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 pmi figures

out of the eurozone. pmi rising 52.6, better than what economists had told us. they do split into the tw components. oservices were a little bit below expectations. this is the euro area services pmi for the month of june. it fell to 52.4. manufacturing though, a touch better than expected. we also have a little bit of central-bank action, or in action in this case. the norwegian central bank leaving rates unchanged at 0.5%, pretty much as expected. but we will get you extra for an exchange checks, including with the norwegian krona. first of all, let's get the picture across the board. the msci world index, getting some help fro. i want to show you the mexican peso. the mexican peso, and the

russian ruple leading gains. crude, rallying above $49, currently at $50.05. now, let's get straight to the bloomberg first world news. voting has begun in the historic referendum and polls close at 10:00 p.m. u.k. time the first result will start coming at midnight. we will be following all the action during the day with a special coverage, which begins tomorrow. the ecb has reinstated greek banks, using the junk debt as collateral. the european central bank also said they would examine purchases of greek bonds under qe at a later stage. havee u.s., republicans hastily returned from the house for a weeklong recess. nearly 16 hours after democrat held a sit in. republicans have dismissed this as a publicity stunt, but it has

the potential to shift the dynamics of an already volatile election-year. and the federal reserve releases the results of the animal u.s. think stress test tonight. u.s. stressnual tonight.ess tests janet yellen says she does not expect to have to force banks to boost capital, however. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. now, let's get more on janet yellen and her testimony yesterday. just to put things into perspective, we were reporting on voting and discussing and analyzing any referendum issues, which we will be following as the result come across the special coverage tomorrow. it actually starts at midnight tonight. watching and waiting. yellen's second day of testimony on the hill did little to convince investors that a hike

is in the cards soon. the markets have been lower for longer. yellen emphasized that it is not all bad news. >> we have a drag from slow growth and the west of the world and a small dollar that is impacting trade exposed sectors. on the other hand's we have -- consumer spending is strong and -- we had an economy for the last four quarters growing at 2%. growth was quite slow in the first quarter. looks to be picking up. while we are watching things, i do not want to send a message of pessimism about the economy and where we are going. joining us for more on guestd rate path is our for the first half hour of the

show. he is michael mckee. great to have you on the program. i am cohosting with you. what surprised you the most? she was very on message, very on point. she talked about gaps within the u.s. economy. mike: she tried to keep the emphasis on the u.s. economy. of the houseembers of representatives, wanted to use the occasion as a chance to score political points. of her own testimony, of the today she spent up there, perhaps the most interesting thing was her interest on minority unemployment in the u.s. it is an economic problem and a social problem. she did highlight it. it is something congress can do something about with fiscal policy. she used that as a prod. congress has not done anything on the fiscal side in years. the fed is out of ammunition. she would like them to get more involved. francine: this was something we were talking about on radio. it is unusual because she put it at the beginning of her speech.

the patterns of consumption could change in the u.s. , but right now she feels consumption is fairly strong across all income categories. that is one reason for optimism. one of the reasons she thinks that growth will continue to pick up is consumers are spending. what happens over the long-term and whether financial market disruptions have an impact? what you say about productivity? it is not looking good. mike: we all look like we are working harder and getting paid more -- and not getting paid more. raising the standard of living for americans. that is a worldwide problem. economies are wrestling with why that is. there is a lack of business investment. people are concerned about political investment. people are concerned about regulation. they are not making a decision to spend, the oil companies because oil prices have

followed. you're not getting productivity gains. it has been going on for quite some time. you add productivity to the labor force and you get potential growth. the labor force is shrinking because the baber bores -- the baby boomers are starting to retire. francine: did you get a sense that she was worried about u.s. jobs? it was the third or fourth time she spoke about it. is less concern that people in the markets are. we cannot keep creating 200,000 jobs a month forever. there has been a sawtooth pattern. we have not seen that in this recovery. it is not unusual to see the kind of thing we saw in may. does it pick up again? the level, you only need about 100,000 jobs to absorb the new entrance into the labor force. the issue is the direction we are going and the magnitude of the change. if we keep falling back, the fed will feel the economy is slowing. tune in july 8 to the june

numbers. francine: thank you. michael mckee there. stay with "the pulse." china steps on the gas. despite talking about -- a lull, the chinese government is wrapping up its off budget spending. i will bring you my chart, plus foreign demand from american drivers. with u.s. oil markets falling? "finding dory" scores the best film.omestic range for a we will analyze the results. ♪

francine: now let's get straight to the bloomberg business flash. matt: goldman sachs has told 98 employees in new york at their jobs are being a limited. that brings the number of dismissals disclosed to state officials to over 350. goldman has been reducing staff as it seeks to whether a slump in trading and dealmakers. volkswagen's second-largest shareholder has refused to sign off on the actions last year of two of the carmakers board members at the first shareholder meeting. bartoner saxony -- winterkorn who was current chief executive at the time and the are under chief, both

investigation for market manipulation link to the timing of the public notification of the scandal. one of africa's biggest renewable energy developers has raised $118 million to expand its footprint in the markets for solar and wind. nstream is planning a venture that would install power by 2018. the ceo told us exclusively the projects made good business sense. >> we're actually coming in at half the price of new: south africa. -- new coal in south africa. if you want to build coal or wind or solar. the reason is it's half the price of new coal. thmatt: that is your bloomberg business flash. francine: matt miller there. let's talk emerging markets.

here is my chart. the chinese -- the stimulus in an effort to hit the leadership's gdp target. it shows how government investment has taken office of private sector slows. china's fiscal deficit will exceed 10% of gdp this year. when you add budget measures. that is triple it's official number. let's introduce my guest for the hour. he says emerging markets cross asset strategy at ubs. good to be able to speak to you for an hour. when you look at china, nothing has changed apart from extra stimulus. yet the markets are taking them in their stride. the fear of china comes back on. think that very well could be the story in the fourth quarter, perhaps in 2017. to put this in perspective, china's credit stimulus is huge.

-- china'so 20's credit stimulus is huge. thatind of credit impulse china is seeing right now is not that dissimilar from 2012 and it -- more importantly when the government spends, it spends in sectors such as infrastructure. intense.ds commodity it should help brazil and colombia and chile and cso on. today's's waste management, environmental protection, water conversation. stuff that is not the commodity intense. number one, china growth is slowing -- francine: is that to make sure there is not a social result. one of the things i kept on hearing is the fact that china signed up to the climate agreement because they were concerned and were high levels of pollution, the people would be unhappy. >> that's true.

i think sort of the issues of social mayhem in china are slightly exaggerated. they themselves want to clean up their act in terms of pollution. for the last three or five years, they want to bring down polluted industries. that is why more investment. we have not moved away from investment as much as we thought we would towards consumption. but investment had mood more towards services -- has moved more towards services. that means that china's love for the rest of e.m. is going to be that much lower because a lot of these services -- consumption is much less important to them than investment. not everyone understands. where i think people are not paying attention is that within investment if you are moving towards services, that is not going to bring as much as an income boost to other emerging markets. francine: if we focus on china,, and this i have heard a couple of times, they will have to put so much stimulus and they will end up doing what the fed did. zero rates. and so much more.

what are the chances of them doing that, and does it mean that the chinese economy is growing at 6.5%? bhanu: it is likely that over time the china's economy will glow at us -- will grow at a slower pace. the template for china will be a decline in assets. the only way you can keep is tolf from exploding bring the term structure lower. i think china will be cutting rates for the next several years. should we interpret that as a positive? i don't think so. china is going to be cutting rates only to avoid a debt service ratio blog. and that will result in weaker growth. to slownsity is likely down. not chinese growth is slowing but imports are slowing at a much faster pace than growth is slowing. so, the earnings impulse for the rest of e.m. is going to be weaker. francine: can india pickup that

pace? when you look at oil consumption, indian consumption of oil is going up dramatically. talks about the balance of the oil markets we were expecting five months from now. bhanu: let's be clear about this. for the next silly years, no chance, right? francine: because of structural reform? nu: also because of the size. china's consumption is five times. six times that of indian consumption. it is difficult to fill in the shoes of china. i do not think india, brazil and russia put together can compensate for a slowdown in china. ut brazil is you p something that is very separate because of the political turmoil? we saw the news with -- bank earlier on. is brazil a commodity e.m. story ? bhanu: i think it is a commodity story as well. brazil has been helped by oil prices and also higher oil

prices going up. stimulus from the fed, and stimulus from china has helped tremendously. you can see brazil's export volumes have begun to recover. dear seen demand from china recover as well. there is a political element -- you have seen a demand from china recover as well. downeed to bring government spending. politics is a large part of that. but you are going to be influenced by the fed, influenced by china. for brazil, the question is will they be able to hit the primary surplus or not? that is going to be quite tough. the market is not too worried. they are not too worried about brazil because they expect that credit spreads and brazil are likely to continue to come down. as growth emerges from a slowdown and does not go back to medium levels over the last five years, we could once again question whether structural reform in brazil be strong enough to give you the kind of stability you need. francine: that would lead to

more volatility in brazilian markets. we will look at more on that next. thank you so much for coming on. an even 50 as good as it gets? we talk oil and we talk emerging markets next. ♪

caroline: gasoline prices in the u.s. and demand are at a record. >> they are driving a medievalist amount -- a ridiculous amount. prices have been cheap. that encourages people to buy. they will drive more.

the question is is that sustainable? when it is no longer two dollars a gallon. caroline: onto zinc and copper, copper is a much better benchmark to see the state of the global economy. what does the price tell us about strength? >> global demand is slightly off the boil. i think the margin, carpet -- copper is -- china is going to invest in the electricity grid touches quite heavy on copper use. between copper and iron ore, going forward, iron ore is slightly weaker. >> that is right. zinc, copper and all of the metals, you have this trend that the stockpiles we can see, that is giving people a false sense of supply and demand balance.

caroline: stuart wallace, stays with us. we will be talking emerging markets. we talk about low interest rates. ♪ 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. francine: welcome to "the pulse." live from bloomberg's european headquarters. i'm francine lacqua. voting has begun in britain's historic eu referendum. the first results are due to start coming throughout midnight. we'll be following all of the action and special coverage tomorrow starting at midnight. federal reserve chair janet yellen says slowing price did see growth is a serious concern. the fed is increasingly technology that we could gains be the new normal.

speaking to the committee in washington, yellen says she was not sending a has a mystic message. >> -- sending a pessimistic message. impacting trade exposed sectors. on the other hand, we do have strengths and consumer spending is strong and bouncing every thing out. for the lastonomy four quarters growing 2%. growth was quite slow in the first quarter at the end of last year. looks to be taking up. we are watching things, i don't oft to send a message pessimism about the economy and where we are going. -- business investment flags -- physical investment will see 10% of gdp in 2016, more than triple

. that is according to economist at ups and -- ubs and jpmorgan. -- evencosmic is claim as policy makers claim -- markets are higher this morning. let's head to matt miller. matt: across the board, we're looking at 1% gains on the broader indexes. 600 and thestoxx imap function shows that everything is up at all industry groups broken down here. the materials are the biggest gainers. telecoms also rising. it has been an incredible run for european stocks. if you look at the past five trading days, you can see we are up 7%. this is the stoxx 600, a 7% gain over the last five trading days. i want to pull out tesco. it came out with same-store .3%s, up three -- up

compared to estimates of .2%. a back-to-back gain in same-store sales. they haven't seen that in five years. investors are extremely optimistic. the stock is up 3.3%. the stock has taken a hit, if you take a look you to date. tesco had taken a hit in april and just started to come down, because investment concerned about the profitability. since the beginning of the year, up 11% including today's games. -- today's gain. it is doing better in the trade today. francine: thank you so much. matt miller with the latest on the bloomberg terminal. the u.s.len says central bank will not be joining the subzero rate club. -- thee interest negative interest rate debate,

we're joined by mark gilbert. we have you on every couple of hours, every couple of days. you wrote a piece on the bloomberg terminal. saying qe has not worked. the only shocked the system is you raise rates. feedback.t a bunch of when they raise rates in december, they said there are four increases on the way. then it became one rate increase. people are paying attention. companies are not investing. consumers are not spending. negative interest rates say the world is so bad, we have to have negative interest rates. the theory would be if that is [indiscernible] it is a demand problem because

no one is willing to invest in spent, then maybe you raise interest rates as a solution if you say to the world, we are going to raise rates in the months time, if you want to invest, do it now. francine: first of all, that would also mean the false -- that would mean defaults. if you raise rates, it is almost a cathartic moments. capitalu got a lot of trappings on companies that would buy debt if money was and so cheap and what we need -- debt. .ou need those companies to die that would free up the capital for more enterprises which is good for the economy. -- agree?it is heart or disagree? >> qe is entering returns. -- >> i don't think we

would be sitting here if qe1 did not take place. lower.ave become volatility has not become lower. the role of volatility is to constrain. qe is becoming less us -- less effective, -- you start raising interest rates, we do create a destruction. the point is as liquidity trap emerges, as policy becomes less he met -- less effective, you have to lean on other policies which is regulation which is what larry summers argument is. higher rates will not help necessarily. you will need to de-leverage overtime. for policymakers to kill these companies actively, i think it is going to create a massive runoff, declining growth. it is the sense that

only central banks are doing things. they are sense is that doing so much that there is no limit. it has been eight years and counting and there is no nominal growth. what will kick started? it.hat will kickstart >> the other part of the policymaker has not kept its part. you have not seen regulation change. francine: shouldn't there be retaliation? you had a lot of feedback on it. what have they been telling you echo -- telling you? >> the financial crisis terrified me. then the banks have taken away all of the returns of my savings . i am not spending. why would i? why would i spend my savings has gotten the return? there is another angle.

that is one of the things germany is focal about. savers are being punished. euro, --ok at the gray much more involved than it was a decade ago. those people are not spending. if you give them a return on their investment, that might spring them into action. >> savers have been penalized. that is the point of policy when monetary policy has been cut down to it investors are not taking the cue. the fact that you are this incentivizing the sale, that's investmentisn't picking up? is because of massive leverage -- why isite is investment not taking up? is it because of massive leverage?

creativet not only destruction, but also -- monetary policy by nature conquers cyclical. it cannot address structural issues. for structural issues, you need to address investment. francine: productivity. what is going on with productivity echo janet yellen -- productivity echo -- productivity? right?not measuring it are we being paid too much? you guys had -- he is convinced it is a problem. >> productivity is not being measured correctly. francine: central bank would figure that out. economists areis

not business people. if the central banks were run by people who had to make payroll at the end of each month, that's created value for the economy. >> that is possibly right. private spending is declining in every major economy. despite interest rates have been so low, you're suggesting it is because of the fact that interest rates are so low. i am suggesting that it is despite that. >> i think janet yellen is frightening people. janet yellen is in front of the committee saying we don't know what is going on which is the summation of what she said. policy, that is terrifying businesses. higher rates would probably terrify them even more. i see your point. i think it will shock the system in a manner we have permanence -- permanent damage.

francine: we are going to ask ceos how much they listen to yellen? voyager -- bhanu baweja and mark gilbert, thank you for joining us. up next. >> dory, there you are. look at this. her friend got taken. >> it is a fish. francine: disney's finding dory smashes it at the box office. not everyone is taking the bait when it comes to sequels. ♪ >> you've got to use your echolocation. ♪

francine: welcome back. let's get to the lumber business flash with matt miller. mexico voting has begun in -- matt: voting has begun in britain's historic eu referendum will be following action across the day. goldman sachs has told 90 employees in new york that their jobs are being eliminated. it brings the number of dismissals to over 350. goldman has been reducing staff and six to whether a slump. volkswagen second largest

shareholders refused to sign off on the axis last year of two of the carmakers board members. at the first board meeting, the german state abstained from a vote to ratify the actions of 2015 of martin winterkorn and current vw brand chief people both are under investigation for possible market many relation linked to the timing of public notification of the scandal. that is your bloomberg business flash. francine: let's talk about the media sectors in and in even start to the boxee this -- box office start. finding dory which turned the tide in the record weekend for an animated feature. -- bhanu baweja is still with us. i love this. they go. overall, sequel fatigue.

not all films are critical. >> the summer box office -- they get 40% of their annual receipts during the summer. it is a make or break time for the studios. the summer has started off their week, down 20%, year-to-year. still very early. there has been a lot of disappointments. the teenage mutant 10 -- the teenage mutant ninja turtles movie came out disappointing. even disney had a miss with alice in wonderland. there has been some bright spots, you mentioned dory. that is been a box office smash for disney. there are some other big movies slated for the rest of the summer. francine: we cannot call it a trend yet. these to do so well in the past -- they used to do so well in the past. paul: the frustration of some moviegoers seems like hollywood

is just churning out sequel after sequel and a franchise franchise.r marvel if you are a media mogul in hollywood and you are thinking about green lighting a $200 million movie, this is a movie that has to play globally. has to play in china which, next year, china will become the biggest film market in the world. superheroes and franchises and all of those things play well. francine: they had the preview at disney shanghai. what was the most significant thing for you. >> they built a top-quality facility there. the resort at this a land shanghai is extraordinary. they built a premium quality product, but they are pricing it at a premium price. the pricing is $75 u.s. disney, you say you're

building a premium product but you also charging a premium price. investors are willing to see how the chinese react. francine: how that elusive chinese consumer spends and how much appetite that have four attractions and foreign films. >> you know how we were speaking about the negative at the china? this is diametrically the opposite. there are three parts of chinese consumption. technology, consumer services and entertainment and tourism. this is where you have massive growth, volumes and the consumer is less price sensitive. i think you'll see trim it is growth. the fact that through this year the sequels did not work very well. advisors thantter i on these movies. tourism in china -- ex line francine: will it be similar to

the 1950's america. i will never sitting down and they were placed in the hotels and people would drive around. they need spots to eat and drink. are we under symington -- are we under assuming the fact if they are not going to replicate the american consumer. >> it might be a completely different template, but real incomes and china have been growing for the last five years. -- itnsumer who is not has been a one child society. there is a need for entertainment. there will be massive dollars to spend. paul: it just keeps getting worse. i think we are in a holding pattern. some of the executives and board members demand the ceo and challenging sherry redstone, the daughter of sumner redstone who

is trying to gain control of the company. it is going to happen relatively quickly. we're going to get resolution quickly. investors will have to see whether it is a plus or minus. investors are looking for change at the top. they're looking for board change of management to turn this company around. francine: paul sweeney from bloomberg intelligence. and bhanu baweja, thank you as well or to spend is up for its second election in six months. another scandal hits the campaign trail. we're live in madrid next. ♪

francine: spanish voters head to the polls for sunday for the country's second election in over six months. the big question remains who is been to be running it? sales joins us from madrid. how is it going to affect the shootings? -- affect bhanu: --s? been: -- >> this is a recording of the interior minister in his own office. it is quite remarkable good in that conversation, the minister is asking the fraud investigator

what sort of evidence he's got against separatist notations and discussing the best way to get that information into the papers without it being traced back to them. campaign thatc has been brought into the open three days before voters go to the polls. francine: what is the outlook beyond sunday. ben: there is a consensus. voice bp is going to have the most -- rajoy's bp is going to have the most seats in parliament. in the middle you have the socialists and pro-market reformers who are looking for european consensus friendly reform of spain, more competition budget discipline. but that bp, the socialists and less analysts, you have

agreement on what the policies -- on what policies they want. -- well rajoy try to cling onto his job despite the allegations against him flacco or will the step aside? if he steps aside, the deal between the two parties will be done ready quickly. why if you seats up or did -- or down is going to have a big effect on his bargaining position as he goes into those talks. francine: thank you so much, ben sills. we will be following that. we'll bring fall -- we will bring you any breaking news phone that on sunday. -- news following that on sunday. european stocks are also gaining. u.s. equity index futures advancing the pound still

strengthening. atico peso, you can see that 18.32. the russian ruble leading gains as crude rallying above $49 a barrel. voting has begun in britain's historic eu referendum. 10:00 p.m. u.k. time. we will be following all of the action across the special day coverage. stay with surveillance. -- surveillance is up next, stay with bloomberg. with otmar issing we will talk helicopters. all of that debate about negative rates and whether mark gilbert may be right. whether there may be some truth in that the qb is becoming -- qb

is coming to the end of policy. ceosuld also intensely get what they need to invest again. ♪

francine: britain votes. public spaces are open across the u.k. u.s. futures and european equities are higher. extra acid checks. stimulus stealth. china plug the gap. gap.ina plug the this is bloomberg surveillance. i'm francine lacqua with tom keene who has been here for the week. an interesting day. tom: a historic day