Transcripts For BLOOMBERG On The Move 20160621

Will the fed chair change your view of the u. S. Economy . Morning, less than half an hour away from the European Equity market open and what is session it was yesterday. The bulk of the European Forces up 3 . Some really stellar gains being posted. Today, this is the fair value column. It looks like london is good to sink a bit but only 1 . Elsewhere it looks like we are going to add to those amazing gains. Starting to see a little bit of the correlation between what is happening in the ftse and the rest of the market. Have a look at some of the assets. The pound coming off of its lows, it was trading lower. Now we see it trading flat. Yesterdays stellar gains that we saw it on the equity market. We saw it in the pound surging 2. 4 . Today, just flat. I signed a light on the dollar index. We are seeing it slip for a fifth day. The longest losing streak and 11 weeks. Yellen takes the hill as testimony starts. Will she sounds more dovish . Stocks rallying on what might be said by the federal reserve. The japanese yen is the main underperformer on the major currencies. The story of the dollar weakness all a part of the yen, climbing. 5 . That helping to light the stock market. Lets get to number first word news. Lets get to bloomberg first word news. Britains referendum on European Union membership remains too close to call todays before the vote. Separate polls show leads for both sides. 42 . Thet remains cofounder of leave eu campaign told a bloomberg that uncertainty reigns and no one knows what the outcome is going to be. It is strong to leave. I doubt anyone really knows. Someone tell you they know what is going to happen, they are lying. The june meeting of australia essential bank shows it held recent positive economic data. Reiterating that inflation would remain low. It cap change jesse cap rates unchanged. It kept rates unchanged. An International Event like britains Eu Referendum plays out. The senate voted down a series of measures intended to prevent terror suspects from buying guns in the wake of the orlando massacre. Two of the defeated proposals were offered by republicans and two by democrats but none reached a 60 vote threshold needed. Some republicans say they are working on a new effort to break the years long deadlock over guns legislate overdone station. Legislation. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. This is a bloomberg. Caroline . Caroline thank you very much indeed. We said that the top, billionaire investor sounding the alarm on brexit. Joseph searles says the pound could fall 20 if the eu if the u. K. Votes to leave. He would scale by his sizable investment in the u. K. Earlier this month. Li king to bloomberg, ashing spoke to us. I hope they dont leave. If brexit happens, it will be detrimental to the u. K. And it will have a negative impact on the whole of europe. It is not the end of the world either. Guy lets welcome our guest, s p global ratings. You have indicated that you feel the u. K. Will lose its aaa status were there to be a leave the vote. Is that a binary decision . U. K. Votes that way, the rates changes. We are going to see how it goes the first day. Is it as binary is that . Is not very fuzzy, it is pretty much binary. If brexit wednesday the day, if brexit wins the day, it is more likely that remain will win. If brexit wins, the rating which is still aaa with a negative outlook on the u. K. Would go down. If remain is the winning faction, you need to see what comes thereafter. The initial expectation of hope of the Prime Minister has been this referendum could help to heal old wounds in the party and in society. This may or may not happen right now it looks as if the campaign has become pretty personal. It is hard to see how they can kiss and makeup. We will observe the markets. Guy the politics are affected . Morris it is the part will economic policies be impacted. We are of the view that u. K. Has one of the strongest governance standards and visibility in the world. Will this persist . History has a cautionary tale that goes back a long time. In the 19th century after the repeat of the corn laws. T is pretty similar yet the conservatives in the Prime Minister, forgot his way but a few months later his government was finish. Thes quite difficult from current perspective to see what the politics will be like. That is what we will be watching. There is uncertainty there. Whether those are of decisionmaking and predictability and effectiveness of policymaking can persist after this rather controversial and crisis campaign. Caroline the u. K. Sovereign rating is under threat. Will remain in . Or will we exit . If you have a brexit vote, the rating would go down. Stating that he clearly. Stating that pretty clearly. Clearly, the world does not end there. We have to look at the future and assess what will be the future of policymaking in the u. K. There is a possibility that life will be the same after the referendum that it was before the referendum. On the other hand, this might not be the case. We will have to see whether we can continue to base their aaa rating which is the strongest that there is. There is just a dozen countries left. Whether this is still based on the same strong institutions, it is unknown. This campaign done to change your view of britain . Hasnt changed anything . Anything . Changed hasshifted your view it shifted your view of policy trajectory . Has the world moved on in terms of what you have seen here . The genie could be out of the bottle. We are thinking toward thursday. Lets get the referendum and see the results. The political life will go on. Look at the Scottish Referendum which was relatively clearly one won by the remain camp. Did this with the end put an end to the debate . It did not. Look at quebec which had a referendum on independence from canada. Many years later had another one. I really think we have to look beyond thursday even if remain wins. What does this mean for policymaking in westminster . We think the institutions are strong good they probably have selfhealing capabilities are strong. They probably have selfhealing capabilities. The conservative Party Reunites and that in a semblance of unity and continue to govern like a single party. We dont know that yet. I will hope our hope is that we will go back to the old standards but can we be sure . I dont think anyone can be. Manus guy thank you very much indeed. The secretary that is on the league sides of the fence, get her take on whether she feels the conservative party has the ability to self heal. Brexit is that the only risk out there. Spain has not been half governed for half a year. How to make sense of the bond market next. Caroline welcome back to on the move. A rather jury berlin a rather dreary berlin. The best day on the dax since march 2015 today we can be a little more cautious. Janet yellen, will she be more dovish . Thank you. Frances largest insurer plans to increase possibility to 2020 by seeking 2. 1 billion euros of cost cuts and intensifying digital investments. The Company Wants to tap growing demand for policies protecting savings in health after targeting and adjusted rate over the next four years. Thetions have arisen about space to expand into china. It held its shareholder meeting. We said our mission is to connect everyone in the world and china is a part of everyone in the world did we are learning, study the world. Where learning and studying about the chinese market. Well see what happens. Tidjanet suisse ceo sete Tidjane Thiam says the companys share prices are being hurt by a high level of short positions. Funds were wrong to assume the bank will have to raise Additional Capital or to Credit Suisse has lost half of its market value since he took over last july. Tesla is said to have chosen shanghai as its Production Based in china. It signed a 9 billion deal with the City Government owned firm. Allowld about it would tesla to avoid a 9 a 25 levy. Today the trade is reasonably unchanged. We have seen a big move within the european complex. A brexit is only one factor for many of these nations, certainly spain. The nation goes to the polls on sunday for its second election. Mauritz kraemer still with us. A couple things i wanted to do, we talked a little bit about the brexit. Betweenthe spread germany and spain and it is coming quite sharply over the last few days as we witnessed this move in the polls. Lets come back to this be scenario and talk about what would happen if there were to be a brexit. Do you think you would see significant spread widening echo do you think that is something widening . Do you think that is something the ecb would handle . At the time when the polls the brexit wins today, [indiscernible] it seems to rebalance in the spreads go down. T is no coincidence the same way we would see with currencies, right . You have a brexit, put pressure on some of the safe haven currencies like the swiss franc, etc. That we can assume. The deeper question here on the bond market, Government Bond market in the eurozone is one of our levels, i would say. You have 10 year german bonds basically at zero. That is in the environment of an inflation target of the ecb, of close to 2 . If we have a longterm rate and we are 50 year bonds, belgium and others being sold at yields just at the inflation target, this could signal that markets believe that the inflation target, even in the longer term, maybe decades, if that were to case if this would be to be the case, eurozone would be with problems. It is a call to see how this spreads between the periphery and the core because if we do not go back, if the ecb loses control over the longer term over inflation, the spreads are inexplicably tight. Of ne give me a sense made leaps and bounds in terms of reforms. How much is it in the eye of the storm when it comes to brexit . Because of its significant dependence in terms of trade . Moritz we have measured the other sovereigns in europe. The vulnerability toward brexit. Island is ireland is top of the list. They have a lot of exposure, not only on trade, but it is the most exposed in terms of migration flows so that the share of irish citizens living in the u. K. , compared to the regular population is way off the chart. I had a lot of investment fdis, so ireland is the most exposed. Not even ireland, we would think as far as the rating is concerned would be at risk. In ireland, you have a small open resilient, flexible economy. It has gone through a pretty big shock. Intact. Ome out fairly it is not undamaged, with a black eye, yes. We think it can weather the u. K. Brexit. Man guy you dont think there will be downgrades on these type of countries. You took about this mechanical downgrade that would happen. There is this domino affect referendum clear that is gripping many people in europe. You will see similar copycat scenarios taking place. Are you not worried that is something youll have to look very carefully at . Moritz i dont think so, because of will happen in a brexit scenario, it will be a very long process of trying to figure out a new relationship between britain and the eu. When greenland left, it took three years. That all ofemember the incumbents are facing pressure from the own populace, eurosceptic movements. They have no incentive to negotiate a sweet deal with britain. They are beingnk punished . Moritz this is not a pushover for either party. This will take a long time. If you were to find an agreement, this would be in a treaty form. The treaty would have to be approved by all parliaments and a number of referenda and other countries. Maybe even the u. K. There are a lot of veto players. Maybe a decade of uncertainty where investment is going to be reduced. The u. K. Is more dependent on capital employed because of its Financial Center than any other country in the g7. The demonstration effect would be such that a copycat referenda are quietly are quite unlikely. Us. Stay with minutes away from the European Equity markets open. Eight minutes away and we are to take a look at some of the corporate movers. European forces had a massive day, up 3 . We will dig into the details and tell you what we think is going to happen when the European Markets open. Guy welcome back. Five minutes until the european open. What to be expected in terms of corporate moves . Big costcutting out in asia. The market takes that one. I want to talk about amplatz. Its all wes is falling. It saw prices falling. Years ofing another 10 a difficult times at the eye and or as the Iron Ore Price continues to adjust. We could see some fairly big moves. I mentioned stuff happening within the resources sector. European markets are a little more flat. We softened a bit over the last half hour. As you can see, the ftse is pulled down. 2 . A 3 down 20 . Pulled down. 3 . Keep an eye on exactly what is happening, clearly the bond market story is going to be one to watch out for. Ets flag up what is happening caroline . Caroline interesting story on the german side of the equation. Whether we will see the german court overruled the bond purchasing and stand back from where the bond is back bundesbank plays its role. The volkswagen volkswagen today. The to reject the diesel scandal. Conducting an independent investigation. A gloomy day in germany. Bright and breezy in london. 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. Guy on the move good morning. You are watching on the move. I am alongside caroline hyde. She is in berlin. We are moments from the start of morning trading and caroline as your morning brief. Caroline we have warnings of a black friday for sterling. An exit would hurt everyone, we are told. The polls tighten and fresh doubt is built up. Hill when she ss a speaks to lawmakers later today, guy. Guy lets talk about how we think this European Market open is going to go. Today we think it is going to be slightly negative. Unsurprising, given the scale of the gains yesterday. The polls are vry tight. European markets are opening this tuesday morning. Lets show you where we stand. This is the picture. Lets take you to the terminal. These are the gains with a yesterday. Lets see how the ftse 100 opened. Here we go. Yes, its beginning to trend lower. And you is now opened, can figure is beginning to edge a bit lower. The cac is beginning to follow suit, as is the dax. Markets, allean beginning to soften up. The ftse 100 is down by 0. 5 . What is going on below the surface . Lets find out with matt miller. Matt it looks like a risk on day from what we saw from asia overnight and what we are seeing for example, real weakness in the yen right now. This is fx ip, which is a great screen to follow all parents the information to follow all currency information. Lets take a look at the imap here on the stoxx 600 and see which sectors are moving down and which are moving even further down. Almost all of the sectors we are looking here are broken up on the stoxx 600. Telecoms are the worst. Energy though, the secondlargest. Telecoms are not a huge sector compared to energy. The reason there, we see drops in crude oil and many commodities. So, you will be miners and Energy Companies down today. Lets look at the individual stocks that are moving. Very weak last month, down 21 . Hemont. Is down. 8 , ric axa has come out with bank estimates that were in line with the estimate. For example, 2. 1 billion euros in savings by 2020 and investing one billion euros in savings. And there you see glencore, as i said. Energyand companies are down across the board today. A stronger performance yesterday. This is after the remain rally really kicked in. Today we are softening up a bit. That is the financials of the week. Lets let this reset. On the banking sector, we are down by 0. 5 . Lets bring out guest back into the conversation. Is there i in trying to understand magnitude here. So, you downgrade the u. K. As a sovereign walk me through the read into the Financial Sector. We have been clear on the sovereign. The Financial Sector, look at the banks in the u. K. , they are significantly lower than the sovereigns. Enough have to read across into other sectors here. Guy you dont think, there would be concerned surrounding funding, shortterm funding and mediumterm funding. Certainly, and there are challenges coming up with brexit. That would be because of the uncertainty. Been discussions about what the economic consequences would be, whether there would be a recession or not and what the slowdown would be. This would have an impact on the quality of the banks. But to be honest, i dont know what the economic consequences would be. It is hard to say with any degree of certainty, this is how the banks are going to be affected. On that front, we prefer to the how the situation unravels. Rating action would not be hinging on the economic situation. It would be hinging on the global weakening of the political institution. It is not affect the Financial Sector directly. It does not affect the Financial Sector directly. Caroline if we do see a vote for remain, would there be any up taketicks in any particular areas . Could there be any affect in terms of Credit Ratings on that side of the industry . As i pointed out, our best case from the beginning has been that the u. K. Will remain a member of the eu. Gsat is builtin to our ratin currently. I dont have particular insight from that first active. Caroline you are so focused on the political risks that could affect the United Kingdom in terms of its political rating. Indeed, what about concerns about the current account . Is this an area you have been focusing on for the u. K. . I believe that the u. K. , of all the countries in the eu, is the country that benefits most from inward investment, in the past. It is quite, you know, legitimate to question as to whether or not this will be the case. We have a prolonged period of uncertainty as to what the relationship will be. What will you be investing in britain . Will it be like norway, or like albania . This is important for Real Investment and financial investment. And britain is very interlinked with the rest of the world. There is no other economy in the world that has so many financial flows going in and out. This is actually multiple of the current account. Ad there, if you have only mall part of those not coming forward, it will have a proportionate impact on the u. K. Economy and Financial Sector. It is paramount if it comes to the brexit, to negotiate in the process that is not antagonizing and creating unnecessary uncertainties. You know, the fact that the u. K. Is so integrated is actually a sign of strength. Majority of investors wanted to put their money into this safe haven. We have never seen this situation, where a safe haven becomes a normal country. This could happen, depending on how the negotiations with europe go. That is a new risk that is hard to guage, but it is advisable to tread carefully on that one. Than kyok youaemer, for sharing your time with us. Up next, as britain prepares for the eu vote, how is it viewed on the continent . That story, next. Caroline welcome back to on the move. We have breaking news in terms of the reshuffling at the ecb Advisory Board. They have been on the Advisory Board for several years. They have stepped down for personal reasons. The resignation was partly due properlyeements how to convey how the surveillance from the ecb should be applied. Elaeinen said it was due to personal reasons. But, let get onto the market check. We are looking at a market that is softening up a little bit. And i say a little bit because i want you to see this chart here, which takes into account what happened yesterday. Move that we had at the get go of training yesterday. We arerning, yes, softening just a little bit, but it really is not very much. And if you take a look at which stocks are on the move, we can run you through what is going on. Side where the down we can see some weakness, the telcos are actually reasonably mixed up. In reality, it is the big miners that are softening up most here. Anglo is up pretty hard. You have bhp and rio also softening up as well, which explains why you can see a little bit of underperformance on the ftse 100 this morning. Lets get you caught up with what you need to know with bloomberg first world news. Reporter britains referendum on European Union membership remains too close to call two days before the vote. To 42 , butad, 44 another poll puts remain at the front. Meanwhile, break the campaigner says 54,000 new jobs would be created if britain leads thves the eu. We have been very unsuccessful with the eu. We have taken their own estimates on freetrade deals. As an independent country, we can do direct business. We think we can do business better. There would be 64,000 new jobs. Reporter apple ceo tim cook is to host a fundraiser for u. S. House speaker paul ryan. Some of the money will go to the National Republican congressional committee. The is aiming to boost ratings of the established republicans. Controversial comments were made by donald trump about women, minority groups, refugees, and immigrants. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. This is bloomberg. Caroline . Caroline now, lets get back to that top story we started with, thursdays vote on britains membership in the eu. Ministryaffairs Jeromin Zettelmeyer joins us now. It is wonderful to have you on the show mr. Zettelmeyer give us a sense of how deep this impact could be . It is really not possible to tell. A voteeral sense is that for leave would yield a long period of uncertainty. It is really not possible to quantify. Caroline what about the eurozone, in terms of the economic ramifications. How much would this affect and what areas would it affect of the German Economy . We have a very close trade ties to the u. K. Of course, it would affect the number of areas, but it would depend on how things unfold. So, we dont have specific estimate. Caroline it seems that you do believe they could be a recession. How much have you been assuming this for any sort of base case . How much of the polls been affecting your viewpoint . We are assuming best case, the remain camp will prevail, but there is a high risk, we might be in a period of uncertainty that could have economic ramifications for all of europe. Guy good morning, sir. It is guy johnson in london. How long do you think the economic ramifications would affect the u. K. , where it to leave the eu . I really dont know, but the general sense is it would take years, andm, two possibly longer. Guy in terms of the possibility that others would consider such a referendum, you think you would see that domino affect . Therefore, that domino effect could suppress Economic Activity across all of europe . Again, i am not a political analyst. So, i could not really speculate on that. But i certainly know that there is a worry that this might happen. That worry itself might have an impact economically, in terms of how it affects markets and investment behavior. Caroline give us a sense of which areas of the economy you feel could be the most exposed. Is it the trade side of the equation, if the going to be direct investment into the u. K. . U. K. Point of view and then the eurozone point of view. Obviously, it would be anything related to trade within the u. K. And possibly come outside of the eurozone and within the eurozone as well. Caroline so, there is not one particular the u. K. And the eurozone are tied together in many ways. As i said, we have not actually done an estimate are very deep analysis. Because of its interdependency, both the u. K. And eurozone would be negatively affected. Caroline and you would see recessions in the eu as well . That i think would be very unlikely. We could have dampening of growth, which would depend on how bad things turn out in the u. K. Caroline mr. Zettelmeyer, of course, you will be staying with us. Up next, germanys highest court is about to rule on five different bids to block Mario Draghis bond buying scheme. We are discussing that after the break. Guy welcome back. 19 minutes past the hour. The ftse 100 is down by. 4 and that is interesting. Let me take you to the bloomberg and show you a couple charts. This shows you the 30 day correlation between the ftse 100 and the pound. This has done significantly over the past couple days. Some are saying this is a result of the Financial Sector. But this morning, as i have just highlighted, the london market is lower, but we are actually seeing the pound rising. So, cable is higher and equities are lower. That correlation is beginning to break down this morning. The European Central bank out if one of its key policies is illegal or not. Germanys highest court will rule on the omc monetary transaction policy, which is an emergency Bond Buying Program instituted four years ago. We are now joined from frankfurt. Paul, walk us through the outcomes here. What if this is successful . Is the if the bid is successful, it will be a blow against the ecb. As he know, this program has never been used. As you know, this program has never been used. Ecb to Purchase Limited Quantities of the bonds of the countries suffering from stress, which is threatening the monetary transition in that country. And they can do so, as long as that country enters a reform program. You can do that under qe. Qe is a spread across the entire area in relation to the economy. So, it could become a handy program in the future if it is still available. Init is not available germany, there could be work arounds, but it would be a damaging blow. Caroline it seems as though germany want a bit more independence formrom the ecb. Could we potentially see an echo of the u. K. Brexit campaign . There is the aspect. He much everything the ecb has done under draghi has been challenged by various german organizations and individuals within the court. It could be seen as a fight back against deep european integration. The chief challenge here in the court is that the ecb has taken on powers it was not entitled to under euy law. It has taken powers to a european level, where they should say at a National Level and that certainly has echoes of a brexit. Caroline still with us here in berlin, Jeromin Zettelmeyer. Mr. Zettelmeyer, give us a sense. Is the ecb taking the right steps . Are they injecting growth. Perhaps i should say the German Government does not have a position on what the ecb does. As a private person, i think that you have to distinguish between the german perspective and the european perspective. From the german perspective, monetary policies are too loose in europe now. We have extremely low negative interest, as the note. As you know. So, we do not have a demand in germany. Risks do hveave some associated with very low interest rate. From a eurozone perspective, it looks rather different. And so here, i can understand the ecbs argument that it is committed to its mandate. The mandate tells us to expand. Caroline growth is still far too low . How do you see to progressing . How do you the it progressing . I think we really need to unleash, if we want to be competitive with other continents, particularly with the u. S. And large emerging markets. The other issue is we are still in a period of fragility. We have high debt levels in some countries. And so, growth can help us with that. Some of these factors are also the reasons why growth is not very high. 22, whiches a catch the ordinance could help graduate. You relating to migration, spoke about the fact that germany has an output gap that is closed. You spoke about the very low levels of unemployment that exist within the country. You think germany is doing a good job of assimilating the migrants that have been arriving . Do you think this has turned out to be an economic bonus, given this data does not show a spike in unemployment . So, i think it is a potential economic bonus. But we are also concerned that it will take a long time to integrate these migrants into the labor market. So, we have done quite a lot to facilitate immigration. So, we have removed most formal barriers to great labor market integration. We have ramped up playing which courses. Languageped up courses. We have told employers that if they are to train young migrants, they will not be supported for the training period. So, we are really trying to do what we can. This said, it was a very large shock in a very short time. We did not have the institutional setup to take you to migrate individually by the hand, so to speak, and devise a program, like sweden has tried to do. But i think we are on the right track. Few weeks ago a will be passed in the next few weeks. Dont have experience on this magnitude with immigration. Caroline Jeromin Zettelmeyer, thank you for joining us. Jeromin zettelmeyer, chief economist for the German Ministry of the economy. Caroline welcome back to on the move. Here in berlin, 30 minutes into the trading day. It is a mixed picture, generally flat on the stoxx 600. The miners, dragging us down, up by. 9 . Oils and metal trade, into the red. We could see the ftse 100 dragged lower by the oil majors and miners. Guy. Ac 40 is up by. 1 , guy lets take a look at how the markets are shaping up in terms of the details below the surface. As jon ferro says, lets lift the lid. The miners in particular are actually adding to the bottom of the ftse 100. Matt miller in i have been kicking this around. This might be why we have seen the correlation breakdown between cable, which is going up this morning, and equity markets, which are going down this morning. Matt miller has plenty of other things to talk about. Matt and maybe that is the place you can make money today, guy. If you see something that does not look right, you can place your bets and it might pay off. I want to show you what we are looking at, in terms of talks that are trading. The nikkei will close now in purple and u. S. Futures in wi hite. Over the last couple of months, you can see we are in an uptrend now as the odds checker probability of the u. K. Leaving the eu is in a downtrend. There is the reverse correlation that is fairly obvious. It is very similar to the correlation between the pound. Stay s in britains days i the eu, everything is ok. Accessway, you can as this on your bloomberg. Gold in white and the pounddollar cable here in blue. You can see, correlation is the name of the game today. They had been correlated for many, many months, almost an entire year. Now, a reverse correlation. Obviously, as the news looks better you might want to look at this from the markets point of view then we see the pound rise and gold fall. As uncertainty arises, the pound drops and the price of gold rises. Guy one man interested in gold is george soros. If british Voters Decide to leave the eu this week, it could affect gold. They could make speculators very rich. Chairman hashe told bloomberg that a brexit could have big consequences for the London Housing market. We have uncertainty at the moment and markets hate uncertainty. Come friday, we will know. If we stay in, probably more of the same. Undoubtedlythere is more volatility. If as you say, all of the pundits suggesting that will be a run on the pound. That means 20 cheaper property in london. I have no doubt people will be piling in. Guy lets bring another voice into the conversation. Just to be clear, you want us to leave, right . Absolutely. Guy the markets dont seem to share that view, a massive rally on the idea that the remain with getting back on the front foot. What do you make of that action . Well, it is not surprising. There were many short positions. The markets reflecting shortterm sentiment. I want to leave because i think it is best for britain over the to 30 years. Guy the market is indicating that we are going to stay, but you are willing to accept some quite dramatic market volatility in the meantime . I think we should not be thinking of the next weeks and months when we are making a decision that will affect us over generations. And the changes i think we can benefit from will benefit the country over the next 10 to 30 years. Caroline i am interested, mr. Shore. You have many offices in the United Kingdom, but one also in germany. One is in edinburgh. Are you worried about the domino effect . Good morning. We have an office there in berlin as well and we very much enjoy the city. Scottse any chance the will leave the uni when oil prices are around 50. Caroline and you are not worried about the hampering this might have on the city . Independent Financial Services companies, a lot of people who run those independent Financial Services Companies Find eu regulation an inhabitant to doing this and is. Doing business. There is a difference between large banks and smaller banks. No one is going to single out the single markets. Our trade deficit is so large for the rest of europe. If they remove our access to Financial Services, we will have a trade war. It is not in any ones interest. I go to germany all the time. German business professionals are absolutely petrified at the idea of us leaving. They feel they have more to lose. Guy and you are not worried about this, that work around . I have never advocated leaving the single market. Guy you have to have money in your business. You have to find a shortterm solution because we would not know that upfront. There is a two year period in which the negotiations will take place. We dont know what is going to happen. You have been managing this business on a day by day basis. You need to take shortterm action. I know you think the longterm story is different, but what about shortterm . How would you manage it . Our particular business, the bulk of our International Interaction is not with european counterparts. 90 of smes in the u. K. Dont do business in europe and yet, they are subject to all of the european regulations. Very few of our Business Activities and Financial Services are with european counterparts. The passport is not a big factor for us. You have mentioned two years. We know that the next day, if there were a brexit, which i dont expect to happen, nothing would change. They would be a negotiation and i think that would end up with a lot of rhetoric and a lot of mudslinging initially. But ultimately, the most our full business interest the most powerful business interests in germany is the export market. They dont want anything changed. The access to the European Market will not change. Caroline what about your talent pool, mr. Shore . How would that change if we did see the u. K. Leave the eu . I think one of the great benefits that the u. K. Had post 9 11, when the americans made it more difficult for talented people to come and a study in america,nd a stad stay in is we got brain gains. I would like to choose the talent pool based on the maximum benefit they can provide to the company, not whether they are european or not european. Therefore, we are trying to limit non eu immigration. Guy you talk about the longterm story of how much it would benefit the u. K. The treasury has, im kind of b thisa little glib about the treasury has issues with predicting next week. Why are you so confident that you feel you have the ability to see what is going to happen with the british economy when some of the biggest institutions in the land are struggling to get passports around the corner . I have confidence in our ability to innovate and to basically, we can really focus on the things we are good at if we are outside of the eu. In terms of funding things like pharma. We have five of the top 20 scientific institutions in the world. We should be subsidizing and focusing on developing those areas. We can do that from within the eu. 60 of our regulation comes from the eu. It is a killer and it will continue to go intn the wrong direction. I have a vision, which i believe, and i could be wrong. But i feel we are losing an opportunity. For howard shore, thank you sharing our time with us. Up next, the polls remain incredibly tied ahead of thursdays vote. We are outside of parliament. That brexit debate, next. Caroline welcome back. This is on the move. A down day on the European Markets, so lets get to the Bloomberg Business flash. Reporter thanks, caroline. Bloomberg seeking saideck hutchinson chairman a brexit would have farreaching implications. I hope they dont leave. If brexit happens, it will be detrimental to the u. K. And it will have a negative impact on all of europe. It is not the end of the world either. Reporter frances largest insurer will seek to. 1 billion euros of cost cuts. The company once to tap growing demand. 12 to 14 over the next four years. Tesla has chosen shanghai as its Production Base in china. Deal witha 9 billion a City Government owenened firm. This would allow tesla to avoid a levy on imported cars. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. Guy separate polls show leads for both sides. The leave vote is ahead 44 to 42 . Meanwhile, another survery just take a look at the important elements within that. Toshows remain ahead by 53 46 . Audience why he is planning on remaining within a reformed eu. It is a turning point because if we leave, there is no easy way back. If we remain, i believe europe has got to change quite dramatically to something much more democratic, much more accountable. Guy meanwhile, Brexit Campaigner nigel has urged voters to quit the eu. We must go out there and tell the Political Class that we want our country back and we will make our time in history, june 23, our independence day. Anna guy anna edwards is outside of westminster. Anna i am joined here by a member of parliament and the Northern Island secretary of state. It is great to have you on the program, you are a campaigner for the leave side. We wanted to get your thoughts on george soros saying the pound would fall 20 in the event of a brexit. If all of this comes to pass, would that be ok with the leave campaign . People like george soros have been predicting doom and gloom. Anna what about is the u. K. Was to lose its Credit Rating . Credit agencies are already warning that this could be a direct result. I dont believe for a moment that people are taken in by these rumors. We have seen that frankly, the big money in the city has made serious mistakes since the 2008 crash. I think most people in the United Kingdom will be making up their minds on a basis of the facts. We have spent millions of pounds in brussels each week. There are high levels of uncontrolled immigration depressing wages. At the moment, the people who make our laws are often not the people who we elect. We need to revitalize our democracy and make sure that the people who make our laws are the people we can vote for in the general election. Anna you might not care what the bigmoney men in the cit y think, but what about the smaller money men . The chamber of commerce wants to stay in the eu. Using to be on a different page from northern ireland. You seem to be on a different page from the rest of northern ireland. Is surveys recently have shown that the leave campaign is gaining ground, particularly with small businesses. E united of the net a kingdom will be able to trade with the European Union. That makes jobs and opportunities for Northern Island and the rest of the country. Anna are you not worried about the brexit could put peace at jeopardy . Brexit, or any control across that border, that could jeopardize the Peace Process . I think it is nonsense to say that a brexit vote would jeopardize the Peace Process. Those that made that allegation, like tony blair, or wilare realy quite reckless. It is based on the strong commitment of the best majority of people there to determine their own future. Ise principle of democracy important here, not violence. I dont believe for a moment that a democratic vote what effect that strong commitment. I think tony blair was very irresponsible making that allegation. Anna the former police chief also made those comments. It was not just tony blair. Even some in ireland spoke about this. You might need to have some part of controls in place. Is this likely . It is just not true to say that the common travel area between the u. K. In ireland is dependent on Free Movement principles within the eu membership. We have had a free common trouble area since the 1970s. It survived a 30 year terrorist campaign. That will survive a brexit vote because it is an interest of both the u. K. And ireland. And the irish ambassador to london has on his website, the statement that the, travel area will not be affected by the brexit vote. Leave campaign has been described as divisive. Did you experience that side of the campaign at all . No, it is wrong to which is the millions of people it is wrong to accuse the millions of people across this country of this kind of divisiveness. It is untrue. I speak to people every day about this campaign. Thathat their concern is, this will interfere with the democracy. People want to restore that democracy. Much,thank you very therese villiers. Caroline . Caroline a very sunny london. I hope it remains that way for you. Up next, yellen takes to the hills. How upbeat will her comments be on the u. S. Economy, or not . We will discuss that, next. Caroline now, here are some highlights for you from the day ahed wad. We are having some technical issues. But at 2 00 p. M. U. K. Time, we tol see mario draghi speak european parliament. And then at 3 00 p. M. Today, yellens testimony to the senate. Go. Can follow that at tlive ted,ferendum debate was hos the last major event, which includes boris johnson. That will be fascinating. Guy yes, at wimbley stadium no less. Caroline, lets talk about what happens on the hill. The yellen testimony in many ways, is the major event of the day. Us. Than ferro is also with he used to be an anchor of this show as well. Mike, does she change the tone at all today . Know, we dont have a bit of data that would change anybodys mind. At this point, the fed is on hold. The real question is, what would get them off of that . They want to get through the vote here on thursday and then they will looking at when they might move again. The enthusiasm, obviously from the fed to move is gone and they are not in any hurry anymore. Lawmakersnk if u. S. If you count these dots at the bottom, you will see the u. S. Fed president s dots. White as he have a policy maker that does not see more than one rate hike over the next two years . Why are you still forecasting a longterm policy rate, when one of your policymakers does not see this . Caroline we have seen the dollar, for the fifth day, the longest losing streak we have seen. Is that a theme to remain . The dollar under pressure . The dollar is going to move along with fed expectations. It is the wildcard within the remain vote because if it is not moving and a sterling goes down farther, it is a problem. H atybody has price in bot this point. Guy we will listen and pay a great deal of attention. Janet yellen, speaking later. The pulse is up next. You can listen to Jonathan Ferro and i on the radio. That is coming up next as well. Francine a dividing United Kingdom two days until the vote. Even the polls are split. The pound falls. A verdict on whatever it takes. Germans constitutional quote rules on the ecb Bond Buying Program. Janet yellen heads to capitol hill to answer questions on the right path. Man isngs richest bullish on china. We bring you that interview. Francine welcome to the pulse