francine: the killing of labour cox says both sides of the finance minister says there's rhetoric about the strength of the yen. and a great transaction, bill gates praises microsoft's $26 billion deal with linkedin. we'll bring you our interview with the microsoft co-founder. i'm francine lacqua. tom keene is in new york. tom will be making his way to

london over the weekend, but we have a full eight days of brexit. but tom, the country still under shock because of the killing of this m.p., and for the first time, we are expecting the tone of the campaign to change. tom: well, i would say it would change, and, of course, the mystery is when it ramps up as we go to next thursday. certainly, francine, a somber tone that really resonates across america that has seen assassination too many times. it really puts a change to our discussion, at least as we go through the weekend. francine: it certainly does. let's get straight to news, and we have more on the brexit campaigning being on hold. >> in britain, the campaign over whether the country should leave the european union is still on hold after the murder of a labour party leader. police have arrested a man in the shooting of jo cox. cox was shot while talking to constituents in northern england. prime minister david cameron

spoke not long after her death. >> we've lost a great star. she was an m.p., great campaigning m.p. with huge compassion, with a big heart, and people are going to be very, very sad. >> one witness says he heard the man who attacked cox yell "britain first." russia's president vladimir putin is about to go on a borrowing spree. the government plans to boost sales of ruble bonds over the next three years to cover the budget deficit. it will also help preserve russia's reserve fund, a rainy day fund of foreign currency assets. dozens of u.s. state department officials have criticized the obama administration's policy in syria and called for military action. their criticism comes in an internal document. it says that u.s. policy has been overwhelmed by the civil war in syria, and it argues that military action is needed to pressure syria into engaging

in peace talks. president obama is pleading for congress to consider new gun control laws in the wake of the orlando massacre. the president spoke at a make-shift memorial to victims of the nightclub attack. he wants congress to limit access to military-style weapons. on monday, the senate will vote whether to ban gun sales to people on the government's terrorist watch list. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. tom: thanks so much. on a friday, a quieter data check. it has been something this week. futures churn, the yield churns, but, of course, this is a reset lower. oil, couldn't get a bid yesterday. a bit of a bid this morning. let's get through this quickly. we've approximate got a lot to talk about. the v.i.x. back under the long-term average. sterling gets a bid this morning, and euro a little bit better off the thomas jordan

interview yesterday that guy johnson had. francine? francine: tom, this is my data board. you're right, stocks are gaining. i also put pound 142, maybe a little bit of a respite because the campaigns were suspended, but i also want to show you the polish currency. don't look at it very often, but actually it's been declining a touch after strengthening yesterday afternoon on this suspension of the brexit campaign. so again, there are ramifications for these eastern european currencies. tom: we purposely don't do this. francine and i don't know what we're going to show in the data check before we do it, because it's fun to see where we overlay. let's do that right now with the queen of london. we go over to swiss, which i came up with a while ago. i've never done this before. switzerland is compared to eastern europe. here's strong, the financial crisis, ugly, and you sort would have thought that eastern europe would do ok and get

better. no. much weaker paired up with the swiss franc. so it's good to see. we're channeling as we get together on monday. francine: i know, maybe change. this is what i am looking at. i actually did it for you, because i looked at something that we watch often on the show, a haven in times of turmoil. gold jumped to the most expensive relative to copper since 2009 this week. so this is my chart, kind of en lapse late all the angst we saw in the market. so you can see this -- i brought it back to 2008, and this is the level we saw this week. again, i don't know if it's in the coal mine, but certainly the level of fear brings us back to recession-era ages. now let's get to demrobal strategist and our guest host for the hour. kit, great to have you on the program. when you look at this, when you look at central banks, currencies, there's nervousness out there. kit: yeah, there's nervousness.

i look at your gold-copper chart and i think copper correlates very well with industrial metals overall, and therefore, with copper like that, the chinese economy, we can park that bit on one side, and then we can see the polish, which indeed, you know, is going to spend the next week wondering what happens if the u.k. were to leave the european union and the knock-on that would have in terms of impact, and poland is the most liquid of the eastern european cancer as. francine: on a friday, what is the most significant piece of news we found out this week? if we go back to the fed, janet yellen still believes there's strength in the u.s., or is it now they're expecting one rate hike? kit: i thought the biggest move was in the downgrading of the 2018 dot and the 2018 deprothe forecast. so 3% rate gone as an idea. 3% growth gone as an idea. this is the fed accepting new

normal. we're in a world where 2% growth is as good as it gets. tom: there is a polarity of debate before the assassination yesterday, and that is that all of this market move is about brexit remain, and another group of people saying, yeah, it's really, really important, but there's more going on. which camp are you in? kit: there's a lot of brexit remaining. i've been traveling around and asked by any number of people. innocent terms of the impact here, but in terms of the uncertainty that it cause insist places like poland. i was in spain, what it means to spain, what it means for italy. but i'd have to say, you know, the biggest story, which i would describe as the fed running out of tools, running out of influence, the fact that the fed was very dovish and the equity market didn't get much of a bid. emerging market currencies

didn't get a bid for more than half an hour before it went south again. i thought that was going to last with me longer, or at least if the u.k. votes to remain in the european union, that's going to be the big thing for me for the rest of the year. tom: set up the yen for us. we're going to dash to japan here in a moment and give us a briefing kit before we go to brian fowler, on the idea of how japan responds to janet yellen, to her presumed dovishness. how do they -- how does japan respond to that, or are they so independent they don't have to ook at it? kit: they will look if dollar-yen goes under 100, and i suspect there's going to be pressure for that to happen. in this super low yield environment, the success of the japanese driving their currency down is being eroded on pace, and today is a day off, and i don't think that's gone away. eventually i think that they're going to be forced to consider what they can do to stop their currency appreciating and giving up all of the losses that it had.

i don't think they're so concerned about the currency piece in doing that, but i do think they have to respond. they're called out by what's going on. francine: is everyone caught up? yeah, tom. tom: it's global, and i know we're going to go to brian fowler in japan in a bit here, but to me it's a remarkably global brexit story. francine: it is, and actually, tom, what i was trying to get from kit, i guess let's say that brexit happens. i know we'll talk more about brexit, but will the world central bank come together to provide some kind of liquidity, and will we not see a shock? kit: i would be very surprised. if the european central bank, they may need to make sure this system, the bank of england obviously makes it willing to do some of that. i do think that, you know, either way on this vote, the single most liquid currency to put in various pairs in the middle of the night on next ek will be the yen, so trading one way or the other in the euro-yen, threes currency

pairs you will see traded in the middle of the night on the back of this event. francine: kit, thank you so much. kit stays with us for the whole hour. next week, live brexit coverage from london. stick with us for the latest insight and perspective from global leaders and thinkers. ♪

francine: this is "surveillance." let's get straight to the bloomberg chase. >> hsbc will take a $585 million pretax charge for settling a 14-year-old shareholder lawsuit in the u.s. the suit was over allegations that a business acquired by

hsbc in 2003 misled investors. the bank agreed to pay $1.6 billion to resolve the lawsuit. in spain, authorities are investigating b.n.p. paribas with a case.nity they may have helped shield customers' transfer from officials. santander isn't commenting. there's another noncore asset. tesco has agreed to sell a chain for $309 million. the buy sear group led by mid leavian capital. tesco has been trying to revive its main supermarket business. that's the bloomberg business flash. francine: thank you so much. this is what we heard from japan, the d.o.j. not doing much. i know we heard earlier on. he tried to verbally intervene in yen. that weakening of the yen is short-lived. brian fowler is the managing

editor for bloomberg news, and he johns us now from tokyo. brian, was it a mistake from d.o.j. not to do much? we saw yen strengthening overall. >> yeah, i think it was more a case where the b.o.j. realized there wasn't a lot it could do. with the brexit hanging over the market, i think they realized that any sort of yen weakening would have disappeared very quick al mid all the safe haven flows that are going into yen assets. francine: brian, he was basically saying he wanted coordination with his counter part. will that come, or is the best they can hope is that if they intervene, they won't be scolded for it? brian: he and his counter part, the common thread today is we are concerned about excessive volatility. the big question is what is excessive? he said in a statement, said

they don't to want see excessive volatility and currencies, but i think right now the u.s. would say what's happening in japan is not excessive at this point, that there's a bit of a disagreement there. tom: we've spent a lot of time on the europian bank, and then we missed on this. what is the state of the apanese banks? brian: japanese banks are very upset about negative interest rates. ou've got tokyo mitts birg threatening to stop being a primary dealer out of protest over negative rates. they're hurting. and one of the questions is, why are they hurting so badly when banks in denmark seem to be doing better? tom: to me, fabulous to see this bank walk away from the primary market. i guess i can imagine j.p. morgan saying no, we're not going to play every day in the sand box. what will be the knocks

knock-on effect of that to the public? brian: well, i don't think they're actually going to follow it through. i think they're just threatening, trying to keep the b.o.j. from doing it. but the knock-on effect, the public is worried about negative interest rates, and i think you're going to see mr. abe is going to pull slowly away from the b.o.j. he's going to be relying on fiscal policy from here on in s desperate effort to revive abenomics. tom: brian fowler, thank you so much, with coverage on the knock-on effect of what we've seen this week. we talk about a global economy, and i talk about poland earlier. south korea to me is almost the switzerland of asia. how does south korea as an adjacent country to japan and china, how do they adapt and adjust to the new low rate regime? kit: they'll end up with very low rates as well. they've got a relatively expensive currency. they're very affected by the

slowdown in the chinese economy. they're very exposed to any capital controls from china. and they're exposed to -- they were exposed to a stronger yen. it goes down like a house afire in seoul. the economy, it's the most changed place i visited for the last 25 years or so. seoul is a developed economy city with a fantastic education system, fantastic work place. but the economy is slowing, population is aging. they have very low savings. they have a lot in common with japan, increasingly in common with japan. francine: japan, kit, what kind of levels? there's the third arrow, and are we focusing too much on the yen instead of actually for the third arrow from abe? kit: we need more time for it to work, because the third arrow in terms of structural reform, we're still not getting that. what we're going to get instead is, if you like, abenomics 2.0,

which is with we go back to fiscal policy to support demand because the bank of japan owns so much of the debt that now it's safe to ease fiscal policy yet again. the line between this and helicopter money, if you like, gets blurred and blurred. we'll see where this goes in terms of conference. francine: i don't know if you're looking at technical levels. yesterday we talked yen. can they intervene at 100 or should they just hold off? kit: they can intervene. part of the problem to me is, if you intervene, the yen is a safe haven currency. if you intervene to try to weaken it at a time when it's strengthening when the world is a scary place, you're really leaning against the tide and the flow of the market. you do better to act on days when, you know, the equity markets are going up, the sun is shining, we haven't got anything to talk about. on those days, action intervening in dollar-yen. if i were a central bank and

someone said a move this quickly from 125 to 104 doesn't count as excessive volatility, i'm sorry, i wouldn't -- i would just get on with it and intervene. tom: lots to talk about here. recalibrating into the weekend, and, of course, into a busy week next week. in our next hour, stephen roach of yale university, yes on china, but much more, stephen roach on how we move ourselves and distance ourselves from our old economic orthodox. good morning. ♪

>> working towards a common future. tom: she stats a case for europe. christine l.a. gad in vienna, u.s.a. re a. she says progress is never linear, and, of course, she goes on to make comments on brexit. no surprise, madam lagarde talking about economic brecksity and talking about a case for the benefits of the united kingdom to stay within the european union. i like that idea, progress is never linear. that sounds like a good idea, francine. francine: well, yeah, everyone would rather it be linear, but we know things don't usually go according to plan. it's time for the morning messages. erik schatzker sat down with bill gates to talk about the company's acquisition of inkedin.

bill: i think the value of the two companies combined is greater than the two by themselves, but i love the idea that the market wants us to show that. i mean, the company is expert in software and managing those audiences, and it's great that they have an opportunity to surprise the world and say, oh, my god, look, this speed, this professional speed and linkedin, that is how i want to learn about my career, my company, my industry, and i'm going back there. we can make that as, say, valuable as the facebook feed is in the social world, that's huge value creation, and that will happen over, you know, a period of years. francine: tom, we'll hear much more from bill gates throughout the day. he talked about genetically modified mosquitos, and he also talked about gun membership or the fact that there are a lot of guns going around like the

ar-15 rifle in the united states. tom: a lot of different themes here for mr. gates, who's in some shades of retirement, but moving on to his other things. but i would say, francine, really front and center this morning is an analysis of twitter, is the follow on linkedin. i'm not trying to get any speculation or rumors going here, but certainly percolating off of microsoft-linkedin is an analysis of what is everybody going to do with twitter? francine: you're absolutely right. what happens to twitter, is it a takeover target? is it not? i would also go a step further and actually say, if you look at what microsoft has been doing, it's largely missed out of all of this social media, dominated by the likes of google and facebook. for them to acquire linkedin, i don't know if they're just too late to the game or whether, as bill gates was saying, they can really prove to the markets that what they did will make sense. tom: yeah, and i'm not going to give my opinion here. nobody cares what i think. but certainly there's a polarity of debate over the

future of linkedin and how it bolts in as a small bolt-on to whatever the new microsoft is. i would suggest, with the reading i've done, francine, that this is a huge debate about where linkedin microsoft will be 36 months from now. francine: scommuge important debate. up next -- we will go live to the st. petersburg nternational economic forum. we'll talk about that goldman sachs report saying that the old markets are still fragile. that pits it against what the i.a. thinks. they see it balancing in a stronger market. where does bob dudley stand on this? ♪

tom: good morning, everyone. francine lacqua in london. i'm tom keene in new york. a more subdued friday, which, frankly, is a relief after what we saw on wednesday and thursday. right now, let's get to our

important bloomberg first word news. >> thanks, tom. for a second day, the campaign over whether the u.k. should leave the european union is on hold. campaigning was suspended after the murder of labour party lawmaker jo cox. police arrested a man accused of shooting her. cox was a strong advocate of staying in the e.u. one witness said he heard the man who attacked cox yell "britain first." it's the closest bernie sanders has come yet to hinting that clinton clinton will be the democratic presidential nominee. sanders didn't concede, but in a speech live streamed to reporters, he declared his intent to work with clinton during the general election, and he described his most important goal. representative sanders: a major political task that together we face in the next five months is to make certain that donald trump is defeated and defeated badly. and i personally intend to begin my role in that process in a very short period of time.

>> sanders also said that his political revolution must continue. and philadelphia has become the first major u.s. city to impose a tax on soft drinks. the city council approved adding a 1.5 cent per ounce tax on sugary and diet beverages. the market raised the prekindergarten and recreation centers. the soda industry spent millions of dollars arguing it would be unfair to consumers. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. francine: thanks so much. now let's get straight to the st. petersburg international economic forum. we've been talking a lot about oil and talking about the opec warnings about whether there's a lack of investment it leads to a higher oil price or spike. ryan chill cot is there, and he's joined by the c.e.o. of b.p. ryan? ryan: thanks, francine, exactly, i'm joined by bob

dudley for an international broadcast, and we are going to talk about the oil market and brexit. thanks for joining us, bob. the last time you really weighed in on the oil market, you were talking about how wee got swimming pools full of oil, and that's going to weigh on prices. has anything changed? bob: i think it's getting close. we've said this for a long time, but you can see by the end of the year, i think it will be by the end of the year, we'll get back to a supply and demand balance on a daily basis, and that will firm up i think the volatility somewhat, and then we still have a lot of stocks we need to work off in the next few years. but it's a big difference when they're continuing to fill versus starting to drain. ryan: at what point does u.s. shale production come back online? bob: well, shale is shale. there's big differences. i'm sure there's heartland shale that will take -- but some of the areas, they can produce and do it economically,

30's and 40's and 50's. it's not an exact on and we are primarily gas right now i do have oil. we are rebasing our business to be able to operate. getting down to be able to run our business had two dollars. see prices by the end of the year? >> based on the fundamentals, will be a 50 at the end of the year. next year, 50 to 60. >> plaster you produce more gas than oil. a lot of people talking about the oversupply. oes that continue? > >> depends on where you are. the u.s. has a lot of gas production.

countriesur gas is in short on gas producing on the ground. egypt is a good example. oman is a good example. >> are we in the era where it does not pay to export oil in the future? does it mak >> the u.s. has to get its cost structure down. maybe parts of the arctic. expiration is not going away. onshore, you make it vary economic. some of the basins, there supply is down. people are stealing back. >> what price do you need to see to see the pricing capital expenditure? veryu are getting very,

concerned with capital. the name of the game going forward in the industry -- we were up around 27 billion with capital. we think we can operate the next three years within that framework of 17 and have vary the project. >> you wake of june 24 and learn to u.k., they have decided exit the european union. what do you do? >> we will respond. my personal concern is the independent -- unintended consequences. account will gyrate a bit. pound will gyrate a bit. and, what are you telling

your employees about brexit? >> i think my employees know about my concerns. office, what we said is that we are not a political organization. we encourage you to vote. we won our employees to get out there and get engaged. people arestion -- talking about a weaker pound being a net gain for exporters and oil producers. it might be a byproduct of a brexit. do you agree with that. ? >> i think that is a view. i think it is financial markets creating uncertainty. the fed did not raise interest rates. they said something about brexit. all prices drifted down.

a set of complex things could've happened. >> bob dudley, chief executive of bp joining us. >> thank you so much ryan chilcote. that was bob dudley talking about a bit about brexit. when we heard from esther dudley -- what we heard from mr. dudley is that they can operate with capital over the next three years. are we seeing a rebalance sustainable? >> demand is steadily going up. it is different from copper then from your earlier chart. i thought the takeaway was that the market weight -- market is sorting itself out. if progress is it linear, the big jump is happening, but all the little jumps of expanding

supply down are happening every day. they try to be the local producer. it may go higher. there is a big, fat ceiling somewhere. to: i'm would love francine interject madame lagarde. she says progress is not linear. let's go to the oil chart. yearsoil back one million in approximation adjusted for inflation, and then adjusted for the idea of rising wealth over 50 years, richer and we used to be. we have the opec collapse. down we go again. i'm sorry, 1986 looks a little bit like right now. when you do your economics, do you assume the cartel is dead? >> yes. without influence, but they are not a cartel in terms of dominating the market. the swing producer of oil in the

world is the united states, not saudi arabia with the market now because domestic politics in saudi arabia don't let them play that role efficiently anymore. the rules of the game have changed. to that chart, i think that is right. we are probably and for a long period baby bump the 20 or 100. tom: i thought that was an interesting interview with bob dudley. the idea of what they do with their cash flow will be interesting to see in the number of years from global oil. let's do a global data check. wednesday and thursday, a lot more exciting, but i am sorry, the new regime, look at that interest rate on a quiet day. 1.61%. francine lacqua in london. i'm tom keene. stay with us.

♪ francine: welcome back. this is "brilliant surveillance." i'm francine lacqua. tom keene is joining me. while bernie sanders has vowed to work with hillary clinton to defeat trump, he has not publicly accepted her vp nominee. minute.t a advanced team. an is the advanced team. has bernie sanders pledged allegiance? odd moment.en an

a lot of odd moments in 2016. 200,000 of his supporters watched it last night. we kept waiting for the final shoe to drop and bernie is pushing on to philadelphia. he is 1900 delegates. he will not release them. many people believe this is the start of a real momentum in the democratic party, a disruptive party, and he wants to continue with the platform and the things that are important, college education, and wage, tapping poverty. he will push on to make sure that they are a part of the democratic form. francine: if he endorsed hillary clinton, would it not be easier to push through what he cares about? >> hillary clinton had not come out for $15 for minimum wage. she talked about $12 and up. that is one play he will make. he is trying to use leverage to

get other things. some type of agreement on college education. tackling the crisis of student debt in america. his team believes he has more leverage if he keeps his supporters motivated. he has raised $200 million. pretty amazing stuff. francine: what is going on on the trump side? he is in the u.k. next week. megan: he is going to be in scotland. we do see signs that while the party feels like he needs to unify behind him and it is hard to do so. even paul ryland -- even paul ryan chastise him for his rhetoric. he has always had an aggressive tone. he is in texas right now. there are signs that this is going to be very difficult to get cohesive unity behind him cannot controlhe

comes out of his mouth. francine: it is extremely difficult. i thought three weeks ago that he was meant to have a teleprompter. clearly, that is thrown out of the window. megan: when tragedies like orlando happen in america, and you saw the response. we had a bloomberg poll showing hillary was a 12 point lead. the kind of comments and to beic in action he took the presumptive nominee, but he is definitely having trouble transitioning into a true democratic -- two republican candidate. cox won't be able to vote. e eas explain to our global audience what it signifies, this danger to ministers within their own districts? yesterday tragedy

here. we are vary close contemporaries. she is today's younger than me. we are seeing this extremism on both sides of the atlantic. we have seen in western democracies. you are seeing people really taking a step back and this will be a moment of reflection for people saying is there a time where we really need to think about the rhetoric we are putting out there, both in the u.k. on brexit and in the u.s. in 2016? have we got into a temperature and politics that has gone too far to do public good? have we taken politics a step removed for the benefit of public good? tom: megan murphy, thank you so much. the vote on brexit. it we will continue with our -- we will continue with our full

coverage on politics. market john had been on framing the debate. this is "brilliant surveillance." ♪

i'm tom keene in new york. francine lacqua in london. let's get your bloomberg business flash. >> the swedish network maker ericsson says it is cooperating with an investigation by u.s. authorities, but don't say what the program is about. they say the sec and justice department are investigating erickson or suspected corruption including at its operations in china. brexitirman of russia's would be that news -- the chairman of russia said brexit would be bad news. he says he is already seeing impact on the bank stock. the lasthares during

week -- our shares during the last week, -10%. waiting for the brexit. -- stors [indiscernible] meanwhile, russia's central bank may cut interest rates possibly to 9%. from the redstone and his family are reclaiming by a, in slow-motion. the holding company has replaced five by come board members, one of them is is once trusted associate felix dorman who remains ceo and chairman of viacom. and felix dorman is not going anywhere. decide if court will his ousting was legal. francine: here is what we are watching for the rest of the day. at 7:00 a.m. in new york this morning, that amir putin will speak at the st. petersburg international economic form.

putin will speak at the st. petersburg international economic warm. draghi wille mario speak. let's get back to some of the risks we are seeing. let's get back to the question on everybody's mind. murder of -- raul is with us. when we look at the campaign and the fact that it's been suspended for a second day, will the tone shift because of the horrendous murder yesterday but the market -- because of the murder yesterday? >> we are seeing introspection in the political debate.

people are recognizing it has been a very aggressive so far. maybe we will see less aggressive campaign in the coming few days. francine: will that change? how many people are undecided? will that change the way we talk about the referendum? less will maybe be a negative or aggressive, or a bit less apocalyptic on both sides. a lot of people are still undecided and don't have the information between a fifth of the voters are higher. but the question of the voters going to the polls on the referendum date, or if it will stay home given the nature of the campaign so far. tom: i want to congratulate you on a somewhat neutral approach. somewhat of a neutral approach has been from olivia blanche aed.

rd. the impact of a brexit is overestimated the mysterious a little too much -- the hysterias a little bit much. some technicalg difficulties, tom. iswhat tom wanted to know how difficult is it to understand the impact of a brexit? what will the ramifications be of a brexit? >> we will not know who is going to be in charge of medical he -- the interest politically in the u.k. we don't know what the government to make up will be. that will lead to further market uncertainty. the big questions will be what sort of trading relations with the u.k. go for with the eu and how long it will take. it will be a lot of uncertainty in the days following, not just

because of the politically unrest, but the long-term economic situation, and that will be hard for the markets surprise, and we will see a lot of volatility if it is present. francine: will central banks provide liquidity? >> i am sure the bank of england, their first task is to make sure there is no collateral damage in terms of shortage of liquidity. the liquidity problem is one for the overnight session of the new stuff that will trickle through. but after that, i think they have the hang of the liquidity thing at central banks. tom: where is positioning into the weekend? other folks like you taking weeks off in spain? that iof the people visited on the client side of spain, tom, they have suddenly become much more concerned about the impact, not so much on the u.k., but i was being asked yesterday what is the impact on business, bond spreads?

what is the inference that it draws in terms of the u.s. vote? does it affect mexico? i do think given a spike in foreign exchange volatility and the moves we have seen in the last week, the positioning now is much more evenly balanced. you see similar moves in both ways. tom: thank you so much. we greatly appreciate your work. in our next hour, less on china and much more on the tumultuous week we have seen in central banks. stephen roach of young university and kevin roberts out with a most beautiful book. ♪

♪ tom: debate is put on hold as a member of parliament is assassinated. joe cox was quote, a rising

star, mother, and wife. from janet yellen to brexit to a slowdown after a wild two days, markets are calm and this hour. stephen roach of young university in the fabric of the british people, next week, martin mickey and i will join francine in london. good morning, everyone. this is "brilliant surveillance." friday.r bags this i'm tom keene. francine the problem -- francine lacqua will try to have a good weekend. they will travel to london. they greeted by a good economy? give us the state of united kingdom's economy. francine: it is the second day whether campaigns have shifted because of that atrocious murder . the state of the economy is not bad at all especially when you

look at the rest of your. there is a growing sense -- when you look at the rest of europe. there is a growing sense of -- you have seen a shift in the polls for brexit. see thewas good to mansion houston or last night continue on even with the tragedy. for more with our first word news, we begin with nejra cehic. >> in britain, the campaign whether the country should be the european union is still on hold after the murder of a labour party lawmaker. police have arrested a man in a shooting of cox. she was shot by talking -- while talking to constituents. prime minister david cameron spoke not long after her death. >> we lost a great start. campaign leader with a huge heart.

people will be very, very said. >> one witness says he heard the man who attacked cox yell britain first. has denied any involvement in the killing. the man suspected of killing joe cox reportedly had ties, not to group in the u.s. according to a watchdog group, tommy was a longtime supporter of the national alliance and he supported a manual on how to build the pistol. cox was shot by a weapon as witnesses described as homemade. president obama is pleading for congress to consider new gun-control laws in the week of the orlando massacre. the president spoke at a makeshift memorial to victims of the nightclub attack eerie he thes congress to -- president spoke at a makeshift memorial to victims of the

nightclub attack. officials have criticized the obama administration's policy in syria and call for military action. the criticism comes in an internal document saying u.s. policy has been overwhelmed by war in syria and our use of military action is needed to assure syria in engaging in peace talks. global news 24 hours a day and more than 150 news bureaus across the globe. i'm near cherished - francine: it is wonderful to have a calm day. on to the next screen. vix -- a weaker yen. i threw a euro swiss there.

calmer this morning. francine: stocks up and banks up. it the japanese finance minister talking about possibly intervening. the tone of the campaign may change after this murder of the np yesterday. the brexit campaign are suspended for a second day. the withs good is stephen roach and maybe he helps us recalibrate the week into the weekend. as we go to london next week. 's classic book, the -- "the next asia." yellen was one of janet greatest phd --

yellen was one of yale's greatest phds. tom: you have been a sharp fed critic. they need a new strategy in terms of -- instead of tried to guesstimate market trends? stephen: it is easy to become critical. it policies are not in anyone's textbooks. -- policies are not in anyone's textbooks. there is a bigger issue, tom, and that is understanding the trade-off between inflation -- andng and inflation financial stability or lack thereof. the fed and other central banks are repeatedly looking at concerns over financial stability and attempting to guide real interest rates, which

are now in unprecedented territories toward jousting against an inflation and may not on the playing field. tom: someone say all of these modern restructures are expressed through european banking that is exceptionally fragile. .e have seen deutsche bank tank we have seen union bank of italy come down as well. that financial instability in europe, could that migrate over to the united states, or is it all clear for the u.s. financial system? 2008,n: what we learned 2009, it is impossible to build firewalls. tom: you would thought -- think they were free and clear. with it europe ended up disproportionate amount of the distressed debt. the banking system around the world, whether it is the united

states, europe, or china, where i came back from last night, it is facing significant stress and a weak global growth environment with a lot of debt-intensive growth, especially in china. on theanking system field that is resistant to these types of pressures is extreme a .roblematic francine: stephen, that is where i wanted to go. pressureslot on the of the european banking system. how worried are you? given all the dead, we are going to see a financial debt in crisis? stephen: categorically, i don't see we are going to see a financial crisis in china at all. china has the world's highest a mastic savings rate. , owes tothat it owes

itself. crises comes when you odette debt to people offshore and they pull out their capital -- crisis comes when you owe debt to people offshore, and they pull out their capital. this is a big interactive debate going on in beijing right now. european banking problems are of a different nature. extent, itto a large is a system that could benefit by a much much stronger growth in the european economies able to deliver, and the structural impediments to take on growth are wreaking havoc on the banking system. francine: could we see liquidity problems across the world and the banking sector? thatthat lead to something

would be systemic, or have we moved beyond that, because we have seen crisis after crisis in the last eight years? stephen: again, where central banks are, they have expanded their balance sheet dramatically . you might argue, even excess liquidity into banking systems around the world. i don't think this is an issue of liquidity. it is a lack of economic growth. then needs to be addressed dramatically. ,aybe at the upcoming g-7 excuse me, do 20 summit in september, that will be item number one on the agenda every tom. tom: one of the great moments was a packed dinner and davos -- in davos. you stood up in that meeting and said everybody has to stop at the blame game, the singular blame of the fed, singular blame of this person are that person. we were all in this together.

you think the nation should adapt and adjust to a political season where it seems like 24/7, we have a blame game going on? know, where i you am in on this, tom, and it is a great was no. you fly on these long flight like i do. and you think about things like this. like all card-carrying economist, i embrace trade globalization. but it is a theory that is unconnected with what is going on in this populous backlash and middle classes in united states and in europe and in other places around the world. we have got to do a better job in understanding that disconnect rather than sit here and our ivory towers and say everything is going to be fined in the long run because the world always strains. stresses and ,hese adjustments are wrenching

and we are not doing a good job responding to that. and our theories need to be updated or we will let these populous politicians grab the reins in. dangerous -- in very dangerous place. francine: dr. roche will weigh in on brexit. honestly, tom and i will be all the latest coverage on brexit. we will have perspectives from global leaders and thinkers. we were just talking about european banks in the global financial system. this is what they are doing today after hitting record lows yesterday. deutsche bank getting 5.3%. ♪

♪ francine: welcome back.

i am francine lacqua in london. tom keene is in new york. as get to the bloomberg business/. an $85 millionke charge for settling a lawsuit in the u.s.. the suit was over allegations that a business acquired by hsbc and 23 -- 2003 misled investors. the bank agreed to pay $1.6 million -- $1.6 billion to resolve the lawsuit. some of the banks employees may have helped shield customers. microsoft cofounder bill gates says he was very encouraging at a microsoft acquisition. gates spoke to bloomberg's erik schatzker in boston. >> to surprise the world and say, oh my god, look, this

professional feed and linkedin is how i want to learn about my career, my company, my industry, going back there. if we could make that as valuable as a facebook feed in the social world, that is huge valuation will happen over a periods years. $26 billion paid for lincoln. salesone of the biggest on record. tom: thank you so much. let's bring up a chart of mediocrity. i had no idea how mediocre discharges. that is a mediocre chart. -- i had no idea how mediocre this chart is. that is a mediocre chart. viacom is not disney. thomas egan for ages has

followed the media business. dana joins us now on the soap -- joins us on , -- oap opera on we don't think the managers will take over viacom because we don't expect them to merge. that would not make a lot of sense. for example, if they were to merge, cbs and market cap would fall. to cbs were to fall by 5% two 10%, i come with have to increase market cap to keep it neutral. that would not happen. it doesn't make a lot of sense. tom: let's go back to the soap opera. game of thrones is ending its season. this is essentially like "game of thrones."

who hasthe episode -- the upper hand in the next episode? >> since the redstone tough control of the trust because a half four of the seven votes, they have the upper hand. even if the red stones were to lose their next court case, since they control the trust, the have the upper hand. tom: been there is the underlying properties of viacom. -- do the mtv network they have the content right now, that yousiness plan look it this equity is a terrific value? >> certainly, their fundamentals have been lackluster. if you look at the first quarter, they were the only major media companies who declined year-over-year. it will gett easier.

turnaround -- we think that a turnaround as possible. if you look at time warner, they are turning around. it is possible. tom: thank you for the update. francine, the new york gossip at the moment just on viacom? francine: this is an important story because there are legal wranglings that make it more entertaining. this is a picture of the assets we are watching. a little bit more of a quiet day compared to the rest of the week, tom. global stocks seem to be rebounding from a week low. commodities also advancing. german bonds fall as demand for assets cool. brexit wasn on suspended for a second day. we are expecting it to resume with a different tone, possibly as soon as tomorrow. ♪

♪ we are fortunate and you are fortunate. francine lacqua in london. tom keene in new york. stephen roach from yale university. dr. roche, you mentioned this, dare turn out with his book and write it up and project syndicate. this is blistering. the current official fiction however is that all dead will

eventually be resold to private again, a realng public liability that must be repaid out of future, fiscal surplus. it must have no recognition that many debts, both public and private, since they cannot be repaid. dr. roach, from 2007, we have been trying to have a pain-free readjustment of mistakes made. is that part of our economic slowdown is that we have not cleared the debt out? and we are just festering and festering and festering? stephen: i would go further than not, tom. to dok what we have tried since 2008 is once again rely on financial engineering to give us a shortcut to economic recovery. by expanding balance sheets. by going to negative interest rates.

not recognizing that the only real six two a crisis problem around the world -- six of a crisis problem around the world. we're not just kicking the can down the road. we are wandering off a road we have never been on before. what worries me significantly is the lessons of the crisis where we get into trouble through financial engineering are being compounded by simply a new and untested strain of financial engineering today. in many respects, that leads to more debt and intensive growth, premise to but the create growth shortcut this usually flawed in my view. roach, goingfessor back to the debt write-down is that he is specifically mentioning greece. greece and japan are having debt

burdens that are unsustainable. we ever going to be in a place that these two countries will be in a better place to market and what is the prescription that country such as these will not have the success of debt? certainly, we will be in a better place provided that crisis-torn economies address their structural issues. but the point i just may, francine, is by relying on untested monetary policies to foster economic recovery, the odds are those structural changes will be deferred because a frothy financial market and open ended credit, which is made amply available an unprecedented interest rate gives a superficial impression that we don't have to make the fix.

fix. for all the criticism that is being directed at china, they are alone in the world at least they succumb to the need to address some of the structural issues. governmentchinese and the chinese strategy a lot of credit for doing it. stephen roach, just that from china overnight. coming up, this is wonderful. kevin roberts on the murder that we saw in england overnight. kevin roberts on brexit. he is out with a beautiful, beautiful new book. ♪

♪ tom: from london, from new york, "brilliant surveillance." calmer markets this morning. >> for a second day, the

campaign over whether the u.k. should be the european union is on hold. campaigning was suspended after the murder of labor party lawmaker jo cox. police arrested a man accused of killing her. cox was a strong advocate of staying in the eu. one witness said he heard the man attacked cox yell, britain first. the group denied any involvement. it is a closest is bernie sanders has come to admitting that hillary clinton will be the dem attic presidential nominee. presidentialatic nominee. he declared his intent to work with clinton during the general election and described his most important goal -- together we face, and the next five months, is to make certain the donald trump is defeated and defeated badly. and i personally intend to begin my role in that process and

very short period of time. >> for companies are deciding to set out the republican convention in cleveland. donald trump's nomination has vacancy thatvel of has never been seen. number of companies has said they will not be a part of it, among them wells fargo. is city council approved adding a 1.5 caps on sugar inside beverages. the money raised is in march -- -- news 24 hours a day. i am nejra cehic. tom: sometimes you get lucky.

stephen roach always with young university is an item of good fortune. but joining us now is kevin roberts of saatchi & saatchi. he has given us wisdom and he ,omes with a beautiful book which is my book of the summer. it is a spectacular, gorgeous book in lee's a black-and-white imagery. here are images of speak with fort moment for england this referendum that we see within the united kingdom. kingdom ofhe united another time. capturing this beautifully and his commanding book. this gives you an idea of kevin .oberts's 26 shot gorgeous, gorgeous photos. this is a spectacular, smart, beautiful book. what is the goal here, to provide wisdom for present

leaders and future leaders? gap for new is a leaders and what is becoming a crazier and crazy world. most of the leadership doctrines were written and more settled times. this is to help the young people get a grip, and the old people stay focused. tom: i could be a wise guy and said if you have spoken to mr. trump on this? [laughter] tom: here is a quote from the book that i think speaks on humans about jo cox -- i think cox.s volumes about jo mobilizedent said, you -- he mobilized the english language and send it into battle. are we winning the war? kevin: we are losing the war.

boris could only look at churchill and figure out what churchill said, when the going gets tough, keep going. we would not be giving up on your. -- europe. kevin, i am reading a lot of commentary. people are trying to figure out what margaret thatcher, if she were alive, what think about go?xit 30 years ago a she was disillusioned and suspicious of all things made in europe. had she known about the implications of a europe that will be breaking up. kevin: i don't think that mrs. thatcher was ever for turning. she would say we are committed to europe now and what our

toigation is not to retreat and island, but to move forward and fixed europe. francine: our voters across the world disillusioned with their politicians? is it disillusionment with the political elite? kevin: the work we have done around this area says people think they are being unrepresented. they are not being listened to. collisions -- politicians are looking at their own agendas with you move to the right or left. what the middle classes are saying, pay attention to us now. you have got to listen better. you have got to do something for us. tom: you are a unique voice on this. stephen roach has talked about it with optimism. quote, my mother worked in a shock. my father worked in a mental hospital as a security guard. how do you speak authentically to the idea of a middle class in

united kingdom that is furious and livid but the elites in london, all of them -- had you bring those worlds together? kevin: when i think of the heart of leadership in a crazy world, you have to be a radical optimists. we have an of synnex. we have -- we have enough cynics . fuelingenough people fear. next week, i think england will -- this is a big issue. i think england, mostly, will vote with its heart, not with its head. and it will go for them -- tom: is a chinese elite culture, is it a culture of optimism or pessimism? kevin: i think it is a culture of stability, which i would say is hopeful optimism, but a of their future.

they have been through a lot. they have got a lot to do to go to the next phase of their journey. they got to tackle a lot of difficult, vested interests to tod chuckle -- two unshackle their own policies. francine: is there a region that stands out as having the best politician jacn? china -- dr.id roach said china. it is better than -- kevin: i don't know they are doing that the people. i spoke at taking -- peking university and they were radically optimistic. i spend a lot of time in new zealand and i think new zealand has fantastic politicians. i hope the next general of the

united nations, helen clark, has a chance to show that on the world stage. tom keene is definitely showing it an author wellington. stephen roach, you believe central banks have been doing too much. if they were doing less, would it enable politicians to do more good? stephen: enable is a little too strong. it would force them. the more that central bankers focus on producing froth and financial market, the less politicians and other authorities feel the need to act. i think we really need to turn the screws on them. we have had a lack of fiscal remedies and a disproportional reliance on monetary policy. tom: kevin roberts, you were brutal. trump, what isd your counsel to mr. trump to right the ship after a difficult two weeks of polling? kevin: maybe start having

policies that make sense. tom: that is what mitch mcconnell said. but seriously, what is your prescription for the republicans and for mr. trump? kevin: the prescription for the republicans is that it is probably all over this cycle, and you better be focusing on honesty and relevance going forward. francine: all right. isn't anything else? is it in style? i am struggling from where i'm sitting to understand how much the policy in the u.s. has to do i'm struggling from where i am sitting to understand how much the policy in the u.s. has to deal with substance. kevin: i think mr. trump has picked one, huge, human condition, which is when you are threatened with loss, it is three times more effective than

winning. if someone threatens to take something away from you, emotionally, that has much more impact on your psyche than the promise of a gsin. ain. and he has tapped into that dramatically. tom: kevin roberts, thanks so much. this is a spectacular, beautiful book with gorgeous black-and-white shots. kevin roberts joining us with 64 shots, my book of the summer. i will be reading it on the plane. , rare thing, he loves to be on the same plane. michael mckee will join francine lacqua in london next week of our coverage of brexit. from new york and london, "brilliant surveillance." ♪

♪ francine: welcome back. this is "brilliant surveillance." i'm francine lacqua in london. tom keene is in new york. let's get straight to the bloomberg business flash. >> the real estate market in san francisco is starting to lose its steam. the last four years, the median price for a home has risen to 1.2 men in dollars, but now the -- but now, smaller homes are at a record high. wererancisco's high prices because of a hiring boom. erickson is operating with u.s. authorities. they don't fit with the probe is about. a newspaper says the sec and justice department are

investigating erickson for suspected corruption, especially at operations in china. it is a setback for apple and one of its most important markets. regulators in beijing ruled that apple violated design patents of the chinese smartphone maker. it may have to stop selling his latest iphone and the chinese capital. apple is not commenting. he can appeal the ruling and still be allowed to keep selling the phones during the process. it that is the bloomberg business flash. francine: thank you so much. market working out with a great piece talking about ecb exhaustion and negative german yields. we are also joined by stephen roach of young university. great to have you on the program. , thergue that this week german tenure went into negative rates for the first time. we have him look precious of the board which says ecb, the prescription is put in place is

not working. >> if you look at all of the interest rates expectations and financial markets on the five-year forwards, no inflation on the horizon of any kind. whether you agree or not, central bank should have a 3% target. there is no way they are want to meet it. what is happening in the bond market is telling you that there is no prospect for consumer prices rising in the future. francine: so when does a helicopter land? >> we are reaching exhausting points of what monetary policy can be. the fiscal site needs to step in. borrow is if german can for free for 10 years, why does it not fiscal room given monetary policy is not working. given that all the pressure is on ecb, why does jimmy not do something? -- why does not germany do something. mark, have you seen the

regime change jac? is there a change in behavior? >> it is not talking about kicking the can down the road. .ou can feel their pain they really don't know what the implications are. oh the government not acting at all, they do not know what to do next. flip-flops on exchange rates. it is another sign that we are in uncharted territory. quantitative easing, which it u.s.,ike it worked in the does not look like it has done the trick. something has to change. i don't think central bankers know what to do. mark, it is deeper than that. whether it is the federal reserve, the ecb, or more recently, the bank of japan, we

have seen extraordinary monetary accommodations through balance sheet expansion, and now negative policy rates in two of the major central banks. but the weakest economic recoveries on record. but the traction -- so the traction on unconventional monetary easing and the real economies that they r2-d2 target is completely broken down. it that central banks are being allowed to continue to experiment with policies that are basically not working? they give you this ridiculous counterfactual saying you should see how bad it would be if you are not doing this. is his ability -- i dispute the validity of that. the longer they are allowed to get away with that, the less likely there is the opportunity fix, what the world really needs.

tom: do you know where the risk-free rate is? do you know where that is that when finance and the stephen roach economic? stephen: the interest rate transmission mechanism is not working. there is an aversion to taking on new debt. tremendous, looking at japan, an appetite for rejecting debt as a solution for economic recovery. trumps- that rejection -- dead rejection trumps -- francine: what happens if we do pull away from all of this qe and central-bank action? there isn't a argument gaining traction, at least for me. ,his thing about the lower bond it is like quantum physics, he gets spooky as you get into that

zero realm. i'm starting to wonder if higher rates would give consumers and businesses a bit more confidence about the outlook? the current policy is not working and you have to try something else. maybe higher rates is the thing you do. gilbert'so mark point, raise rates once and we are done. why can't they do that, versus the measured vector that everybody is afraid of? stephen: that is much more consistent with my view than not. ,ut i recognize that in a shaky global economy, the political pressures on central banks to raise rates are cute. checked, we time i stole the virtue of independent central banking law policy makers are supposed to be immune to political pressures. paul volcker was a central banker, you would be having

raging double-digit inflations in the u.s. many courage from leaders to , that are much more independent in the art. tom: stephen roach will come back with us. roberts,ords, -- mark thank you. the markets are calmer today. calmingerts, homing -- the markets today. stay with us.

♪ let's do a quick report. yen, 10 three out to a weaker 104, 28. francine? francine: coming up, "bloomberg " with david westin and jonathan ferro. david: looking forward to present next week. we will be joined by west a cot talking to him about the tragedy that occurred yesterday in england and what it means for the campaign going forward as well as the state of brexit. we had a big, dill -- deal

announced microsoft buying linkedin. we are going to see what bill gates thinks about it. aol is a major force in the internet area. that is coming up. tom: david westin, thanks so much. be sure to talk to ted about the pittsburgh penguins. [laughter] tom: make sure he is aware of the pittsburgh penguins. david: we are asking about las vegas and new york city. [laughter] tom: david westin coming up. that will be most interesting, especially with the ambassador. on a to do this with stephen roach, one of the great china-watchers of the modern age. year-over-year, one year moving average of china exports is a great end if beijing does not like it. write an export decline

with currency depreciation, or can they be another tool to give china the vigor they used to have? stephen: you don't use the currency to deal with that trend, tom. it is much more of and outgrowth of a sluggish economic economy. it would take a massive devaluation and a lot of anti-china\to try to address that. the tools you need is to shift consumption,rivate which needs a stronger currency to make chinese consumers have greater purchasing power. headed where china is and that is encouraging. tom: i'm sure you were in the meetings at the morgan stanley global indexes and they pushed china away for a second or third time. how badly does china need to further get into global markets? stephen: i think the decision that was made this week is a reflection of the fact that the

equity market culture and china -- in china is not well developed yet. that is a big problem. lacking an equity culture, china relies far too much on debt-intensive growth to drive economic activity which is the essence of its problem right now. tom: you are a trooper to come directly from jfk. stephen roach off the plane from china. ,he are saying in my ear francine, that i am excited to see you. they are right. francine: just bring big red chewing gum. r we have year as well.

jon: the killing of a member of parliament rings silence to the brexit debate. campaigning is suspended for a second day. david: global equities rebound.

crude snaps its six-day losing streak. >> japan's finance minister calls for g7 correlated action over the surging yen. jon: a warm welcome to bloomberg ." we begin with breaking news from jim bullard on the regime change . the situation can change and will change in the future, but exactly how is hard to predict. the best thing we can do today is forecast the current regime will persist -- bring