that. good morning everyone. welcome to "street signs." blame it on brexit. bracing themselves for market turbulence. the vote just one week away. haruhiko kuroda's inaction sendic the yen to a 22 month

high against the dollar. >> it could have consequences in turn for the u.s. economic outlook. o it would be a factor in deciding on the appropriate path of policy. >> while brexit ties the hand of the fed, persuading janet yellen to hold off on any rate hike as there are signs of potentially slowing growth but the head of the russian central bank tells me she's not worried about the uk referendum. >> we've had discussions to try and analyze the possible aftermath of brexit and the consequences for the russian economy. there is no direct consequence for the russian economy. >> and a call for more direct capital sends ubs to the bottom. after they might need to raise an additional 10 billion francs.

hi everybody. welcome to the show. a lot lined up for you. i will be heading back out to russia eminently. here in europe, shares trading lower across the board. a handful of stocks hanging on to gains there. stoxx europe 600 down just over a percent. we're all watching the brexit vote, the days ahead of the vote next week. main european equity markets lower in the region of a percent. a little less in the ftsi. ftsi mib off 1.5%. a lot to digest in terms of what the central bankers are saying and not just the central bankers but it the fed or the ecb but the bank of japan also failing to introduce fresh stimulus, sending the yen let's not forget a 22 month high against the dollar and the nikkei to a 4 month low.

these where big moves. sri is in singapore. and this important because as i was tweeting it does seem as the bank of japan is caught between a rock and a hard place at this stage. >> you nailed it. and all central banks in the run up to the brexit are being forced to sit on their hands in terms of policy decision. but there is a big onus of responsibility on the bank of japan to do something. be it scaling up jgb purchase, scaling up equity link purchases to get to the elusive 2% inflation which has been such a hard task for governor kuroda. and even then, there is no guarantee they will get to 2% inflation. anyway the yen really is at the center of all of this consternation right now. we are looking at close to 2 year highs in the japanese yen

it. has been fairly disorderly arguably over the course of the day. this move higher in japanese yen. dollar yen getting clobbered today. the negative feedback loop is very very negative for japanese equities because of the exporters and because of what the yen does to those exporters. so here in lies the problem for the boj. yes we do have the abe administration delaying tax hikes and that acts as form of fiscal stimulus. 2% inflation remains elusive. they have to do something and do something big. even then there is no guarantee. roll on the july meeting. i think that is absolutely yilt here. there is a lot of pressure on mr. kuroda and the team to really scale up and expand

the --. as for now the big issue is about intervention and yen from appreciation. are we going to see it especially when japanese authorities is on the watch list and some other stuff. >> thank you sri. moving from the bank of japan to another. and the fed brexit fears played a part by the fed to delay hiking rates in their meeting yesterday. suggestion is there could be spillover to the u.s. economy but dot plots suggested wed could see two hikes this year. the fed chair calling this the new normal. listen to what she had to say. >> what you see a downward shift in that assessment over time the sense that maybe more of what's causing this neutral rate to be low are factors that are not

going to be rapidly disappearing but will be part of the new normal. now you still see an assessment that that neutral rate will move up somewhat. but it has been coming down. and i think it continues to be marked lower. and it is highly uncertain. >> now just in the last half an hour we've heard from the swiss national bank. they have also left interest rates on hold. like the fed they expressed concern over uncertainty in turbulence on eu membership. very interesting taking place with regard to all of these brexit uncertainties. i wonder how worried the central bankers at this stage are of an unwinding coming via the financial sector in london or the uk if we are to see a no vote. how much of an impact that potential could have on global financial market, on european

financial marks and whether that is one of the main worries they have. and i'd love to know how much they are talking together. we haefrd from kuroda this morning that he is speaking to other central bankers by the looks of things. >> they all seem to be saying look we're taking note of it. but depends who you speak to. even short-term volatility, very short-term and we'll move on. >> that is largely the message coming in. i think the central bankers have another problem here and it's growth. and still at this point, in spite of the continued drum beat of hawkishness from some members of the fed committee it is clear that that last jobs number took a lot of people by surprise. it was so weak compared to expectations that it had some people walking away scratching

their head and saying can we actually justify or stand up a hike on the back of that number? and what will be interesting is how the market begins to reprice expectations on when we get the next move from the fed. because increasingly there will be the worry a la 2015 the window is closing here guys. and even people like evan say forget the window. we're data dependent. we go when the numbers say. it has felt as though there was an opportunity with this steadily improving employment picture and that last number has set the cat among the pigeons. >> and now you have six members of the fed saying we're actually going to achieve one hike this year. the question is do we see a hike before the u.s. election here. for me what was quite interesting was the forward planning there and the fact they have taken hikes out of 2017 and taken the equivalent of two and

a half hikes out of 2018. and i wonder given the spillover of the effects from december and the con earn about dollar strength if they don't move here in the next few months there is an interesting effect for other central banks. china is interesting. relieves some of the burden on those banks. would see ae a rate cut from china? >> i think that is great point. and if you watch what we've seen in terms of government yields, there is no evidence that the market has an expectation that rates are going to go up any time soon. in fact if anything, the move at the 10 year bund into negative territory, again a signal that the market's expectations around inflation and rate rises is weakening, not strengthening. >> you could argue that is also about ecb bond buying.

also about risk aversion as well. i completely agree. it is not just about germany or europe. it is also about the fed as well. >> we're here in st. petersburg. talking about the russian economy louise is a. i asked the governor about the fed and how its policy path may be effecting the decisions that the russian central bank itself can make. let's listen to what she said. >> translator: internal factors and internal risk are much more important to us. we are paying attention to them. and we are also certainly paying attention to what is going in th external markets and the decisions that are being made by among other institutions, the federal reserve. but i would also like to note that it is very important that the fed is very actively communicating with the market and we see that investor expectations often reflect the kind of decisions that may happen in the future. so we do not expect any dramatic

changes in the market right now because everything is being done more softly so to speak. so we hope the normalization of monetary policy in the u.s. will be fairly smooth without leading to any big discrepancies with market expectations. >> a number of central banks are making preparations for next week in case britain votes to leave the eu. can i ask you, are you making any plans for special liquidity provisions in case there is some disturbance in the global economy as a result of a vote to leave? >> translator: we have had discussions to try to analyze the possible aftermath of brexit and the consequences for the russian economy. there is no direct consequence for the russian economy because we have a fairly low level of mutual trade with the uk and not very significant high level cooperation in the financial sphere. so we are definitely taking into account this type of risk and in

the event they happen we have a full set of instruments to use because we have recently been through this set of turbulence so we have full set of tools necessary to cope with it. if there is a need we can apply them but i don't see any risk of the russian economy because of a possible brexit. >> what impact do you think it would have on global market? >> i think volatility may rise slightly for same time but the market will find ambulance as it often does and stabilize at a certain level in terms of foreign currency and financial asset prices. >> we were looking just after the weekend that these latest poll, indicating more traction for the leave camp. and just looking at another poll coming through. 53% of brits would vote to leave the eu.

but again, the ipsos poll. 53%. and last night, out of a room of 25 tables i asked how many would vote stay? vast majority of people raised their hands. and how many leave? and we had maybe four or five. it may be also goes to show what a difference between polling the city versus polling the rest of the uk. so yeah, by all means the conversation continues. let's move on. because we're also looking towards some of the biggest lenders at the moment. switzerland's two largest lenders will likely each need to raise an additional $10.4 billion in capital to meet new leverage requirements. that is according to the snb. switzerland's government recently approved two new big to fail bank rules. a headline requirement for 5%

ratio to total assets to be met by the end of 2019. chip making equipment giant has agreed to buy microvision. the terms of the deal gives a 17% premium to hmi shares. the taiwan listed company shares jumped by their maximum daily limit of 10% on thursday. and fiat chrysler trading lower this morning after citi group did something. and higher than expected that% rise in european sales last month. higher than industry 25% rise.

talks over proposed merger between france's schneider electric still ongoing jeff? >> no. that would appear to be the message would it. we caught one the ceo this morning. and one of the big stories since the global financial crisis has been the redestruction in cross-border m&a activity within europe itself and it looked like we were going to get a deal done about six months ago when schneider electric began talking with a british company. they would spend 550 million was the amount talked about and they would buy new shares in the british company. and there would be a sharing of some parts of the operations of the schneider electric business. that deal didn't happen. and now with i guess

conversations just taking a couple of days, the latest attempt has faulted. so let's find out from the ceo of schneider electric what went wrong. >> we worked large part of last year together with aveva on a project. schneider was contributing its software division to create a unique actor in the play of industrial software. so that would have been given aveva the size of double of triple what it is today. -- diversified exposure. plus we were very attached to leave aveva as a listed company -- [ indiscernible ]

we worked on the project, a very simple deal. at the end of the day it is on acquisition, on a merger. and schneider called off the deal because of the environment. we call off the deal. it was a very friendly discussion. we stayed in touch with the board. the chairman. we entered the discussion. came to a, very attractive proposal for your --. >> are you done now? could you potentially revise the offer once again and try to talk to them again? >> we were in talks for

structure which we all agreed on six months ago. that was leaked somewhere so it was too preliminary to say. we take the position of the board of aveva. >> how many times we tried to push him whether or not these talks will resume. >> there is a lot of logic to the deal. and i think he was very reluctant. speculation is of course that the terms got worse between, you know, the deal that was first moved here and the one that was flagged up again. >> and oil price has risen since and therefore --. obviously i wasn't here last year. you got a better chance of the scarcity but tsentiment from th us russians is that things have turned a corner. we're going to be catching one

the charles robinson to get his take on the potential ipick up n in russian economy. stay with us.

welcome back to st. petersburg. we're going to pick up on the outlook for the russian economy. joined by charles robinson. great to have you on the show. we've been talking all morning about the russian central bank the fact they cut rates last week but they still have these laser focused on a 4% inflation target by the end of next year. are they too hawkish. >> they are certainly not winning the battle of credibility. we just had a battle this morning where the audience were asked what do you think inflation is going to be next year? just 7% think around 5% inflation. 38% think it is going to be 8-10%. so there isn't any faith or trust yet that russia is going to get this down. >> how does she get that? does she just have to hold the line and maintain the line she's given here? >> gradual interest rate cuts but you have a fairly weak economy. by think it is going to shrink

minus .6% this year. double digit interest rates and will come down i think and will turn russia into a mixco. they think mexico differentiates by having low inflation and that will encourage investment and change the long-term story. >> this is about sentiment though. as, you know, charles. and that is what i think that room voted that people cannot get their head around the idea that they could have low single digit inflation in this economy. so while inflation expectations remain elevated in the marketplace, that is -- that actually forces the central bank to work harder and keep interest rates higher. >> i think -- more right than others and bond markets some extent are buying into this as well. they love the orthodox here. love the government that wants to cut the budget deficit, that

has real interest rates. unlikely the west with its negative interest rates. so that orth dox is very popular in bond markets. not so much corporate level. >> how do you get growth? haven't with learned that if you are that stringent in terms of your fiscal policy in particular, you have to do other things like reforms in order to boost growth and nothing i've read coming into this suggests if we see growth recover it is going to be anything to write home about. >> the focus here seems to be about innovation and saying so much more could be done. so there is another question where what is the key problem for the economy. is it sanctions? only 1/5 of the add, thought the sanctions was a problem. they thought too big a government role was a real problem and want that to be address. so much more that russia can do.

here they are making progress but there is still further to go. >> a great deal of resistance to the program. we just listened to andre kosta of ecb. the state is only doing this to refill the covers. this is not about proper structural reform here. so again the skepticism -- >> -- letting you repeat the process. -- himself was saying there is political ratings and the fear of a fall in political ratings is what is deterring change. >> i saw survey recently of senior management. and it was foreign and international and domestic companies i think 42% of them said actually they want to leave russia. 16% were saying they want to leave in the next two years. and a third of those that wanted to say leave are saying we want

to go because we want to set up a company elsewhere. so whether you are lacking innovation or incentives for businesses here to start up, nothing really seems to have changed. and will it? given proximity to elections. >> pushing the idea that you have to feel that you are going to get rewards for your investment, two or three years down the line. he's in charge of a big new strategic plan. >> how much -- really have though? it is a think tank isn't it. >> we've been here before. and markets will at some point say well it might happen and therefore we should buy that into that a little. we're going to find out in 2016? >> is this a safe place for western investors to put their money? >> they have quite a few western companies saying they want to expand investment. schneider i think is here and budweiser. there are companies that still a market of 140 million plus is

something you can't ignore. >> charles, good to see you once again. thank you for the compliment. charles robinson. well, it is all about football, isn't it. still. the french riot police charged on english football fans last night. using tear gas and batons to break up the crowd. scuffles broke out across the northern french city throughout the day, including small standoffs between english and russian fans. these are some pretty violent images that we're show. how much do you think was orchestrated beforehand? e-mail the show. find under the circumstances a @"street signs" cnbc. and i'm on @louisa bojesen.

a lot of people pointing fingers but who knows. hosts france left it late but broke albanien hearts with two goals at the end of the game to become the first team to qualify for the knockout stages. antwon griezmann was left unmarked to put this cross home. both players were dropped from the starting 11 for the game but made a big impact from the bench. elsewhere switzerland came from a goal behind to secure a draw with romania to put them second in the group behind france. and there are some mouth watering clashes in today's schedule with the most anticipated been between england and wales in lentz.

very exciting. we have to take a quick break. check out our world markets live. . we'll be back with more from here as well as from st. pete s st. petersburg in a couple on minutes

welcome back to "street signs." we're live from london and the st. petersburg international forum. global stocks head south as market turbulence impacts central banks views on what could happen here. that vote just one week away. >> it could have consequences in turn for the u.s. economic outlook. it would be a factor in deciding on the appropriate path of policy. >> brexit ties the hand of the fed prompti ining janet yellen

hold off on interest rate hikes. but the head of the russian central bank tells me she is not too worried about the referendum. >> translator: we have had discussions to try to analyze the possible aftermath of brexit and consequences for the russian economy. there is no direct consequence. >> the bank of japan government says the referendum is behind the drop in bond yields after his inaction sends the yen to a 22 month high against the dollar. and the swiss marble bank says the country's two biggest banks might need to raise an extra 10 billion francs. hi everyone. welcome back to "street signs." we've got uk may retail sales just hitting the wires and 0 .9%

month on month. expecting a gain of .2% month on month the year on year figure is plus 6%. the biggest rise since september of 2015 and far outpacing the reuters poll of 3.9% year on year. so instead of 4% we got 6%. they go on to say the increase in retail sales partly reflects the biggest monthly rise in clothing sales seen since march 2014. and looking at plus 3.4% month on month as the weather improves. and we have indeed had improvement in the weather. and just recapping again that the majority of the moves that we are seeing these days in sterling comes from the worry heading into this referendum

vote taking place in less than a week. and the smart people are saying that uncertainty is going to continue. but the pound still down a bit on the back of this data, despite the fact we're seeing a big old jump. the may retail sales rising at the fastest annual rate since september 2015. now federal reserve chair janet yellen left interest rates unchanged yesterday citing tepid growth, slow job gains and britain's impending vote to determine its future in or out of the european union. >> clearly this is a very important decision for the united kingdom and for europe. it could have consequences for economic and financial conditions in global financial markets. if it does so, it could have

consequences in turn for the u.s. economic outlook that would be a factor in deciding on the appropriate path of policy. so it is certainly one of the uncertainties that we discussed and factored into today's decision. >> and as the federal reserve keeps it eye on britain, so too our investment bankers. and now a new survey from m&a advisor merril corporation shows 67% of advisors think a vote for brexit would have a long term negative effect. you put out some research that you have done. and it is not painting a pretty picture. >> no. we did research with m&a

advisors who are a think tank that we work quite extensively looking at trends in the marketplace. and we handle over 5,000 m&a transactions in a year typically. hundreds of ipos and high yield bond issuing. and what we see because we see stuff very early. we stuff when it is still at code name level when it comes on to our systems and virtual data. so we see the trend early. and we see a slowdown about 8 percent below this time a last year on the high yield bonds. the -- sorry. on the m&a activity. the high yield bonds is down 35% on this time last year. ipo similarly across europe. i think it is just a level of uncertainty in the market. they want to derisk and clearly brexit signifies significant risk for all of these people. >> isn't it natural to assume there is going to be a pull back before any election, be it

presidential election, or revere referendum. and then after that unsescertai is gone people still say wii nowe need to put this money to use still. >> there is a sense in the market there is pent up activity waiting for release. and i think if the vote is to stay in i think we'll see a quick release of that. a surge of activity in m&a and a sur surge of activity on the high yield bond market. if we vote the leave, i think that uncertainty extends for a longer period. thinkty market wills right themselves over a longer period but i think we'll have probably 12 months or longer of uncertainty in the market and that in itself will cause some pausing in people's activities. >> or could it possibly work the

other way? where british companies, if there is a vote to leave they think oh my goodness i really need m&a now and really need to find a partner abroad to team up with them. >> this is robert frost's fork in the road. the road less traveled and i think if we go down a road less traveled in fact never been down before, i think there will be a sense of national pride that len courage people to think creatively and become entrepreneurial and activity in the market i think there is no question we'll see some of that response come out of our financial organizations and our corporations. however there is then question marks about what do the trade agreements look like? how will people react to buying and acquiring uk companies? whether they are american who use uk as a launch pad into

europe or eu companies buying into an exited britain. i just think there is an uncertainty. it could be a good outcome but i don't think we can predict it. that is the problem. >> managing director for emea merril corporation. now if you want to read more about the survey and possible impact on a brexit, log on to cnbc.com. there is lots of good stuff brexit related online. check that out. the reeve and remain camps have taken their war of words to the water. the battle of the thames.

>> european equity markets trading lower. the u.s. future, interesting to see the u.s. stocks yesterday were lower a fifth session in a row. despite the fact that janet yellen was relatively subdued. i think it is fair to say the fed was subdued. the applied reopen is for a slightly lower start to their session. >> cannot improve until its human rights record -- let's listen vrmgts this is a nonnegotiable requirement for russia. let me reiterate that.

there can be no return to normal relations if russia behaves kraer from international law. international law is an indispensable tool for maintaining peace. >> mr. schaeuble on the issue of sanctions. one other story here in russia has been the energy price and what implications that has for companies that rely on oil for the production of petrochemical product. we have dmitry with us. can i ask to start off with, what impact has this volatility in the oil price had on your costs and your ability to manage the volatility? >> [ inaudible ].

basically no one welcomes. pretty strong beneficial factor for petro chemicals. the marginal are higher than historically have been. so --. our customers on cautious on purchase and how they build their own investment. >> what do you expect net profitability to look like for 2016? as we look at the 2015 numbers, clearly head line growth has been strong but the net line has been hurt also by fx volatility. so can you give us a sense of

what 2016 will look like in the round? >> well if 2016 ends today, which is --. dollar ruble exchange rate -- basically we do not have this effect which struck us in 2015 and 2014 when the non russian part of our debt has --. which hit our bottom line. but we are much more stable in this conversion from this level. actually if you look at our performance with the lower energy prices we do enjoy higher margin in our business and it is like 10% of the higher margin

than we used to have in 2014. >> can i ask about your ongoing relationship with china. -- made a huge investment in your company. i this i $1.4 billion for a 10% stake. they said they were hoping to acquire a further 10% stake within the next three years. how is it going working with the chinese? and what role are they playing in the business? the chinese play an interesting role. they invested 10% in. and there is lot of discussion. it doesn't seem to be any binding agreement between them. just the decision made by the russian antimonopoly and regulator for foreign investment which allows chinese to buy up

to 20% which doesn't mean --? [ inaudible ] >> we're in discussions. they bring quite an interesting angle. they are the second largest global company. they have pretty much significant portion of chinese petrochemical markets. they have their own technology and own market and there is something for us and for them. >> thanks so much for coming along. good to see you this morning. greetry konov. still to come we're going talk about the greek/russian relationship. and about space also. up up into the blue yonder. we'll tell you more when we come back.

airbnb has secured a billion. and raised over a hundred million dollars in funding late last year. uber rival didi chuxing has raced 7 billion in new funding according to the wall street journal. including the $1 billion from apple earlier this year. the latest effort leads china's largest ride sharing company with around $25 billion. disney has opened its gates to the new park in shanghai within the last couple of hours.

bob uygur spoke at the opening. younes is at the resort. all fun and games? it definitely is all fun and games. louisa, tens of thousands are here on the grand opening day and it feels as though all of them are in this shopping arcade behind me. this is a very important day for disney. the company's ceo was presiding over a dedication ceremony for the grand opening. and he was speaking. an his opening remarks he was stressing the importance of the relationship between china and disney. this is what he had to say. >> today is a celebration of creativity and collaboration. commitment and patience. a triumph of imagination and innovation. and a testament to the strong partnership between disney and china. together we have created an

extraordinary destination. here east meets west, the past meets the future. and anything is possible for those who believe. >> high level officials were also in attendance at the time. also disney received letters, congratulatory letters from both the u.s. president as well as the chinese president underscoring the importance of the u.s./china relationship. now this part has been years in the making. five years of construction. $5.5 billion in investment. and finally it's arrived. and the company has said this is a very important move from a strategic standpoint for disney because as the ceo has told me, it is a booster rocket for the business so that it could build up the brand, get people to buy more disney movie tickets or in this case buy more products in disney stores. also what's interesting louisa

is that the bet really could pay off. and that is because disney estimates that 330 million people live in the three hour radius either by car or by train and can actually come here and afford to come here on vacation. so there is a lot of optimism about exactly where disney is going in china. over to you. >> younes, thank you very much. greek prime minister alexy tsipras has faced calls to resign as thousands took to the square to protest. outside of parliamentary session debating greece's latest growth plan. joined by the deputy minister of foreign affairs for greece. thank you for joining us this morning. my sense from talking to people

in greece is actually that the people don't yet understand the full extent of the measures that are still going to have to be enacted here. and at the same time in the polls -- is now behind new democracy. how will the government turn this around? and is there a risk of fresh elections. >> the government has -- govern for four years. we know there are some fiscal measures were unpleasant measures however these measures have for a or tran, this means when --. recovery can come even this year despite some provisions. in this case you can understand all of this unpleasant fiscal measures would be relaxed in part or by the time we will have another kind of policy. this happens in countries which face such kind of crisis.

we have fiscal measures. policies. and when recovery comes we can see relaxation of the measures. so i can say that we are in the worst period of governing during this period is the first year of this 4 years. we have applied everything that we have agreed. and this context now, our main goal is to how we can see the recovery of the economy and which way growth can come greece. >> one way to do that is to look for investment from the likes of russia. president putin was here -- sorry n athens last month. can i ask you specifically what deals were signed? what dollar investment have we seen in greece? >> interest in two areas. first is prooifizatioivatizatio.

second is how can attract foreign investors in greece. and we present many opportunities many many areas. not only in energy, food stuff and tourism. there is other areas with aerospace for example. we have very small firms but dynamic in these areas. but in this context we try to attack attract not only from russia but from --. we tried to attract investors which can invest many areas because greece has a dominant strategic place in the whole area of balkans and turkey and middle east. so this geopolitical factor is a main determinant favoring for investors and the --.

cost costco has -- [ discernible ] and these two ports, besides the other ports that we have can. >> we've got wrap you up unfortunately. but thank you so much for coming out and seeing us here on the set. we need to just wrap up here on "street signs." so let's just listen in to what the head of the russian space agency said to me about donald trump and what would happen sending u.s. astronauts into space if donald trump was elected. >> -- very important for us. and we saw that in the past.

like they use apollo programs and even in times of cold war we had very promising and very good projects. and for the moment we discuss now improvement of our joint problems in the man missions and developing fast paced missions. lunar and mars as well. >> do you worry that either hillary clinton or donald trump could close that door, that relationship that you have with nasa? >> i didn't even thought about that. because it would be a bit strange. if we take the history, there was no time even with the different political -- not systems, but different, say, approaches. different times that we stopped

our joint programs in the manned missions. and our projects in the deep space. >> yeah. that was interview there regarding outer space. that is it for today's show. "worldwide exchange" is up next. see you stotomorrow with more f st. petersburg.

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the boj stands pat. the yen spiking japanese stocks plunging. >> one week away from the crucial brexit vote and central banks around the globe are sounding off on potential impact. >> and no holding back. >> poland. >> totally. >> yes. and as a reputation of not being a great listener. >> via com's former ceo speaking out as the sumner redstone drama continues. june 16, 2016, "worldwide exchange" begins right now ♪ ♪ mama