anna: -- >> welcome to on the move. we have -- we are counting you down to the european open. i am airline hide with matt miller in berlin. the yen surge. it sorted to a 22 month high. stocks bonds after the boj refrains from extending monetary policy. the slow path. the feds yellen signals -- citing the uk's referendum is a factor. the final countdown.

where are we in the brexit debate just a week to go until the u.k. votes. we are less than half an hour until the european open. -- futuresls disabling. we saw -- futures signaling. we saw asian stocks tumble. check out what is happening with features. asia tumbled 3%. that's happening with futures. asia tumbled -- happening with futures. asia tumbled 3%. all eyes on the eu referendum. the cac 40 showing it to be down 1.5%. it is going to be a down day. here are your asset classes. matt: big, big moves. .ook at the nikkei down 3% 15,434 closing, worst level in a

month. you see the yen right now down to 104 -- 104.20 real strength in the yen last week you can find more than seven yen for a dollar. the japanese twenty-year getting close to a negative yield. it is going out and negativity. brent crude falling another 1%. down 48% -- down 48.50. real pressure on oil as more supply comes online. let's get the first word news with haslinda amin. haslinda: matt, deutsche bank's chairman has become the latest leader to one about a potential danger of a brexit. he says it would be an economic disaster for the u.k. and a political disaster for the eu. just a week to go until the e has michael gov

criticized yesterday budget that the remain camp says would be necessary to shore up public finances. george osborne -- fighting a growing rebellion as the party lines up to reject spending cuts. the car market has fallen the most since december. it comes as matthias mueller prepares to deliver his new corporate strategy later this morning. car owners said the u.s. government has been given more time to file several proposals in the vw emissions scandal. a federal judge the late the filing deadline until june 28 majors ofhnical negotiations. which crashed last month with 66 people on board. egypt's aviation ministry says they have obtained images of the

wreckage but did not specify the location. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stores on the bloomberg at top . caroline: haslinda, thank you very much. talking of central banks, hurry up and wait. that is the message from the fed which kept steady in last night's decision. yellen says the brexit vote influence the vote not to take -- influenced the decision not to take any action. the boj's news conference is underway now. does have a look at some of the headlines coming out of governor kuroda's japan. they have continued to moderate a recovery trend. he expects japan's economy to gradually expand. he expects the price will gradually rise.

he expects inflation to come back toward 2%. oil seems to be jammed tomorrow. they are jammed today with the pan. -- with japan. we'll keep tuned in to that live press conference. let's get some analysis on all .f this central-bank news bob, the bank of japan holding steady. economists seem to be split on what would happen. 30% thought that we would see a move today. is it about the global risks? bob: i don't think so. i think brexit is an issue but one central-bank uses brexit as a reason not to hike and another uses -- use it as a reason not to cut. it doesn't add up. is a kind of japan lastng view that -- in its

inning. the yen reaction is maybe looking forward to the end of abenomics. with thehe old trend yen much stronger as the world is kind of -- the world's kind of weird safe haven asset. matt: do you expect the bank of japan to hold out -- to pull out a big zynga dess big bazooka and fight the strength of the yen? are they just giving up? think theyk they have done the big bazookas. with every central-bank and every easing, the half-life is shorter and shorter. the eurozone and the fed. the bigger issue is are we at the 20 end of what center banks can get away with.

we are looking at this will policy but policy -- at fiscal policy but policy looks along on the way. -- and excitement go central banks outside of the federal reserve in america can no longer expect effectiveness from their policy? since a bank policy alone cannot move the needle? bob: the data .ells you, look at bond yields if you go back five or six years, nothing really worked. that part of it has failed. the bit you are kind of pointing canrd is essential -- is central bankers keep asset bubbles longer? mr. draghi keep saying a few things. mr. kuroda has been trying to

loosen further. it is not going to do anything around the globe -- around the growth inflation debate. bookhing happens to the just to the growth story this lower we're in for longer world. i look at this year's performances of assets, bonds have done fantastically well. bonds -- assets have flattened. caroline: that theme is being emulated. want to bring if you were headlines coming from governor kuroda. they will add stimulus is needed . still see unstable moves in the markets. as governor yellen did, giving speak to the fact that they are looking outside of their own economies. the bond patches have

affected the market so far. the 30 oh yields, -- -- happening over in russia. the economic forum getting underway today. russia's biggest investment event in this year being overshadowed by recession, international sanctions and the plans of oil prices. with a week until the referendum, the possibility of that u.k. exit from the eu is possible. ryan: good morning caroline. exactly is it a good place to start the conversation. i am joined by alexander, the owner of the evening standard. a prominent russian businessman. we have to talk brexit. there is this perception out there that the russians, the kremlin could not be more

delighted if the u.k. exits because it means a weaker euro. not true? alexander: i think the brits are much wiser than thinking about making criminal he -- making kremlin happy. there are much more serious considerations. i don't think it is so important on the kremlin agenda. there might be someone there who might be personally thinking that something changes under brexit -- ryan: let's forget about persons. alexander: influenced by individual politics. russia plays a big role. whether brussels will be playing the role or some london politician. let's assume that brexit happens , what does change about what

britain thinks about russia? nothing. yesterday when i think, without interfering. i think from the point of view of being wise economically, i think the decision to leave would be pretty difficult. it is going to cause detriment to the british economy. i understand some of the considerations of my british friends which is raining in brussels. and my it is 50-50 personal thinking is the brits are much more conservative in a good sense of the word did once they go to the polls, they are going to think twice. ryan: do you think that a lot of russians will say if the u.k. were to exit the european union, this is a less attractive place for me to go on vacation, by a house, spend my money, part my money. russianslly for the with dirty money, we spend them

on buying property in london. it will be a less attractive place. russians like myself, it cannot be the same and we are much more affected by the exchange rate because have to play twice -- we have to pay twice. ryan: you wake up on the morning of the 24th and learn the u.k. has exited the you -- alexander: i hope i learn that britain is safe. expression the real of the british people, it's got a be [indiscernible] ryan: it doesn't affect the digital arm? alexander: we enjoy 70 million readers digital per month. ryan: if we get jermaine, a lot of people talk about -- we did

remain, a lot of people talk about how that is going to be accompanied by volatility. alexander: david cameron will definitely strengthen his position. boris johnson might be [indiscernible] the pound would be strengthened. ruble?oming from the alexander: i am making little profit [indiscernible] still a fews million pounds. it doesn't matter much peter ryan: getting back to my first -- matter much. ryan: getting back to my first question -- what do you think about the reaction to all of the fighting and clashes we have seen between the russian and england football. russia can really get a bad name out there, doesn't it?

that the: it feels feeling in europe about russia has been seriously impacted. -- i was in zurich talking to a friend who is a big lawyer and he would say [indiscernible] we have a correspondent who would write the brits were really enjoying themselves with a lot of -- and fighting the police for a couple of hours, until russians kick somebody. traded as if the russians were infiltrating. hopefully this is what it is for . the economic forum is going to start improving.

ryan: i want to ask you about that. this is the biggest investment form of the year and what d68 -- what do you say to your foreign friends? is a time to get in? we have seen the oil price go from the high 20's to $50 a barrel. rush is still in recession. they are still sanctions there. -- russia is still in recession. there are still sanctions there. alexander: this economy, the worst is done. they exchange rate, the budget with thets and even gdp growth, which are estimated , top 100 countries in the world, not too good at all. i think the worse has gone. this economy has adapted. the people in businessman --

sanctions doesn't matter at all. it helps improving the russians because it helps substitute agriculture for example. sanchez doesn't matter. it's just -- sanctions doesn't matter at all. hopefully it is going to work. -- we needhave gone to find the button and be where we can properly cooperate. a lot of opportunities. ryan: owner of the evening standard joining us with his perspective on all awful lot of issues -- on an awful lot of issues. with the investment climate is really like here in russia. caroline. caroline: ryan chilcote in st. petersburg. we'll be digging into all of those comments. let's bring in you -- let's when you up-to-date coming out of the japan press conference. governor kuroda speaking out sing the effect of negative

rates will become clearer. they don't think negative rates have been cutting into the banks profit. -- they wills continue to watch the function of the banking sector. also speaking about the brexit affect saying it is affecting the drop in bond yields, and they have been saying the decision on brexit is up to the voters in the u.k.. they are in close contact with central banks including the boe and they will monitor the impact of the brexit vote. it holds a fire. will they go in july echo the yen surging -- in july? the yen surging. back after this short break. ♪

matt: it is 7:50 in london. you're looking at a live shot on this gorgeous sunny morning of the brandenburg gate here, right on the cusp of the tear garden. we are minutes away from the open and we are seeing -- caroline has been telling you lending costs -- borrowing costs fall to record lows. und boned has gone -- the b has gone down to negative. .04 percent to

the german government to lend for 10 years. with volkswagen news coming out today. we did have some in the u.s. -- we have some volkswagen news coming up today. we did have some in the u.s. because of the complexity of the issue that it has to deal with. possibly more moving for the stock will be the press conference we get at noon. the new ceo is going to tell us that's is going to tell investors how he is going to cut costs further -- is going to tell investors how he is going to cut costs further. he going to bring component part makers and whether or not he will sell any of those brands. there are brands like a copy on the block -- like to copy on the block. have volkswagen -- we will

check it out after it opens in just nine minutes. caroline? caroline: also on the back of the european car sales data. 22.9% of theon to overall market share. on u.k. stock this morning, how land could fall on the open. -- pound land could fall on the open. airbus ceo saying they could have trouble leading up to all of their commitments. managing to pop-out 50 of those by the end of the year. it could fall 2%. let's get into some of the central bank news. we got bob janjuah to dig through it all. i want to go further. talk to us about the federal

reserve, sounding far more dovish. you're thinking a cut is more likely on the cards. bob: there is space -- there is space for a hike so any hike is unwarranted by the data. i am going to come back on this show and probably six months time and talk to you about the fed and why they cut rates. the jobs recession is beginning. we got they relate cycle lack of productivity. the corporate sector always response the same way by cutting costs. the biggest costs they can cut is labor. between now and then, perhaps the july meeting -- september seems too far away. there may be pressure on yellen to do something. that is more to do with the election. caroline: pressure from politics, you think? bob: i think there is going to be enough a lot of pressure on ms. yellen. if you know anything about ms.

yellen, their political leanings are well known, i think if your child, this is the same issue with brexit -- if you are trump, this essay makes you -- this is the same issue with brexit. the average joe has done bad out of this. the pressure is going to be on yellen. is perhapss perhaps -- i think there is perhaps some political motivation to show trump that she is not there to backstop hillary. not store up a little more dry powder? costs atce of lending a all-time low going to do anything to slow up the economy? bob: it is not about slowing the economy. i think doing one more hike to show that the fed is not married to hillary, or that ms. yellen

is not pro-hillary or pro-democrat that she would do whatever it takes. it is not the economy. the economy is slowing down anyway. from my perspective, we've got the beginnings of some recessionary indicators flashing. i think that is going to hit worse. the u.s. is not an island. the global economy is slowing down. the fed's projections are advising slowdown. 3%.is what to come in below for that economy is awful. central bank can play with the theet but the reality economic -- it is not there. this is not just after brexit. brexit is having some impact but the bigger picture is globally, we haven't got enough demand.

anna:--caroline: and bearish oil. of next, we have the market opened. check out the futures here it -- check out the futures. ♪ get ready for the rio olympic games

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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. caroline: good morning, and welcome to "on the move." alongside matt in berlin we are moments away from the start of european trading. it will be a down day. the: the yen surged, japanese currency surged 22 month high. bojks slumped after the holds fire. yellen signals a less aggressive set of hikes, citing the eu referendum as a factor. the final countdown, where are

we in the brexit debate with just a week to go before the vote? caroline: whenever i hear the how -- headline, i hear that song. about 1.5%gloomy day below. as we rev up to the open we have seen already the cac is off, the ftse also down. we will likely to see significant risk aversion. down by moreg asia than 3% today. we see concern about the bank of japan's unwillingness to add more stimulus. concerns this is the -- the miners will be in focus. golden focus. we see that as a safe haven. let's get to nejra. nejra: on the imap, it is red

look athe board if you the stoxx 600. it is financial leading the losses at the moment. health care following closely behind. the best performing group, if you can collect that is still down. that is energy stocks. offre very much and a risk and environment at the moment. i want to bring up the 10 year, we have seen this fall to record lows. move inust seeing it now. that yield is dropping lower. it is at 1.09%. is that a new record? has an eye to see if that fallen to a new record. it looks like it has to we are to japan and australia 10 year fall to records as well. look at the stocks we're watching. are keeping ane

ion. we are waiting for mulder to open at the moment. we got some numbers. this was higher after those full-year total revenues coming in at 155.9 million pounds. it also saw sales continuing to grow during the year. keep an yeye on that. also being called higher. do keep an eye on this. it saw full-year earnings modestly above top and market forecasts. we have seen second half trading as robust. it had its century profit coming million pounds. we saw its market share frolic and after we got that european car sales data. dropping the most since december. strategy, we get a update today. caroline: the u.k. gilt yields

have fallen to record lows. is on the u.k. 10 year. germany is in negative territory. japanese borrowing costs are sinking. clinging onto any sort of positive territory. let's get into the asset allocation. give us a sense, bob, of where we put our money in the situation. we have every energy group the slumping. the banks are feeling the pain today. is it still all about bonds at the moment? a long-termare investor, you can look at some element of the credit market. health care will do well over the next 50 years. we are all getting older. i think, for the foreseeable future, there's only one trade in town. that is long duration. ise cheapest duration market

treasuries. 30 years heading towards 2%. i think we will see that in the next few months. matt: if i look at the ftse over the last year, it has outperformed the stoxx 600. why do you think that is? is it only because of the currency? our investors not concerned about the brexit? bob: there has always been a story that the ftse is largely a u.k. index. commodities have done ok since february. the other element is that the ftse doesn't include the italian banking sector. the third thing is -- overreaction around brexit. firstly, i don't

really care what happens. we have to adapt to whatever happens. it will be very close. don't think enough has been said about that. cutly, if you -- russia was off from the world a year ago. everyone was forecast in the collapse of russia. it didn't really happen. the currency allowed an adjustment to happen. global economyhe will collapse because of a u.k. exit to me just seems -- it does seem a bit hyperbolic. it is been through lots of problems over the years. one of the outlet is the currency. now, is it risk free? absolutely not. tohink the idea -- paraphrase donald tusk, that it is dependent on brexit not happening doesn't say much for western civilization if that is

the case. matt: in that case, let me ask you about equities. is there a sector the think has been beaten down on fairly? maybe it is showing some value right now? bob: i am not really looking at the sectors too much. if you're taking a long-term view, education and health care have become nondiscretionary costs. spending on education will go up. we want the best for our kids. spending on health care will go up. we are all getting older. we all want to live longer. outside of that, i don't have a strong view. equity markets generally are way too expensive. the valuations don't justify earnings. the outlook doesn't justify. whether central bankers can keep that -- i will use that word carefully -- k-fed

bubble going. caroline: what about emerging markets? bob: there are different types of em, partly we've seen a commodity cycle. willnk in the long run, em not be em. are converging. it may take many years for it to fully become apparent. that is what is happening. there is money to be made in em. em rates look attractive. caroline: dollar denominations? bob: local currencies. andidea that em local -- you have to be careful which countries. it is not like liquidity is there in bucket loads in developed currencies for step it is not like we don't get takeout side moves in developed countries. unfairly tainted with some of the past. countries likeem

brazil. but you also have countries like india. they could be doing a china over the next couple of decades. right.e: if they get it maybe want to be analyzing if you want any sort of upside. bob is here to stay. brexit dig into the debate. up next, the final countdown. just a week to go into the u.k. decides about its eu membership. we will look at where we are in the brexit debate. ♪

caroline: welcome back to "on the move." let's check on the markets. it is a down day. risk aversion flood the market. the bank of japan is holding fire. the stoxx 600's down. so's the ftse 100. the miners are feeling the pain. the cac 40 is also off. what is moving the dax? deutsche bank seems to be dragging things lower. they had their price target to cut to the tune of 40%. that is by the likes of warburg at the moment of their. we could see a worsening of the investment bank revenue. or ubs.t f the cut for all of the banks. the peripheral nations feeling

the pain. feelingcommerce he a is that as well. keep an eye out, unicredit, they're feeling the worst. on the other side is the german stocks. the being upgraded by goldman sachs. the gold miners are your only a performer on the mining area. the spiked higher for highest since may forcibly the search for safety as the federal reserve seems to be putting off any rate hikes. that makes gold that much more appetizing. there you have the breakdown. risk aversion all over the markets. has surged. japanese stocks extended losses. the bank of japan refrains from extending monetary stimulus. engages --as the boj

engages the economic impact of its unpopular policy. the global market has given reason for pause. the governor is scheduled to hold a news conference at 7:30 u.k. time. bloomberg customers can follow that. meanwhile, federal reserve officials expect the bank to raise interest rates more than once this year. policymakers painted a mixed picture of the u.s. economy. growth is picking up. job gains had slowed. they voted unanimously to leave rates on hold. janet yellen sided -- cited britain's eu referendum. upcoming u.k. decision on whether or not to leave the european union is something we have discussed. i think it is fair to say that it was one of the factors that factored into today's decision.

chair hasvolkswagen's fallen the most to 22%. that comes as he prepares to deliver his new strategy later this morning. meanwhile, car owners and the u.s. government had given more time to file settlement proposals. a federal judge delayed the filing deadline, citing highly technical natures of the negotiations. investigators say they found the main wreckage site of egyptair which crashed last month with 66 people on board. search ministry says a obtained images of the wreckage. but it didn't specify the location. global news 24 hours a day powered by more than 1500 journalists.

bank's chairman has become the latest global banking leader to warn about the potential dangers of a brexit. he says it would be an economic disaster for the u.k., and a political disaster for the eu. morgan stanley economists have raise the probability to 45%. --enior client advisor at joins us now in london. bob, what feeling do you get as we are going in? is it neck and neck as we approach the vote? day, will thethe u.k. likely remain in the eu? bob: i private opinion is my private opinion. i think it will be very close. i am relatively confident in that. i think the city, the street,

the market, is reflecting the increasing probability over the last few weeks. athink there is already debate beginning in the market about the fact that if it is a seconduld we have referendum later this year? that is on the basis of a renewed offer. that seems way out there at the moment. i think this is buzzing around the market these days. think -- where, in terms of asset classes? pound volatility is spiking. this is remarkable. the pound has slumped by 7% this year. implied volatility, look at the spike. the highest level since the financial crisis in 2008. bob: i think that should be

expected. caroline: we're over blowing it? bob: in the short-term, anything can happen. that could happen today. on any kind of -- i think these days we have been captured. we have stockholm syndrome. not one country in the world wants to have a strong currency. if the worst outcome of brexit is a weaker sterling, that is something every country in the world would love to have. do i think the u.k. economy could adjust? yeah. think any problems with also spill into europe? yeah. beyond that, i don't think we can say enough a lot. thatold enough to remember not signing up with the euro was going to hasten the end of the u.k. it was the opposite. i am not suggesting this will

always be the opposite. but brexit will be close. there will be panic. personally, i think a lot of the market will look at that as an opportunity. scene fromhad a russia early on. all i heard from people is that of sterling cheapens up enough they will buy assets. go figure. matt: let me jump in. i'm sure you're hearing from wealthy people. none of them are buying deutsche bank shares. are falling toe a low. 12 euros, 96 that is what we are seeing. the lowest on record. is abig, drop, this one-year chart. would be aaying it disaster for the u.k. economy, a political disaster for europe was to do you think people are sensationalizing this? is it truly such a momentous

about? bob: it is a bit of both. i think people are over sensationalizing this. be moment this was a is where we need to step back. we look in the context of mr. trump, in the u.s. reallyrage citizen doesn't listen to the economic argument the way that we the market do. the average citizen in the u.s., or the euro zone, has sat there for the last eight years. they have seen their standard of living fall. while the inequality in the economy has gone through the roof. socialist, but i think it was a point. the difference between now and 100 years ago is that 100 years ago most four people were much poorer than they are now. they didn't realize how rich rich people were.

if you are an average citizen, you have seen your house and your real income lower. your standard of income is falling. people are responding to that inequality. it is a protest against the system. people should be more focused on the economic argument. how can you say that? people can say i haven't benefited from an economic upside. struggling to believe in that. that is what is going on you and brexit, with trump. afd nextee that with year. british people don't hate europe. but it is a protest against the establishment. if there's anyone to blame, this is my personal view, blame cameron for his speech. for promises that haven't been able to be delivered. you can look at the eu and say the deal you give cameron,

frankly, was going to be impossible for david cameron to say i have a good deal. it is all from that. caroline: the uncertainty seems to be geopolitical risk. thank you very much indeed. off now to go and speak at a bloomberg event downstairs. viewshanks to have his board today. up next, global sovereign bond yield is collapsing. we look at the extraordinary trend in the bond market. a record low, after record low. the ftse 100 is off in a gloomy city of london. ♪

to "on theme back move." you are looking at a live shot at the deutsche capital. biggest bank, the german bank, falling to its lowest level on record. deutsche bank shares at 12.97. the price target they have for deutsche bank. 12.70 ondown to concerns that investment banking will be slowing. the lower interest rate are not good for bank profits. those don't seem to be good for

bank profits. don't want to contradict anything mario draghi would tell you. caroline: of course, governor doesn'tlso saying he think they are feeling the knock from negative rates. 600, it isthe stoxx the worst performer. into dig into the worst -- a chart now. the new anchor for bloomberg markets: middle east. the erosioning with profitability today. it is being hurt by the bond yield. to be on air. i couldn't wait to get my hand on the terminal and start playing around with that. what a week we have had with the government bonds. the flight to safety. there is more to this story. you have investors looking to escape the negative yield. longere jumping towards maturities.

they are pushing the rates down on the further end of the curb. -- the curve. a whole iss flattening. if the three-month treasury line, that visual blue line. it is going towards the bloomberg index for global .eveloped sovereign bonds that is an average life span of 10 years. 10 years versus the three-month treasury yield. look how the two converge. you have a slow convergence. then it accelerates into 2016. that really sparks a whole other debate. central bankers will have to address that in the coming months. jonathan: i think you are right. matt: absolutely. let me say thank you very much for that. looking forward to all the work you will do for us at bloomberg. we will take a break.

up next, brexit and the banking sector. we look at what the u.k. leaving the eu might mean for that industry. that is a big story. ♪ get ready for the rio olympic games

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caroline: welcome back to "on the move." let's see how things are shaping up. it is a bleak day on the market. every industry group is declining. we are trading at a four-month low when it comes to european stocks. ftse 100 is all. dax -- is off. dax is also feeling the pain. matt: central bank of low and negative interest rate. stayingone that is negative. it is maintaining its deposit 75 percent.

unchanged there. that decision breaking right now. we see the snb leaving its three-month target rate between .1.25 no change as far as its rates. it see the gdp forecast. that is the same as the previous forecast. -0.4%. +0.9%. it is not going to move its deposit rate right now. it's as it will intervene in fx markets as needed. of course, this brexit vote coming up in just one week from today could affect the swiss.

the swiss franc is the place to go to seek safe haven. the swiss national bank is read marketservene in fx when needed. it is not doing anything today. caroline: maybe keeping its powder dry until after june 23rd. people seem to think more intervention would be brought about by the governor should u.k. exit the european union. give a great interview coming up with thomas jordan, speaking with our own guy johnson. that is a great interview coming up later today. now, let's go into the key stock stories. mention deutsche bank. i am highlighting some other

banks that are the worst performers this morning. we arwe looking at banks in spain and italy. there doesn't seem to be any specific news flow driving this. maybe this is over concerns about brexit. maybe there could be for the risk aversion. for is that going to mean peripheral spreads? what effect that have on these banks? perhaps that is driving these moves today. also, the best performer on the stoxx 600 after it remained confident for the year. andave had some come out express their concerns about a brexit. for now, not ws atkins. wanted talk about a bit about deutsche bank.

we look at the snb. the headlines. you can narrow that down if you want to see just a bloomberg resources. you can see bloomberg news, first word, and everything else. it was interesting to see the headline on this screen. the snb is watching closely its banks. it says financial instability risks could increase further. its banks have further shored up their capitals. it is watching them closely. there are concerns about low interest rates. negative, it has interest rates most of you heard mario draghi in the past thinks that negative rates don't affect the banks negatively. saying he doesn't take a negative rates are directly affecting bank profitability.

we're still seeing bank share prices fall to record lows. deutsche bank now at another record low. caroline: that is a notable move by deutsche bank. these are very volatile stocks. many are just penny stocks. we are seeing some of the big payers. that is fascinating. and of the central bank, as with the federal reserve, talking about global ramifications of the eu referendum. the u.k. referenda may cause more uncertainty. theypotentially feeling could see more action coming from the swiss factional bank. swiss national bank. will that surge today? up next, we now go to st. petersburg again. once again who returns to the risks of a

potential brexit. what will that do? ♪

matt: the deutsche bank chairman said a brexit would be a disaster for the eu. he also talked to regulatory pressures. he said it is preventing banks from stimulating economic activity. for more on what a brexit could

mean we're joined by the center professor,al studies thank you for joining us. let me ask about regulation. a lot of people are talking about monetary policy, and this go policy. i don't think people are talking enough about the importance of bank regulation. >> absolutely. this is one of the big developments since the financial crisis. we had a complete overhaul of the regulatory system within the european union. this system is now starting to contract and work. its implementation is not fully done yet. caroline: give us a sense within this regulatory environment, how to makee expected any profit at the second moment. deutsche bank is being cut

because they feel the investment banking revenues will hurt further. it is not helping with these negative bond ratings. the yield cannot manage to make any money on bonds. jan: that is right. the regulatory burden. the regulation requires banks to hold enough capital. other loss have absorbing capacities. so in the event of a problem, they can shoulder it themselves without being bailed out. that is the main thing. for alluld be a move the big banks in europe. that hasn't existed before. that led to state finances being drawn down by banking crisis. there is a relationship between banks and states. we have cut that. a much better market environment now. these regulatory things constrain banks, in their

behavior. in a way, the cost of that new regime. caroline: give us a sense of what the ramifications could be eu, ink. exit from the terms of where was in the british banks go. so many want to stick to being a global banking model. you managed to put in place and he views it will be -- managing to put in place any views of where it could go? itself is only happening after a lengthy process following the vote. the vote is more important as a trigger of policy action. e important information that the market is waiting for. that is where the volatility is coming from. the vote itself, i don't think that is relevant.

after the vote, we see policy makers coming together and trying to find a way forward. i think they will sit together a way forward. either into a world which has less centralized european decision-making, or a world which has even more. that is what the markets are waiting for. for the banking -- we need -- sorry? professor, just quickly, a non-regulation question. many of our viewers are working in banks in europe. many are wondering if they had to move the continent, where did they go? where in the capital of european continental banking in the event of a brexit? could we all moved to munich? jan: if there is a true brexit acision, i would expect that

number of functions would move to europe. both to paris, particularly the asset management side. and the trading, and part of the banking business that is commercial backing would probably move to frankfurt. the largest volume, however, will stay in london and will avelop well in their role as global financial center. don't think this is that much harmed by such a decision. matt: you don't think we would see german banks gaining market share, and getting stronger, against banks based in london? you don't think it would be any help to european banks? jan: at the moment, what would help european banks would really be to become european.

to extend their functions across many european countries. the leading position of london in terms of the investment banking side is not really under scrutiny. brexitmainly, i think, will determine how the european banks will be able to expand across europe. they are not able to do that. matt: very good. we start with regulation. thank you so much for joining us. also, i think he is a member of the academic advisory board for the german finance ministry. very good to get your opinion. now let's get the bloomberg business flash. aslinda: volkswagen's chair

fallen bys it has the most since december. be prepared to deliver his new strategy later. givenile, they have been more time to file settlement proposals. federal judge delayed the filing 8th, site injune 2 technical nature. head ofe, the global sovereign ratings has the short-term impact of a vote to leave eu would be negative for the u.k.'s economy. the long-term effect is unknown. >> i think the immediate economic implications would be negative. 24th ande up on the are out of the european union. even the leave campaign technologies that. uber's rival in china has been valued at $24 billion.

billion and a.5 round of funding. they increase the valuation and largestke didi the privately backed company. that is your bloomberg business flash. caroline: what a valuation. thank you very much. brexit has been the topic of this week. let's see if it is in st. petersburg as well. ryan is there. am joined by the chairman of europe's largest tour operator. klaus, thank you so much for joining us. i should point out klaus also five different european boards. he will talk about what happens

if we end up with a brexit. the company orth the chairman of. what threat would it pose, theld we wake up and learn u.k. has a to the -- exited the european union? klaus: i think it is a real german, british, company. we have merged the old entity. forre a good example analyzing what could happen. what is the first thing is that we believe that there will be no exit. second, we analyze carefully. as other companies are doing, everybody works on what will be the consequences. i believe we should be aware that if it comes to a disruption

ct currency, this will affe our business first of maybe not in a huge dimension. this could have negative consequences. ve already seen a devaluation of the town. are you seeing pain because of that? klaus: everyone is being cautious. they're taken all measures to prevent the negative impact. ryan: the biggest problem with a weaker pound means brits travel less. would tui consider moving some of its resources in the u.k. out of the country to his germany -- to germany should there be a brexit? i don't think so. we are so strongly committed to the u.k. we have an excellent workforce. we believe that this will not h

elp us in terms of cost to shift it over. i believe, if you made a commitment, and have excellent people doing a good job, we will not change in a way that we will shift significant labor. ryan: you were talking about a weaker pound. how would that hit profitability? that at the u.k. exits the european union brits will pay more for travel? klaus: in terms of the, we had a very short-term -- the negative impact which will not be a big one. we can manage it. we will always stick to our profit guidance. overall, i believe it will be something that could be very

negative. this has nothing to do in an isolated view. we still have to operate a business. to ask you about terrorism, and perceptions of terrorism. there has been a lot of it. tui has seen through this. can it continue to do that? klaus: you have to differentiate. you have to look forward. what will be the future destinations where we will go with our clients? and, i believe it sets an awesome part of africa. a lot of countries we think we should invest. we will not increase our presence. we are working on other issues. one is to look for safe destinations. tot may be, as an example,

position ourselves more in spain, italy, and greece. and what can we do in countries in the caribbean? ohe other thing is, we have t increase our own safety and security. i believe these are things we can do. we are managing this reasonably. ryan: klaus, thank you for your time. talking about the challenges of the prospect of a brexit. what that might mean for their business. pound.t mean a weaker caroline: thank you. an informative interview with a man on many boards. that brexit won't occur. let's talk about the backlash, if it did. economists expect action if the

franc rises. the decision next. ♪

matt: the swiss national bank held the rate at its quarterly meeting. guy johnson will be speaking with the president later. what other takeaways from the

snb statement? it is not a normal time to hold the rates. think what is interesting is that they held the rate. to intervene.ady with one week to go until the defend they are ready to the swiss franc against significant appreciation. look at the risk reversal, the market has been buying protection against a big move. clear it willing be intervening. what is interesting, the derivative conversation is that maybe they intervene rather than cut rates further. the talk of the town is that banks are getting to the point where they'll be hoarding cash if the reckless more negative. we are in a position where the tools in the

toolbox. intervention looks like the most likely outcome. caroline: guy, we are looking at that risk aversion chart. expecting a significant move, what could those toolboxes supply us with? we will have to get more creative. the interesting thing. again, if you extrapolate forward and think about what could happen. the snb could do all kinds of things. becoming increasingly limited by public opinion. the public won't tolerate extreme measures being taken. the swiss national bank may be getting to the end of its toolbox. they are buying all kinds of things right now. the global ramifications of the u.k.'s

decision day that approaches. we look forward to that interview by guy, speaking to president. a murky city of london. ♪ get ready for the rio olympic games

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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. francine: the bank of japan holds fire. the insurgents through 103 against the dollar. the brexit break. u.s. fed gives -- the us-led skip stage and hike. -- it'll intervene in fx markets. -- the boe ist expected to keep rates today. the growth may not be referendum on related -- referendum related. ♪