dubai. breaking news. anna: from the clothing retail sector, let's get straight to those numbers. better than estimates the best way to summarize in terms of q1, 705 million euros, better than the estimate of net profit, first-quarter sales just a touch ahead of the estimate for the first quarter. they are saying that sales in 1 to juneose 15% may 13. and looking at the number, that is coming above estimate as well. many, thene of the global presence is perhaps insulating the company from tougher sales backdrops that they might been seeing in various individual countries. but i would not stop some negative fx implication, we performance of -- weak performance that they cannot but better numbers, than estimated. let us turn to the brexit question, manus. the eu referendum on the 23rd is just eight days away, marking them off as my calendar goes. we have a series of charts illustrate how the market is looking at the story right now. manus: we have. look, no doubt about it. let us talk about a pound, the only currency in 2016 that is actually declined. if you want to understand the risk reward, and the size of the betting against the pound, take a look at this. what you have is the premium sales sterling at an all-time high. that is what the top right of the chart is telling you. the premium to sell over the premium to buy, standing at 9%. now that trumps anything we have seen, scottish referendum, back with margaret by recession. 25 billion pounds, the jordanian economy, and i have not gone into the middle east, i can give you an example in europe. that is half the size of luxembourg economy. 11 billion pounds betting against the pound in march, and if you cannot afford the volatility of the pound, do not worry. you can always short the euro. repe seeing a mini prieve, would last as we get on to first word? mini-repreive seems to be the best thing we are seeing. we're showing to the asian market and the currency market, cause for breath, whether we go back to the concern of brexit we will see. i have a chart also talking about volatility. this is the index here in white bettingthe odds checker odds for brexit or you will talk about this many times, manus, the volatility of brexit going up according to the odds in the betting market. and is being reflected in what they are seeing at higher volatility, this is the chicago bond option matter of volatility. let us get the bloomberg first word news. the u.k. anna, chancellor will warn in a speech today that leaving the eu could spark a fiscal crisis. george osborne says reduced trade and investment believe a 30 billion pound black hole that would have to be fixed by increased taxes and spending cuts. boris johnson has again argued that the u.k. should quit the eu because of the slower eurozone growth and excessive bureaucracy. his comments came in a telegraph huffington post debate with the prime minister. >> if you look at the eu as a whole, and has the most growth anywhere in the world. they have catastrophic growth in many parts of the mediterranean countries, running 51% in greece. the whole eu progress is a machine to generate excessive bureaucracy and red tape. haslinda: meanwhile, double line ceo says that if britain votes to stay in the eu, despite leading in several polls. this game after multiple surveys this week show believe campaign ahead of the remain side, sending global stocks and the pound down. onected give the benchmark lending rates on hold today, but statements from janet yellen at press briefing will be scrutinized for clues of the likely timing of the next increase. futures indicate the odds of a move by july have come below 60%, down at the start of the month. expectations have been hampered by turbulence and global credit markets. has opened aon double-digit lead over her rival donald trump in a new poll by bloomberg politics. the survey has clinton leading among 750to 37%, likely voters in november's election. more than half of those polled said they can never vote for donald trump. but trump outpolled clinton when it came to combating terror, both in the u.s. and abroad. bloombergon has told that the work and structure of the clinton foundation would change if hillary clinton wins the election. the former president was talking to david western at the clinton global initiative event. mr. clinton: if you think very clearly about it, we will do the right thing. and we will try to explain it to the american people, but i will have to wait -- first i do not believe in counting chickens before they have hatched. so, let us see how this election unfolds. there will clearly be some changes and what the clinton foundation does and how we do it, and what is it across the bridge we get there. haslinda: global news 24 hours a day powered by 2400 journalists in more than 150 euros around the world. you can find those stories on the bloomberg top . linda, thank you very much. let us get into the markets, and many reprieve for the pound. juliette sally is standing around. will it last? usiette: i guess if any of have an answer, manus we would be sitting on a beach somewhere. certainly we have been a little bit off coming through an asian equities today, and fact nothing that the four-day decline, the biggest we have seen it since february this year, all focused away from the brexit it seems at the moment and back onto the fmoc as we await that decision. want to check this really big jump we've seen on the shanghai asian market, up by 1.5%. shanghai has been down by much as 1.1%. there is a lot of speculation now that there might have been some state-based buying,'s of national intervention coming through. the market now on the lunch break, but it had a big jump just before that. we had the chief executive officer on, saying the chinese government never want to see the market following too much. there could be some government intervention coming through there. here in hong kong the market also trading around one third of 1% on the lunch break. and we have seen a little bit of weakening coming through in the yen, the nikkei 225 up by 2%. the fxkets weighing on 200, you see markets across southeast asia and mainly pretty flat. but surly on the regional index we have seen things turn around from early in the session, we were trading at around these lows that we had seen for quite some time, in fact the gate had been down by 4.4% over the last four days. that is the biggest drop as i mentioned it since february. when you put it in market capital it was about $2 trillion off the value of asian equities. good to see a little bit of buying coming back through ahead of the decision coming through from the fed tomorrow morning, our time in asia. i still want to show you the currency, we did actually see sentiment really new, and the yuan fell to a five-year low, the weakest level since january 2011, holding there at the moment. thank you.tte, joining us from hong kong. the yuan has extended losses from a five-year low, dragged down by the decision to lead the domestic indexes for the third time. chinese stocks fell at the open, but has since been reversing early declines that there could be intervention. joins us from hong kong. great to have you. we caught up with yesterday. what reason, why weren't they included in the index rebound? is: the basic sense of it that it comes down to control and access, four for foreign moy managers, in the sense that they need to know that some of the rules in china around stock holds and repatriation of funds, they're not comfortable enough yet that for pension funds and mutual funds that he did of the intake money in and out, and the amounts they want when they want. look, they have been rebuffed on a number of occasions. what is the likelihood they actually get -- what do they need to do? do they need to show less than the relation, less government control? what needs to happen? sam: that is a very good question. and it is one that everyone is looking at right now. it certainly is that they left open and anytime in the coming months that they could change their minds or makeup a decision, the expectation is that we will all be here in 12 months time. but some of the big issues are big issues, and they could be intractable issues. china has done a lot in the last 12 months to change the markets, rules, make it more acceptable, for want of better word, for msci. whether they can do more and change of the outlook in the next year remains to be seen. anna: sam, thank you very much. bloomberg's team leader for asian markets, joining us there in hong kong. let us talk about china, bring in our guest host, neil williams from hermes. great to see you. msci deciding not to include china. china is incomplete. you can see why they say that, the global equity markets and the second largest economy in the world, msci had the reasons. neil: they did. and we thought most of the conditions have been for phil third time unlikely for china, but maybe relief for emerging markets may have been nudged out of the way in the index, had a china been included just yet. my concern now running up the macro is in there may now be some added retaliation from china, at the time of the fed is in tightening mode. maybe not today but later. and of course we had last autumn this policy face-off, where the fed was talking the dollar, and of course china retaliating by then pushing down the reae currency in august. if you're going to hike, we are going to give you a deflationary blowback that is greater than you first thought. i hope the decision overnight in asia will not add to the time when they are already looking at the fed. manus: you sort of almost played into my hands. good morning, manus in dubai. i have the 15 and five year low -yaun, breakingo through and going beyond the five year low. does this add to capital flight? does it add to the whole momentum in terms of the currency? would rejection at the msci level really invoke that level of direct currency war? is that what you are talking about? niel: it would not be the only reason. but it could be used as an excuse and added reason to get the currency down in china. let us face it. it is not the only dashboard to press, they have many in the more than we do in europe. certainly a weaker currency, done gradually, is an important part of their way of stability the economy. and taking back some of that slowdown. the problem really in china in terms of doing that really fast, the fact that the interest rates can be reduced far more aggressively. but at a time when the property sector is really very hot still, if you look at property transactions, they are running it twice the speed of building. at a time when interest rates, if you take into account interest rates paid by enterprises, whose own devices 8%, what they as could do on the other side, the fiscal side is simply spend. we have seen some signs of that by state owned enterprises being forced to increase cap fx. which is in the short-term allowing china to reach the growth numbers. so the currency as part of that. the concern i have now that as the fed starts to tweak in the next few months interest rates further, that china may couple that with the currency move. and we can return to we had last autumn. anna: some people suggesting that china should not be welcomed any further into the global international market fold, saying there is too much intervention beard what they have done a markets has been intervention. can you look at global quantitative easing and all of the unusual measures we have seen in central banks in action, that is intervention in some markets. if you look at japan, for example. neil: no surprise that japan is a very good test case for china in this case. but china is too big to ignore. so why should may be included ultimately in the index? and $11 trillion economy slows down, which accounts for half of the demand, we tend to notice. it seems to me that some of the indices and credit rating may be behind the curve. anna: neil stays with us here on countdown. up next, will be hawks fly the coop? tune into our special coverage that kicks off at 6 p.m. u.k. time. we will talk fed, next. anna: welcome back. 1:19 in hong kong. of aang seng up by 2/10 percent. doing well despite that missing out on the msci inclusion there in the industry. let's get a bloomberg business flash. haslinda: anna, china's asset managers are preparing for regulatory shutdown as part of a move to shut down shadow banking. the use of mutual funds will adjust to equities, fixed income, and nonstandardized products. it is estimated that once they come into effect, they wanted to hold about $300 million in net capital for every $1 billion under management. the final round of bidding for at&t, ands verizon, quicken loans founders, joined by private equities, each of the suitors once the core internet business, as well as some of the intellectual property and real estate assets. most of them value yahoo! between $4 billion and $6 million, but verizon's bid is lower because it is not include property. navigate the way out of the emissions scandal, that is according to people familiar with the matter, saying that the company is planning to combine components to cut costs and boost efficiency. vw faces billions in fines and repairs, having a minute to rigging emissions test for millions of cars. a full platform review that may ng ofto the selli ducati motorcycles as early as tomorrow. that is your bloomberg business flash. manus: thank you very much. a pretty big day ahead. we will give you the headlines. highlights, even. 9:15 u.k. time, billionaire philip green will be questioned by two house of commons committees about the collapse of bhs. selling for one pound last year. at 6:45 p.m.ter, u.k., justice secretary michael gove faces audience questions in the bbc television special. at 7:00 p.m. it is the big one, the rate decision followed by janet yellen's news conference. that is a half hour later. make sure you follow all of these events on top live go. real-time coverage for you. you will want to tune in. we have a fed decision special a kicks off at 6 p.m. let us bring in neil williams back to the conversation. i want to go straight to the heart of the matter. can the fed keep two rate hikes alive. is that mission-critical? neil: i think it is. let us face it, having hiked all of once, the fed is the only test case we have to see whether central bank can ever normalize again. one,nterest rates, i for expect them to try. two more hikes this season, i have long been going for september and december to try to andd the winds of brexit what is going on right now. outside of the u.s., i guess from the decision today, a move on rates would be a surprise. so i suppose the focus then is on the famous dots. anna: the focus will be on the dots and inflation i suppose, whether we can find much evidence of it. you say two hikes. i'm looking at the work function on the bloomberg, suggesting the rest of the market or at least what is back into the markets is less than that. the market less convinced. what do you see that made you think there will be two? i have a chart that shows inflation not so great, expectation is the title, reversing a june survey of only 2.3%. does that feel like time to be hiking rates to you? neil: to me, no urgency to hiked today. they have a convenient domestic reason not to do that, which of course is one month payroll numbers. i would look, as well as janet look beyond the one-month. anything the fed still looks at the rolling three month average, the underlying payroll figures that have slowed from about 200,000 two more recently posted to 100,000. they have a handy domestic excuse to hold off in june, maybe july. but it seems to me, the question is why hike now and maybe risk return to financial market problems of last autumn? when there is a rather large potential disturbance happening in europe, so i think it is best to see through that. and move in september. on the reason for hiking at all, the fed has a mandate looking at two things. the labor market is strong, 4.7%, below what the fed believes is a level under which we can take off 5.5%. and inflation is pushing up. the number we should get on thursday will have headline inflation about 1%. the core number of the fed 2%.et now is if a martian landed and look at the inflation and labor market data, read the fed mandate, he would say there would be a hike. inflation in advanced economy is 0.3%. i want to get your terminal rate, if the fed does keep two rate hikes alive by the end of the year, just want to get an estimate from you on where you think trajectory is for the terminal rate? going back to the inflation discussion, the chart and what you just said, inflation in a vast economy is plus 3%, the least since 2009. go with me on this journey here. how close are we to helicopter money? neil: well, helicopter money has been tried twice in the states givingt decade while rebates to consumers. it worked. i don't know if any to be repeated in the states now, or they could work in the eurozone for example when there is still no single fiscal agency, which makes it far more difficult to do. but turning back to those dots, manny, i am sort of the other way around on the money markets, where the fed currently is, i see the moving pretty much in line with those dots. but then stopping. my terminal rate is actually as low as 1%, at the end of this year or maybe the start of next year. and the reason for that is firstly because i expect those rate hikes to have an impact, for what it is worth, my estimates suggest that three rate hikes together if you include december left taken over half a percentage point of u.s. growth at the end of 2017. anna: we will see if that margin lending will come with a helicopter or spaceship, perhaps the money we will call it. thank you very much. neil williams, chief economist stays with us here on the program. when we come back, we will talk about what is going on in the u.k. and japan. japanese government bond yields slumped to record lows this week. all of the details coming up in our chart of the hour, we see them falling and the majnin in e domestic market. and talking about germany's 10 year yield falling negative, what that will tells about the global growth story. we will broaden that conversation, as well. ♪ manus: it is just on 9:30 a.m. in dubai. 6:30 in london. good morning. let us get to haslinda amin. manus.a: hey, china has been denied entry into msci, backed by indices for a third time. the emerging market index, one and a half trillion dollars of assets, and policymakers the to make more improvements to its ability of the share market. thesetback, to raise profile of the major market, and to bring the yuan into international currency. again arguing the u.k. should quit the eu because of slow eurozone growth and excessive bureaucracy. boris johnson's comments came on tv with former scottish referendum leader. boris: the eu as a whole is a zone with the most growth, apart from antarctica. they have catastrophic problems in many parts of the mediterranean countries. running 51% in greece. the whole eu project is a machine for generating excessive bureaucracy and red tape. the fed is inspected keep the benchmark lending rate on hold today, that is coming after comments from janet yellen at a press briefing, it will be scrutinized for the likely timing of the next increase. byures indicating the odds july have trouble below 16%, down at the start of this month. expectations have been dampening by turbulence in global markets. hillary clinton has opened a double-digit lead over her rival donald trump in a new poll bloomberg politics. the survey has clinton leading trump 39%, among 750 likely voters in november's election. more than half of those polled say they can never go for trump. but donald trump outpolled clinton when it came to combating terror, both in the u.s. and abroad. bill clinton has told bloomberg that the work and structure of the clinton foundation will change if hillary clinton wins the election. the former president was talking to david westin at the clinton global initiative event in atlanta. mr. clinton: we will think very clearly about it, and we will do the right thing. and we will try to explain it to the american people, but i will i do notait -- first believe in counting your chickens before they have hatched. unfolds. how this haslinda: global news 24 hours a day powered by 2400 journalists around than 150 bureaus the world. more on the bloomberg top . anna: thank you very much, has news.amin with the most regional currencies have weekend ahead of the fed policy enough of the day. nejra has more. what a relief that they have pressed pause on the brexit-related nervousness we have seen. nejra: certainly in some parts of the market. if we look at asian equities we are seeing again today. the msci asian-pacific rising for the first time in a week, snapping the biggest four-day decline since february. it is a broad-based rally, seeing both gains in japan and china. but of course we are not seeing this risk appetite everywhere. just if we look at what is happening in the bond market, i want to bring up the treasury 10 year yield, because there are two things mainly investors are focusing on, the fed decision and the risk around brexit. of course the two becoming increasingly intertwined. but treasuries, are headed for the best first half in 2012. brexit in particular benefiting treasuries. falling below zero for the first time, yields on japanese government bonds have hit record lows across the board. that 10 year moving farther into negative territory, sing the record lows -- seeing the record lows. the bond market seeing that bid for the sake haven. , but then we talk about sterling we are seeing a bounce both against the dollar and the euro today. but i want to highlight that investors are still boosting protections against sterling decline. this is the u.k. in the depth of recession. this is the scottish referendum. that is the eu referendum vote at the end, approaching. what is happening? the net cost of protecting against sterling weakening versus the dollar has surged to a record, a one-month risk reversal we are looking at here, showing the amount wagered on the pound following to the 1980's level has actually more than doubled during the past three months. this risk very much priced into markets and the moment. finally just taking a look at crude oil, falling for a fifth day, the longest run in decline since february. as u.s. industry data shows stockpiles expanding, exacerbating the global glut. manus: thank you very much. japanese government bond yields, slumping to record lows this week. all ahead of the bank of japan's policy decision tomorrow. that is what we are looking at in the chart of the hour. we have the soon to be sitting in on a regular basis, but we thought we would send you to london. welcome to the family. take it away. jgb, the whole world is going negative. >> i cannot miss out on the rain. that is point number one. you mentioned the record lows, brexit rattling markets around the world. underpinning that flight to safety we are seeing weighing in on the government bonds in japan, and record lows. following what we saw with the german bund earlier, 10 year trading at an unprecedented 1.85%. and put that in the context, we pulled out a chart for you with the different maturities and put them in three phases on the left, you go into the expansion of the stimulus, and ultimately it is a negative rate as of january 2016. notice the sharp fall in yields as the maturities lengthen. 80% of jgbs now have a negative yield. that underscores what you mentioned manus, that this will give the boj meeting in the next 24 hours something to think about. us: i suppose the question is fiscal stimulus in a court four hours. i have seen a whole range of promises, suggestion, a delay. the sides of physical fitness really moving the agenda here? including what is going to happen with the federal reserve meeting, you have a strengthening yen. it is the g 10 best-performing currency. if you take a look at what the analyst is saying, bloomberg has surveyed, 29 out of 40 surveyed economists that early policy will remain on hold, 11 expect the stimulus. that number increases as you go towards the summer, because the argument for a policy change for expansion of stimulus strengthen spirit you are looking at 55% for the july 29 meeting, and then you have a critical vote manus, the national election upper house vote. and that of course means that be very is likely to careful in any policy changes to make sure it does not affect voter sentiment, that as you know, monetary policy increasingly less popular in japan, or at least the conversation surrounding that. anna: thank you very much. soon to be taking up that anchor position in dubai. great to see you here. lots of talk about with regards to the eu referendum today. lots of different opinions on the eu referendum this morning. as every morning. former mayor boris johnson says london has to free itself on the risks of the slow growth and bureaucracy. the u.k. chancellor george osborne's warning that a brexit would leave a 30 billion pounds hold in the country's finances. money managers think the u.k. will vote to stay in the eu after all. all,to make sense of it let us give his thoughts to brexit, what the outcome could produce, ian webster, chief operating officer. and neil williams is still here in the studio. ian, right to have you. i read with interest your a 24%ch talking about drop in european stocks as being a likely outcome of the brexit. talk about what your researchers found, what you expect to see, if we vote to leave the eu? ian: thanks very much for having me. just thinking about this as an issue, if you google economic consequences of brexit, there are 600,000 hits. it seems like we have about 600,000 different opinions out there. when we look at this, as a research problem, what we are not doing is the economic models, that the others would do. what we are doing is looking at market reactions, to similar situations. so what we are trying to see is how the markets are likely to react. anna: so you have been looking at precedent to get a head start. ian:'s accommodation of historical fact and mathematical fact. we are doing scenarios, strength test, nothing different from all of our clients who use our software to do that type of thing. the people in the city will be running scenarios, looking at all of the various assumptions that are out there. so when we did our research, what we did in making the assumptions is go back to history. so rather than thinking about possibility, we look at some of the historical precdedence. as far, perhaps we look back as the first referendum. the data back there is a bit spotty, the market structure is very different. wraps nothing much to say there, anna. but we could look at what happened when greenland left the market. that is really not the same thing. we know, and i think from some of neil's research, it was a fairly difficult process for even greenland to go through. it is not really a good analogy. we really focus on three different areas. one is the rm, black wednesday. debt crisisgreek and the whole european debt crisis. and three was a scottish referendum. we areobviously, yeah, going down memory lane. what we want to get to, none of these events anyway, i suppose really reflect what we could go through next friday. but i had meant to do no what is the biggest propulsion and volatility, and the biggest reaction on the pound and currency, which of those events do you think had a level of volatility similar to what happened next week? that is what we want to get to, volatility. ian: absolutely. what we look at me look at those three crises, was say what actually happened after those? scottish referendum, it was a bit of so what? as we saw earlier in the place, there was a lot of awful action before, afterwards things bounce back to where they were. something scenario, that would look like if we remain in there. there be a big shrug and a so what? but there is a political fallout that will come out of this than might change things in terms of the market. thatu look at the crisis, is a very interesting one in terms of looking at it, we just entered it in the end because that was a very finance crisis. what actually happened after black wednesday was in the equity markets rebounded. equity markets in the two days after black wednesday went up 8%. and a couple of months afterwards, went up almost 20%. that that is the likely scenario in this event. anna: neil, what you look for in dence in the eue referendum? ian saying they look at the case study that was interesting, but they actually rejected it. neil: i think it is unique. i think the nearest thing, i hate to admit it, way back in 1975 when we had this referendum. a nurse show kept us in -- inertia kept us in. but interesting what ian says, the impact on the pound is fairly straightforward intuitively. what i could do was model impact on inflation. because if the pound does go down, against the dollar to $1.2 0, it was the mid 80's and a remover it fairly well, we could crv i headed to 3%. and the cpi of the bank of england targets toward 2.5% by spring. and which case, it seems to me they will not raise rates. but the question i then had is was on to buy the guild? because the third of them are held internationally, who will care about credit ratings? i just wonder in the event of the brexit, will the banks once again have to reel off quantitive easing? anna: will we hit parity? ian: if there is a brexit and are written effects elsewhere in europe, as i assume there would be for the country's, i think a move toward parity is a possibility. anna: that is just get manus in a moment, ian. manus: ian, i'm just curious to know, we seem almost obsessed about our market. global markets are just going to the catch a process, in terms of our volatility. take me through your suggestion on that international contagion. because you make note of that being the second reaction, the fairly localized developed market, but more widespread emerging markets, i mean you have done some analysis there. ian: and i think is responding to a little bit of what neil says drives a straight into that discussion. it is unclear to us that it is straightforward about what the equity markets do. is that if you look at the dence of black wednesday, that rebound was very unexpected. and of course, because of the impact of currency in the markets, do the price of u.k. equities look relatively cheap? and people start to see some value in that? i think that that is one scenario that could happen. i think of the alternative scenario is very much around this notion of uncertainty. that we are thinking of the referendum as a single event. and of course, that is not the real issue. if we vote to leave, we have two to three years of uncertainty. and i think that uncertainty is likely to drag on the markets, more than anything else. and we are very likely to get into a sort of risk situation. because of that certainty, rather than necessarily anything else. anna: and indeed i keep seeing more and more people refer to the actual outcome, how close the result is to how uncertain things remain, even if there is a remain though. interesting conversation. becky both very much. neil williams, hermes. wester, thank you joining us very much. our next guest says he will be voting for britain to leave the eu on june 23. we will be asking edi tr uell, why? that is up, next. ♪ manus: it is 1:50 a.m. in new york. beautiful bright lights of the city that never sleeps. does stop about the saudi stock market, taking a step market to joining emerging market status. we monitor the positive evolution. let us get to tracy alloway in abreu dobby. the to have you with us. how soon could it come? well i think china has been grabbing the headlines today. if i can direct your attention to hear in the gulf region, we could see the msci talking about how is monitoring improvements to saudi arabia's stock market in terms of access. they said if the reforms are fully implement it i mid 2017, than the saudi stocks could potentially be included in those all-important benchmark emerging indices. now we know those are huge, huge deal in financial markets, something like $1.5 trillion of wealth under management. alone, they are gaining increased importance for saudi arabia particular, because the country is of course try to open up to more foreign investment. , so if is included in the indices than that could be a good thing for the market. twove to say, just about minutes before the set, it has been exactly one year since they opened up the foreign investors last year. we want to check in and 12 months and see if they're closer to msci inclusion. anna: tracy, thank you very much. tracy alloway in abu dhabi. let us move back to the european agenda, the u.k. chancellor will warn in a speech later today that leaving the eu could spark a fiscal crisis. george osborne will say the reduced trade would leave of 30 billion pound black hole that will have to be filled by increased taxes and spending cuts. our next guest has been a conservative market manager, for 30 years, operating on many industries.rvices he says he is pro-brexit and will vote to leave in order to vote pensions. edi really good to see you on the program. as a sort of big macro drop to this question, saying that to leave would create a 30 billion pound black hole of finances. that is not great for the u.k. economy is it? edi: it absolutely would not be . but george is ignoring the economy risk to the eu. my topic is pensions. the eu, for the last six years, has been dissolving the solvency. but what does it mean? it means the eu is going to 400 billion pound hole onto british pensions. why is that? british pensions are about two thirds of all assets in the eu. so if they are being told by the eu we have to improve the pension operation, they have done this to our insurance agency, which again is one of the leading insurance industries in the world. it costs billions of pounds to implement, tens of billions of pounds in terms of extra capital. anna: but whatever the issues around regulating the industry or regulations that are imposed by brussels, in your words no doubt, by brussels on the pension industry, a slower u.k. economy would not be good for pensions either. and if you look at all of the warnings from very prominent economists and various others, a slower economy as we get if we leave the eu. edi: i don't believe that. that was when the best things that happened to the british economy, six years after that, the economy grew at its mythically faster rate that it been growing for the five year previously. so basically leaving the euro, which is what it was for a first purposes, was a significant boost to the economy. manus: edi, where you are physically located is the heart of the city of london. and to leave europe, would reduce the ability of city americanons, institutions that are a great deal of money, and have a lot of people in the city of london that it would ren interrupt tha. reduce jobs. what you make of that particular argument? edi: i think some of the big banks have invested hundreds of millions of pounds complying with european directives. they have directed those barriers to entry, the barriers to challenge the make it very difficult for new entrants, or for foreign entrants to come to the eu. they have a logical business reasons for supporting the eu. but anybody actually interested in financial change, or indeed the free exchange of finance between different markets, would want to trade outside of those eu barriers. risks we havethe raised on countdown is about the current account deficit. one of our last guest said be careful, standard & poor's has we relyut our rating, on the kindness of strangers of the moment. what that get worse? edi: i would expect to see the fall oflling, but the the town would clearly change the balance of trde on current account. that is absolutely correct. . britain import a lot more than it exports from the eu. i would actually see dutch manufacturers, german manufacturers, and so on will be working very hard to get access to the eu market. anna: moore to the other parts of the world then the u.k. has a trade. only surplus and financial services and pharmaceuticals. in every other sector, the u.k. is in deficit with the eu. anna: we will have to leave it there. thanks for your thoughts. we would take a short break. when they come back, will the hawks fly the coop? special coverage at 6 p.m., u.k. time. ♪ ?c+sv manus: fed time is not charmed. shares being included in the benchmark indices. you want slumps to the lowest point in five years. asian shares have stopped the global selloff. and brexit battle. boris johnson argues that the u.k. should quit the eu. george osborne prepares to warn that leaving the block would spark a fiscal crisis. ♪ manus: good morning. you're welcome to "countdown." anna: i am anna edwards here in london. it is 7:00. let's get straight to the futures. what does it tell us about where we are going to open in around an hour. looks like we will have a balance in a european equity trading. a surprise if you look at what is happening in the asian session. we would not like to say joy line under our brexit but passed palls on the global selloff that we have seen in a number of risk assets around concerns about what the decision u.k. makes on the 23rd of june. manus: yes, it is all about the pound. -reprieve. mini we are down on the d10 currencies. it is all about volatility and how much premium are you prepared to pay to protect -- we are paying 9% over the right to buy the pound. that is something that history tells us. back when we were gripped by recession, recession could be back again. scottish referendum, that is when the william -- that is when the premium ratchet higher. -- rapture higher. -- i willian economy give you half of luxembourg. that is the size of betting against the british pound. this market might be expensive to hedge your risk in, but if you cannot get your hedge on in pounds, going out there. -- go on out there. anna? anna: we have seen investors seeking shelter in fixed income markets. let's put up the bond market yields right now. check out how low we got on those yields. we are back up in positive territory on the 10 year german. 0.01%. the 10 year u.s. treasury -- as we head toward the fed's interest rate decision. yieldpanese 10 year bond has been in basic territory for a while. here's haslinda i mean -- haslinda i mean. haslinda: -- leaving the eu could spark a fiscal crisis. as osborne will say reduced trade -- george osborne will say reduced trade -- and spending cuts. boris johnson has argued that the u.k. should quit the eu because of slow euros on growth and bureaucracy. >> if you look at the eu, it is a zone of the lowest growth. there got catastrophic unemployment -- they have got catastrophic unemployment. the whole eu project is a machine to generate excessive bureaucracy and red tape. double imceanwhile, oh says britain will vote to stay in the eu. multiplents come after -- the remain side, sending global stocks and the pound down. the fed is expected to keep its benchmark lending rate on hold today. that is the company statement from janet yellen will be scrutinized. futures indicate the odds of a move by july has tumbled below 15%, down from 53% at the start of this month. expectations have been dampened by weekend u.s. payrolls data and turbulence in global financial markets. hillary clinton has opened a double-digit lead on donald trump in a new poll by bloomberg politics. the survey has clinton leading to 9% to 37% among 750 likely voters. more than half of those polled say they could never vote for trump. out -- bill clinton has told bloomberg that the work in such of the clinton foundation will change if hillary clinton wins the election. the former president was talking to david westin at a clinton global initiative event. >> we will think clearly about it, and we will do the right thing. we'll try to fix -- to the american people. count thee to wait to chickens before they hatch. let's see that legislation unfold. haslinda: global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stores on the bloomberg at top . anna? manus? manus: a little bit of breaking news coming in. this is the u.k.-based software company that makes software for the oil and gas businesses. they have terminated takeover talks with schnider electrical. this is the second time they attempted to get their hands on it. that would have rounded off their business exposure to the oil and gas business. this is an announcement this morning. aveva terminates the deal with schnider. ingles. out to david he is standing by. good morning. seeing, this is the equity story, we are seeing a global downturn in the equity space. in asia, it seems we may end of after aoverall snapping four-day losing streak. japan closing up shop. look at shanghai, 1.7%. of course the big story, mci not including dish msci not including china -- msci not including china. that is your initial reaction. a 1% drop. that is a 3% rally to where we are at the moment. we do understand all of the chatter in the market that there might be intervention in the market. this is very difficult to confirm. with a swing like this, some .eople are talking about that that being said, when you look at the overall picture, it shows you we were book ended by short-term investments. perhapse called for investors selling into the rally. we'll see if that happens thursday, friday. the next 20 for hours, we got the fed and the boj. i want to bring up the bond yields. this is another story relatively connected to have a look at where the japanese 10 year is at the moment. 19 basis points. every from the five-year to the 40 year hitting record low yields. 42.5%.year text 42.5%.hed it does give you an indication despite the rally, a lot of people are busy -- are betting on this space. the global economy is not going to be a stable place. guys? anna: david ingles in hong kong. will beire philip green questioned by two house of congress committees about the collapse of vhs -- the retailer he sold for one pound last year. we get the u.k. unemployment figures for april. faces theichael goes audience questions at a bbc brexit special. market event on the calendar. fed rate decision followed by janet yellen's news conference. see follow for real-time coverage -- make sure to follow for real-time coverage. joining us now in the studio, stephen isaacs. -- marketse fed focused elsewhere. brexit. brexit, brexit, it has been a bad three or four days for cameron. terrorism both in orlando and the murder in france. interesting is murdoch is not a friend of the eu. he is a canny operator. would he have pitched in and less he thought he was going with the tide? this is not just a question of him actually putting his position clear, but rather his judgment. france, the strikes, the mess in the euros with the security issues early in the weekend, that doesn't help the sense of eu safety argument. england, the football, the famous story in the 1970's world cup finals that gordon banks who was england's hero, goalkeeper, was indisposed and that forced peter to take the post position. english -- england lost to germany in the finals and was knocked out the next day. -- and was knocked out. the next day, it was an election and it was a low turnout. cameron got his jersey on and hoping that england was going to -- anna: with all the blue on blue. manus, come in to the conversation. manus: good morning. i look at this chart in terms of sterling. we are trouncing anything in the referendum. if i am going to pay 9% to protect myself, what is my scenario next friday morning? i know it is a bit of finger-pointing in the sky. money is rushed in and out of the pound. how much more momentum is there on the event of a brexit next friday morning? stephen: in front of the referendum, your point is valid. we have quite a lot of discounting here. i would not be a fed agreeable with volatility next week could volatility levels are very elevated. if we do go out, i think we are looking at a lehman scenario. the market is actually -- when i am talking about long-term money -- i don't think they have taken proper insurance. they could've done -- and if you go back and look at some of the interviews, two or three weeks ago, people were pretty certain that this is a storm in a teacup . anna: do you think the u.k. leaving the eu could be as significant as a lehman moment? stephen: i do, for currencies. anna: markets overall would like liquidity. stephen: the short run, i think for the stock market is not quite as obvious that there will be a major collapse. the reason, there is no question that the central bank considers doing cost of easing and other measures to calm the situation. the bond yield is already tumbling. look how much lack of opportunity elsewhere is already holding insults pretty well. the real story is in currencies. where will cable be on the 24th or a week or two after? manus: that is exactly where i wanted to come in which is many people through the door talking about 135. you said it is a lehman like moment. that says lower than 130. here's treasuries, ok? this is u.k. treasury -- this is u.s. treasuries. where do i go if it is a lehman moment? where do 10 year government bonds go to? the money could go to treasuries. stephen: cable goes through 20 -- goes through 120. on longer-term basis, it may well be that the sustainable levels depend on a lot of negotiation between the various parties. we don't know what the world would look at -- look like after a brexit. will sense prevail? will the chairman of my chris persuademercedes-benz their various governments to see sense and negotiate some sort of free trade agreement with great britain? i think they will do. the anger which is already mobile in europe is also very -- already palpable in europe is -- anna: more the changes that are said to be taking place. that is next on countdown. ♪ anna: welcome back. it looks a little bit sunny out there. -- 5004 to 33 -- in the immediate impact on markets in terms of that eu referendum coming up on the 23rd of june. volkswagen -- >> volkswagen tries to -- that is according to people familiar with the matter. -- to cut costs and boost efficiency. [indiscernible] tests.emission it is said to be considering a possible review that may lead to the cell of motorcycles. thisy make announcement may make an announcement as early as tomorrow. the two largest clothing retailer has reported -- profit increased 6% in a three month through april. -- theenue came as they final round of bidding for yahoo! is said to have seen verizon, at&t and quicken loans joined by three private african groups. each of the [indiscernible] yahoo!'s court internet business. equities -- but verizon's bit his lower. that is your bloomberg business flash. anna? manus? manus: haslinda, thank you very much. let's stay with the developer it's at the volkswagen and its strategy reviews. let's talk to matt miller's -- to matt miller. this is about credibility. this company has a grip on the situation. matt: it is about incoming or -- ceo, with tears muller, matthias mueller and what he plans to do here. this is a massive company, half million employees. a company in which the german government owns a 20% stake. it really means a lot to the people of this country. we are talking about a country that's a company that has a ton of brands. volkswagen, audi, porsche, skoda, ducati. a number of truck brands. they really have a lot going on, so this group to not only -- so there scoped to not only selloff units, but to merge component makers in order to cut costs further. they have to cut -- they have to pay for this diesel scandal. estimates for the costs went up to 70 billion euros. they still have to settle with the u.s. government and pacified customers. it is going to cost billions of dollars. the question is what do they do going forward as far as their brand? they own a 10% stake in bayern munich. what do they do in order to cut costs? before general motors went bankrupt, they put all of their component makers into one unit, .elphi, which was bought off four did the same thing with their component makers, so they can be -- ford did the same thing with their component makers so that could be a possibility. -- that would only bring in one billion euros or so because they paid back in 2012. anna: we will leave matt. matt miller in berlin. let's continue with stephen isaacs. aboute talking earlier on what could happen if we saw a vote to leave the eu in terms of asset markets. you talked about the pound. how likely is the brexit? that is a question the market is still trying to work out the answer. stephen: we just don't know. the polls last year completely flustered. it is even more difficult for referendum, because you cannot have a control group. you cannot say that one particular graphic or one region or gender group has a particular profile, because it is such a divisive issue. we were having a discussion in make up this morning. anna: it is not something you say every morning. stephen: this is an issue that is confounding the polls. we will only know at about 5:00 on the 24th of june. my personal view is i think we will stay in. it is very difficult to say and i would not put any money on it. beus: where are you going to tuned in at 5:00 that morning? you're going to be turned into anna edwards and me. you will be nowhere else. tell me this, $26 billion worth of a deal with, microsoft and linked in, i look at this, it is all about that. it is about to ceos who did not impress me on the tv. dated impress you? stephen: it is all about the amounts of cash that are still slopping around on high-profile companies balance sheets. fingers burning to do something. we are willing to deal work in the long-term, who knows? the stock investors, the kind of ,ope theory or greater theory if you own a number of that have since struggled, you're going to be feeling pretty confident that somebody is going to turn their attention to you. anna: are you looking for more m&a? stephen: because the money is there. the market is not punishing. if microsoft share prices have been hammered on the back of this deal, that might have stopped other ceos around the tech world from looking over these type of business. tech ceos are getting away with these kind of deals. the burden of proof is not on them to actually make them work. mental stephen, one other event could we got the fed -- manus: stephen, one other event. we got the fed. we've got the bank of japan. stephen: i think we are on hold globally. the ecb and the bank of england recently up until the 20 for the june, the fed today -- there is enough conflicting data, retail sales were not too bad. i think generally speaking, the second quarter in the u.s. is shaping up to be better than the first and ok. i think yellen is going to be very patient. certainly in till the 24th of june. anna: after that, more hikes? stephen: it is impossible to say. the fed doesn't have a crystal ball. they are giving up trying to say well we know what is going to happen. this is the projection. they are like the rest of us, followed -- rest of us, fumbling around in the dark. anna: stephen, thank you very much. that is it for "countdown." we leave you with the "on the move." until 30 minutes to go european equity markets open up for wednesday's trading. you can see a bounce at the start of the european equity day. see you tomorrow. ♪ guy: welcome to on the move. we are counting you down to the european open. i am guy johnson alongside matt miller. he is over in germany. here is what we are watching. rattled by the polls, george osborne will warn that brexit will mean higher taxes unless governments -- and less government spending. we speak to john redwood. not this time. china's domestic shares are denied access to the benchmark for a third time. is this more symbolic than significant?