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tv   On the Move  Bloomberg  June 15, 2016 2:30am-4:01am EDT

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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?
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will yellen hide behind the brexit? is july still a like -- still a likelihood? -- u.k. time. at less than half our way. a couple of things happening. we are going to see a bounce in europe -- in european equities. -- the u.s. markets are called into negative territory. we will see if that changes a little bit later on. at the moment, it doesn't seem we are going to see a higher open in europe and a lower open in the united states. matt. matt: take a look at what is going on in china, i look at the nikkei. it rallied up from losses overnight. the shanghai composite really turning around. big down index because of the
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msci, and yet it comes back at the end of the session. here's the 10 year bond looking fairly positive. it had been negative five 1000th of the percent. it looks like we are back to a positive yield. i wonder how long that will last . i guess it depends on the brexit polling numbers that come out. you see the pound, a little bit of a gain. being led around by the nose by polls. to the pound that one for the 1.71. 141.71.s -- brent crude. oil on a big losing streak. four down days in a row after we got more rigs, more supply in the u.s.. 49.12 for brent. let's get to the bloomberg first word news with haslinda amin. mscinda: china's --
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benchmark indexes for the third time. $1.5 trillion in assets says the country's policy makers need to make more improvements. the decision [indiscernible] to raise the profile of the markets and make the yuan into an international currency. the fed is expected to keep the landmark bench -- the benchmark rate on hold today. scrutinized will be on close for the likely timing of the next increase. features indicate a move have belowoad -- have tumbled 50%. -- below 15%. hillary clinton has opened a double-digit lead over her rival, donald trump. a new poll finds clinton leading
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49% to 27%. more than half of those polled say they could never vote for trump. chop outpolled clinton when it came to combating terror, both in the u.s. and abroad. global news, 24 hours a day, powered by 2400 journalists and over 150 news bureaus around the world. you can find more stories on the bloomberg at top . guy: thank you very much. george osborne will warn of a brexit text told saying induced just sing reduced investment from the you would leave a black hole in the british economy. his speech will come after five polls in 24 hours showing the leave vote leading. having they momentum. let's talk to our guest, david stubbs. good morning. matt winkler has written a nice
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view piece for bloomberg in which he looks at the polling and he looks at the market. he is saying will the u.k. vote against europe? markets vote no. should we believe the markets? david: certainly best case remains. thinking 65% to 45%. landslide.s a in a referendum, that is a landslide. medical it will be interesting to see what will be the indication of the remain campaign and what is close enough for him to still be questioned over this issue. for there to be massive risks in the conservative party. i don't know the exact number. i know when they started out they were hoping to get 60% and then it would be victory in terms of referendum, especially
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in this country. we have had some of the undecideds move toward brexit. that is what some of the polls have shown. there is a check of people that have not made up their mind -- there is a chunk of people that have not made up their mind. vote undecideds will remain in the last moment. matt: i have a chart of it here and we have $35 billion that the 35nd will drop to one dollar -- $1.35 or less. falling to a low that we have not seen since the 80's, how far do you think we are going to get in the pound before the referendum vote? what do you think this amount of bets on such a low level means? david: obviously there are people out there playing the embedded leverage to hedge the risk over brexit and make a good
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return if it turns out. i would not be surprised if the pound trades under $1.40 as we get right up to the vote itself. we have seen a lot of that weakness being priced in. what has been interesting as the polls have switched and we get very close to the referendum, is -- degree to which this is that policymakers are focused on us. even if it is not as major an issue as say a u.s. recession or chinese hard landing. the things we were worried about a few months ago. meantime, itor the is putting policymakers on hold it we've seen the effect and a modest slide to safety and government bond yields globally. guy: a previous guest described it as a layman like a moment. is it? david: it is a swiss franc moment.
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janeway 15th last year was a huge moment in global fx. move, it is scale possible. what would that do to the economy, saying mr. jordan. has been dealing with this for quite a while. still, is the british economy going to be up to deal with like that? guy: in some ways it is easier because it is going the other direction. currency. a weaker david: it will be a weaker currency. this will be destabilizing for a range of people. i don't think it is a big enough event to cause a major systemic issue. the bank of england is aware and we'll hear about the places -- we will hear about the precautions they are put into place.
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this is going to be a major move if -- and a currency, if we do vote to leave. leave a there is a vote, don't you think that will be massive with rippling effects? look at, we have already got the yen at 106 four dollar. if there is a leave vote, don't you think that would pile in down under 100 right away? david: i don't know if the yen would go below 100. you will see some pretty heavy turmoil on global markets on the day and the days after the brexit event. look, isn't this really systemic? it is politically in a medium-term for europe and the institutional and -- framework that we have been operating for decades. it is not the same as someone leaving the eurozone because it is not read the nominating assets.
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really relevant in the region of asia? i am not sure if it is irrelevant on the degree. it would be a big shock in this world where growth has been tepid. where there is no shortage of things to worry about. it would be a shock to a fragile system. it would come to keep the monetary policy of other countries in the short-term. is enough to keep the fed away from doing something further in july. guy: david, stay with us. entry., denied china fails to get into the club after the msci says it markets needs to be more hospitable. we are going to get the reaction from hong kong next. ♪
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guy: -- matt: here is a live shot of the brandenburg gate in berlin. i'm matt miller. we saw japanese markets and asian equity markets turned around overnight and arise. european futures rising as well. here are your dax futures up 1%. let's get to the merck business flash with husband i mean. will sellvolkswagen assets as it tries to navigate its way out of the emissions scandal.
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according to people familiar with the matter. the company is planning to combine to cut costs and boost efficiency good vw faces billions of dollars in fines. .- efficiency vw faces billions of dollars in fines. vw may make an announcement as early as tomorrow. the largest clothing retailer has reported first-quarter profits that beat estimates. it increased to 705 million euros in april. -- fromted revenue came the zara store. china's asset management are preparing for a crackdown as a part of a move to target shadow banking. mutual funds will need to adjust leverage ratios for investing inequities, fixed income and nonstandardized products.
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units of public mutual funds will need to hold $300 million in net capital for every $1 billion under management -- the final round of bidding for yahoo! is said to have seen horizon -- verizon, at&t -- joined by three private equity groups. -- somethe six suitors of its intellectual property and assets -- poverty in assets. -- property in assets. that is your bloomberg business flash. matt. matt: haslinda, thank you very much. china's stocks have been denied entry into the msci world index for a third time. surprising analysts at goldman sachs and hsbc. the one weakens beyond a five-year low -- the yuan weakens beyond a five-year low.
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sam, this is a blow to china's ambitions. what has been the reaction? sam: hi matt. the chinese government says they agree with the decision. you can take that as you will. there has been -- there were some people who thought they would get included this year. we have been hearing the sentiment of people saying that they did not think it was going to happen. matt: so what are we seeing in markets? is this a short covering? sam: there has been talk that the government is buying up to make sure the market rises today. there's nothing official. willan make of it what you . the fact is also that the market had been falling for a few days before today, so some of it could be people flying up again.
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matt: sam, we will leave it there. thank you for joining us. david stubbs, it will market ,trategist at just david stubbs -- david: at the moment, yes. it is going to be a big deal when they fully include it. the market is bigger than south korea, taiwan, india and south africa combined. it is a very large market. it surprised if you people. there are major issues. ,ook at the volatility, data suspended from trading in a frequency and duration does not present in other markets. it doesn't matter whether they get included now or a year from now, probably not. in inclusion is going to be phased in. it is not like there whenever full way in from day one.
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if you look at the chinese shares which are in the msci, they have a little bit over 20% already. about getting the onshore stuff together. china is moving that way. we have seen some of the tensions and what is fascinating about china is their long-term goals -- we have seen a combination of for reform but also stimulating the same will parts of the economy as last time. for the moment, it is not the end of the world but the chinese are going to have to wait. now? what would you do expected to come in at any point , do you start loading up on the stocks that you think are going to go in? do you wait? do you average in? how do you invest?
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david: when i look in market, a look at a market that worries me. the way it trades. the valuation of the smaller cap onshore is fairly elevated to me . i am happy to get my exposure to chinese equities through a broader msci emerging-market. i am happy for my fund manager to own some namesake in the asian market that they think are very compelling that they trust the numbers on in the books, that they think are leverage to the long-term growth and consumption of volatility that we are going to see from this economy which is going to be a story for the next couple of decades. i am not falling over myself to gain exposure to the domestic market. with potentially compelling opportunities opening up in similar parts of the emerging markets, i think it is a risky to target one country or another in emerging markets. there are a plethora of options out there.
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guy: how do you judge risk in china? we see what is happening with equities. we went through a weird phase where commodities were all over the place. the currency with the dollar doing what it is doing, beginning to creep up at fairly elevated levels. isn't that -- if you're looking for an idea of what is going on, is that the best place to look? david: the market has become more comfortable with chinese policy. we've got the message that they are managing into a basket. the dollar is not the be-all and end-all of the world. you look at the data of claims for chinese institutions abroad, it is clear that a huge amount of foreign currency debt repayment when on. that was a big part of the currency outflows. lot.has slowed down a you look at the current account
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surplus is very large. they can have an outflow and it is balanced by the money coming in on the current account. some of the reasons we don't think the china sick currency -- the chinese currency is going to be under a lot of pressure, obviously it is the slowdown in manufacturing side. it is going to be hard for them to maintain that topline growth. we think the period of maximum stress for the current time is behind us. matt: it is not that much of a feature right now. david stubbs is going to stay with us. up next, we are going to look at some of the corporate movers in today's trading. ♪
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guy: it is 7:54 in london. we are minutes away from the start of european trading. let's look at the stocks we need to be focusing on. caroline: and deals that seemed to be dead before the begun. aviva, 8% on the open. .his is the u.k. software maker schneider electric analyzing the company thing they want to do a reverse takeover. they have two days of talks. this is why we saw a spike in stocks. we could see a slump.
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agomber, it was six months that the initial first time they tried to do this deal fell away. with the stock price reaction then. desk will be at a see a slump at -- will we see a slump at aveva? this is about the brexit which we have been talking about all day. barclays has a significant warner -- warning to 20% slump in reservations this year. reservations down 20% because of the eu referendum. good thereis growing is a real dumping this year because of the brexit affect. , it an eye on this stock could rise as numbers beat the first quarter. back to you, guy. guy: thank you very much indeed very caroline hyde on the stocks
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to watch. up next, we have the market opened. european equities on this sunny day in london. it is going to be sunny today. london market up by .5%. ♪
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guy: good morning and welcome. you are watching "on the move." i am alongside matt miller, in berlin. he has your morning brief. matt: rattled by the polls. chancellor george osborne today will want the brexit will mean higher taxes and less government spending. we speak to the "leave" campaign's john redwood. china's domestic shares are denied access to the msci benchmark again. plus, will yellen hide behind the brexit? and is july at least, still a
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live fed meeting. guy: matt, let's talk about where we think be the european markets are going to go. we think we will see a positive open, this is what the futures are showing us. let's look at the ftse 100, which is just opening up right now. it looks like we are probably going to see a slight bounce at the open. here we go. remember, we had the 6000 level yesterday. we will see how the day progresses, but maybe we will start to retest that level. nevertheless u.k. assets have been all over the place. it is interesting that the ftse 100 has been below the 6000 level. we are up 40 points of the moment, trading at 5960.
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let me bring up the rest of the european markets. we will have to wait for the dax to open. full is up a as expected, the euro stocks are trading up around 1% as well. those are the stock market moves. let's see what stocks are moving the market. caroline: a sea of green, everything will industry group is on the rise this morning on the stoxx 600. dig into the biggest movers today. 3/4 of als are also up 1%. every single industry group is trading higher after five days of losses on the stoxx 600. $2 trillion worth has been wiped out from the entire global stock market valuation over the past week, but today, a sign of relief heading into the fed
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meeting. 77% of people think the fed will hold fire, but what will janet yellen discuss in terms of the overall picture of the economy, both internally and externally? let's look at how yields are moving. they are coming off of those record lows. lessrisk evident today and risk aversion. the 10 year yields are just a little bit higher at the moment. but interestingly, there was not that sort of flight away from safety in japan. with all yields come down in japan. in fact, every single benchmark in japan is trading a record low yields -- we are talking about your five year, 10 year, 30 year. they are all in negative yield that the moment. let's have a look at the stock markets for you. i want to look the individual stocks.
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profit is rising higher than expected, up 6%. sales rise 17%. i think i am blaming matt miller here. the $60 jackets were flying off the shelves, and i'm sure he helped. berkeley group is up .3%. they say uncertainty is hitting current transaction levels because of the eu referendum. group, unchanged, but this is likely to fall on the open after schneider electric's talks fall on the open after just two days. matt? matt: obviously, i am more likely to purchase a ducati than a pink jacket at zara. but i've be able to buy the entire brand soon. full flag and will hold -- 2025wagen will hold its
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investment meeting. they will tell investors exactly what they are going to do to cut costs. what we know from people familiar so far is that the new ceo is planning to possibly combine all of the component makers from his 12 different brands into one company to cut costs. this is something, guy, we have seen general motors do. ford did it, but maybe more importantly, at least to me, the new ceo could tell us about the brands he could sell. ducati is one of those. or you could see a spin off of a luxury brand, like audi or porsche. i did not realize until recently that volkswagen owns a 10% stake in bayer munich. guy: presumably, matt, the bikes
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make more sense. less synergy that you could derive as a result of bringing together the subcomponent layer. my question is, who would buy it? matt: well i mean, it has been on by private equity in the past. investment industrial owened it. and it is not a lot of money. volkswagen payed 820 million euros for it. but you're right. the synergy does not seem to be there. the ceo has said will liken and ducati -- the ceo has said and ducatilavolkswagen do work together. i will ask him who he is talking to about a purchase. guy: which ducati bike, i am just curious?
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there could be a very different experience. matt: it will be a multi-strada. i'm actually going to drive to london on friday. i am going to join you for a week and then i will drive down to bologna from london. guy: a european road trip, it sounds nice. let's bring david stubbs into the conversation. we will talk to him about bikes, but we will talk to him about what is happening with the european car space. it has gone quiet on the investment front. story over for you, when you talk to investors? are we over it yet? david: we are potentially over it with this one company getting a full idea of a scale, but you still have investors 30 worried about, what happens if there is a drop in the car industry? we have seen other people have to fess up. this is the danger of running a concentrated portfolio. you have the individual stock
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risk. this is a highly competitive market globally. volkswagenif struggled, who else was? this is a very sophisticated german manufacturing group. the survey looks ok. the first quarter was the best we have seen in a while. that should drive consumption at home. of course, the big question for some of these companies is, the patient demand abroad, especially in places like china. we know that china is trending towards euro household spending. things like cars are symbols and emerging-market currencies. we see no reason why this can't be a fairly good time for car volumes across the board. jump intot want to the conversation and update you on one big share move we have
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seen. plc, not toa group be confused with all the other aveva groups out there. schneider has been attempting to acquire a majority stake in the business. a couple of days ago the talks were potentially sort of looking like they could be back on and negotiations were potentially happening. that we have learned this morning they ended rather abruptly and that conversation is not going on. by share price is now down group plc.n aveva let's talk about the global mma story more broadly. when you think about how the story develops from here, what do you think investors should make up a barely a ripple being caused by microsoft going out there and purchasing linkedin.
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other areas where some of these deals don't make sense? or have we gotten to that point yet? david: in a very rapidly changing tech sector, it makes sense for microsoft to purchase things which maintain relevance course, it does not have the greatest record of purchasing things. that was a hardware unit. this is obviously, a key link in the global, social media euro-chain. more generally, especially if you are looking in europe, what to ecb is doing is going fuel significant issuance. that should fuel mma in europe. you do have the ability down to issue -- the volume of this debt can be much greater. the mma has lagged in the united states.
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with the potentially, this could be a story for europe going forward. a big pickup in mma and a big pickup in debt issuance. companies are going to try to use that to boost their margins, in what is a growth tepid story. matt: obviously, most of the action is in fx. but if there is the u.k. leaving the eu, are there any companies, are there any industries that would actually benefit from the? -- benefit from that? david: well, of course. the u.k. exports will benefit from a weaker currency. we are a service-based sector. but of course, on the flip side, you have another currency and a massive question mark over services to access the eu market on what terms. i struggle to see how the brexit will assist any industrial group
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immediately. obviously, the debate is focused on the medium and long-term health of the country and where our places both in and out. but whatever size you are i don't think you can get away from the fact the initial moves will be negative for most financial assets in the u.k., negative for the economy of confidence and investment both take a hit. many companies will not wait for some deal to be brokered. they will react in the months, brexit, and change the operations accordingly. that will have a hit on the economy. we saw that open onto the imf. i don't think that is up for much of a debate. matt: no, not a lot of financial positives there. david stubbs will stay with us. we preview the fed rate decision. plus, tune in to our special
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coverage, which kicks off at 6:30 u.k. time. janet yellen speaks at 7:30. ♪
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guy: welcome back. you are watching "on the move." we are 14 minutes into trading and we have a positive pop when it comes to european stocks. x 600 his up by 1.2%. let me show you the france
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stocks this morning. zodiac has been upgraded, up by 4.03%. let's get you caught up on what you need to know with the bloomberg first word news. reporter: guy, china's domestic equities have been denied entry bank indexes for a third time. iny have $1.5 trillion assets. the country policymakers need to make more improvements to assess the ability of its market. the president is trying to raise the profile of the mainland market. the u.k.'s chancellor will warn that leaving the eu could spark a fiscal prices. george osborne said this would leave a 30 million pound black
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hole that would have to be plugged by increased taxes and tax cuts. it has been again argued that the u.k. should quit the eu because of slow euros of growth and excessive bureaucracy. his arguments were caught in the huffington post. >> they have got catastrophic unemployment in many parts of andmediterranean countries, greece, the entire project is a machine generating excessive bureaucracy and red tape. reporter: hillary clinton has opened a double-digit lead over her rival, donald trump, in a new poll. the survey has clinton leading amongst 750 37% likely voters in november's election. more than half of those polls
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said they could never vote for trump, but trump outvoted clinton when it came to combating terror both in the u.s. and abroad. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . matt? matt: thanks, haslinda. the fed is expected to keep its benchmark lending rate on hold , but the accompanying statement from janet yellen will be scrutinized for any clue on the likely timing of the next increase, or indeed, the possibility of a turnaround. futures are pointing to the odds of an increase in july two now less than 16% from 53% of the start of the month. expectations have been dampened by the surprisingly weak payrolls number we got last time round and turbulence in global financial markets due to brexit. let's bring back david stubbs from jpmorgan asset management.
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we still see a pretty strong dot plot. by the way, you can see that on .loomberg, dots we are looking for a benchmark rate of almost 2%. do you think we will get there? david: i think it is pretty unlikely that the market you know, gets to see that interest rate out of the fed indeed. i am not sure if they want to adjust their dots in this set of projections too aggressively because you could argue that we have seen an outlier and if it bounces back, we could potentially have two rate hikes this year. i do think there is enough concern in the market. at temporary employment, for example, and how that has rolled over in recent months. i think there is enough dragging on the u.s. economy in the labor
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market to prevent the fed from going any farther than the one rate hike this year. nextuld have two or three year, which does not get us to the supercenter they have been projecting. it will be interesting to see what comes out in the survey of economic projections, what are they thinking for growth and inflation over the next couple years? and will they continue to ratchet down nex expectations for long-term growth? that is the big issue here, we don't think the u.s. could go faster than 1.5% over the next 10 years or so. we would like to see the fed recognize that and bring down the long-term growth projection. guy: where do you think -- if you look at the impact we are going to see the greatest, where is it? when you think about the geopolitical stories around the world and lead it back to economics, walk me through what
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exactly a fed rate hike is going to look like. we are not going to get one today, but the market is supposed to be a discounting mechanism. david: traditionally, you look at things like em to get worried about this, but with the first rate hike, the impacts on financial markets are either reversed or the dissipate. we know this fed is going to telegraph any move enormously before they do it. can i think what is much more important for emerging markets right now is where the dollar goes. obviously, we have seen some weakness this year. and also, where we are in the commodity cycle. we're clearly near the end. i think we have entered a period now of trading ranges. that i think, is the bigger driver of where financial markets in emerging markets are going right now. if you look at exchange rates, if you look at for the economy, look at your earnings for the equity markets, if you look also
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where the country is in absolute terms and growth than amex, i think this is a place to start building emerging-market expect exposure. this is an entry point for long-term investors. on thee will carry conversation david has started. brent crude extends its losing streak as u.s. stockpiles rise. we will talk about commodities, what impact the fed will have on it. we will check in on the oil mark et, next. ♪
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guy: welcome back. 23 minutes past the hour. so, oil is enjoying its longest losing streak in four months as u.s. stockpiles expand. joining me now to talk about this, the new anchor of "bloomberg markets: middle east ." good morning, what does the data actually show us? because this fundamental element to what is happening with the crude market is one we have ignored over the past few weeks as we have focused on the dollar. the dollar and all the other elements that play into the oil equation, we have data we are waiting from the eia later today. and according to bloomberg estimates, there is a draw down there, 2.2 million barrels last week. point 5 million
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barrels, i am told that is a marginal drawdown. but again, the oil markets are looking for direction. we had some of that guidance coming from iaea and opec, but they look forward to a more balanced second half of the year. 2017, the demand and supply evening out a little bit. there was a guy from goldman sachs earlier today who says price discovery does remain fragile and there could be surprises from opec, apart from nigeria, with a surplus expected for the first quarter of 2017. $60 range is ao very critical range too many investors because that is the favored range for the shale drillers to come back online. matt: we have seen the shale drillers come back online. i wonder if it is giving a boost to for example, nigeria.
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you see the militants there, ready to talk. almost an impetus to people who can put more oil back out on the market. >> absolutely. this is a real dog fight out there. let me give you some data from south korea. their imports from iran have increased to the highest levels in five years. that is a 132% increase from a year earlier. iran is expected to come out with a new form of oil contract and are waiting on the government to sign off on that to really help them accelerate the ambitions they have for oil production. the iaea guys think iran is expected to manage 23 million barrels by the end of 2016. guy: great to see you this morning. usnext, john redwood joins to talk about, you guessed it, the brexit. this as george osborne talks
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about a big blackhole in u.k. finances. we will discuss that next with john redwood. ♪ get ready for the rio olympic games
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you are watching "on the move." we are 30 minutes into the session. yesterday, we saw the ftse 100 dip below the 6000 level. we have yet to recapture it, but we are being taken back up, within grasping distance of t. the cac is outperforming flatly by 1.2%. which stocks are moving the market? let's find out. caroline: the leader of the pack, zodiac aerospace. we are leading the charge up .9% of the moment. why? the numbers are looking pretty good afor once.
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revenue is up 4%. organic growth is also beating estimates. there are still a few concerns being voiced by ubs. 350 silvers seem to be little bit slow on the front. there is a lot of downward trajectory for this stock in the past. it seems to be outperforming though, today. and look at this laggard. it is currently down some 16%, the worst day for aveva group plc since december. since december, for the second time, we have seen a deal unraveled for aveva group. s looking ats e this not once, but twice. it seems as though aveva group,
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tumbling on the news it would not be getting an excessive 5 million euros coming its way. and lastly, berkeley group, one of the biggest losers today, down 1.6%. as you can see, there is a sea of green out there. the four year profit, living up to expectations. theit is up 5.6%, but since start of 2016, they say reservations are down 20% because of the reduced lunches on the back of the eu referendum. so, plenty to talk about on the ongoing brexit saga. boris johnson has again argued that the u.k. should quit the eu because of slow eurozone growth and excessive bureaucracy. his comments came in a tv debate with the former scottish minister. >> if you look at the eu as a whole, it has the lowest growth
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out of anywhere in the world, except for antarctica. eu project is a machine for generating excessive bureaucracy and red tape. guy: is that message getting through? well, take a look at the polling. areof the most recent polls pointing to a brexit following next thursday's referendum. here to talk about what is going on is the conservative party mp, john redwood. do you believe those calls? do you believe momentum has moved your way? john: i believe we have a lot of support. who knows who is going to win. i believe it is quite close. we are urging everybody can once a free britain to vote "el leave." guy: this seems to be having a tactical effect. you might see that in the "rema
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in" campaign. george osborne might ramp up that rhetoric by talking about this budget black hole. do you think the mistakes being made here is related to what we can see in the polling and what do you make of the chancellor's numbers. >> it looks like they are going to lose. my advice is to carry on campaigning and maybe best case win. and his fantasy punishment budget is absurd. there is really no way a surge of mp's is going to vote for anything like that. the british economy does not meet a budget like that. and when we leave the european union, instead of having to and must and raise taxes, we will be increasing the spending on priorities like the health service, because we have the contributions we send it to the eu at the moment and don't get back in any form. we would like to spend those to boost the british economy. matt: do you think, mr. redwood, that george osborne's budget
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predictions are a threat to brexit voters? are you saying you think it is irresponsible of him in his position? 20-30 forecasthe in particular, that is very absurd. most economists will say they don't notice going to happen in 2030, but if you do, at least get the numbers right, which he failed to do. forecaststs -- his have already been wrong because we have seen them try to talk interest rates up and the pound down. government interest rates have actually fallen. has not beenfect there. it has not meant that the british rates go up in the way that mr. osborne was forecasting. guy: people are buying gilts because they see it as a safe haven. are purchasingy
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safe havens around the world. the point i am making is that the brexit is not the only thing going on up there. the brexit is not strong enough to get the interest rates up; so, they were wrong about that. they were not even write about the pound. the pound against the dollar at the end of february, 1.3850. it is now up to 1.49 today. guy: people are buying a lot of protection, though. john: and some people are going to lose a love money as well. of moneyng to lose a lot as well. guy: i am nothing. i am just saying by market pricing. john: i will talk about market pricing. by the end of february, nobody thought the brexit had a chance of winning.
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now, people think there is a 40% chance of the brexit winning. so, why is the pound higher against the dollar now? surely, if it was going to come down against the dollar that would have started to happen when the odds improved for brexit. it has not happened in the way they had predicted it would. guy: there are other asset classes that have moved. they are exaggerating everything. forecasts wrong. 10:00 a.m. allowed to point that out. and you should run that from time to time to balance out your program. we areet me ask you, if talking about this from an investment perspective, let's take it a step further. what would you invest in right now that would benefit from the u.k. leaving the eu? to offer not here investment advice to the audio viewers.
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i have to be very careful about these sort of things. matt: but are there industries do you think that would benefit? john: the whole economy will be better. we will have a fiscal stimulus because we can spend the contributions the currently don't get back from the european union. we can get some better paying jobs into the public services. i think we will be better off because we can in due course get free trade agreements where the eu has failed to get any free-trade agreement with america or china or brazil or india, a very large market. for 43 been in the eu years and they have done our trade negotiating for us. i think it will be better when britain decides what is best for u.k. business. this is a slightly bigger question about whether or not we are arguing about the right thing. we blame brussels for an awful
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lot of things. we blame the confident because we are awfully overregulated. before we joined the group, we had regulation. it was not like we were completely bereft of regulation. isn't it a danger that we are putting all of our ills into one particular area and then therefore, blaming the eu for many things that are just may be wrong with the way the economy is structured globally and maybe specifically, with the u.k. john: that is not true. i think the business argument is completely divorced from the arguments going on along the streets of our country. people there are talking about the very big issues. we can't kick of people who govern us from the european union. can we impose our own taxes? no we can't. can we control our own borders? no we can't. business wants it to be a debate about trading business. we are going to trade with a
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them whether we are in or out. they are not going to want to damage our trade with us because we sell them so much more than we sell them. please relax because business is not an argument. we will carry on trading. this is an argument about much bigger things, who runs the country, what kind of a country are we. do we control our own citizenship? do we spend our own money? matt: let me ask you specifically, mr. redwood, about us. germany,ing here in arguably the gateway to western europe as far as immigration is concerned. do you think that is the main issue voters will be deciding on when they vote on june 23? john: the main issue they will decide on is, who do they want in charge? do they want democratic control of their own country? or do they want other people making decisions about their borders that they can't elect.
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matt: what has immigration been the catalyst for this? john: i think it is an important issue. but it is not the only one. the requirement that we have to , these are all o things that the british people are very annoyed about. but they are symptomatic of this much bigger issue. and do not underestimate the british people. i think the people are much more sensible than some of these big business leaders. they understand a fundamental issue about who governs and who is in charge and i was the british people to be in charge. the only way they can be in charges to make sure all the important decisions are made by their elected representatives in westminster. guy: do you think you are expecting any intervention from berlin or from brussels over the next few days? john: i would love one, yes.
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it would be really helpful. guy: how would that help you? john: it would be very helpful because people are very frustrated with the impetus. guy: if there was to be a move on immigration. john: we don't believe them because the has to be embedded. we need the consent of 27 other countries and we need to know the timetable of the new treaty is. mr. cameron could not get any of that when he went off and had his lung negotiation about this referendum. why would we believe any last-minute promise that has not been properly embedded within european law? has to be much more substantial than just a few words. guy: many people have argued that this is an internal campaign happening within the conservative party and there are questions being asked about who would be the next prime minister if there were to be a brexit. do you think david cameron would be the prime minister if there is a brexit win? john: i think he could be.
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i am concentrating on this much more important issue. is there a country to govern or not? we can discuss who will govern it when we sort out if we of the country to govern or not. guy: thank you so much, john redwood. european stocks rally as the pound rebounds. we will bring you all the market action, next. ♪
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matt: welcome back to "on the move. we are here in berlin. wait, is it raining? is it rainy outside? the, a rainy shot of brandenburg bridge. let's get to the bloomberg business flash. haslinda: showers are blessings, matt. to navigate its way out of the omissions scandal according to people familiar with the matter. the company is planning to combine the component units to cut costs and improve efficiency. vw faces billions in fines and repairs. it is said to be considering a portfolio review that could lead to the sale of ducati. they will be an announcement early tomorrow. the world's largest clothing
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retailer had profits that the expectations. -- that beat expectations. threellion euros in the months since april. they were more garments online from the zara store. cihina's as that managers are preparing for a regulatory crackdown. subsidiaries and mutual funds will need to adjust the leopard ratios, fixed incomes and nonstandardized products. it is estimated that once this comes into effect, units will need to hold about $300 million in net capital for everyone billion dollars under management. the final round for bidding for at&t.has verizon and three private equity groups have joined. each of the six sitters wants core internet business,
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as well as some of its intellectual property and real estate assets. most of value the company between $4 billion and 6 billion $6 billion. that is your bloomberg business flash. guy? guy: thank you very much, haslinda. what we are looking at is an interesting piece. we can see a bounce back. the stoxx 600 is a still up by 1.2%. the ftse 100 is up by .8%. the dax is still below the 10,000 line as well. banksstingly, some of the are bouncing back today. i was chatting with jon ferro a little bit earlier, who will be anchoring "bloomberg < p o>."
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he said the volume is up and though he was talking about the sound on his television, i was talking about the market volume as the approach of this brexit vote. there is a great function on the bloomberg terminal. you can see that volume compared to the 20 day average. i am used to seeing volumes dropped because over the last few years equity volumes have come down, down, down. on the stoxx 600, volumes are open up by industry group. for the most part, they are gaining against the day averages. this is financial with the huge volume jump. this is industrials. 30% higher volume, 40% higher volume and there are very few industry groups that are down in volume and even those that are are not down by 30 much. energy and materials are down slightly because they traded heavily as the prices swung back up. i think it is interesting that people are turning more stocks as we get closer and closer to this vote, guy.
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guy: it is interesting to see some of the churn. he would not think that would be happening at this point. do we normally get this kind of churn at this time of year? matt, we are going to talk about the central banks and clear the brexit story. a bit of a side story today. it is always hard to argue that the fed is something of a sideshow, but with the referendum dominating the story, yellen might have something to say about the fomc headwinds. we are going to look ahead, next. ♪
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matt: welcome back to "on the move." days a darky and clodudy here in berlin, but the sun is shining on the equity markets as we see gains across the board. billionaire philip green will be questioned by two house of commons committees about the collapse of bhs, the retailer he sold for one pound last year. 15 minutes later, we will get the u.k. unemployment figures p.m.pril and then, at 6:45 tonight, michael gove faces audience questions in the bbc television special. at 7:00 p.m., the big one kickoff. the fomc's rate decision.
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that will be followed by chair yellen's news conference 30 minutes later. make sure you follow the top live blog. .ype in tliv and then turning to our special coverage on television, the fed decides starts at 6:00 p.m. u.k. time. right now, we are joined by bloomberg strategist, richard jones. how excited are you for the fed press conference today because obviously, we are not going to get any kind of decision? richard: i think the fed press conference could be quite interesting, matt. obviously, with the brexit dominating a lot of investors' thoughts at the moment, it will be interesting to see how much the fed highlights international headwinds, and do the name check brexit, and how important is it
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in the press conference? it will be interesting to see what they say about domestic u.s. data. we have seen a slowdown in the labor markets index. even some of the pmi's are softer and obviously, the jobs data was not great. i suspect we believe the near-term, 2016 dots, unchanged. guy: the brexit, though. that is a great excuse for janet yellen, who is in a bit of a weird place now. some people do think that number was a blip. she needs more numbers than the brexit is a great thing to hide behind right now. richard: we are still within the second quarter as well. and after a relatively soft first-quarter, it probably suits little bit more data and see if the rebound in the second quarter is as strong as they are expecting.
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they still have a couple time to sneak in a couple more if they need to. i don't always they will, but on a calendar basis, they certainly can. matt: bloomberg users can type . richard, is the fed just predicting a higher interest rate schedule than it can reach to give the markets some optimism? richard: i think if history is any guide, matt, i think there is optimism. they have been revised considerably lower sensince ther conception. i do think investors are as optimistic as the fed is in terms of the rate path. it would not surprise me in the coming months if we get those dots lower. guy: richard, thank you. up next, it is "the pulse." we are seeing equities
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rebounding. london is looking little brighter today with equities on the front for. to retake the 6000 level today? you never now, stay with us. ♪
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francine: zero change the market -- as brexit risks ways on this week's central banks decision. the dax poll -- the uk's chancellor could spark a fiscal crisis -- remain a connect. -- the country's shares are denied entry into the benchmark indices for the third time. ♪ francine: welcome to "the pulse." live from bloomberg's european headquarters.


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