Tom what an interesting 24 hours. Francine i just had a great exclusive interview with luke johnson. The problem is that is all about immigration and sovereignty if you are the brexit side so we may have people deciding in the booth basically to vote brexit. Tom a lot to talk about in the coming hours and some good guests. That there is other stuff going on in the world. I believe chair yellen may have something to say today. Francine we have to look at the dot plots with Michael Mckee. When a to see exactly what the underlying strength and that is but we need to get to the bloomberg first word news. Vote, two days before the the battle over whether the u. K. Will remain in the European Union is too close to call. A new poll has the leave campaign in front meanwhile a survey from or be has remain holding a 53 to 46 advantage. Police in brussels have arrested a suspect after a bomb scare at a shopping mall. According to a belgian newswire a man called police to say he was Walking Around with an explosive belt. They determined the device was a fake. French police may band the planned protest march by labor unions. Protesters are unhappy with labor reforms pushed by president francois hollande. On capitol hill, the senate has blocked for proposals to keep terror suspects from buying guns, two offered by democrats and two proposed by republicans. Some republicans say they are trying to find a way to break a years long deadlock over Gun Legislation. Donald trump fell far behind Hillary Clinton and fundraising last month. The likely president ial candidate raised a little more than 3 million. Clinton took in more than 26 million. The Trump Campaign manager struggling to put together a funding structure like clinton has had for more than a year. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Cehic. Jra tom lets get right to the data. Equities,continues in bonds, currencies, commodities. Yields churned a little lower earlier, akin fourth, tweet by tweet on the polling board. Doing much the vix better than it was on thursday and friday with sterling stronger. Maybe that is the ultimate thermometer this morning, and the two year yield in the u. S. May be sensitive to what chair yellen says. Francine this is my board. You can see the vix is what i chose, european stocks, most are fluctuating, the dollar dropping with yen. The market feels very binary because they are looking at the polls and depending on the poll in brexit they either sell off or pile on. Tom and they were in with a mixed poll earlier. On to the bloomberg. I am using my take by take tone by tic tone. C i did not move the blue line over on the right and the idea here of sterling strength in the last few days breaking down strength,terling shows you the move we have seen and the last two days. Francine i chose something a little away from brexit. This is a benchmark, the blue line is two year treasuries versus the jgb and the white line is the currency spread between the yen and dollar. In 1995 there was an International Trade dispute that inped drive a 25 plunge dollar and investors say we could see the same again. That is my chart of the day. Britains referendum on eu membership remains too close to call with two days left prior to the vote. Quite put myot finger on whether it is too close to call because of the undecided on whether it is just too close to call. Anna too close to call is certainly the way to sum it up this morning. 2 poll puts the leave camp ahead and another part the remain camp at 7 . Who eventually gets themselves to the polling booths could be the factor. Joe caulks was murdered last cox was murdered last week. The Northern Ireland secretary tate on dismissing tom are the members of parliament looking to london right now where are they looking back to their constituencies . Anna there has got to be a lot of both i suppose. If you took the pole within the houses of parliament you would not get the same percentages you would find on the streets of the u. K. And that is a big question. If we see a revote, the question vote, thewith a leave the houseow to of commons is overwhelmingly for remain. Syncthe mps want is out of with the rest of the people. Interesting warnings from the likes of george soros in the last 24 hours, some pleading as well from other International Leaders whether that is the hungarian leader or businesses in scandinavia or french industrialist. All of them trying to encourage the british to remain in the European Union. Francine anna edwards, thank you so much. Grauwe. Us is paul de great to have you on the program as always. We wanted to take a little bit of a different angle with you. What would a brexit mean for the eu . Paul when you look at the economic picture, surely a brexit would be bad news for the European Union. Clearly, britain would experience a slowdown in economic activity. That itd dropping names would be more expensive and as a result it would be more difficult for eu countries, especially eurozone countries to export to the United Kingdom so that would be an Economic Loss for the european con in general. Continent in general. When i look at the politics, the political dimension of this in the longer term i am saying, the United Kingdom has in the past all the time been a nation that tries to block further integration in europe. In fact, it has also been a force trying to deconstruct it. As you know, we have a model of integration based on the federal idea that you allow majority voting. The brits have always been against it. They want a model of intergovernmental wisdom enter governmental intergovernmentalism. I tend to believe in europe we need further integration and britain in the European Union will always try to block it. Tom you are one of the world experts on the budget dynamics of this. How do you respond to wellmeaning professionals who suggest that britain exiting will take a norway model or a canada model . Maybe they will take and italy model, a belgian model. What is the best model if this nation votes leave . Paul the best model i would think is Something Like the norwegian or swiss model which means the u. K. Maintains access to the internal market, but with all of the woes tom but the critical distinction is if they take the swiss model, does london become the ultimate safe haven driving up sterling . When people see an independent United Kingdom, do the millions and billions flow into london . Paul that has been the case here now also. Lets not forget the u. K. Has a large deficit which is maxed by a Large Capital inflow. That is the situation you describe today. Tom let me bring up the sterling chart, this is the gloom chart of the brexit vote. Sterling at the red circle down it 1. 20. If you go the other way longterm and get a safe haven stronger sterling like the swiss franc. Francine you have the two camps actually slinging mud at each other and it is unclear, so the remain campaign will drop the pound over 60 and a Brexit Campaign says it is good in the longer term, and theres talk about inequality, that because of the eu london has everything that it is too expensive and if we are switzerland and will be even tougher. Is it difficult to model . Paul we have to look at the detail of the trade deal so surely it will not be the swiss because that also implies lots of rules and regulations the u. K. Would have to take over. I cannot see how the brexit camp is willing to go in that direction. It will have to do it in another way, it will have to do go she deal. Negotiate a trade tom i want to know where you stand with Olivier Blanchard formally of the imf. Hysteria,ant that the the analysis is overwrought and this will be a nice summation. Do you agree with them that whatever the vote, written can move forward . Paul i believe there has been a hysterical component on both sides. They remain camp has over precise the negative implications and the brexit camp , so i thought it is important to come to an agreement. An agreement that establishes a new trade arrangement between the u. K. And europe, but that will take a long time. Therefore i do maintain my prediction that during these years, this will be negative news for the United Kingdom. Francine paul, thank you so much. The problem is you have an electorate that a few months ago did not understand much about the eu. Tom but they do now. , and a lot arepe undecided and are unsure how to model this. We speak to Norman Lamont with the brexit camp, a most interesting conversation coming up. Paul francine i am Francine Lacqua in london with tom keene. We are reading things all british and we are all over the market. Tom the telegraph, get out and you open the add and it is a fullpage ad for Richard Branson who stays who says stay in. Toncine lets get straight the Bloomberg Business flash maybe for some clarity on the polls. Officialan has made it , it is buying airplanes from blowing in the first deal in theowing boeing first deal since the sanctions were lifted. They plan to buy 100 lanes. Pick shanghaiay to become its Production Base according to a person familiar with the matter. A company has signed a nonbinding agreement with tesla and they may invest up to 9 billion building a rectory in shanghai to allow the electric carmaker to avoid the chinese 25 import tax. Francine lets get on to china, and hong kongs richest man is bullish on china despite debt and the worst Growth Numbers and a quarter century. I have a lot of experience when it comes to manufacturing. The fact is, china exports more than it imports. Aside for manufacturing, there is also the Service Industry as well as many other channels of income. Debteople can only see the in the state owned enterprises when they need to recognize that china is a big exporter, and the inflow from Foreign Exchanges is also positive for china. Francine our angie lau therefore an important interview. We have not spoken to liege li kashing and four years. And the current is live. There are some things going on with the boc. When li kashing looks you in the eye and says we are going to do better than expected, do you believe him . He certainly is sending a firm message on china. Some of the bigger tycoons are nothe world actively trading and investing in china. He says to look at the longerterm horizon and the economy can pull off what they are trying to do. You hear his warning on brexit and it goes to show you that notwithstanding he has a big investment in the u. K. , but it shows you the Ripple Effect if the u. K. Votes to leave the European Union. When you hear a big tycoon like li kashing may, like that, it is worth listening to. Tom i saw a rate chart of chinese debt yesterday for the day before. The movement and growth of chinese debt is remarkable. How does that work through the chinese system as compared to working through the american system or the german system . It is a different rulebook. What is going to be the outcome in those brutal moves in Chinese Private and public debt . Enda one outcome could be an escalation of bad debt among the banks. We may need to see a major recapitalization of the banks to the tune of potentially hundreds of billions, along the lines of what we saw in the early 1990s. The big worry for china is that the extent of its debt to pay for the buildup and the level it has is really what the worry is. It is not the overall level. It is the fact that it is still an emergency an emerging economy and still has debt due and a half percent times. I think the fear is debt among the Zombie Companies was saddled with banks going forward, that will drag on growth and cause the comp the government to recapitalize these banks. That is one scenario that could play out. Tom enda curran in china this evening. This will be the major story today without question, except there is a modest vote in the United Kingdom. Janet yellen. Janet yellen will helicopter over to capitol hill and maybe talk about helicopter money. Look for that later today on bloomberg. Francine this is bloomberg surveillance. Tom keene is in london with me. It must be referendum week. Mustread, ing picked out something for you and paul de grauwe. Tom why is donald trump coming to the United Kingdom . Francine he is opening a new golf course that he has and so i picked out something saying his politics are divisive and his taste in gaudy fountains questionable but donald trump will find no shortage of supporters in southwest scotland when he formally reopens his turnberry golf resort this week. When you look at the popularity of donald trump, i want to pick that against brexit. The problem is that the eu is not popular. Is it the eu or politicians in general . Paul i think it is a combination. That the stands thatlobalization, the fact globalization creates lots of people who are better off but also losers, and it creates the same in the u. S. Here it is about the European Union that is in a way the institution for which globalization does its work and creates winners and losers. That is one aspect and the other aspect is politicians. That theed by the fact u. S. With trump and here with brexit, getting away with lies. I see it tentativeness and a resistance to any dialogue from Prime Minister cameron. I do not think i would have gotten that from valerie. Paul if you compare today with then, there is incredible momentum to do something positive. Today, this momentum is totally gone. Young people do not think about how to get out of this so it is a very different dynamic. Tom this is a key thing to discuss throughout the week. Francine and we will have plenty more. Coming up, we speak with Norman Lamont, the foreman u. K. Chancellor and he is probrexit. We will talk about the referendum on thursday. Okay, ready . Whoa [ explosion ] nothing should get in the way of the things you love. Get americas fastest internet. Only from xfinity. By switching to xfinity x1. Rio Olympic Games show me gymnastics. X1 lets you search by sport, watch nbcs highlights and catch every live event on your tv with nbc sports live extra. Im getting ready. Are you . X1 will change the way you experience nbcuniversals coverage of the rio Olympic Games. Call or go online today to switch to x1. Tom good morning, everyone. Francine lacqua and tom keene and london, we will be here through the thursday vote and into friday. Democratsashington, long losing streak on Gun Legislation is intact. The senate has turned down for proposals designed to keep terrorists from buying guns. Republicans are feeling pressure from voters in several say they are trying to break the years long deadlock on Gun Legislation. Apple is not expected to sponsor the Republican Convention next month when donald trump will be nominated but tim cook is willing to back the establishment republican candidate. He will raise a fundraiser for paul ryan and his political operation. Some of the money will benefit Republican House candidates. Any rock, the government in iraq, the government has declared that the city of falluja has been liberated. Soldiers say they have been slowed down by snipers hiding and residential building. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. I am nejra cehic. Francine thank you so much. The polls are so close that every day, the markets are leaning both ways. They are a little bit in the binary sort of mood that we had two polls, one saying that once i believe in the other saying the other side leads so it is impossible to tell what the referenda on thursday will bring. Joining us is Norman Lamont and still with us is paul de grauwe. Thank you so much for joining us. Why do you think the polls are so close . Norman i think there is something called the mystery of public opinion. I think the debate has swung to and fro. I think the brexit side had the momentum a week ago and then we had this appalling, awful cox. Dy of the murder of jo in a strange way i think that has swung things back the other way. Certainly there is more momentum. Happens on the friday if brexit happens, which you very well hope it will . What happens on thursday . Norman i do not think anything is going to happen in terms of if you are asking me about government policy, for quite some weeks. I would expect, if there is a vote for leave that article 50 , but be in vote invoked i think not immediately. There would be a pause for reflection. The Prime Minister, who i hope would carry on and be in charge of bringing about the new change , we would have a twoyear period in which everything remained exactly as it was but the 27 would debate among themselves the negotiations. Sterling goes out to a new high since mr. Cameron said the vote here, just under 1. 48. It is the effect amazing what effect you have on currency. Major,ed it with john with huge gyrations in pound sterling. I believe you corrupt 320 miles north of edinburgh, which is out you grew up 320 miles north of edinburgh so you have to be an expert on what scotland will do. What will they do with a remained victory or with a leave victory . Norman i do not think it is Crystal Clear that Scottish Opinion is dramatically different from english opinion, but i am a unionist. I believe in the union of england, wales, scotland, and Northern Ireland, and if you believe in that you cannot insist on a double majority for any part of the u. K. And be a unionist. I do not think any part of the u. K. Has a veto on it and i do not think there will be another referendum. The price of oil is still very awkward for Scottish Independence and i think there is a bit of a movement away from Scottish Independence now. Tom this next chart somewhat a vintage of myself. We can understand this chart. Francine is too young. This is a turnout from a year ago or two years ago in the vote. There was a great line chart a few weeks ago on this as well. Turnout is everything. Do you think the kids will show up . Norman i do not know but i think that is a key factor. 45, peopleple above who are old enough to remember tom those are elderly people. Norman i am elderly. People who are old enough to remember 1972 when we joined and how the European Union was sold on a very different perspectives on how it is today, they are much more for brexit. I think young people who perhaps do not remember that and are concerned simply about the uncertainty, i do not know how they are going to vote but i think older people will be very determined to vote. Paul, and you look at the possible turnout and the division amongst the u. K. , what surprises you most . With johnson was saying there seems to be a clear divide amongst young and older, north and south, london and the rest of the u. K. That my take on this is maybe the young are less concerned about things like sovereignty. Which the older population may be more concerned about because they remember when britain was great. Britain has lost much of its world importance and i think the young are more practical and more pragmatic about these things. They do not think much about sovereignty. Norman that is put into slightly unfavorable language. I think it is that old people can remember when britain was a country like britain and canada that made its own way in the world. Young people have a difficult time imagining that. Tom do you guys predict currency instability, either euro instability or sterling and the ability off of this vote . Norman i think there is bound to be some turbulence but of course it does not always go in the way that everybody anticipate. A shock by definition is something that is unexpected. Volatility is associated with a certainty and as you mentioned earlier, if grexit prevails then we are in if brexit prevails then we are in for years of certainty of exactly what the trade years of uncertainty of exactly what the trade deal will be, which leads to volatility. Needn i do not think that be a long time and it could be within two years because we have trade arrangements, and some very powerful cards in our hands. I do not see why it should not be done within the two years. We negotiated our way in with 55 countries who belong to the commonwealth without it going on for 10 years. Countriesave 27 eu that look at this trade deal. Do you think there will be union m a unanimously . I know it will be very difficult to come to an agreement and i do not think this will be finished after two years. Norman this is what people want to say because they want to scare people. Paul it is reality. Norman the reality is we have a large deficit, we are the biggest market for german cars and a large market for french agricultures, which is heavily protected and vulnerable to the prospect of britain. Francine what needs to happen for these trade negotiations to go quicker . Hopen i would very much the Prime Minister would carry on. Situation,nk in this continuity and stability at the top of government be very important. Francine thank you. Tom paul de grauwe, thank you very much. Lord lamont will continue with us. Much more to talk about as we go to thursday morning. We will speak to roland rudd in the next hour, looking forward to this. He has a feeling that i will call a remain feeling. From london all week, bloomberg surveillance. Francine bloomberg surveillance, live from london all week. Tom keene is with me and looking at the pound such a high since David Cameron called for the eu referendum. Time for the Bloomberg Business flash. Nejra walmart is reshaping its operations in china, taking a 5 stake in jb. Com. They will take ownership of walmarts online chinese marketplace. They are slow to adopt to a rise in online shopping. Shifting more of its investments harvard will no longer continue a strategy of select the fund has more than 37 billion. The Largest Insurance Company in france is looking to cut 2. 4 billion in cost by 2020 and they plan to step up Digital Investment to cash in on growing demand for policies that protect savings and health. They want more growth in asia. That is the Bloomberg Business flash. Kingdom, in the united you would never see this headline in new york, rail firms to be fined if trains one minute late p are cothis has never occurred one minute late. Can we go for an hour . Francine i love this. If they were on time they would be fined because no one would be there to catch it on time. Should central bankers be raising rates rather than lowering rates . This is contentious and comes from our very own mark hilbert Mark Gilberts latest. He says he is willing to entertain the possibility that it is time to rip up the textbooks and try some financial heterodoxy. Maybe it is time to give higher Interest Rate a chance. And stillrt joins us with us is Norman Lamont from the probrexit died. Probrexit side. I love this. We have gone into negative territory, so lets shocked the system with higher Interest Rate. You are the only person i have heard say this. Mark it is actually gaining ground. I mentioned the possibility on friday, got a bunch of emails, and started looking into it. One thing about negative Interest Rates, the Federal Reserve is telling you they think the market is down. There is capital trap in places where financial darwinism would otherwise kill lowes companies, so the idea that you would raise Interest Rates, give people warning. Maybe people start doing things. Francine didnt the fed try this . We had the temper tantrum from emerging markets. Mark one reason they were trying to raise rates was because of the philosophical ideas and the idea was that they need ammunition in the future. This will be telling everyone in the major economies, we are planning to raise Interest Rates and if you want money to invest and spend, get in before the cost go up. Tom cannot work in a new open economy can that work in a new open economy . The basic idea that rising rates can work may be in a closed economy, but can it work in a new, very Global Economy . Norman i do not believe that capitalism can work and less Interest Rates or there to allocate capital properly, and we have an incredible amount of distortions in the system because of the low yields. I am not saying i would put up rates now but i am very firmly rates,al about negative which i think would send a very bad signal and i think would have a bad effect on confidence because as you say, that would be absolutely frustrating that people know something we do not know about how bad the World Economy really is. Tom for other people who love looked at this, do you raise rates just to raise rates or are you a slave to higher Interest Rate . Mark it is a step change. If you are going to have a 2 inflation and the real rates are not working as we have seen, and 3 with some2 or morning and a pause is the way that you warn. Francine the docile approach to this which is something that Deutsche Bank chief economist with saying, we just giving politicians too much room not to act by keeping all of this qe and lower negative rates. The pushback from mario draghi, if i take this away it will be messy. How sure can it be that the economy is not sufficiently ugly to warrant this . Monetary policy is the only one in the world where you say only going to do more of he has not working tom been a harsh critic of austerity and is very much in the remain camp. What fiscal policy would you like to see forward to give your United Kingdom . Norman i am not in favor of an active fiscal policy and terms of spending a lot more on infrastructure, increasing the deficit, and frankly i think sometimes we have to be patient. After you have had a recession caused i a banking crisis history shows that you will emerge from that wretchedly. Gradually. Americans may be very impatient with their growth. , normant is a breaking lamont suggesting that americans are impatient. Norman but your economy is healthier than a lot of places in the world and i would not advocate a lot of fiscal loosening. Francine how much do you think about productivity . Mark has come on the show talking about the loss of productivity and the fact that there is a productivity puzzle in the u k and u. S. I suspect it has a lot to do with the u. S. Economy and how we measure productivity. This is been looked over in a bank of england study how we measure productivity and gdp, and a lot of things that are being produced now you should be measured in gdp and are not now. Paul you think it is a measuring issue . Norman i think it could well be. The productivity phenomenon is worldwide as well. Tom mark gilbert, thank you so much. Love seeing the continued debate of monetary policy. Janet yellen speaking later today. Mario draghi will be speaking today in a hearing of the European Parliament in brussels. Somehow i think the United Kingdom will come up in the conversation. Janet yellen later today, 10 00 a. M. , her testimony in front of the United States senate. Tom good morning, everyone. From london, bloomberg surveillance. We are trying to be balanced, a remain guest and a brexit guest. Lord lamont with us. This is a newspaper quote. Lord the mont read this in 1963 and it is called the guardian. One of the comical sideshows of the referendum has been the continuing invocation of churchville. If nothing else this squalid campaign has certain has surely made at least and thatchers point about referendum playing into the hands of demagogues. We have long since ceased to be a great power. Must me at last ceased to be a great country . What would churchill do . Norman churchill is frequently misquoted because he called for a European Federation but he made it Crystal Clear that britain would not be part of it, and people often quote him saying he wanted a European Federation. He made it absolutely clear he did not think britain was suited to be part of it. Tom psychologically, so much of this is the idea of the history and nostalgia, the reality of this british experiment reasserting itself into a you United Kingdom a new United Kingdom. What do you suggest could be the new United Kingdom if you succeed in brexit . Norman we are not talking about a new United Kingdom. What we are talking about is actually the right of the United Kingdom like the United States, like canada, australia, to actually pass its own laws through its own parliament and pass its own governing and not be subject to the european government. That is what it is about. Tom i would say on a gorgeous day yesterday going through Trafalgar Square and seeing the commonwealth embassies wrapped around. It was a gorgeous afternoon and it was a rainy one. Four seasons in one day. Lord lamont, are you concerned that banks may leave london because it is an expensive city . He would give away the Financial Services thrown to somewhere in europe, berlin or paris . Norman i do not believe we would give away the financial thrown as you put it. I believe the Human Capital is here and i cannot do the derivatives market, the Foreign Exchange market, they are not going to move to frankfurt or paris. It may be that a few Investment Bankers will see what they can do but i think london has they have the Human Capital, will firmly remain the capital of europe. Tom what are your thoughts on the future of the Prime Minister . Norman i believe if there is a win for remain he will fully remain Prime Minister and if there is a vote for leave, i would advocate that he should remain Prime Minister. I do not see that because he has taken one side of this debate means that he should stand down. That individuals are allowed to differ under the conservative party and he gave the people what they wanted, to have this vote. I think he should appoint someone to do the negotiations and he should remain in overall charge. Tom thank you so much, lord lamont. In support of brexit. In our next hour, we take a different side of the discussion. Roland rudd joins us from london. Stay with us. 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. This morning, new polls signal a sharply divided United Kingdom. Turnout will be everything for remain and leave supporters. Janet yellen will travel to the hill. She will not take a helicopter, though helicopter money will be a topic of discussion. And mr. Trump makes a huge move to reinvigorate on the path to cleveland. Good morning, everyone. This is bloomberg surveillance. We are live from london this tuesday, june 21. I am tom keene. Greeting me, Francine Lacqua. Francine looking at her screen because we have a biel because we have a deal, 8. 9 billion. . 10 has decided to purchase a stake of prospects in super cells, and this values the finished game maker at 9 billion. Sh game maker at 9 billion. The gaming industrys top business. We will speak to the younger banker. Headlines on minecraft, we will do that later in the show. Was nejra cehic. The vote, days before the battle over whether the u. K. Will remain in the European Unions too close to call. Poll,paul a new 4442 . Police in brussels have arrested a suspect after a bomb scare at a shopping mall. According to a belgian newswire, a man called police to say he was Walking Around with an explosive belt. The bomb squad determined the device was a fake. Police in paris may ban thursdays planned protest march by labor unions. A protest last week turned violent. Among other things, their forms would make it easier for businesses to fire workers. On capitol hill, the senate has blocked four proposals designed to keep terror suspect from buying guns. Two of the measures were offered by democrats in the wake of the orlando massacre. By were proposed republicans. Republicans are trying to find a way to break a yearlong deadlock over Gun Legislation. When it came to fundraising, donald trump fell far behind Hillary Clinton last month. The likely republican president ial candidate raised a little more than 3 million for his campaign in may. In contrast, clinton took in one and 26 million. Trumps campaign is struggling to put together a fundraising structure together that clinton has had from one any year. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world, i am nejra cehic. Tom . Tom let me do a data check here. It is an extension of what we saw yesterday, a blowout yesterday for remain, with a sigh of relief for those looking for the United Kingdom to stay within the european spirit. The euro is stronger. Onto the next screen, if you would. Sterling, we just saw that new high. After the announcement of the vote. A stronger sterling. Francine sterling is significant because we are not sure what to make of it. Next i wanted to show you stocks gaining with the pound, dollar falling before Janet Yellens testimony. Tom euroyen. This is one of the thermometers of where we are with a big exit rally. The blue curve up, up, up. Down we go in the last two sessions. Very strong remain, strong sterling as well. The blue line is static from a number of days ago and shows the pound strengthening of sterling. Francine this basically goes back to 1995, and this is when we had International Trade disputes in the u. S. And japan. You can see the spreads for both the twoyear and treasury. It basically means traders think that trade may be back on. That was a 25 punch in the dollar versus yen. Tom we just had a brilliant discussion with lord lamont. Paul donovan i know is going to be much more circumspect about whether he is leave or remain. We know managing director of Global Economics at ubs will talk to us about agitation and uncertainty moving forward. You lived lord lamont when the Exchange Rate mechanism blew up with john major. He was on the watch as chancellor. Take us back to when lord lamont was a household name within currency volatility. In 1992i just started in 1992, i just started, and the whole erm move came about because sterling of pressure. A lot happened in the bank of england was forced to raise Interest Rates to defend the currency, and it was completely unbelievable because the u. K. Interest rate structure means the if u. S. Rates goes up, Interest Rates go up, so the domestic cost overwhelmed. Tom we have the sterling chart here. If we get leave, if we get brexit, if we get you pick a 1. 20, one point way five sterling in the lower right will we defend the currency . To look at the initial moments after a potential exit vote. If markets have become disorderly, then there is the tendency to come in and provide a degree of order and liquidity. Tom it is the rate of change. Paul and it is the nature of the markets. Do you have liquidity . In which case, it is the obligation. Tom we are not allowed to do calculus. Francine because it is tuesday. Wednesday we are allowed. I have heard it all, people saying that this could be a Lehman Brothers shock. Others say that this has been so well flagged that we are prepared for it. I am even between the two s on this one. There is the potential for shock on aes or a no vote. A no vote. Or on an exit vote they cannot be fully appreciated because we do not know what happens next. On a remain vote, there is perhaps an underestimation of what that might say about the u. K. s role in europe and where europe goes in the median term. Tom thrilled you are with us for this hour. Paul donovan with ubs, with some terrific perspective. You will get centralbank perspective this morning and into the london afternoon. Had anhi has been important speech in brussels. And later today, janet yellen will testify before the senate on capitol hill. We are in london. Francine lacqua and tom keene. Here is big ben. The bell will still ring, whatever the outcome of the vote, right . Tom when in doubt, we have a surveillance correction. Francine lacqua turned to me and said, for whom the bell tolls, it is in restoration. Being restored and is quiet the summer. Francine i googled it. The 31st of may, 2017. Tom i am sorry if i offended the british. Talking about the silenced big ben. Here is nejra cehic. Nejra iran has made it official that it is buying airplanes from boeing. The deal includes a mixture of 737 and 777 jets. Walmart is reshaping its operation in china. The Worlds Largest retailer has taken a 5 stake in jicarilla myers in ecommerce giant j. D. Com. Of. Com will take ownership luxury Home Builders in london may get a break if the u. K. Votes to leave the European Union. A brexit could lead to a cheaper pound, and that may tempt buyers back into the struggling market for highend homes. Deals in london have stalled in the runup to thursdays vote. That is the Bloomberg Business flash. Francine lets get more on the dregs it debate. We are two days away from the referendum. It is too close to call, according to all the polls. Remain, onelead for poll shows a lead form leave a lead for leave. Is it too close to call . Many essays that we have written on the ability of the u. K. To get accurate polling information, to interpret the polling information you remember in the general election there was a oneyear review that concluded that there were big problems that would take a long time to fix. That is compounded by the fact that we are not talking about a general election, which they have a great ability to run polls on. This is something new. The ability to compare that with history, to draw conclusions, that is diminished. That is one of the difficulties. We had a twopoint lead for the leave camp, a sevenpoint lead for remain. Financial markers continue to make their mark. Tom very quickly here, what is the likely turnout . Do you have any numbers, guesstimates of what the turnout will be . Anna taking us back to the Scottish Referendum, that was going to be a really high one. A particularly high turnout for general elections in the u. K. , but the Scottish Referendum was up in the 80s. That is getting to matter around age groups and what kind of turnout we get for different ages. That is one of the big divides around this. Younger people are very much more likely to remain an older people are more likely to vote to leave. Anna edwards in front of parliament. What a joy it is to have different sides of the debate. Rudd goes the other way, not picking flowers, looking at the trees, but spelling out letters in a photo moment. , with rudd joins us interesting public relations. Roland it was a lovely morning, great turnout, and great optimism, and it made a great picture that it was in the medium and next day. Will the remain people speak to undecided voters in the coming two days. Roland when you look at the polls, not the headline polls, the numbers what it is is, the number of people that are concerned that we would be worse off if we leave the European Union that is going up. Clearly, it is about safeguarding the economy. You come out of the single of absolutes an act destruction to the economy, and a number of undecideds are saying we cannot risk it. I think they are right. Francine how can we give a positive message about u. K. Voters a positive message to the message soen far is negative, that if we leave it is really bad . Roland i think it is very positive. Extending the Single Market to all services, it is a very positive message. It is the shape of britain that we want to live in. What sort of britain do we want . David beckham,t reaffirming that we want to remain, it is not just Climate Change but security. We are threatened not just in the east from vladimir putin, but also from isis. We can sort through things that really need tackling. If we actually built up barriers , we are in a poor position to do that. ,om earlier we had lord lamont saying there is so much red tape it is holding back entrepreneurship, lord lamont saying we grow better on our own , it is so difficult a model, so difficult for the common voter to see what they are choosing between the two alternatives. At that,hen you look it is enormously on the side of remain, and not just large business, which is 10 million employees, but also the federation of small business. Red tape thing is absolute nonsense. Of course there is red tape. There is red tape from brussels and from westminster and we need less of it, but some regulation is important. Likeet rid of things banking, that is mad. Tom bring up the chart here. This is my theme today, the idea of turnout. To youe the young vote are remain and you have the young vote. We know that. How do you convince the 60yearolds, the fossils like me, to stay in . What do you need for the older voter who is voting on a motion . Roland there are two big things. You cannot denigrate experts. It is an absurdity. Either you listen to someone like the governor of the bank of england, who is totally independent, who says we are much stronger by staying in the European Union, that has an effect. Two sets of sanctions were put against Vladimir Putins russia. Francine so many people do not believe what Governor Carney has done. Roland that is not true. He comes way up in the rankings in terms of people believing that this is somebody who is honest and forthright and has given his view, and he has done so completely independently of anybody in the government. Tom speaking in manchester, the head of the labor party first we saw him with the remembrances. This is mr. Corbyn speaking in manchester, driving the conversation forward. Do you need the leadership to get out of the way in the next two days . Roland i am delighted that Jeremy Corbyn is talking more. This is about his third speech. He has done a couple of appearances on tv, and we need the leadership stepping up as they are doing to remind labor voters that they will be much worse off if we leave. Francine given the argument that you make, and given you say that mark carney is making whyrs believe his argument, are the polls so close . Roland this is a binary thing. A lot of people are saying my be outays maybe i should for one of these particular reasons, but the reasoning is coming back toward remain because the good people are saying i am going to be worse off and it is not worth it. Have different opinions, as we do, on bloomberg surveillance. Continue the discussion, the debate on Bloomberg Radio worldwide and of course across the United Kingdom. John redwood is a member of parliament and will join us to continue forward, this most divided and heated debate. From london all week, bloomberg surveillance. Tom good morning, everyone. Sterling advancing. Francine lacqua and tom keene in london all this week as we go to the thursday vote. Lets look at the morning mustread. M Princeton University taking thesor mody script from roland rudd there as well. Tell of the panic on the remain side. Roland there is no panic on our side, absolutely not. Tom i believe i saw that with a Prime Minister the other day talking about neville chamberlain, the ghost, if you will, from world war ii. Roland i think people always thought this was going to be a close thing, but it is important to rally every single voice and every single vote right up to the end, and that is what we are trying to do, as you rightly say. There are a huge number of in thisds, more referendum than you ever get normally. , as anwas downtown amateur, what we call downtown here last night at the opera house where you are a trustee. You cannot tell me that that will disappear if you lose this vote. We will survive perfectly well on our own, but we will not have the opportunity to thrive in the way we are now. We have the opportunity of actually leading in europe, so to leave at this moment is sort of madness, not just economic madness but manus also to our security and our place in the world. The European Union helps magnify our voice. It does not moderated in any for it does not moderate it in any form or shape. Francine it is difficult to know whether jobs will move elsewhere. Roland we do know. It is a huge Financial Service center in the world. 30 of our gdp. And a number of our banks and businesses have said they will relocate if we move out. Francine come friday morning, or notither rate hikes rate hikes, and more low Interest Rates. England hasnk of got basically two conflicts. There is the risk of a loss of confidence in the event of an exit vote, which may lead to further weakness in sterling, which would lead to an economic downturn. But then what do they put their focus on . Are they going to try to shore up sterling and deal with the potential inflation consequences of a weak currency, or are they going to try to stimulate the economy. Tom thank you so much francine thank you so much, paul donovan, who will stay with us for the hour. Roland rudd, thank you for joining us today. Taking a seem to be positive cue from the latest polls. Tom often in the present days, in the past days, the coming corbyn speaking in manchester, looking for every marginal vote. We are here all week from an absolutely riveted london, on this vote across the United Kingdom. Lets get to first word news with more on remain and leave with nejra cehic. Nejra billionaire investor george soros warns that a brexit would make investors wrist and voters would make investors rich and voters poor. Warning that they would be a bigger devaluation them and he bet against the pound in 1992. Fourenate has turned back proposals designed to keep terror suspects from buying guns. They were brought to the floor in the wake of the orlando massacre. Republicans are feeling pressure from voters. Several say they are trying to break the years long deadlock on Gun Legislation. Le is not expected to donald trump will be nominated for the president ial candidate, but tim cook is expected to back the establishment republican candidate. He will hold a fundraiser for paul ryan, according to two party aid spirit some of the money will benefit Republican House candidates. In iraq, the government declared the city of falluja has been liberated days ago. Are battlingtroops Islamic State forces in pockets of the city. Soldiers say they have been slowed down by snipers hiding in residential buildings. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus in moreworld, than 120 countries, i am nejra cehic. Tom we saw a headline earlier of new strengths in pounds sterling. Up and nearly 148 level. Paul donovan has joined us from ubs. And now, chris turner from ing. I want to talk about the knockon effects. If we look at euro swisse, what will be the adjacencies, whatever the outcome on thursday . What does it mean for europe, for switzerland, for Eastern Europe . Euroswisseding the , it has been a difficult across Exchange Rate thing to analyze. They have been in the market intervening, they admit that. The swiss franc has been the gotwo safe haven currency. They are threatening to cut. Ates gotos very much the currency or do we have done some analysis looking at whether the brexit story could be isolated just to the u. K. , but invariably not. It was going to spread back into the future of the eurozone. And the questions being raised about the future of the euro, we think it would impact the currencies. Francine how significant is a brexit for the eu . There is an argument that says that member Union Countries will have far more to lose from brexit. There is certainly a cost. A what have the british done for us type of thing. The you clay the u. K. Played a strong role. On financial regulation. It is one of these littleknown fact that most of the technical design of the euro, the technical design was done by the british. Even though they were not part of it because they have the expertise. If you lose that from europe, it does have a cost. Tom interesting. I look at the dynamics right now with janet yellen testifying on capitol hill today. Noisy and upset right now that you cannot have a conviction, strong or weak dollar . Had over the months, weo five have changed our view. We think the fed is increasingly taking the dollar into account as they underestimated the impact it is happening on the thefacturer on manufacturing sector. Those factors have been introduced to keep the euro under fair value, which is still under one point 25. That will wane in the next six to 12 months. Paul, does this suggest ont german incomes here urodynamics . They need a weaker euro export, right . Paul no, that was probably true about four years ago. Tom i just said it to get you upset. Paul in terms of the volume of exports from germany, that is not affected by the level of currency. But economists do not worry about profit. We are above vulgar things like profit. Tom what he just said there is so important, ice cream in meetings about the partial differentials between unit dynamics and i scream in meetings about the partial differentials between unit dynamics and price dynamics. Francine we have this double expectation, right . We were. Xpecting a 6. 4 figure is germany much more domestic . Doesnt mean that ceos will start boosting some of the cash they have in the coffers . Paul we are seeing that to a certain extent. They are spending a bit more money. Then on top of that, of course, negative rates are actually working. I do not think this is what mario draghi intended. But negative rates are leading companies, so we need to cap off Balance Sheets somehow, and they are putting some of their cash to work in the economy. Not necessarily by investing. It gets them going. Tom what about the points of the United Kingdom economy, chris . I was thunderstruck by the persistency of strong housing prices. I looked at one of the halifax series, the threemonth yearoveryear series. Housing prices go up but then they come back down. Plus perelevated at 9 year. What does that signal to sterling around a strong United Kingdom . House pricese seen starting to slow there. The economy has been recently resilient, up until about three or four months ago. Brexit, maybewith one point 2 off sterling versus a baseline scenario. We are not going into this maybe 1. 2 off sterling versus a baseline scenario. Just going to your point about the links of sterling to the pound, there are many factors. Differentials, the Economic Investment environment, leading to the msci world index. Coming back to where sterling is trading right now, we think indicates they remain, for example. , what could come out is a 2 risk tom to premium. 2 risk to premium. Tom chris turner, we really appreciate it today. On the currency dynamics, the litmus paper of this system. We are thrilled to bring you tomorrow, meghnad desai. Thatys hubris is something may be needed across the United Kingdom. London, bloomberg surveillance. Francine we are all over the markets, all over this referendum. Francine lacqua from london, with tom keene. We check on the town, we checked the papers, and we check in. And we check opinion. Lets get the Bloomberg Business flash with nejra cehic. Nejra Chinas Tencent holdings has agreed to buy immaturity to buy a state in super cell. Chinas biggest messaging service. It has been expanding its gaming business. The twins who claim Mark Zuckerberg stole their idea for facebook have a new business opening in london. Tyler and Cameron Winkle voss are they got into the a settlement they got from facebook. They will join bloomberg later today at 8 00 a. M. In new york, 1 00 p. M. In london. A Real Estate Fund will focus on germany, france. That is the Bloomberg Business flash. Tom i flew into london courtesy of boac. We had to fly on separate planes. Why is that . Janet yellen will appear at the senate. Michael, is that right . Yes, she is before the senate today and the house tomorrow. This is probably the least anticipated Humphrey Hawkins ish appearance. The real question is, why is the fed so pessimistic all of a their . They brought down Interest Rates, but you can see the lower lines show that the fed is still way behind the market in terms of its anticipations. Tom and the two dot lines down there michael that is jim bullard. We put together the fed forecast versus actual growth. Tom is going to hate this chart because you do not like a lot of lines. Bottom line at the all the others are the fed growth in the last three or four years. They have been way too optimistic. It would be good if they could explain why and how their models are seeing the world these days. Francine so we have the dot plots. We have heard janet yellen talk twice about the u. S. Jobs report. The killer question is what . Michael when are you going to raise rates and why . What is going to get you to move if we have not been able to move under the circumstances we have seen . Donovan, your view has been optimistic. Can you maintain your optimism in the background that this gives us . Paul absolutely. You have inflation on almost every single measure in the than theates, higher 20 having year average. 20yearr than the average. This is not a lack of demand for jobs, this is a lack of supply of people qualified to do it. Francine they should have hiked, so why are they not hiking . Yellin has confirmed there is a group in the labor market is been in the labor market that has been left behind by this labor market. Tom there is a debate in the dynamics. What else should we talk about . Is she the only one who will not talk about remain or leave . Michael she will probably be asked about it she talked about last week, it could have consequences that spill back into the u. S. The story in japan is the Central Banks are getting k other are getting together to talk about what to do. They are already doing that. Talking about providing liquidity to other countries. British companies cannot get their hands on dollars, the fed can provide it. That is the fed rescue plan. But there is nothing really else in trade. Tom will senator sanders be one of the senators asking questions today . Michael probably not, but there could be other interesting things they will talk about. Besides regulation, there is the effort to steal money from the throughsh centralbank the Federal Reserve bank of new york. She may get asked about that, we are told. Tom say that again. Michael people have been hacking into the Federal Reserve system like everybody else . Have you checked your bank about have you checked your bank account lately . Friend and i are going out to dinner tonight. Francine do you sometimes feel like the market is misinterpreting because the Central Banks are over sharing their information . Paul there is clearly a problem with communication. There is also a problem with the fact that markets react to initial data releases, which are getting increasingly poor in the policy. The fed is getting led around by the markets have a need to stop that. Tom Michael Mckee and i with further bloomberg surveillance. We will do that on Bloomberg Radio. Part of that will be chair yellens testimony in front of the senate and the important q a as well. Before that, mario draghi in brussels. Week,ondon, all this bloomberg surveillance on television and radio. Tom from london, a forex report. We can do that here as well. The sterling with real strength earlier this morning, and still strong or in looking at eurosterling, really an odd thing. Apart from bitcoin coming up shortly, bloomberg coming up. Jonathan ferro is here with great interviews coming up. Windre talking to the across the if you went to sleep december 31 and woke up today, the pound is unchanged at the story has been dramatic. The shift has been huge in the last couple of days. As far as i know you guys have been discussing it it is over 95 of the money going on remain. Tom really . Not 95 off money, the bank. There is a difference. , stay here. Lets look at the single best chart. This is a job creation idea of the United Kingdom and all of the eu. The red line is the beginning of the u. S. Crisis, and then up we go with elevated u. K. Elevated eu unemployment, and britain doing better and better. Kingdomovan, the united is a job creation machine, isnt it . The u. K. Economy has done very well. Europe we areith getting a cyclical recovery but no structural agreement. U. K. Has got the structural labor market which allows it to create jobs. We are seeing a mix in the u. K. Over the last tom but the fear of the leave people is the United Kingdom. Ill import euro sclerosis is that a fear here . Remainse United Kingdom control of the labor Market Regulation and flexibility, skills training wish will he increasinglyill be important. Is something i think which benefits the u. K. Labor market over the mediumterm. What is the prescription for the eu to get back on its feet . I have had many commentators coming here on our program saying brexit would be a shot for the eu to transform because growth is nowhere to be seen. It is getting a little bit, 1. 5 . But we can do better than that. The European Union has partially embraced structural reform. Some parts of it half. If we look at germany, the last decade has been a painful process of change. The problem is, the momentum behind changing europe has faded over the course of the last few years because they are dealing with crisis. Tom we are going to bring in jon ferro. We have been americanizing him. He has to understand the difference between the chicago the cubs between the chicago cubs and the Chicago White sox. When you like to ask a question . Yellen hair general janet yellen has a division. I would like to know how she weighs in on jim bullard, who is no longer there. Do you think the Federal Reserve should have a longterm forecast , the internal rate that they put out there in public, that they can gravitate toward . Paul i think it can be useful to help i think it can be useful to have that. Lower nominal world. That is one of the key issues. It will cause so many investors are used to a world of nominal returns that are substantially higher than they are likely to be over the next few years. Putting out a nominal fed on longterm target like that helps shape expectations about what investors can realistically achieve over the next five to 10 years. Bullards talked about a regime that only needs one more hike for the next two years. Can the fed gravitate toward where he is currently . Paul not without mind altering drugs, no. You cannot. You have negative real Interest Rates at the moment. To say you are going to have one more rate hike, you have to me making extraordinary assumptions about inflation in the future. You have to be making extraordinary assumptions about where the labor market is going. Probably even lower than the natural rate of unemployment, you are really in an environment which does not bring Interest Rates this close to zero. Aancine i want to bring back call from mark gilbert on bloomberg view. The real Interest Rate is giving you the perception that it is worse than you think. What about increasing rates so that it shocks the system . Paul i think moderate increases in rates are fine. Inot think any wants a do not think anyone wants a volker shock. Ink a measured pace francine i am talking ecb, not just going full out. Paul the ecb is in a really awkward position because it is basically the only pan euro force that exists. There is nothing on the physical side. They have to try to maintain coherence. So for them it is a lot more problematic. I am not sure the quantitative policy is doing a great deal through negative rates were tacked on the banks, but overall i think it is broadly supported. Tom thank you so much. Mr. Donovan will continue with us on Bloomberg Radio. Jonathan ferro will do bloomberg worldwide with david westin and company. Tomorrow, Andrew Sentance from london. Bloomberg surveillance. E our money gamblers p on the u. K. To stay in the eu. Sterling climbs. David billionaire brexit warning. George soros saysu. K. Decides to leave, making speculators rich. Jonathan will the fed chair change her opinion on the u. S. Economy when she speaks to lawmakers in her semiannual testimony . From the city of london and new york, a warm welcome to bloomberg , viewers worldwide. Im jonathan ferro, with david westin. Two days to go until the brexit referendum, and the polls are split. But the money is backing remain. David i have been very consistent. It will have the very latest on that, plus we hear from the richest man in hong kong