Hell drive down costs. With ceo ben then burden shortly. The r. B. I. Governor will not be drawn. This after leaving rates on hold today. We are less than half an hour away from the European Equity market open. It looks like a fairly fairly stolid a fairly solid start to the day. This is what you want to look out here. This is the percentage risk price. The ftse is liking a little bit. European isor looking up a little bit. A solid start for european stocks. We have solid gains across the board in asia. I am showing you only the nikkei and the hang seng. Some of the smaller indexes, especially in china overnight were negative and have now turned positive. Games and equity in asia, games and currency as well. The centralollar as Bank Leaves Rates Unchanged but gets a little bit more dovish and it leaves its main benchmark rate unchanged. It gets a little bit more dovish because it is not seeing the inflation that it would like to see. The pound up 1. 5 because of thin liquidity and high volatility. Lets get to bloombergs first word news with david inglis. Lets get started in the u. S. , Hillary Clinton has reportedly secured enough gallant delegates. One daynation comes after president obama was said to spoken said to have spoken to Bernie Sanders in a bid to unify the party. Former bank of Japan Executive its the boj should abandon twoyear timeframe for inflation to avoid having to take more drastic action. That the boj is already engage in aggressive stimulus. But if it has more policies that if i common sense it will have explaining to do. Saudi arabia has approved a sweeping economic overhaul. The National Transportation Program Includes cutting publicsector wages and borrowing billions of dollars. Seenublic debt is declining to 20 of gdp by 2020 to less than 8 right now. Pickle analysts say is unrealistic. Istanbul has set the turkish currency lower. According to cnn, people have been wounded. There are no details yet on what caused the explosion. They should speak to a lawyer first. That is the morning from jenny watson and chair of the Electoral Commission. She says Financial Institutions hoping to gain an edge will fall afoul of British Electoral law which forbids the publication of any information about how people have actually voted before polling locations close at 10 00 p. M. Dayal news 24 hours a powered by our news bureaus around the world. Janet yellen says she is still fairly sure the u. S. Economy will improve enough to warrant another injuries Interest Rate increase despite fridays job numbers. The economy recently has been affected by a mix of countervailing forces. I see good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones. Lets bring in our guest. Is september the new july . This closerget into to the general election i still think that the fed which is sensitive to political pressure will pass on the september and november opportunity and moved to december. Unless there is a pickup and economic eta or a meaningful trend that justifies moving. Her speech centers a lot like a template or a blueprint. Why they have delayed the rate hike and still try to keep expectations on the table for a rate hike at least once this year. Here what we see is that u. S. Inflation in blue, a lot stronger than eurostat. We are looking at a rate of 1. 1 , a core rate of 1. 4 . If we see it further pickup of inflation, and if we have unemployment hovering around 4. 7 , why shouldnt the fed raise in july . Both targets look like they are about to be met, what i believe is the fed might be patient. People are still very nervous and the fed have tolerated the low target inflation for quite a while. Maybe some inflation closer to 3 for the time being might be helpful in getting wage pressure moving at starting to get the economy up and running with nominal gdp growth as well. I dont think that just because we are approaching the target that the fed is in a rush. They can take their time and slowly move rather than doing anything too aggressively. How much do you listen to what janet yellen has to say . A certainn to it to point but you have to pay significant attention. Which is more important . Both are important. Ould say that janet yellen there have been mixed messages. One of the things that is confusing has been that they pretty much put a third mandate on the table when it comes to raising Interest Rates which is that markets need to be relatively calm and not too volatile going into the rate hike. That means it makes it quite difficult from an investors point of view to take everything the fed says to a degree of enforcement. That means try to work what comes out, i think it is ridiculous. Has beenal bank driving the boat since the financial crisis. Maybe the markets are driving the boat . The fed is datadriven. That fed thats most important will be inflation and jobs data and market levels. They want to see markets less volatile. Our markets really the dog . Is aat list of jobs data long and difficult list to get everything into the perfect position to justify an Interest Rate hike. The fed have managed to get themselves into a difficult position. Every time they do the markets kickoff. We are not quite there yet. We will speak to the ceo of shell who will give us details on his first strategy update. To on theback move. I am matt miller. If we were data dependent on the weather, we would definitely be raising rates. Yet another gorgeous day here on is it the capital of the continent . I dont know. Lets look at samsung first. The company considering introducing to smartphone models that will feature bendable screens. This is according to people familiar with the matter. The light imaging diodes could be unveiled as early as next year which will likely give it a head start on new apple iphones. The General Motors ceo is bullish on china. She said despite jitters around the worlds secondlargest economy, she sees huge potential. Even though china is more volatile than it has been, we still see tremendous growth between now and 2020. We have over 60 new models between now and then. A typical emerging market will be more volatile but we see tremendous Growth Opportunity there. River Capital Management is closing its billiondollar fixed income hedge fund after the leader announced he was stepping away from managing monday. Cash will be returned to its clients. The playboy mansion is being bought up for more than 100 billion 100 million. It is but by the eldest son of the billionaire who owns the property next door. He has agreed to allow hugh hefner to continue to live at the mansion. A sweet purchase. Chart to quickly share a that Bloomberg News put together here. It shows a u. S. Rig count here and it is interesting because we actually had an increase in the rig count over the last month. Nine rigs were added back last week. Increase sincet december and that is as Oil Prices Get to that 50 to 70 mark that citigroup has called the sweet spot for shale. Its really the key factor here in u. S. Oil production i am in berlin, but in the u. S. You know what i am talking about. We have seen 500,000 barrels come off production which has led to price gains now. The concern is that maybe that will push us back down below the sweet spot. Global Market Strategist joins us. Alex, what do you think about the supply and demand relationship with oil . As prices come back, that that shale production is so easy to turn on and off. That is something that will keep a lid on oil prices for the foreseeable future. I cannot see us getting back to 100 per barrel anytime soon. You have seen some significant cuts to the market outside of shale oil production. Since the summer of 2014 to the the oil firm has made 350 billion worth of expenditure cuts which delays 3 billion barrels per bay of production to the next decade. That is a lot of supply taken out of the market hoping to stabilize prices and putting them back up. This 50 approach barrel range, Shell Production starts to come back online. That puts a cap in it but i do not see it going up or down but trending sideways in the oil market. Guy we believe that conversation there and come back to it in a moment. I want to update everybody on istanbul. The blast earlier with details beginning to emerge. Eight people injured as a result of the blast. Injured. Een critically we did see reaction in turkish assets of little early on but we are starting to get more confirmation on the details. Exactly how this happened and who has been hurt. Chart that i want to use for a next guest. This is the conference table for brent. It takes us all the way out to 62. That is not very high if you are basing all of your numbers on 60 per barrel. Last hour, the release their update highlighting the target of synergies through 2018. The companys ceo is within, ryan over to you. Lets take it over to the oil price which is what most people are paying attention to know. There is a lot of optimism on the oil market now. Opec is cautiously optimistic. What if prices stay where they are, or dare i say, lower this year . That is a very good question. Nobody knows where oil prices are going to go. We can sit here and say great recovery so far. We have to balance it at the Oil Price Level. We have a number of important levers we can pull. One of them is cost. We can pull that hard and we will continue to pull that heart. A Lower Oil Prices a great opportunity to reset. At the end of the year, you want to get to a level of 40 billion of operating cost. We plan to run our Capital Investment program at todays oil prices were trending toward the bottom of the bend. If it stays below 50, we will trend below the bottom. , i am wrapping up a lot of projects. An extra 10 billion coming from new projects. At Lower Oil Prices we will be able to sell less assets. I think we have plenty of room to make sure that we balance our Financial Framework. Lets talk about capex. You said youd expect to hit 29 billion this year. You just said if we stay below picking on dollars per barrel we can go below 25. How low can you go and at what point do you affect your production . That is a difficult question to answer in a single way. Ultimately, we believe that we need to be roughly at the 25 billion dollars level. You have to have assets that continuously decline. We believe it 25 billion a year we sustain the dividend and growth dividend overtime. If we are in a tight situation from a Financial Framework respective, we can go lower. We can bring it down to below 20. Im not suggesting that is the best way to run it but there is room for us. At what price would you say that something i need to start weng seriously about . Will have to see. As oil prices come down, costs deflate. We all see it in shale. With complexens deepwater projects. They have rate even prices in the mid 40s. We will have to see how the trend develops over the next year. You also mentioned trading expenditure. Have we seen any Oil Services Company say it is time to pay us a little bit more . How confident are you that you can continue to reduce the 40 billion . Oil services an company, you have to bear in mind that 40 is staff cost. We can take a tremendous amount of cost down as well. More than half of my costs are in the downstream and have nothing to do with oil service companies. What we have seen we talked about that being synergies. The moment you start looking under the hoops and start challenging the organization to do things differently, we found a number of ways to reduce cost. What we can see at the synergies in december. That will help us tremendously with the operating costs. A jump from 14 last year to 26 . Youve talked about a range up to 30 . Is 30 the point at which it becomes uncomfortable . At thelevel where we are moment, 26 is premuch what we expected. You have to bear in mind there are about two Percentage Points in their because of what your accounting purposes we had to classify as data. In terms of metric numbers it is slightly better but our First Priority for cash has to be reducing the net debt. Bringing debt down and making sure that we get back to levels of debt that are consistent with a strong aa Credit Rating for both agencies. Have any of your investors said, we always told you that dividend is king, but we are concerned about dividend levels and debt levels, so we are willing to have a conversation . You can hear different views from investors. I think the majority of our Investor Base likes the policy that we have. Muchividend policy is very road dividend in measured steps. That is pretty much what we will be doing. For this year and for last year, we took the unusual step of preannouncing the dividend seven quarters and offense. For next year, in advance. For next year, we go back to the old one. In terms of the investment program, i understand it is more important in terms of the divestment program, and a stent is more important that is not on my mind at the moment. Got into the market, but it is not based on a solid plan we have working. In the end, think of it. We like to get out of some of these assets. We want to hire great the portfolio. De we want a higher gra portfolio. Thef you are unable to sell 30 billion by 2018, does it make sense to extend the timeline . We have always said this would be a value driven program, not a timeline driven program. At the moment, i am still confident that we will be able to do 30 billion by the end of 2018. Price can shell balance its books . Can you balance that 40 per barrel . Fundamentally, we have to look at it this way. We will balance it at every Oil Price Level. It is basically what the Business Model is founded on. Saw an average in the low 50s. We were able to balance at that price as well. Coincidentally, we created 11 billion of free cash. That happens to be what we need for the combined shell bg combination. In a way, you can see we are balancing the books. If we see Oil Price Levels at a level where we have to go further, we will go further. We still have more in terms of taking the cost up, more in terms of deferring or canceling investment programs. We can work much harder on operations as we are doing as well. I am not so worried that we can balance the books. Let me ask you quickly and at the oil price. Very confident that by the end of the decade we will get close to 60 per barrel. How confident are you this year . I dont want to do any detailed predictions of where we will be at the end of the year. There are a number of factors that are all working in a strange way together. We have opec cycle times. We have shale cycle times. We have larger complex investment cycle times. They are all different. They are all working together in a way that is hard to cover hand. Oil prices may be all over the place. By the end of the decade, 60 seems a reasonable assumption. At that Oil Price Level i want a company that can easily do double digits in terms of capital and can generate twice 5 billion of free cash flow. Just a one sentence answer, we get to 100 when . Maybe never. I dont know. Yesterday the take away what was that Interest Rates will not go up as early as we thought. The jobso before number, she expressed concern about the global economy. We learned from the fed last week and what does it mean for shell . Isthink our business correlated with how the economy performs. See that Energy Demand grows faster at Little Energy prices. This year, we expect to see about 1. 5 Million Barrels per day of demand growth in oil. That is more than 1. 5 . That is a strong growth compared to where we have been before. I think that will help stabilize the market and bring it back in balance again. That was the ceo. Saying, maybe we never see 100 oil again, back to you. Ben, the ceoks to of shell. Keeping everybody happy. About whereuickly we think the price of oil will go. Will it get to 60 per barrel before 2021 . We are waiting for about. This is the picture we find ourselves at the moment. We are pulled up around. 6 . That looking like at the moment. We are going to see market open. It is going to be dominated by a few interesting stocks. These are the numbers as we have seen them come through. The ftse 100 is up by. 4 and climbing. The euro stoxx 600 is up by 3 . The European Market is opening on the front. Lets check in with caroline hyde. Caroline that Risk Appetite flowing over from asia and yesterday. We saw stocks in the green yesterday, driven by Energy Stocks and miners. Today, it looks like the same drive. The function gets into the industry details on the stoxx 600. Energy up. 6 . That entry that we saw the bloomberg commodities index go into the bull market. A little bit of taking states. Clearly the move is on miners. It seems as though janet yellen stepping away, calming the market expectations. Less than 25 22 probability of a rate hike comes alive according to the that he irc function. Lets have a look at some of the fx moves. We have had reports in the stumble any stumble of an explosion. Dollar higher, nero lower. Lira lower. This 5 09 a. M. Is when took off. Issued up of 1. 5 on the british pound. The dollar, what happened . Perhaps it was in aramis trade. A lot of stop loss orders perhaps they came in to action and we jump higher. We settled back. We are. 5 higher on the pound. Concerns about the polling yesterday just ebbing a little bit as we head toward that allimportant june 23 date for when britain decides if it remains in the eu. I want to get into some of the moves. We had that interview with the shell ceo. We are keeping an eye on royal dutch shell. They are cutting back their spending. This is a key thing after the record bg group. 29 billion they are going to be splashing out instead of the 30 billion they were trading toward back in may. Daimler up 9 10 of a percent up. 9 . Cutting back on people. 1200 jobs in north america in north america in north america. The market likes that focus on cutting back in its division. Lets have a less look at a company we did not look all of that much. Burckhardt compression falling back. Theyre giving a dividend that is less than the market expected. That market that felt overall. Watch it fall potentially 5 . That is your market open. Everybody. To update following a blast earlier this morning in istanbul. We are getting a mixed picture. That is understandable given what is happening. A nice picture of somebodys chin as well. The source i am going with is saying we have two dead and eight wounded. We will continue to update you. It has had an impact on the market this morning. At the moment, we are waiting for details on what happened, who was targeted. Looks like a Police Vehicle was targeted in this attack. Details on what exactly the casualty numbers remain a little bit mixed. That is the number we are putting on the screen at the moment. The most accurate numbers we have. Lets come back and talk about what is happening with the equity market story at the open. Global Market Strategist for jpmorgan joins us. We talked about the feds, what is happening with the oil price, shell and its dividend. European equities . Buyer sell . Are they cheap for a reason . For me, europe has a lot of room to run in terms of economic growth. Look at the Unemployment Rate at 10 . Standing,e the ecb willing and able to act. I think i am a positive about certain parts of the european and these. Those that are not exposed to the cyclical upswing starting to kick in in europe. There is a more confident consumer. Unemployment coming down and retail spending going up. All of that starting to show signs of kickstarting a domestic recovery. More focused on a domestic economy rather than what was the play last year which was taking advantage of the weaker euro. More domestic. Guy why am i buying equities . There is difficulty within the credit markets when you look at how much is yielding in negative territory in this sort of uncharted waters. European guy what about Corporate Credit . Alexander 2 is Corporate Credit. That is going to increase as the ecbs persists start to kick in. Yielderall universe is 2 . That is not a lot of reward for potential movement pdf to think about the liquidity at play you have to think about the liquidity at play. If for example you cannot get back out again, if the liquidity is dried up within the market. Talking about whether or not stocks are cheap. The ftse has outperformed the stoxx 600. Chart take a look at this why have british stocks done well and they are valued cheaply . Alexander this is about the muncie turnaround. It is looking to me like some of the Commodity Prices have bottomed out and oil and some areas and that has given a lift share which is a commodity heavy index about 15 of the index is based in oil or commodity stocks. This move has caught a couple of Fund Managers offguard. A big rotation in fund manager performance. Those Fund Managers that were in have beenst year heavily underweight commodities. Going into this year, they held most both positions. They have out they have averaged 79 percentile to date because they have been hurt by the recovery recovering commodity stocks. It is started to underperform due to concerns about a post brexit economic slowdown. That is something we will be watching closely. It is an interesting dynamic and play. In play. Guy you think oil has gone as far as it is going to go. It is all down to the dollar and fed. The run over for these guys that have done so well. Alexander theres a certain in commodities price to earnings ratio are looking quite extended. There is the other side of the coin where the u. K. Made smallcap space and exposed to the k the mystic economy to the u. K. Domestic economy subsequent economic slowdown might come with that could damage the domestic orientated Equity Stocks within the u. K. While those that are globally exposed have guy Alexander Dryden is going to stay with us. U. K. Stocks posted their best performance in eight years. We are going to talk about the stock story, brexit and the swiss impact as well. That story coming up next. Guy welcome back. You are watching on the move. In europe, this is the picture we find ourselves with. Europe. Bounce out of the dax responding solidly. Trading 10,002 at 48. 10,248. Lets get the bloomberg first word news with david england. What lets have a look at is happening there with Hillary Clinton. She has secured enough delegates to scoop the president ial nomination. It comes one day after president obama [indiscernible] ahead of the general election. Sanders has vowed to stay in the race and force a contested convention. An explosion near the Historic Center of the turkish city of istanbul appears to be a terrorist attack targeting a Police Vehicle. Two people have been killed and eight wounded in the blast. The turkish lira is trading at little bit lower this morning. Three people have been killed in anods and drowned off of eastern off of [indiscernible] eastern australia. They were trapped in the cars. In damaged Beachfront Homes in northern sydney. Claims well over 41 million. Any banks or hedge funds thinking of commissioning [indiscernible] Eu Referendum should speak to a lawyer first. That is the warning from the chief accounting officer and chair of the Electoral Commission she says mitchell institutions hoping to be in an edge risk [indiscernible] which prevents the publication pollingommission before stations close at 10 00 p. M. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg on top. Guy. Guy thank you indeed, david english. Lets talk about the brexit. Lets talk about what is happening in switzerland. White . Let me walk you through the argument. This morning we have had the release from the smb about the currency reserves. Things jumped 602. 1 billion the last time around. You can picture the details on your bloomberg. What is interesting is this next chart. This is euro swissie onemonth risk reversal. We talked a lot about risk reversal charts surrounding the pound. Lets talk about the swissie. The idea is if you were to see a brexit, it is the swiss that would take the brunt. You would see fund flows foreign back in fund flows pouring back in. The implications are being felt around europe and a number of currencies. David bloom was on this program talking exactly about this story. He says it could take a few pushing out a position, it could take six minutes if it were to happen lets bring back in Alexander Dryden. Where would you hide out . Alexander what youre seeing is people are looking for different areas, areas to scrabble to for safe haven. One of the most interesting aspects is the safe haven being Government Bonds has also been passed by in the recent scrabble, because 40 of it is in the negative territory and looking for areas like old. Eurozoneacross the because it is not just the brexit referendum that is a political risk, we got french and german elections next year. The swiss do have some issues because they will continue the safe haven currency. That idea and the idea of the swissie is a safe her test safe haven currency was challenge year when the central bank decided to make an unannounced move in unpacking its take against the euro. It had that tarnish taken away from it in the safe haven currency a little bit. I still see the argument that youre saying where that could be moving. Matt the swiss franc is a safe haven currency and a currency eurozone. The eu, the the british pound i would think of in the same way. There is an argument that it should not get battered so hard in the event of a brexit. What do you think . Alexander there is an amount of uncertainty with the issue in the event the u. K. Voting to leave the eu, we could see a balance of 2 knocked off economic growth. It is difficult to work out how much the pound would move. I see numbers as far as as high as 30 . Me, i think the Economic Uncertainty is the problem, and how prolonged the uncertainty could be. It could take two years to tie up all of the loose ends and. Anage the uks assets that is the problem for a lot of investors. Right now it is difficult with investors trying to get a read on what is happening in the markets. Yet to take over the polling data with a pinch of salt after the Scottish Referendum and the general election. Looking at the bookies odds. They are significantly lower. 30 . Lower places, 25 to you can see why people are moving into cert into safe haven assets. Matt i wonder if brits in european investors are as gold crazy as americans. We have seen an incredible move higher in gold. Ive got a year today chart that shows you at one point we were well over a 20 gain year to date. Were still at 17 . Is this a good safe haven . When youre concerned about what is going on in the elections in europe and the rise of populism . Gold has been traditionally a safe haven asset . There has been a step change ever since other safe haven assets such as Government Bonds have started to yield into negative territory, because one of the criticisms of gold is that he did not yield you any income. Perhaps your cash was in it. Would not it gets when he be better to put it into Government Bonds would need be better to it be betterwould to put it into Government Bonds . Toative rates continue dominate across the Government Bond sector. Guy is it too late to ensure your portfolio . If you think there is an outside chance of brexit happening . Alexander it is difficult to identify which sectors are going to get hit harder than the other. You can have stocks in the same sector but one with significant business with europe and the other is not. Actually, it is difficult and you have not seen Much Movement from the u. K. Fund managers on opec positioning did a lot of them have held their positions on into this exit debate, because they are not sure which way it is going to go. Guy the housing sector, there are areas in which you have seen a slowdown. You talk to guys around here, they will tell you it is dead. Nothing is happening. That sector has moved has stopped massively. To unpack trying whether this slowdown has been happening in u. K. Data because the economy has the brexit lose, there is a downward theres a trend in downward data which is been going on for the last year. U. K. Has been a very job fueled economy. The government has been very good into getting people off the sidelines and getting them to work. You now need to get those workers and work to start producing more. Productivity growth from 1970 two the financial crisis was 2. 5 . Since the potential from 1970 to the financial crisis was 2. 5 . I have bigger fears beyond what is happening with brexit about the u. K. Economy in the six months to follow it. Guy to see this morning. Great to see you this morning. Alex dryden joining us from jpmorgan. Bank. T, talking to rbs rba bank. Discussion coming up next. Guy youre watching on the move. Lets talk about what has been happening down under overnight. The aussie spiking after the rba expectations for a rate cut. Did it really got to lets get out to sydney and our editor,. An preachy dan petrie lets talk about what we had today. I read notes pointing to the fact that the view is despite was erroneous. The rba has left the door open for further cuts. Dan a very good morning to you. That doesnt seem to be the case although there was no explicit easing in the statement. That was a nugget i took away from that at 2 30 today. What this is a case of, the rba at the moment they have to taken this view test taking this view of Glenn Stevens stewardship. A wait and see approach because so many of sriracha sauce values currency, when the rba makes its decision in relation to currency, as well as factors back. Theyre probably wouldve been to look at by capping the rates, perhaps more money going to the Housing Market which is already pretty hot. A wait and see. Looking at the fact is overseas, deeply the Federal Reserve in the united states. We have been talking about the miners helping to boost the ftse. In austria, the mining boom has been delivering the gdp growth that this last generation has been used to. Is that a thing of the past . That mining boom . Dan very much so if you look at it now, weakening profit numbers coming through from all of the reporting. Australians enjoy to 24 years of uninterrupted economic growth. Grind slow. Arts to it has been. Everyone talks about a nonmining boom. The iron ore and coal has delivered in australia well beyond the wildest dreams. It really is a case of trying to adjust to a new world order. That is what we are seeing. Guy we will wrap it up there. Talk aboutof time to what might happen in brisbane this weekend. [indiscernible] up next, we are going to talk r. B. I. Guy welcome back. Youre watching on the move. Lets show you with the markets look like. Solid sessions being generated around the continent. It is the commodity stocks that are very much on the front foot. Lets get details. Caroline hyde has what we need. Tara caroline we have a couple of big moves. Doing pretty well on the fact we have oil and gas and Energy Stocks today. It is 25 exposed to the oil and gas sector. The reason it is of the most is it is going and analysts that want you to buy it. This has to do with can accord going out there saying compared to american beer, we are going to be trading at a significant discount. Pretty unimpressed with the rally in oil stocks in general. They dont believe we are going to be hitting any sort of bottom. They do feel this company has a track record of cash generation through good and bad times. They should not be trading at a discount to their north american peers. Up 3. 8 . This is all down to analysts recommendations. When the Analyst Recommendations are moving the stoxx. Capital return and jeffries mixed. Roving returns a not being reflected yet and the stoxx and we are seeing a price target being raised to 595. We are at 434. Guy caroline, thank you very much indeed. The stoxx we need to be watching. In the essential governor has left rates unchanged. Find lower at 6. 5 . Nobody is surprised. Investors are searching for clues as to whether or not he will get an extension to his term as governor. It is due to end in september. Does he wanted . Does he want it . A big question. Bigger than where rates go next. Lets talk about the story and what does it mean for the Indian Economy and investments . Good morning. Goes, if he goes, what are the implications . A weaker opening. A lack of Investor Confidence in india. , if there was a price for investing in a central banker of the decade, he would get it. Three years ago, india was considered one of the fragile five last year, the rupee, the best underperforming currency against the dollar. You write takes that primitively broaden in gold imports that led to massive contract is just massive contraction. Massive contraction. Would be a big loss for india were he to go. Guy what signals would it send about government policy index vacations dealing with corruption . All of the issues that have worried so many people in the past about india. Peter it would signal a real question about the Central Banks and broader monetary policy. With the use policy more aggressively . Would they use policy more aggressively . The question of red tape and corruption. That is a question of the government to deal with. Guy heres a guy that has not done what we wanted him to do. He has been criticized for rates, as a result i know youre leading to the central bank story but it leads to a whole list of other issues about whether government priorities really lie. Peter one thing about the modi government, when he came into power, everybody was excited. It was the first time we had a politician that not only talk about performance but had the backing to implement them. We have seen a real pullback on the scale on what he wanted to do. We have not seen labor market reform or land reform he is trying to cut red tape and cut down corruption but the broader reform package has not been initiated as such. This is a real thing for india. Matt peter, he cannot do anything about the red tape that the government needs to deal with it when he can do is monetary policy. He expect him to cut rates later in the year . May be in the Third Quarter . He is Holding Tight because of the risks with brexit, with the fed, etc. Is there a way these things are going to play out where he does not cut rates this year . Peter first of all, it is unlikely we did not see a cut today, mainly speaking because we have a lot of political event risks. I think the only reason he would not hike rates would not cut rates later would be if we saw a more aggressive fed hiking cycle. At this point, i think that is unlikely. Low inflation and declining inflation in india should lead , probably rate cuts q3 or q4. Matt how about a brexit . It seems like the equity markets are not concerned. A lot of people are talking about 20 , 30 odds of a vote to leave. The polls are still showing leave as a gaining force over remain. What if england votes to exit the eu . Would that be another risk that would hold him from cutting rates this year . Impactwe have to see the it has on equity markets and more broader markets. Not just in europe but elsewhere. If that were to happen, it could lead to secondary or unintended consequences which central bankers in both developed and emerging markets have to take into account. Guy lets take it back to rush on what kind of discount would be applied to indian assets were he will to step down . Peter equity markets would weaken, 15 . Ruby would weaken. Ee hasamazing rup been one of the least volatile currencies. Likewise, the rupee could weaken considerably in the region of 5 to 10 . There is a discount factor that would apply that would be leaving. F he were i dont know why they would change in. If something is working well, why change it . We would be doing it for the wrong reason. Guy we are going to come back and talk about what is happening in emerging markets. He is going to talk about the fed implications. What will be the catalyst . Is the rally still on . That story coming up next. A lovely day, london. Stocks on the front foot. The london markets up by. 7 . Matt i want to give you some breaking news on what is going on in turkey. The bomb blast, the car bomb apparently that exploded there is being talked about by the governor. He is talking about the blast and he is getting some numbers. I want to be clear that we have accounts,different each of which have come with different numbers as far as the injuries and possible dead here. The istanbul governor is saying 11 have died in this blast, including seven police officers. We have had a number of different people, News Agencies reporting different dead counts of different degrees severity. Of sincerity. You see the most recent, a 11 dead, and seven police officers. This is according to the governor. A moving target. Guy . Guy him to get peter kinsellas take i want to get peter kinsellas take it we are watching carefully a different style a government emerged very clearly in ankara. We have an executive residency that looks like it is clearly on its way. Weve had a series of terrorist attacks. Investor sentiment, how does it get affected . Are investors looking through it . Walk us through. Peter a terrible tragedy, what is happened. Going forward, beyond the situation in turkey, where focusing on an executive style presidency. The checks and balances in turkey are not as strong as they are in other countries. Ultimately speaking, they are cutting rates to quickly when maybe they should not. Consequently, youre likely to see more weakness with higher inflation. The old story of a week or higher a weekly higher inflation, that is not going away. Sentiment toward a would be shaky for those reasons. All. Doesnt help at in that sense, Investor Confidence in turkey will be shaky. Real Interest Rates are not high enough. Guy lets talk more brightly about what is happening in the m space. We have seen quite in the em space. We have seen quite a rally. How much room is this rally itng to run macro peter doesnt have does it have room to run . I would say yes. Thenese as a data chinese data has come down a little bit. It does have room to rally. The longer the fed stay on hold,. Ndicate a modest cycle good news for emerging markets. More important for em, if we see which weinstability have seen for the last five or six months, that would lead to a with a backdrop of stable currencies, recently declining inflation, that is pretty good news for em. Matt stable commodities, right . Looks like the volatility that comes out of commodities this most recent bull run, at least oil has been hovering around 50 a barrel for a couple of weeks. Tc that holding back out is that important for eu growth for em growth . Peter i believe we have gone too far too quickly. Clear thatis pretty we have seen a top or bottom in the oil price in the oil market. Thatse scenario should be supportive for em and most commodity producing ems. Matt we talk about the lawyer oil prices being beneficial to Lower Oil Prices being beneficial to the western consumers. It has to be more important for emerging market producers. Peter if you look at countries like russia and elsewhere, break if you the oil price assume budget is at 40 a barrel. It helps enormously. Getting oil price around 40 a barrel is helping to a large extent. The scoop for longerterm upside toward 65 to 70 is more muted with shale. Guy how quickly do markets look through the fed . Watch been interesting to. Kind of like south africa. We see the fed, we get a reaction, em currencies do well. They come back and look at it and go at problem still exists. Where does growth come from . Markets. Function from isnt changing . Is it the same . What is going to change . Peter it is broadly the same. If you look at the em rally, it has been largely a dollar story. Out, it is not like growth is improving massively in most ems. Money has a look very large structure of problems. This Interest Rate story of how quickly the fed are going to raise rates. What i think is not helping is the fed saying in the last couple of weeks, june is a possibility. A bit more consistency from the fed would help most investors, not just in the em. Matt what this volatility due . Guy what does volatility due . Does it go up . Does it change . Walk me through what how hard is it going to be . , ifr what we tend to see you look at the last six months, what we tend to see is volatility quite high at the again in the year. The market repricing from the fed. In recent weeks, we saw the fed talking more hawkish lee. More hawkishly. We need aiew structural change in the market. Liquidity is tighter than it was consequently, you are awarded for having a bias in any portfolio. We have very high little risks. Think of south africa. Turkey to a lesser extent. Ahead of ait potential fed move. Mexico all of that in mind, what you think valuations should be . Matt all of that in mind, what do you think valuations should be . Fairly that has always been the case. That will continue to be the case for the shortterm. The point is from investing in the em space and equity space, anything you might make on the equity, you could lose on the fx pretty quickly. Are said, sure valuations compelling in some areas but not in others. Russia looks interesting. I think places are to avoid are like south africa we have very high political risks. Peter kinsella, head of emerging markets at deutsche bank. June is out. July might be out. Markets say we could be waiting until december. Yellen rate path. We will do that next. Guy welcome back. Youre watching on the move. We are 52 minutes into the trading day. Things are shaping up. This is the picture. Stoxx 600 up by 1 . Dax up by 1. 5 . Not been a good year for deutsche bank. Deutsche up by 3 . That is why germanys outperforming. Matt, what do we expect the next the rest of the session . Matt deutsche bank, it is interesting to raise the top. They are down 21 year to date. Down 31 year to date. Adidas the biggest gainer. Close in just over an hour, there is a final reading of First Quarter eurozone gdp. I wasvening, this is what talking about, following the close at 8 00 a. M. David cameron and nigel farage are going to take part in a brexit debate. It is it 00 p. M. U. K. Time. Time. Is 8 00 p. M. U. K. I will be staying up late to see that. Just over an hour later, the World Bank Issues its global aspen local economic prospects, 2016 report. Time. M. We are joined by richard jones. Richard, what do you expect from the world bank here. How closely do you Pay Attention an institution like the world bank . Richard that is far past my bedtime, so i am going to to pick that up when i wake up at 4 00 in the morning. You always have to Pay Attention to what the world bank says. They have a good feeling about global provisions. They have been cautious in previous reports. It will be interesting to see what the update is when i rise early in the morning. Guy we have to go to bed very early. Ets talk about the fed we are all listen to janet yellen last night talking about what she has in store for us all to the market has now moved away for the summer. Not. Est of the market is the rest of the market is pointing toward december. Richard i think we will be lucky to get one in this year according to market pricing. The most interesting thing she said last night was current policy is it generally appropriate. She is cautiously optimistic. The uncertainties are sizable. She name checked brexit. Guy very excited about that this morning. Richard given where the pulsar, theyre going to be looking for anything. It is looking tight. That is going to have an impact on fed. Guy matt is janet yellen because ng brexit the entire sweat the entire fed has swung too hawkish this. Hawkishness including her all of a sudden, 38,000 instead of 160. They got to do anything they can to backpedal. Someone says maybe you should mention brexit as a concern. Richard it is not just the 38,000 which catches the eye. The previous two numbers were lower. Theres a lot of stuff that gave the fed paul smith thought. That is what janet yellen said yesterday. Theyre leaning until they see if this is a one off, the start of a new trend. Theyre concerned and that is why they will end up waiting. The obvious month, that is where we get more than 60 . Richard my call has been nothing before the election. Ive had that few for a while and i still maintain it. Before the election, we would be hardpressed to see a fed rate rise. Maybe next year depending on the data. Matt richard, thank you so much for joining us. Guy, i will see both you and richard. Im going to join you on Bloomberg Radio next. Stay with bloomberg television. Up next, it is the pulse. Francine clinton clinches and ap delegate count has hillary making test of a u. S. Major political party. Yellen is keeping the fed hike alive after her cautious tone pushes expectation. Shell cuts deeper. Europes Biggest Energy come company cuts. We speak to the ceo. Francine welcome to the pulse