♪ 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 "surveillance." i am francine lacqua in london

.ith tom keene in new york there is a lot in the markets. the havens are under pressure. the yen at 103. we need to look at the banks, as well. tom: more than i expected 12-hours ago. this has been a massive adapt and adjust to the pageantry we saw yesterday afternoon at the yellen press conference. i don't know where to begin on the market interdependencies right now. it is an extraordinary morning. francine: i know you are looking at swiss. we have a great interview with this was -- with the swiss national bank president. let's get to the bloomberg first word news with nejra cehic.

nejra: investigators found the main wreckage site of the egypt air airplane that crashed into the mediterranean. they gave images of the airbus' remains to authorities. investigators are trying to find the black box flight recorders, which may be the only way to find out what caused it to crash. president putin has a message for the european union. but's put you crying behind us and get back to business. he is speaking at the st. petersburg economic forum. he will call for normalizing relations between russia and the eu, but will not offer concessions on the war in ukraine. this is according to people familiar on the matter. saying francedent must take a hard line with terror suspect. he said that pronk should foreignely expel non-actions or tools citizens with ties to terrorist nationalists. he said french citizens indulging in such activity should be placed under house arrest. hours delivering speeches on the floor of the u.s. senate demanding restrictions on judge. the speech marathon came

three-days after the mass shooting and orlando. some republicans in tight races for reelection might help. they might be willing to compromise on proposals to keep suspected terrorists from buying weapons. more than one third of likely voters are backing hillary clinton for president and thing that she should take senator elizabeth moore and as her running mate of according to the latest bloomberg politics poll. is backed byren 35% of clinton supporters. almost onecans, third of likely voters say former house speaker newt gingrich should be donald trump's running mate. senator marco rubio was a second choice. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. i am nejra cehic. tom: we will not bury you with data. mckee across all of bloomberg surveillance this morning, we will give you a

tapestry of markets. it is a backdrop. deutsche bank is down 21% in june. let me say that again, it is so profound. deutsche bank is down 21% in june. equity markets are weaker. yields need to be re-described. morning, a 15610-year. the euro is the one spot of stability with oil weaker. up theee how we can pick pieces in francine's data check. the yen, there are no words to describe it with loads of intervention talk. just talk. 104. 18 blows through, strong, strong yen. i don't know where to begin on the negative yield derby. maybe all i can say is hello copenhagen. it is like denmark this morning. francine: that could be a song. we are looking for negative

yields. i have a chart that shows the 30-year yield. i want to look at pound on the back of the referendum, seven-days from now. 104.en at we recently touch 103. they set a month ago we will go to 95. tom: in euro-swiss, we do not have an hour data checks, but the interview with mr. jordan is critical. over to the bloomberg, something we showed yesterday, the lollipop chart. up we go with fed meetings. there is a fed meeting here. we break down massive, massive weakness in the two-year way outside this trend of improvement. this is hugely disappointing to someone, say, like vice chairman aller who stays that we are drug and markets are going the other way. francine: i wasn't sure if i show the swiss

30-year. this shows what is happening in swiss, it is a haven. in yellow. 105 mark we touched 103. the boj did not do anything. maybe they are saving ammunition in case the risks they were talking about comes true. this goes to the problem of abenomics that seems to be not working out as planned. should we getts to synthesize all of this action? which guests could we possibly select to synthesize -- francine: i think we have them on set. i think he is next to me. he is a senior independent economic advisor at ubs investment bank. how do you sympathize the markets? it goes back to tom's point that everything is interrelated.

should we be less comforted by the fact that if one thing goes wrong, all of this, central banks, policies, cutie, even equities, come crumbling down? george: in some ways it is reminiscent about what was happening at the financial crisis time. -- it of european banks is dimon center, -- it is diamonds and dirt. currency, gold, precious metals, something that people will buy at any price. shares, banks, but -- francine: i love that. diamonds and dirt. we need to see what is going on. symptomatic. is it in the banks. deutsche bank is at a record low, or is it what is happening

with yields? is not just happened within the last 24-48 hours. there is weakness in some individual financial institutions and and the banking sector that has been going on for a bit that has prompted people to say may be from a regulatory point of view, maybe things are proceeding at such a pace, restrictions on what banks are allowed to do is impairing the earning capacity. is negativedness yields. people have made the illusion they are trying to establish the fusion between negative yields on the business of banking. i suppose if the global economy, the national economies were offorming well, the roar economic growth was to be heard, we probably would not think about this. we are now in no good space, essentially. the basic theme of many

intervention discussions this morning. at some point, the ministry of finance, the bank of japan, will respond. there are bruised after the wreckage event mishandled the end of january and intervention is likely on the underside of ¥100. what is your shot? -- your shock. comes outt something of nowhere to upset the servitude in applecart. what is the shock you are watching for right now? george: i wonder if your question is rhetorical, tom. they -- in a shocked is -- the shock du jour will be with us for the next week. the risk of the u.k. voting to leave the eu.

this is not just the kind of short-term cyclical problem. this is an exit central issue, which does have a germanic implication -- this is a nexus dental issue, which does -- an exetentialh -- issus, which does have long-term consequences. tom: they have acceleration to them that is frightening. what do the banks do? george: well, in this particular , we can argueis whether it is illogical or whatever, but i think the central bank, the european central bank in this case, can only do one thing. which is to make sure that the front gates of liquidity can be opened if need the. -- if need be. to the extent it threatens an systemicach -- and ask

process. what can draghi do to improve the profitability of banks? what can the european central due to give investors confidence that bank share prices should be percentage is higher. not from a macroeconomic standpoint, maybe from the point of view of credential care and the regulatory change. there are things that they can do. not for the next week or the next two-weeks time. francine: thank you. george magnus. stay with us. there are so many yields all in further, lower, and into negative territory. we will also speak with the swiss national bank president, thomas jordan. what it feels like, what he can do to move swisse. is it. german and? -- is it.

intervention? ♪

.om: guy johnson is in zurich he will speak with thomas jordan. if he adapts and adjusts to he directly addresses the brexit and makes very clear negatives part of rights. he is supportive of the philosophical negative rate debate. later this hour, thomas jordan with guy johnson. let's go to our business flash. the u.s. government has been given another week to work out a settlement in the cheating case.

a federal judge delayed a filing deadline citing what he called the highly technical nature of the matter. billion toarked $10 resolve civil claims in the u.s. the scandal might still be hurting vw shares. the market share fell the most last month since december, below 24% in may. while european auto sales rose 10%, the vw rate was half of that. disney has opened its first team park in china. the vice premier took part in the ceremonies. the $5.5 billion shanghai disneyland is the largest for an investment ever for disney. that is the bloomberg business flash. copresident joins us to discuss how hedge funds are managing take moves in the

market. george magnus is also with us. welcome to the program. i do not know how you deal with these yields. is it distortion, distortion, distortion, and how do you look through it? >> the short-term effect on the yen with the brexit vote next week, it is very clear the bank of japan, they cannot do anything until it is out of the way. in a broad picture, the answer is that type of chart with the n is annd on dollar ye opportunity to make money. the longer-term picture is that it is hard in a world of zero rates out of at the swiss bank has out to 32-years of zero rates, it is hard to allocate capital when capitalist free. -- when capital is free.

francine: we could see these negative rates being in place for a long time, or certainly normalization taking longer than we thought three months ago. that my own view is normalization will not happen in a nice, gentle way. we are probably stuck with them for an extended time until you get a very big shift. predicting when that happens is almost impossible. tom: we are all aware of multiyear underperformance by hedge funds. how is man group adapted and adjusted to try to make better out for, to make it better so you can get to 2 and 20. what has change in your business versus 20 years ago? luke: i'm not sure i take underperformance as the right way of thinking about it. it has been hard to make returns in this environment that has been driven by central bank intervention and by the fact that bonds and equities -- passive markets have had their as yoully for as long

can remember. it is like a 98% or 99% return. we try to concentrate on making alpha. in a world of zero rates, out foot is incredibly valuable to clients. if you look at ford expected returns -- at forward expect ive returns from equities, you can convince yourself maybe 3% or 4%. that is not enough for pension fund. they need the alpha. francine: what is the biggest bubble? luke: biggest bubble? that is an interesting question. i'm not sure you can call bond yields a bubble. there is a strange effect that is created. bubbles require someone to make a lot of money. no one has been making a lot of money out of it. what they have done is create a strange environment where needs to be ings

less risky fx, the opposite of what they were trying to get. francine: we will get more from george. i like diamonds and dirt. tom keene and i will bring you withbrexit coverage perspective from global leaders and thinkers. the latest from the polls and we will be talking about the markets and negative yields. ♪

>> the correlations between the market. ♪ bloombergthis is

"surveillance." i am francine lacqua in london. tom keene in new york. we are talking to the man group copresident luke ellis and george magnus. we're talking about the impact and distortion of negative yields. this is the greatest experiment of all times. we are eight-years away from the financial crisis and we are seeing low nominal growth. what is the prescription for change? luke: the prescription depends on the diagnosis. why are we now into our fourth or fifth year of zero or negative real rates and nominal negative rates, such a huge quantity of debt outstanding, that the diagnosis is pretty simple, really. .e have excessive savings we do not spend enough on investment and everyone is trying to save more.

households, corporations, companies, and governments trying to reduce their fiscal deficit. until we solve that problem, and that is not beyond the wit of men and women to do that, until we take hands that problem, it will stay with us. francine: what is the one thing people are getting wrong in this market? is thate simple thing humans are constantly wanting to call a change in the market. people have been trying to find the right moment to shore bonds. there are trying to find the moment to get short in the yen. we have an environment. it is with us. like most possible trades you could've had for the last two or three years, it has been long bonds. been very have profitable. as an investment strategy to generate output, it is good. as humans it is hard to do.

you have someone say bull bonds are the next yields. god bless computers. they never have to explain themselves. tom: where is the derivative market right now? i know it is a changed derivative market run before the crisis. are you using to rigid in -- are you using derivatives to hedge? are you not using them or you have to freelance every day? futures verye actively. we're very big players in the futures market. one interesting thing is that futures market liquidity today is bigger than it has ever been. our ability to get trades done in different parts of the futures market, even in some of the index products weaken trade -- we can trade very big size. we are not big users of options.

places,me in vatios but mostly we create our own option alley in trading. tom: equities, bonds, currencies, we could go for literally an hour on a ne -- on a nuanced data check. coming up, the 10 year yield, that is a stunning statement on central-bank policy. 1.56%. next week, francine lacqua has agreed after careful negotiation , to greet me and michael mckee at heathrow airport. we will look at the brexit all next week. ♪ 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. tom: thank you for joining us. francine lacqua in london i am tom keene in new york. a quick data check. the nuances are unreal. the vix over 20.

it will be higher on opening yen. a stronger yen with a 103. a little bit of stability. the euro-yen, global system for the pros showing 119 to a stronger yen weaker euro. the negative yield derby is more negative. the german two-year, -0.59. that is an extraordinary yield. that is very danish-like. in london, let's go to our first word news. global banker has come out against the u.k. leaving the european union. says thebank chairman brexit would be an economic disaster for the u.k. and a political disaster for the eu. he says he hopes british bookies are right. there are predicting that the remain campaign will win. countryhat his

has no need to cooperate with saudi arabia. alexander novak spoke in st. petersburg. we have money in the market to follow what is happening there, the developments in the market, before any joint decisions of work out. we have to think about the consequences and readiness. our goal, when we talked about the freezing production at $20 per barrel, was to recover the balance between supply and demand. novak says that crude oil may average $50 a barrel next year. it is trading below that right now. disney says that the beaches at its florida resort will stay closed after the alligator attack that killed a two-year-old. the child's body has been recovered from a man-made lake at the grand floridian resort here he was one foot from the shore when the alligator snatched him on tuesday night. paul ryan will unveil another

part of the republican party's agenda. he says it is aimed at "reclaiming the constitution and the principle of self-government." it is designed to rein in what the republicans think of as presidential overreach and reinstate the congress's authority. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. i am nejra cehic. .rancine: thank you with some of the top stories that we need to be looking at, this is one story you need to be looking at. deutsche bank hitting an all-time record low. let's get the latest with michael moore. he heads the finance team in london. thank you so much for sticking around. michael, thank you for joining us. this is what we are seeing from deutsche bank. we have seen a lot of concern about the bank in february and march. none of them are having a great time. deutsche bank, specifically, how

much are people concerned about deutsche bank to let how much are they worried about negative rates on the macro environment? michael: it is mostly the latter. in january and february you had some deutsche-specific concerns about the a one's and ability to pay back security here that seems to have faded. you're seeing credit suisse move down in the same way. some of the u.k. banks around the brexit are moving in the same way. you have a lot of headwinds right now in europe. among the large banks in the u.s., the average net interest margin is 3%. for the europeans, it is half of that. francine: you must look at the banks quite a lot. 10-years ago, it was about consolidation. now we have one regulator, that seems unlikely. will we see banks breaking up? george: if you ask me why the deutsche bank is under share

pressure today, they employ a lot of people in london. if we get a vote that goes the wrong way -- my humble opinion -- they're restructuring charges will be very significant. they're going to move the most people out of london in one form or another. it is no wonder they are under specific pressure. the reality is margins are very tough in the bank. the cost is is too high. a lot of restructuring will go on. from our point of view, all we care about is the money good, good counter partners? deutsche bank is still a strong counter partner for us. tom: i look at money good as being the linchpin of mr. c regulatoryogue with authorities. how close are we with the market u.s.oing from 48 billion dollars? how close are we to with a phone

calls are made saying that we have a problem being money good? i think there are concerns when you see a drop like that. since the crisis has basically been bad for shareholders and good for the credit holders, the bondholders, of the bank. whether it is the capital front making them take less risk -- it is hurt their profitability. it has helped their creditworthiness, then being money good. there's less concern on that side. it is only if the share price declines parks some sort -- share price decline sparks some kind of wider panic. the brexit about remaining, but after june 23, if they can raise capital, could they raise it? michael: the problem is, it would be so dilutive. they are trading at less than

one third of book. it would be pretty painful to do it if they had to, they could certainly attempt that. i think they will try other things, such as selling postbank and other assets before they try that, given the level they are trading at. francine: how do you look at japanese ranks? -- japanese banks. they welcome the fact there is not more stimulus from the doj. japanese banks have expressed a concern that the doj policy of negative rates is eroding their reasons. george: when you think about japanese banks in this context, any differently than i think european banks, or any other -- swiss banks, where negative interest rates are obviously the principal tool that central banks are using to try to have the limited briefing

they have got. we were talking before that it is kind of an irony. tom spoke before about the banks need to call one 800 -- of00-draghi, it is kind perverse. them to: it is up to come to a position where they can withstand more negative macroeconomics? george: yes, but it is tough. we are in a world of negative short-term rates. you take a japanese steak, negative short-term rates, they are not going to give negative rates deposit -- deposit holders in japan and our lifetime. it puts the squeeze on banks. are being kepts a very much under control. part of the process of very low

zero rates is that when companies can borrow at zero, it is quite hard to get into default if you can borrow at zero for five years. there is some relief. the banks have to restructure costs in order to make a return for shareholders. where are the mergers and acquisitions? do you presume that this time is different and that we will see him and a the european banks as they take cross out? yes. i think eventually at the moment, the reality is the places where talking about a very big tanks. -- big banks. they have enough capital issue that it is hard to see the mergers and having to deal with more costs is an easy solution to the problem. tom: i look here, francine. the rapidity of the decline is extraordinary. what is a signal to you, george

magnus? what is a signal to you to see the brutal moves that we have seen right now here the first and second derivative moves. whether it is european banking or negative interest rates. what does it signal? george: at the risk of stating the obvious, i think it signals a malaise. i think about this as a macroeconomist. for me it is a macro economic malaise. i want to extract a little of what is going on at the moment. a deeps really about sense of worry about risk related to the main issue of the moment, the referendum. , some ofcated before the we are seeing in financial markets and negative interest predatesnks, so one -- concerned about the referendum. it is based a different set of

circumstances about our , or oury so far difficulties, in managing the aftermath of the financial crisis. the united states, which has done it better than most, is not immune. francine: what does that mean for man group if we saw an exit from the u.k. from the eu, do you have a plan b? luke: we have to work out what happens on the regulatory point of view. we are big exporter for the u.k.. depending on how the regulatory environment changes, we will have to work out what we will have to do. at this point, we don't know. clearly, the first market affects -- what we care about is how to manage client's capital through the process. whether it creates opportunity or difficult it will be something we see after friday.

short-term, if there is a vote out, i think there will be a lot of market turmoil for a long time. it has real implications beyond the u.k. and across europe. whether it is the bank moves, what is going on generally in equity, there are not to very many brave buyers in the markets anywhere. people are risk-averse. if we get a lot of uncertainty, they will become more risk-averse, which leads hike relations and lower markets. tom: thank you so much. michael moore, bloomberg news. we spoke with richard cleared and yesterday. the former president of the minneapolis fed. look for that later this morning. ♪

francine: welcome back. i am francine lacqua in london. tom keene in new york. that thee telling central banks to not do anything. you can see it clearly in bond yields. george magnus, the senior economic adviser for ubs. we talked about macroeconomic to me about currencies. if your governor kuroda or mr. abe, what do you need to do to get the yen to a level you are in trouble? it needs to be straight intervention? george: at this point, given the background circumstances, i expect it is a question of when the boj thinks that market foritions are appropriate intervention to work.

it could be here, it could be down at 100, it could he below 100 -- could be below 100. it is a question of waiting. it is going to happen if this keeps going. you take early if there's a vote to leave the eu. this flight to safety will be amplified. we will see greater moves and currency markets, including the yen. francine: if there is a brexit, does the dollar automatically rally? for my opinion, what it's worth, i think that the dollar will be a big buy against the pound in those circumstances. i'm not sure about the yen. could behat the yen stronger than the dollar in the immediate aftermath. tom: it is very asymmetric this morning. you nailed it. i am saying obvious movements like the yen and the swiss franc

, but the dollar is not moving. is stable. that gets us where it was two years ago where said there was elements of a plaza mentality. an accord?g to see get the yen 95. sterling 138. what is coming at the end of this year or next year, a meeting of claridge is in london ? francine and i will show up. in the first place, i think we have to assume, whereas in 1985 i sure central bankers did speak to each other, the lines of communication between central banks are clearly open all the time. it is more complicated nowadays because there are more people involved. , the size of transactions, the size of markets is so much bigger.

china is the elephant in the rooms that we haven't mentioned here today. on whatese position goes on in global markets, the , it is morey key difficult for them to arrange things the way they arranged it. the let's go back to win fed's change i change. right now the feds are changing. i'm looking at 156 u.s. 10-year starting in negative yields. how will bankers adapt and adjust? let's speak about governor carney. it is june 24. what do they do given how the markets are moving? george: well, the central banks very limited, including the bank of england, a very limited menu from which to choose. in the case of the u.k., if it appears over the next several

weeks, months, over the summer, that the economy is suffering from a decision to leave the eu -- investment dries up, spending the bankwing dry up -- only has limited choices. it can cut its policy rates further. it might go to negative rights, as other central banks have done . we could see a revamp of qe, or a reintroduction of qe. tom: i like that idea. let's come back with george magnus. but i would point out to mr. magness' idea of limited degrees to 10 spread the in the united states. it is right here, breaking down the new curve flatness. francine: this is on the back of broad selloff in the euro stoxx 600. i've hundred out of 600 companies down.

mentioned deutsche bank. a lot of the peripheral thanks as well on the downside. .his is my data board this is what we are looking at in general. for the sixth time in seven days, stocks are down. oil declines are deepening. there is more concerned about monetary policy and currencies .oving with the yen at 104.38 ♪

tom: good morning. from london and new york we welcome you worldwide. the ramifications of the fed meeting yesterday. we go on to challenge markets this morning. two are bloomberg business flash, here is nejra cehic. the world's largest natural gas exporter is not too concerned about a glut that could last for five years. the russian ceo says there's plenty of growth in europe. they are counting on falling output in europe to boost exports and lock in the 30% market share. uber's chinese rival didi completed a round of financing. one of the investors in the company is apple. at $28 billion.

they are trying to fend off uber's aggressive expansion plan in china. alibaba and other market placers that connect chinese buyers with markets. fees forlash shipping small items are most of the items cost $10 or less. that is your bloomberg business flash. tom: lots of research out. yesterday afternoon, new york time, here is james steel of hsbc. he nailed the stronger gold call . looking at a stronger and more fundamental field. on intervention by central banks and treasuries. gold is not linked or dependent on monetary authority or economic policy, so is almost entirely intervention-risk. if investors seriously thought

that thomas jordan and mr. roda, they could trigger currency intervention and in greater safe haven driven flows are likely to move into gold. that gold still has a use as a traditional barometer within our global system? george: i wonder whether you ask that in the light of comments ,hat were tribute it recently i'm not sure if it was donald trump are one of his advisors, but that the u.s. should reintroduce the gold standard. i don't think it has any relevance for the 21st-century economic system. i see it as an interesting and very useful barometer. tom: you know all of the gnomes of zurich. you know them all. either gnomes of zurich? francine: i have never seen one. george: they're usually a bit taller than that.

it is a country, which most people know, has a particular affinity for gold. throughout my career, i get more questions on golden switzerland than any other country. are the gnomes hankering for a return to a gold-based monetary system? i don't think so. francine: given what we've talked about for the last 54-minutes, if you are a ceo come you should stay put. they get a lot of criticism for not investing, but there's nothing good out there. george: we talked about negative interest rates and economic backgrounds of savings and balance. part of the reason, there are complicated interconnected reasons why companies save a lot and don't invest. if you want proof of why the decision to invest is not really there, and why people are very

restrained about committing capital to future projects, just look around you. as you suggest, it is what it is all about. francine: george magnus, thank you very much. we will be talking swiss franc's next. we speak with the swiss national bank president, thomas jordan. they talk about the brexit. they talk about brexit putting pressure on the franc. this is the biggest monetary policy experiment apart from the boj. this is what george magnus is talking about. everywhere we see risks. we will talk to mr. jordan about his biggest risks and how he can defend the franc. ♪ get ready for the rio olympic games

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negative rates drive ever more negative. the yen surges. let the intervention talk begin. about global growth, deflation, and now gold is up to $1300 an ounce. and then we will get a conversation with the president of the swiss national bank. good morning, everyone. "bloomberg surveillance," this june 16. what captures your attention most, francine? wait until wen't speak to thomas jordan from the swiss national bank. we will try to understand how he sees brexit, which could complicate monetary policy across the world. this is not just a swiss national bank problem. it is how he deals with this flowing enter haven.

>> the words i have been using adjacent. right now, we are adjacent to our first word news. nejra: investigators have found the main wreckage site for that plane thatir crashed into the mediterranean. investigators are trying to find the plane's black box recorders, which might be the only way to find out what caused the plane to crash. former french president says france must take a hard line against terrorist attacks. should pefrance immediately expel all four nationals with ties to terrorist networks. he says that french citizens and building in such activities should be placed under house arrest. a week to go before britain both on whether to leave the

european union and new polls show that the "leave" campaign is in the lead. eu withort leaving the 47% wanting to stay. meanwhile, mark carney has hit back at critics who say he is improperly supporting the u.k.'s membership in the eu. mark carney says the bank has a duty to report his judgment to the public. speeches on the floor of the u.s. senate, demanding restrictions on guns. this came three days after the math shooting in orlando. some republicans might be willing to compromise on proposals to keep suspected terrorists from purchasing weapons. more than 1/3 of a voters backing hillary clinton think she should pick senator elizabeth warren as a running mate, according to the newest bloomberg politics polls. warren is backed by 35% of clinton's supporters.

she is followed by julian castro. supporterscans, say newt gingrich should be donald trump's running mate. r candidate marco rubio is second. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. tom: this is what i was talking about earlier. indonesia has cut their rate. this is moving away from the headline makers, like thomas jordan. again, we are waiting on that snb interview. right now, we're looking at equities and current commodities. futures negative today. on ten-year. on to the next screenplays.

dean with us on the many volatilities in the market. 1.03cine, you mentioned a yen. and there are negative yields across the world today. what do you have? this is the message that central banks are failing to assure that the global economic outlook is getting any better. yen bonds are rising and has climbed to the highest since 2014. tom: a life going on this morning. this is different. this is for thomas jordan of these with national bank. jon ferro were in zurich. this is arguably one of the two or three of the biggest moves in eight years since the financial crisis. the is the swiss saying, enough. this is thomas jordan's management of the swiss franc,

someone say, spending their national treasure. rollover here of the swiss franc. that has led to tension in the market. francine, i know you are following this tic by tic with our guy johnson. what do you have on the bloomberg today? francine: there was a huge impact on a lot of eastern european currencies. this is a plain-vanilla japanese yen chart because it busted through 1.05 and it is currently at 104.29. this is also because it has been prompted by brexit concerns. so, we need to go to the central bank's actions and we need to go with the swiss bank. tom: without question, our most important interview of the day

on "bloomberg surveillance." he will celebrate his 20th anniversary at the swiss national bank next year. our guy johnson in conversation with thomas jordan. guy, good morning. guy: good morning to you, tom. we have been waiting for this interview all morning and it is a great pleasure to welcome thomas jordan to "surveillance." good morning. we live in difficult times right now, and you certainly do as well. we have the referendum next week in the united kingdom. you talked about the idea that you're priority is to stabilize the market. are there any limits to what that stabilization could actually look like? if you were to intervene, are there limits on what you could actually do? , as you said,ble our goal will be than to have an impact on the market that would study it. that that would -- that would

steady it. guy: the risk reversal rate shows the market is preparing for some very big moves. >> i cannot be very specific, that we don't have any specific exchange rate target. the goal is to have a stabilizing impact on that day in order to avoid volatility. guy: you have surprised some people this morning, talking about the fact that further rate cuts are possible. you are already at -75. you,lose to the edge are regarding what the market will tolerate and what negative rates can achieve? >> we have always said very clearly that it is not possible to go anywhere. are at thee moment, it is still possible to lower rates. guy: but there are limits. horizon,mit on the

or is a quite close? >> it is hard to say. of course, there is a risk that happens when people take cash out of the bank. there is a limiting impact on how far you can go. so, there is no evidence from the banks themselves that there was talk if yoa few days back. you are not getting any hints from the big swiss banks, looking at that? are no incentives by banks to take out cash. we have this amount, where banks don't have to pay an interest rate on. but if they take the cash now, it will take away from that amount. guy: how high is the bar for another rate cut? >> as i said, i cannot be more

specific. there is still room to lower rates. analyze thee situation very carefully and then make a decision, whether we have to change the monetary policy or not. guy: when you look at what else could be potentially in the toolbox for the snb, wales is in there that you could possibly do? -- what else is in there that you could possibly do? what else is there that is possible for you to achieve? >> we do not have the possibility to tax people. this is not the toolbox of the swiss national bank. but our monetary policy is very clear. as i said before, there is still some room to go lower. and the willingness to intervene if necessary in the foreign exchange market. reporter: do you think the general public is getting comfortable with the way monetary policy is progressing in switzerland?

>> i think most of the people in switzerland understand quite well the function of monetary policy. it is quite a difficult environment we are in. is a safe haven w ith the swiss franc, it is very strong. they understand you have to follow the monetary policy. guy: if you are going to sequence your tool priorities, intervention would be where he would go first. >> of course, in the first phase, to have a stabilizing impact on the market would be the preference, of course. guy: when you think about what is happening more broadly around the world, janet yellen speaking yesterday, talking about the global phenomenon she is seeing. she has an incredibly closed economy. you have an incredibly open economy. how difficult is it to run monetary policy right now? what did you take away from what janet yellen had to say?

>> this is a very difficult situation, especially for a small open economy. it depends on the financial markets and the global grossing. as long as the demand is not as strong as it could be and as long as we have turbulence in some financial markets, that creates a more difficult situation for us. we are small and open. you can profit from the global economy and if you profit under one hand, you have to accept on the other hand that there are time to time difficult situations. guy: what advice would you give the bank of england, if you had to manage january 2015 and you work your way through that? when you look at look at happen over the next few days -- you guys run a 24 hour operation -- what advice would you give them? >> i have confidence in my

colleague, mark carney. so, i don't have any advice for the bank of england. guy: right, but presumably, on that day, you guys will be talking, making sure you are on the same page. will any coordinated policy action be possible? >> of course, all major central banks have that information once it is here. but at the end of the day, every central bank has to analyze its itsation and for phi fulfill own mandates. unless the situation is extreme, the global coordinated missions are very rare. guy: thomas, he has been so great speaking with you. it is a little overcast here today. back to you in new york. tom: coming up, we look at the

volatility in our many markets, particularly the polarity between europe and the united states. a perfect morning to speak to orean curnutt f macro risk advisors. ♪

tom: if you are just joining us, francine lacqua in london. the markets have moved. it is a little better than two hours ago, but francine, not very much. i thought that was a very cautious thomas jordan. he was very careful in choosing his words. francine: he was very careful, as you would expect from a central banker. what i thought was interesting, what guy johnson did. he hinted at some accord.

we heard murmurs that if the brexit were to happen next thursday, then on the friday, maybe central banks will have to step in for extra liquidity, or maybe something more. tom: let me go over here to the bloomberg terminal. help me out here, anthony. dean curnutt series. every time he is on, i learned something. this is the volatility of europe, versus the utility of the united states. what you have here dean, we are essentially, record wide. oureen their agitation or education, what is going -- or our agitation, what is going on? >> it is a huge number. it obviously reflects the uncertainty from brexit. i will tell you what, what is really interesting, if you look

at very short dated options with of the british pound, that is even more accentuated. tom: francine lacqua has shown us that many times. is this about the brexit or a slow economy and the central bank harming the financial system? >> we have never had another risk event on the calendar that has implications as profound as this one. tom: there you. -- there you hear it, francine. this is all that we are talking about. francine: what happens if it does not get resolved on thursday. what happens if the vote is so close they could come back on the agenda in 18 months from now. >> the vote is the vote. it will stand. i think you can make the argument that 51-49 is not enough of a mandate for this to go away. but if they vote to stay, i

think he will be a pretty strong risk on. you will see a huge deceleration inimplied volatility'ies things like the pound and the euro. the question is, it is way too close to call and as you just saw with the interview with the snb head, nobody knows what the asset price reaction will be. tom: that is very important. i just put that out on twitter. dean curnutt, mincing no words. mike and i will be with francine next week in london. the formeralked to president of the minneapolis fed. an of andw, he has in. ♪

francine: welcome back. this is "bloomberg surveillance ." i'm in london. new york, butn he will be joining the next week. we are now joined by the you can minister to talk about this next thursday. it is great to have you on the program. >> thank you for having me. francine: there is a lot of concerned that this will not stop here, that if we don't get

a clear-cut vote, this is going to be back on the table. are we ever going to have a tory party that can mend the differences and vote together once again. >> i think most people should accept whatever the vote is. i don't think we can have a debate afterwards about the margin of victory. either way. if there were a "leave" vote, god forbid, i would accept it. francine: you believe they have to accept it, but will they. >> i think they will. i think it will be very hard for them, but i think they will. , but if they say we should stay in europe, people should accept the vote. tom: we saw yesterday, the absolutely extraordinary sight

of osborne on stage. you are a card-carrying certified member of the london elite. how are you going to drag tory's kicking and screaming? ed: there is a slightly odd debate going on about the elite versus the people. ide,people on the "leave" s could be characterized as elite as well, but i am an elected politician. so, i think i have a right to say i am a resident of the people, just as many people on the other side of the argument are. the current chancellor any previous chancellor have both had to manage a financial crisis, the big economic crash of 2008. 's likeow what it for a country to face something like that. they are trying to get a message

to the people -- anybody who has done analysis knows that if we leave the european union thursday, there will be an immediate economic crisis. tom: i'm assuming you and chancellor osborne and prime minister cameron can do this by yourself. what do need from brussels? what do you need from angela merkel? what do you need from a distracted mr. hollande in france? ed: there is a debate regarding how much european ministers should take part. this is a debate for the british people who have and it is one to have with british politicians. so, i think prime minister cameron and osborne are making the case quite strongly. i think most of us think it is a debate for the british to have about our place in europe. francine: if you look at the

polls, it is very close, but if the brexit does prevail, will david cameron have to step down? ed: david cameron actually said he would remain on. i don't think that is going to happen, but they all say they would happily support david kamman remaining as prime minister -- support david cameron remaining as prime minister. i think they recognize, it is better to have a prime minister staying put and seeing things through, rather than to all of a sudden have a crisis of leadership as well. francine: all next week, tom keene, michael mckee and i will bring you live brexit coverage from london. we also give you the latest polls on a daily basis. ♪

tom: good morning, everyone. "bloomberg surveillance" from london and new york. we are in the midst of an important conversation.

right now, we need an update on brexit with our first wear news. nejra: the head of the european commission got right to the point when he was asked about the upcoming vote. ryan chilcote caught up with him at the st. petersburg international forum. ryan: we're just one week from the u.k. referendum. what would you like to say to british voters? >> don't do it. anna: the british vote is one week away. russia's president has a message for the european union. let's put ukraine behind us and get back to business. he is speaking at the st. petersburg national forum and will call for normalizing relations between russia and the eu, but he will not offer concessions over the conflict in ukraine. all of this aording to people familiar with the matter. president obama traveled to

orlando today to pay his respects to the victims of the nightclub massacre. the tragedy could end up reshaping the race. president obama has been pushing for gun control, gay rights, and acceptance of muslim americans. he angrily rebuked donald trump for calling for a crackdown on theims in tehe wake of shooting. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. tom? tom: thanks so much. the minister of the conservative party in england is sitting with francine. brief theed you to minister here on your statement. i'm sorry, it is all about brexit. here is u.s. volatility and we are right back to the trend lines, going back 20 years. agitation here, how will the brexit evoke

change on thursday. as you said, everything hinges on that. >> right, we are not focusing on the economic impact of the brexit. this is something that does feel like it is. it will be a headwind if they leave, but these things play out over a couple years. the more important question is regarding asset prices. all of these other assets move, which forces investors to behave in certain ways. and when the price of risk increases, the price of insurance increases. tom: you did not answer my question. the minister has got to make some money here. noon a "remain," there is doubt that sterling is set to pop. tom: there you go! i set it up for mr. vaizey there! francine: yes, he cannot believe his luck there. >> if there is even a hand of

currency trading on the back of the brexit debate, there will be a major surge. i will not be consulting in and the currency speculation, i want to make that clear to your viewers. the pound will its value, it is going to drive up the cost of living. our finance minister has made it clear, there will be a big economic shock immediately and of course, in the long term as well, the economic prospects will be difficult. most foreign investors are going to start thinking, when their next big decision comes, do we go to germany or france? francine: john mills was of course, against this. it is an emotional argument. the truth is somewhere in the middle, that we don't know what the impact is. but given the fact that it is so close and it will have implications are the worse or the better, do you think david

cameron is regretting calling this referendum? >> no, but this is a question that has been bubbling over since we joined the european union 41 years ago. i think it is important that we have this debate and have a clear decision. as i said at the top of your program, once that decision is made, people will respect it will stop francine: you believe this country will not brexit. why have we seen a very clear gain in momentum for the brexit side over the last seven days? ed: it is interesting. i was involved in the last general election and the scottish referendum as well. are often wrong. they were wrong about scotland and they were wrong about the general election as well. i wish the polls did not dominate, i wish the general knowledge did.

britishly, i think the people have a lot of common sense and they think we are better off in europe. tom: dean curnutt, how do you color uncertainty right now? what is the character of that right now, when i see deutsche barclays, etc. what is the color of this right now, and can you trade it? back and you step take a 20 year nap and some negative interest rates -- this stuff is not the textbook. perhaps because negative interest rates are negative, the in is doing something particular. when a look at brexit and the potential impact, it is all about the interdependencies. it is capital flows, systemic risk through banks. iron not convinced that these things have been taken care of

by macro regulation. it is just unknowable. the fear should not be the economic headwinds. it should be the potential impact on hedging. and when those costs go up enough, they force investors to take risks. you have two choices, you can sell or hedge. high060 or 2070 feels too to me. francine: is there anything we should take solace in? we keep talking about the risks in china. actually, do we need to focus on the positives and where are they? dean: absolutely, so if you look at early february -- it was very oil centric and china centric. we had this global commodity deflation. we have a fed that is low forever. and in the u.s., you have pretty high inconsistent profits with a

multiple on the market that is high, but not outrageously high. again, i think the benefits of risk assets is the sovereign debt market is so highly prized, that you have to reach for something. in the case of stocks, try to earn some income for your stocks. tom: minister, what will happen the day after brexit "remain," when we understand there is no equivalent to london on the continent? in every interview we have done, i have yet to have anybody identify a london equivalent. with that said, after the brexit, doesn't live go on for london as a financial center? dean: to a certain extent, that is true. nobody will argue that the u.k. will be a desolate wasteland. but what we are clear about is that there will be a massive economic shock and it will long-term, be bad for the economy.

i think the city of london can do well, but i also represent the tech economy, where we are the leaders. you know, i look at my counterparts in france and germany, the ministers there. they are working very hard to attract this investment. we have other advantages. we do have a more sophisticated financial market for investment, but you can be sure that berlin and paris will be front and center and saying to tech companies, now that the u.k. has left the eu, come and base yourself here. tom: thank you so much, minister. i will see you next week in london. is looking to new with dean curnutt. an imported interview coming up on bloomberg radio, worldwide. is the chairman to the president's council of economic advisers. we will catch up with him later today. ♪

francine: i'm francine lacqua in london. tom keene is in new york. we are looking at all asset classes. the world's largest gas exporter is not worried about a glut. tells bloomberg that they are not counting on europe. we are at the st. petersburg economic forum with ryan. francine.ks, we are joined here to talk about ltoots of stuff. i spoke with you i think in 2006. we were talking about ukraine, the topic that keeps returning.

but today, we want to talk about the brexit because increasingly, the polls show this is something that might happen. you have a business that is global and you have what, 300 people in the united kingdom. should we wake up on june 24 and find out that the u.k. has decided to leave the european union, how will that change business for you? >> surely, it is the sovereign right to decide. the i could note that in u.k. consistent energy equality will travel through a stage. europe should follow the example of u.k., how to manage the u.k.'s energy policy. ryan: if you enjoy the energy policy than presumably, you don't see any problem with the

u.k. leaving the european union? you have a big interest in the u.k., right? you try to get into the retail business, but got a lot of pushback from the government because you are company with large involvement from the russian state. do you see this changing the u.k. energy market at all? >> the global transaction is going down in an accelerated way. several u.k. companies are interested in purchasing russian goods. ryana we of a stor: on the bloomberg -- ryan: we have a story on the bloomberg terminal. pound will avoid volatility. an interesting mistake there. and long-term, this could be

very bad. it is close to liquidity. think -- y i don't ryan: what do you personally think? i guess we are going to have to be louder now that the band has kicked off. what do you personally think about the u.k. leaving the european union? a lot of people out there think that russia would be delighted if the u.k. were to leave the european union because you would end up with a weaker eu. russia does not want to weaken the european union. it's a childish idea. ryan: i want to ask you about the european gas market. i know you think that the shale revelation you see in the united

states is a big threat there. what about asia, where you are getting bigger and bigger by the day. joke.was a for very simple economic reasons. but we are not afraid of competition. we are developing our energy portfolio. nobody can compete with russia. ryan: thank you for your time. francine? francine: thank you, ryan. i like how you try to push the deputy to talk to us about the brexit and implications that a removal of the u.k. from the eu would have on the russian sanctions. we talk about risks, risks for monetary policy. this is what thomas from the snb

was talking about. many central banks have not given any indicators to markets to be clear about what happens next. the stoxx 600 is down 0.7%. the one i would be watching for usd-jpy, 104.21. ♪

tom: an extraordinary 16 hours after yellen, after the press conference, markets continue to adapt and adjust. simply stunning, there is no other way to put it. it is a remarkable for an exchange market -- foreign exchange market today. francine: coming up shortly is "bloomberg ." david, i know you have great interviews. david: absolutely. it is a central-bank extravaganza we have had going here. and who better to have to talk to besides narayana kocherlakota ? we will talk about all the

central-bank activity and some important u.s. economic data coming out. we also have with us the senior executive board member from bmw. he is british, but a prominent executive with a german company. we will talk about cars and the company, but more importantly, about brexit. that is all coming up. tom: thank you so much, david. let's bring up the yen chart. bwhat is different now from 2008 , and previous bouts of joy before that? >> i think in this situation, the hurdle for the ministry of finance in japan to constructively boj -- to instruct the boj to intervene is certainly higher. it has been suggested that intervention is really a last resort, and only for disorderly markets.

and second, the fact that the treasury has indicated that currency manipulation is something they are watching carefully, in terms of their designation of countries around the world as being non free traders. tom: this early markets, and if -- disorderly markets, and if we look at this folks, this is the standard deviation. flows play into that? can't they unravel and destabilize the best intentions? >> you know, i think that is what is driving things here, tom. i think capital flows in general, are slowing pretty dramatically. i think capital flows out of japan, despite low and negative interest rates there, have really slowed because there is not much yield to chase around the world. wwha that means is when cross board capital flows are slowing,

then current account balances become much more important. we know that the countries with very large relative current account balances include japan, switzerland, and also to a certain extent, the eurozone. i think that is part of the reason why the euro is holding up reasonably well here, despite all of these concerns about the brexit and the spillover impact on the euro. atncine: the yen here is 104.30. i would point out that drop in 20 for the first time ever. who has the toughest time, bob. japan or switzerland? , it isink, in a sense switzerland because their economy is so small relative to the size of global capital flows. yet, they get capital flows that are so outsized. you know, the size of their reserves, relative to gdp, is

something on the order of five times the reserves china has relative to gdp. switzerland is a country that is completely dominated by these capital flows. the economy is relatively small. this is extremely difficult for the swiss. francine: right, we spoke to the snb president. he said also, he is ready to intervene. or will japan or switzerland be condemned if they intervene with the currency markets? bob: i don't think so. i think you can make the case these are becoming disorderly markets. i think the problem they face in intervening now is that the brexit vote is still seven days away. and i think that is another event that could increase these risk aversion capital flows. and so, the question is, do you intervene now and run the risk of having it being overwhelmed

by a vote for the u.k. to leave? you have had failed intervention and that makes it more difficult the next time around for intervention to be successful. tom: bob, thanks so much. you and i have never seen this and what i noticed here, at the zero bound 30 years out, this quadratic sense here is frightening. you and i have not seen this before, it is that simple. 30 year, 0% with arguably the safe haven of the world. bob: we have never seen anything like it, it is a nominal yield 30 years out. there is not many ways to make money on the trade. earlierncine mentioned the polish money denominated into swiss francs. bob: there are a couple of different things.

one, there is an economic channel. it is years in the making and it will take us a while to appreciate. it is a financial channel and the sentiment channel. the eurozone is already so fragile. in a lot of our advice, it has not been about the u.k., but the knock on effect to a very fragile eurozone. tom: agreed. francine: when will yields stop falling? i know it is a broad question, but is it 18 months from now, or is it the normal for the next five years? bob: it is so challenging. you know, larry summers as the --gnation -- very summers larry summers has seen the stagnation. tom: thank you so much for you t ime. enough.ot talk to you maybe we could get you back

before the brexit, or maybe it would be more interesting after the brexit. today is thursday, one week until the brexit. we are going to send a strong team globally to london for this vote. is it true francine, they are going to let jon ferro back into the country? francine: they are. i am not sure london is ready for it. i am not sure the brexiters are ready for that. much coming up here on ," including our brexit coverage through this week and into next week. ♪

>> uncertainty dealerships wings. and -- >> the yen surges to the strongest level since august,

2014 as they hold off on new stimulus. >> world government debt. the switzerland 30-year yield falls. >> a warm welcome to bloomberg "go." i want to bring to you unchanged on the bank rate at 0.5% and unchanged on the asset purchase. mark is standing by. great to have you with us on the program. >> the the continued warning saying the brexit could affect the economy and push 2 pound down sharply. we've got the minutes. as you say, no change. that's been the case over the last five months. it says it does have the ability to deal with it but