anna: eu referendum day finally arrives. bitter campaign as u.k. voters go to the polls today. the pound and stocks gained. the ecb resource access to the nation's banks for refinancing. and shanghai, how china is stepping up stimulus in order to hit growth targets. ♪ a very warm welcome to countdown. i am edwards here in london. manus: and i am manus cranny in dubai.

anna, chart me up. where are you going? you a chart to show we have used obviously many times before. but offer a few words of caution about this, it is the eu referendum day here in the u.k.. i know you'll be back in the country later on today. we talked many times, checking the odds of the brexit, the average profitability -- probability. a lot of people asking about the market fixation, whether it is justify. we heard over recent days over how the number of bets in the past have been going on the leave aside, the amount and size have been for the remain side. these have been skewed by the sizes of the bets on the remaining side, maybe those with more money putting money on that site. a real voting situation, you do not put any money down. you display mark in a box. this will be a time when political betting is shown as something valuable to the conversation, or whether it will

be found to be wanting. we will talk about the many ways you can try to get ahead of what is happening. we have meatt singh joining us, number probability index and all of us. let us start with the risk radar. manus: in this last hour, when we can really discuss the last merits, dollars-sterling up 6/10 of 1%. you are seeing levels that you have not seen since the 30th of december, 2015. you are seeing sterling really take on a relief rally. the question is, can that sustain? it is the strongest rally in sterling since the great financial crisis of 2008. the have a little bit of gold in there for you, down a quarter of 1%. 2.5% in the last three days. what do you do in the event of a brexit? $1400 on the card. $50.il is sub-%

production is down from the lowest in 2014, that is giving and support to the dollar index. is janet yellen returning to any rate hike in the u.s.? that is the state of play on the risk radar this morning. let us get to stephen engle, he has our first word news. good morning. stephen: good morning. paul's will open at 7 a.m. -- polls will open at 7 a.m. three out of the four latest surveys show a contest that is too close to call, with two percentage points or less separating. whichr lead for remain, is favored by the bookmakers. the pound has reached the highest level this year against the dollar. the ecb has reinstated it's a waiver on greek banks, using the junk rate as collateral, as

the european central bank says it would examine purchases under qe at a later stage. federal reserve chairman janet yellen says it's low productivity growth is a serious concern. and she is not alone in that. she is increasingly in knowledge gains may be the new normal. speaking to the house services committee in washington, she said she was not sending a pessimistic message. janet: we have slow growth and the rest of the world, that is the strong dollar that is negatively impacting on trade exposed sectors. on the other hand, we do have strength in consumer spending. particularly strong. and balancing everything out, we have an economy that is, for the last four quarters, growing about 2%. growth was quite slow in the first quarter at the end of last year. looks to be picking up. things we are watching,

that i don't want to send a message of pessimism about the economy, and where we are going. stephen: china is said to be stimulus ando me let' efforts to hit growth targets, as investments live. fiscal investment will exceed 10% of gdp in 2016, more than triple the stated ratio of 3%. this is according to economists at j.p. morgan. they say that will strengthen the hand of the state, even as policymakers claim they want a bigger role for the market. house democrats are staging a sit in on capitol hill, vowing to continue with republicans agreed to vote on two gun related measures. it brought house proceedings to a halt, and republicans on a defensive on an issue that has extra significance following the orlando massacre and in an election year. day,l news 24 hours a powered by more than 2600

journalists and analysts and more than 120 countries. you can find more stories on the bloomberg at top . anna, manus? manus: stephen engle there. let us get up to speed with the market. david ingles has the latest action from asia. course.eah, big day of we are just at the time of day when chinese market three open for the afternoon session. it is very hard to make i guess a call the direction of the markets today, very hard to make one definite direction. it is very much -- looking at the regional benchmark, just a judging by that where we were at the start of the trading day and where he are at the moment, definitely a bit more risk. closing session highs on the nikkei 225. part of that is the other market story, about all the money sitting on the side. volumes are super thin across asia. we are talking maybe 25-30 even

35% lighter depending on which market you look at here, compared to what we're seeing this time of day. which to begin with, i should note have already been thin as well, so indication that there is some caution for investors' money. now have a look at where we are first. we are basically saying -- this point is clear. yields across asia on the way up. bonds have been under pressure from the get-go. looking at the currency markets, a very simple story there. range balance commencing the yen weaker, but up against the u.s. dollar. if you look at this as the gate of risk aversion, basically telling you again that story that there is a little bit more appetite for risk at the moment. dollar-yen is trading at a very tight range, 104.64. let me just wrap things up with a aussie dollar. some of the currency guys we talked to here in asia basically mentioned that if you look at

the stock market, it might be a little bit misleading. it is one of those days you look at the stock market and how much downside protection is being bought up, just to give you a real sense of the risk appetite out there in the markets for thursday. guys? anna: david, thank you very much. david ingles in hong kong. the eu referendum clearly all over the markets today. hour to go before polling stations opened up for this historic eu referendum. three of four new surveys say it is too close to call. with two percentage points or less separating the two camps. although a fourth paul, this is the one capturing the imagination, clearly for remainder it also favored by britain's bookmaker. the leave campaign shows signs of momentum, extending gates to reach this higher dollar. in yesterday's session, both sides made their final pages to voters. >> the idea that you take back

control by leaving is an illusion. they would still be meeting. the european union would not exist. they will be making decisions about our lives and our continent. they would be setting the rules and deciding strategies, making decisions about our future but without us in the room. democracy, you help the economy. the point that i want to make, is that unless you have a strong democracy, unless you can take out the competition to the people who make the decision, there is no way the public can predict mistake they will make. anna: joining us this morning for final analysis before the j.p. morganartside, asset management. and alongside him, matt singh, founder of the number cruncher politics. great to have you on the program. matt, let us start with you.

we have been transfixed by betting odds, polls, the number cruncher probability that you produced. you have been pretty consistent, the betting odds suggesting that remain is going to win here. why the big discrepancy between what you say and what the polls say? probability and are two different things. they are measuring any given point in time. and the predictions and the probability are forecast of what will happen in the future. and if there is one thing to remember in the referendum, for example, the status quo does do better towards the end. that is exactly what we have seen over the last 10 days or so, remain having previously dropped back ted, it has come back. anna: we did not see very much of that risk aversion move towards remain in the last few days or so. that is notalysis

always public, but that which has, has shown from around the point there has been a bit of a move. i mean, i did not hear the exact remark. but certainly there has been a move in the opposite direction to what you would expect. which is why, even though the betting markets and forecasters have been expecting remain all along, certainly a became less clear at one point a couple weeks ago. manus: it is manus in dubai. good morning. the one thing i am fascinated to know about the turnout, what you think we might get, the youth turnout, is that perhaps when to push the pendulum? have you worked out why there is such a discrepancy between when i answer the phone and when i answer online? is it about human interaction? what is it? matt: it is mostly because it is a different person. the interesting thing -- the problem that polls have, the

general action that they had with pollsters, they were not speaking to representative samples. on one occasion the samples were not representative, the samples on online and phones were expected different ways. and it has different results. this poll the market is seem to get rather excited about was a telephone poll. the other was online. and the difference between the two has been a feature of his referendum. anna: nick, what are you looking to as gospel as we approach this day of volatility in the asset market. nick: we follow a lot of what matt does in a bloomberg. you look in that, you have three quarters of remain, and a quarter or so for leave. that seems pretty reasonable. when you also look at the polls,

and let us be honest, financial markets will price that. sterling has been a lightning rod. it is moved from 140, and we're closing 150 at the moment. manus: matt and nick, i want to bring you into this. the swiss actually imposed a fine. if you did not turn out the gosh, did fine, my the turnout run higher. we need a in the u.k. government? anna: matt? matt: it is an interesting discussion about compulsory voting. i mean i have in some countries. the thingustralian, about turnout, it has been dropping in a number of democracies around the world. in the u.k. the low point was 2001, where you had the second tony blair landslide. since then, it has been going up

ever since. the reasons for the turnout accommodated. but that is obviously a subjective thing, where you fix it with regulation or not. anna: we are not expecting 84% like scotland? matt: i would be surprised if it were that high. the general election may be that high. anna: looking at the world of gilt and fixed income, how are you fixed, advising clients, talking about? nick: we have sold down risk of it.we have sold down credit. things like gilt and u.s. treasury's, we have been very underweight with sterling as well. but when you look at the risk, they are actually pretty asymmetric now. so the big risk actually is that you get leave.and you look at matt's numbers it is a low probability, but that happens

all bets are off. that is terrible for the referendum. i had aick, conversation with the global head of standard chartered in the last hour. he said the markets are not at all priced for any kind of a brexit. 12%t, you can clarify, 10- undecided, that is a heck of a number. matt: depends on the polls you look at, but around there. you have people that are telling pollsters they will vote one way or the other, but they might well be swayed. and some of them are still fairly undecided and up for grabs. anna: gilt is still a haven? you suggested that is in the basket with treasuries, but one person's have is another -- nick: leave may be well probability, but it is high-impact. ltt g

yield. anna: matt and nick, thank you very much. there are the things me to talk about this morning. what is coming up, manus? do not tell me. manus: at 7 a.m., strange enough the polls will open. it is the historic referendum. the first results are due at midnight. at 9 a.m. we get the june manufacturing composite pmi data. that is for the euro area. and that 2:45 this afternoon we go stateside. followedfacturing pmi, 15 minutes later by the new home sales. that is what this market is focused on. anna> ? anna: up next, the ecb in states a waiver on greek debt. what that means for the embattled banks, and what they can do for the junk at the ecb. we will talk about that, next.

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: welcome back. 6:19 in london. 1:19 if watching in hong kong. this is a shock this morning, of 1%.ng up by 4/10 let us to the bloomberg business flash. here is stephen engle. stephen: well, thanks. goldman sachs told 98 employees that their jobs are being eliminated. it brings the number of dismissals to state officials this year to over 350. been reducing staff as it seeks to whether a slump in trading and deal making. the federal reserve releases the stress test tonight, passing or failing determines whether lenders can boost shareholder payout, which are approved in the second phase next month. but fed chair janet yellen said he does not expect to have to

force banks to boost capital. biggestfrica's renewable energy developers has raised $118 million to expand its footprint in the fast-growing market for solar and wind. dublin-based mainstream renewable power is planning a venture that will solve more in southgigawatts africa, egypt, senegal, and ghana by 2018. >> we are actually coming in at half the price of new coal in south africa. if you compare to goal, if you want to build wind or solar, it is actually good to build wind or solar. and it makes the best batteries, the reason it is half the price of new coal. stephen: the world's biggest utility is said to be shopping in south america, according to people familiar with the matter, in talks to buy a stake in brazil. the chinese power distributor is looking to buy some or all the shares owned by engineering conglomerates. 23.6%, valued at about

$1.5 billion, not including premiums. and that is your bloomberg business flash. anna, manus? with: stephen engle there the latest headline for you. let us talk about greece now. the ecb has reinstated the waiver on greek banks, using the junk rated debt as collateral. that eases the credit conditions for the nation's lenders. the ecb and central-bank also said to examine purchases off greek bonds under the qb program at a later stage. later this morning, we will check the health of the euro area economy. we have june manufacturing and the composite pmi data. that all comes across the bloomberg terminal at 9 a.m. nick gartside is london side, morgan. j.p. this is a great story.

finally, greek government bonds can be used again, giving liquidity lifelines to the greek system. where are we in the peripheral bond debate and the qe, and the ongoing qe to depress further? nick: certainly in the greek concept, that is fantastic news for greek debt. the sense it is now off naughty list and back in the club. and it is critical in terms of credit growth, really helping to get it much stronger in greece again. it is also much better for the broader peripheral context. and when you look at spain, italy, there is no reason that their spread cannot contract by a third or so as you look at particularly with the ecb qe program. anna: you talk about qe programs, but this is not greek debt being bought by qe, but this could be a step along that road. is that where this goes next? nick: this is the first number

of sequences. on one level this is a very critical step though, because if you think of the keys to unlocking economic growth it all goes back to the banking system. theyis really helps banks, can help them extend credit to lend. so very, very important first step for that. and qe could come later. manus: nick, i want to show you a chart. one i prepared for you. you are a bondman. tell me are you worried over the next 48 hours, the next five days, yes, not to a brexit but to a grexit. we have german bond liquidity dropping away. are your brokers, the people you do business with, telling you that? nick: when you look certainly a government bonds and gilt and is fine.s, liquidity what has increased a lot though

is the volatility. but in terms of buying and selling these, it is a very liquid market for doing that. it is just that it is more volatile. anna: when you look across the european growth picture at the moment, it is interesting the european growth picture has been brought into the conversation very much about the eu referendum, where do you see the areas -- is italy the key concern for you? if portugal, spain? having slightly better times? nick: there is a race this year between europe and the u.s. for the first time in many years, it could be that europe outgrows the u.s. how remarkable is that? it will come down to a couple of tenths of 1%. you have great countries that are driving that, certainly spain. and when you look at what is going on in spain, very impressive economic recovery. italy is a little lower. but it is moving, moving out of recession from low growth, and

you have some growth there now. so the underlying dynamic for those favorable growth. manus: nick, i have a little bit of a chart. these are central banks have made and missed targets, inflation target feared a huge number are missing by nearly 7/10 of 1%. thinking about policy response here, rbn and ultimately lower for much, much longer in terms of rates in europe, and in the u.s., setting brexit aside. if we wake up and decide to stay, how busy for banks get up there in terms of the inflation target? nick: and just got a lot more difficult for central banks, because we have interest rates at almost record lows. so the reality is that they have to keep rates lower for much, much longer. and you have to have negative, real interest rates, interest rates underneath inflation for prolonged periods of time. anna: nick gartside, asset

management and jpmorgan, stays with us. he says he hopes u.k. remains in the eu. dublin is interesting alternative to london. up next, we will be live in brussels. ♪

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manus: it is 1:30 p.m. in the afternoon hong kong. 9:30 in dubai. here is stephen engle, good morning. stephen: good morning, manus. are set to open 7:00 a.m. u.k. time for the historic referendum on european union membership. three out of four latest surveys show a contest that is too close to call, with two percentage points or less separating the camps. showing a clearly the four remain, which is also favored by bookmakers. the pound has extended gains to reach the highest level this year, against the dollar. the ecb has reinstated the

waiver on greek banks using the country's junk rated debt for collateral. that eases credit conditions for the lenders. the ecb also said it would examine purchases of greek bonds under qe at a later stage. federal reserve chairman janet yellen sets low productivity growth is a serious concern. and she is not alone in that sentiment. the fed is increasingly acknowledging that weak gains may be the new normal. speaking in washington, she says she was not sending a pessimistic message. some drag from slow growth and the rest of the world, that a strong dollar is negatively impacting on trade exposed sectors. but on the other hand we do have consumer stranding that is particulaly strong. for the last four quarters, the economy has grown about 2%. growth was quite slow in the

first quarter, at the end of last year, looks to be picking up. so what we are watching, i don't want to send a message of pessimism about the economy and where we are going. stephen: china is said to be stepping up stimulus in efforts to hit growth targets this year, as business investment slides, the fiscal deficit will exceed than triple the stated ratio of 3%. this is according to economist at ubs and jpmorgan. that will strengthen the hand of the state, even as policymakers want a bigger role for the market. house democrats are staging a vowingon capitol hill, to continue until republicans agreed to vote on two gun related measures. it brought house proceedings to, a halt and put them on the defensive on issues that have extra significances following an orlando massacre and in

election year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . anna: thanks very much. stephen engle with the news. the pound has jumped and asian markets are mixed as you can voters head to the polls. att miller joins us with market update. mat: i have so much to show you. asian markets are mixed, but what i am focusing in on it is the nikkei. it had an incredible run. this is going on today. you see that of the group, the industry groups that we break it down into, consumer discretionary the biggest winners, industrials, and financials following closely behind her and i'm sure you know this function well if you have a bloomberg at hand. it is very interesting because you can click into the individual pie these is, looking at industrials.

the nikkei, taking a look at the last five trading days, you see the gravel run as we get closer and closer to this decision. and investors are more and more optimistic about the outcome. they continue to buy riskier assets. i also want to take a look at the pound. i have this chart that i use yesterday for battle of the charts, and i won with this. that is how you can find this on your bloomberg. what this shows you is the bloomberg pound index. we have created an index that compares the pound to seven of the most relevant currencies, trade weighted, liquidity weighted, just like a bloomberg dollar weighted index. i normalize it against the dollar to february 20, that is when the announcement was made for the day of the referendum. you see the pound in white as outperform the dollar by almost 6%. the pound actually up since the february 20 announcement, whereas the dollar is down 5%.

i thought that was very interesting to compare those indices. screen thata great you can use if you are tracking inflation. this is the inflation monitor. and what it shows you is across regions, what the headline inflation rate is. , it can also compare that to the policy rate and then take a look at the real rate. this is interesting because if you take a look at the u.s., because of our inflation rate and policy, which is a nominal .5%, the real rate becomes -.5%. as opposed to the japanese which is a positive 4/10 of a percent. the picture may look a bit different than you expect. there is a graph that you can click on, the different regions to get an interesting look. comparing eurozone to japanese inflation. i finally want to show you one more screen on the bloomberg, guys. showing you trade flows in and out of countries or regions. you can put the yellow drop-down box. i chose the u.k.

you can see the most important trading partners across the map. china is the third biggest for the u.k. germany and the u.s. is important, but china very important as well. it is cool. anna: very cool. based on the results of the day, we will see today and tomorrow how that map changes. matt, thank you very much. 43 year membership in the eu is finally here, whichever side wins, we will continue talk about the pound no doubt. manus has the chart of the hour. we cannot talk too much about the pound today. manus: you can never have too much pound. i will see matt miller and raise chart.terms of my pound you get to decide if you're more interested in long-term inflation will the ramifications. 30%most accurate forecast, drop on there. some of this in context for you. back when the financial crisis hit, as low as 1985, we are

rocketing out on the pound. we are up 4%. we had the strongest resurgence in the pound since the financial crisis of 2008. the scottish referendum as you can see is barely a blip, barely nudging the dial in terms of stock volatility, relative to now. relative to scotland, the scottish referendum volatility is hardly peeking. we have seen a high from 2015, up 4%. the odd checker is up. and the risk reward ipo to the market is this, the underside of the 10-12% priced into this market? could this be a dramatic drop, like 1980-85? where were you, matt miller? your dollar rocked, and our pound drop by 55 presented that is double nickels, in american speak. anna: i do not know if i will

wade into that battle. in 1980, i was shoveling my pocket money around. i don't have much of an i on final markets. thank you very much, manus, for the chart of the hour. let us talk more about this referendum in the u.k. the countdown is on of course. polls opening up in 23 minutes time. campaigners on both sides have been making last appeals, hoping to sway decisions. cameron: the real agenda is not about the economy. the real agenda is clinical. we are members of a political union. european law is supreme. the european court of justice overrules our apartment and our courts -- our parliament and our court. but we don't even have a british passport anymore. [applause] i have a european union one. anna: a mixed response from

businesses. hearen's boss told bloomberg believes we are stronger in europe. >> participating in the exit strategy, that has been disappointing. there are politicians on both parties that should be putting the country first. analysis for qualified to we should stay in. and i think it will be a disaster for the country. >> how does it affect you? ron: i think that the -- the overall perspective, we need stability. we are an international company. we have production all over the world. we need consistency of currency, minimal inflation, we absolutely

need a good workforce that is motivated. everybody needs to know that we are in a world of turmoil at the moment. the middle east is in turmoil. conflict in russia. sometimes uncertainty, but the market in china, we need to be together. the: welcome yesterday brexit would cut through the red tape imposed by brussels. so what does europe think about today? ryan chilcote has been in brussels this week. good morning. what are the eu leaders saying? a vote to leave, well out means out, one of the catch phrases i have heard over the last 24 hours. ryan: yeah, i mean we heard john claude say do not do it. that message continues. in addition to the new message, from both the president and new it iss, if you do do it

irreversible. out is out was the phrase the president of the european commission use yesterday. in addition we heard from the french president who said much of the same thing. have a listen. persistent of france -- the position of france day after the vote, it would be to draw all of the conclusions, and therefore to consider this vote as the departure of the united kingdom from the european union. and it would be a reversible. there he latest from brussels with ryan chilcote, our man on the ground. let us bring in nick gartside back to the conversation. he is steve investment officer for fixed income at j.p. morgan asset management. we are trying to take the temperature, the propensity to act to the unknown, which would be brexit. from your world, if the central bank reaction function, in terms of response, swap lines are

open. they are ready to be used. but the banks are not picking up liquidity. complacency,ing our markets complacent? which central banks would have the most impact in the event of a brexit? nick: i think initially it would honestly be the bank of england. it is not unrealistic to expect that they cut rates, they cut qe, to buy more gil and corporate bonds. to be a very well powerful reaction there. you look at the whole brexit, i mean the risk is leave. it is not priced. it is about a quarter priced.the lightning rod for that will be two things initially. sterling and git. lt. anna: let us talk about the volatility we could see the next 24 hours, a chart that goes back to scotland, independence from the hurricane debby 2014. -- led to the

volatility. e amount, people talking about this kind of being small compared to what we could see later if we got something on expected. nick: volatility would spike. but remember volatility always spikes, and that he goes down because assets themselves reprice.if you look at things like sterling , i mean if it is 148 now on 2, the, maybe it is 15 downside is somewhere in the one 30's. that gives you an idea of repricing. manus: nick, one of the things that anna and i focus on, this shift to cash. a billion dollars was taken out of u.k. equities over the past number of weeks. we are seeing cash levels back at levels we haven't seen since 2011. my question to you is this. risk, even state of

after tomorrow, if we vote to stay many are saying to me, look if this is a very close on the edge decision, we still have a lot of risk. where does the money on the sidelines flow? we still see cash flow? nick: what we're seeing now is actually a great rotation, a great rotation into things like fixed income. and the reason for that is that when you take that step back, you look at growth dynamics and inflation dynamics, they are largely absent in the world. so that is a pretty good environment, fixed income and growth income are the enemy. and they are largely absent at the moment. anna: we are not seeing the growth of inflation which would be damaging to fixed income. what about the other sort of structural threats? people talking about whether this eu referendum will pave the way for others if we do see this go the way of a brexit, what

domino effects do you think the markets will prepare for next? nick: markets look at this on a case-by-case basis. in that category of political risks, as a market, we just have for political rest. we are talking up a political election. there is a spanish election as we can. it is all in that camp. the market takes that in stride. fixednick gartside, income at j.p. morgan asset management. he stays with us. what is coming up? manus: well, up next, we are going to have to the spanish voters, going to the polls for the second election in just over six month. we are live to madrid. ♪

manus: it is 6:30 in london. 1:48 a.m. in the city that

simply never sleeps. seeing an angle in hong kong. stephen, the data you. stephen: good day to you, as well. : 98 employees in new york their jobs are being eliminated. it brings a number of dismissals this year to over 350. goldman has been reducing staff as it seeks to whether a slump in trading and deal making. the federal reserve releases the results of its annual u.s. bank stress test tonight. passing or failing will determine whether lenders can boost shareholder payouts, which are approved in the second phase next week. but the fed chair janet yellen said she does not expect to have to force banks to boost capital. one of africa's biggest renewable energy developers has raised $118 million to expand a footprint in the fast-growing market for solar and wind. dublin-based mainstream

renewables is planning a venture that will install more than 1.3 gigawatts in south africa, egypt, senegal, and donna by 2018. the project makes good business sense. >> we are actually coming in at half the price of new coal in south africa. for the future, if you want to or wind foul or solar, it is half the price of new coal. stephen: and that is your bloomberg business flash. anna, manus? anna: stephen engle in hong kong. spanish voters are gearing up to once again go to the polls on sunday. this is the second election in just over six months. while, the outline of the next government is slowly starting to take shape the question remains over who is would be running it. sticking together a coalition, said to be fraught with

difficulty. let us cross over to our european header, live for us in madrid. yet been following recent elements. the market has really been focused on the eu referendum story. so remind us here, what is the state of play, three days out from the other big electoral event that is taking place this weekend? whoell, the prime minister, was been in power since 2011, is still the front runner going into sunday's vote. he is nowhere near a majority. and he will have to try and find allies in some of the centrist party who wants to stay in power. the problem for him is that he faces an avalanche of corruption against both himself and his party. and neither of the main parties wants to do business with him personally. the campaign took an additional twist in the last day or so, h with a big story breakingere about the interior minister, trying to encourage government officials to dig up dirt on his

political opponents. and so that is kind of underlining this narrative, that the pb have skeletons in their closets. manus: ben, tell me this. the dirty tricks scandal, how will it affect the vote? ben: well, it is difficult to say at this stage. the newspaper -- we were discussing at the office yesterday morning after he broke, trying to assess how important. 24 hours time, c the papers are still running with it. a governmentcb, that is very friendly to the government. around of interviews last night trying to damp down the scandal. the headline says i am absolutely calm. the photo they chose to illustrate shows he is anything but calm. some of the more important papers are a comfortable with the development.

and we'll see to what extent the voters are going to be put off by that. there are 7 million that decided to support in the last election in december, despite the allegations against him. and we will see how many of them are going to stick this time. anna: ben, thanks for the iraq. update. nick gartside is still with us. we should not lose sight of other clinical risks. there are many. they abound. nick: certainly when you look at spain, very important though. but away from the politics, a real success in europe. they are the envy in terms of economic growth. they have managed to cope and refine and redo the banking system. it is in great shape. anna: some people have raised questions about the value of stable politics when you can

deliver that recovery. manus: nick, i have my terminal. thinking about this, i'm looking specifically at the european sovereign bonds. they returned over the past three months. lagging to gilt, but you see the return on u.k. gilt, 2.3%. where in your world view to the bottom market? because essentially we have a u.s. bond market auction, a five-year auction, 2009, the lowest since 2009. politics at play in spain. fed in play or out of play. brexit. how do you look at where to put your bond money to work? nick: the first theme is stay with central banks. the way you have central banks doing qe, get behind them. that was you in spain, italy. there is no reason a spread forecast, third a relative to germany. the other area is the u.s.

and that is the valuation argument. when you look at the u.s., it is always surprising americans that u.s. treasury's are high-yield assets, relative to other government bonds in the world. anna: high yields assets. i am told that the work function, looks like we don't get a 50% probability of a hike this year anymore. daysast in the wake of two testimony on janet yellen, caution and uncertain view in the u.s. nick: that seems reasonable. a rate hike this year looks ambitious. so the markets really price for a full rate hike next year. and again, listen to janet yellen. when you look at the trajectory pedestrianit is progesteron particularly, wage inflation. anna: there we have a battle in the markets won in terms of -- nick: we're only halfway through

the year. but certainly if you look at the aart of the year, it is four-year rate hike. they have come down a long way and got much closer to the market. ck, i thought it was interesting that janet yellen focused on the dollar, and the rhetoric she used in the sound we played, the u.s. really has the slower dollar. they are shifting here in the dollar? nick: very much so. if you think a u.s. context, the dollar is absolutely critical. because the dollar is the transmission mechanism which makes financial conditions a lot tighter, or a lot looser. so from the fed's perspective, absolutely. you want a stable dollar going forward. that is over the last few months. anna: thank you very much for joining us a little last 45 minutes. nick gartside, cio at fixed income at j.p. morgan asset management. a busy 24 hours here in the city

of london and around europe. we are just minutes away from polling stations opening up across the u.k. four until that happens. this is north london, where the polling station just opened up. we will be back, the next hour. ♪

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manus: referendum day. uk's vote on membership of the european union. great debt waiver. the ecb move restores access for the nation's banks to regular financing lines. shanghai stealth. how china is stepping up the stimulus, hitting the leadership's growth target this year. ♪ manus: you are welcome to "countdown." i am manus cranny.

anna: i am anna edwards here in london. 7:00 in the morning here. let's get to the futures and what we are expecting to see. this thursday morning, we've got this coming through. we are expecting to be positive at the start of trading, your stocks suggesting we will be .9% to the upside. could be stronger on the ftse 100. as high as 1%. the handover from asia was quite a positive one. let's start the risk radar and show you where various assets are trading. the pound touching a year to date high earlier on in trading. 147.97. seen the gold price dropping 2.5%. oil is further this morning. up by 10%.

wti. is where we are with we just got the dollar index. that is down .3%, the lowest in several weeks. caution and uncertainty around the u.s. manus. manus: and a, thank you. we are waiting -- anna, thank you. we are waiting for tesco numbers. we will bring those to you. we are going to get over to bloomberg first word. cook's thanks manus. voting -- >> tanks manus. voting has begun in europe. the first results are due to start coming through at midnight and will be -- and we will be following all of the action and special coverage tomorrow. janet yellen said slow productivity growth is a serious concern. she is not alone in that

sentiment. the fed is a knology that we can gains -- the fed is acknowledging that we can gains may be the new normal. not sending ae is pessimistic message. >> slow growth and the rest of the world. a strong dollar if it is negatively impacting trade exposed sectors. we do have strengths and consumer spending is particularly strong. balancing everything out. growing 2%.conomy growth was quite slow in the first quarter, at the end of last year. it looks to be picking up. we are watching things. i don't want to send a message of has him is him about the economy -- message of pessimism about the economy. >> china is sending messages of self.

the fiscal deficit will exceed 10% of gdp in 2016, more than triple the government's ratio. they say that will strengthen the hand of the state, even as policymakers claim a want a bigger role for the markets. house democrats are staging a sit in on capitol hill. it will continue until republicans agreed on to measures -- on two measures. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stores on the bloomberg at top . anna? manus? anna: let's check in on the market action. david ingles has the details here it -- details.

david: overall it is a positive session. it took a few hours to get to where we are. haveof the day when you japan, australia closing up there thursday session. you can see this closing up there thursday session. -- closing up the thursday session. mixed.ia, very much small majority. asia.iggest stocks in 55% on the way up. the rest were unchanged or on the way down. and production stocks on the way up. that is the stories -- that is the story on the equity markets. volume still very thin compared to recent averages. there is a lot of caution out there. not exactly risk aversion and have a look at what is happening

in the currency market. long story short, asian currencies, the yen is on the backs. everything else is strengthening. look at the emerging markets currencies, prohibiting together, some indicators currencies,e is -- when everything together, some indicators showing there is risk appetite. guys? manus: david, thank you very much. breaking news on tesco. waiting for this first quarter numbers. up. like for like sales, .3%. that is upbeat. the market was concerned in terms of the turnaround of the united kingdom. life for like sales in the u.k. coming up .3%. .3%.ow was

-- the top line, the red is u.k. is beating estimates. in asia, like for like sales rallied 3.3%. asia missed on estimates. europe missed on estimates. the u.k. which was the core area for discussion about what are they doing to put the u.k. strategy correct? that is a nice beat for them. the group like for like sale grew by nine -- grew by .9%. headlinesour tesco's -- those are your tesco's headlines coming in. ecb has reinstated its waiver on greek banks using the country's junk rated that's. debts. rated ecb said it would examine versus of greek bonds under the tv program. that will come -- under the qe program.

that will come at a later stage. purchasing managers and index at 90 like a.m. london time. peter elston is the cio of seleka investment management. -- seleka investment management. when we hear that greek banks are able to take their bonds and get cash from the ecb, this is a significant turning point in the greek story, isn't it? peter: absolutely. it is certainly on the face of it, it is a fairly imprudent thing to do, to allow greek debt to be used as collateral. it does have a positive affect on what greek banks are able to do. it has a positive effect on confidence more broadly. it helps generally to support the case, believing europe

continues to recover, albeit at a fairly low rate. that is the future of economies everywhere. anna: mentioning the recovery of the european economy and how equities have performed it i have a chart here. europe never recovered -- performed. i have a chart here. europe never recovered. stocks remained below precrisis peaks. you got euro stoxx 50 here in white. people talk about the way europe has played catch-up and that is become a popular trade. how does this play itself out? peter: it is going to continue to play out for an awful lot longer. as you say, europe has lagged an awful lot. the reason is what happened in 2012. the debt crisis in greece and

other problems. it was only in 2012 that you started to see unemployment start to fall. he started to see economies start to improve. in the u.s. and u.k., it happened, started to improve it the years earlier -- improve three years earlier. europe is it ways behind. unemployment in europe is still above 10%. that means a couple of things. it is going to continue -- it has a long way to fall. that has applications for the ecb -- for what the ecb is going to do. no reason for ecb to tighten policy, at least until unemployment gets down to close to where the u.s. and u.k. is. yes --s well for your, for europe, yes. saying -- gartside peter: that is not saying much at the moment. yellen was setting average

growth at 2% -- was siding average growth at 2%. growth has been very low. manus, you got breaking news. manus: this was on tesco. estimate the consensus . u.k. has done nicely. aey are proposing to sell part of their coffee business to cafe nero. a number of people were talking about. they have announced and it is off. it is a part of the reorganization of tesco. a little bit of breaking news. let's return to peter. you are touching on terms of the ecb and what they can do. tell me this, do you subscribe to the view that the world is looking at a secular stagnation period of time? we are -- growth from my

perspective looks rather tame. peter: yeah, this is such an interesting question. the whole idea of secular stagnation has been around for a long time. the better part of 100 years. it is not new but it is making a comeback, quoting the likes of larry summers. we are in a structurally low growth world. he goes into a lot of reasons why that is the case. is with respect to the effects of very, very loose monetary policy, the world economists are incredibly undecided on this question of do low interest rates encourage people to spend and invest? or do low interest rates do the opposite? nobody knows.

low, argue rates are believe you have to save more to generate the same amount of income. not only that, but low interest rates must tell people there is a problem in the world. anna: we must be learning a lot with this negative interest rate experiment. peter stays with us on the program. up next, what will the results of the fed and will stress test tell us about the health of the banking system in the u.s. and maybe globally. ♪

anna: welcome back. these pictures coming live from washington. democrats in washington continuing an unprecedented overnight sit in on the house floor late wednesday night into the early hours. morning, this being an election year, the subject of gun control creating drama in

washington. this sit in continues. democrats show live -- a little signs of -- the republicans try to bring in a vote on an unrelated measure trying to get on with other business. shoutingrats have been "no!" fascinating development in washington. let's get the bloomberg business flash with selina wang. >> thanks anna. goldman sachs has told 98 employments -- employees that their jobs are being eliminated. it brings the number of dismissals to over 350. goldman has been reducing staff -- a slump in trading and deal making. one of africa's biggest renewable energy makers -- to

expand its footprint in the market for solar and wind. than --install more clean energy in south africa, egypt and ghana by 2018. the project has made good business sense. >> we are coming in at half the price. if you want to build cold wind or solar, it is going to build wind or solar. selena: the rose biggest utility is said to be shopping in south america. world's biggest utility is said to be shopping in south america. they are looking to buy some or all of the shares owned by engineering conglomerate. it is 23.6% stake could be

valued at $1.5 billion, not including premiums. that is your bloomberg business flash. anna. manus. manus: thank you. , they arel reserve conducting a series of stress tests to the -- for the u.s. banking system. the tests and results are tonight to determine whether the lenders which are improved -- are approved for next week. janet yellen says she expects -- she doesn't expect banks to boost capital. -- he is still with anna and myself. let's talk about these stress tests. janet summed it up. building up capital, something she is not averse to.

michael: the last five to six years have been about the banks rolling up their capital ratio to a level that the regulator is comfortable with. and now, shareholders have said we have been patient, we want to see the capital return really ramp up for us. if these are not going to be the growth stocks that they once were, you need to start paying a dividend and having some share buybacks to give shareholders a reason to buy them. we have seen in the last few years, some banks have been fine on the numbers, but then on the qualitative side, they run into some issues. the hope for the banks is that they have improved their prophecies to the fed's expected level. anna: what does that mean if you run into qualitative issues? is that making sure the process is satisfied theas regulators requirements?

michael: that you have a handle on what your losses would be if there is the type of stress the fed is estimating. that you know where your trouble spots are, that you can quickly address what you need to address. it is a matter of laying out to the fed at these massive banks with worldwide exposures, that they know what they are doing. manus: i found it fascinating that some of the bloomberg intelligence data, bank legal costs -- u.s. banks fault for the first quarter from a five-year low. banks having -- u.s. banks estimate the death $12.8 billion in legal costs -- estimate that they have $12.8 billion in legal costs. -- these are the good reasons

why there stressed tests and white excess capital is -- and why excess crop little -- excess capital is article. michael: i think there is a longer tail that a lot of people expected on that front. a newis going to be normal in terms of legal costs for the bank. it is a hit for the banks. not only do you pay the costs, but that is factored in to the capital you have to hold because it is considered an operational risk. it doesn't end with paying the fine. that continues in your capital ratio. anna: michael, thank you very much for joining us. michael moore with the latest on the stress test. peter is still with us. when you look at the strength of the u.s. banking sector, is that something that weighs into your assessment to the u.s. growth

story at the moment. are we beyond that? is we what i would say are quite negative on banks. in the u k, we do not hold any banks. reason, wee sort of would be quite negative on u.s. banks as well. we have less control over them, because outside of u.k., we invest in your party managers. about -- it is about regulatory issues. peter: people think we have had low interest rates for long time. we've only had them for what? seven years or so? act in the 30's, had low interest rates pretty much for 25 years. the only really start to rise in the early 50's -- started to rise in the early 1950's. we could be going back to

manus's point. manus: that is not integrate for the banks. the estimates for a lot of bigger banks are all based on it higher rates -- based on higher rates. are we about to embark on a major period of bank consolidation you we have a bank ?ajor -- consolidation bank -- you're looking at a middle east bank that will chop anything you have in europe. -- are we about to embark on a major consolidation or break up? peter: i am not a banker. what i would say is topline , then thepretty poor

only way you can get growth is through m&a, acquisition or some sort of consolidation could looking simplistically, i would have to say that yes, your suggestion is a good one. anna: peter, thank you for joining us. sorry for the long pause there. manus,, nearly the end of the program. let's have a quick look on where we are. manus: absolutely, we got a number of different markets. the risk radar. a couple of moves for you in terms of our risk radar could we got a little bit of old -- a little bit of gold, oil. let's have a look at that. i will take you to some individual markets. we have got the ftse futures , 62.66.d up .1%

147.64 that we are trading on the dollar sterling. gold is also rising. that is in the middle of your $1267. up at nymex crude and production in the u.s., that has been falling for 15 weeks and in essence, that is what help -- what helped move those markets. dollar trade at 93.49. janet yellen spoke. the view is can the fed really get to rate hikes this year? anna, let me have it back to you. i will see you in the morning, bright and early. anna: look forward to seeing you here in london. the futures pointing higher a top of the european equity trading day. let's leave you with live pictures. democratic's stage an unprecedented said in.

-- sit in. this is all about curbs on gun regulation in the united states. .emocrats here staging these pictures coming in live from washington. ♪ 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. guy: welcome to "on the move." we are counting you down to the european open. i'm guy johnson alongside caroline hyde who has returned to berlin. here is what we are watching. referendum they did pulling sessions are open across the u.k. as britain votes on eu membership. the economists see the fiscal gap in china. how far will the government go to get its just to hit its growth target? eggs under pressure -- to hit