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. ♪

francine: welcome to "the pulse." live from bloomberg's european headquarters, i am francine lacqua. we have a great show lined up. couldng to chris ailman also joining us later on, maurice leavy. will be spinning to alex a mordashov. all our exclusive interviews. let's get straight to the markets. -- the the picture european stocks. i want to see you again at 103.9. there is more concern after central banks japan spurred concern that the global economy is losing momentum. refraining from using monetary policy. this get to the bloomberg first word news with nejra cehic,

nara. nejra: the yen jumped to a 22 month high and japan extended losses. governor kuroda says he will not hesitate to ease further. the swiss national bank has kept interest rates unchanged, conserving animation -- conserving ammunition. it has the potential to come to kate monetary easing desk to complicate monetary easing -- to come to kate monetary easing. the frank reminds -- the frank reminds overly valued. minister saysy there is a need for his country to cooperate in the oil market at the moment. speaking to bloomberg tv, alexander novak also said oil prices averaged $50 a barrel in 2017. we'll bring you highlights later in the program.

investigators say they found the main wreckage site of egyptair flight 804 which crashed last month with 66 people. egypt's aviation ministry says the search mission has obtained images of the airbus's 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. find more stories on the bloomberg at top . francine. francine: thank you so much. the federal reserve voted unanimously to leave rates on hold. the meeting also saw a rateficant shifts in the path expectations. brexit, -- yellen outlined -- >> the decision on whether or

not to leave the union is something we have discussed. it is fair to say that it was one of the factors. it could have consequences for the u.s. economic outlook ahead of the labor market. it has been something of a loss of momentum. you should not pay attention to one job market report. if the incoming data were in the coming months to justify the increases that would have this that we have long discussed, i think markets should not be surprised by such a decision. no meeting is out in terms of a possible rate increase. timetablere-specify a so i am not comfortable to say it is in the next meeting, but it could be. it is not impossible. it is not possible that by july, we would see data that led us to

leave -- led us to believe that we are on a perfectly fine course. francine: i want to show you my chart of the hour. the market expectation for when the next rate hike will come. anestors believe there was 80% chance of a july hike and more than 50% chance of an increase by december. that was the picture back then, a week ago. if you look at the picture this byou can see tapping the bart go. investors do not expect increases this year or even by february 2017. my guest is chief investment , the california state teachers retirement -- i am ailman.to welcome chris

a great to have you on the program. you are here 10 days before brexit and we have a fed day. are you disappointed that the fed has been saying for the last six months, we're itching a hike, we are ready for a hike? chris: a couple of those spots were coffee stains. i'm disappointed. i think the fed needs to get back to normal interest rates as quickly as possible. they are out of tools. they have used them all up. i fear that the last unemployment report caused them to be worried. the fact that the polls have balanced out more on brexit is a big concern -- is a big concern. if they looked at the bookies and the way it goes, because that is our view that they are more knowledgeable. there was a chance to raise rates. u.s. a soft, but spending is

still strong. they need to get back to at least something above 0%. care -- francine: when i look i'm sure we have the us closer to a possible brexit, but we kind of knew that. the fact that he almost took july off the table for the fed wants to weakening jobs conditions in the u.s. are you worried the weaker jobs number was something more sinister? chris: i think i would go with more sinister. the mood in the usa is not that good. the election has been doing a lot of it out because they are possibly hit by negative images. if you look at 70% of the u.s. gdp is driven by the consumer and consumer spending is strong, and it will remain strong. blip. that may was just a

i think it is a sign of the underlying concerns in the u.s. economy. the statistics are still very weak. the fed should have moved, now it is a question of september or never. we're talking about 2017, and that is just crazy. it should've been now and it should of been bold. francine: that pushes a lot of negative yields further into negative territory and and a you invest longer-term. how difficult is it to find yields anywhere? and how difficult is it to choose what you want to be in longer-term? .hris: you hit it on the head if there is a yields in the world, it is in the usa. at least it has a positive yield . for us, we are lowering our allocation of fixed income because of that. the fact that the global central banks are out of their ammo. they have no more tools, is a

bit more emphasis on political risks. that mix it tough for us to invest right in front of questions like brexit, ethier selections. u.s. elections. many of the -- francine: if you look at equity, the problem is -- are you concerned that when the qe drives of -- dries up, we are left with distortion in equity? 's go i am worried with rates down -- chris: i am worried that with the rates down, -- even in europe which is in crisis. we have partners who have been looking at middle-market buyouts in europe are seeing things

priced at levels that make it hard to generate the kind of returns we want long-term. i am still cautious. i have been cautious. we think the equity markets are running out of steam. we would like to buy into europe and u.k. but with all of this uncertainty, we draw back. when central banks runs out of ammo, it means -- chris: we are concerned about a downturn. i am always looking around my shoulder for what is best for when the next downturn will come. i want the challenges. in this environment, it is very difficult. that is normally going to be equity and gdp growth. with the emerging markets banks of flat, china being weak, there is very little growth and opportunity. francine: will talk more about china and how you define that 7%

return which seems impossible. usistopher ailman stays with for the hour good coming up, we have lots, including balancing the books as well as energy prices could we bring you an interview with russia's energy manager, alexander novak. countries in 108 the world, we talked brexit. [indiscernible] co-owner billionaire of sever sell. will also speak to alexey mordashov. -- we will speak to alexey mordashov. ♪

francine: welcome back. let's get to bloomberg business flash with nejra cehic. nejra: volkswagen shares have fallen the most since december to 24.2%. that comes as ceo repairs to deliver his -- as ceo prepares to deliver this morning. give been giving more time to file separate post that they have been given more time to file separate -- citing the

highest technical nature of the negotiations here it deutsche bank's chairman has become the latest global banking leader to warn about potential dangers of a brexit. paul ashley says it would be a disaster for the u.k. and a political disaster for the eu. morgan stanley economists have raised the exit probability footie 5%. -- 45%. members rival in china has said to been valued at 28 billion dollars. at $28 billion. the increase on last year's valuation of $68 billion would surpassingdidi, airbnb. francine: how to investors in sri lanka -- negative returns. the skidmore from the man in charge of investing $187

billion, chris ailman. hows, we were talking about it is tough out there for people like you to invest when negative yields. when we think central banks will do more to push return and sovereign bonds is getting difficult. how much are you looking into infrastructure? how much is it difficult to get interaction for fiscal spending? chris: to increase our allocation. -- we would like to increase our allocation. we know the u.s. needs infrastructure but the market is not open yet. for us, the return we're looking for is going to be equity and gdp growth, but pimco in california coined the phrase "the new normal." they were wrong in my view. we got double-digit returns. now, it looks like we are going

to continue to have low returns. maybe now we are in the new normal but the gdp growth will come back. we are just in a slow trough right now. long-term investors will still work out. we like to increase our allocation to europe. where concerned about japan. japan is just -- we are concerned about japan. japan is just so slow. we have to get through these massive hurdles. system.s still a flawed it is going to take a lot of work. francine: the eu is a mess. we need a cathartic moment, or a definitive resolution. chris: the eu is still a grand experiment that has not been done on the world. for us to call it a mess from a single system to a multicountry system, yes, it is a mess. i would not say that from a invest -- that from an investor in perspective, it looks rather attractive.

we need some more financial integration and we need to see more of a constant political system. the ecb really stepped in and gave it some solidarity to having at least monetary consistency. for us, certainly central and northern europe is attractive -- there are attractive financial opportunities. with the risks, we like the european union with france, germany and u.k. is a nice neutral party. the idea of any you that is dominated by france and germany, we are going to have to watch and see. francine: there may be a resolution if people do not say we need to call another referendum before five years, there may be a solution in 10 days. chris: we are long-term investors, so we are not going to start right on june 24 -- we are not going to just make some moves. we are going to let the dust

settle and look. we have held back on our investments in the u.k., slowed our investments into europe, waiting for this risk to mitigate. we will step in. in the summertime, we have been feathering into europe in equities slowly because we want to be more of a global folio on the equity's side. holdve had to put that on with the volatility and currencies and the market. that will take one risk off the table. francine: chris, thank you so much. we'll talk more about valuations and about france. ceong up, we speak to the -- the second largest advertising company in the world. we will talk about technology, valuations and potential growth in france. coming up later, we are live in st. petersburg, speaking to alexey mordashov. he brings you an exclusive interviewer. the russian energy manager is

talking about u.s. shale producers. stay with us. ♪

advertising group supports more than 77,000 special events in more than a hundred and eight countries -- more than 108 countries.

welcome to the program, maurice levy. he is hair ahead of the aveva technology conference. to bring together 5000 startups with top investors. chris, thank you for sticking around. we were talking but the fact that u.s. investors look at europe and you say there is potential in europe. something is to happen for me to put my money where my talk is it how would you rate technology -- talk is. how would you rate technology? maurice: it is about top talent, business, innovation and also the fact that when we get together, a very large company -- in order to have the start up to transform themselves. when you look at the program, it is quite impressive. you have top speakers such as

from google. -- big, bigvo lineup of great speakers. francine: can france ever rival -- are we ever going to have google? >> we do hope. with the disruption, we'll have some interesting startups. maybe we will have unicorns. for the time being, -- there are some interesting operations which are growing. us which arew of striving and trying to build something interesting. , we are all -- we as

publicists, we are already in the field of technology in digital -- technology and digital. so far we have 55% of our revenue which is arrived -- which is derived from technology. very large companies coming with cisco, making some presentations. we have some -- some things that have never been seen in europe such as googles self driving car. we have operators from facebook. we'll have a lot of you -- a lot of new operations. a new police station will be launched by technology. francine: some of these important -- some these conferences are important to generate interest. he shows up in europe, d go to conferences to get the -- do you

go to competence to get the low-down? when you look at startups, you look at valuations? chris: we will invest in some startups. we will be investing through the ships and private equity and venture. we need people who have boots on the ground in those areas to understand the vibrancy of silicon valley. everybody wants to re-create that. it is very challenging because it is a combination of education, entre nous real spirit and that venture capital. on.ice: you are spot you need this combination and shortably in a very place. geographically -- francine: prepare us. chris: i agree.

the silicon valley is really adjacent to stanford university. there is a reason. maurice: there is a technique. it creates high-tech. there are a few startups around some labs. -- we are missing is -- thee: the problem is problem and france is that you have a lot of strikes. are getting there, there are strikes and concerns about the pickup of garbage just two weeks ago in paris. how do you respond to that criticism? maurice: the strikes or something we are used to and we are living with. what happened recently is something which is not very common people and we have seen

with the garbage and also the people who have been demolishing -- all of this is something which is quite unusual. what is unfortunately usual is to have a few strikes. we can deal with that. we cannot stop that, because it is something which is part of workers.om of our they have the right to protest, the right to demonstrate, but we need to make sure this is not abating the -- to come. francine: especially for investors. maurice: what i can tell to chris is we should look at the publicists, we have been the fastest growing company in our sector for years. we have the best margin of the industry. we have transformed ourselves and we are second to none offering and to end the

services. we have been able to do that with the broken english and living in france. you can see that this has not too high to jump over. when you look at all of the investors, most of them are happy. we have a way -- francine: it has been a great company. you have had your share of setbacks with the merger. maurice: it will come back very soon. francine: something bigger? oh, the share price. maurice: i am confident on the track of our progress. i feel good about that. we are right on track. , chris,: we're talking with some of the valuations about tech. i want to talk to you about the deming reports -- the deming

reports. do you think you need to come together with a lot of your counterparts to show you are more transparent in some of your practices? maurice: there is a transparency aspect and there is the honesty and integrity of the deals. i do believe is not only for publicists. what i do believe is that most of our competition as well as ourselves, most of the industry has called into the contract. some contract allowed for transaction. some context demand transparency. we are bound to the contract and we are developing with the contract is proposing.

if it has to be transparent, let it be transparent. if it has to be days that are on markup or some specific issues, we are dealing with this correctly. i don't believe there is a huge issue of integrity. downbelieve we need to sit with our counterpart and come to an agreement in order that this price is going out of the landscape and we can work positively with our clients. chris: all of this is about disruption of technology. you made a point that the company has transformed itself. i think when you think back to france, and most of these transactions where -- where people have parity affirmation .- half proprietary affirmation

we have seen that in the beginning stages of new technology. that is going to be one of the challenges in france. it is very staid and rigid with tradition. fascinating toee see the google economist. francine: maurice: you have this freedom petition. chris: i will play my own -- i will pay my own way. is june 13, july 1, july 2. it is open to the public. one thing i would like to say, because you should not think we're only a french company. 50% of our business is done in the u.s.. only 6% -- in the u.s. only 6% of our business is traded in france. we are clearly a global company dealing with all of the global issues. francine: maurice, thank you so

much. maurice, will have to get you back on. -- we will have to get you back on. chris ailman stays with us. we will be talking more about china and the challenges there when it comes to corporate debt to stay with us. plenty to come on the program could an interview with russia's energy minister -- program. an interview with russia's energy minister. let's check in on the markets. we are trading lower. let's check in on the bloomberg with mark barton. the stoxx 600 down for the six-day. every single industry group is trading lower on the stoxx 600. investors worried about next week's referendum, just a week away 8%. that is what we write up the value on the stoxx 600. chart. the

this is my favorite chart of the day. it is a wonderful chart which highlights what is going on in the global government bond market. this is the yield differential between the bloomberg global developed sovereign bond index which is a test which is an index of all the worlds -- which is an index of all the world global sovereign bonds. this is going back to 2011, the yield on global bonds has been narrowing. the yield on the three-month bill has relatively been moving a bit higher. the differential, the spread, has been moving closer and closer. it is a record low. developedomberg sovereign bond index, the yield is 6.7%. five years ago, the premium was more than two percentage points. that tells you the unorthodox policies that central banks like the ecb and boj have been

implementing. it is pushing money into also said riskier assets -- in all sorts of riskier assets. england of course and no change in interest rates is expected. on.stors are more focused this is a wonderful function. this is the world interest rate of ability function. -- rate probability function. this is for the july meeting. the probability for the cut in july is now 24%. many people saying if a brexit materializes, the bank of england is going to have to cut interest rates to spur growth or just a week ago we were at 16%. go, --ks ago -- six must six months ago, 6%. this is the yen against all of its g 10 years. dollar. the new zealand

every single currency is falling by over 1% against the japanese yen. firstly to the fed, what is interesting, yet nothing happened. although the median forecast, looking at the two rate hikes this year, six out of 17 policymakers only see one rise this year. the projections for next year and the year after offer three hikes. the earlier projection was for four hikes. some of the forces which have been holding down interest rates may be long-lasting and secular. that was interesting. that was the words of fed chair, janet yellen. that is because of slow productivity growth and aging society. that was a slight change of tone from janet yellen. just getting to the end. the boj absolutely nothing today . the and has risen to 104 against the dollar for the first time

since august 2014. the big day is to lie 29th. we would get -- is july 29. we will get inflation expectation from the boj. today. the big thing will we see on july 29 further stimulus from the boj? if we get a brexit, some say we could see the yen rising as much as 60 on the japanese currency -- as much as six yen. it is all about global central banks today i have not have time to mention the -- i have not had time to mention the swiss national bank. toncine: let's get bloomberg's first word news with nejra cehic. nejra: -- more than once this year. policymakers changes a mixed picture of the u.s. economy

where growth is picking up while job gains slow. they voted unanimously to leave rates on hold. one of the uncertainties discussed at the tuesday meeting. >> brexit, the upcoming u.k. decision on whether or not to leave the european union is a something we discussed and i think it is fair to say it was one of the factors that factored into today's decision. nejra: leave campaign is continuing to attack the government vision of a post brexit britain. one of the out campaign leaders criticized the austerity budget that the remain camp says would be necessary to shore up public finances if the u.k. votes to leave. george osborne is fighting and going rebellion. -- fighting a growing rebellion.

investigators say they have found the main wreckage site of egyptair flight it'll for which crashed last month -- flight 804 which crashed last month. the search mission has 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 stories on the bloomberg at the top . francine: thank you so much. russia's energy minister says there is no need for his country to cooperate in the oil market at the moment. speaking to bloomberg tv in st. alexander novak says oil prices may average $50 a barrel in 2017. i think it is not just our forecast. most analysts say that it is

unlikely that the prices are going to be high in the forthcoming few years. we are a part of the global cycle at the moment, the prices are low. we are coming -- we are talking about the next two years. indicating different forecast. period,d be a very long 10, to 15 years before the next hike in oil prices that has happened before. 2008.rst hike finished in 140 -- $148t we had per barrel then it fell down. now it has bottomed out. the new technologies have changed. the new technological approach, the cost of production has gone down. the productivity has increased. now the reserve considered impossible -- there is a lot of

oil in the world. on the other hand, there is positive news, demand is growing . this year, demand is going to 1.5% -- 1.33% to million barrels to 1.5 million barrels a day. india,and growing in much greater than expected. the demand is growing. supply outnumbers demand at this time but it will balance out. francine: that was the russian energy minister talking about -- president clinton will be hoping to woo investors. in the wake of the country's largest recession in two decades. ryan chilcote is there for us. he is a great interview. ryan, over to you. ryan: good morning, francine. i am joined by alexey mordashov.

which happens to be listed in london which is good enough of a reason for us to talk about the subject which is the possibility of a brexit. how, if we wake up on june 24 and discover the key has voted to exit, would that impact your business? quite probably because the u.k. is important financial center in the world. for other companies and groups [indiscernible] about oilhinking companies. the u.k. as well. our economic situation in the u.k. is very important. i am not prepared to say anything about importance of

brexit for u.k. but because the u.k. is a part of the financial community, any disconnection which might secure the brexit [indiscernible] four business plan. -- when canntioned we expect a share sell flacco what a brexit -- share sell? what a brexit effect the share sell in any way? alexey: it is very difficult for --to be specific, because [indiscernible] is implementedch of -- i don't know what will be the final outcome -- if brexit secures. 17 years of instability. all financial agreements in

order to adopt new reality of the u.k. wealthy russians run for the exit if the u.k. leaves the european union go or just the opposite? they will see an opportunity to buy london on the cheap? alexey: i don't have any property in london. business which we have discussed is much more important for me. ryan: russian, your friends,, do you think brexit is a concern for them and keeping their money in london? alexey: different for different people. i don't feel that it is a big topic for russian businesspeople. [indiscernible] we as a company do not keep any money in london. it is an important structure provider.

ryan: the eu is looking at disposing more taxes against the russian steel. do you think that is going to happen? now,y: if it is happening -- which we are going to change [indiscernible] [indiscernible] for example we have a case against russian coal, it was a .ig surprise for us it was a big surprise because we answered all questions. a delegation from eu . we do believe that we could .eceive better treatment

ryan: there's a lot of talk about back home that the russians are pretty embattled, there might be mergers. one of your competitors says if there is a merger, -- it would be a good fit. his severstal in talks with mm k for a possible merger. are you talking a not? we don't have specific discussions. talking are not talking is very very broad. we are talking about everything with everybody. we are members of the same circles. there are no specific discussions to be disclosed. ryan: the evasive chief shareholder and severstal. waiting into the whole brexit discussion. what it would mean for russia.

francine? francine: nice try. nice interview, ryan. maybe next time he will give us more of a feel of what exactly he is talking about. ryan will be with us throughout the rest of the day. he has some great interviews. one of my other colleagues, guy johnson, is in switzerland. he is talking to the snb president and what we hear from than -- don -- mr. your they are following the markets very closely. look at swiss franks, 108.175. we had a lot of roller coaster rides. we saw this only after a year and a half ago they decided to stop that floor against the euro. the time to sustain that floor, now people saying i don't know how much good news that was. up next, taking aim at the free

model used by hedge funds. we discussed that next. ♪

francine: swiss national bank has kept interest rates unchanged ahead of the eu referendum.

year.derstatement of the monetary policy maker, at times of crisis because it's deposit rate at 0.5%. the firm remains significantly overvalued. if needed, i'm pleased to say guy johnson will be speaking to the snb governor, thomas jordan later. guy, i like the way it is compensated. the brexit would coppock it matters, wouldn't it? -- would complicate matters, wouldn't it? guy: they stand ready to intervene could look at the euro swissie and what you'll see is the market is taken up considerable protection against the idea that we would see a depreciation of the swiss franc. how does he deal with that? by massive currency intervention. that would be a net result of a brexit. what i think is interesting is

they are talking about intervention rather than taking the policy rate lower. maybe, they are reaching the limits of their ability to take rates further negative, because just maybe the banks are getting development as well. maybe they will start storing money in their bonds. francine: the million-dollar question is they talk about the fact that the exchange rate -- at the end of the day, it is a haven just like japan. guy: absolutely. we saw what happened with the yen overnight. the boj doing nothing. the swiss are acknowledging the fact they would have to take some sort of action if the brexit were to occur. there is a broader backdrop and what is happening globally. with the fat -- will the fed raise are not raise? what is happening with the fed price -- to the oil price?

there are also thinks they are going to have to deal with. for now, it is a full focus on what happens the brexit. i would expect the to go through all the awful lot next friday. i think it could be a very difficult day for the head of fx. francine: i think it could be. guy will bring us a great interview with the swiss national bank, thomas jordan. let's get more from chris ailman. chris, when we talk -- this goes back. go. it is all about yields. -- this goes back. it is all about yields. how do you view the currency market? it seems more volatile. chris: central banks did nothing yet it is affecting the currency markets, volatility into my first two stops was a got off was to two of our currency

manages to sit down and look -- .ur portfolios are exposed for us it is a matter of hedging that volatility and that risk, trying to take advantage of these kind of market moves. we are not going to bet on this single event. if britain was to be the center of attention, congratulations, you are done it. the whole world is on hold. francine: if brexit doesn't go through, is the second most important question is if we see the resurgence of the dollar on a rally? china has the potential to suffer. that is the biggest risk we are forgetting about is that they are there. yellenas much as janet and -- i think the one missing point was there is no question the chinese are in the back of their mind.

that currently does float a little bit and they will allow it to free float a bit -- free float again. there is a lot of global play in the backdrop of the currency market that is incredibly volatile. investors have realized, especially if you are long-term, this kind of volatility has to be managed. you can't just accepted in the portfolio and drawing your return on a decent investment. francine: how should be viewed the u.s. election? what impact does it have on the market if trump wins or hillary clinton wins? i know we are five months away. it is just like a reality tv show. chris: people ask me what i think about the election and my first response is the brexit? i haven't get -- i haven't gotten past june and cannot begin to think about the election. last year the election cycle .5% to 1%ook almost

off the gdp. pounded incessantly with negative comments about how bad things are, i think republicans started to believe that in their mood. they certainly haven't believed that when it came to shopping. that is one thing americans are good at. we hit the stores. from our perspective, we are going to be very conscious as we get into that. it is a long road to get to november. we will start paying attention to it in september. francine: the matter what you believe, the problem is it is very difficult for me to see what a donald trump presidency in terms of the economy would look like. is it dollar negative? when we start getting the glimpse of what that means? chris: we have talked to economists and their first concern is trading agreements. pacific trade agreement would be on the question. nafta would be back on the table . a very concerned from a global standpoint on how the u.s. would

be impacted. they have not played up a lot of that information. we are back in, two. i will be joined by tom keene. ♪

♪ francine: the bank of japan. the yen surges against the dollar and the central bank leaves rates unchanged. the june hike as possible exit clouds. it will intervene in the fx market if needed. is expected to keep rates on hold. the traders are pricing in at a 25% chance of a cut next month. a slowing in growth may not be all referendum-related. this is bloomberg