Later, johnnt and kerry tells us by china must address its Cyber Security issues. Anathan it is referendum right here in the u k. Law prevents them from reporting on the voting or discussing or analyzing the referendum while we will follow the action beginning at 5 00 eastern time. A quick look at the markets. It futures in the United States are positive. Dow futures are up. The s p is up wonderful percentage point. The european rally continues. Up for the board, it is one of 49 very briefly today. Is 114. Dollar treasury yields are a little but higher. Now lets go around the world and check in with our team for indepth coverage. Francine is in london. Susan is join us in it new york. London. Moore is in jonathan lets pick it up with the data out of europe. We have some disappointing news in france. Lets bring in francine. Sub 50 is not pretty. We sell a 48 in there. 50ncine anything below indicates contraction. The matter what indicator you look at whether its employment or gdp, they are not doing as well as expect. There has been a lot of structural reform. You have a weak president. His Approval Rating is 14 . He is perceived as a lameduck he cant get that velocity in the economy. Jonathan we actually had a 47. 47. 9 on manufacturing. Its a six consecutive drop. It doesnt look good for the future. We would say whats the easy be ecb going to do . They are doing a lot already. Francine there are labor laws and we have the finance minister trying to loosen it up. You go to france and talk to enterprises, they would love to hire more and spend more, i am not confident in the future of the eurozone or an europe, we ut spain and italy and germany on its own. France has some significant weakness and some soft data today. Betweents almost germany and france. They are going in Different Directions right now. Janet yellens testimony is behind her. She talked about tivoli to the Financial Service committee. I am a to mystic about the longer, we cannot rule out the possibility expressed by some prominent economists that the slope to the growth in recent years will continue into the future. Vulnerabilities in the Global Economy also remain. Inid for more, lets bring suzanne. Welcome back. This is not a new thing. She is concerned about product to meet. What did she emphasize yesterday . Suzanne what really counts is the impact on the outlook Going Forward. It exacerbates that great area. It puts the fed in a quandary. Youve got the International Develop went. Stronger dollar which has been an impediment and now weve got questionable strength of the economy, including but a private low productivity. To be more outspoken than the senate. Some of the republicans criticized her. What was a response . Suzanne what they alluded to was we need fiscal stimulus. We need to see that included in that will help to boost growth. David thanks very much. Of course the fed is still in focus around the world grid have another round of Bank Stress Test results this afternoon. We will bring in Michael Moore with the latest. Its great to have you with us. No one expected to fail. One bank is very much in focus. Michael bank of america has the biggest leverage. They have been a laggard in terms of capital return relative to jpmorgan or some of their peers. If they can make it through this cycle cleanly, they can catch up on that and boost the dividend and start reporting the shareholders who have been waiting a while for this. European typically, banks look at their u. S. Peers and say those stress tests are tough. He used to judge the test by whether someone failed. No is expected to fail this test. It is stressful enough. What is the commentary around that . Michael its considered very credible and stressful. The banks have been forced to court this capital the last five years. To payve not been able it out. Its just a matter of whether the fed will feel comfortable with the risks out there and letting them start to return some of the excess capital. Jamie dimon has a ton of excess capital. Regulators may be more cautious on that. Jonathan maybe the big problem is not the test at the Monetary Policy itself. Its great to have you with us. We are looking at the futures market. We are looking globally at equity. We are going to pick out some stocks with julie hyman. Julie back. Blackberry just came out. Last quarter. N there was no profit and no loss. Analysts were looking for a lost from the company. Revenue came in lower than estimated. Yearompany says for the the loss will be . 15. Efficient more operating model. We will keep track of those shares. Tesla, day to after acquiring solar city, is trading lower. Influential person is downgrading the stock. That opportunity may not adequately compensate investors. We dont think solar city is going to help them make that occurs. Were seeing those shares continue that down trajectory. The u. K. Grocer is coming up with growth. Thats the first time its had backtoback gains in five years. Shares are trading higher by 2 . David for an update on whats outside the news, we have the first word news. Emma case citizens are voting in a referendum on the membership in the european union. David cameron was among those casting ballots. While the polls are open. We will be following all the action as result come in across the day. Houseicans adjourned the 16 hours after the start of an unprecedented protest by democrats. They staged a sit in on the house floor demanding leaders schedule votes on gun control measures. John lewis is a veteran of protests going back to the civil rights movement. I have crossed a bridge not just one time but three times to make it from selma to montgomery. We have other bridges to cross. July, weome back in will start all over again. paul ryan it called nothing more than a publicity stunt. Claimingis a success. Hit u. S. Military installations in the pacific during the u. S. Has called in the yuan to take action. The unit has imposed sanctions on north korea. Global news 24 hours a day powered by 2600 journalists and more than 100 20 countries. This is bloomberg. Jonathan thank you very much. Thed it be one and done for Federal Reserve . Are taking rates are going nowhere. Up next , jim grant. David janet yellen came under fire from House Republicans for not doing enough yesterday to get the economy going. Jim grant also has a bone to pick with her, but its not because she has none enough. Why have they gone too far russian mark far . Jim they have moved from central banking into central planning. It is ubiquitous and i think its a net negative for enterprise and finance. When we see that manifest in the real economy . Jim instead of saying Interest Rates, they would think about price control the fed doesnt control Interest Rates. It administers any. Many. It creates a body english to various markets. Ofs in the business administering prices. It would be discovered in the marketplace. David if that were to happen in this country now, where one Interest Rates be . Jim the average Interest Rate is between 5 and 6 . That shows you how far we are from the average. I think they have missed their mark. I think the next move will be to reduce rates and not raise them. Youve asked where rates ought to be. I am in a very personal to tell you where they should be. Fed, i would say theyre going to do less. We would be less of a presence in the marketplace. Name thew by little life story of a baseball umpire, we would not watch. You dont want the umpire to be the spotlight. It shows you how far weve strayed from the true path jonathan a lot of people watching this agree with you. I dont want to offer prescriptions to the fed. They have not followed yours. I want to talk about the consequences that are likely to happen. , very few rate hikes for the rest of the year. What do you think the consequences of the policy the . Jim the primary consequence for investors is the fed has talked up and has moved up various investment markets. The program has been to balance portfolios and raise up prices of real estate and stocks and bonds. It has detached those values from the underlying earning capacity of the assets that ought to be a center piece of valuation. The economy is weakening. The industrial side is near recession. Growing think is a parting of the ways an asset values, the fed is very sensitive to asseluthat might gr artificial lift to asset values which brings us to more radical policy. The danger is we are increasing. Jonathan people in vain saying that for have been saying that for five years. Are we not there yet . Where valuations are already too high. Things are already dangerous. Jim i think asset values are high. The risk of Monetary Policy is radical policy begets more of the same. Nothing says they have to stop where they have stopped. It seems to me they will continue. They will talk about the abolition of currency and the currency. I think they are just getting started. David we are going to be talking about china next. Annual stress test will be released today. Will the banks be able to survive a severe economic turndown . Jonathan we turn our attention now to china. According to economist, the when iteficit there taking off budget spending into account seed 10 of gdp this year. Thats more than trip triple. An economist. In the state is stepping in. Good morning. What we talking about here is old School Balance sheet funding. Its meant to be 3 . Some of the private sector thinks its going to be a lot more than that. Toy are using policy banks to road and rail. Is more debt. Its off the Balance Sheet. 6. 5 it the economy at goes to some of the challenges of understanding the lack of transparency in the chinese economy. It illustrates the pressure the government is under to keep growth where it was. The private sector steps back in the step state steps in. You hope the state could do less. Haveuch capacity do they on a state Balance Sheet to pump things up and stimulate things even further russian mark is the conversation . The private sector doesnt want to spend money at all. They might say that is perfectly fine. The pace of the lip of debt in china is concerning analysts given the economic develop. Its still an emerging market. It will eventually act as a drag on growth. Ainese officials gave briefing and said it cant the leverage to quickly. Its a real balancing act they are trying to pull off. Jonathan thank you very much for joining us. I guess this tells you once again if you didnt know already to top the ignore the topline number and look at the story beneath it. Its always a lot more worrying than the topline number. David you see that story time time again. We will continue this conversation with jim. Ownhave expressed your concerns about the credit or debt side. Must ask about the Balance Sheet. If the company were growing at a rate, we would not be so bullish. China is a financial dystopia. It is immensely leveraged. Leverage is very dangerous. Gdp grew 7 . At 17 insets grew the first. They had 1 trillion of new debt. You might be the one tells us. The wealthcombustion management product area. Its quite worrying. David the world is clamoring for china to keep growing. What is the calamity you see . Jim the Bloomberg News department wrote this piece. 3. 6 trillion worth of these things, closed end funds. They have tripled in volume in the past three years. They are kind of a ponzi scheme. The principal method of refunding these things is to issue more of them. This is one of the great unexamined potential calamities in the world. We spend a lot of time analyzing trouble spots. This keeps more attention. Bad loansre have been made before and it has to be reconciled. They grew their way out of it. Is it possible for china to grow its way out of their problems . My answer. St temper no. Its not possible. David that is their theory, correct . Jim its twice as big as gdp and growing twice as fast. That is not a formula. David what would your prescription be for china . Jim capitalism and freedom. Dedicated to the suppression of free information and the poor reparation of debt. Its the wrong way forward. We need freedom and less debt. David that was jim grant. Thank you for being with us. Jonathan what we need versus what we will actually get. Coming up, are our banks healthy enough . Test. L discuss the stress . C sv viewers to our worldwide in london and new york, lets get a check on the markets. Futures are firmer in the United States. Five Straight Days of gains on the ftse 100 in london. Up another 1. 23 . It is a risk on rally. The eurodollar is pushing higher. A 114 handle earlier. Look at that. 1. 34 in the here and now. And the treasuries, you can see that we are up five basis points on the u. S. 10 year at 1. 73 . Lets put together some headlines happening in the world of business. Emma thank you. U. K. Citizens are today voting in a referendum on the countrys number ship of the european union. David cameron was among those casting ballots. The u. K. Is prevented from reporting while polls are open but we will be following all the action as the results come in across the day with special coverage. Angela merkel signaling that diplomacy and deterrence is needed in dealing with russia. She is pledging to boost spending and the military presence in eastern europe. They have promised to gradually increase spending. Casino billionaire went to las vegas to gamble on the nfl. He is calling on the city to come up with a bigger subsidy so he can get the Oakland Raiders to move. The new tax could raise 750 million for a stadium. A committee of executives and leaders will review the plan today. Global news, 24 hours a day. Powered by our 2400 journalists in more than 150 news bureaus around the world. Im emma chandra. Jonathan we will bring you a morning mustread. One of the top read stories on the bloomberg terminal. Bill gross. The latest investor to bet big on argentina. It emerges that one of the top 10 holdings in his janus global and constrained fund in may is argentinian bonds. And what interests me is that no other countrys Government Debt makes the cut. Not even exit code or brazil. So a big bet by bill gross. David what a difference a year makes. Argentina was an outcast in the Capital Market not long ago. It was perceived as not going anywhere fast. As you know, the team that he brought in with him, it is extraordinary what the turnaround is. Declined Janus Capital to give a comment. Incredible is that the president takes office and you see the Big Fund Managers come in. You are backing leadership. A fight to reform is one thing. You are always going to have a nationalism pulling you back just a little bit. Leadership, back there is a course to obstacle. We are finding that out in india. It reminds me of the vets on moody. David a great point. This is a honeymoon time right now but how long will it last . His the way that modi had honeymoon time. Now we turn back to the United States. Later today we hear from the fed on how banks did in the first round of this years stress tests. Hear a lot about how big banks do but what do they mean for the smaller, Regional Banks . Joining me now is Stephen Stein hour. Our. About how thislk looks to you, from your way to view as a Regional Bank as opposed to a Big Money Center bank. The chickfila with government regulation. How does that affect you . Stephen there is clearly more regulation and more overhead. Having said that there are a number of strong elements. Stress testshe even if it was not required by the government. The same not do it at level but it is fundamentally, a sound idea. Stress test results are one way to compare the facts to compare the banks in terms of their risk appetite. David we had Daniel Tarullo on this program recently and he addressed Regional Banks and the stress test. Take a look. Under 250s that are billion in assets and are very traditional banks not that they cant have a lot of International Activities or buttal market activities to that universe of banks, the direction in which we will move is to take them out of the qualitative side of the stress test and include them in the quantitative side. David said he was saying that there is relief coming for you out of the qualitative as opposed to the quantitative. How much of a burden has the qualitative part of the stress tests been for you . Stephen it is about 15,000 pages. David 15,000 pages . Stephen reducing the qualitative or eliminating the qualitative will mean a meaningful adjustment. A much simply run for more model and to end perspective. It will reduce quite a bit of the burden. But around the management of capital, it comes out of the capital planning. David how much of the relief is pure cost savings . The relief isf freeing you up to do activities you otherwise might not be able to do . Stephen much more about the latter. I will forward and Risk Oversight Committee work on these projects and provide an enormous amount of time and investment of significant energy. And reallocating that back to business will only help us. David so you just are completing up to 100 billion level. To what extent are you compelled by things like regulatory burdens to ramp up in size and scope, in order to distribute the regulation across larger businesses . Stephen the more burden we get in terms of overhead there is supply a scale to the business, increasingly so, which is unfortunate because i think there are wellrun Community Banks across america that are feeling much more pressure than those of us of some size who can absorb these expenses.