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 its growth target? banks under pressure as goldman

tanks another 98 employees good we are going to see -- employees. we are going to see -- the bloomberg taking us out. we are on the euro stoxx up by 1%. the ftse 100 up by 1.1%. the cac up just shy of 1%. in forive start priced european stocks. caroline: significant moves in the euro stoxx 50. check out on the fx market. currently similar moves we saw in asia. on was that risk flooding into the equity market in asia. the british pound up .4%, up against 31 of its trading partners today. the euro up .4% higher.

they are one of the most accurate forecasters of the british pound. -- $1.15. .15 brent crude up 3%. we got a great oil guest coming up. u.s. pulling back production and boosting overall crisis. let's get more on what is happening in the wood of business. first word news with selina wang. caroline could voting has begun in britain's the stork referendum. -- britain's historic referendum. we will be following all of the action with special coverage tomorrow. the ecb has reinstated its waiver on greek banks using the countries junk rated that for

collateral. -- european central bank junk rated debt for collateral. -- european central bank china is said to be stepping up stimulus by still in its efforts to hit growth targets this year. the fiscal deficit will receive 10% of gdp in 2016, more than triple the government's stated ratio of 3%. according to economists, they say that will strengthen the hand of the state even as policymakers say they want a bigger role for markets. house democrats are staging a sit in on capitol hill, vowing to continue until republicans to agree to vote on to -- on two the control measures. it put republicans on the defensive on an issue that has extra significance following the orlando massacre and an election year. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries around

the world. this is bloomberg. caroline. caroline: celina, thank you very much. janet yellen, is she happy with market expectations? it may be difficult to answer but when it comes to communication to market, markets -- markets, she has done little. a strong dollar, if it is negatively impacting trade exposed sectors, but on the other hand, we do have consumer spending. balancing everything out, we have an economy that for the .ast four quarters growing 2% 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 pessimism about the economy and where we are going.

guy: that was day to. -- that was day two. satisfying market expectations when it comes to rates. if you take a look at your bloomberg this morning. -- this morning, the yen has not changed a great deal. hike,ssibility of a rate less than 50%. at the beginning of 2017, less than a 50% chance. the market is expecting not anything for a very long time. what's -- let's welcome our guest, charles newsome. it is not much chance of anything happening anytime soon. it is interesting i did get the slight feeling and some of janet yellen's testimony -- it wasn't much there, but it was some thing that caught my eye when -- said the key test to keep

whether inflation continues to make progress. that seemed to me a slight softening of the language which i thought was interesting. caroline: we were hearing from guy that the probability of a rate hike being pushed out all the way past 2016, not even until 2017. do you agree guy: is janet yellen -- do you agree? is janet yellen happy? charles: i shouldn't think she is happy because i would think she would want the market looking for a rate hike. i am fairly convinced we need some -- we need to move rates up a little bit to make banks slightly more probable, particularly in europe because banks make our lives much easier it we need working banks to work properly -- easier. we need working banks to work

properly. this is the 10 year break yields. we got break yields at 1.48. is that miss priced? idea.s: i have no guy: where is inflation going? it is not near target. you would think the state of the u.s. economy, yellen is going to want to see the white of inflation's eyes. maybe even going further before she even considers a hike. she needs inflation. at the moment, it is not going anywhere. charles: inflation is falling which is kind of bad news. about wagehat pressure? charles: i am not an expert on this. i would've thought there is an element of wage growth coming

through but not a great deal. caroline: sinnott of the mystic about the u.s. economy or how are you -- so not all of that optimistic about the u.s. economy? in a global context, let's face it, the u.s. equity market probably looks the most attractive. global equities have been driven by u.s. equity performance and the ceos and u.s. businesses to look like the most attractive place to put money. they are the best place for capital. there is an element of trust. even with the rest of equity markets, europe has put a promise but not delivering. guy: equity versus bonds, do you pile into equities? the bond market is so stretched, but it is the widow maker if you are going to continue to look at a shortening treasury.

you have to bang your head against the wall on. think -- some corporate bonds which is like equity. you're going to get a better return. more to come -- plenty more to come from charles newsome. immigrants holding a sit in -- immigrants holding a sit in on the u.s. house floor. -- democrats holding a sit in on the u.s. house floor. we are going to get more next. ♪

guy: 41 minutes past the hour. let's go to bloomberg business flash with selina wang. >> thank you, guy could goldman sachs has told 98 employees in new york that their jobs are being eliminated. it brings the number of dismissals to over 350. goldman has been reducing staff as it seeks to whether slumps it volkswagenng has refused to sign off on the actions last year of two of the carmakers toward members. at the first shareholder meeting since the cheating scandal erupted, the german -- to ratify winterkorn of martin who was chief executive officer good current branch chief --

officer. current brand chief -- linked to the public notification of the scandal. one of africa's biggest renewable energy developers has raised money to raise its footprint. isis planning a venture that -- gigawatts of clean energy in south africa, senegal and gone up by 2018. the ceo told us that the project has made good business sense. >> we are coming in at half the price of new coal in south africa. al oru want to build co wind and solar. if -- is it is half the price of new coal. is your bloomberg

business flash. energizeddemocrats are holding a sit in on the u.s. house floor that has the potential to shift the dynamic and a volatile election-year. -- in a volatile election-year. what are the details, billy? give us a sense on what the sit-in is all about? a.m. u.s.about 11:30 eastern time, the democrats led by the lieutenants took to the floor in refused to give up. not were saying they were going to leave until they got votes on gun control legislation which they have been sinking in the wake of orlando and other shootings. that led to 16 hours so far of and a bige floor

quandary for house republicans who hold the majority. they don't want to give those votes of the have other business to proceed with. caroline: a long day for you, 16 hours. republicans try to get some sort of actual votes done in other areas regarding the zika virus. how strange has this become? how rare is this? billy: it is unprecedented. the current minority leader, nancy pelosi, turned on the lights -- turned off the lights on republicans in 2008 on a debate and gas -- on a debate on gas prices. after getting word that this vote on the zika bill, house republicans are going to pack their bags. they were supposed to leave town at the end of the week for the fourth of july week off, but they are going to quit after this vote. tonight, democrats

[indiscernible] billy.anks our congressional reporter joining us. newsome, reporter -- give us a sense of how european investors should be reading the line over there and whether it will have impact on portfolio distributors? gives a sense of how we should play this one. strauss call it depends of -- charles: it depends on donald sterling. , i canclinton at work see why some americans like her. i can see why some americans dislike her. for me she seems the sensible win.date to clearly the polls would suggest that.

.he did seem to have a lead trop, however, you can since having recently been to america does engender quite a lot of support. people like what they have to say because of some of his policies. you can feel they want to support him worryingly. guy: i want to come back to this conversation of bonds versus equities. a lot of people are frustrated with the traits they see in front of them. here is an interesting chart. -- with the trades they see in front of them. here is an interesting chart. , just shy ofead 4%. for people in search of yield, in a low yield environment, and if your income fund -- the no-brainer of equities is as

simple as that? or when you look at what is happening with the fixed income story and the appreciation you're getting by getting into it -- you're getting by getting into treasuries, how do i work this one through? bonds just look like a disaster zone. charles: one should think carefully about this, because i have seen a lot of investors and prominent market professionals make big errors in the hunt for yields. this in 2005 and 2007, people looking for more yields at lower rates and making silly errors about their investment. my firm belief is when you invest, you must invest with the utmost intelligence and looking for yields by try to be clever, buyng i am just going to u.s. government bonds, because i think i can make a capital appreciation, just strikes me as daft.

ok, have some insurance in the portfolio, but purely hunting for yield because that is where you are likely to get the best returns, strikes me as a dangerous. there been many instances overtime or people have looked for yield, pressed too hard. if you're not sure what to do, you must sit and wait and be patient. said thereoline: you seems to be value in the united states, value in the equities could gives a sense of where the gas equities to give us a sense -- wherethe equities does the dollar go? charles: i think the dollar will continue to strengthen. that comes from the point there has been such a strong trend of the dollar of late. i think the trend is likely to continue. it was interesting what mangino had to say earlier.

i think that is likely to continue. it also seems to me for u.k. and european investors, what's europe has clearly got some attractions, until we've got a banking system that is properly functioning in europe, allocating too much towards european equities, strikes me as a bit foolish. guy: charles newsome from investec with us through it the show. we are minutes away from the european open. some corporate movers in today's trading. tesco out with first quarter sales. just a reminder that vw goes ex dividend today. if you see a big move on a stock, that is the reason why. ♪

caroline: a beautiful morning here in berlin. , big screen to watch football between australia and iceland. the dax futures signaling a flat they. you were talking about ex dividend on volkswagen. shareholders not agreeing as these two. let's get into some of the u.k. stocks. guy: we are going to take a look at tesco. they are out with test numbers.

it is going to be interesting to see how the stock opens up. european stocks opening up a little bit higher this morning. let's bring in charles newsome. you are not a fan. charles: i am not a fan of food retail generally, principally because the returns on invested capital in these food retailers is not that good. the margins are poor. tesco has had the best and that is the reason white warren buffett -- reason white warren buffett but his. -- reason why warren buffett bought his. margins are poor and a lot of competition. there's a lot of morning that's a lot of money being poured into -- a lot of money being poured into, and driving down margins. i can see an argument saying

they have fallen too far. maybe there is a principal bounce. as a long-term investors -- investor, food retail would not be on my list. guy: we think tesco may have been in positive territory. markets expects to open up around 1%. i want to take you about to the w ei function. this is what we are seeing. a fairly decent bounce being priced in for european equities this morning did the fair value -- morning. the fair value cancellation. caroline, we're up 1%. caroline: we did see a risk appetite out there in asian trading. china being excluded from that. hurt.akers being overall, there has been risk appetite going into equities in asia, flowing through into europe. keep an eye on tesco and we are

group. plenty to digest. pretty gray in the u.k. futures up. ♪ 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. you are watching "on the move." i'm guy johnson. i have caroline hyde come over in the city of berlin. we are moments away from the start of european trading and caroline has your morning for a. -- for your morning brief. caroline: it is voting day for the brexit. economists see the economic gap in china. how far will the government go to hit the growth target? and banks under pressure. let's talk about how this

open is going to go. away and looksds like we will see a reasonably positive open here in europe. so, we are called up on the ftse by .8%. continental markets will open up a little bit softer. this is what is happening and as you can see, we -- that is the ftse 100 beginning to open up. we are beginning to replace some of the losses without towards the back end of the session yesterday. we will see how the cac opens up and look at what is happening surrounding the dax. the cac is beginning to rally a little bit as well. for the london markets, we have a reasonably strong open, followed by the german market as well. caroline: keep an eye on that cac this morning because we can see french pmi data coming in

below expectations. manufacturing, 47.9, well below that 50 figure, which signals expansion. this is in contraction territory. we got prillaman are numbers, 29.9. -- we got preliminary numbers, 29.9. that is well below estimates. matt, give us an idea of what is happening? matt: as far as the broader 0, a strong open this morning with all 10 industry groups rising. telecoms and consumer discretionary, doing the brest. if you take a look into the cac, you will see a different picture. i can pull that up and see how the friends training is broken down. you actually see some pretty with gains here as well only utilities showing this

decline. let me swing across to a couple stocks we are watching today. first off, guy was talking about tesco yesterday. that coming put out store sales that were up by .3%, rather than the .2% they were expecting. it is a small and marginal being, but every little bit helps. the stock had taken a big hit, nown by 1/3 since april, o concerns that the price cuts will hurt profitability. the cdc is recommending against flu mist.azeniceca's they said they have got to consider the fact that they will have declining sales because of that. volkswagen is actually gaining right now. hasvolkswagen brand head

put out a statement. this means to be a bureaucratic thing. they have to wait until the investigations are finished before they can sign off on the actions of those executives. guy? guy: mr. miller is making jokes u.k.t you creat supermarkets. now i have seen it all. let's focus on the french economy. the data again, coming through weak. manufacturing, 47.9 with the forecast 48.7. , 49.9s services pmi with a forecast of 51.6. the french economy is not pulling out and you wonder if there is this option of massive fiscal stimulus. how do you deal with the french economy right now if you are mario draghi or angela merkel? the second engine of the

eurozone is not firing at all. how do they pull themselves out of this nosedive? >> i think that, for european investors, obviously, france is not working. we do think there are opportunities, but clearly it is not working just yet. and therefore, be patient. what are they going to do from here? i find it extremely difficult to work out. i am no expert but they are going to have to do something fairly drastic and fairly quickly. caroline: interestingly, charles, we get gdp figures for france tomorrow. we are already expecting that growth for the second quarter because of the strikes that we can see. this is so hard for the french government to put into place, the necessary reforms. the evening in labor laws that is necessary. is it reform that is needed in

france right now? >> it is certainly reformed that they need, but they need to bring the french people with them. clearly, the french continue to rail against any reforms that the french politicians but through. until they can gather people up drivingnder people into decision-making, it will be difficult to achieve anything in france. guy: this is in the wake of the fact that we do have large plays. when you talk about fiscal stimulus, will they be allowed to deliver that? if you look at the rules under which they are bound, and you look at the pressure put on them from brussels and berlin, is the french government capable of delivering a fiscal push at this point? they are trying structural reform, but that takes ages and they are struggling with that.

>> they are going to have to do something because if the economy continues like this, the whole of the european experiment is goign tng to fail. they are going to have to stimulate these economies and get things moving. for germany and brussels to continue, it is becoming a nonsense, it seems to me. they have to take proper action to re-stimulate these economies. guy: as any of this possible before the french election next year? >> possible? but not probable, i suspect. guy: charles, thank you very mu ch for your time. up next, stimulus in china. china claims it wants market forces to take a bigger role. we will discuss that story, next. ♪

caroline: welcome back to "on the move." let's check in on the markets. currently up .4% on the stoxx 600. we are adding 41 billion euros to your market open this morning, the highest since june 8. interesting reflection on greek bonds as well, guy. the yield is coming down those 10 basis points. not phenomenal moves when you

look at the actual yield of 7.9%, but the ecb is able to take in collateral from the banks. they reinstated the waiver on greek debt, allowing the banks to tap that regular refinancing line. we are not going to see massive moves, but it does show there is a little bit more risk appetite therefore greek debt overall. let's see what else is moving the market with the bloomberg first world news. >> thanks, caroline. voting has begun in britain's historic referendum. 10:00 u.k. at time. we will be following all the action tomorrow. the ecb has reinstated its waiver on greek banks using the junk rated debt for collateral. that uses credit conditions for the nation's lenders. they said they would examine

purchases under qe at a later stage. house democrats are staging a sit in on capitol hill.. the protest brought house proceedings to a hault and put republicans on the defensive. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. caroline? caroline: thank you. and china, now stepping up stimulus by stealth in efforts to ensure hitting the leadership's will target. they are trying to enhance the role of the state, even as policy makers they want a bigger role for the market. according to jpmorgan, that would mean a fiscal deficit that would exceed 10% of gdp, more than triple the government's stated ratio. guy: it is interesting whether

goldmans is stepping in and the private sector is stepping out. that miller is o -- matt miller is on set and charles newsome is with us here as well. the private sector is funding big investment projects. you can see this really clearly on this chart. assets, look at that chart. really surging over the last few quarter's. you have to step back and say, the chinese economy, near term, delivers better numbers. are you happy to invest in chinese stocks right now? the you see any asset you want to buy? >> i don't see any assets i want to buy. i want to find ways to allocate money towards china. however, we continue to worry about the government's we see

there. and the overreliance on continued intervention to restimulate, which always worries us. it comes and goes pretty quickly. one minute you think it is going to work and they say they are going to do something and then they don't. and you never really know what is going to happen. i am always a nervous investor around china and prefer to invest in what i think are high-quality businesses with a reasonable chinese exposure. guy: the rise and fall of shanghai has been spectacular to watch. mr. miller is on set with us. matt, this chart, this would frighten a few people. this is effectively moving averages in the way the market moves. and we have seen some nervous points that point towards some big sells. are we getting one now? matt: the 50 day average is

coming down below the 200 day moving average. i'm not a technical analyst, but you are and you say you notice something even more sinister in this chart. >> even got to be careful with moving averages with markets which are sort of trending sideways. and you can clearly see that here. however, the two dead crosses from the left, the 200 day is falling. and one on the right is beginning to rise. the reason we use the 200 day chart is because that is the average of about the last year. that is why they tend to use that number in my opinion. generally speaking, the average is very slightly o on the up. therefore, that cross you could be seeing there, i'm not so sure about it. clearly, it is a warning signal, but not a particularly strong

one. matt: this is a bearish signal. the shanghai composite shows the relative strength index not overwhelmingly positive for members of the index right now. you have a bearish signal their. meanwhile, you have this hedge ,und manager, who ran the fund which is a great name for the fund. i'm right. year, 6200% returns last the self-taught hedge fund manager. at the beginning of the year he was bearish. he then liquidated the funds because he wanted tuesday io stn cash. he now says he sees an 18% gain in this quarter. guy: in one quarter? that he is not bullish for the rest of this

year. caroline: it is fascinating. thethey still feeling opening up of the market? what would it take overall charles, for you to start to think china would be good for you to take on? would it be a clear statement from the government that they are letting the market takeover that much more? think from china we need to see consistent numbers that alson trust and you can see a positive trend. you listen to these experts talk about china and they say, we are going to see a short-term gain. that does not strike me as a sort of market i want to invest in. guy: what do you think, mr. miller?

i will give you the last word on this. matt: look, it is an incredibly high risk investment. anybody who invests in china is really making a bet. it is more about gambling because of the incredible volatility there. and you don't see the swings in the chinese equity market correlated well with the moves in the chinese economy, as well as you would in other economies. guy: i wonder if the chinese have moved on from talking about equities. they are now focusing on steel and cotton and everything else. i am wondering if it is a regulatory story, if regulators are trying to catch up with the market. so, i just wonder whether the chinese market is a little bit easier to invest in now. charles: it might be, but i think matt's point is, it is

very speculative. guy: but it little bit less speculative than it was? charles: it still strikes me as a speculative. caroline: very good. it is interesting to note, the benchmark in china today, actually lower on the back of steel makers being hit by headts that the u.s. might r way.ore duties theitr andt thansks to matt miller charles newsome. up next, is this the end of oversupply? a new era of policy. next.cusse oil more, ♪

guy: welcome back to "on the move." oil revenue was that a 10 year low last year. that failed to compensate for a collapse in prices. meanwhile, saudi arabia's oil minister has admitted that price targeting has not been successful in the long run. the tools that opec has used in the past create market dislocations that ultimately hurt producers and consumers.

we are now joined by an analyst from barclays capital. . the little bit about where we are with oil at the moment. -- let's talk a little bit about where we are with oil at the moment. i asked you about this during the break. we have this chart here. i in going to zoom in on the b ack end of this. through what this chart is telling us, and whether it is telling us the higher oil prices lead to more rigs. >> it is telling us a few things. three consecutive weeks suggest there is activity. it should resume after a very long period of declines. now, the thing to note is, these rigs are not being put there because of the low oil prices. that is because of decisions made a month or two months in

advance. suree still not entirely what the reaction function at $50 a barrel price is because we have not seen the evidence in the data yet. that said, there are two counts at the moment, in terms of people who believe sahle will come back very quickly. whond the other camp, believes it will take more time. and the market is in the middle, trying to guage what is happening and this is the latest data point they have to play with. caroline: talk me through what you think. at the moment, you think this $50 handle well not stick around. to see us going back weaker $46 by the second quarter and $41 by the third quarter.

is this the reaction function you were talking about? >> yes, we are very bearish for the third quarter of this year. on the demand side too, in particular, we think most of the positives have been factored into the market, weather be a recovery in chinese oil demand, etc. most of that has been backed in. the second reason, the macro side. the data coming out on the economic side, whether it be u.s.,arm payrolls in the all of them look weak. that gives me a bit of fear as well. those are the reasons on the demand side. the two reasons on the supply side, the red count data, which is starting to increase. that might be a theme traders might look at come q3. if we see that rise, they will

try to guage how quickly u.s. shale is rising. the reason they are balancing so quickly is because of these unplanned outages. 4 million barrels per day. between nigeria, columbia, iraq, and possibly saudi arabia and kuwait together, we can see another $600,000 per day. that is quite a lot of supply for the market to handle. that is why we are bearish. guy: one number are you plugging in for the dollar? >> for the u.s. dollar, our currency analysts would rather not comment on it. guy: but for your models, what do you put in? the dollar, we don't have it moving quite strongly at the moment, at least for the third quarter. guy: so, that is a

reasonably stable picture for you. >> the dollar does not influence it as much, at least for the third quarter. beyond that, it depends on the fed's hiking cycle, it depends on the u.s. elections, the state of the u.s. economy, etc. a lot of factors on the currency side, but that is a currency analyst's point of view. guy: talk me through what this does to investment. this quotelighted earlier from the saudi minister and this is where it comes into play. genuinely worried what the implications of this would be in the future. as much as we are bearish on q3, we are constructive on q4 and for the next year because investment has been taken off the table, which would result in

the non-sticky supply. guy: thank you for joining us. up next, we are live in madrid before the election on sunday. ♪ 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. caroline: welcome back to "on the move." we are 30 minutes into the breaking day and have more breaking news because we have french pmi will below expectations, but journey comes out and wins in a big way. 54.4 is the number four june manufacturing. this is homegrown manufacturing for germany. nce,'s services sector is not living up to expectations. with france, the services sector is not living up to expectations. the market had expected 54.3, but it is a big beat over

manufacturing. services are not living up to expectations. is notarly, the euro reacting at the moment, still a .3% to the u.s. dollar. once again, that labor reform, taking time to get through, guy. guy: caroline, i am looking for the trading story. this is the picture, broadly positive with most markets up 0.5%. the manufacturing stuff, the comparison between france and germany at the moment, absolutely amazing. sets policy for one market, but nevertheless, big variations within that. lid, as jon ferro would say, as to what is going on with these markets. matt: i am going to continue with a theme we were talking about yesterday, bearishness overall.

i am looking right now at flows into gold etf. into thelion of flows gold tf. 2610, the mostn money that has flowed into any etf. it is the best we have seen for the gold etf since 2009. so, investors are piling into gold and into silver. yesterday i showed you a spread on the dax. so, the line is trending up -- that meant bearishness. guy, you recall this. today i am going to show you a skew. the bullish trend has started here, indicated by heading down.

this is interesting because investors are still continuing to be bullish with gold right now, regardless of what has gone on with equities. you have seen a good run with the ftse over the last five trading sessions. and in japan, nikkei is up by 5%, but investors are still piling into gold. does this one sit well with you? guy: of course. did you make this? matt: no, hillary makes it. hillary makes all my good charts. now, i sometimes make my own charts, but she has a knack for these things. she has a knack. caroline: we love your charts, but we want to shine a light on spain today. spanish voters, they once more head to the polls on sunday, the second election in the country in just over six mon

ths. the big question remains, who is going to the running this? of economice head policy joins us now from madrid. give us a sense of exactly what you expect come sunday. your party came forth in the last election. will you be hoping for a better place than fourth? >> thanks for inviting me. i would say the results are not going to be very different than what we saw last time, that we saw six months ago. for us, i'm very optimistic. i think we have run a good campaign and the big question is, how are we going to be able to perform a government. the point here is, the party of represent is going to support a constitutional majority.

reformist and pro-growth agenda. we will try to get to an agreement. is, therek, my goal is going to be room for agreement among the three big parties. guy: good morning, it is guy johnson from london. do you think he will with the next prime minister? >> we don't think he should be the guy that should be leading the transition, or this second b ig transition in our country. he has been very closely connected with some scandals. i think he had a big opportunity throughout the last four years to really go ahead with a strong economic reforms. he has not done enough, in our opinion.

we don't think he should be the one leading the transition. so, we still think there is room for agreement in terms of policies. we will have to discuss who is the leader at the end once we know the results. can you give us a sense who you believe is in the running. tell us your top few candidates. thexcuse me, can you repeat question? caroline: give us your top pick for yourself. >> i think there is a clear room for agreement among 70% of the spanish voters in the second on a common set of policies to address the problems we have in the labor market, to address the huge problems we have with immigration, to also regenerate our institutions and fight corruption. i just think we will have to

discuss on the leadership. i don't think he should be the person leading this transition, even if he is the first coming out of the election. we will try to change the leader and find somebody who better represents this new period of renovation, who can actually reform with more leadership. can i take you to your area of expertise, economic policy. have even surprised how well the spanish economy has done without a formal functioning government? got -- you have know, we had that big crisis. now we are in a period of recovery. they were some key reforms that took place during the 18 months. were some key

issues done on the labor keyet, saome reforms on pensions. but there are still something to do to boost long-term economic growth. , somell have problems notlems in spain with mutual regulators, etc. we think we can have a better market place with better competition. i think we can do better to boost long-term economic growth. we have been growing strongly. we went down strongly. we are still above 20% with unemployment after seven years. there are still many things to do here. caroline: what is the sentiment like in spain at the moment? does spain want to stay? is spain looking forward to this economic growth? >> well, a see a lot of looking. the last parliament, we had mp's from of the

completely new parties. there is really a demand for change in spain. and i think there is now some parties that actually represent this new demand for change. big ambition to change things. we also have less constraints internally, love compromises, and more freedom to implement those reforms we want to do. i'm actually optimistic that there is room to do great things. we just need to be able to leave behind short-term political needs and blind short term politics and look together at the long-term. i think there is not other alternative, other than sitting down at a table and discussing among the three big parties to push forward some big reforms

that the majority of spaniards support. guy: final question. , is he having aaghi good effect on spain right now? >> it has been obviously, positive to control the spreads. we would have had to spend lots of money probably on interest if draghi wasn't there. i think the expense of monetary policies came a bit late to europe. it is good that they remain there for a while. it has been beneficial. context of not so clear political outlook and with this political uncertainty it is good to have the support of the ecb. guy: toni, thank you very much indeed. we look forward to hearing the results from the weekend. up next, a merger, not a

takeover. that is the word on the plan deal between two of abu dhabi's biggest banks. ♪

caroline: welcome back to a beautifully sunny berlin. the stoxx 600 is up by .4%. every and history group is climbing. let's get to the bloomberg business flash. >> volkswagen's second-largest

shareholder has th refused to sign off on the carmaker's actions. they abstain from a vote to ratify the actions in 2015, it was the chief executive officer currentime, and parent v vw brand chief. both are under investigation linked to the timing of the scandal. one of africa's biggest energy developers has raised $180 million to expand its footprint in the fast-growing markets for solar and wind. they are planning a venture that will install more than 1.3 gigawatts of clean energy in south africa, egypt, senegal, and ghana. they told us that exclusively that the projects made good business sense. >> we are actually coming in at half the price.

if you want to compare for the future, the want to build coal or wind and solar? wind and solar makes the most sense. it is half the price. guy: happening in the united states, we can see stress tests being delivered a little bit later on. goldman sachs told people they were bringing the total number of dismissals to 393. matt miller joins us now. where do you want to start? goldman sachs? matt: we are talking 1% of the total workforce. this will be across all divisions. these 98, which is the third round of layoffs this year. that amounts to 353. obviously, trading and investment banking has been so

slow. they have cut dozens of managing directors. guy: goldman sachs is trying to hold on, particularly in fixed income, where european banks said they would walk away from. goldman sachs is trying to hang on. we are getting this drip feed of numbers, though. matt: i am sure if goldman sachs was still a partnership, they would hold on. but you can't if you are a publicly traded company. guy: the circle of life in investment banking. matt: that is exactly right. what i think is more interesting, and the results are going to come out at about 4:30 9:30 innew york, about the u.k., the stress test. there is a lot riding on this. the bank of america could raise

its payouts and dividends and stock buybacks by 53% if it passes these tests. that amounts to $9.1 billion in payouts over the next four quarter's bank of america could be handing back to shareholders and investors, who have been waiting for this. are is why the stress tests so important. obviously, it is not just the bank of america. of: we ran a whole load european stress tests after the financial crisis, which is said the irish banks were solid. it turns out, they weren't. matt: i remember. guy: we looked across the atlantic and said, the reason the u.s. banks are in such good shape is because the fed went in there and straightened them out. is there a perception stateside that these stress tests are credible? matt: i actually don't think there is.

i don't think there is a perception that it is a cakewalk , but for the first couple rounds of stress tests there was a perception they were a little bit too easy. it is not stressful enough. if you have a real financial crisis, like the one in 2008, many of these banks would be in serious trouble as they were previously. on the other hand, they are better off than they were back then. p.m., we will tune in and wait for those. more details are emerging regarding the plan to deal between two of abu dhabi's biggest banks. we are told it should be viewed as a merger, not a takeover. we are joined from abu dhabi. a has been almost a week since the news of this potential merger has broken. what has been the reaction thusfar for these two stocks?

>> i know there is a lot to focus on europe today, but i can direct your attention to the middle east for a few minutes. we had this potential mega merger. really, it is attracting a lot of attention. the big question everybody has on their minds is, will it happen? of course, but also the structure of the deal. how does it get educated? when we first had news of the deal breaking, people were talking about mbad being taken over. a 14%ould possibly pay premium. but now the latest we have from bloomberg news, they are quoting and saying we could get a merger of equals, something that would entail a lot more corporation between the companies, something a lot more friendliness in the transaction. caroline: interesting. so often when we get these big mma deal, they are so desperate

to look as a merger of equals. in this instance, it looks like the media is leading the charge. this could be a mega deal in the banking sector. up next, the box office battle. who are the winners and the losers in the media space this summer? we will discuss that, coming up next. ♪

caroline: 52 minutes into the

trading day. we coming off of our highs on the stoxx 600. it seems the banks are dragging us lower by .3%. the miners are still a performing. se is up by 0.5%. tesco sales have done better an expected. $1.50.d end the year at meanwhile, oil is up .2%, coming off of the high of $49.29. caroline, it has been a very uneven start to the summer box office season. disney'sout, maybe "finding dory." my children are looking

forward to that one. all, what does the u.s. media landscape look like? we are aware of the phrases like cord cutting and people walking away from the traditional networks. that has been in place for quite some time. are we able to analyze it a little bit better. the stocks overall have had an extraordinary run outperforming the market. advertising was strong. everybody was making money. then we started getting money from the cable companies that people were dropping on the margins, some of their cable subscriptions. they were opting for skinny bundles where they don't need 300 channels. channelsor 30 would do. people did flock towards netflix.

this is becoming a bigger issue and that has put pressure on all of the media stocks. the distributors, like the comcasts of the world, as well as the media companies, like viacom and time warner who provide the content for consumers. i think investors have a step back and said, i really need to try to pick some winners and seems in a world where it like there is a little bit of fragmentation going on in terms of media consumption and who is going to pay for it. caroline: give us a sense of some of the losers. the latest in the battle of viacom. what is happening there? this context of winners and losers and the big media sector, viacom has emerged as a big loser. as you mentioned, the stock is down significantly. the fundamental issue there is both of the two big businesses are struggling. their cable business,

nickelodeon and mtv, they has the declines over the last couple years, which has pressured the business. and then paramount studios has been on a losing streak over the last couple years. the this year, one of biggest movies to lead off the summer, "teenage mutant ninja turtles," that caused the company to cut its profits for the year. everywhere you look, there is fundamental problems and that is exacerbated by the turmoil with the executives. guy: is the top affecting the bottom? is it poorer market performance because of this? >> the poor performance of the company has given a lot of fuel to the critics of the board. had takenrry redstone the underperformance by the company as an opening for herself to come in and rearrange the board, the company that controls viacom. it has given her some fuel.

now we have a very unsettled situation at bviacom. guy: the polls are open in the u.k. great coverage coming up tomorrow. ♪

anna: britain votes in polling stations are open across the u.k. u.s. futures and european equities are higher. the pound strengthens and we bring you extra asset checks after volatile month. gap from plugs the falling investments with state spending as it sets up efforts to hit the road targets. -- the growth targets. so, welcome to "the pulse." i'm francine lacqua. i am just getting