 15 minutes away from the market open so let's get to the global financial scorecard. no drama in u.s. equities. look at the ugliness in europe. the dax is 92 points lower. yields are grinding lower across the board on treasuries, down three bases points on the 10 year. the yield on the german tenure 0.01% for the first time ever. protrudingng is a 8/10 of 1%. aix: link and rose 42% after 42%- a linked in stock rose

after a $26 million deal. is this the start of more mega tech transactions. alex sherman joins us now. this could be the first of many? >> that would be unusual in the larger tech world. techsually see one big deal per year. dell and thenaw we saw facebook what's app before that. it's usually one deal every year. this is somewhat early this year which will allow for more run rates for a bigger deal but you have to wonder, now that one of the big tech companies, microsoft, has made a leap and decided they are willing to spend 20 plus billion dollars, there are a handful of names you would figure might decide that

if they are looking to do this, it might be time to raise our hand and say maybe we can get something done with another giant. maybe one of these companies can get something done. what are those companies? maybe its ultimate software which does human resource capital. maybe its net suite or twitter. all stocks sold off in january and february. we have been waiting for a huge spark in m&a in energy but it did not come in. why is a coming in with technology? >> because of january and early february where the entire tech. universe collapsed the look at valuations or just look at linked in. this year earnings and many companies had earnings that disappointed.

the stock fell off a cliff and when that happens, the higher suddenly said now is our time to do something and we can put out a premium and hit the price in december or january. i talked to one of the advisors involved in this a link 10/microsoft transaction and he said there's something in this transaction for everyone. you looked at it from the linked in perspective and they have a 50% premium. microsoft paid the price that the shares were trading at in december. pushed that dynamic has the bid aspect spread closer. dealhan: it's an all cash but they will funded through debt. -- they will fund it through debt. talk to me about that dynamic. >> we have a great article on this that you can see on bloomberg.com. you get benefits from using

debt. shielded based on paying a lower amount of taxes by taking out the debt instead of using it all cash where they would have to repatriate this money and you pay big taxes. i think the article said ayers serving $9 billion by doing it this way. saidthink the article microsoft is saving $9 billion by doing it this way. if you're not going to use this for an all cash deal, when will you use your cash? jonathan: it makes sense of funding it by that. the rate income people take a different view. an enormous company like microsoft, they can probably do this and it will not kill their

credit rating. you are right, there seems to be a collision course where you wonder if the rules have to change in order for everyone to get on the same page. that is out of my pay grade. jonathan: great to have you with us. shareholderaleant meeting is underway and what will we hear from the new ceo? ♪

alix: this is "bloomberg ." pharmaceuticals is holding its call right now with its new ceo. let's go to drew armstrong. happen in the next hour for investors to feel better about valeant. >> we are getting the initial proxy votes and usually these

are pro forma. investors say we will vote for the directors. we are seeing of what appears to be a protest vote against the executive compensation plan. is notve their approval low enough to fail but it's in the mid-60% range. 99% likethese votes go unopposed. you are seeing some discontent but not that it will result in a disapproval but people are raising their hands and saying you'ret love the way necessarily paying these executives after destroying the value. there is a little bit of a rumbling out there of outside montreal where the meeting is being held. jonathan: in terms of new management, deutsche bank is

facing problems and is trying to transform itself and the approval rating of the new ceo is fantastic. aleant as a company facing problems. is there a strategic plan to turn this around? hopeshink they have the of investors but i don't know if they have full support yet. we are at the low point as the stock is trading in the 20's and is not done that immediate bounceback that everybody had hoped. they outlined a plan that involves selling off some of their assets and trying to turn around some of their most important businesses like dermatology but it will take time for those things to prove themselves. rhis is gone from what was a p in scandals and issues with the business to a this is an actual business story that needs to get act on track. it will take time to do that. alix: what does the new ceo

shareholder neat -- what does the new ceo need to do? >> ninnies to win over the board and the shareholders. needs to win-- he over the board and the shareholders. assets areow which company will have to sell off to pay down some of the debt. they have issued guidance a week and a half ago saying they will him pop against their loan covenants unless they get that taken care of. both constituencies need to do work. alix: thank you very much. jonathan: that's it for "bloomberg " in the opening bell is up next. ♪

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x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. jonathan: this is bloomberg . moments away from the opening bell. no drama in the u.s., futures soft by 1/5 1%.

if you -- equities ugly in europe. 1%,dax down by 7/10 of brexit concerns dominating the debate. if we switch up the board, yields grinding lower. 10 year rates in the united states, 1.58%. negative 0.01%, negative bund yields in the first time ever. on dollaryour handle yen -- 105 is your handle on dollar yen. let's cross over to julie hyman. we are seeing stocks pull back, not necessarily the magnitude of selling that we are seeing around the globe. yesterday we saw the selling accelerate by days end.

be watching the financials here just as we are in europe as yields around the globe continue to decline. , baiduindividual stocks cutting its revenue for the third quarter. to have blamed regulatory regulations that have reduced advertising. there are questions about the legitimacy of some of the drugs and health care practices that are being advertised so sales projected to be at most 8.2 billion one. nxp semiconductors we are looking at. now selling its standard products business to a group of chinese investors for $2.75 billion. china has been making a number of different semiconductor acquisitions and the shares are not much changed.

we are watching for the second straight day shares of twitter going higher. yesterday they surged after microsoft agreed to acquire linked in. sharplythe shares up yesterday and it looks like that of draft is continuing today. valeant, you guys were just talking about the company re-approving the compensation plan. theyding to our reporting are working with advisers at morgan stanley trying to decide whether to sell a couple of its dermatology units acquired in 2013 in its big acquisition spree. the shares not reacting much at the moment but they have fallen quite a bit over the last year, down one quarter of 1%. jonathan: let's get you more on the markets because i think it is remarkable. byopened lower in the u.s. about 1/10 of 1% and when you

carry it across to europe, we are down approximately 1%. v stocks looking at the volatility and european equity vixfixed looking at the -- looking at the volatility in the u.s. u.s. equities, if you are able -- if you are a bull, what does it mean for the brexit debate? alix: yesterday it meant you were buying the vix. this is the vix forward curve. this orange line is where the curve is now, the green line is just where was on june 7. but how much volatility has re-rated in a short amount of time. matt bailey came out with a note saying you saw the vix have a spike yesterday but the s&p was relatively flat.

does that set us up for some kind of short-term balance? volatility -- this event risk is here to stay. beyond the referendum you will see increasing political fragmentation in the u.s. and europe. alix: especially when you see volatility pickup in treasuries. volatility across u.s. treasury, that big spike so you do say that event risk filtering through u.s. assets. in the light of this, you have brexit coming and the fed's june meeting although market expectations for a hike have fallen. what should we be looking for? -- andrg intelligence with us terry weissman. want to start with

you because we were talking about stocks. what kind of volatility will we see reflected in the u.s.? that is pretty interesting because you had a lot of positioning where you actually had market participants that were short the vix but were actually still bearish equity. there is still a lot of interesting things going on with the vix now that you have a proliferation of vix products, etf's, and leveraged funds have to go in and buy vix futures. that brings up the question, if brexit, or move on a if the fed has a surprise in any way, perhaps if tomorrow they come out and there's commentary about global economic issues, that is what kind of freaked out people last year. and a surprise could see this or moves in the s&p.

the question i would ask you as you look at those two charts, the one i brought up was relative calm and the other one was relative pricing. oliver: a lot of people were pointing toward the vix being a little bit more of the read through. that sounds kind of crazy after seeing such a huge pop, but the market has been sort of tightly in this range where if you do not get above the 21 level you move back down. it seems like there is a lack of conviction. lack of conviction, carl, that is your thing. , are we going to see any kind of surprises? carl: i think the fed looks at things like today's retail sales

data. sales and at retail other economic indicators, we see that growth is plugging along. i think we should see a decent q2 number. janet yellen i think holds her cards close to the best. dramay not beat the july that i think she is going to hold to the possibility of multiple rate increases because if you look at the retail sales numbers, we are growing at almost a 6% annualized pace. this is very much in line with previous growth projections of 2.2% for the full year and they thought two rate increases were justified. we are not seeing a lot of evidence the economy is getting knocked off of that trajectory. , ourhan: with that in mind

saidague joe weisenthal this was the highest it was in the financial crisis. should we be seeing this much volatility around a vote to exit the european union without re-denomination risk on the without any fundamental read about what this means systemically. should we see the pickup involved by this march? would not bebut i surprised if it comes back down even after a brexit vote that was successful. volatility has a way of spiking and coming down. andauthorities in the eu u.k. have been reluctant to talk about what comes on the day after a successful brexit vote. they have not done that because they do not want to raise fears or suggest they think this is going to happen. subsequent to that, you will see containment efforts.

you will see efforts to calm the market and i think that is one reason volatility will calm -- will come down. jonathan: we can bring up the u.s. equity markets, we opened lower by 1/10 of 1% and i think the story in the united states is no drama. do you take any kind of confidence from the resilience of u.s. markets right now? >> not really. it seems it is more corporate buybacks. alix: oliver's favorite topic. oliver: it is not really an indication of positive sentiment coming out. alix: this is kind of a best case scenario for the fed, right? you had stable retail sales, a stronger mike it -- market despite the fact it felt like europe was falling apart.

the u.s. economy is domestically oriented in 2017 and it is very much dependent on consumer spending. that is why the last jobs report was so relevant has consumer spending may not be too far behind. there are plenty of reasons to believe the last jobs report was just an anomaly and when you see retail sales like this, it tells you everything remains on track. --x: jonathan: strategic vagueness is a policy talk. if she had the choice, when janet yellen have a news ?onference at all her job to communicate to investors and beyond main street, what is the message? -- the message is

that things have not materially changed since the last fed meeting. it tells you something when they were so adamant in their come munication's -- communications campaign to band market sentiment toward the view that midyear rate increases were possible. i do not think she is going to put her neck on the line with the july meeting but will talk shake theough tone to market by its lapels and say, do not write us off. be, itsage is going to is not an appropriate assessment. s&p flipping into positive territory, the fix falling. -- the vix falling. coming up, tech ipos have dramatically slowed down. our market forces to blame or venture capitalists more in

favor of staying private for longer? we will hear from yuri milner next. ♪

alix: this is "bloomberg ." i am alix steel. coming up, an exclusive interview with former president bill clinton at the cgi annual meeting. shery: i am shery ahn with the latest business flash. a new forecast says the global oil market will be almost balanced next year. they predict that demand will continue to rise faster than production and it says the oil surplus in the first half of this year is about 40% smaller than estimated a month ago.

alibaba predicting revenue will soar in the coming fiscal year. the largest e-commerce company in china says sales should rise 48%. part of that growth comes from dealmaking. alibaba has spent almost $19 billion on acquisitions in the last year. more news from alibaba, jack ma says there is a new just a big problem when it comes to rooting out counterfeit goods online. he says the fakes have gotten better than the general article. alibaba is the best in the world when it comes to fighting the sale of counterfeits. jonathan: the equity market in europe is not looking great, still down about 9/10 of 1% on the ftse. in the united states things firming up a little bit. we are coming back into positive territory almost across the

board. abigail: one stock we are watching, revamps therapeutic shares are plunging after their lead drug candidate failed a late stage study. the street reaction to this is pretty mixed. spring capital did downgrade shares from a hold to a by the piper is still bullish. sharp premarket bosses, baidu shares are hired 2% reversing a two-day slide even after the company cut its revenue forecast for the second quarter on advertising restrictions from the chinese government around drug companies. this follows the death of a student who used by do to search for cancer treatment of a rare

drug. those are some movers we are watching at the nasdaq. the: speaking of tech, number of tech ipos this year has dramatically shrunk. an exclusive interview with erik , oftzker and yuri milner whether wall street still has a role in the success of silicon valley. yuri: i think they play an extremely useful role if you just look at the numbers. trillion total market capital of all tech companies, only 300 billion is private market cap versus 2.2 being public market cap. 90% oflmost a cost of capital belongs to public markets. eventually wall street does play

an important role in taking this company from private to public. >> is it as useful as it used to be? wall street is to be the shepherd that took you by the hand from private to public and help you raise the money. now that we have all this private capital it does not seem this is necessary. yuri: the company that i helped bynd was taken public goldman sachs, morgan stanley, and jpmorgan in 2010. i personally went through this experience. i did not find this experience being terrifying. some of those banks helped us to raise money even before that.

of course the market was very different at the time, that i think there is a logical evolution. i do not think there is one solution for everyone. i do not think there is a golden bullet which will solve all the problems. to have the diversity of instruments is something that the founders of the past did not have. alix: that was erik schatzker speaking with yuri milner. jonathan: you just wonder whether wall street needs silicon valley rather than silicon valley needs wall street. speaking of the future of isicon valley, bloomberg hosting a technology conference in san francisco and cory johnson joins us. looking forward to the conference. what is on the agenda? cory: the conference is looking juicy.

it is a really interesting gathering of companies large and small, new and old. anywhere from microsoft to some of those unicorn companies. they allow for storage for big companies and some really interesting companies talking about the notion of r&d market. a venture capitalist of note be joining us about starting leading to the internet exploding with netscape so many years ago. on the cost of venture capital and understanding what changes are happening with the new companies coming out of silicon valley. alix: of course the big story in tech was that microsoft -- microsoft-linked in deal. what is the buzz? cory: i think we do see it as a big surprise.

it is a huge deal but i think it also reflects a very interesting point in time. marketing opene -- market opening, i am thinking about companies not going public. you have these overstuffed corporate balance sheets like apple, google, with billions on their balance sheets. investmentpital across all of the economy at a historically low level. you have got earnings not growing in companies really in the last two years for the s&p companies and five -- and beyond. swellinge for yield is the valuations of some of these public companies like dropbox, some of the new companies represented at our conference. the result is you have venture capital funds getting huge amounts of funding so as much as been something of a writedown in

these big companies, you still have the balance sheets swelling and that means many of the investments are yet to happen. alix: investors looking for a return. thank you very much, cory johnson. jonathan: coming up is "bloomberg markets" with mark barton. but itfirming up a touch has been quite a session already. mark: and what a day to have scott mather on who manages pimco's returns. on the day that german 10 year goes below zero, joining switzerland and japan. the ontario finance minister will be joining us as well. biggest banks,'s many of which have a sizable

exposure to the u.k., the hit by a potential brexit? president obama will be holding a news conference after the national security council meeting. "that, "bloomberg very own david westin speaks to bill clinton. jonathan: bloomberg markets the european close coming up. we will wrap up the first 25 minutes of global trading in the united states. ♪

jonathan: this is "bloomberg go," i am jonathan ferro. equities resilient in the united states. the s&p 500 lower 1/10 of 1%. compare that to europe where we are down one full percentage point. yields are low with 10 year bond yields negative for the first time ever, grinding lower on

treasuries as well. stronger yen, weaker pound. ok, but u.s.ainty, market resiliency, you saw in futures throughout much of the session. alix: industrials just flipping into positive territory. that is a risk on sector. you have crude paring some of those losses as well. jonathan: compared to europe where every single industry group has been trading negative in the session. alix: david westin has an exclusive interview with former president will clinton. ♪

>> it is 9:00 a.m. in chicago and 10:00 p.m. in hong kong. i am vonnie quinn. mark: live from london i am mark

barton. markets" onomberg bloomberg television. vonnie: we are going to take you from chicago to london to washington in the next hour. here is what we are watching. the fed begins its two-day meeting as retail sales rise more than forecast in may. where the central bank stands on a rate increase and where investors are putting their money ahead of tomorrow's all-important decision. mark: anxiety over the brexit vote is wreaking havoc on the global market. falls to a10 yield negative. we will talk with pimco's scott