."y: welcome to "on the move caroline hyde is on assignment. what are we watching? idea ofsborne flows the cutting corporation tax of 15%. will it be enough to keep business in britain? the landgrab begins. paris should be the new home for euro clearing. do the germans agree? largest banks its

with crude.rapples we are live in a vote dobby with the latest. left than half an hour away from the european equity market open. first of all, let us start with the gmm function. seeing a little bit of a movement in the swiss curve. china had a reasonably positive day, up by 1.68%. are nots in the session being repeated today. looking at european equity markets. another front foot section. it is independence day for the united states. have therefore light volumes to contend with. let me run you through some other assets. fxs is the picture in the market.

132 .89 is the trading on cable. take a look at the forecast is. the rate is significantly lower. about silver later. look at the gold silver ratio. it has been plummeting. we have not seen these rates since 2014. rent is trading at almost exactly 50. at almosts trading exactly 50. what will we hear from the bank this week? us to really is a election has resulted in neither major partyhaving enough seats to form a government threatening to undermine the nation's credit rating. moody's has said there are limited implications for australia's top grades. a deficit could put downward pressure. on tuesday.umes

an increasing number of banksists predict chinese will receive a government bailout within two years. respondents in the latest a bloomberg survey say they suspect the move. capitalization will exceed half $1 billion. chinese investors are grappling with a growing amount of bad debt. british government tries to initiate the process of leaving the eu without consulting parliament. acting on behalf of of an anonymous group of clients, he says the triggering of article 50 can only be started with parliaments consent. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . guy: the u.k. chancellor george

osborne has set a goal of 15% in an effort to keep businesses investing in the country. he told the financial times that he accepts the referendum and now wants to mitigate the economic impact. we welcome our guest to the studio. is that a good idea? >> he has remarkably little choice. he has to follow the irish example. is in a better position. i think it is a smart move. guy: what else needs to happen? we have to ease monetary policy. we have to have easing fiscal policy. economies see the understanding they cannot continue. i hope germany understands its

role. the u.k., you talk about easing monetary policy -- what form does that take? wood cutting rates be on enough -- would cutting rates be enough? >> he can only facilitate. there isto be sure liquidity and credit available in the system and he has to be supportive of the commercial banking sector. the central bank is not lending money into the economy, but through the commercial banks and they in turn lend the money. commercialibrant banking sector. a critical part of the mechanism. he needs to step up on keeping commercial banking alive. should we use that as an advantage? >> it is an opportunity for

investors in the bond market. there is a bifurcation between deflation, trade in goods and services and domestic inflation. guy: we will continue the conversation with james. frankfurt has high hopes of becoming europe's financial sector in the case of a brexit. is bloomberg. ♪

guy: welcome back. let us get you a bloomberg business flash. postal savings bank of china is thinking to raise a billion dollars in what could be the world largest -- this year. have furtheret to lifting applications. listing isn't likely to take place until september. -- $28 billion of assets. talks of a possible merger. -- cicc hasdeclined declined to discuss the merger.

it is offering 35 million shares . tech ipobe the largest of the year. national bank of abu dhabi has confirmed its merger with the gulf bank creating a regional powerhouse with $175 billion. it will operate under the national bank of abu dhabi name. it will compete with regional rivals. it has missed its forecast. the electric carmaker delivered just over 14,000 vehicles in the second quarter, below its 17,000

estimate. that is your bloomberg business flash. french executives and politicians are circling the u.k. for the spoils after last month's shocking referendum. euro clearing. largely based in london. it has been the subject of great controversy. interview, the french official has euro clearing clearly in his sights. frankfurt. morenk that we have players now in paris than in frankfurt. and a deeper marking plan -- marketplace in paris. it is something to be negotiated.

i think it does make sense. colleague spoke to him and joins us now from paris. is it a done deal for the french? it does not sound like a done deal. it will take time. it will not happen overnight according to the french economy minister. paris and frankfurt are competing to get a piece of the u.k. financial cake. clearing at the moment. euro denominated clearing is about 70% done in london, only 11% in paris and 7% in frankfurt. thinks paris has a better chance of taking some of this business. notlso said that he did

exclude running for president in the next election. will be at thepe center of the campaign and he and affer a market european alternative. wasfrench finance minister more cautious. he did not appreciate when david cameron in 2012 ruled .- rolled out the red carpet guy: interesting. maybe that is the view of the desirability of having bankers in your capital. spoke about the brexit. cio i spoke with

says 10% to of the revenue stemming from the u.k. is a little worrying. the slowdown of the construction sector. have a listen. >> there will be a slowdown in u.k. construction. we don't know the magnitude. i don't know if it will be terrible but there will be an impact. don't expect a significant impact elsewhere in europe. positive dynamic in many european countries and the construction market. i can did her that this will continue. all that i spoke with want to make this brexit an opportunity for france. he is saying that paris and answers dam -- amsterdam are better places than others. thank you very much indeed.

the ultimate implications of the brexit may take years to be understood. some already the financial hubs outside of london as an investment opportunity. we are joined by the ceo of the german estate group. the french think they will get a big chunk of the business that will come out of london. are they right? >> yes, that is what we expected. guy: right. why would people moved to frankfurt rather than paris? activeink many globally companies maintain their europe head office in london. will considere relocating to other european cities. and to avoid regulatory financial hurdles that might

come out. i expect that there will be a shift to other european cities like amsterdam, and paris and possibly frankfurt. we are looking at pictures of the ecb. is the ecb's presence in frankfurt a big advantage? >> what you can see these days is that there are some requests of other banks moving their head office from london to frankfurt. today, the ubs an ounce that they are thinking of -- announced that they are thinking about frankfurt. of quickve a couple questions. frankfurt has a high vacancy rate. some may see that as a disadvantage.

it was a disadvantage without doubt over the last years. you should recognize that a lot of these vacancies are not in the quality. it will be helpful on short investfor investors to in assets. able to offer be space to london-based companies. briefly, do you think frankfurt is a place that is attractive for people to take their families? if you are an american, will you want to live in frank for? -- in frankfurt? >> absolutely. frankfurt is the most international city in germany.

it is the most international city in germany. i have no doubt that frankfurt and the surrounding areas will be attractive to americans and other english-based people. guy: thank you very much. bevan is still with us here on set. we spoke about real estate opportunities in the city of london. do you still think they have great yields? >> i am much less optimistic. i am very nervous about this sense of transition. i see huge challenges in europe. i do think that the europeans will cave in. the whole of the european project is at risk. guy: let us stay focused on finance.

that is is an area going but as far as doing business and opportunities elsewhere, how does europe stack up? would you move to frankfurt or paris? -- the problem that any global business will have is the uncertainty of the policy agenda particularly regarding passport and regulation. people will want to anticipate what the rules will look like. they will recognize that the brexit hurdles will get higher. it would be smart to contemplate paris or frankfurt. guy: looking at the london listed property companies, some are talking about yields struggling to go further than

where they are now. give us a sense of them is pricing that could exist -- the mispricing that could exist. >> the prop -- property sector was knocked down last week. and adjusted discount rate. we have not seen any evidence of the actual shift in rent. government bond yields in the u.k., 10 years out yielding less than 1%. this relative yield is still argued and justify significant inclusion in the diversified mandate. securities versus the equivalent in frankfurt. >> i worry about the current versusf client frankfurt underlying demands.

if i were a business thinking iout relocating to europe, would definitely anticipate that frankfurt would be a smarter place to consider doing business accepting the reality of the european project being uncertain. all parts are still on the table. guy: a short-term win. want to participate in the future of property in europe. the residential in germany looks more interesting. in majornt property cities in europe including poland as well as germany, they look very attractive. yields with as of be kicking out? >> six or up to eight. guy: let us think long-term. how different is? europe is european finance going

to be a loser wholesale? >> long-term, it is difficult to say because you have to the retreat to of globalization in the face of democratic pressure. we will face more perfectionism. guy: stay with us. james bevan. we are minutes away from the european equity market open. we will take a look at the potential corporate movers. this is bloomberg. ♪

guy: welcome back. minutes away from the european open. a lot of green. the check is up by .4. we will have a very positive start. it will be a light volume day. some things to be aware of. we should also be continuing to focus on its italian banks and what is happening there. it remains interesting. we will talk about italian banks

and a few minutes time. the market open -- looks like we will see a positive start. the u.s. is out. the market open is coming up in four minutes. this is bloomberg. ♪

guy: good morning. "ou are watching "on the move. we are moments away from the start of european trading. here is your morning brief. taxing times. ofrge osborne flows the idea cutting corporate taxes to 50%. will it be enough to keep business in britain? the landgrab begins. paris should be the new home for euro clearing. will the germans agree? the uae merges its largest bank with gcc. we are live in abu dhabi. good morning. monday morning. the u.s. is closed by european

equity markets continue. we are looking at a fairly positive start to the day. london will jump out of the gate at .7%. other global markets look like they will be reasonably positive as well. european markets set to open a little bit higher. market --s the london the purple market is the dax. we sold off a little bit into the close on friday and now we are jumping higher. getting up to the session highs that we saw on friday. it is interesting to see the cac slipping a little bit. dax opens inow the just a moment. the dax and the cac are now both jumping up. a positive start to the session here in europe. let us get the details on how the session is starting.

bera: it is shaping up to similar to asia. in asia we saw material stocks leading the game. if we look at the imap -- it is predominantly green as it was in asia. the game leading followed by consumer discretionary. where we had the laggards at the moment are ip and energy that we are seeing pretty much every industry group gaining on the stoxx 600. crude oil rally today. let us look at how the gilt markets are opening. unchanged on the yield. visit fell below 1% for the first time ever in the aftermath of brexit. the is where we are at moment on this 10 year u.k. yields.

take a look at the stocks we are watching. i am starting with firm a -- pharma and novartis particularly. the paper did not say where it got its information but we are seeing novartis move up a little higher, .4%. i thought we would bring this up because there were reports that the ecb is demanding that monte schi -- looks like it is 3%.ing lower, down looking at deutsche bank. over the weekend, we had reports that the ceo said deutsche bank will not be to access capital markets or to sell its wealth

management business as it continues to build capital organically. where shell pick up was talking about italian banks. to inject public funds into the banking system as a last resort in direct defiance to the eu according to the financial times. let us bring back james bevan. this is an area of interest of his. >> i think he has no choice. inappropriately that europe is saying this. you can understand why germany is saying this. there are rules. guy: this is the area of friction. germany says these are the rules . everyone else says there are rules that we need to be pragmatic. is this a fault line? we think about how central banks work. there are constituent members and they have 20 their balances

at the end of the year. him -- have to balance at the end of the year. guy: let us go back to the italian banks and look at the investment opportunities or lack. this is unicredit's price to book. .2214.now trading at value trap or value? >> the first challenge of the financing of the bank itself which mr. renzi has to deal with. the opportunity to make money. we have a real challenge.

the italian economy has stopped a growing and the italian banks themselves face significant challenges. guy: is it worth injecting money into banks at this point? >> it is essential that there is credit and liquidity made available by the central bank and the government to the commercial banking sector to ensure adequate confidence. in parallel, you are right to say that we have to clean up a need to have that in spades. unicredit -- i would suggest that the overwhelming majority of investors money should be in growth.

the opportunity to be wrongfooted is quite strong. unicredit represents an interesting opportunity. guy: what would be the upside? if we were to see revolution and the major challenges in europe. bad on thedit is a -- a bet on the euro. eventually takes went to the breakup of the euro with the exchange rate mechanism being brought back in. you have to bear in mind that the market anticipates. is a good option. it gives you the option on the possibility that europe sorts out its problems in ways that

markets do not anticipate. a resurgence in the value of the euro itself. guy: in order for this strategy -- you either get a breakup of the euro or it sorts itself out. >> a recognition within europe that things are not working and we need policies that are more supportive to the commercial banking sector. we need structural change. it if the you sell germans say absolutely not -- it is forbidden to inject additional money? >> mr. renzi at that point will disregard germany. recognizes that he is between a rock and the heart place -- and a hard place. guy: a silver rush.

silver has hit a two-year high. we will bring you that story next. this is bloomberg. ♪

guy: welcome back. quick check on the markets. let us show you what is going on.

that is the gold silver ratio which is what we will talk about next. let me show you a quick gmm. -- the ftsexx 600 is up by a similar amount. the ftse is getting closer to a bull market. european equity markets are on the front foot. it is independence day in the united states having light volume today. let us check in on the bloomberg first word news. one of london's biggest law firms have threatened to take action if the british government tries to initiate the process of leaving the eu without altering parliament. acting on behalf of of an anonymous group of clients, it says the triggering of article

50 can only be started with parliament's consent. french economy minister has told bloomberg that paris is a contender for the euro clearing is this post brexit. other euro clearing areas from frankfurt to dublin have been gearing up for a battle of transactions currently done in london. brexit will be a big question mark because of the access to the european clearing. our road -- our role is not to play on uncertainties. we are politically responsible. what we have to do is respect the road or. be a true that it could benefit for our financial players. we have a lot of financial

players and institutions and we can welcome a lot of institutions that would like to join the eu. us really is elections have resulted in neither major party having enough seats to form a government. this is threatening to undermine the nation's credit rating. moody's has said there are limited implications. saturday's election results have yet to be completely finalized. tempting resumes on tuesday. an increasing number of economists predict chinese banks will receive a government bailout within two years. commonwealth bank of australia 19 respondents to the bloomberg survey. recapitalization will receive half $1 billion. chinese investors are grappling with a growing amount of debt. global news 24 hours a day

powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . guy: going back to the italian banking story. an italian official is denying mr. renzi's challenge. do you believe that? >> absolutely not. mr. renzi recognizes the gravity of the situation. and il continue to argue am confident he will return to the eu challenge again. europe obviously has attention and a conflict of interest but mr. renzi must ultimately do what is right for the italian people. guy: a silver lining to the brexit story. investors seek haven assets of following the brexit vote. is where we stand on gold

silver at the moment. silver trading just high of the 21 that we got to earlier. i want to show you this chart as well. the gold-silver ratio and what this shows you is that people are now buying more silver than gold. interesting trade. fantastic head and shoulders we have over here. take on where we should go with our precious metals holding. do you have gold in your portfolio? >> no. i regard gold as speculation. i worry that commodities generally are now overpriced. at the stories running on china at the moment. that china'sear policymakers have become

reactive. policy the expansionist in response to the difficult numbers of the first quarter. supportreverse of that and i believe that china is now going to wait until the banks -- rates. i think there is every chance that this will be reversed. guy: do you not think given that we have bond yields trading at rates, that the story surrounding gold is a little bit more attractive? >> i do not. when we had currencies that were tied to the gold standard, you could understand why people held goal. today, it is separate. it is relatively tightly correlated to currencies writ large.

it is due a downward correction. guy: an aggressive downward correction? gold.ver and if the germans commercial banks store money, then the euro party finishes much earlier. when i think about what lies ahead for equities, i believe that corporate earnings in the u.s. will be 4% or 5% because revenues are running at that level and margins it should be stable. i don't expect expansion or contraction. the capital return for equities in the states could easily be 4% or 5%. in an environment where the bond yield is near zero, i with still be supporting equities.

u.s. equities look better placed than most because u.s. companies are doing extremely well. looking at the mainstay of european portfolios including swiss funds and i look at the u.k. players. i anticipate that with bond yields falling, a minimum variance -- we will have another path. guy: one more block with james still to come. plenty more to get out of him. this is bloomberg. up next, a year of unexpected events. yenbiggest shift in the since 2008. ♪

guy: you are watching "on the move." that is indeed what i have. the yen spot rate in white. 102.72. the blue line is the change in the forecast. a bloomberg survey has the currency weakening to 107 per dollar bike year. that prediction tops the most

bullish estimate at the turn of the year. jp morgan, the 110 call. the forecast have gone beyond that. the most will wish call is now barclays predicting a rally to 87 this year. i have circled this because that is a level that has not been seen since january 20 13, 3 months before the bank of japan launched its stimulus program. the bottom line is that the boldest forecast for gains underestimated the yen strength in the first half of 2016 by at least 10%. the young exceeded all estimates and investors flocked to it as a safe haven. as a result of events that were unexpected happened like brexit and donald trump as a presidential nominee. jp morgan says that for the rest of the year, it is the u.s. presidential election that will be in focus for this hair and analysts are seeing limited

scope for the bank of japan and any action it might take to push the yen down. on: let us get james' take all of this. >> i worry hugely about what is going on. i look at the divert and the underlying value of the yen and the dollar and i look at what happened in iran. i think we are heading towards another accord. he said we need monetary policy to be coordinated. draghi is a very smart man. world will do whatever is necessary so he has to shift the focus away from the european central bank to the

broader capital. he also has to shift focus to the fiscal policy. investment in real capital to get the economy doing. printing money does not create growth. we see that in japan. the negative interest rate policy that was designed by economics.mics --abe the yen will carry on going up. guy: fiscal policy is clearly one element of that. will they monetize the debt? >> the big changes we have to have our a change in strategy by the germans and the german economy. they are taking advantage of the weakness of the euro to have an export led recovery and growth program. the process -- they are saving. that is acting as a black hole for wealth in your. we see the same in north asia particularly china where the export continues to drive money into china which then saves and

not spence. get that mindu shift to change? be a fundamental shift in the way we are approaching. a fear of crisis. if we come back to china, it seems clear that their abandonment of fiscal support as evidenced by the numbers because china recognizes it has a difficult time ahead and it will write more checks in due course. we are not quite there yet. let us order the crises as you see them. sequence them for me. >> begin with the root cause which is access in monetary manufacturing meaning we have ongoing deflation meaning we have low rates of inflation and low levels of consumption. excess debt. we have to blow that away. we need to have a creative

distraction. keep -- what saved us in the 19 30's, neville chamberlain took away planning controls in the u.k. property markets on all but 70,000 acres. he and empowered thanks to create mortgages. in order to save the british economy. we had a resurgent economy in the years following because chamberlain knew what to do. growthvered the sort of that the u.s. could only dream about. imagine what will happen in the u.k.? we have the removal of planning controls and the emancipation of the banks. people talk about house building being in the math. i think if we have tight planning controls, we will continue to go up.

we have a balance in supply and demand. james bevan, thank you for joining us. this is bloomberg. ♪

guy: 30 minutes into the trading day. the market is broadly positive when it comes to equities. european equity markets are beginning to fade from their earlier rally. let us get into the stock stories. some of the best performers on the stoxx 600 this morning are the miners of precious metals. i can imagine this because of the rally in gold and silver. ounce topped $21 and

earlier for the first time in two years. that metal has outpaced gold this year. some see it will continue to outpace gold. assets in gold etf at the highest since august 2013. wrangler resources up almost 4%. halted brieflyre earlier. looks like they are moving again. down 5.6%. inre were some reports saying that the ecb has requested this bank to present a plan on bad loans as soon as possible. this is a letter from the ecb received the day before the brexit referendum saying the itser has to reduce nonperforming loan ratio to a normal level. i know you have been focusing a lot on italian banks this

morning. guy: let us look at the block -- at the bond market. where do we go from here? story isean fascinating. we are joined by the chief macro strategist at rcb. at the moment, we have a curve that looks broadly like that. we were here a month ago. the curve has flattened out. what will happen next? what will the bank deliver next? >> starting with the monetary policy. he is probably going to also look at what the fcp can also do most is more arcane for

people. i think it is going to be important for the economy. the first thing he will probably do is cut rates. the question is how deep? the market is pricing in at a little bit more then 25 basis points. we think they could go all the way down to 10. i think the front end has more room to move. guy: the front end has not moved as much. how much lower will this person go? >> it is already in there. probably another 10 or 15 basis points in their which is not nothing for this part of the curve. on the longer end of the curve, is the bank of england going to roll out another qe program? we think they would. that would be influencing the

cash market. guy: are you looking on this curve here? where is the sweet spot? it depends a lot on what type of investor you are at if you look in absolute terms, it would yearmewhere along the 7-10 point. you also have to see how inflation expectations pan out if the bank of england rolls out such a program as this. let us say 5-10 years. other curves are flattening. the u.k. curve is a little bit special. if you look between fives and tens, it is quite possible. guy: let us look at the german curve. ecb in some ways is in a

difficult spot. what impact will it have? logic,ou follow the same and start at the front end of your curve, the difficulty is int the market is pricing another 10 or 15 basis points lower than the ecb which i think the ecb will have a hard time delivering. i don't see a lot of value on that part of the curve. let me stress. question for europe is what will the ecb do with it qe program? its qe program? they buy or will they just increase the ratios that they can? all of this has huge bearings. guy: i have just added to this chart the spanish curve which is up here. a different shape.

is the bigger opportunity, if they did redesign the g, on the periphery, how much bigger a story could it be? >> a much bigger story. the spanish curve is tacked along. benefitian market would the most. it is a larger market. that, andre to change there is a big conditionality on that, you would basically by less germany and more italy. guy: where does the u.s. fit in all of this? is in a completely different environment. the economy is doing relatively well. the question is, when will the fed resume rate hikes? it is a different ball game. with everything we just discussed, a lot of people would put their money into treasuries.

the dollar is probably going to appreciate. there is a bit of a scare factor going on. u.s. ell europe and by nationally? >> it will probably be more the core -- it is too expensively priced. there are other reasons why people buy. guy: great to see you. up next, he speaks out against the european commission. this is bloomberg. ♪

guy: let us talk about the headlines we are seeing. is bank here in the u.k. speaking on the radio in london. he is saying that the economy will slow up their brexit vote. not a banking crisis for him. it will be interesting to see how that plays out. that the brexit vote has been a hit to the bank though it is not a banking crisis. i also want to bring you some lines coming out in terms of the macro analysis that the s&p has been doing.

the u.k. will barely escape a full fledged recession. a contraction which is what the s&p is talking about producing a drag on the u.k. gdp in 2018. estimates as a result of what we are seeing. here is a bloomberg business flash. postal savings banks of china is seeking to raise a billion dollars in what could be the world's largest -- of the year. the firm it is said to have a listing application with the hong kong stock exchange and they are confident the ipo will be a success. noting that the actual merger will not take place until september. it is offering 35 million shares at its debut.

the largest technology ipo. tesla motors has not met its forecasted vehicle deliveries. it delivered just over 14,000 vehicles in the second quarter, below its 17,000 estimate. that is your bloomberg business flash. guy: a growth opportunity for the eurozone. the eurozone based on markets. places and players. this is what some of them have to say. >> there will be a slowdown in the u.k. construction. we don't know the order of magnitude. i am not sure it will be terrible though there will be an impact.

significant impact elsewhere in europe. positive dynamic in many countries in europe in the construction market. i consider that this will continue. >> some players, market participants, providers of financial services will have to get closer to their clients, put assets in the euro within the european union and with the -- with an the eurozone. and be a legitimate player in the new game. for sure it is an opportunity for france and for frankfurt and maybe for amsterdam. [indiscernible]

i anticipate that a few parts of the -- could come to paris. for the french economy, it would not be bad. guy: we will come back to that story. it will be one of the big debates. what happens -- frankfurt, paris? although dalby is also in focus. it is combining two of its largest banks to better compete with that -- regional rivals. there will be a deal that will billion lender with 175 in assets. we have the latest details. brigham young the details of the deal. is it a merger -- breakdown the details of the deal.

is it a merger? >> a megamerger. first gulf bank and the national bank of abu dhabi agreeing to combine and create a new entity. it will have a market value of $29 billion, larger than the market value of deutsche bank. this combined entity will have one of the largest pool of assets in the middle east. this is all part of an effort by abu dhabi to diversify its economy in the face of lower oil prices. they want to create a national banking champion that can better compete in emerging markets and even on the global stage. the way this is being done is through a merger of equals though it is a share swap. holders will end up with about 52% of the combined entity. the nbad name.

guy: what is the reasoning behind this? what reactions are there to it? reporter: you can pick it down to wider trends. we have lower oil prices. abu dhabi still generates the vast majority of its revenue from oil and it wants to move away from that dependence. on the ground in although debbie, there is a lot of talk about more bank consolidation in the works. we have seen some analysts single out some banks including an abu dhabi commercial bank and union bank as potential targets for other deals. their shares were up yesterday. clearly a lot of optimism in the market. on the ground here there is also some trepidation. remember we have seen consolidation that we have not

seen for almost a decade in the uae region. people are worried about job losses. there were no specific mentions of job cuts but there are a lot costlks about synergy and savings. whenever you. that, there is some nervousness on the ground. guy: thank you very much indeed. the german finance minister has suggested that germany wants national governments to set the pace for future will -- for future cooperation. for more, let us go to berlin. tony, how does wolfgang schauble 's comments fit into the post brexit debate? byit is an opening gambit germany because there is a lot of debate and shocked on the brexitnt about what does

mean and what lessons do we draw from it. wolfgang schauble is saying that the european commission is the central body that has driven the eu and has a role to play but if it is too slow and countries get deadlocked and after all, there are 27 or 28 of them, then we need to have national governments move forward. he of the possibilities raised for example is a defense union or some kind of defense cooperation between germany and france for example. a are looking for practical projects and not big visions of europe. i am curious as to merkel's strategy. -- is sheying that implying that europe is too bureaucratic?

words too not use the bureaucratic though we have heard from merkel in the run-up to the brexit vote that yes, we agree with the british on some things that the eu should do better or do less of. clearly, that is a code word for right tape and interference in national affairs. there is a strand in germany -- there is only so far we can go with this european integration idea. merkel has mentioned several points that could be pursued especially finding youth on them -- fighting youth unemployment which is a huge problem in many countries in the euro area. we don't have a lot of specifics yet. we will clearly care more about this. merkel has said as much herself. oddly enough, this seems to be

going over the summer. there does not seem to be on her part a massive amount of haste. guy: that is fascinating in and of itself. tony, thank you very much. may's lopeter rolled number, we await the june jobs data. that is out on friday. this is bloomberg. ♪

guy: and back. a quick look at where the markets are. light volume today as it is independence day in the united states. continental markets are softening up a little bit but not down by much. kearney did a pretty good job after the vote. let us talk about what we are looking at. stocks and bonds markets are closed today. mark carney holds a news conference tomorrow to discuss the financial stability board. wednesday sees the release of the minutes of the feds june policy meeting. theound off the week with

all-important nonfarm payrolls. -- richard jones joins us. policy,rms of monetary they are set out strongly from last week. does he say more about the general situation? they can change a lot of things that they put into place leading into the recovery that they thought would happen. toit has been acknowledged play a more important role in the bank of england approach to regulating the markets here and in terms of monetary policy. guy: payrolls? >> it has a chance to be short-term noisy. it will not shift the dial in terms of what the market expects

from the fed. stan fisher has come out saying that they are still doing their analysis. as to what brexit means. i think given what they have said and their previous dovish take by the fed, that friday's numbers will be massively surprising. theas caught everyone on hop. other than hsbc calling the 150 yield, this is something that has compounded all kinds of economists. i read an interesting thing. you buy equities for the yield and you buy fixed income for the actual capital gains. the world turned on its head. does it make their job harder or easier? >> i think their job is very difficult. the market has pronounced what

,t thinks about the fed rate completely different from what the fed outlined six months ago. guy: there is a lot of uncertainty. are some advantages near-term? in the u.s. are tied to the 10 year rate as well. that is 140 and change. giltsthe same thing with here. we know why those yields are here and that is why it makes it so complicated. guy: stay with us. the pulse is coming up next. london discuss where will go from here. some fascinating comments coming conference. aix

today's sunny day in london. are trading. we that is the ftse price. this is bloomberg. ♪

mark: george osborne osborne floats the idea of cutting interest rates. the french economy minister says paris should be the new home for euro clearing. and european stocks give up early gains, dragged down by banks commodities rally while the u.s. takes the day off. " live ino "the pulse london. i'm mark baron in