At 10 00 a. M. , us home sales for the month of april. 2 00 p. M. The fed releases the book ahead of jobs friday and 3 00 President Trump welcomes the Prime Minister of vietnam to the white house with trade on the agenda. Jonathan it has been a choppy session for sterling. A projection in the times shows Theresa Mays Conservative Party may miss winning a can a conservative party and face a Hung Parliament. Study based on a new model and showed her Party Falling short of the majority by 16 seats. Joining us from london is an morass thomas. Great to have you with us on the program. Break down the new study and the methodology and whether we should take this with a huge dose of salt. In britain has been in crisis. They have the brexit referendum in the last general election result. This study seeks to address some underlying problems in pulling. You can win a majority getting a majority of the popular vote so really elections are won and lost on 100 key constituencies. This poll tries to make a local approach. By hunting in on local areas, they have very small sample sizes in each constituency. There is room for error. Theyre are also saying this is not a prediction, it is a per direction. There is a range of seats and they also emphasize this is a snapshot today. This is what people are saying saying thatey are could change from now until polling day on june 28. Is clear isat nothing is clear. A month ago we had a 20point spread. What has changed in the last month fundamentally within the United Kingdom that is really has really skewed the polls this month . Emma i think the main thing has to be the proposal that may came out with on elderly care basically making old people pay for their care using save its savings until their assets are down to 100,000 pounds. That has been labeled a to mentor tax demented tax. Badly. S gone down very of course we had the Manchester Bombing and during the while the campaigning was suspended after the bombing in manchester, polls were not published and that kind of made it hard to see exactly what has led to the change in the polling. Jonathan i thought we kind of had faith in the polls again after the french election. Maybe not. Emma rossthomas, we really appreciate your time. Thank you for joining us. In the fx market, sterling initially rolled over in the asian part of the session and we snapped back a little bit almost 128anged on the day at point 34. Joining us to discuss is megan greene. And jordan rochester. How are you thinking about this now . The polls come out and things get choppy and sterling is all over the place. Jordan last week we published a piece called what if labor wins . The first reaction i had from a colleague is that is great, jordan, it is like talking to me about what happens if aliens land on the moon. The market was not pricing in the possibility of polls tightening. We discussed faith in the polls after the french elections of the main thing is the polls can move. We look at the previous election and the last two weeks and just shy of two weeks now, you can blair lost 90 in the polls and he was a favorite to win in 1997. There was enough of a percentage to worry theresa may and we are seeing switching from conservatives to labor. Is if labor was to even get a chance of winning, it is a coalition. The interesting thing for markets is they are actually prosingle market access. Stable leadership under theresa may is what the markets have become used to. The market might zone in on the fact this coalition is good for the pound. For me, i think the pound suffers in the selection because people are uncertain and we have seen in the past or an investor flows into the u. K. Tend to slow in the last few weeks into the election. Once we find out the result if it is tories or the labor coalition, it will be good for the pound. I would be vying for a dip around that time. Yourhan it dropped research dropped into my bloomberg email and i turned to a guest and they asked asked them about it and they laughed at me. It was the first piece of research in my inbox what does it mean for a Jeremy Corbyn win and they laughed at me and i go back to that because nobody was pricing in that scenario. You just said to some extent we are pricing in the tail risk. Are we really pricing the tail risk at 120 830 128. 37 . Jordan we are pricing in the very low probability of a tail risk. The weighted average of showsility probability an 80seat majority. They are still pointing to 90100 seat majority for theresa may. They are pricing maybe 10 probability about labor scenario. Alix the whole point of the snap election was to give theresa may a mandate going into brexit negotiations. Is that totally now off the table . The whole point was for her to increase her majority so that she would go in with a stronger hand. She might have a slightly weaker hand, but she is she has an incredibly we cant anyhow. What we should be looking at is what the e. U. Want third that will not change whether it is corbyn or theresa may. I think it is interesting maybe the u. K. Isnt looking for strong leadership, maybe they are looking for a character. If this is about character, you can see why Jeremy Corbyn has come ahead. Some of theed reason we see a move in the polls is because of what the tories have put forward. Labor put forward a manifesto that is economically bonkers. It does fundamentally offer something to something different. Alix what is the election actually about . Megan thats a great question and i think it depends on who you are asking. For a lot of people it is a vote on brexit and for a lot of people i think politics are pretty local. For a lot of people it is about it is about their benefits and the dementia tax. Alix jonathan, what does your mom think the election is about . Experiencingmom is some political fatigue. When they conducted these polls, there are people saying they will definitely vote when the vote comes around. How important will that actually be and those in the lower age bracket say they are going to vote and they also say they are going to vote labor. Are they going to show up next week . Jordan i think the youth vote is interesting. They tend to disappoint anyone who has big hopes. If you take the polling support by age, anybody under the age of 50 is more likely to vote labor. Conservatives control the upper end of the age bracket. In terms of what the election is being fought on, the u. K. Cause is very interesting on the manifestoes. Theresa may has a home run when it comes to brexit. Like megan talked about, its not really about brexit. Its about the method polity policies. While it may be economically bonkers, it is all the antiausterity and high spending on education really ranks highly so the Free Education for Higher Education and the university fees, that big promise from labor is one of the vote winners around the youth folks. David one of the things we learn about polls is forget the actual numbers, direction really counts. Donald trump was moving up in the polls while Hillary Clinton was moving down. The direction seems to be one direction over only and that is toward labor. It looks like they are really on the rise. What would it mean if they were even with the coalition to be able to try to implement their policies for labor . Megan i think it would mean increased spending. There would be renewed concerns about the u. K. s fiscal house and it would mean a softer brexit, which some people might be in favor of and that is why some are arguing that pound would rally at the back of this. David explain that. Why would it mean a softer brexit. If you are on the other side of the negotiation, why dont you toughen your stance because Jeremy Corbyn for the Prime Minister, you would really be a weak opponent. Jordan you have to remember the makeup of europe that tends to be the sentiment type cleaning type of government. It would be quite welcome if the e. U. Had someone who was going to negotiate. He wasnt talking about walking away if they get a bad deal. It is that no deal is better than a bad deal and it really does frustrate a the europeans because they know it is a bluff. It is very unlikely that we have that cliff edge. Deal possibly a better making opportunity for the e. U. When it comes to labor manifesto what is increasing as the word benefits. I am not talking about fiscal benefits on the handouts, i am talking about the benefits of the single market. At the same time, they talk about controls in neighboring labor and migration. Labor is not going to get majority. If they get the chance of being number 10, it will be the coalition of the s p and amy out to rein back labors assertion on work with then u. K. On that. Alix it can mean a stronger jonathan they could mean a stronger pound. If we wake up on june 9 with a Hung Parliament and the idea that may be Prime Minister may has to step down. Talk to me about the initial reaction in sterling that day. Jordan it is going to be lower because you dont know with certainty who is going to form the next coalition. Conservatives could even try the 1974 february election where you had a minority government in place until the next election in october. They could try to hold a ofority government sort an agreement with the smaller parties to get through the months afterward so the markets wont like that uncertainty. The whole point of sterling rallying is the stronger hand for briggs it for theresa may. Afterp, labour discussions in those rooms about what theyre going to give up and what theyre going to sacrifice to have a coalition, the market might get that good news. I think sterling will head lower on a Hung Parliament announcement and there will be opportunities to buy the dip. Core coming up, u. S. Inflation slowed to the weakest annual pace since 2015. Robert kaplan will join us on pathit means for the feds to normalization and what he thinks about unwinding the Balance Sheet. That is lot at 8 00 a. M. With tom keene. This is bloomberg. Alix got the growth but not the inflation. Euro area inflation slowing then forecasted, slowing to 1. 4 , the weakest level so far this year. Particularly the look at the core, the white line. Under 1 . Joining us from london is david powell who also has a new report on his Economic Outlook for the region. Its a big report they put together looking through inflation and what it means for the ecb. What was your biggest take away on inflation question mark is the slow grind lower or is this a blip . David the reading for may is really just a blip caused by transitory effects such as fuel prices and airfares. Underlying inflation is probably unchanged in may and looking ahead, which is what we try to do in the report over the next quarter and several quarters actually over the next two years, that underlying inflation is likely to accelerate slowly. You windthe same time, up having unemployment continuing to come down. 9. 3 , the lowest since 2009. Look at spain and germany, the rate entities to fall. What bind does that wind up placing the ecb in . David the decline in unemployment is a reflection of the rapid speed of growth we are seeing right now, which is strong and ecb is happy with that and neville probably allow that ecb to talk about tapering. The real problem they are facing is the disconnect between the rapid pace of growth and the rate of inflation. That growth is not translating into faster inflation at this stage, even though the decline in unemployment as you pointed out would normally lead to higher wage growth and therefore higher inflation. That is not happening. The importanty is word in that sentence. When you look at what mario draghi had to say, he really sent a message to the markets, we really arent so sure about this growth. We need to continue to support these markets. Our economist becoming concerned the models are out of date and Something Else is going on they dont fully understand . David the link between growth and the recovery which is symbolized by the decline and inflation in unemployment is not leading to higher wage growth which we would normally expect. In particular if you look at a country like germany, germany has had full employment for a long time in the rate of unemployment is what we call the nonaccelerating inflation rate of unemployment meaning that inflation should be getting seeing a bit of signs of life, but it is not. There is a disconnect even in the healthiest economy in the euro area at this stage. David megan, how do you sort of this . Why is there a disconnect . Megan i think its because you have countries in the larger globe. It is actually taking some upper pressure off wage growth and therefore off of inflation. It something we see in every developed market, not just the euro area. It is also plaguing us in the u. S. Is also a lot of capacity left across europe, the likes of the spain growth is good and output has been fine, but look at the Unemployment Rate. Isnt that the story in europe when you set it up against the United States . Jordan we got the unemployment gap closing in, so it what explain high inflation to come. We do believe you have enough inflation to encourage the ecb to tighten policy. We have to think to think of it more longterm that just the last few months. I remember the rise talking about the rise of robots and ai and how that diminishes the ability for labor cost to lead to inflation. I think whilst we talk about the euro gap closing, look at the u. K. All the way from 5 in unemployment and it hasnt really picked up, nor has wages. Europe may be thinking it is possible as well. Wages is the main point to think about this if this inflation will be sustained. Looking at the situation for the ecb, they just got bailed out and the data for next week sent shows the pressure is off. David risk is too high. Theres that not that much pressure that has been reduced because the next change that is likely to come next week would be the wording surrounding the risks to the Growth Outlook as being changed from a downside to balance and that probably still can be changed, it is a small step toward the exit and the improvement and growth does merit some change. That will probably be the discussion of the governing council faces next week. Alix investors look at this and say we are not going to believe you and we will expect rate hikes. Yesterday it was not only companies that would start investing in europe. Investingel under where as europe we have a high degree of certainty in the core component in europe that will lead to more investing. Fast as thegrow as u. S. If not faster this year. That that ceosy will start moving money in as investors are, too . Megan i dont really buy that. I think europe is experiencing the same thing the u. S. Is, this big bifurcation because between hard and soft data. If you look at production in the euro area, it has actually contracted. Schism,as there is that see investors making longterm investment plans or consumers making plans on the basis of better confidence or survey data. Alix what were they have to do to see that . See investors making longterm investment plans or consumers makingyou mentioned st other data like unemployment is holding up and some Area Services are doing well. What would they have to see to echo the movement we have seen an investor money . Megan i think you would have to see hard data coming in. Not just confidence about how things will be going in manufacturing and services, but you would have to see manufacturing expanding and services expanding. Until we see that, i dont think investors will pile in in the way a lot of people would like. Alix coldwater doused on there, those investors in europe. Thank you so much, megan greene and jordan rochester. Both of you are sticking with us. Coming up, Stephen Schork will oil andon the latest on opec. We will discuss what is next. This is bloomberg. Emma Deutsche Bank will pay 40 1 million to settle a Federal ReserveMoney Laundering investigation. The fed claims the banks u. S. Operations failed to maintain adequate protections against illicit trades. Regulators say the case involved billions of dollars and potentially suspicious transactions. An executive at uber has lost both his job and the potential 250 million payday. The Ride Hailing Company says they fired anthony because he failed to comply in an investigation from the alleged theft of the google self driving project where he used to work. According to an uber index it up executive, he forfeited his stock grant. The 15,000 Financial Advisors are and Morgan Stanley will get some help at cyborg. They will send reminders when a clients birthday is coming up. The thinking is humans with algorithmic assistants will be a better solution for wealthy clients. That is your Bloomberg Business flash. Alix thank you so much. U. S. Equity futures are relatively flat. In the u. K. , miners are getting hit. Part of the reason is iron or trading in china at 57 a ton. That is painful for some lower grade miners. The lobe of the great the higher prices you need. A few weeks ago and month ago we were talking about 80 a ton and now 57. On the upside in the premarket over 1 . Up by reports indicate the company could be trying to forward a sale of the generic unit that could bring in 2 billion. , they say 2de billion would be about 7 to 10 diluted earnings. Michael kors down in premarket. The retail slam continues. Disney earnings by three cents First Quarter calm sales lost a . 57 on theollars high end. Revenue down here on year 11 . It was just a horrible few months for retailers and now it is all about the trickledown. What about banks that have loans . What about the retail space . Jonathan i need a cyborg assistant to go shopping. On friday, lets get the payroll. A great lineup of guest reacting to the payroll report including mohamed elerian, rick rieder, and bill gross. From new york city counting you down to payrolls, you are watching bloomberg t