of the year until now, it is an uproar. anna: and we are live in paris at the annual forum, where we speak to the organizations secretary general, angel gurria. here, on bloomberg. ♪ a very warm welcome. i am anna edwards in london. manus: good morning. i am manus cranny, in dubai. the china danger, should be drawn into the moment of calm? what is really going on. dollar-yuan,w you near a five year low, the title of this chart is yuan on the brink. this is january time. that is the five-year low. alone,back 1.5% in may the biggest loss since the devaluation last year, which was back here when you saw that ratcheting spiked. but this is really the interesting part. the fx reserves in china, they are building a lot, $17 billion in march and april. are they really that volatile about defending the yuan? capital outflows are getting less and less. low,ollar-yuan, five-year do we just drift that lower on the back of that data? there is many more questions than our answers in terms of manufacturing and servicing. in the rebalancing is going on in china. back to you. of thate confluence domestic data out of china and the global picture around the bed very clear there. let us show you the risk radar, a few key assets overnight. we said that abe has denounced the sales tax in 2019, fairly well debated. but more on that as we go through the day. 110.26 is very are on dollar-yen. aussie dollar getting a boost. we have the commodity complex moving higher in terms of foreign exchange. kiwi is higher. gdp out of australia that are than estimated, the reason why. wti, the price heading towards the opec minister meeting. that takes place tomorrow. ryan chilcote on the ground. he will bring us details on all the walking and talking that is taking place with the oil ministers. let us give the bloomberg first word news. here is rishaad salamat. says he will decrease the sales tax until 2019, and the move may help consumer spending but helps, kate the efforts for debt. previously, only an economic shock. lehman brothers or the major earthquake would prompt to delay. data, a hatchet to jobs cutting investment banking positions as part of the ceo governor's plan to reduce cost. according to knowledge of the matter, 30 positions shuttered in hong kong. japan and india. about 8% of the workforce, following an industrywide trend that is scaling back on these trading volumes. barclays,s, including had similar cuts this year. larry saying he is expecting consolidation in the asset management industry. this is as they struggle to meet many money too managers struggling to get anything better than average returns. larry: we fundamentally believe there will be a massive shift, and we believe it is going to create a huge consolidation. china's official factory gauge expanded in territory in may, as gradual economic stabilization in the economy, pmi coming in at 5.51. to private measures grew 49.2. more or less in line with economists estimates, down from april. new yorker trent doyle said it would be the longest decline, as opec ministers gather in vienna ahead of a meeting. discussing production quality, the globals oversupply says prices slumping in 2014, and it is correcting itself. >> we will need to give the market sometime. and the market will correct itself, as we saw from the beginning of the year until now. it has been correcting upward, and i think all of those are good times. we just need to get negative inflation. rishaad: warning today that a vote by britain to leave the european union would endanger future investment. quitting the that eu would put a risk more than 107,000 manufacturing jobs. but believe side has hit back, saying the daily threats are becoming absurd. global news each day, everyday. bureausrnalists in 150 around the world. if you're a bloomberg terminal use, just use the top function. rishaad thank you very much. let us get up to speed with the markets. dollar-yen is on the move. juliet has the news. good day to you. juliet it seems a little bit that the rumor is still in effect. nikkei comeee the down 1% today, holding on those losses before these were announced. very much widely affecting the market. we have team consumer stocks rise over the past two sessions in japan. but they're in mind, volumes coming through today. we have seen the nikkei come off of one month high. that is weighing on the overall regional index, as the losses in australia really dragged down by lower crude prices. hong kong down 1/10 of 1%. but we have seen a pickup in the as rishaad wasi, talking about, understand location. a new trading month in may. we actually saw the asian equities fall by 1.5%. smbc telling bloomberg that now is not a good time to actively buy into equity index, because such a busy month with the brexit vote, u.s. jobs data, and the fed decision as well. looking individually as stocks, we have seen higher. u.s.,a shares fell in the this is on reports that they are offloading at $7.9 billion stake in alibaba. and the aviation, the second biggest ipo we have seen in asia, going in hong kong today. cutswas mentioning the down in sydney. a mixed day across asia. anna, manus? manus: juliet, love that. sell the facts. anna: china's official factory gauge, signals improving condition and the manufacturing sector for third month. ,mi stood at 50.1 in may compared to the median estimates at 50 a bloomberg economist. stabilization in the world and the world's second-largest economy. for more, let's bring in our chief asian correspondent, enda curran. the to have you. what does this meeting really tell us then? well, good morning. like you say, at the very least, adding to the narrative now that the economy is maybe stabilizing. and we had some decent figures coming out of march, the we had a few wobbles in april. now the start of the picture seems to be that things are somewhat finding a footing. but the same time, no real evidence that the economy is gaining momentum either. that is what is coming out of the numbers today. sure, hobbling along. not getting any worse. but when you consider all of the stimulus, all the money the government spent, the various channels of their open to get money into the economy, we know there was a record level of credit. we know the warnings of debt. thenow all the engines central bank is taken. we still have a picture where commissions are getting more precise. but they're not exactly taking off either. not much to write home on pmi today. i would say. manus: all of it rather flat. at the top of the show, i was showing the yuan at a five-year low. that is drifting. money is not leaving as aggressively as it was earlier in the year. so, what are they worried about? raising alarm bell over? well, interestingly enough, they cannot with a warning about how, you know, when you look at a sub index, the new orders for the indexers, i just go to illustrate the story. china still remains under some pressure, no matter how you cut it. and the exporters are struggling. in many respects, that reflects the global picture. demand is down for all of the exporting nation. it is not a unique to china problem. but the same time, china has to deal with it or it may have to rely on the old steelmakers and cement makers. while the export side of things clean. i think it is goes to show that all of these risks, even as china models true, but all of these risks having gone away, you have to look too far on the rising to see the fed meeting next week. if they will come out, either with an outright interest rate move, that in of itself would definitely ricochet into china. putting pressure on people to get money out of capital in china. and we will quickly see a flareup of some of the oil problems that seemed to have gone away. anna: thank you, enda curran, chief correspondent joining us there from hong kong. let us bring in our next guest. ussen joins us. give us your thoughts than on the problem facing china. excesslking about the capacity, the state enterprises, and how china seems to be hobbling along right now. yes, stabilizing a bit in the latest data. but a lot left to go. key point.at is the you need to throw more and more stimulus to get the same growth outcome. and what we have seen, when you look at the momentum of credit growth in china, if we think about it as elasticity, you now need to get 1% extra credit growth is to get half a next her point of gdp. i think that is where you see creditna challenge, elasticity has really come off. you to throw more and more credit growth, at an economy that, at the same time, a huge capacity problem, deleveraging credit, you see that challenging credit off between the short-term issues and the medium term for the chinese economy. that gives you what we have been calling a bumpy landing. it is the same kind of idea. and when you look at the policy response to try and tackle these excess capacities, underperforming loans that result from that, and of course the job losses will eventually result from it, you see the to put a policy response in front. and there again, we expect there to be a trial and error approach. we will probably see more choppiness coming out of china. manus: good morning. i mean, you stirred a whole host of thoughts there. having reached the limit of monetary policy on a global braces? we will circle back to that. let us deal with what we are moderately good at, adjusting currency. yuan on the brink. that is the title of the chart. if monetary policy is nearly spent globally, or the elasticity is dissipating, that leaves me as currency with the adjuster. michala: we can all have a weak currency. and you have to raise the other question as well. if currency is as powerful a tool as it used to be, if we look at what is going on in global trade patterns, the idea that global trade has been white lackluster in this environment for everyone. and one of the reasons for that, when you look at the composition of gdp, investment seems to be the most intensive component of gdp. and when investment is lackluster, that means that trade is lackluster. it all feeds one into the other. and the idea that large economies, be a japan that tried it or the euro area that also had a go at it or be a china, discontinuing to try to drive yourself to exports in a world where demand is lackluster and everyone would like to have a weaker currency, i think it is becomes quite a dangerous game. anna: let's talk a little bit about japan dan. that takes us into the conversation, prime minister abe denouncing the delay in income tax. only going from 8% to 10% captures economic imagination somehow. so much emphasis has been placed on the sales tax increase. is this the right call right now, were you surprised? which question the use of do you prefer? michala: does not come as a surprise. but more importantly, as a shift in economic policy, if we listen to what we're hearing from the ecb, and it will be interesting to see if that is reiterated this week, coming back to manu'' point, monetary policy in isolation is less effective. that is the message we have been hearing over the past couple of weeks so with monetary policy is less effective in isolation, what does that mean? it means you need structural reform. and some kind of fiscal boost. and that is essentially what abe has come out with now, delaying the consumption tax hike. the last time japan did this, and basically push the economy back into a low growth environment. and i think he is very keen to avoid that kind of a situation again. and i would not be surprised that we see more fiscal stimulus. and again, that was one of the things that came out of the g7. anna: thanks for the analysis. michala stays with us on the program. manus? manus: let us set out the slate of the day ahead. we have a slew of manufacturing pmi out today. data for the eurozone as a whole, 9:00 a.m. u.k. time. two big events to watch for. oecd releases the economic outlook, and shinzo abe will hold a news conference. two hours after that, we have the mortgage applications in the united states. anna: up next, we speak to the ceo of the nordic telecom giant, live from the world economic forum in kuala lumpur. we will have that for you next on "countdown." ♪ anna: welcome back. 1:19 in the afternoon if you're watching in hong kong. 6:19 in london. let us to the bloomberg business flash. here is rishaad salamat. d: former barclays director being accused by the u.s. about getting tips to a plumber friend in exchange of cash. arrested by fbi agents yesterday, he faces conspiracy wire fraud and other charges. the largest investment in alibaba says he will sell the least $7.9 billion in the chinese e-commerce giant. and pay down debt. even after the sales, softbank will remain the largest shareholder with a 28% stake. 21% since theined initial public offering, back in september 2014. shares rising on the debut here in hong kong. this is after raising $1.1 billion in anticipation of the aircraft releasing the bank of china. the second biggest ipo of the year in asia, providing new airplanes set to overtake the u.s. as the world's biggest market for aircraft in two decades. that is your bloomberg business flash. rishaad, thank you very much. the world economic forum in kuala lumpur is underway. haslinda amin is live the special guest. over to you. haslinda: the focus here is growth. given a slowdown across the board, where to governments and companies find growth? with me is telenor's sigve brekke. where are you finding growth? sigve brekke: we are finding growth in our asian markets. haslinda: where specifically? sigve brekke: six markets in asia. markets like thailand and malaysia, where we find more growth and people consuming more data. and then anymore emerging part wherea, more in pakistan, people are still asking for basic services. it true that't sales in thailand and malaysia are slowing down? sigve brekke: it is a tough competition right now. but this goes up and down. if you look at the need of consumer demand thre the data demand, is almost doubling. we're almost doubling every year. which means that the customers are consuming almost twice as much data. and this is all coming from more and more services. haslinda: what are you doing to capitalize on more data? sigve brekke: the way to capitalize this is to make the service very relevant. that is why we move beyond the traditional communication services, all of that, into more local-based services. doing a for example, lot of financial inclusions through cash government. we are doing health services. we are looking to do educational services. and this is a huge demand, especially in the mask market. haslinda: where are you in restructuring? you are not there yet. you are in the midst of a conversion. sigve brekke: that is a good question beard we really need to move from the traditional telecom player into being this. which means we need to take away, but it also means we need to look a lot and being part of an ecosystem. we cannot do all of this alone anymore. we will be depending on partners. and that is a transformational journey. that the whole telecom sector is involved in. and i would say that we have given ourselves for our five years to go through that transformation. and we hopefully come out again as a service provider, and talking not about telecom anymore. telcos, regulation is key. and it is usually a hindrance when it comes to expansion beard are you facing that in markets in southeast asia? sigve brekke: two answers your question. first, i really hope that they can harmonize regulations in asia. now, they are very different from market to market. i think of some to learn from the european union, where they are harmonizing not only telecom relations but others. the second one, we need to legalize. we are still facing regulations. and i see no reason for doing that. thirdly, we also need new regulations and other types of services. like banking for example, we need regulation for others to come in and take a part of the financial inclusion. so, yes, we are having a major hurdle for regulation. that is ultimately what is the most concerning issue. it is about regulation. haslinda: what is surprising is myanmar. it has opened up more than people thought. that has benefited tlelenor. sigve brekke: we got a license and myanmar in october 2014. that is a few years ago. basically, no telecom service back in. a sim card cost more than 200 u.s. dollars. 50d now we have $5 million customers. surprisingly, 60% of that base are active users. more in thevested last 15 years. i will give credit to the myanmar government. with regulations, they were quite modern when they look at regulations, which i think the dry the telecom sector. gve, i wantuickly, si to talk about your asset stakes. i where are you in that conversation? sigve brekke: we are preparing for that happen. nothing is being sold. but we are quite definitely want to exit. however, we are not going to jump the stock. you will have a fair value. haslinda: what is a fair value? sigve brekke: that is yet to be seen. haslinda: when will you conclude talks/ sigve brekke: the time is right, we will exit. haslinda: sigve brekke, thank you so much. manus, back to you. live from the kuala lumpur forum. manus: great work today. well done, haslinda amin. live to paris next for the forum ahead of the interview with the organization's secretary-general. the one and only angel gurria, friend of the show. we will talk brexit after this very short break, with anna edwards and myself. ♪ manus: it is 6:30 a.m. 9:30 in dubai. let us get the first word news with rick sharga salamat. rioshaad: abe saying he will delay the increase in sales tax until 2019. it may help consumer spending but, it the government efforts to contain the debt effort. he had previously set only an economic shock on the scale of lehman brothers or major earthquake would prompt delay. banks cutting senior investment positions, all part of the ceo's three-year plan. a person with knowledge of all of this saying they will shed around 30 positions from the cash equity businesses in japan, and india. it amounts to about 8% of the work phrase. volumesack as trading fall, and they announced similar cuts this year. fink saying hery expects consolidation in the asset management industry. as they struggle to meet benchmarks and u.s. rules with passive strategy. he says there are too many money managers struggling to get anything better than average returns. larry: we have to believe there is going to be a massive shift, createe believe it will a huge consolidation in the industry. china's official factory gauge remained in expansion territory, as pmi coming in. a welcome sign from policymakers, but the private matchingdown to 49.2, estimates. down from 49.4 in april. 50 is the dividing line between expansion and contraction. new york oil heading for the longest run in decline since april actually. this is as opec ministers gather in vienna on thursday to discuss policy. the representative saying that the global oversupply that has caused prices to slump is correcting itself. >> we will need to get the market sometime. the market will correct itself, as we saw from the beginning of the year until now. it is being corrected. and i think all of those are good signs. we just need to be patient. men'sd: the bosses of the will warn that a vote by britain to leave the eu will endanger your investment. they will also say that puts at risk more than 107,000 manufacturing jobs. but they say that these daily threats are becoming absurd. in0 journalists operating 150 bureaus globally. of course, this is bloomberg. if you're a terminal user, go use the function at top . rishaad, thank you very much asian stocks have retreated along with copper, and the chinese manufacturing data a picture. nejra joins us with an update. you have been divining the numbers. what is your take away? nejra: if i look at asian stocks first, it is the end of a five day to winning streak or the asian pacific index. off by 2/10 of a percent at the moment. it seems that some of the markets that interpreting the chinese ada necessarily good news. we had the official gauge close to that 50 dividing line. also of course, u.s. equities settle in the first day of trading, since janet yellen spoke on friday. investors digesting what is happening in the u.s. and in china. if we look at the yuan, i want to show you this. it is drawing closer to eclipsing the lows during january's turmoil. on thend about line, verge of a five-year low. of course, chinese manufacturing data playing into this. but dollar strength has not been helping either. in fact, goldman sachs said last week that the end of a temporary sweet spot that tim china enjoyed, witness against trading partners, will actually spur renewed capital outflows. sticking with currencies, leading higher today is the aussie dollar, gaining against most of the major ppers. this is after the australian economy expanded more than expected. the 10 year yield was higher, too. you see dropping off a bit there. what we were seeing these move in tandem, initially after the data. of course, the reserve bank of australia unexpected the cut the benchmark in may. we are looking at tuesday when the central bank cuts that rate again. ofally, looking at oil, course ahead of the opec meeting which begins in vienna tomorrow. we are seeing oil slip for a fourth day, the longest run of the kleins since april. we have had a comment from the uae minister. he said the global supply that has caused the slump is correcting itself. we have indeed seen oil surge, since touching a 12 year low earlier this year. and what analysts surveyed by bloomberg are saying, opec is unlikely to reach an agreement limiting production this week. anna: nejra thank you very much,. 3.8% falling, the seventh consecutive quarterly decline. the annual forum began in paris, will government ministers, academics, and business leaders are discussing economic growth and inequality. caroline hyde is there for us. very good morning to you in paris. it seems ironic that all of this is taking place in france, as france deals with strike action across the country. in the midst of that strike action, a real focus on structural form where you are. i mean, real irony it feels to me. this entire gathering of ministers, academics, business leaders is to talk about revitalizing productivity, trying to get us out of the so-called low growth track, which they have coined. really, haunting the whole of the global economy as to why we cannot exert more global growth. a few percentage points they have been expecting. at the moment, we are speaking to some of the business leaders regarding the effect of the strikes, that today are going to start wreaking havoc on the railways. tomorrow, we expect the metro and the airport. they could soon be affected. that is spilling over from energy strikes. starting to cripple france for the past week or so, we have spoken notably to some of the onecompanies, such as synta telling us that the timing is not great. anna>> i do not understand why france cannot achieve what other countries, you know, our neighbors around the world have done. which is to really discuss about these issues, and reform of what is to be reformed a. i think the government and the unions, and all of the stakeholders, need to talk to find a solution. because there is a solution. elsewhere, there is optimism about growth. it is not all doom and gloom. the early, across europe. caroline: i mean, you are right. today, we get a wealth of pmi data, manufacturing from the eurozone. it was only earlier this week that france pulled out of the bag first quarter gdp better than expected. unemployment coming down two consecutive months. and we are starting to see signs of revitalization across the eurozone. interestingly, we spoke to a chief executive, he is the leader the focus is on temporary employment. he sounded so buoyant about the eurozone. have a listen. >> europe is improving. absolutely. percent, growing 7%, a which is good for us. the dutch market has been growing around 10%. so that is pretty good. we see early this year germany improving. germany is now around 5% growth. year,and italy, also this posting double digits. so europe is really thriving after all, whereas the last two or three years, it was the u.s. caroline: many feeling that showing signsgain that the u.s. can start to raise rates. and we'll that does in terms of the dollar strength. we are what we talking about the emerging markets year. i will be on a panel with the south african finance minister, and someone from chile talking from the emerging markets, the u.s. move to raise rates. but noticeably, just under half an hour, speaking to none other than angel gurria. and of course the all-important brexit issue. a greataroline come job. looking forward to all those interviews. say hello to angel. welcome back. you are looking great. that is caroline hyde over at the oecd. our tracking lineup, global head ,f economics, michala marcussen still with us. caroline saying this up nicely. we have the fed them play. the jobs report on friday, 150,000 is what we are expecting. unemployment at 4.9%. janet yellen is saying the fed is in play. what i find fascinating here is that there is a wonderful piece on the bloomberg, the u.s. economic indicators of the world's biggest economy ranked as the weakest in the world, in terms of surprises. have underperformed, relative to the forecast throughout the year, according to citigroup. are we all being blindsided? because this is telling me something very, very different. michala marcussen: i think when you look at the overall condition of the u.s. economy, things are still going quite well. the u.s. economy is coming into the later stages of the cycle. importantly and quite interestingly, the fed is the only central-bank of the major ones that is even close to the inflation target of today. and what we are seeing is clearly a concern the price tag of waiting too long is increasing. the risk is that, if the fed waits too long, inflation starts to become more visible. and the markets become spooked by that. and you get an unpleasant correction on the long end of the bottom market. clearly, the fed is worried about that. on the other hand, the fed also has concerns about global financial conditions. we touched this morning upon china, upon oil. and when you link all of that together with the global broader picture, looking back to 2015, it was really the response of global financial conditions that made it difficult for the fed to continue that momentum. but i will say that i still think there is some life left in the u.s. consumer. i think there is life left in the housing market. and i think we will see a fed hike this year. but i think it will be december before it comes. anna: that is interesting. i pulled up the work function on the bloomberg. now, being 53% priced in for a rate hike by july. you do not think then that the number is a lot higher, when we do see that july move? michala marcussen: what i think is really interesting in the market prices, when the fed started testing the ground for a rate hike, the market price as basically said, ok, we believe you may hike the summer. but we don't believe you'll get anywhere close. if you look at the december 17 future, basically that is only gone up by about 15 basis points. not even a full extra rate hike price then at the horizon. and that tells me that the markets are still very skeptical of the idea that the fed can get much beyond one hike this year, one hike next year. manus: i want to sort of challenge that a little bit. i mean, it is very difficult to understand all of the rhetoric that has come from the fed and from janet yellen herself. and the consumer. why are you so reticent? we even have people talking about two more hikes coming from the fed? what is really holding you back? what are we missing? : was brekke: wasmichala marcusn holding me back is how the markets would respond, starting to price in a profile that is i think what you see at that time is an appreciation of the u.s. dollar, would lead to a tightening of u.s. financial conditions. i think you will see more volatility in the market, more pressure coming from also the oil prices. i think that is really the key here. what are the key conditions that will allow the fed to tighten? well, i think we need to have a little bit more of a balance in the market. and i think we need to see slightly better conditions in some of the em markets for that happened. anna: the fact that we did not see a big panic in equity markets though, just around the time we started to consistently seeing these more hawkish messages from the fed, did that come from you that the u.s. economy can figure a rate hike the summer? michala marcussen: i absolutely think the u.s. economy can take a hike. but once bond markets are to fully present in, the bond markets have not really priced in anything close in time. and i think what is really interesting is that when you look at how the markets have corrected since the turmoil, the one variable that really stands out is long bond yield in the u.s. it is one of the few market variables has not come back to where it was. i think once bond markets restart to price it in, i think you'll see more volatility in the market. what would just make the fed more hesitant. anna: michala marcussen, stays with us. up next, opec ministers gather ahead of policy meeting. will any agreement on output freeze be reached? we are live in vienna, next. ♪ anna: welcome back. 1:48 the morning in new york. 6:48 in london. 7:48 in switzerland. i mentioned that because we have risingirst quarter gdp by 0.1%. the estimate was for an increase of 0.3%. growth being held by private household construction, and investment. but weaker government demand, this is economy that has been franc,g the swiss as we know. manus: back to the potential growth around the world, let's talk about one area, saudi arabia, selling $50 million worth of debt this year. that is according to people with knowledge of the matter. the first foray into the international capital market, it could happen as early as july. that is when ramadan ends. our middle east executive editor tracy alloway joins us. what is driving the saudis to join the bond frenzy we have going on down here? will i think bond frenzy is one way to put it. it is interesting dynamic, where we generally see one gulf entity consolidate debt into the market. they're all looking to raise money, raise cash because of low oil prices that have caused wider than expected budget holes. dhabi,ed off with abu with $5 million worth of bonds. that was very well received by the market. then we saw just last week, they saw a record $9 million worth of bond, $23 million worth of orders. for the amazing. now we have saudi arabia eyeing a bond rate of $50 million worth of issuance. back a few years ago, when these are really rare in the middle east market, it has all changed over here. manus: tracy, you know, you qatar, abu dhabi. were really strong. i had a conversation with credit suisse, earlier saying this will get saturation. what is the risk? tracy: it is a good question at this point. there is clearly a lot of yield seeking cash out there. we talk about negative yielding bonds all the time. people are looking for places to put their money. buying debt from companies that may be facing budget holes, but still have quite a lot of cash on hand, is not the worst idea. that said, this is a huge bond issuance for a region that really has not been rushing to capital markets over the past few years. the other thing you have to think about is the headline risk coming up, both abu dhabi energy companies and dubai will eventually sell debt as soon as june. which is what we could get a rate hike from the federal reserve. that would have an effect on emerging markets. we also have the brexit referendum, which could have an unknown impact as well. , really quite a lot to look out for we get the sales. there.racy in abu dhabi opec ministers gather in vienna ahead of a policy meeting tomorrow. all but one of 27 analysts surveyed by bloomberg say they do not see an agreement on freezing oil output. ryan chilcote is in the in a. ryan, the actual agreement or prospect of, a big story coming out of the of this time around. you have been catching up with the oil minister of the uae. where did he stand on oil price? ryan: well, i am not so sure that he is happy with the oil price, around $50 a barrel. like most of the oil ministers, the is little bit reassured by the general direction of travel we have seen since february. why? the is sort of unofficial spokesperson for the gulf countries, an important faction within opec. that has to be the faction that saudi arabia, the most important gulf'sof opec, and the countries message, let the market work things out. let the saudis champion, the they pushed through in the last meeting in november, removing the production ceiling to push out rivals with the price falling, so it is not profitable for them to actually produce. that appears to be working. it just needs a little time. he basically said things are looking up. have a listen. year, a expecting, this year of correction. the market is -- the rules of the market, supply and demand, are working. i think that is the essence of this policy. i think we need to wait. the market will fix itself, to a price that is fair to the consumers and to the producers. ryan, traditionally the saudi minister is king. there is a new man, a new attache, what is the complexion of the new man from saudi? ryan: very different hitting the ground. i have to say, a sort of no-nonsense kind of guy, he got here and has not really talked to the press at all. i think it is fair to say that his bodyguards have been nothing short of kind of zealous in keeping the press away. we used to go for a speed walker i would not say he has been particularly talkative or transparent. but he did say think it and you have to be next to him, and casey did say something, because he could move the market. beyond that, i think there is a feeling amongst the oil analysts, people watching the market, that his predecessor, who did 70 opec meetings, also had a lot more autonomy in actually dictating policy. whereas he is really here to take instructions from saudi arabia. as more of a technocrat, make sure that those get carried out at the meeting. manus: no better man to get that man to speak on bloomberg. that is a challenge. taken away. ryan chilcote indiana. i want to bring in michala marcussen back into the conversation. let us talk about the price of oil. we are nudging this $50 level./ have really try to be aggressive on the short end, they have been wrong. a lot of my guess that come through, the ability to hold through $50 is there. what does it mean for the world, oil and $50? michala marcussen: i think of you know, a lower prices go. too lois bad news. what we see is the risk of default as some of the oil companies start to decrease, especially in the u.s. there is been a lot of concern about the balance sheet for the producers there. somewhere around the $50 mark, people feel quite comfortable with the idea. at the same time, if user to see a real picked up in the oil price year, getting it going up significantly, the concern is it weighs in on the consumer. we talked about the important strength of the u.s. consumer, it in europe as well, has been a tremendous price for consumer pricing power. it is a goldilocks on oil people are hoping for. it comes back to the relationship between what is driving the oil price and what is driving the dollar? as you know, there is a two-way causality between those two. and it did seem to break down for a while. but recently, it seems to be coming back a little bit again. it comes back to the fed. when they sound more hawkish, will that drive the dollar higher? will that be affected pushing down oil? i think ultimately, oil will be driven by the supply and demand balance. we have seen our temporary outages here. anna: we have nigeria very much in focus. libya and canada with that in mind. thanks a much for spending the last hour with us. michala marcussen,. slowed andy has inequality is getting worse, we are live in paris at the oecd. we talked to this man, next. ♪ abe holds fire. the japanese prime minister said he has decided to delay a sales tax hike until 2019. china's factory gains signals the world's second-biggest as smalls stabilizing and medium-size manufacturers picked up in may. oil slips, headed for its longest losing streak in six weeks. we are live to vienna when opec ministers gather. the uae tells bloomberg patience is a virtue when it comes to crude. >> we will need to give the market sometime, and the market will correct itself. from the beginning of the year until now, it has been correcting upward, and i think all of those are good signs. manus: we are live in paris at the annual oecd forum. we will speak to the organization's secretary-general at 7:00 a.m. u.k. time. its first. it's on bloomberg. welcome to "countdown." i am manus cranny. anna: i'm an edwards ib london. trading when we start off for this wednesday session in around an hour time, this is the picture. you can see the immediate region, and it looks like it will be sluggish, flat, fairly mixed. whole, flatcks as a at the start of the trading day. i know we are going to talk about some of these risk assets. to see thesting moves we have seen in the last 45 minutes around the japanese currency, shinzo abe telling lawmakers he is going to delay the increase in the sales tax. it's interesting some of the voices in japan that the move in the end the last 15 minutes or so was triggered by stock markets saying the slump in stocks meant that losses were triggered around the 110 level. you can see the move in the dollar-yen. manus: 109.94. to a certain extent, you have to say, how much of this sales tax hike was so well flag or suggested? what grabbed my attention come if we keep our eye on that risk radar, the aussie dollar rising, but at the top of the board, 109.91. to 2019, andx hike he would do this if it was a lehman-like moment. abe at the g7 saying, we are facing a potentially similar crisis to 2008. everybody was saying, that is not necessarily the case. if you talk about the aussie growth story, we are seeing a nice gdp number, 1.1%. data youat the swiss broke, anna. that data shows still here -- i know switzerland is in part of the eu, a 1/10 of 1%. the market was looking for 3/10 of 1%. let's have a look at the bond markets. this is where you are going to see concerns about the ecb. what are they going to come up with with their inflation target? 10-year yields in the united states dropping by a pit. , down bywn in london 1.43%. japanese government bonds in , you have toitory go 10 years almost to get a positive yield. let's go out to rishaad salamat. he is standing by with the first good -- first word news. you, manus.d day to japanese prime minister shinzo in will delay of the rise the country sales tax until 2019. the move complicates the government's efforts to tame what is the world's biggest debt burden, marking an about-face for abe who previously said a shock on the level of lehman would prompt a delay. hsbc says it will cut senior banking positions. it's part of a plan to reduce costs. a person with knowledge of this matter saying mccoury will shed around 30 positions from its equity business in hong kong and india. industrywideows an trend of scaling back. bnp paribas has announced a similar cut this year. larry fink says he is expecting consolidation in the asset management industry, this as his struggle to meet benchmarks and these new u.s. rules that favor passive strategies. there are too many money managers struggling to get anything better than average returns. >> we believe there is going to be a massive shift more into passive, and we believe it's going to create a huge consolidation in the asset management industry. >> china's official factory gauge is remaining an expensive ofrain come at into evidence gradual economic stabilization. p a mise the figure, 50.1. to private measure fell 49.2. that is essentially in line with estimates and on from 49.4 in april. we have new york traded oil headed for the longest run of decline since april. the uae's representatives are saying that the global oil supply has caused prices to slump, and that issue is correcting itself. >> we will need to give the market sometime, and the markets will correct itself, as we saw from the beginning of the year until now. upward,een correcting and i think all of those are good signs. we just need to be a little bit patient. rishaad: they claim that quitting the eu would put at risk 170,000 manufacturing jobs. global news each day, every day, 2400 journalists in more than 150 news bureaus -- this is bloomberg news. if you are a terminal user, is our function at top for all of our top stories. anna: thank you. the oecd says since the global economic crisis, productivity growth has slowed, and inequality has been getting worse. it's the theme of this year's forum in paris. caroline hyde is there with the organization's secretary general. indeed in aam rather dreary paris, but i'm by the secretary-general angel gurria. are you optimistic about the risks at the moment threatening the global economy, or are you more to the downside? mr. gurria: frankly, it's going v be flat growth at 3% visa ast year, 3% 2015, 3% 2016, little bit of an improvement in 2016, but very gradual, very moderate. outlook a rather dismal , because no surprise, the engines of growth -- trade is growing at 2%, 3%. it should be growing at 7%. only five times in the last 50 years has trade been growing below the rate of growth for the gdp of the world, and those five occasions, there has been a deceleration and even a recession. i'm not saying there's going to be a recession. i am saying conditions are difficult. -- investment today, growth tomorrow -- that is growing at about three bank 5% 3.5 percent. credit is not flowing. banks are saying there is no demand. small and medium-size enterprises are saying conditions have tightened much. last but not least, engines of growth in the last 10 years, 3.5 percent. china, india, south africa, brazil, russia -- right now, second year of recession for brazil, second year of a recession for russia, and very flat growth in indonesia, or let's say less growth in indonesia, less growth in south africa, and about half the growth of a few years ago in the case of china. that fourth leg of the growth engine, the fourth cylinder of the growth engine, is at half speed. caroline: trade investment -- mr. gurria: and emerging markets. caroline: what region are you most concerned about? mr. gurria: we have a change of the situation. normally, we were worrying a lot about europe and worrying a lot about the u.s. and japan, and the engines of growth were emerging. now the uncertainties are lying much more on the side of emerging markets, mostly because the price ofse of commodities and oil -- many depend very critically on commodities and oil. at the same time, it was so good. they did not take the necessary measures. the reforms were not introduced. diversification in the economies, which was so necessary, was not promoted, and right now, they are realizing in the good days, if it ain't broken, we actually had to fix it. in the rainy days, they would be better prepared. caroline: what about the u.s. looking to be raising rates? that is going to force more on the emerging markets, wouldn't it? mr. gurria: yes, but that is a good sign. normalization of interest rates in the united states means the united states economy is sound. it is sound from the point of view of job creation. it has created more than 60 million jobs. i have to say that is one of the criteria for the fed. the other one is of course that growth looks steady as she goes, although not spectacular. caroline: don't you have to have a global perspective? mr. gurria: they have to have a global perspective, but first and foremost, it's about the u.s. the latest numbers in the u.s., maybe the greatest concern is the drop in productivity. that is a phenomenon that is affecting practically every single country in the world, certainly every country in the oecd, but the last numbers in .he u.s. are quite worrisome productivity is something we should focus on. that is going to be one of the issues we are going to be looking at the ministerial , together the oecd with the idea of inclusion, fighting inequality, getting more people on board, which is an important theme in the united states and which president obama has mentioned as the defining issue of our time. abes: japan, we saw backtracking, saying he would not raise the sales tax. what about the japanese economy? mr. gurria: japan has been flitting deflation for about 15 years, and what they are doing through very energetic, very intensive work from the central bank has been to reduce rates even further. they are practically zero. that, of course, is passed on to consumers. interest rates are very low. the only question is, investment has not recovered enough, and mostly what we see in japan is, notwithstanding a scarcity and a shortage of labor, we have not seen the recovery of wages. caroline: is that the government's fault? mr. gurria: absolutely not. it is basically the employers, and there is a question of wage negotiation between the unions and employers. it has given rise to relatively modest wage increases. wage increases are the way in which you can involve -- inject some dynamism in the economy, because overall demand would improve. of question of the increase the vat rate, which is for next , has been al political debate. we recommended that they should not have -- times when the increased by 2% or 3%, but let's avoid theear, you distortion in consumer conduct, who will say, i will buy everything before the increase and nothing after the increase. caroline: let's talk about what other political debate, and that is the united kingdom staying in the eu. how much of the focus is brexit going to be? mr. gurria: it's always there. threat, but it's a mostly it is a threat to the well-being of the u.k., the people in the united kingdom. we have said it is like a tax 5000goes from 2000 to pounds or sterling per year. normally, when you pay a tax, you expect to get something in return. here, you would just be net loss. mr. gurria: thank you very much indeed. gurria.angel that was the secretary-general of the oecd. manus: thank you very much, caroline hyde with the latest parism, stay with bloomberg. we've got a lot more guests coming, including luxembourg's finance minister. that is coming up at 9:40 in "the pulse." anna: up next, former government minister iain duncan smith joins us live from berlin. that is next. ♪ is 10:19 in dubai. let's get the bloomberg business flash. here's julie at sally. : a former barclays director is being accused by the u.s. of giving tips about future mergers and acquisitions to a plumber friend in exchange for cash. stephen mcclatchy was arrested by fbi agents yesterday. he faces conspiracy and securities fraud charges. dutch bank, the largest investor in alibaba group, says it will sell $7.9 billion in its stake in the chinese giant to bolster its cash position and pay down debt. even after the sale, softbank will remain alibaba's largest shareholder. alibaba's u.s. listed shares gained almost 21% since the inl gained almost 21% since the initial public offering in september of 2014. the operation, which includes still works and to mills, look trade under the name british steel. the is this employs around 400-4000 people -- 4400 people in the u.k. juliette atyou, sally in hong kong. sterling fell by the most in almost two months against the dollar yesterday after a new poll showed a jump in support for the campaign to take the u.k. out of the european union. joining us from berlin is the vote lead campaigner and u.k. in duncan parliament ia smith. good to see you in berlin. i wanted to ask you about leadership of the conservative party. what kind of result would it take on june 23 to prompt a leadership change at the top of the conservatives? mr. smith: actually, i think the issue about leadership is irrelevant. it's a debate about whether britain should remain in what i consider a bureaucratic and inefficient european union, or whether it should leave the european union, and that is the sole point of the vote. leadership isout all really pointless, and the vote you have is the one in front of you. anna: yes, absolutely. we know what the vote is about, but in terms of leadership, it is no secret that this is something that has divided the party for many years. are you telling me that no matter what the result is, david cameron's seat is safe? mr. smith: i certainly believe categorically that he is the prime minister who was elected a year ago. whatever his own view is, his job at the end of the day is to listen to what the british people say and implement that, and i'm sure that is what he is making plans to do. minister, he called a referendum. there were always going to be passionate debates on this because it's a big issue, and on a big issue, people will divide. having divided, they will come together and say, the british people have decided. if it is to leave, we must get on and do that in the quickest way for the british people. that is what i have been campaigning on. i believe there is no reforming the european union as it stands. wayg in berlin in the last for hours has convinced me that no one wants to see any change of any structure, while we see chaos in the euro area, unemployment at unprecedented levels -- manus: it is manus cranny in dubai. audience you about the focused on this debate who watch bloomberg everyday? people we have spoken to, leaders of industry, hsbc, ubs, the governor of the bank of england, they have made the point there is a severe probability that 45,000 jobs could be lost in the case of a brexit. i know one side is peddling fear. you are peddling myths. the reality is that the city of london would lose its preeminent role. mr. smith: all nonsense, total nonsense. manus: you would disagree with hsbc, barclays -- mr. smith: will you let me answer? about to give you one. i don't agree with those forecasts. they are the same people who got their forecasts a wrong -- wrong . the british economy actually boomed. the same car casters told us we had to join the euro or be on the margins. the euro has been an utter disaster for the european union. manus: let me ask you. mr. smith: let me finish. i haven't finished yet. i'm sorry. you keep interrupting. let me finish this answer. in 2007, not one of these big forecasters got the forecast for the biggest crash that happened in the world economy since the second world war. argive me if i actually say little humility from some of these people who forecast this -- the truth is i actually believe, and the forecasters go on to say this, it would be beneficial for the u.k. manus: may i ask you about passports? one of the issues of for people who visit the united kingdom is about this concern that passporting writes would have to be renegotiated, or they might be lost. my question is, can you assure part of the 19% unsure of what way they want to vote who are involved in financial services across the kingdom -- the united kingdom that these rights are fine, protected? mr. smith: i am pretty certain that what we will do is sit down and have a proper negotiation with the european union about what is in their interest as much as ours. bear in mind the european union terms of capital goods does very well out of the u.k. we want an open market in financial services. when it comes to pass porting rights, there's an awful lot of nonsense talked about these passporting rights. most banks and companies know hurtpassporting writes involved in that sense. you can set up organizations and areas in other countries in the european union. there are banks i have talked to who say they don't think this is a big issue in any shape or form. the first thing that will happen if we vote to leave is we will sit down and discuss what the european union would like to do, which is to trade and sell goods at high levels of profit to the u.k. we want to have an open market on financial services, which has never existed in the european union. anna: what is it about your visit to berlin that convinces you that no reform is wanted by the eu? mr. smith: it was a very strong and long debate yesterday, but what i found while listening to most my counterparts in germany was they simply cannot agree to question the very nature and the structure of what is going on in the european union. i pointed out to them that the european call to justice and the commission together on ratchet driving, this idea of the overarching federal concept where powers are taking away from nationstates, there is a sense of, why would you question that? i said, if it is such a good thing, why are so many people unemployed across the european union, high levels of youth unemployment, lives destroyed by the political project? not one of them answered that. anna: i'm sorry to interrupt you. we are just out of time. thank you for joining us, mr. smith. "on the move" is up next. ♪ okay, ready? whoa! [ explosion ] nothing should get in the way of the things you love. ♪ get america's fastest internet. only from xfinity. anna: welcome to "on the move." we are counting down to the european open. i am anna edwards alongside matt miller in berlin. here is what we are watching. japan's prime minister postpones a sales tax hike after having vowed only a lehman-like shock or a massive earthquake could prompt the delay. we look at the future of the financial services industry as hsbc and mcquarrie are said to count headcountsd