Transcripts For BLOOMBERG Bloomberg Go 20160621

Lee k shang lee k shang. They are revealing a new location for the Gemini Bitcoin exchange. A fundamental shift in the last 24 hours, a swing back towards remain over the weekend with the markets moved to go with it. Big gains in new york, the biggest pop since august of last year. It will continue with features firm. Board, a bigthe day for sterling yesterday, the biggest pop since 2008. The gains continue, pretty much unchanged for 2016. The euro is just a little bit lower and the fed chair is that to speak in just a few hours time. The euro down 1. 68 on the u. S. 10 year. David ok, john. Thes check in with Bloomberg Team for an indepth coverage of top stories. Anna edwards and it is in westminster and guy johnson is an london. Is in brussels, and Erik Schatzker is an washington. Jonathan all reporters and the lives of the stories are stacked. Withdwards joins us live the very latest on the polls from westminster. Guy johnson alongside me to talk about the market reaction. Anna, the polls in the last 24 hours are split. The bookies tell me a different story. Break it down for us. Anna absolutely. The polls are split, we have a lead of two Percentage Points in a poll, and a lead of seven points for remain in one poll. The money ise going, at the end of monday the chances of a brexit were only 26 , 95 of the wages the wagers that have been placed were for remain. Interestingly, many of these conversation with the bookies you see the big money going on remain and smaller bets by more people going on a brexit. Thats an interesting trend weve seen so far. It seems as if the market is making their minds of already. Their minds up already. Have they made their conclusion too early . The pound is holding the biggest gain since 2008, touching levels not seen since february. Jonathan im going to bring in guy johnson with more. George soros comes out with a big oped in the guardian newspaper, its going to be ugly, ugly, ugly and stir league can fall as much as 20 . Do you think those warnings resonate with the electorate . Guy george soros has a reputation in the u. K. , in 1992, john major, all caps of problems being felt in the u. K. Economy. He was the man that broke the british pound. To a certain generation, that does resignation does resonate. Less so with the older democrat demographic. See if be interesting to that resonates, is a name that is known in investor that has credibility. As a result of which, you may have an effect. I dont think he is off base in terms of the calls he is making. A lot of people have similar calls, i would like to see what his trading book looks like. Jonathan a lot of us would like to see that. If you listen to the likes of george soros, the remain campaign had an extraordinary capability to leverage big names and big organizations. This story continue going into thursday for the next two days . Do they just keep banging the economic drum . What does the leave campaign try to do to get the momentum back to where they had a before friday . Anna it has been the economic story that the remain site has been blogging for so long, and people are asking if there is fatigue setting in and terms of whether that message resonates. Whether the george soros message resonates with voters. We spoke with a cabinet minister who said she dismissed these type of messages. This office was about that is not what this is about. Its about seizing control for the u. K. Forecasters and got things wrong before, thats the way to leave camp dismisses the likes of george soros. As another big name in theray today, David Beckham took to twitter to say he is backing the remain side, as is his wife, victoria beckham. No family divider along those lines in that particular household. Some of these cultural figures can keep us on our toes in the next few days. Sitting in them city on the trading floor, im not sure thats when to push me to take that cash off, but maybe David Beckham may sway a few people. Lastve had a shift in the 24 hours, we talked about how volatility yesterday was very elevated, still a lot of nervous is out there. We really have to wait until friday morning to get it done and dusted . . It will be interesting to see when the bookies call it. I think people are leaving their insurance on, thats understandable. Some of that insurance is not taken out by the Financial Market or hedge funds, its taken out by real money accounts. The story with the bookies is very clear. You can see that as we saw in elevated chance for the u. K. Leaving. That has come back down, that is what the market seems to be paying attention to, rather than the polling, which seems tight. For real money accounts, the insurance stays on, we may see a different story when it comes to hedge funds. They may take a different view to say if you are running a big company out of the u. K. Jonathan a lot of nervousness. Edwards,on and anna thank you. Invousness out there, but the last 24 hours, a real shift towards remain. What makes it swing back . David we will know within 48 hours. Thank you, jonathan. Investors are also watching the heads of two Central Banks. Is waiting for a key address from mario draghi. Mario draghi and the ecb have really stepped up on Monetary Policy. To what extent do you expect him to push lawmakers to say it is your turn now, what about fiscal policy . Ryan im sure he is going to say that. Im sure he is likely to get asked about brexit, and what that might mean for ecb policy. He is going into a hearing that usually lasts for three hours. It comes down to what the members of the European Parliament actually ask him. Obviously, brexit is the elephant in the room. This happening two days before the referendum. Asked, we can expect a couple of things. We heard janet yellen last week talk about how a brexit would pose a threat, both economically and financially, to markets. I think it wouldnt be shocking to hear the ecb president follow her lead on that. And also perhaps address some concerns about with them i mean for the eurozone forecast, or kind of Downside Risk that presents. These are things he hasnt talked about. If they come up, it would be surprising that it didnt feel like it was necessary to address them today. David that makes perfect sense, although it seems to me that he has to be careful this close to lookote, that it doesnt like he is becoming political and trying to weigh in on that debate. That could backfire. Busy have to be careful about that does he have to be careful about that . Does, and he he sees a way to address anxiety in the market about what if there is a brexit without waiting into that conversation. Into that conversation. He can talk about the tools they had to deal with this. We can talk about the standing swap agreements that the biggest Central Banks in the world have. There are six banks that set up these swap lines back in 2012. Bank of japan, bank of england, snd,ed, the ecb the they can lend money to one lenders if there is a crisis. As likely to be the main tool in the toolkit, along with a lot of verbal intervention if we were to see a brexit. Three hours ago, he got a surprise from germanys highest court, which said some of the program,at the omt another program and hasnt used to deal with debt markets in Distressed Companies distressed countries in the European Union, that tool is allowed. He could use that, should he needed in the longer run to deal with any crisis in the eurozone if we do get a brexit. David thats Ryan Chilcote joining from brussels. We will have to brussels for live coverage of Mario Draghis address to the European Parliament and 9 00 a. M. Eastern. Janet yellen will begin todays days of congressional testimony on the economy. Lets go live to washington and get the latest from bloombergs Erik Schatzker. You get a sneak peek in advance of this, although its embargoed, we wont be able to hear from you until 10 00. As you go into that room, what are you looking for . Erik evidence, or if not evidence, more indication as to why the feds thinking changed so much from the april fomc meeting to the fomc meeting last week. In april, if you recall from the minutes, there were quite a novel of fed officials who thought that by june, it might be time to raise Interest Rates. Last week we had a unanimous vote to keep Interest Rates at. 25 . Clearly something changed. We got a hint from janet yellen last week that the feds thinking thinkinged feds has evolved. Its been doing to adjust to the notion that we are in a new normal or what Larry Summers has termed the secular stagnation. She did say the words new normal. How did the fed get from april to june is a bit of a mystery, and we are looking for answers. I will be in her prepared testimony. Its worth reminding everyone that the testimony comes in two parts. The prepared remarks and the q a. Prepared remarks may give us insight into the feds thinking on the domestic economy and the International Pressures the fed is mindful of, such as the brexit. And when the q a starts, thats when political theater begins. There is no telling what senators will ask her. Typically, in many cases theyre looking to score political points. This is the heat of election season. They are not as focused on the markets, they are not as focused on the daytoday as people like you and me and many of the viewers. The questioning may veer off into a number of different areas. Certainly, it will focus on relation at some point. David senators scoring political points, thats news. That is surprising. Erik schatzker coming from us coming for us from washington. We will cover the starting at 10 00 a. M. Eastern. An update on whats missing headlines breaking news to john. Jonathan justin breaking news. News. Tin, breaking president , the heir apparent, is stepping down from the japanese company. A surprise. One of these companys most profitable deals. The formal google executive and one of the highestpaid Company Officials at the company is set to remain as an advisor, but ofself, the president softbank was that to be the heir apparent. The company just close out one of their biggest deals, and he was meant to take charge of the company at some point in the future. A lot of questions will be asked after that breaking news. Lets get you to speed on the big headlines in first word news. Thank you, john. On capitol hill, the senate blocked four proposals designed to keep terrorist suspects from buying guns. Two of them were offered by democrats, two by republicans. Aresome gop legislators trying to come up with a way to break a yearlong deadlock on then the decision. Hillary clinton plans to bas donald trump. Proclaim him as erratic and unfit to do the job. She points to his Business Record of how we would treat working families and small businesses. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. Im at chandras im emma chandras. Jonathan the brexit is two days away, the polls are split. Are the polls even measuring the popular opinion correctly and should you just follow the money is going, as a bookie . I dont think thats what peter orszag does, but will put those questions to him anyways. David this is bloomberg , im david weston. George soros is out of alarm on a possible brexit. He warns about the 20 slump in the pound if britain votes to leave the European Union. Is the us now vicechairman Investment Banking as well as Bloomberg View columnist, peter orszag. Good have you here. Hes also former director of the office of management and budget. Lets talk with George Soross comments about brexit. He said it will be a disaster. The pounded down 20 . As an economist, what do you make of the potential ramifications of brexit . Peter theres a big potential for big problems. Its not just the direct impact, but policymakers around the world dont have the full array of tools that we had available to us in the great financial crisis. Fiscal policy, for example, i find it hard to believe would be able to step in and help out in the way that it did then, now. Is not just the direct impact, is that the firefighting tools the water level is low in the fire truck. David if there were a brexit, what tools would be available to the ecb or the u. K. To try to ameliorate the problem . Peter their Monetary Policy tools that are available, but there are inherent limits to just using Monetary Policy. Even the Monetary Policy tools are not as expensive as they were during the financial crisis, in part because rates are already so low, theres only so much room you can go. Then you were into nontraditional Monetary Policy. Road,eady been down this its not that nothing can be done, its just not as expensive as in 2007, 2008. The capital that was coming into the country, you could see a sudden stop. It sounds very dramatic, but it plays into the debate is happening currently about the Monetary Policy response. The obvious reaction is to raise more stimulus. Theres a debate over they may have to hike Interest Rates. Is that something that would happen, the potential to have to put up rates in the face of that . Peter thats why the fiscal policy dimension is so important. The natural way of getting yourself out of that box is policy, whichal helped to cushion the economic blow and put upward pressure on rates to attract the capital back into the country. As we were just discussing, thats really not happening. David peter, i wonder whether part of that is the reason we are in this drama. The politics are going in the opposite direction from economic policy. Whether in europe or the United States or elsewhere, things cant be done politically. Back ine are stymied, his world of hyper polarization. In the United States, for at least 40 to 50 40 to 50 of the population, Life Expectancy is down. People are frustrated and mad and we are not getting the kind of policy reactions that can make us all better off. David we talk with peter orszag about janet yellen. What should we expect to hear from her . Thats coming up next on bloomberg. Than two hours from right now, venture janet yellen will testify Monetary Policy before congress. Fed chair janet yellen will testify Monetary Policy before congress. Peter orszag is still with us. Tell us now, less than three hours from now. Where is the economy . Are we in trouble . Is meh. He economy not great, not terrible. With growth rates 1. 5 to 2 , you can have bad numbers that are close to zero much more likely that if we were growing at 3 , what a bad number would then be 1. 5 rate. One of the dimensions here is that we are skirting effectively the plane is just very flying, and thats a dangerous situation. David shes focused on employment and job numbers. Time,b numbers are, over pretty encouraging. Both in unemployment and underemployment. The white line is on employment, the orange line is underemployment. They both have been coming down steadily. Is that thead news Participation Rate for prime age people, 25yearold to 54yearold, is not really recovered. And productivity growth is down about. 5 per year. The employment rate has come down, but it is still the case that a lot of people are out of the workforce and choosing not even to seek work. And for those who are employed, we are not expanding productivity rapidly enough. Jonathan i call it federal confusion. No one understands was going on at the fed right now. Janet yellen seems to be shifting to the Larry Summers view of the world. They say only one rate hike for the next two years. Our witnessing a fundamental shift in the thinking of the Federal Reserve . Or are we just hands off for one month and then put things back on the table in the coming months . Peter its a combination. Some downgrading of expectations for the growth rate of the economy, and all that carries with it. , evenll due respect though the polling looks better, we dont know whats going to happen with regard to brexit until the people actually vote and we see the outcome. With a verythat poor jobs number, and its not surprising that the fed is just saying lets hold on for a second and see how this all plays out. We will be reassessing the state of the economy once we get through brexit. We also have the election coming up. I dont think it is surprising that they are in this watch and wait mood for right now. David delicious to taste about health care. You are a student of this give us just a taste about health care. It is starting to slow down . Peter Health Care Costs have decelerate insignificant way. There is a report suggesting that for employers in 2017, the growth rate of Health Care Costs will be of what it was a decade ago. This is improving the longterm fiscal outlook, easing the burden on employers. This is a good news story. David theres some good news. Peter orszag, thank you. Peter good to be here. Jonathan janet yellen in the hot seat. She will testify before the senate in less than three hours. Torsten slok has your preview next, when bloomberg , returns. Jonathan from london and new york, a beautiful picture of big ben in westminster. Its cable making new gains right. 1 . And the ftse off by im Jonathan Ferro, from london in new york this is bloomberg. Futures firmer with dow futures up about 60 points. In london, the ftse gains. Through 10,000 points on a session up by about 45 today. Switching of the board, the pound is the strongest story, highest for the year almost as we close the roundabout here. The u. S. 10 year a set ahead of the fed chair Janet Yellens testimony. Some of the big market moves in todays session. Lets get over to emma chandra. Emma thank you, john. When it comes to fundraising, donald trump fell far behind Hillary Clinton last month. He raised a little more than 3 million for his campaign in may, in contrast, clinton took in more than 26 million. His team is scrambling to put together a fundraising structure to match clinton. Hers has been in place for more than a year. Declaredthe government that the city of falluja had been liberated days ago by iraqi troops, still battling Islamic Forces Islamic State for ces in the city. If your doctor except accepts free meals, you may get stuck with the tablet. Doctors are more likely to drugs rathernded than cheaper generics. Thedy jerry picks Doctors Group says the study jerry picks data. Picks data. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. Im emma chandra. Jonathan an oped from billionaire investor george soros in the guardian. Joining me to discuss it, tom keene, two days away from a referendum. Thisbeen a catalyst has been a catalyst. Tom black friday, doom and gloom. Jonathan lets look at what george soros had to say. The brexit warning quote theyre specular forces in the market more bigger and more powerful. He is comparing this to 1992. They will be your to exploit any missed out relations by the British Government or the british voters. A vote for brexit would make some people very rich, but most voters considerably poorer. , but a viewview that is shared among some of the financial elite. Tom one of them wonderful moments ive had doing bloomberg surveillance, was a long conversation with george soros, about 1952. He was in the basement of a building at the London School of economics learning from karl popper, one of my heroes. He was generations in front of me. And george soros brings a heritage here that really needs to be respected. Whats fascinating about his of thisis that age skew vote. You lived it, dont americans understand the polarity of age difference between young and old. Here is george soros, aggressively supporting the young kids who will vote remain. Feelhan a lot of people that way. The older generations feel that way, its a generational decision. Your to go all the way back to the 70s to the last time we have the opportunity to make this decision. Onrge soros, his view sterling and what would happen in the event of a brexit is not of line with strategists from london. Its variant testing. The idea that the bank of england would be concerned of credibly constrained with the ability to have a monitor response. What are your thoughts . Think good thinking by leeds be overcome by events. Whatever this vote is on thursday, we pick up the debris on friday. I go to washington on monday. We move on through june into july. The basic idea here is everything will become overcome by events. How will the real Global Economy do . That is the real backdrop, how will aggregate demand to be in europe, in china, across the pacific . Jonathan pulling away from the brexit debate, weve seen an obsession with the nearterm risk. When he of one of many risks. When everything seemed to be falling off the cliff, we werent talking about brexit, we were talking about china and the fed. Dovetail this into what we will see from Janet Yellen Mario Draghi this morning. Has two verbal what she did last week, which was amazing to see the market reaction. I did not expect it, nor did many others. There are other things going on besides the focus on remain and leave. You have to figure out how to weight them it. Jonathan you can catch tom keene on Bloomberg Radio with michael mckee. Tom keene getting paid at sterling now. Tom i like that. Jonathan we witnessed a fundamental shift in markets. Global equities rallying ahead of this weeks referendum. Joining me now to discuss it is mark boleat. He is in the remain camp, he says thousands of jobs could be lost if the u. K. Leaves the European Union. Lets begin with the idea that they will be lost. Outrgans jamie dimon came and get the drum pretty hard about the potential for that to happen. Why . We hope they wont be lost, because the vote will go the right way. But they would be lost if institutions based in london or the rest of the country could not operate through the whole of the European Union. The single passport, the ability to operate throughout the whole of the european Single Markets from one country is really important. London is the dominant player in Financial Services. Thats why there is a risk of jobs being lost. Jonathan the narrative is that somehow these jobs go from london to paris or london to frankfurt. We get to have frank and honest conversations around a bar with a beer with people in the city of london. Youve talked about the prospect of them going to paris instead of working here in london. If they manage people, they will have two things to say labor laws and tax. Are they really going to move away from london in the event of a brexit . Mark everyone would like to stay in london, and they would keep in london whatever they possibly could keep. And that is looking at a whole range of other factors. They might need something somewhere in the European Union. It might not be paris, it could be luxembourg or dublin or frankfurt. In some cases, it might be they could move the business outside europe at all. We hope that doesnt happen at all. Votes to leave, every big institution that operates throughout the European Union from britain would have to assess where it should be operating from. They will have a couple of years of uncertainty until our relationship the new relationship of the European Union will become clear. Two years of uncertainty would be one thing, the talk of 1000 100,000 jobs being lost in the city. Ers have estimates out that really resonate with you . Mark its a plausible figure, difficult to estimate. It depends on what deal britain could secure within the European Union. If we could stay within the then union uncertainty is not helpful. That will be resolved to some extent with the vote on thursday. If it is leave, we have a couple of years more uncertainty. We want that resolved as quickly as possible. Jonathan you mentioned the eu passport. Best to put uncertainty around the city of london . Lets not pretend thats not going to have consequences, because it will do. The city is a massive part of the Global Financial system, will the regulators really take that risk to change things for the city . Mark whats become clear in the last week is that the brexit decision is going to have implications for the whole of the European Union and global Financial Markets. It is not the thing is purely for britain. It is not in the hands of the regulators, is going to be in the hands of politicians at the end of the day. If britain votes to leave the European Union, the settlement will be between the British Government and the governments of the other European Union countries. I think the regulators well understand the risks. Im sure they will be doing a thing they can to make sure that any market turbulence in the next few days can be accommodated. That is not the issue. Its the longerterm issue of Financial Services. The center of Financial Services for the whole of europe, not just for britain. Most of europe like to keep it that way. The bloomberg audience does not need convincing of the importance of the city. Everyone knows the importance of the city, watching this program. How do you communicate with the rest of the electorate . How do you convince them that a smaller city isnt a good thing . Mark i fear it is the case that think that people think a smaller city is a good thing. Its not just the city, i was at a london tech week conference this morning. Ecology is a rapidly growing industry in london and britain. The overwhelming fuel much than that britain needs to be in the European Union. Not least because a lot of the people running tech businesses are not british, they are from other European Union countries. We need to persuade more people. This is an age divide. We know that the young are overwhelmingly in favor of britain remaining, they are less likely to vote than the old. Jonathan is it going to come down to turn out . Critical,out will be and that depends on factors including the weather. We are hoping for a big turn out, its a critical vote. We would like everyone to vote, no matter their view. Jonathan im back in london, we have to blame the weather. Mark boleat, great to have you with us. David if you blame the weather, it just turns in north london pretty quickly. Just wait, he will change. Coming up, mario draghi and janet yellen on the hot seat as they provide details on their monetary policies. On. Xt david this is bloomberg , im david westin. Coming up, tyler and Cameron Winklevoss join us. Thats gemini here on bloomberg. Emma heres your Bloomberg Business flash. On emma chandra. This deal includes a mixture of 737s and triple seven jets. No dollar amount was given. Earlier this week, irans Aviation Ministry said it plans to buy 100 boeing planes. The Largest Insurance Company in france is looking to cut 2. 4 billion in costs by 2020. They also plan to step up Digital Investment to cash in on growing demand for policies that protect savings and health. It wants more growth in asia. And that is your Bloomberg Business flash. Im emma chandra. David thank you. Two of the worlds most powerful central bankers will be speaking before their respective legislators today. Ecb president mario draghi will be speaking in about 90 minutes. And its Janet Yellens semiannual testimony before the u. S. Congress. For more now, were joined by deutsche banks chief international economist, torsten slok. Today,raghi testifying what do you expect to hear from him . Far, the ecb is in the early mode of doing credit easing, we need to see how its going. The main measures of him will be are these things working, his recovery progressing, what is an update on where we are in the move towards high inflation in the euro area . David in the past he has suggested that he could get some help on the fiscal side, it cant be all Monetary Policy. Do you think the time is coming where he will have to push harder on lawmakers in that regard . Torsten he has been trying to remind people that the ecb has done a lot, and theres a limit to what more they can do. He will try to shake them a little bit further, that maybe fiscal policy and structural policy should help the recovery along. They cannot be only Monetary Policy that is helping out in europe. Jonathan were going to have an auction of liquidity for some banks if they want the money, they can just go in london to Companies Land it to come lend it to companies if they want. What do you expect the take up to be for that first round of new money for the banks if they wanted . Want it . Torsten this is helpful, but not will solve all of europes problems. There are so many other things that need to be done. An important part of these measures today will be to continue to reiterate what he has been saying before, that Monetary Policy is helping, credit easing is helping. But it is all Small Economic impact, where what really is it is a huge boost to the economy that could come from the fiscal or structural side. If we dont have structural reforms, it is difficult to see how we can get significant improvement in the recovery that we all want. Jonathan for the last couple of years, we reduced ecb Monetary Policy down to one sickle currency, one single currency, the euro versus the dollar. Our colleagues have put together a sterling index. The pound index. If you look at the pound against the dollar on its own, it shows some sterling strength getting back to 2016 highs. If you look at this bloomberg , its an intraday index. What you will see is that it is still weak over the last year. Thats because of this index, this currency basket determined on the share of International Trade and liquidity. The euro makes up 42 of that basket. You still have euro strength out there, even while brexit risk starts to fade. The euro strength does it persist . How much of a problem is it for the ecb . Hasten Continental Europe a currency surplus, which has been helpful in putting upward pressure on the euro. But that is not what europe needs. Europe needs a lower euro. We saw the euro go down in the dollar go up, and this is all something that was very helpful. That has stalled for the last 12 to 15 months. It will be helpful for the european recovery if the euro were to go down. Dollar willthat euro continue to depreciate, and we should see it move down closer towards parity. David we are a little over two hours away from janet yellen testifying in congress. Things of gotten much more dovish over the last two or three weeks. Do you expect her to be indicating this is a longer term trend or just an aberration because of the jobless numbers . Torsten they are moving the goal post within march saying things were not that great, and in april saying were about the high grades. And now hike rates. And now flipflopping. I think she will stick with the message she had last week, where it was clearly more dovish and saying theyre a things to worry about on the events front and in terms of Economic Data and the u. S. Not being as strong as we all hoped for. David is that moving around the goal post a matter of the fed following the markets too much . Should they be leaving more . Leading more . Seeing theey are Economic Data has not been as great as we wanted. They are concluding that it makes sense to step back a little. They will be asked about helicopter money and they brought a prospect of what can be done if we do see a slowdown. We are already doing helicopter money by the money that is paid from the fed to the treasury is about 100 billion per year. If you divide that for households, on average the fed is already providing about 1000 to households per year, not directly through tax cuts or spending. They are debating what other options do they have is another negative shock its the u. S. David there are increasing talks about recession in the u. S. Recoverieswe dont die of old age, they die of natural causes. Thats imbalance in the economy, on the consumption side or in balance on the side, meaning too much Business Investment. It should be some in balance and Financial Markets. It doesnt look like we were having dramatic imbalances anywhere in the economy. Its difficult to see why we should have a significant slowdown. David one of the causes could be tightening, and there has been de facto tightening. Could that lead to recession . Theten particularly, depreciation of the dollar has been tightening. Thats why the fed is turned more dovish. There are a lot of things that go into the mix of wise the economy doing better or worse. To get a recession, you need a negative big shock, and it doesnt look like we are facing a negative shock. If you look it lending in the labor market and weekly indicators across the board, most Economic Activity in the u. S. Is suggesting we are just not seeing that significant slowdown that people have been talking about. David last question what about earnings . Earnings have really been down. Torsten the reason why earnings were down was the dollar was high and oil prices were low. That has reversed. We should expect to see earnings through the coming quarters rebound quite substantially. We still dont think there is is a recession on the horizon, able, but i dont think we think it will come, but not right now. Carrying janetbe yellens testimony beginning at 10 00 a. M. Eastern. Jonathan coming up, it is 1995 again. Dollar traders bracing for trade war trouble. We show you why in off the charts, that. Next, david this is bloomberg , im david weston. As the United States has into election, both resident of candidates are planning to reshape trade policy. Julie hyman will baucas all the way through it. Are looking at history as a potential indicator of why there could be trouble. In the 1990s, there was tension between the u. S. And japan, it ended up resulting in tariffs being imposed on japanese made luxury cars, up to 100 in some cases. That happened in 1995. We are looking at the Interest Rate difference between the japanese twoyear and the u. S. Twoyear. The difference in those rates as well as dollar yen. The dollar fell in the early part of 1995 as this tariff was imposed. To thist a discount Interest Rate differential, which is not the case historically. And then rebounded once the trade issue was resolved. With them trend is tracking versus one another, the spread between Interest Rates and the Exchange Rate. David right now we do have growing trade disputes. There are more and more trade complaints being filed against japan, but also china and other countries. Julie potential for issues with europe as well. Its not clear where these trade issues would arise. In the to thousands, we have the u. S. Imposing steel tariffs on the eu. We have return of that as well. Looking at the Exchange Rate as well as the Interest Rate differential. In 20032 thousand four, with all the dollar falling versus the euro amidst these disputes. U. S. To sided with the david both candidates have come out on trade saying its a real issue. This may be a place where we are starting to see some reflection of market of the Political Campaign in the United States. We are seeing it in fx markets, not equity, not debt. Julie currency traders are warning there could be more. David back to you. Marioan later on , draghi speaking in brussels. We carry the remarks right here on bloomberg. David brexit hangs in the balance. U. K. Two days to the referendum, and the polls are too close to call. Gamblers say it is over and see a clear outcome. Jonathan george soros warns of 20 slump in the pound if british if britain votes to leave the European Union. David and on the hot seat. Mario draghi and janet yellen phase legislatures as they provide updates on the monetary policies. David welcome to the second hour of bloomberg , im david weston along with Jonathan Ferro live in london. Another two years ahead filled with centralbank action, brexit debates, and very special guest. Coming up on the program we hear exclusively from li kashing on chinas bright economic future, at least according to him. David we also had a brussels for live coverage of Mario Draghis statement to the European Parliament. But first, john had a look at the markets. Jonathan its been quite a shift. If you are just tuning in, features or firm of about a third of 1 . Ftse comfortably through 6000 points, of a number 11 on the session. The dax up by. 6 . After the biggest gains in europe yesterday since august. We climb towards yeartodate highs on the pound against the dollar, the biggest gain for sterling against the dollar. Another appreciation today, up another third of 1 . Lower, upis creeping 1. 68 on the u. S. Tenure, david. David thank you, jonathan. We check in with the Bloomberg Team for top coverage of our stories. Chilcote,ds, ryan Carl Riccadonna and Peter Ahlstrom with the very latest with the change on japans softbank. Jonathan lets get the latest on the brexit vote. Fromedwards joins us london with the latest on the polls. The polls tell me one thing, the money at the bookies tell me something with more conviction. It seems that those putting their money to work at the bookies and maybe in the markets have decided tentatively what they think is going to happen here. We will wait and see, the polls are too much to call. A twopoint lead for the leave camp in one of the overnight polls, another putting the remain camp ahead with seven points. The bookies saying the chance of a brexit down to 26 . That number was over 40 just last week. We had a big rethink. 95 of the money wagered in the last 24 hours they said last night was for remain. If that gives you an indicator of any kind as to where things might be heading. Things are still close to call too close to call. The pound has been Holding Onto Gains it made yesterday, moving back to levels we havent seen since the vote date was set back in february. All that despite george soros, who was a man who many in the knewno love as someone who a lot about the pound in the 1990s, he has been warning we could see the pound losing 20 of its value in the event of a brexit. Jonathan if there is one man that knows something about sterling, it is george soros. Guardian, in the newspaper, a big spread for everyone to see. The gains traction, gets tongues wagging in the city of london, but does it resonate with the public . Debate overs a big whether the campaign to remain has got the right tone over recent weeks. Certainly there have been criticisms of the remain camp has been pushing the economic arguments, maybe that sounded too fearful, and theres been that criticism. You are now starting to hear people saying they are for remain. David beckham tweeting he is for remain. Maybe you see a slight change in the conversation here in the u. K. Global viewers dont know that it is dividing people here in dividing families increasingly on generational lines, which is really interesting. The leave camp, they dismissed the warnings of george soros saying that is just the view of the big city man. Jonathan anna edwards, great to have you with us from westminster. David mario draghi appears before members of the European Parliament in one hour from now in brussels. Ryan chilcote joins us live from the european capital. Were talking with peter orszag a few minutes ago about what tools mario draghi might have to deal with a possible brexit. What tools does he have left at his disposal . Has aree main tool he those standing swap lines. Going back to 2012, the bank of japan and bank of england, the fed, the ecb, they all join together and set up the swap lines whereby they can lend their currencies to one another. England needs euros, the ecb can provide it. Those are in place, those havent been tapped that we know of since 2012 when this most recent arrangement was made. What we can expect is if one of ,he banks needs to use them they will. He could talk about that. Theres a lot of talk about if we were to get a brexit, what we is maybe even a coordinated response from the g7 countries or maybe not coordinated but specific global banks saying we are prepared to act, we are acting with the swap lines. David this is a political body, the European Parliament, what here . E politics where is germany and this, and how much pressure might he face from parliamentarians coming from Different Directions about what he should be doing . Ryan im sure he is going to get a lot of pressure. He is in there for three hours, the first 15 minutes belongs to mario draghi. Thats where he gets to release date his case. He is probably going to talk about his view, generally speaking, for the economy and what the ecb is doing. Thatgoing to tell him fiscal policy can do more to achieve better results, faster than Monetary Policy that the ecb pursues can. In the remaining two hours and 45 minutes, even expect a lot of pressure from the germans on what the correct approach should if and on the whole issue of we do get a brexit, what would be the best way to deal with it . We saw germany with a legal , allenge to the omt mechanism that the bank can use to directly assist countries. Not all countries like it. Some legally challenged it. He got support from the highest European Court today, but that is the thing to hear about during that hearing. David Ryan Chilcote, joining us from brussels. Mario draghis address comes up and 9 00 a. M. Eastern on bloomberg tv. Later this morning, janet yellen will begin two days of congressional testimony on the economy. We bring in Carl Riccadonna, welcome back. Say thatt could she would surprise you, would make news . We have to watch every word and see if it measures up with what she said last week. One key phrase it, and tension in the postmeeting press conference, she said a rate increase over the next two meetings is not impossible. That is hardly a rousing endorsement of rate hikes in the near term. I want to see if that seem theme plays through. Policymakers have reacted strongly to that may jobs report, but janet yellen says dont overreact to a single data point. I want to see a greater sense of how she is interpreting the recent apparent downshift in the labor market, although we will to see wait until july 8 that hold up in the june data. Carl, these are political bodies. What sort of questions issue facing . What to the senators want from her . Carl you see a lot of electionyear grandstanding, i think she will get pushed a lot on bank regulation. David thanks, thats Carl Riccadonna. Carrying tv will be Janet Yellens full testimony today starting at 10 00 a. M. Eastern. Jonathan looking forward to that. In corporate news, a Management Change over at softbank. Peter ahlstrom has more. Walk us through. Peter softbank announced this morning that their president , aurora nikesh arora, will be stepping down. He was the air apparent at softbank. He joined from google a couple of years ago, and was promoted into the role of president and was widely received it to be the most likely successor. Today there was a small briefing in tokyo, and the two executives he had decided he wanted to stay on longer in the ceo role, and for that reason, nikesh was going to give up the president role. Jonathan what do you think of the timing of that . Iner they sold their stake super cell, a very big payoff for them financially. More relevant is that the cash aurora nikesh arora, had come under criticism for some of his practices. Question is what role did those criticisms playing his departure. Peter roskam, managing editor frazier technology. Lets get a look for asian technology. Emma police in brussels have arrested a suspect after a bomb scare at a shopping mall. A man called police to say he was Walking Around with an explosion belts. The bomb squad determines the device was a fake. Bance in paris may thursdays protest march by labor unions. A demonstration last week turned violent. Protesters arent happy with labor reforms pushed by president france while law and. And bywhile law the french president. Global news, 24 hours a day, powered by 2600 journalists in more than 120 countries. Jonathan gemini trust, the usbased Digital Currency exchange is expanding again. Gemini cofounders cameron and toer winklevoss join , explain their Newest Exchange location. Jonathan it is the central bankers versus the lawmakers, round one in brussels. Mario draghi goes before the European Parliament. We will take his comments live right here on bloomberg, in 45 minutes. And then its on to d. C. , the semiannual testimony of fed chair janet yellen in front of the senate. The attention of global Financial Markets in two sessions. Well bring that to you in one hour 45 minutes. David there is some news occurring in your country today, besides brexit. A new exchange is opening in the u. K. , a Bitcoin Exchange. Your bitcoin on gemini in the United Kingdom as well as in the nine states. Joining us on the brains behind the move, cameron and tyler winklevoss, the cofounders. Cameron, i will start with you. Bitcoin,mething about by dont understand why we need in exchange for bitcoin because it is public. When i was trading with whom it. People need a safe and reliable place to purchase bitcoin, and we offer that. We are related by the new York Department of Financial Services. That is the main reason. Sort of the same reason why you need a Nasdaq Exchange creates moreit liquidity and price discovery. They allow more Market Participants to plug in and participate as opposed to just me and you exchanging bitcoins. Its a scale issue. David you have been up and running in new york since october. Cameron correct. David what type of volume . Cameron we are on track to do 100,000. David is that on target . Cameron every month we have been increasing month over month. Weve seen the amount of user signing up in the last month alone have been larger than the previous couple months combined. Part of that is due to the price increase in bitcoin and the circulation of bitcoin is going to be cut in half coming up in a couple of weeks. Theres also a lot of interest from china. Weve seen a dramatic increase in interest. David lets talk about china. One of the things that is said , its a way for people to get our capital in china out of the country. It may be. Im not in a run Capital Movement from china. The bitcoin block chain is public and transparent. You can see the movement of bitcoin if i send you a bitcoin. Everyone can see that bitcoin move on the block chain. It may not be so anonymous. It definitely is not anonymous as people make it out to be. It may or may not be used by the chinese in that way. Thing for sure is when there is uncertainty in a macroeconomic environment, which we are seeing with the upcoming brexit vote in the chinese economy, people tend to favor assets that act to store value. Traditionally that would be gold and more recently we seen people favoring bitcoin. In may, it was less volatile than gold for close to 30 days. A there is a bit Bloomberg News piece out that golden bitcoin treated together. The question is whether its become a value repository. Cameron we have been saying that for many years. We feel the killer bitcoin at is storing value. David bitcoin is starting to move now with gold. Is that good news for you and what you are doing . Tyler it lines up with our thesis. We think bit cold bitcoin is better. When you look at the characteristics of money that make gold valuable, there are about nine territory six. It is more scarce, more divisible, more affordable, it matches were beats were beats gold across the board. You dont need to keep it in a vault. ,e think it is a better gold and the way it is trading with gold, and being a hedge against Global Economic uncertainty, we think that lines in with our thesis, we think thats positive. If you look at the market cap of bitcoin right now, its about 12 billion. ,t is going to disrupt gold there may be a 100 x return in bitcoin from today until that point. We know that the gold market caps are over 1 trillion. Cameron if people are holding some portion of their portfolio and gold, some portion of that portion should be in bitcoin. Prior to gemini, there was no regular to Trust Company were safe place to buy bitcoin and store it. We offer that service. David we talk about bitcoin, either trades in in ether. Network is focused on building smart contracts, where bitcoin is focused on value and Payment Network and things like that. We added ether about a month and a half ago, and we got approval from the department of Financial Services in new york as well as Governor Cuomo in new york. U. K. , it is in the bitcoin to either and either to bitcoin, not dollars pounds. What is the step to go to realworld money . Tyler the first up was adding bitcoin and ether, and coming soon, we are adding dollars and currency. That is partly technical. Cameron we were ready to add bitcoin and ether first. David who is your competition . We are the only licensed exchange in the world right now. Its a little bit apples and oranges comparing us to other exchanges. There are many exchanges were building with no licensing or regulation. Tyler they are offshore, it is a race to the bottom. We opened up a dialogue with regulators, we are going into the front door and building an exchange that looks and feels like exchanges for other services you use, other banks you use in the financial world. Its really easy to build a Bitcoin Exchange early with bad security, no licensing. Its hard to build it the right way. We are the only licensed bitcoin User Exchange in the world. We are really competing with ourselves. David you embraced regulation. Isnt that against the entire gestalt of bitcoin . I thought bitcoin was formed by people who were rebelling against the establishment and regulation. Tyler thats not quite right. There are people who have political bentz that are attracted to bitcoin. But the founder Never Associated with any of them. That bitcoin, in order for it to grow, we need to build regulatory ramps and bridges to the mainland of finance. There are certain people who disagree. But that is what makes it interesting. We really want to plug into and make pension funds, mutual funds , be able to purchase bitcoin. Some people are taking a different approach. We are obviously taking the regulated approach. The institutions we are working with today and will continue to work with Going Forward will never work with an unregulated exchange. If you want that capital of those types of people in the system, you have to be regulated i can trust fund. Sheet is there a such a a satoshi . At this point, the source code is open, its so far beyond the first version that its kind of a distraction. At some point, someone should be able to sign a message with a key that he used to prove it, but i dont think that person has come forward yet. David cameron and tyler gloss, thank you. Coming up, tyler winklevoss, thank you. David this is bloomberg , im david westin. Julie hyman in the markets. Julie im going to start in new york, where we continue to see traction for stocks as we get the latest polling on the vote in the u. K. You can see the breakdown of the european stoxx 600. Banks and Financial Services as well. Anything having to do with finances doing the best in todays session. If we can look at some of the movers, we have individual banks , particularly in southern europe. The banks that are more volatile or reactive to what we see in the markets. Bank in italy,t and these are the best percentage movers. Deutsche banks downgrading the stock, down about 1 . Analysts are looking at the companys cash flow over the next five years, and there is a bias to mature offshore and conventional assets, that means returns not might not be as high. And the dividend yield for this company is lower than some of its competitors. We are also watching facebook after late yesterday the vote to reelect all eight board members, including peter thiel, who had that campaign to bankrupt gawker. And the stockholders improving creation of those nonvoting shares that Mark Zuckerberg head out of had advocated for. Up by about. 4 , were watching them throughout the session. As is coming up, chinas economy stable . Li kashing reveals his perspective. You guys be good. Ill see you later [ bark ] [ bark ] bye. See ya pal. Ever wonder what your pets do when you leave home . [ laughing ] aw you cutie pie. Aw. Aw. Aw. Aw. [ barking ] [ washing machine running ] partys on know what your pets are up to with xfinity home. Xfinity. The future of awesome. See the secret life of pets, in theaters july 8th. Jonathan from london and new york bloomberg , this is, where the politics of westminster dominate Financial Markets. The pound in a january 1, 2016 high. Piling in and the markets are shifting in the last 24 hours. Dow futures up 60 points. Index futures up. 4 of 1 and the rally continues across europe. I will go through the Asset Classes, cable 147. 4 d. Just one basis point lower, one hour and 30 minutes away from Janet Yellens testimony in front of lawmakers. Market movers happening. Lets get an update outside. Thank you. Hillary clinton plans to bash donald trump on the economy today. In a speech in ohio, the likely democratic president ial candidate will portray her rival as unfit to do the job. She will point to his Business Record as evidence of tally would treat small families and businesses. Indonesia says that china is treating fishing waters as its own. Detained a chinese fishing boat after firing warning shots. They say it appears to be part of the effort by the chinese to extend their claim over the south china sea. If your doctor accepts free meals from the drug industries, you may get stuck with the tab. A new study found that doctors that received [indiscernible] are more likely to prescribe branded drugs to patients rather than keeping that generic. The trade group says that the study cherry pick today that the come up with the false narrative. Global news powered by journalists and analysts in more than 120 countries. Thank you. Chinas recent Economic Data shows that the country may be continuesg even as it to worry about rising debt levels. Hong kongs richest man, chairman and founder spoke to angie lau in his first interview in four years. Heres what he had to say. I have a lot of experience when i comes to manufacturing. The fact is, china exports more than it imports. The site for manufacturing, there is also the service industry. As well as many other channels of income. People can only see the debt in the enterprises. When they need to recognize that china is a big exporter and the inflow from foreign exchanges also is positive for china. Exports exceed imports. That is a fact. A lot of income is also generated in the service industry, so in the long run, chinas economy looks good. Angie recently, youve faced criticism from some publications in Mainland China accusing you of diversifying away from china at a time of slowing growth. Is this true . 19771978, when the dangle for lost power, it was then that i visited Mainland China. There was an opportunity and they invited me to visit. Nothing had been announced that he would be the leader. From the knew that initial speech and their inclination. Them. With at the time, china gave me a very hopeful feeling. Angie there are a lot of Chinese Companies looking ,verseas to acquire businesses but they keep getting shut down by regulators, including yourself. What is the impact for Chinese Companies in the future . Have to they fix this . Be fair. Eds to china welcomes foreign investments, so other countries should also welcome chinese investors. Angie is this frustrating . Li no, we do not have problems with their situation. Countries, and we are continuing to expand their business. The past couple of years in europe, we have been going into new sectors and making your investments. No problems there. We need to be respectful of other countrys regulations and the way of doing things. I am still confident in my businesses. Exclusive more of our interview with li kashing, tune into daybreak asia and you can also watch it on your own bloomberg wherever you are. We will turn to u. S. Politics. Donald trump has pledged not to self fund his campaign and the general election, but he said this morning that he may end up using some of his on financials. I spent 55 million of my own money to win the primaries. Money but evenf any standard. I may do that again in the general election. This after reports show his campaign lags Hillary Clintons and fundraising last month. The brink in stephen of venomberg we brink in ste of bloomberg trade he actually was cloned he actually loaned 55 billion 55 million that he expects to be repaid. Been hishis has message all along, a talking point for a long time for donald trump and a lot of things in this campaign, we see that natural tension between the strength of the primary election , trump strength in the primary clashing with water now weaknesses in a general election. Fundraising is one of them. He trailed by tons of money. David go through some of the numbers. He collected 3. 1 Million Dollars in donations last month, pride . Is equivalent to three days of Hillary Clinton. Cashn the key number is on hand. He only has 1. 3 million cash on hand. Ar president ial campaign in general election, he is essentially broke. For comparison, the Clinton Campaign has 42. 5 million on cash on hand and they have been spending it, running ads. Run 5. 5 million with the bats this month. User unanswered attacks on he says hep, where is responding to them but he still gets tons of free media. We cannot discount that. We cannot overstate that enough, the super5 million, pac has been spending 17 million against donald trump. David her campaign has already spent 232 million. We are not even at the conventions yet. Steven in 2012, president obamas campaign did a lot of the defining of mitt romney before the convention. Timefically, and it was a when they still had money to spend in the primary. Mitt romney could not spend money until the general election started and they saw this as an advantage to start defining the early, running ads and they did. There are a lot of people who say that the race was over by the time romney got to the convention. This is what the Clinton Campaign is trying to replicate. They are trying to do as much damage to donald trump between now and the convention before voters really start turning and thinking about the general election. David is it possible to look at these numbers the wrong way around . There have been reports that donald trump and the Republican Party are spending money differently and it is going into the party and they are spending money rather than the Trump Campaign spending money as opposed to Hillary Clinton. Steven the rnc has touted the fact that they have outraged the Democratic National committee this cycle by 50 million or so. In the grand scheme of things, that is nothing to sniff out, but it is not an enormous chunk of change. They have raised about 155 million for the Republican Party , so were not talking about 1 billion, which is what the campaign expects to spend. It is a good point. The Term Campaign has about 70 people on staff and the Clinton Campaign has about 700, so just linefinition, trump is a on the Republican Party infrastructure and the Republican Party has Staff Members all over the country already and they will be working. We cannot discount that, but the more time that the party spends on propping up donald trump, the less time they spend propping up their candidate, so this has an effect somewhere. David take us inside the donald Trump Campaign. There was a shakeup and they are placed the campaign manager. They must have known that the numbers would be coming out. Are they connected . Steven they are. Around here on with all due respect at that 00 p. M. On number, we talk about at 5 00 on bloomberg, we talk about the numbers. Things thate three really are trumps biggest problem. Tension isand connected because the more dysfunction in the campaign receipt, the more skittish donors are to pour in this money that they are worried they are wasted. David other indication that Donald Trumps campaign is getting this together on the financial front because they have heavy hitters and they are brought in a finance committee. Theyre having some events in new york. Can they catch up . Steven yes. Such anton campaign has head start. Catch up, that might not be the right word, but they can start to shape the Campaign Intern the 747 in the right direction and that is what we saw yesterday when trump fired his campaign manager. That is the signal to the world that not only on fundraising but in Campaign Infrastructure and hope a gym other things, he is starting to take this new approach. He admitted that he is taking a new tact and in his mind, thisll hopefully calm the worries of donors, the worries of Party Leaders and hopefully the rally behind him and start to catch up the process. David thank you so much, Steven Yaccino of bloomberg. Coming up, currency chaos. The pound coming down off of their biggest oneday gain since 2008. We will dissect the evolving currency market next on bloomberg. David this is bloomberg. The david westin in hewlettpackard enterprise green room. Coming up, mario draghi will speak at a hearing at the European Parliament. Jonathan just getting headlines, the official residence of the u. K. Prime minister addressing the audience, media and headlines to bring to you. Paramountron on their on economic security. But i think is interesting on the comment is in trying to communicate to the older generation that has been told to lead, urging them to think of childrens hopes and dreams and to think about the younger generation. David cameron really targeted demographic with this particular statement today. Fx market. On the i want to look at the pound against the dollar because movement is interesting. We have a little correction, the pound dropping a touch on the dollar. About 15 minutes ago, it remains that 45 and leave that 44 . Closerhat is slightly than many people anticipated. Not showing the big swing toward the main. The pound corrected just a touch at 147. , research from london global high the fx strategy. Great to have you with us on the program. What a week, what a shift in momentum one way to the next. The action happening all over. Is it all over . Is a markets are for you, basically, markets pricing in and out. I think as far as our essential scenario, we are pretty much in odds by thee betting market, which is seeing one out of that out of brexit. Be k the scenario will but having said that, i prefer to stay in the headlines for now. It is subject to a lower headline risk. Jonathan i spoke with my colleague earlier about this herd mentality and the behavior in the fx market. On monday last week, there was a shift and huge move in sterling one way and then the following monday, the shift and huge move toward sterling the other way. It has become a binary market. This that change anytime soon . It will change once we get the referendum result and still will get higher because of it going lower, but it will be much more free and faster. People are trying to get ahead of the curve. Jonathan i want to bring up the correlation of sterling. The 30 day correlation has been hitting the fouryear high, going all the way back to 2012, does that break down . Is that the correlation that sticks with us . In the short term and the aftermarket, they will be the referendum result because we pretty much know it is going to happen to sterling and u. K. Equities in either scenario. Getback of it, lets say we rallyl, we get a strong of sterling and strong rally of u. K. Equity, the opposite will be two of the get a brexit, which means that the correlations will remain less for the next couple weeks at least, but over the course of the mediumterm, one month to three months reverting back. Jonathan the hardworking people will be happy to know that we put together a pound index, gp on the bloomberg terminal and we can get it up for you. We will look at the brexit affect, the pound against the dollar, and we see the correction on cable. The correction on the pound index, you still seek sterling weakness against the euro because the weighting of this index is 42 europe, 35. 71 dollar. Talk to me about eurosterling because that is what is happening. I want to add that currency pair and how it evolves after the referendum. Fascinating ons sterling because if you do that, you still have to talk about the eurodollar and it goes back to our old story about the dollar. It has been a dollar story so far this year, the dollar weakness story, so that is why you see cable rallying so much because it did not participate in the rally earlier. Jonathan it is playing catchup. Vasileios exactly and it will have plenty of room to go in the event. On the eurosterling, it is the adjustments you are getting. I have little doubt that can either way we are going to see a spike at the higher and lower in eurosterling, but i think the bulk of the move is going to be concentrated on cable. Jonathan i want to talk about the conversation you have in the cards right now. Hedge funds versus [indiscernible] you are having different conversations, have the city of london hedge funds moved on from this already . Vasileios hedge funds so far seem to have positioned to a large extent. I think the corporates are probably lagging a bit behind, but it is definitely brexit, not just the currency market but brexit has the concept. It is on the top of conversations right now. Night,n thursday overwhelming consensus in the city, the beating heart of the global fx market, i wonder what is the conviction trade given the events of the last couple of days . What is it going into thursday and coming up on the other side . I think conviction of visibility are extremely low. I think the most likely outcome having said that, over the past few days, we have had quite a big move pricing in that. I think it preferred to sit in the sidelines, potentially lose over the first couple of percent moves and then drive into that aftermath of the result. Jonathan that is the brexit day, great to have you. Coming up, battle of the charts and the hunt for yield. Which country outpaces the rest. The answer might surprise you on bloomberg. Jonathan from london and new york, this is bloomberg. Coming up, ecb president mario draghi testifying in front of lawmakers in brussels. That eight minutes away. Pictures firm ahead of the open. Futures up about point to five of 1 . Stocks rolling over a touch. Futures up about. 25 1 . Stocks rolling over a touch. Of the charts with julie hyman and matt miller. Julie, geography matters to me, prove me wrong. Julie [laughter] i am looking at the global chart. If you look at the 15 largest economies in the world, you find only one that has seen arising 10 year yield this year because everyone is thirsty for yield in this environment. It is china. China has seen the increasing yield. I have normalized this to percentage changes and we have the japanese 10 year, german 10 and it went0 year negative at one point. The chinese 10 year bond has arisen 13 basis points this year to about 2. 95 percent as of mondays close. The only increase of the 15 largest economies, the chinau. S. Spreads. If you look at chinau. S. , it is the widest in about 10 months, so we have some banks Like Fidelity recommending people look at chinese bonds. There is a catch. Not a really open market and there are a lot of first actions on people investing in chinese 10 year and that is the issue of slowing growth in china. The yield have been rising because the outlet inflation [indiscernible] we will perhaps not see more monetary easing, but it is interesting that when you look around the globe that this is where you are going to see the yield. David i love your chart. Jonathan is biased. Hopefully he is biased for me. I have a chart that we have taken from the macro tourist, the macro tourist. Com is a blog that hillary and i love to read. He is on vacation for a while and he took this from a buddy of his. But it shows is the fix follow to the in green the vixx volatility in green and downside put with the pound and euro together because we have really been seen the concerns about brexit and they have not force people out of the pound from the euro, and we have Seen Movement against the dollar that way, but the euro and pound her taking heat on this. This is way back in 20082009, and everything i will not use the expression, but the british out the great expression [laughter] now,ee what we are seeing total divergence, so pound volatility, euro volatility on the rise, and s p 500 volatility way down here. Does this mean, this is how you make money, that it is cheap on s p 500 or doesnt mean you have to sell it on the currency . David i think the british expression as you are out of time. Terrific chart. Julie, i love you, but matt, i like your chart brother. Julie i am confused about his chart. David it is an fx issue and not market issue. Jonathan i think it is a brilliant chart, just the risk and correlation. A lot of people trying to work out where the breakdowns are. Up next, ecb president mario draghi speaking in brussels. E draghi about to begin his remarks on the european economy and the potential cost of brexit. We will bring you that live in the moment. Jonathan brexit the question for janet yellen. She will talk to the subcommittee on the house of the u. S. Economy in about one hour. David after fixedincome trading, jeffries reported a 55 surge in bond revenue last quarter, the biggest bank revenue increase in eight quarters. We are just under 30 minutes away from the opening bell in new york. This is bloomberg. I am david westin. Jonathan ferro joins me from london. Jonathan two days until the referendum. Bloomberg with special coverage all week. Lets get you market reactions. Dominating markets still, the car master. Looking at the futures in the United States, about one third of 1 , just rolling over a touch in the last 30 minutes, down about. 1 of 1 . The dax up about. 5 of 1 . Switch of the board quickly anelka to the other Asset Classes. The pound rolling over with the ftse, the conduct 147. The biggest is on sterling against the dollar. Just down to basis points, 1. 67 during if i could drop up and bring you a preview of what is to come, i would say central bankers versus lawmakers. Ecb president mario draghi will speak at brussels in front of the European Parliament. One hour after that, round two for the Central Banks. It will be fed chair janet yellen on her annual testimony 10 00 a. M. Tifies at eastern time, 3 00 p. M. In london. And in hong kong, 10 00 p. M. David with us now is the director of high yield and we are just about to go to mario draghi, but give us a preview. What will he say . Probably more of the same. Stimulusking, a lot of to come, but he is going to want to get through that it cannot be Monetary Policy alone, but structural reform, and he is going to want to get that message out and also comments and Say Something to the effect of that the eu would rather see britain stay in and if they do not, he will prepare for support. David what kind of push back will he get . Gershon i dont know if you a push it really hard, but he wants to make sure that the Monetary Policy alone cannot fix anything and that is not just true in the eurozone but everywhere else as well. David ok, well go to london now. Jonathan just talked to me, how can you tell the politicians to reform when his central bank is buying corporate debt that some agencies rate as junk . Gershon [laughter] think youre really asking how Central Banks in general have the kind of credibility to ask politicians to do anything. That is a good question. We will have to see what the reaction is. It will come back after him after the prepared remarks. Jonathan we will get those questions in the couple of moments. The ecb president sitting down in front of the European Parliament. Just to get another question as we await the comments from president mario draghi, what is less in terms of stimulus . Isnt that the message left . That there is nothing left to buy in opposition to the program and apart from stocks . Gershon you can start buying highyield debt. They could start going lower. Anytime a think there is not something left to buy, there seems to be, so you could buy more, other assets. I doubt there will be i doubt he will talk about the socalled helicopter money that people speculate about. It will be interesting to see. David i just have to say that looking at the parliamentary halt, and looks like people are attending a much as in the u. S. House or congress, which is not that much attention. Jonathan mario draghi saying is expected to hover at low levels in the coming months. Draghi about to speak to the eus parliament in brussels and we are awaiting has comments. There are prereleased comments and they say that it is considered to recover at a moderate pace. I will get a few more of those comments were you on the terminal on the bloomberg. Ecb taking note of the Constitutional Court ruling, saying that the euro Recovery Area Gains Momentum of the recovery continuing at a study and moderate pace and says the ecb is ready for all contingency on brexit. A couple of topics of discussion for opening remarks. One on inflation pressures are here in the eurozone and that is germanys constitutional calling in their rolling today and then the outside risk and politics in the eurozone, but also what is happening in the u. K. Referendum on the doorstep of europe and what the feedback looks to be in the potential negative consequences for the eurozone and for the contingency plan for the European Central bank. To bring up the eurodollar and look at the market reactions to his comments in the last 10 minutes, rocket reaction rather subdued looking at the today compared to yesterday, but look at this move. The euro going in to the speech down about. 4 of 1 and the euro right now it 1. 12. Draghi saying stimulus is in the pipeline, saying the ecb action has put the recovery on a more that itot and they say remains rather subdued and for the stimulus is in the pipeline. We will bring up the board in the markets and look at the other Asset Classes straight futures firm going into this. The United States futures up and rallying in much of europe. The dax pushing higher and the euro weakens just a touch. The session as we head toward the close in the next couple of hours in europe. Switching off the boards and looking at the other Asset Classes. The euro at the moment weaker at 1. 12 and we traded down. 33 of 1 . Yield was moving south by about two basis points on the u. S. Tenure at 1. 67 and nymex crude at 48. 30 and over two Percentage Points. It is mario draghi, the president of ecb, that gets to go first in front of lawmakers in brussels. Fed chair janet yellen will be going in front of lawmakers in the senate and she testifies on the hill in about 55 minutes, suggest to it through the headlines from mario draghi again, saying that further stimulus is in the pipeline, and inflation dynamics remain rather subdued. The ecb will recover on a more solid foot and saying the ecb action secures conditions for inflation to rise but further stimulus is in the pipeline. As we await those comments from mario draghi, i am being the sure that they are coming to you rather imminently. He will step up and begin his opening remarks. Dont get this right here on bloomberg tv. Honorable members of the committee, ladies and gentlemen, i am grateful to be speaking to committee for the second hearing of this year. Let me first say that the ecb takes note of todays judgment of the federal courts. This judgment confirms the ruling of the court of justice of the European Union, which concluded that the omt program law andtible with eu falls within our mandate. In my remarks today, i will review the state of the euro Area Recovery and the recent Monetary Policy managers adopted by the ecb. Then, at the request of this committee, i will discuss the Investment Outlook and look at why more action is needed to most investment demand in the euro area. Regarding economic developments, the recovery of the economy gained momentum at the start of the year. It is expected to proceed at moderate but steady pace, supported by solid domestic demand and the effective pass through of our Monetary Policy measures to the economy. Consumers are better fitting from steel relatively from relatively low oil prices and improved employment prospects. Likewise, investment is edging up, supported by higher corporate profits and favorable financing conditions. Forward, according to staffne 2016 euro system Economic Projections from the euro area, annual gdp is expected to increase by 1. 6 1. 7 in thed by next two years. At the same time, inflation dynamics in the euro area remain rather subdued. The rate of headline inflation was lightly negative in may and is expected to hover at low levels over the coming months. Lower Oil Prices Continue to act as the drag on the annual headline inflation. Domestic pressures are notably from which growth, also remain muted, reflecting persistent economic slack. To the euro assistant staff projections, inflation should be up toward the end of 2016. Inflation is expected to increase further after 21. 3 in 2017 and 1. 6 in 2018. As strengthening economic recovery mobilizes unused resources. Since the start of our credit easing measures in june 2014, bank lending rates for firms and households have fallen by about 90 and 80 basis points respectively, reaching historical lows in april 2016. Creditwth rate of bank to the corporations turn positive in 2015. At the same time, other sources of finance and in issuing of Debt Securities and shares by nonquote nonfinancial corporations are benefited from more favorable Capital Market conditions, improving corporate profits and increasing earnings. Especially felt by small and Mediumsized Companies , which are heavily reliant on bank credit. In our recent survey on the access of enterprises in the euro area, sme continue to report that further improvement in their access to credit and an increase willingness of banks to provide credit at lower Interest Rates. You bank credit to companies is increasingly being used to finance investment projects. Furthermore, the stimulus is in. He pipeline we started our corporate purchases earlier this month as part of our Purchase Program. The program has started smoothly, with ample purchase volumes. Since the start of 2016, and even more evidently since the Corporate Bond Purchase Program was announced in march, conditions for companies with direct access to the bond markets have improved materially. For example, over the first half of 2016, the cost of market based debt or euro area and National Corporations has declined i around 75 basis points. We expect more mid firms, including Midsized Companies to be able to access this source of external finance over the near future as the market for Companies Debt expands and deepens. Will starte conducting the first operation of our new series of targeted, longerterm refinancing operations. Secure allow banks to longtime funding in very attractive conditions that can be as low as the deposit facility rate. This should further eus the boring cost of the private sector and provide an additional impulse to credit creation. Measures have been instant our measures have been instrumental in putting the recovery on a more solid footing , thereby, securing the conditions for inflation to rise in an levels closer to 2 nottoodistant horizon. The have underpinned revival in the consumption of durable goods, which we have 2013, and are finally showing through in a more robust pickup in nonconstruction investments. Stimulus, bothy growth and inflation would be significantly lower. Particularackage in has mitigated the Downside Risk to the euro area economic outlook. Impetus will come from the measures that are still at the early stage of implementation. At the same time, uncertainty remains high and Downside Risks are so significant due to the continued fragile state of the Global Economy and geopolitical developments. We will closely monitor the evolution of the outlook for price stability, and we stand ready to act by using all bit instruments available within our mandate if necessary to achieve our objective. For allis ready contingencies following the uks eu referendum. Let me say a few words about the investment in the euro area. After the sharp downturn observed during the financial crisis in 2008, and a renewed decline during the european sovereign debt crisis, Real Investment in the euro area has now begun to recover. Particular Business Investment has undergone a welcome recovery since 2013 and public and Housing Investment has recently ly stabilize. E despite the positive trends, the current level of investment is out of the factory. The total of Real Investment in the euro area remains more than levels. W precrisis therefore, further action is needed, including at the eu level. The Investment Plan for europe is a welcome example. Beyondwould support 2018, the 18 success of the current plan breasts on the capacity to improve the investment environment at both european and national levels, and only reforms in this area can guarantee its longterm effects. , the europeanl parliament has an Important Role to play as a legislator. We should further deepen the Single Market, notably in the areas of energy, transport, and the digital economy. We should also make full use of the potential existing Single Market legislation by ensuring it is complete and consistent enforcement. Strengthening the european nation of regulatory enforcement complexity,o lessen enhance a level Playing Field reduce the fragmentation of product markets. In addition, we should act channelingo make the of savings into productive investments more efficient. The banking union, including the ecb and its micro and micro credential vault, has an Important Role to play in ensuring that thinking markets efficiently allocate resources to the most productive Investment Opportunities across the euro area. Progress on the Capital Market toon is also essential develop a favorable environment for productive investment in the European Union. It will help diversify the sources of funding needed to spur investment, notably for sme and longterm projects. They complement and finance with deeper, more developed Capital Markets. The legislative acts regarding simple, transparent, and standardized securitization you are discussing our tangible examples of how eu legislation and brought in financing opportunities for eu companies, the border investment, and ultimately have a positive impact on the eu Investment Outlook. On the national level, reforms to improve business framework conditions and reduce regulatory and administrative bottlenecks also need to be further pursued. It is their whole institutional framework that helps to transform Financial Resources into productive investments, which in turn increase productivity and ultimately create jobs. Inefficient public procurement, taxation systems, judicial insolvencyd frameworks identified in some countries need to be fully addressed. Countries specific recommendations can be a powerful tool to identify and address barriers to investment in individual countries. Countries were Public Financing is allowed investmentrtake areas conducive to growth. Regarding other countries, let me mention that longterm investment benefits from stability oriented macroeconomic policies. Finally, investors need certainty regarding economic and institutional environment in which they will operate. This is also one of the reasons thealmost one year ago, report set out the plan for strengthening europes economic and Monetary Union. Llow me to conclude looking ahead, we expect economic recovery to perceived a moderate but steady pace. Nevertheless, for this recovery to become solid data to consolidated, our efforts should concentrate on strong policy action to improve the business environment, favor investment and raise productivity. Delivering on these objectives, we not only will create the conditions for inflation to accelerate its return to levels below the close to 2 , it will r kochake a majo addition to the standard of living to the people of europe. Citizens and markets need to be sure about her capacity to take on the common challenges we face. I focus should be on making our. Ommon home, europe, stronger thank you for your attention. Now, i am at your disposal for questions. Y very much thank you very much for your introductory statements and youre very compressive assessment of the policies for increasing our investment level. We give the floor to our members for questions. First speaker is our vice chair. Pfister thank you feist chair thank you very much ir thank you very much. I have three questions, the first relates to brexit. He said heoccasions, would use the full range of ammunition at your disposal. That was ecb president mario draghi testifying over in brussels at the European Parliament. Just to go to some of the headlines out of the initial same inflationhi dynamics remain rather step to rather subdued and saying that ecb reaction put them on a more solid footing and he testified ecb reaction, perhaps no surprise. Said that growth deflation would be lower with that ecb action and the rather negative headline is that Downside Risk is still significant and uncertainty still high. Still with us is gershon distenfeld, director of highyield. Just listening to the comments, it should further reduce borrowing and target longterm refinancing operations. Fromere going to be demand corporate for the banks to take advantage of that and lend it out . Gershon i think so. What struck me about his comments is sometimes a loose sight of what the actual goal is of the stimulus. The cause and effect, he mentioned specifically small and medium businesses have access to credit in favorable terms. It should extend across the board. That was significant. We did not really learn whole lot here. It took a little victory lap great i thought it was interesting he said with of the german rolling basically saying, i was right and he goes on to talk about the increased growth and preventing inflation but it is still under control and they could do a lot more. I thought it was really interesting and you cut away from the question, but he said other thanut brexit the context that the ecb is prepared to do whatever it takes and it had to wait for a question. We do not hear what he was going to say specifically. Jonathan do not worry. We have that ready for you. Here is the answer from president draghi. Mario draghi the impact to perceive the various dimensions vote in u. K. Would impact on the markets and on the economies of the eurozone, it would be difficult also to outcome, soout one let me just say that we are withg to be ready to cope all the possible contingencies. At this point, it would be very, very difficult to be more precise than that. I think that we have done all the preparation that is necessary now. On the second question, it are question, let me just say that first of all, the only empty hasram the omt program had the cingulars has had [indiscernible] ecb area and we have always argued that it would fall within the mandate of the ecb, which is to maintain stability. This is confirmed by the European Court of justice and today by the Constitutional Court in germany, and we take note of this. Is about reforms and Monetary Policy. Policy, the Monetary Policy we had in place, it ensures that the recovery will take place and is actually taking place. Will it transform the recovery to a structure . One, the answer is not without structural reforms. Second point is that i have said many times that inflation and monetary phenomenon, we know that this is the Monetary Policy and will allow the inflation rate to return to our objective of inflation rate below 2 . This willat which happen will change very much depending on whether the structure reforms are in place or not. It would be a much, much faster and less painful process. Some such reforms have been undertaken in some countries. More work is needed. Thank you. Thank you very much and thank you very much for the comments that you have made and the way that you have stressed the stakes with regard to investment thatrope. I am sure that backs up the comments that you made a few days ago four years ago in vessels at the brussels economic forum, where you [indiscernible] earlier, we know that the current setup is uncompleted and progress in this field is necessary for the longterm, but it is also relevant for the short term because of the effect on investments. From that point of view, i would just like to ask you to questions. First, something you alluded to, you were talking about the report about the hypothesis of the eurozone and we have to report ongoing, which is arguing in favor of that sort of a move for the euro area. What do you see as future steps toward us and in relation to the referendum in the u. K. , and also, there has been a debate about the work being done by the commission on the extension of the Investment Plan known as the younger plan. You talked about areas where we could mobilize in europe over and above the five president s report, complete with the , is one of the relevant approaches, and he gave us an example in the extending example, was this not necessary to make corrections to give greater ways to Public Investment to achieve the leverage effect on the one hand, and then also look at the risk rate, which has been proposed because that seems to be giving a greater priority to high turn investment markets. There is a huge need that we needed investment projects, which may have lower returns, including those which would encourage convergence of economies. Mario draghi thank you. Her first question is we have said it many times, the monetary andn is still incomplete while it is in complete it is also fragile. For a monetary unit to be fragile, it means it is foldable shocks it is vulnerable to shocks, and that the members, the citizens of its members, may have to pay a higher price for belonging to the Monetary Union and they should if it were to be completed. There are several ways in which the Monetary Union should be completed. One of which is to make it more , and another one is to enhance labor mobility. Another one is to increase the financial resharing, and another one is to complete the Capital Market union and another one yet is to create a shock absorption, like the one that is hinted at in the five president s report. Not tost thing is overburden fiscal policy. We have seen entering into the financial crisis how many countries have had a fiscal situation that would basically prevent them from using any fiscal policy. They were without tools to cope with the crisis, they were without tools to cope with the crisis because they had overburdened fiscal policy in the years before made many fiscal policy mistakes. The first thing we say is to make this fiscal policy is oriented, do not overburden it fiscal policy resilient is do not overburden it. And to address the aftershocks, we must have this shock absorbing mechanism. This is what i would say would be necessary to complete the european Monetary Union, but we toe to remember here that have this shock absorbing mechanism, we have to have trust , anden countries in place to have trust in place, one needs that solidarity and it comes together with responsibility. One needs atappen behaviors byortant neighboring countries. One is compliance with the rules and the second one is convergence. We will have plenty of opportunity in the coming discussion to discuss more about this, but i think i can give you the sense of how all these things come one after the other, beyond what would be a techno to how toesponse strengthen the european Monetary Union. Having said that, is this the forward . To move i think if one looks at the recent experience, there are grounds for optimism because in fact, even without creating the new institutions, resources have been pulled together to cope common needs. An example is to cope with internal and external security. Another example, which we will see more of in the future but already, is the fence. Is defense. Institutionsreate and then giving tasks to them, the members of the european Monetary Union and also the European Union together pulls their resources together to cope for the challenges for their nature that cannot be addressed individually. Aboutecond question is investment. I have made this point several times the for higher level of Public Investment is very strong. What happened in the crisis and under the pressure of the Financial Markets, several countries have undertaken budget consolidation. Perhaps doing so under extreme did what they appeared at the time to be the easiest course of action, mainly raising taxes and cut Public Investment without lowering expenditure. I think it is very important to restore the level of public and i mentioned in the introductory statement that it is 10 below what it was before the crisis and it was not high before the crisis by any historical standard. Public investment has been repeatedly cut in many countries, starting from mid1990s onward. Also, it has become very important now or very selective in what Public Investment is in mind, and focusing on education and Human Capital and research and the digital agenda more than simple infrastructures. , the plan is welcome, but we also have to keep in mind that the process is low. It does not produce immediate, so it is absolutely better and it is important that we start changing this important feature of our budgets, but the process is low and the ecb certainly welcomes the extension beyond 2018. Thank you. That was ecb president mario draghi testifying in front of lawmakers in brussels at the European Parliament. Just looking at the headlines, president draghi saying inflation dynamics in the eurozone remain rather subdued and potentially more stimulus in the pipeline. The ecb has been operations needed ahead of the u. K. Vote great in answer to the question found,rshon distenfeld still quite vague what the ecb would do. Lets try to nail down some specifics. In the event of a leave, you wake up friday and that is what happens in a get this moving eurosterling potentially in the big lake to the upside, is that something the ecb would have to react to . Mr. Draghi himself said that he does not know necessarily what the reaction would be. I would say that is part of the problem in general. They constantly have to see how markets are reacting. I have heard from that speech was basically or that last answer was, we have done everything we can, we are prepared to do more, it is up to you guys now. We cannot do it alone. David there is another central little overng in a 20 minutes, janet yellen in front of congress, and we had peter on earlier and he said that thegulf coast goalposts keep moving in reaction to the market. Is that what you find . Gershon i totally agree with that. Theres the question that janet yellen is an extremist mark woman, but in early 2013, unemployment at 8 , and she said the Federal Reserve had done a study that said the most important metric in the labor market is the and employment market and now we are at 5 and we say that is not enough. Earlier this year when we were creating jobs, they said it was not coming through in retail sales and now they are strong and we say, well, the last month was not great for job creation, so i think the problem this connects the two Central Banks it used to be prior to the financial crisis, there was a simple mandate from Central Banks, trying to get that balance between unemployment and inflation. Simple statement that hard to do in practice. What has happened since then, the third bracket overwhelmed the first two, so we are in this vicious circle. Central banks are talking in this case and they are hawkish. Used as an excuse not to do anything. I do not think that is helping in the long run. David we will come back to a janet yellen will be talking about later and we will be covering janet yellen live at 10 00 a. M. Eastern time. The stock markets opened and we will go to julie hyman to find that would is going on. Julie there we go. Lets take a look at what is going on. Not Much Movement now because investments are waiting for janet yellen, waiting for brexrow, waitg for the votei, i should say two days from now. In advance of all of that, not seeing Much Movement in terms of direction with the stock markett with the exception of the nasdaq up about. 25 of one percent. Not much decisive action. If you take a look at the futures over the twoday period , we will show trajectory. We had a strong rally in u. S. Stocks and a late save, and then we have been climbing back to some degree but fading into the open. There is just not a lot of conviction it seems in buying stocks over the past several days with all of the events banking over investors heads. Take a look at the bloomberg care for what is moving. Here you have the imap, so Energy Stocks trading lower and utilities are under pressure. Tech and consumer state and health care are the three leading groups, so there is a mixed bag on the plus side in terms of what is leading gains. In terms of individual stocks, technology, watching facebook after that vote at yesterday reaffirming all of the company and board members, including peter thiel and approving the creation of that nonvoting stock , which basically consolidate Mark Zuckerbergs control of the company. On the bottom of the s p 500 today, we also have a number of the auto parts makers because we have had some downgrades. American axle all being downgraded to neutral over bank of America Merrill lynch. Analysts are looking at u. S. Vehicle sales in north America Production forecasts and they are cutting them and that hasnt locations in turn for these auto parts makers. David thanks so much. Now we turn to positive news for banks. After a plunge in fixedincome revenue, jeffries out with strong secondquarter numbers. Laura keller joins us now with more. As i say, it was week in the first quarter, but jefferies has come back. Laura it is very positive news as we look back, i cannot find a better quarter since it jeffries changed the way it has been cataloging its fixed david income earnings since david 2009. How far up are they . Laura 59 up, and some analysts thought they would only do 140 million in revenue but they did 250 million above that. David do we know what is driving this . Laura they are a highyield shop, and they do other things, but that is one where they concentrate. David you are in that business. Do you see jefferies in that business . Gershon jeffries is in that business but there is a difference between being the intermediary between customers. Im not picking on jeffries. We dont see a lot of that across the industry. Laura that is interesting that you brought the point that because one of the things they brought up is that a lot of dealers are not coming in with capital and the ones that are our maybe cutting back the not too significant degree or they are benefiting from that. Gershon jeffries has is this heyday, back in the cities of the world and communal capital, jeffries has always facilitated customer trading, so it would make sense that they are benefiting from both environments. David what accounts for the dramatic rise in jeffries . Is it the question of volatility . Laura i think that is most of it. Some of the attributes that we talk about the Federal Reserve being more communicative and how they are potentially going to raise rates, but it is more and it has been really helpful. As we look at the bigger banks and we say, some executives have been signaling to us, this would and thats quarter, what it gives a lot of credence to met what we might see in july when the bigger banks report. David we will have to follow that. Thanks to laura keller. Coming up, is chinese economy stable despite the debt . Hong kongs richest man ways in the next in a bloomberg exclusive. Vid this is bloomberg i am david westin in the hewlettpackard enterprise greenroom. Coming up, Janet Yellens testimony on capitol hill. Jonathan i am Jonathan Ferro. Lets get a check in the markets. A bit of Euro Weakness in the last hour. The euro down to 11250. Mario draghi same further stimulus is in the pipeline. A reference to the measure already announced not yet started, so not necessarily new measures, but the reference to the measures announced and not yet started. More specifically the time of the lending and refinancing operation. It will take place in this coming week. It will be interesting to see how big that stimulus actually is and how much takeup there is some eurozone thanks. The markets about 18 minutes into the session. Lets go to julie hyman. Julie the bestperforming stock in the s p 500 is a aul is airline aul. To have extra revenue and they are setting that target for 2018 and trying to close a profit cap with competitors. Among other things, aiming for 1. 5 million because of increasing customer segmentation and they will make changes to their frequent flyer program, and it will also try to save 1. 3 billion by using larger planes and slimmer seats. Scherzer up like 2 . Checking on planet fitness. Shareholders top will be selling 9. 6 million shares in a previously announced secondary. Theyre talking about some of the other sellers as well as typical when you get a secondary and the stock is down by 5 . Jonathan thank you. That is about that some of the movers. The s p 500 marginally higher and the nasdaq up around. 2. Abigail . Enterpriserner shares are down more than 9 and tracking and transportation did announce that Second Quarter yesterday after the bell on the downside. They are sliding sluggish freight conditions, along with rising costs and we have multiple downgrades on the street, including deutsche bank, jpmorgan, bank of America Merrill lynch and you have to wonder what this announcement says about the economy, but some are not surprised that there is a high bearish look this year of about 12 . David thanks, abigail. Away fromt 10 minutes janet yellen testimony up on capitol hill. We went to bring in gershon distenfeld. You already said that the policy is basically incoherent. That is to quote you. But we do like her to say . Gershon it is more than what i would like her to say. I would like to recognize that keeping rates as low as they are is just not consistent with with Economic Activity is these days. We should be normalizing all the time. We dont have to do it in one fail swoop in one swoop. It is not reacting every single day to what markets are saying. In less than 10 minutes, we will know and we will carry that live at 10 00 a. M. Eastern time. Much more bloomberg , next. David this is bloomberg. Blessed them. Janet yellen will begin her to day of testimony brennan of congress. I am david weston. Janet yellen will begin her in front ofony congress. We will hear and seven minutes time with janet yellen half to say. A flurry ofl get headlines and then she probably would not speak for another 20 minutes or so. Schatzker has been meeting the testimony and he would tell us what it is. But will he say . L i think he is going to say that the commentary in her prepared remarks will be virtually identical to what we heard from the fed last week, we heard from chair yellen in her press conference. If there are notable differences , it is significant because the rest been no Economic Data and interim, so her view of the world should not have changed. If there are more than subtle differences, this is clearly her trying to correct the messaging following last weeks meeting. David her main goal is not to make any news, is that what you are saying . Carl do not rock the boat. David for what you have said already on the program, you do not think no news is good news and you would like some very. , i kind in some respect of long for the days before my career, when you did not know what the fed was doing and there were not careful about every single word that came out. I think what she should say but she will never say is we do not care what the markets are going to do. The right thing to do is to continue to raise rates for you cannot hear that. A just ofink we got that over the last few months, where the markets did not know what the fed with do because they gave us this guidance pointing to rate increases and then backed off of that at the june meeting. It seems to be really gershon the second they looked at the market, the markets break and it is a vicious circle. David it strikes me as we look at this scene that it illustrates the fundamental problem. On themohamed elerian program yesterday and he said we had messy politics getting in the way and here you have the senate, which specializes in messy politics, and how can janet yellen help that situation . I think she has to release the are clear. Im sure she is going to get and immp questions will have some remarks, notably like in the harvard speech. I think she will be pressed on the issue of the low Interest Rates and she will push back with the same phrase she uses, which is a healthy economy will do the best thing to help financial for seniors, and what i will be very interested in is that the timing of that midyear move because they could cause real problems with respect to the election. David thanks, Carl Riccadonna, and gershon distenfeld. Us. Than that does it from the fed chair janet yellen begins or semiannual testimony on Monetary Policy of the u. S. Senate, just minutes away. Nie breaking news covers from washington, d. C. Janet yellen away from breaking her testimony to congress. You can imagine that she will not only answer questions on Monetary Policy but also the upcoming u. K. Referendum on brexit. We have seen the markets move on this. She will be entering the chamber. Lets go to Erik Schatzker live on capitol hill with the previous. A preview. Erik is about to give a more sobering press conference than earlier in philadelphia this month. I would like you to listen to this prepared quote. Proceeding cautiously in raising the federal fun rate will allow the moderate fund growth in place while the ss whether growth is returning to a moderate pace. Let me repeat that last part