Welcome to the pulse. I am mark barton. Francine is at covering london city week. She will be hosting a panel on the economy with vito constantia. And Charles Evans. You can see that here live on bloomberg just after 10 00 a. M. Lets check in on the markets after two weeks of decline, stocks of open higher helped in part by the stronger oil price. Up by onelondon are third of 1 . The pound is lower against the dollar. Growth forecast will be published on thursday as with the latest u. K. InterestRate Decision. Is up by 0. 9 at 45. 78. Lets hit the latest bloomberg first word news. Is here. Ic crude prices are on the rise after wildfires in canada knocked out more than 1 million a day of production. The company iss Biggest Energy and have declared force majeure on supplies from the region. Thats a provision protecting companies from contracts a go unfulfilled for reasons beyond their control. German factory orders picked up in march a strong local trade helped upset a low end domestic demand. Orders rose 1. 9 . The reading which is typically volatile compares with the median estimate with an increase of 0. 6 . China has reported in modest stabilization exports as well as the first backtoback gain in foreign reserves in two years. The Worlds Largest currency board rose 70 to three point two 2 trillion in april. The data suggest that the economy is studying amid slowing growth. Chinas meet leading communist Party Mouthpiece has a knowledge the risks associate with the risk of debt. Miss at high leverages the original sin that leads to risk in the Foreign Exchange market, stocks, bonds, real estate and bank credit. The article that started on page one of the paper seven nation needed to face up to its nonperforming loans. s mostf the world influential Bond Investors and the head of the new york fed are signaling that the u. S. Central bank is on course to raise Interest Rates even after poor interestrate job data poor april job data. Despite the u. S. Only adding 160,000 jobs last month short of the 200,000 that have been projected. Global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. You can find more stories on that bloomberg at top. Saudi shakeup. The nation has a new oil minister policy and market share is likely to stay the same. The newly appointed khaled a close ally of the deputy crown prince. Tonn kerry he has vowed maintain policy. How meaningful is the change . Hes maintaining oil policy as it is. Its a shift in personnel but not an policy. You have to see how that the saudis react to Global Market conditions as we move forward from today. Mark how does this fit into the greater overhaul of saudi arabia . It does significantly. To us twice spoken and has indicated he would like to wean the country from oil and is taking steps to do that. He has discussed oil policy, he has a new cabinet in place and this is all moving forward and his idea of where it will be envision 20 30. What we need see now is how they address the Economic Issues confronting the country. Its not going to be a straightforward transition, is it . No. The transition and personnel is the easy part. Its the addressing of the slower Economic Growth to get saudis working. Its one thing to have people in new positions and energized ministries but they still have to address the fundamental challenges that the economy faces with low oil prices. As i mentioned earlier the slowing Economic Growth that has accompanied that. Thank you for joining us. Lets bring in the Bloomberg News him a managing editor for energy and commodities. Hes been part of the wallpaper for two decades. Its a huge change for everyone involved in opec. Hes really been a fixture of the global oil scene. The man is 80 years old but i think its still quite a shock for a lot of people. But does the new minister really change policy is glenn was saying, probably not . There is a lot of continuity here. Ali alnaimi has been for 30 years and has risen to the top and taken his next step to oil minister. I dont think there is a massive but a new person always to jews its style and maybe eventually substance. I think hes obviously close to the deputy crown prince and will reflect those imperatives. Does that mean hell take a tougher line with his opec colleagues some say he was close to a deal with russia in doha hist the prince was image was waiting in the background and that could have swayed it. Thats right. Theres no about that his intervention was one of the reasons why the deal didnt happen. But dont forget that the architect of this whole oil policy that saudi arabia has of maximizing the market share he was the guy who put it into place in november, 2014. I think continuity is the watchword here. Mark what does it mean for the oil price . We are at mid 40s now. The oil price now is don it by supply constraints in the market. These fires and canada have taken 1 million per day out of the north American Market which is a drop large amount driving Prices Higher and thats to existing method nigeria whether blowing up pipelines again with the economic collapse is taking its toll on production. Thats what interesting that we are seeing supply constraints elsewhere thats one reason to suspect that saudi arabia production will continue to creep up and will set a new record. Iraq and in the meantime, just keeps pumping and tries to reach its targets . East producers across the board are putting more oil into the market. Irans Oil Production is coming back fat much faster than many predicted and saudi arabia we expect to see a new record above 10 Million Barrels per day the summer. The middle east producers are really winning from this. Does that mean a freeze is not going to happen . That isnt a need for a freeze right now. Is there a level . At what point do shale producers start stop returning. Thats can be one of the most interesting things to watch. Its of analysts would say above 50 that you see some of the shale barrels come into the market but this is untested territory. We never been in a boom and Shell Production before so it will be of a vital interest analyst to see how quickly those barrels come back. Will kennedy in london. Stay with the pulse, coming up plenty. Including carney, lagarde, cameron, and johnson. We will look at the big hitters speaking out this week on the junet debate, plus is line. The little charts of the rate rise next month. Bill gross disagrees. We will ask who is right and where next for the Global Financial services industry. Francine lacqua is live at the start of londons conference. Mark that skip the Bloomberg Business flash. Here is nejra cehic. Toal has agreed to buy expand its clean energy operation. The offer represents a 40 premium. Nickel and lithium batteries for Industries Including transportation and civil and military electronics. The owner of the worlds biggest shipping line says negative Interest Rates are hurting the industry by delaying a badly consolidation. F the ceo says that the Monetary Policy environment means consolidation to be much slower because its easy for banks to keep week shipping companies above water. Its the latest example how they are distorting markets and potentially slowing growth. Jaguar land rover has reported an 11 decline in sales. The jaguar brand saw sales jump almost 50 on demand for its new sedan. The airbag recall may increase to 118. 5 million worldwide. Thats after last weeks order by u. S. Regulators compounded the biggest safety crisis in the history of the auto industry. The expansions may result in 6. 2 billion of additional cost. Disney new shanghai theme park is proving popular even before its official opening. They held a trial run ahead of the launch and pulled and tens of thousands of fans. Disney is hoping the 55 billiondollar resort hope it cap into chinas glowing middleclass which is the Bloomberg Business class. Lets talk brexit. Mr. David cameron has evoked memories of wartime leaders winston churchill. In a speech and at persuading britains to vote against leaving the union. He said the u. K. Is more secure and prosperous in the eu. The United Kingdom is stronger, safer and better off by remaining a member of the european union. Better off, certainly. Were part of a Single Market of 500 Million People which britain helped to create. Our goods and services which account for 80 of our economy can trade freely by right. Mark lets welcome our guest in fixed incomethe investor of j. P. Morgan Asset Management, nicholas, thank you for joining us today. Untilhan two months to go the referendum. The early market jitters have passed but if you look at the chart over my shoulder its neck and neck. 4140 when you look at that name. Andundecideds could sway it accountability pushes it in favor of the remain cap but market concerns have eased from those heightened levels in mid february. I think they have. Eight weeks to go or something until the vote. A lot could happen then and there will be a lot more debate. The market will be a lot more excited as we get closer to the actual event. Mark how does that affect Bond Investors. Initially we saw flows out of that now we saw flows back into that. How are the next few months going to pan out . There will be a huge beneficiary whatever. Reality is that what Bond Investors do is take a step back. You look at the growth conditions in the inflation conditions and they are absent. This isnt a brexit comment but the u. K. Is slowing when you look in virtually every economic indicator. Thats a good environment. Brexit, the bank of england is down, not up. You really believe that question my Global Conditions. See with have in this year. We had a huge easing from the bank of japan. Huge easing from the ecb. Surprise cut from the reserve bank must really a week ago. So the u. K. Starts a look a little like the odd man out. So we shouldnt put too much related on referendum slowdown concerns. There are other concerns which you say could and should select sway the bank of england. Even if we do stay in the eu. The reality is that the u. K. Is not an economic island. Its part of the Global Economy. When you look at what is happening to the Global Economy, it is slowing. Ever other Central Banks recognize that and they have eased policy very aggressively this year and the reality is that there is probably more to go. Are you just talking a Interest Rate cuts or is it a reappearance of unconventional measures. Is probably all those things. Theres a limit probably to how low Interest Rates can go how country does cover both central bankers are reducing Interest Rates for tops and never doubt the creativity of central bankers. The reality is it could be more qe or indeed other things. This week is the cause of the Inflation Report. This week the central bank announced its latest Rate Decision. Some are saying we could see one or two votes or as you say a cut. Whats important is how mark carney gets around this referendum. Some say hes been too political, he says he hasnt. How is he going to try to debate the referendum. He will certainly be quizzed about it when it is such an uncertainty. The reality is that the bank of england publish that Inflation Report. Its a tremendous document and thats the economic rationale for whatever Rate Decision they made. Underpins the forecast going forward. Maybe the bank are lucky that may is an Inflation Report month and that will provide the economic evidence for the decision that they make. Nicholas staying with us. Up next, dont count out the fed. Nings from the worlds worlds most influential bond traders fall on deaf ears as u. S. Rate hike expectations remain muted. Should investors listen . Im not so sure that june is out. , weeard from stan fisher heard from williams in San Francisco and they all seem to get it. They also to know that at some point they should be raising Interest Rates in order to preserve a semblance of profitability for savers and the like. The most influential Bond Investors as well as the head of the new york fed are signaling the u. S. Central bank in on calls to raise rates but markets are not listening. Despite those warnings from bill gross, Mohamed Elerian and mark easel and william dudley. Markets are pricing in a single fed rate hike this year and not until december. With me is the international chief Investment Officer at j. P. Morgan Asset Management. 8 is june. 22 is july them a 35 in september. 37 november. 52 is when we go above 50 . Are you more on the fed side or the market side . Im with the market on this but i like the summers and i think theyre high in terms of what their pricing in for a rate hike. If you think with the fed want to do every meeting has to be a live meeting. Has to be too two way. They done the right thing. When you look at the trajectory of the Economic Data releases in the u. S. Mark the economy has been slowing for three quarters. They seem eager like bill gross. He verbalizes it well. They seem eager to get further away from zero. They do but thats only Certain Committee members. If a Big Committee there. Not all numbers are equal there. So it comes back to the data releases. Think of the justification for raising rates when an employment growth is lackluster. When Economic Growth is lackluster. Its not an obvious thing to do. Wage growth picked up. In fridays jobs report. Thing in the right direction on an annual basis. Its going in the right direction but it is still woefully low. If you think about where we are on the Economic Cycle its closer to the end than the start. Wage growth should be significantly starting stronger than now. Mark and yields at the beginning of the year forecast to be significantly higher than where they are now but on the 10 year we are at 1. 77 where we finish the year. What is her u. S. Bond strategy right now. 10 year treasurys finish the year in and run 1. 5 . Part of that is the back trough of we growth in week inflation. The other is that international backdrop. Take every Government Bond in the world, rank them from high yield to your oleic low yield and 85 yield less than a 10 year treasury. Internationally they look like a steel. And high yield is a message or banging as well on the european basis and in the u. S. As well for the highyield looks great. In the u. S. Part, he probably get rid of the energy. Thats really a coal on the oil next but when you look energy its pricing in innings aggressively hire default rate. The real standout is in europe. When you look in europe, an economy growing ahead of the u. S. , they have highyield bond around 5 with good value. Save your viewpoint for european peripherals because we will talk about greece in the next section. To the fed you are suggesting doesnt move. The bank of england youre suggesting could cut. The ecb carries on, the boj carries on. Are we looking at a recession . In the next year or two. Looking at two things. I signaling the body just outlined that in a convincing way. The second is yes. If you look at economist expectations of a recession in an run 20 now. As you look forward that probability will rise. Lets face it, were closer to the end of this Economic Cycle than the beginning. Will stay there. Will come back to you. J. P. Morgan Asset Management team. Up next, the grace and good of the city with francine lacqua. The future of global banking. [ soft music ] e. T. Phone home. When you find something you love, you can never get enough of it. Change the way you experience tv with xfinity x1. Mark welcome to the pulse. Im mark barton. Lets get the bloomberg first word news. Heres nejra cehic. Nejra saudi arabias new oil minister says the kingdom will probably keep producing crude at near record levels as the Worlds Largest exporter sticks with a policy of defending market share. The chairman of the state producer saudi aramco took over from longstanding oil minister this weekend. Crude prices on the rise after wildfires in canadas oilsands region knocked out more than a Million Barrels a day in production. The countrys Biggest Energy companies have declared force majeure on supplies from the region. That protects companies from liability of contracts that go unfulfilled. German factory orders picked up in march, as strong global trade in domestict a lull demand. Orders rose 1. 9 from the prior month. The reading which is typically volatile compares with an estimate of 0. 6 in a bloomberg survey. China has reported a modest