francine: a dividing united kingdom two days until the vote. even the polls are split. the pound falls. a verdict on whatever it takes. germans constitutional quote rules on the ecb bond buying program. janet yellen heads to capitol hill to answer questions on the right path. man isng's richest bullish on china. we bring you that interview. ♪ francine: welcome to "the pulse."

live from bloomberg's european headquarters. i am francine lacqua. onto the board, we had a risk on move. things are a little bit risk off as these polls in the u.k. pointing to a a lot more uncertain outlook after the referendum on thursday. you can see the ftse down a touch. the yen 104.5. we'll get more on the markets. let's get straight to the bloomberg first word news with nejra cehic. nejra: europe's -- britain's referendum remains too close to call. several pulls -- separate polls show leads on both sides. thewhile the cofounder of leave eu campaign tells uncertainty reigns and no one knows what the outcome is going to be. cooks it is strong to leave.

-- >> it is strong to leave. the fact of the matter is this referendum -- [laughter] george soros says the pound may slump against the dollar if it is voters decided to leave. this would be a devaluation bigger than when soros bedded in 2002.t tim cook is this set to hold a is aiming to boost because of controversial comments made by presumptive nominee donald trump about women, minority groups, refugees and immigrants. minutes from the june meeting of australia's central bank shows it held data while inflation

would remain low. it remained unchanged. the r.b.i. appears to remain content as the country has toured an election next -- country heads toward an election next month. the release of the boj's april minutes. negative interest rates had .lready adduced its effects the senate has voted down a -- fromf measures buying guns in the wake of the orlando magic are. two of the defeated proposals were offered by republicans and two by democrats. none reached the 60 vote threshold needed. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. this is bloomberg, francine.

francine: bloombergs -- europe's referendum remains too close to call. one shows a vote for the remain and one shows the remote -- shows the vote for leave. echodid she tell you the anna: good morning -- tell you? anna: good morning. the message from the side, and she is very much on the leave side. the message is about taking back control. thatismissed allegations the campaign had become inward looking, xenophobic and divisive . she did mrs. claims that any departure by the u.k. would leave the board of control between ireland and the rest of ireland. side, comments from jeremy corbyn as to why he

was to stay in the remain eu. george osborne talking about why the brexit -- they have made no preparation in the government for brexit, except for the ones behind -- around financial stability. francine: hanging in the balance. for the first time, george soros weighed in on the debate. anna: george soros warning we could see a 20% jump in the pound if we saw a brexit. interested in george soros's view. i was wanted to see how the newspapers are ramping up their coverage. this one i've read here which is the metro includes a cover for leave and an article for remain. it includes an article by the french industrialist for remain. edwards -- some words of encouragement.

it says we love you, but we are in business. francine: that is quite fun. the italians are launching some kind of change for kisses for the brits pit what is funny is there is more eurosceptic in france. and edwards outside of the houses of commons in westminster . let's introduce our guest, luke johnson. better known for running its express. he is involved with the business for britain. rates to have you on the program. you think -- great to have you on the program. you think this would foster entrepreneur? is a the european union highly bureaucratic centralizing extra layer of big government that produces more laws and regulations and directives that inhibit enterprise.

business is not really the source of job growth peers smaller companies are. if we want -- a job growth. smaller companies are. if you want to grow our company, we need to have more entrepreneur. they will prosper through less red tape. 90% of britons companies do not -- 90% of britain's companies do not trade with the eu. to half of all legislation is now produced by the eu. francine: having to be sure that you get a better trade agreement within the u.s.? the u.k. and some of these -- export to china to the u.s., to south america. they are a part of the you. luke: the eu does not have a trade deal with the u.s. exon

there are many -- with the u.s. the reason why the eu has not managed yet to consummate a trade deal with the u.s. is because they cannot agree on it and when you have 28 countries trying to put their vested interest first, it is difficult to get agreements. chile has more trade agreements than the eu. i will see what we can structure trade agreements overtime that will benefit. francine: do you think this will be short-lived? luke: there is always market turmoil. one has got to look at the longer-term. fall,prices rise and exchange rates go up and down. if sterling falls a bit, that will help exporters which is what everyone is worrying about. , exports to europe are

about 15% of our gdp. not by do fall, it is any means the entire economy. it has been unhelpful that the remain side has been putting out , so thatscaremongering if in the democratic process and british people do decide they want to leave the eu, they have set out a lot of unhealthy .ropaganda which is exaggerated francine: they would say the same on your account. as an outsider, it is difficult to know how to believe. geico i think the economic arguments -- luke: i think the economic arguments are complicated. what i would say is the democratic argument is very irrefutable it seems to me. outside the eu will be more democratic. the eu with his comic in structures is not really a very as you pointed

out, actually the eu is less popular places like france, according to the pew research poll. the eu has the profound democratic deficit right across --ope and this is a major and it needs to address it. francine: pop up -- politicians are unpopular as well. luke johnson stays with us for the hour. we have plenty coming up, including draghi in the dark. the legality of the ecb's bond buying program. we will bring you the details. we will look ahead to the fed chairs testimony before congress . when will u.s. rates rise? the carsnalyze industry and we've got breaking news. theany's top court rejected

challenge -- questioning the legality of the bond buying program. we -- what wet understand is the german constitutional court is clearing .he ecb with certain conditions they are putting some caveats to it. overall they are rejecting this challenge which had investors worrying what that would mean for the bond buying program. what's more of the top story coming up next. -- much more of the top story coming up next. ♪

francine: "the pulse." welcome back to before we get to the bloomberg business flash, just had breaking news. germany's top court has rejected the challenge. caveats.me we'll have the statements in full. this is but a judge of the top constitutional courts in the middle of germany. let's get to the bloomberg business flash nejra: france's largest insurer plans to increase profitability by seeking 2.1 billion euros in cost cuts and intensifying additional investments. they want to attack demands after targeting every turn on nick d over the next four years

-- facebook's plan to expand into china. it's held its annual shareholder meeting. >> we have set our mission is to connect everyone in the world. china is a part of everyone and we are, studying about the chinese market and we will see what happens. nejra: did jim c -- credit suisse ceo says it's profitability is being hurt. they were wrong to assume the bank will have to raise additional capital. credit suisse has lost half of its market value since thiam took over. deal signed a $9 billion

with a government owned firm. manufacturing in china would allow tesla to avoid a levy on import of course. that is the bloomberg business flash, francine. francine: just to recap one of our top news that came up five minutes ago good germany's top court has rejected the challenge to the monetary transaction by the ecb. this is the ecb bond buying program. positions --in the the provisions that he could do it. the court is rejecting it with some caveats. judge liberates more, we will bring it to you. let's talk more about europe and entrepreneur. luke johnson is with me. we talked a little bit before. for the viewers that are just joining us, you are for brexit.

you think coming out of the eu would benefit the u.k. because you get rid of nonsense loss and you cut the red tape. what would it mean for european on spinoza? luke: i think -- european entrepreneur. luke: i think it would be a good signal. it would give the european union a good shock. it would force them to reform. when david cameron went before this referendum to get changes, nothing was given. -- seemedto compete to continue to be the right word. -- the watchword. rather than having this giant centralizing bureaucracy the eu is, i think it changed culture will be helpful so that more pro-business deregulating, devolving powers. i think these would be helpful for the startups.

if you look at the high levels of unemployment across spain and portugal and italy. and the sluggish investments there, i think something has to change. francine: is it not beneficial for the u.k. to have a europe that is at its doorstep that is not doing great? you are checked the top talent. people come here. luke: companies and businesses andot do well above misery the more prosperous everyone else's, the better we will do. misery. the more prosperous everyone else is, the better we will do. i am all in favor of france and italy and france and spain becoming more dynamic and entrepreneurial.

that will help. the culture spreads. francine: how you faced the big silicone valley giants. we got an update on this court ruling in germany did whatever it takes to get an approval. they just rejected the ecb's bond buying program. for more on all this let's get to our european central banks allen. paul how significant is this ruling? paul: ecb has already said it is theident it would win ruling, particularly after the european court said it was legal. inre'll be a few white brows the headquarters here in frankfurt. the ecb wants to have a program that allows it to target individual countries should they find themselves under periods of stress. that is why o&p was announced back in 2012. it allows the ecb to buy

unlimited qualities -- quantities of bonds. judy is not like that. it buys bonds across the euro area. if germany was not able to take part in known see, that would not have been the end of the program. there may have been workaround that made it difficult to go forward. francine: mario draghi is getting more criticism because qe is not working to the extent he wanted it to. what are we expecting him to say today? he may well address this issue. quite rightly he was a we always said it was legal. we have the capacity to do what we say to save europe. it is going to be an interesting time. he is at the moment calling for time to allow ecb stimulus to work. at the same time urging

governments to play their parts with fiscal stimulus where they have room to do so. this makes life easier. francine: paul gordon, our central banks editor. not worried about debt. why hong kong's richest man is bullish on china. we bring you the interview. ♪

francine: welcome back. recent economic data shows

china's economy is stabilizing amid persistent concerns arising about debt. bloomberg --o's speak to bloomberg and his first interview with media and four years. he says he remains optimistic. >> i have a lot of experience when it comes to manufacturing. the fact is, china exports more than imports. beside manufacturing, there is the service industry. it is one of many channels of income. the people can only see the debt and the state owned enterprises. when the need to recognize that china is a big exporter and the inflow fumble foreign-exchange is also possible for china -- of foreignlow exchange is also possible for china. a lot of income is generated

from the service industry, so in the long run, china's economy looks good. >> the are a lot of chinese companies that are looking overseas to acquire businesses, but they keep getting shut down by regulators, including yourself. what is the impact for chinese companies in the future? how do they fix this? fair.needs to be china welcomes foreign investments. other countries should also welcome chinese investments. >> is this frustrating? have problemst with our situation. .e are in 52 countries we are continuing to expand our businesses.

in the past couple of years in europe, we have been going into new sectors and making new investments. no problems. we need to be respectful of other countries regulations and their way of doing things. i am still confident in my businesses. was li ka-shing. k-fed at risk becoming a slight to market as it reacts to data. reveals -- we look ahead to her testimony on capitol hill. marketsa picture of the and we are about an hour and 26 minutes into the trading day. overall, a lot hangs in the balance this referendum on thursday. the brexit vote is in the balance as polls seem to differ over which side leads.

600 -- the ftse down a touch. the six yen, 104.39 as index is down 5.3%. ♪ you guy's be good. i'll see you later

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party's on! know what your pets are up to with xfinity home. xfinity. the future of awesome. see the secret life of pets, in theaters july 8th. pulse"e: welcome to "the live from bloomberg's european headquarters. britain's referendum on european union membership he comes to close to call two days before the vote. one had leave ahead 44% but another puts remain out front. meanwhile, the cofounder of the leave eu campaign errant banks has told us that no one knows

with the outcome is going to be. >> a strong to leave. i do not know that anyone notice. if anyone tells you they know what is going to happen they are lying. nejra: the senate has voted down a series of measures in an -- two offered by republicans and two by democrats but on reached the threshold -- but none reached the threshold. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. this is bloomberg. francine: thank you so much. markets pretty flat this morning. .et's head to mark barton

mark: the biggest rally since august 2015. global the wonderful macro movers function. these are the european equity benchmarks. greece is up 4%. belgium, little change, germany, little change. bonds, the yield on the u.k. two-year is up by a couple of basis points and commodities are down. a very different day then we saw yesterday after a couple of polls show that the outcome of the referendum is still in certain. leaving me to look at the level of sterling against the ftse 100 index, this chart, both of them in recent days to have moved to the downside and then the upside. twocorrelation between the

is at levels not seen since 2001. one we would be moving in lockstep and we are at .60. yesterday,se by 3% the most since february 11. the intraday gain was the most since 2011 and it is the best western european benchmark of this year. what a day for the pound yesterday against the pound, rose by 2.4%, the most since december 2008. mr. soros has been smoking -- speaking and he said sterling may slump more than 60% if brexit materializes and the pound would fall at least 15%, possibly falling more than 20%. that is grossly underestimating the true cost of

brexit which will have an immediate impact on financial markets, investments, and jobs. i thought we would look back to black wednesday, the day mr. soros made one billion by voting against sterling. that day, the pound fell 4% against the dollar. right then it was $1.86. february 11 the following year it fell to $1.41, a decline of 41%. soros says we could fall below $1.20. analyst think the pound could fall below that but you would be a brave man to argue against mr. soros. mike is going to tell you all about the fed and yellen today but just before mike speaks, i want to talk about the world interest rate probability and as you can see, july for the u.s. is a percent.

3%,ember is 30, november 30 and we are not above 50% at least through february. francine: janet yellen heads to capitol hill today to face questions. -- mohamed el-erian says the fed risks becoming a slave to the market as it react to short-term limiters. michael mckee joins us for more on what to expect and luke johnson is also with us. we are looking at the function that mark was showing us. first of all, what does this tell us? i keep on being told to ditch the plot. that is what a lot of folks on wall street are saying because the green line is where people think it should be and

the purple lines down below are really interest rates say it should be. there is a big difference even though the fed came down at its last dating, it is still more optimistic about where the u.s. economy is going and she will be asked about that. i am not sure how much new we will learn but the members of congress love their opportunity in the spotlight. francine: the one thing we are still uncertain, we have to look at the macro landscape from outside including brexit, which we will get back to you, but how much will she once again talk about the jobs number that was worse than expected. michael: why was one number so important to the fed? right before that number came out everybody was pricing in a fed increase and when the number comes in, all of a sudden it is uncertain. how did things flip so much in terms of the outlook from the fed? francine: there are two

questions. where is productivity and there is more -- does more transparency from central banks make their job harder? luke, can you explain this productivity puzzle which is very much like in the u.s. as in the u.k.? luke: i think at the root of it is probably investment and capital expenditure in companies. they are doing stock buybacks, dividends, acquisitions, but they are not seizing organic growth opportunities and i think that leads to a lack of productivity gains. productivity is key because potential growth is the size of your workforce and productivity out of together, without productivity because the baby boomers are starting to retire, every country's growth rate is potentially coming down. the question is, what is the policy reaction?

what can you do to try to increase that investment and get productivity up? luke: it seems to me the clear thing the u.s. needs to do is cut corporate tax rate which i think will stimulate a big remittance of offshore profits that court -- corporate is keeping offshore for tax purposes, and i think that would stimulate growth. michael: than they would see a more normal kind of economy, get out of this new normal where we do not grow it all. that is whatless we are stuck with for the next five or 10 years. thank you both for joining us. luke johnson is staying with us, michael mckee will be joining me and tom later on. w, wherestrators pro v does the scandal leave the auto industry? ♪

francine: welcome back. german prosecutors are investigating whether volkswagen was too slow to tell investors about the potential cost of the diesel emissions scandal. where does the episode leave contact -- confidence in the german car industry? mathiasspeak to wissman. it does seem that vehicle sales are on the decline overall. ?an you link it directly

mathias: the sale numbers in europe are good. the sales numbers have not dropped but it is no doubt the manipulation of software and trust intest has cost the company and in the industry. isis good that everyone trying now to draw the necessary consequences, more transparency, or control, better compliance. that is absolutely necessary. what is the future of the car what is -- francine: the future of the car industry and where does it leave the german manufacturers? matthias: more than 50% of the r&d investment of the german automotive industry is going to

powertrain electric vehicles, hybrids, and all that makes us less dependent on fossil fuels. it might be interesting for you to hear that we now how -- we now have in the german automotive industry 30 cars which are electric or partly electric. that will continue to be the big , tolenge of the industry more and more get away from the aassic engine and get into zero emissions concept for the next decade. but we need a bridge and the bridges are the best diesel cars with the lowest possible emissions and lowest fuel consumption's, and the gasoline engine. that will bridge our way to the

time the electric car is even more perfect than today. francine: talk to me a little bit about how the euro has affected the german car industry. have you gained market share in the u.s. and have german automakers been more popular thanks to foreign exchange market? matthias: in the united states market, the diesel has a market share of some 3%. the image of the diesel there, which is not very good, is suffering. in the european market we have a diesel share of some 50% and there, the sales show that diesel has not lost consumer confidence, still very strong because people know it is a very efficient car. as i said, the diesel is bridge technology to that time where we have an even more effective electric vehicle.

and in the premium car sector where we are extremely strong as the german automotive industry, we at the moment represent some 80% of the world market, and that has not suffered at all. that is a good message for bw -- otheraimler, audi, and premium carmakers under the german umbrella. francine: thank you very much, dais whisman. -- mathias wissman. luke johnson, thank you so much for sticking around. two days until the referendum. what does it tell you about the fabric of the u.k. society? luke: i think there is a divide and this is a really interesting election because you can split the country three ways, between london and the rest, between older and younger, and between

socio-demographic classes. i think that is the way people are voting generally speaking so if you are a younger london resident and better off, you are more likely to vote remain. if you are less well off and you live outside london and are older, you are more likely to vote leave. that is an interesting sort of generational split. francine: are you surprised that the vote is so close? luke: i am not, because i think the eu has a serious democratic deficit and i think in a sense we have been waiting for years for this vote because i think we joined up for a trade association, and it has become a political project. francine: how much does it have to do with the campaign, that you think leave was stronger in campaigning? luke: i think remain has done a bad job in promoting.

those of us like myself who want to leave say on reform of all, and we would be better off reform -- -- on unreformable. those voting remain are not very passionate and it is a much higher propensity to vote for those who want to leave. francine: unless there is a clear majority to remain, which at this point seems unlikely, can david cameron survive this? luke: i think there will be serious questions asked about the credibility of david cameron and chores are born. -- george osborne. the scaremongering tactics during the campaign, i think there is a huge loss of faith in them, particularly in the conservative party. and so i think there is a big challenge for the leadership. i think change is likely. francine: are you concerned

about the possible political turmoil is a brexit goes through, what happens to the political system, the perception of britain? luke: these are short-term things. britain is a strong and resilient country that has been around for hundreds of years and we will deal with any possible .hort-term turmoil i think there are potentially good leaders out there, perhaps boris johnson who could assume leadership and become prime minister. i think that would not be such a bad choice. francine: why? broadi think he has got crosscutting appeal. twice, which the latest candidate for the conservatives did not have a help. he proves he reaches out in a way that cameron doesn't. francine: how much do you believe the polls and how many people do you think are undecided? luke: it is so difficult to

tell. i think after the last general election all of us have lost faith in the polls. i think there are does cofactors. in the privacy -- i think there are two factors. in the privacy of a voting booth people might he had differently than they would in a public arena. there is the tendency in referenda for people to play it safe and vote for what c as the -- what they see as the status quo, which is the eu. -- and factoring those in the so difficult. understandome do not what kind of vision the pro brexiteers have for the country. the fact that there is a perception the u.k. still thinks they have an empire. luke: we do not have an empire.

tom: what kind of country would you want the u.k. to be? luke: i think we want to be an independent nationstate which successful, free market, the fifth largest economy in the world, confident and globally facing. just because we are not part of this little european group which is now only to one of percent of hugeorld's economy, structural and choose -- structural issues, does not mean we do not have a dynamic and vibrant future. francine: they can counter the u.s.? luke: nato is why there has been peas since -- peace since the world war, not the eu. its history of intervention and things like yugoslavia have been a disaster. next, what will the

brexit mean for the rest of europe? we are live in brussels with our special correspondent. ♪

francine: welcome back. show thet polls confusion and uncertainty around a potential brexit. the results differ on the outcome, on which outcome is in the lead. a u.k. exit would be unchartered

territory for the european union and ryan chilcote as live in brussels. but aren't officials doing to prepare for a potential brexit? ryan: we know that they are doing quite a lot but we also hear they are not putting too much of it to paper for fear that could get leaked and spoke people. what we know for sure is a little bit of the timeline. the president of the european union, commission, parliament, ,nd the dutch prime minister they are all going to gather on friday morning in brussels to discuss the results of the referendum. needed, they it is could decide there should be a meeting of the euro area finance ministers as early as friday evening. .hat is moving very quickly at the very same time we have eu foreign ministers meeting in luxembourg. that was already scheduled to discuss the eu heads of state

meeting that is supposed to take place on tuesday and wednesday of next, that they could decide that it is important to have an emergency heads of state needing that we are hearing, perhaps will take place on saturday in addition to the already scheduled meeting on tuesday and wednesday. , send at to show message that the european union is united even if we get a brexit. they want to do that before spanish voters go to the polls on sunday, lest anyone there thanks the union is not as strong as it was before the brexit took place. francine: thank you so much, ryan chilcote in brussels. here are some of the highlights for your day ahead. 2:00 p.m. u.k. time mario draghi speaks at a hearing. an hour later janet yellen starts her monetary policy testimony with congress and it

will continue tomorrow with the house. if you are a bloomberg user, bbc 8:00 p.m. u.k. time the posts it's great debate eu referendum show. irveillance is up next and will be joined by the one and only tom keene who is taking london by storm and shopping until he is dropping. a conversation with paul to grow degrauwe. remains tooferendum close to call only two days before the vote with separate polls showing leads on both sides. now also warning of a slump in the pound should voters back the brexit. euro 600 gaining some

2.4%. 104.47 and you can see the volatility index down. "surveillance" is up next. ♪ okay, ready?

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x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. francine: a divided united kingdom, just two days to vote and the polls are split. the pound falls. a verdict on germany's , janetutional court yellen heads to capitol hill. china confident is bullish despite rising bad debt and the worst growth and a quarter of a century. this is bloomberg surveillance. i am francine lacqua in london