francine: frozen. for more u.k. property funds holds withdrawals. the tory race narrows to two. the industry manager and candidate lays out her post-brexit vision. we bring you that live. the french company makes a total billion-dollar bid. ♪ francine: welcome to "the pulse." live from bloomberg's european headquarters. i am francine lacqua. it is not :00 in the morning

london time -- it is 9:00 in the morning london time. this is as oil is rallying a little bit. data that is meant to forecast that u.s. crude stockpiles fell. gold advancing as the foldout desk as the fallout from -- we will have plenty more on the markets. let's get first to the bloomberg first word news with nejra cehic. nejra: the federal reserve is using confidence that it needs to tighten anytime soon. the meeting last month held before the britons referendum shows officials facing rising uncertainty. policymakers want proof that job creation has resumed at a healthy pace, the underlying momentum is intact and inflation -- bill gross says sovereign bond yields at record lows are not worth the risk. he built the world's biggest bond fund spoke to bloomberg

television. >> high durations which we have now at low interest rates. even a small change in terms of yield can produce a significant loss. your sovereign bonds are not up my alley. for more u.k. property funds have frozen withdrawals as investors look to dump holdings. columbia threadneedle and canada light have suspended trading in at least 5.7 billion pounds of assets. aberdeen fund managers cut the value by 17%. investors have time to reconsider. u.k. business confidence sank to a 4.5 year low in the days after that referendum last month. the sentiment slid 26 from 32 in may. just slid to six from 32 in may.

in may.to six from 32 production and justin for seasonal swings from the previous months. economists predicted a 1% gain. it is the sign that headwinds from the economic slowdown and political uncertainty in europe has doused activity. in a deal worth $12.5 billion including debt. -- aeal is a premium targeting sales growth of more than 5% by 2020 and half of its business king in on consumers seeking healthy eating alternatives. global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. i am nejra cehic. this is bloomberg. francine: brexit continues to haunt europe two weeks to the

day after the historic eu referendum. funds frozeperty withdrawals overnight and u.k. business confidence sank to a 4.5 year low. italian banks also europe's pressure point. my next guest says we should not .e to feudalistic -- simon,es's chief great to have you on the program. the problem is the people will look at these withdrawals and fundswith -- and these and they fear this is something worse. something ugly will be around the corner. this feels like 2008. true or false? simon: i think false. you have to take a step back. the broaderat financial market reaction, the pound fell significantly.

every commentator ahead of the vote suggested lower in the event of leave it -- leave. the pound is roughly at 1.30. the ftse 100 stocks which would benefit from the translation effect, 75% or so coming up short. that is exactly what is happened. francine: people did not predict the fact that we really do not know who the next prime ministers going to be. we have not started negotiations with the eu. is there a false sense of confidence? simon: it is a more amazing that the market has been orderly in the context of the lack of local closure that's lack of political leadership -- lack of political leadership. not seeing elections a swing back to euro skeptics.

i think the fact that theresa runner risen as a front -- given the assumption of the way she would negotiate with the european union and not rush. i think the orderly major markets, gauging the property funds aside, i think it is an optimistic trend. francine: this does not feel like 2008, because it is not systemic? there is a lack of liquidity in the markets and whether this is contained to property, because people get scared. or whether there is a fundamental liquidity problem of the markets that will get worse. simon: this is not to designate, because why we are sitting here in london, it is london, not the united states. 2008 was about the entire mobile financial system collapsing.

mobile financial system collapsing. -- definitely from the outside as people looking at this much more contained to the u.k. there are concerns about potential friction and fracturing of the eurozone, but that seems less likely. francine: how much to the ask you about italian banks? they are probably the number one systemic problem. simon: if there's concern about what brexit means, it is not a thought in this country is what it means to u.k. assets. who have been talking to and asia, the conversation about brexit is how could this possibly ask -- how could this possibly happen echo frank -- happen?

francine: do you think the italian banks will go down echo -- will go down? it is systemic and it will create a domino effect that could lead to 2008. simon: we're talking about a tying banks. if that was allowed to -- we are talking about italian banks. if that was allowed to happen -- led to u.s. and financial stress. clearly that is a path to which this could be a systemic issue. francine: everybody thought it was fine, even if it goes down. simon: i don't mean to sound like the eternal optimist. i always think there are risks out there. if you look at the reaction function of the european leadership, if you look at the ongoing reaction function of the ecb, the most likely course of action is this is contained.

francine: simon, thank you so much for now. us and we will talking more about central banks and janet yellen. talks between italy and the european commission are said to .e reaching a sticking point we'll get the latest live from the line. exquisite interview will ask the yoox net-a-porter -- andrea leadsome speaks. this is bloomberg. ♪

francine: welcome back. let's get straight to the bloomberg business flash. -- to buyncine, and white wave foods in a deal worth $12 billion. derivatives a premium of -- it represents a premium of 24%. -- more than 5% by 2020 with more of it is this zeroing on consumers. former u.k. property funds have

frozen withdrawals as investors look to dump -- henderson global investors, canada life have suspended trading and 5.7 billion pounds of assets. aberdeen fund managers cut the -- 70%. investors who asked for the money back have time to reconsider. samsung has considered this has reported its biggest -- has reported its biggest profit. the world's largest maker of phones made $6.9 billion beating estimates. the results underscores how the south korean company is defined a slowdown. of wanted ae bank passkey -- the talks between italy to recapitalize have reached a sticking point over who takes the losses.

to -- every day there is speculation about whether u.s. banks or whether the commission is willing to be flexible or not your run what we know where we are at. >> where we are at is a bit of a stalemate between the talks that italy's holding with brussels about trying to arrange some sort of package, primarily from akamai to kospi -- banca monte paschi he. to violate competition laws. yesterdayme comments that there was a need for flex ability. european officials need to reflect on this issue. italianseen of course

newspaper articles on interviews with prominent bankers including jamie dimon who weighs in on the issue saying flex ability is needed on the bailout rules. italy does not have any intention of independently some sort provoking of legal skirmish on the issue. i think there is no doubt that the compromise has to be reached. , nohe coming days and weeks one wants to have a truly , rightc banking collapse now, when in this pokes exit world when valdez in this post-brexit world when volatility is extreme lehigh -- post-brexit world when volatility is extremely high. francine: he said it could be systemic. in italy, the banks -- if a bank it goes or if there is not a

resolution, that means the prime minister will have to step down. we are at thatk point but lurking in the background in all of this is renzi's own referendum that he staked his future on, the one in october on his political reforms . the last thing he needs right now is a full-blown banking crisis, a run on a bank as he heads into that key vote in october. there is probably going to be a few more days of -- on both sides. provoked aterest to full-blown post lehman financial crisis right now. francine: that is exactly the point, dan. maybe germany and the ec overall will be a little bit softer. for more on italy's banks, stay with us.

algebra's hour we see ceo. we'll be asking him about deutsche bank. in the last couple of minutes, we have had some breaking news and we have been telling you about yuan and we have some foreign exchange reserves in china for the end of june. they are at $3.2 trillion. the estimate was a touch below. it means the economy is being managed ok by authorities. we are closely watching some of the doubles that we have seen. we have not seen any of the -- with china's stocks. up next, despite a market slowdown -- targeting 20% annual sales growth. we will be speaking to the company's ceo, frederico market the test frederico march eddie -- frederico forecaddie.

francine: welcome back to "the pulse." when you're after closing the merger, the new ceo of the group has a new ambitious plan. he spoke that sales will increase to the percent. beat -- ant-a-porter italian slowdown moving. for next was an interview this morning, he is federico

marchetti. great to have you on the program . yesterday you put out your five-year plan. you have been in charge for less than the year. things are feeling uncertain in terms of the macroeconomics. china is probably slowing you a little bit. brexit is happening and what is your main concern? : we are in a market that is growing. grow.xpect this market to they're expected to grow around 15% over the next five years. market fromerent the luxury line. [indiscernible] expected to grow around 15%, seven times as much growth. this is because the new market and the luxury spenders are becoming more mobile, driven.

[indiscernible] the people born in the 1990's, 1980's. they're expected to become the largest generation to buy luxury and they are born with the mobile in their hands and minds. luxury will be driven. francine: where do you see the most demand? u.s. consumers, the person that makes or breaks luxury. we hear about the china, they scale back. is there one market you want to own? usa is our first market with a third of our revenues and we expect he continue to be our first market. we have a plan that yes, we announced the market to investors and shareholders and employees. we expect china to grow immensely. it is already [indiscernible]

this shows the difference between online. if you think china, we were the first one in 2010 to send luxury food price in china [indiscernible] we were the first ones for 2010, no one was heading luxury food price it after 2010, many others came after us. we expect such growth. francine: are you ask -- are you concerned about a slowdown? are people going to scale back their spending because of brexit? you are extremely tied to the u.k.. federico: yes, we have anglo italian roots. my mother was born in the u.k., but we are a global company. -- more than come 180 countries.

a positive impact on our margin because of the cost of the revenues. demands of a slowdown in from consumers, definitely it could be a shock, but what we are seeing, talking about the past, we have navigated very easily the biggest recession in 2008. the highest revenues and record sales on that year, because the off-season business is countercyclical. we are very well-balanced and diversified. have the prime brands and at the same time, you offer a discount. people may just shift instead of not buying.

federico: during the off-season, the rice is pacing -- the price is pacing. consumers have more confidence. it is like having an airplane with two engines and when one is slowing down, the other one keeps the plane stable. actually also for the seasonal businesses for consumers, the so-called extremely important people -- our vips. francine: which is a stone how much per year -- which is based on how much per year? federico: 10,000. they will probably change the habit. they love to shop more. for example, they prefer anonymous packaging and a brown bag rather than lavish packaging to show to everybody.

francine: are you concerned about your cost? brexit, we don't know what the relationship with the eu is. do you have a plan in place that you can activate? federico: yes. the answer is yes. we were surprised by brexit, but we were not taken by surprise. francine: you are probably one of the few, congratulations. -- the plan we have announced includes the potential impact of brexit. actions,egies and our and in terms of duties, back to your question, we have a plan before brexit, perfect for brexit, we have been quite lucky rathert, provides --

than netapp or terry -- net-a-porter will be affected by brexit. u.k., but also the u.s. we are creating a network of logistics centers. .iversify the risks basically before the merger -- francine: in which countries? do you go region by region? the plan is to open a logistics center in italy and continued to operate in the u.k. . two separate inventories to the u.k. will deal with the demand coming from the u.k., whereas the italian one will be the center of management across the

different logistics centers duties very low because it will be only for the management and on a transfer price basis. plan.ss than the original francine: for the middle east, this is a huge market, i cover andy day the price of oil the impact on revenue overall. how do you think of your company ? the market shares that you want? or revenue growth? federico: both but it depends on the market. we announced recently a cap increase. that's a cap increase for $100 million. -- a cap increase for $100 million.

our plan is to break into the middle east with full pricing in terms of logistics. knowledge -- the that is white we consider him a strategic partner for us being that he operates the biggest -- francine: doesn't it mean you debtso get more high-end does it mean you have to get more high-end? -- does it mean you have to get more high-end? example, we have announced yesterday the launch ada.roduct -- launch of prod i am very honored and i think them so much. in big achievement for a company prada.

fine jewelry and watches which is basically going from luxury to hard luxury. especially for the middle east is absolutely perfect. to sell watches, $20,000 in terms of price. have ae: you seem to natural handle on hedges. how concerned are you about overall the situation -- i know it is difficult -- i don't know if it is political but this is a country that is been through so much. unemployment is so high. are you concerned that we go back to the worst of 2008? federico: i love my country.

i am an italian on cheaper nor but at this in time -- an italian entrepreneur but at the same time i'm running a global company. 7%, so italy less than it is a small fraction. yoox before the merger has been growing in italy always in the past did except for one quarter -- in the past. except for one quarter. the world economic -- use is at is jewel for italians. .ou is a jewel for italians it will continue to grow. francine: thank you so much for coming on. -- let's gethetti

straight to the bloomberg first word news with nejra cehic. nejra: of the federal reserve is losing confidence in his need to tighten anytime soon. minutes of the fmo sees meeting the month held before britons referendum shows officials facing rising uncertainty. posted makers want proof that job creation has resumed at a healthy pace. inflation will eventually hit target. for more u.k. -- have frozen withdrawals as investors look to dump real estate holdings in the aftermath of britain's brexit vote. they have trading and 5.7 billion pounds of asset -- by -- so that investors who are you asked for the money back have time. german industrial production unexpectedly fell in may. production adjusted slid 1.3%

from the previous month. economists predicted a 1% gain. it is a sign that had once from the slowdown and political in atainty has dampened -- deal worth $12.5 billion including debt. the deal or a premium of 24% on white waves closing price. business thing consumed desk keying in on consumers -- keying in on consumers. -- francine: we expected a 1% decline. overall, let's remember it is what may -- it is may.

it is way before brexit. simon is with us. when you look in general, what would be the best case scenario for u.k. post triggering article 50? are we looking at a resumption of manufacturing in the u.k. which would benefit from a lower pound? are looking at more services? should they cut taxes to attract more corporations? simon: we saw this goes on the tech side we expect the bank of england to cut twice, bring interest rates down to 0%. the best case scenario, i think in terms of what happens after triggering article 50 is a lot of negotiations that a been done before. if you negotiate trade pacts, you negotiate benign outcomes.

it will allow the economy to continue to grow. francine: talk to me about havens. it is basically gold, gold spot pricing. you see the line above 2000. global gold etf holdings. everybody this is saying to do with the markets fear. do you think this will continue rising? are a lot of your clients asking to have more tangible thanks to protect themselves -- tangible things to protect themselves? simon: there has been a flood into safe haven. . see this goal chart if this was a 2008 scenario, gold would not be rallying in this way. it would've been getting sold off as other assets. this is people not particularly liking the outcome -- the outlook for risk assets.

flacco in 2008, they were not holding cash. -- francine: in 2008, they were not holding cash. simon: i don't think that is case. -- even january, february, they have consistently been strength, theb's, yen. gold serves well in a portfolio in a pure liquidity -- and that tends to underperform. francine: gold has been the best performer. risen.h it is if you look at treasuries, are you concerned that we are seeing a flattening of the yield curve. it seems like treasuries -- i don't know what your risk pricing their -- risk pricing there.

simon: they seem to low. we have been having the same conversation a year ago, three years ago and yields have gone on a one-way path down. the change in sentiment toward , people are trying to take yield where they can get it. they are not overly optimistic about the future. so 1.5% yields are positive in the u.s. francine: overall, your best bet? what is the trade that will make money for your client? we tend to- simon: be modestly overweight. we think the risk premium -- and the support of ecb action by every part of the fixed income market will support european high-yield.

in terms of best bets, it is longer dated dividend futures. very sharp selloff was brexit. it looked the longer day-to-day european euro stoxx 50 futures, they are pricing in a far more dramatic fall. francine: i think we are going to westminster. we're heading -- we're hearing from andrea leadsome. conservative leadership leader is speaking. she is expected to set up her post-brexit vision. she is due to speak any moment. i think we should listen and. -- listen in. >> that way we can send that clear message to the hold parliamentary party that we expect them to do their duty. [applause] ms leadsome: today i will be

voting for candidates who i think has the skills and expertise, the judgment and the values to do the top job. a candidate who offers fresh leadership. , but ifeans opportunity you want to make the most of that change, you have to be that andrea has come from nowhere to become a major contender. you can only do that when you are ready. she is ready to be our leader .nd our prime minister [applause]

was the: that introduction speech for the conservative party leader. contender, and you let some, who could become the next prime minister. theresa may the home secretary is a favorite. there is around the votes and who knows what happens yet got we should have a new prime minister by september. what are we expecting from andrea leadsome. she is speaking in two seconds. do you want a very detailed plan? simon: no, i don't think that is realistic to have a detailed plan. she is looking good in terms of this petition. sheehan to present desk she needs to present a strong massage -- a strong vissage. francine: your sing some photography. we have not heard from theresa may what she is expecting post-brexit.

if we believe the polls, and we need to be careful, there are going to be two women that will fight to become prime minister. one pro remain and the other not. does it make a difference to markets? simon: i am very careful and respect to polls and bookies. whoever gets in, stepping through how they are going to negotiate will be important for markets could i think it is unclear -- francine: let's listen in. leadsom: i and my colleagues are but to exercise the democratic right to make it incredibly important decision. we will be selecting two mps to go forward to the country so that many of you can decide who is going to be the next leader of our party and of our country. that person will face in enormous challenges and today i

want to tell you why i want to want to party and why i lead this great country of ours. you see, i am an optimist. i truly believe we can be the greatest nation on earth. [applause] ms. leadsom: as we showed the u.k. is opened to the world and united and our new destiny, so we will expand our horizons. the should be our goal, not hostility. -- not austerity. [applause] i want to spread prosperity to every corner of our country. i want to help create more jobs

because we need to hear and he'd those millions of our fellow citizens who feel and fear that their country's leaders are not worrying about them enough. [applause] ms. leadsom: those people who think that the chief executives of some big businesses get telephone number salaries but they are no relation to the performance of the country -- the company's. i say to all of those people that i am with you. i want you to share in the great future for this country. [applause] ms. leadsom: i want to see better training, smarter working. yes and higher pay for the many. i want to lead a nation where

anyone who aim's high can achieve their dreams. [applause] my first task is to show how great our potential is as a nation. let's banish the has missed -- the pessimists. [applause] mark carney, the bank of england governor was right last week when he said, and i quote, "the vacant had a change. it has one of the most flexible economies in the world and benefits from a reservoir of human capital, world-class and for structure and the rule of law. its people are admired for their strength under adversity. the question is whether the u.k. will adjust, but rather how

quickly and how well. he then goes on to say that the clear plan is needed. he is absolutely right. today, i want to speak to the markets, as well as to the nation. no one needs to fear our decision to leave the eu. [applause] ms. leadsom: we will do so carefully, reassuring our european friends and those businesses that are worried about change. trade must either top priority. continued tariff free trade with the eu, continued free trade with those countries we have agreements with and current members of the eu.

over to the, saving the opportunity to take up new pre-trade agreements with fast-growing economists around the world. -- fast-growing economies around the world. [applause] ms. leadsom: there is a big job to do. we also have to give certainty to defend groups in our own country. certainty on migration. we want fair but controlled immigration. fair to those who are already here and fair to all of the talents across the world. i tell you today, i will not use people's lives as bargaining chips. [applause]

ms. leadsom: people need certainty. they will get it. i say to all of of you who are legally here, you will be welcome to stay. [applause] ms. leadsom: we need certainty for farmers, for universities and for others who currently receive our monthly -- our money through the eu. to them i say the u.k. government will give you that same money when we leave and we will work with you to make more targeted use of those subsidies. [applause]

ms. leadsom: and we want certainty for those who want to travel, to study and collaborate with others on the continent. i say to them you will be absolutely free to do so. [applause] ms. leadsom: a key job of our new prime minister will be to ensure the continued success of the u.k. economy. we can see the forecast of a disaster for sterling, for equities and for interest rates have not been proven correct. the pound is weaker, partly as a result of the market being wrong on the results of the referendum and partly on the expectation of further interest rate. lower sterling is good for exports. it makes inward investment more attractive. it means we may import less and buy more at home for good

things. [applause] ms. leadsom: the ftse 100 is trading higher and outperforming other global stock market indices. the government cost of borrowing has dropped with private sector loans still available at the same rate as before. that means the price of our state borrowing has fallen by a remarkable 40% with ten-year interest rates below 0.8% versus 1.37% on june the 23rd. [applause] our valuable financial services sector has been boosted by barclays and hsbc bosses, saying their plans are to stick with the u.k.. -- stick with the u.k.

[applause] i will work tirelessly to reassure investors that the u.k. is open for business and a great place to employ people. [applause] when we come to see the post eu figures, i expect to see continued growth. i expect to see people buying goods, going about their normal business, buying their homes and yes, enjoying a pay rise. i would expect high standards of company behavior, recognizing their obligation for their communities and to the employees. mine will be a realistic but optimistic voice. i believe we have a great future ahead of us.

[applause] ms. leadsom: we need to unite. we need to be positive. we need to make the most of our enormous strengths. we are one of the world's biggest economies. we speak the world's international business language. our contract laws and judicial system are second to none, inspiring great investor confidence. we are part of a commonwealth of 2.3 billion consumers, many of whose economies are growing fast. we have historic trading links around the world and from tourism to software to financial services to manufacturing, we have a great deal to offer. [applause]

ms. leadsom: this is the country that gave the world the rule of law, parliamentary democracy, the right to own property, the english language and the three market -- and the free market. [applause] ms. leadsom: we are a remarkable people. we have so much more to give. that is why i am here today, and i want to say to you let us unite. together, we will write another prosperityer, one of and tolerance and hope. thank you. [applause]

francine: that was energy minister and conservative leadership contender, andrea leadsom on her post-brexit position. let's check in on the pound and we have seen volatility. just a new record lower, the lowest in 31 years. let's get to the bloomberg business flash with nejra cehic. nejra: u.k. industrial producers are on course to post their first positive quarter in almost a year. that after output shrank by less than economists forecast in may. output at factories fell 0.5% following an upwardly divide in 2.1% surge in april. economists have predicted a 1% drop. for more u.k. property funds have frozen withdrawals as .nvestors seek to dump holdings henderson global investors, columbia threadneedle and canada

life have suspended trading. aberdeen fund managers cut the value of a property portfolio by 70% and briefly halted -- by 17% and briefly halted production. on is set to buy whitewave foods. that represents a premium of 24% of whitewave 30 day closing price. targeted sales growth of more than 5% by 2020 with half of its business king on that skiing in on consumers. -- keying in on consumers. samsung -- bolstered by demand for his galaxy s6 smartphone. the world's largest maker of phones and memory chips made $6.9 billion. the results underscore how the south korean company has defied a slowdown in the phone market.

that is the bloomberg business flash. francine: markets slightly higher this morning and yet we are still seeing a slight and the havens. let's head to mark barton with your asset check. marco -- mark: officials were going -- were losing a confidence in the economies ability to withstand higher rates even before the referendum ere in the u.k. still the stoxx 600 is 6.7% below the close on june 23. all industry groups arriving. this is the big piece of data today. u.k. business confidence sinking to a 4.50 low in the days after written -- after britain voted to leave the u.k. -- the eu. more service showing that sort of figure. this is an interesting chart for you.

these are the big home builders in the u.k. since the referendum on june 24. you see all of them are falling between 28% to 39%. reiterate, also housing market fundamentals remain strong that it is too early to assess the impact of the referendum on the u.k. economy. after this seven property funds have frozen withdrawals this week after four more joined the lift on friday. you've got declines from aberdeen of a percent to henderson group, down by 22%. francine: mark barton with the asset classes you need to be looking at. surveillance is up next. tom keene will be joining me from new york. about italy'sking

good banks and talking to a general manager of any credit. we will look at some of the havens, markets. more of that coming up on surveillance and this is bloomberg. ♪

francine: frozen. for more u.k. property funds halt withdrawals after investors look to dump assess after post-brexit. talks between heavily in the european commission over safeguarding the nation's banks hit a wall. a will speak to the ceo -- $12 billion bid for whitewave foods. it is about currencies and organic foods good this is bloomberg surveillance. i am francine lacqua with tom keene in new york.