tv Bloomberg Surveillance Bloomberg June 20, 2016 5:00am-7:01am EDT
francine: remain campaigning in the final days before thursday's referendum. surge.equities treasuries and gold slump. the reserve bank of india governor will leave in september. this is "bloomberg surveillance." i'm francine lacqua in london with tom keene. he joins us for a week of brexit coverage. tom: and remain coverage.
francine: 50/50. the debate yesterday -- it felt quite personal. tom: it got personal again quickly. there seems to be real momentum for both sides to reestablish what their key distinctions are. francine: this is what we will be covering for the day, the week, and possibly the month -- depending on the outcome. there are just three more days before the u.k. votes on whether to leave the european union. prime minister david cameron is accusing his opponents of trying to deceive people in voting to leave. it is the first day of campaigning since labor leader was murdered.coxe in italy, a setback for prime minister matteo renzi in local elections. the candidate of the
antiestablishment party was elected the mayor of rome. another five-star candidate was elected mayor of turin. in kabul, afghanistan, four people were killed when a suicide bomber from the taliban .argeted their minibus the taliban has recently increased attacks on civilians and afghan security forces. you can call this another stress test for india investors. the central bank governor announced he will leave when his term ends in september. since taking office in 2013, he has helped to make the rupees stronger. ryan isse speaker paul standing by donald trump despite a number of reservations. ryan said he had the number -- a responsibility to back the republican candidate. he said he will challenge trump
if he does not abide by conservative principles. tom. tom: thank you so much. let's look at our data check. what a different market it is. futures up 24. now up 28. that is a huge move. dow futures up 213 points. even oil capturing. on to the next screen. if you would. level, moving from a 20 a 19 level. positive.year, yen is churning. i think the yen movement is a real story -- what is not happening. it is not participating. francine: i think you're right. you see the havens taking a bit of relief, apart from yen.
this is my data board. usually show things happening when people are nervous. we are not seeing that happening. the pound strengthening on the back of the most recent poll. director mike amy now joins us as we talk about brexit, remain as we count down to the eu referendum. , great to have you on the program. as always. let me bring you over to the terminal. this is pound volatility. this is the recession back in 2008. this is what we saw before the scottish referendum. this is still different. is it going to get worse in the run-up to thursday? mike: i suspect it will probably
calm down a bit, if i'm honest. the volatility in the polls has been huge over the past couple weeks. my suspicion is that as you move especiallyevent -- given the moves today -- that we might get a couple of days of relative calm and then we will see how things pan out on thursday. francine: there are so many that are undecided and they seem to flip-flop. people don't really know their mind yet. mike: we have always assigned a 40% chance of brexit because of the uncertainty over the polling -- we don't have any back testing for the polling -- there is a chance there -- and then there is the immigration debate, which is where the out campaign focused their discussion. tom:. i'm fascinated "the times" of london want to remain and then
four pages in "the times" this onning is an exposé passports to get into the united kingdom. each paper seems split within the newspaper, as well. mike: yes, there is a bit of schizophrenia, i think. papers havef the come out clearly on what they want to do. " is out. " the times" is more mainstream. tom: can i ask a dumb question? can i ask an american question? to the papers influence people? mike: that is an interesting question. sun" wants to be on the winning side of things, the winning side of history. mike: that's right. has generally been on the right side of votes.
one ins a fairly famous a general election. my suspicion is that them coming out will not influence things that much. tom: we saw cash levels at record levels. is that a market choice? or uncertainty? mike: i think it is. i think a lot of people have taken chips off the table. there are one or two markets where there are bets in. cable is one and one or two of the rates markets. a lot of the money is on the sideline. it is a binary event. binary events are tough. francine: how difficult is it to understand what people will vote on? mike: really, when it comes down to it, what people are voting on is whether the loss of sovereignty by being in the eu is sufficiently large that you
want to change your arrangements. that is why on the remain the cost ofu get the exit being high. that is why the brexit campaign focuses all about the risks not being that big if we move out. that is one of the reasons why the voting public has not really engaged that much. they hear the argument. tom: help me with the distinction among economists. a set of economists today very much stay within the eu. a number of weeks ago, a guest said the economic impact would not be that great. gerard lyons writing in "the telegraph" saying it is always overrated. where are economists? mike: i think the central
tendency is that the u.k. would be better off in rather than out. you get the short-term hit to gdp. you would put growth down to zero or slightly above. then there is the persistent uncertainty on whether you can get a decent trading arrangement on the way out. francine: the problem is that you have a lot of economists saying it would be better to remain. i spoke to the former deputy governor of the bank of england saying there is backlash. people say that you are not the people who have to suffer if we remain in the eu. tom: i find it fascinating. there is no equivalency i know within the united states to this moment. people are totally focused on this. francine: all right, we will have plenty more discussion with mike amey from pimco coming up in the next hour.
it is estimated a sale could bring $11 billion. oil than its more some mobile. --japan, exports have fallen the slowdown in the global economy and the stronger yen have made japanese products less attractive overseas. for the first time since february, gasoline prices in the u.s. have fallen. the average price for a gallon of gas dropped to $2.37 per gallon. that is the bloomberg business flash. francine: thank you so much. india's central bank governor is to step down in september. the rupee made it steepest before on the news paring its decline. think is a much for joining us from mumbai -- thank you so much
for joining us from mumbai. we understand why he is stepping down. is there a concern that the central bank is not as independent as he wanted it to be? definitely, that is one of the concerns. he has been pretty outspoken. in monetary policy and beyond that, calling on the administration to maintain fiscal discipline. he was the first governor who got the government to agree on .n inflation setting target unfortunately, his departure has created some concern about how the rupee will react. tom: good morning. is the central bank of india -- are the independent from the narendra modi government? not really.
the appointment of the governor itself, the power lies with the government. it had to say that they are completely independent of the government -- hard to say they are completely independent of the government influence. francine: thank you so much. i don't know what to do with this -- it is central bank independence -- he was forward thinking, international, he gave reassurance to the markets. mike: yes, we will clearly have to wait and see who will get the job when he steps down. i think we will find out in august. one would hope that the next appointee -- obviously, there are various names in the mix. if you get one of the current deputies or something like that, then at least you have got some continuity. tom: right. mike: what you don't want to see
is a step change. if you move to somebody who has been to a strong character, internationally respected, our view is that there are very capable people in the reserve bank of india. tom: bring up the chart of the rupee. what i find fascinating is that we have the nigerian float. we will show that chart in the 6:00 hour. even this is currency depreciation as policy. i'm not critical of it. that is economics of dollar-rupee. are we beginning to see an unraveling of emergency market stability as indicated by currency stability? mike: it is much harder when the u.s. is raising interest rates. that is classically the environment in which countries have the toughest time. they have been raising fx reserves, let the currency go
down a little bit. at least they have got some flexibility. i would say, in general, you look at emerging markets and they have a decent bounce back again. tom: the idea of emerging markets is distinctive from developed markets. where does that stand? are they two separate worlds? into everybody converging having janet yellen be their central banker? mike: there is janet yellen being the central banker. then you have india as a classic example of the beneficiaries of weaker growth profiles. i think what you end up with is this underlying yellen factor. then you split the emerging markets into those on the good side of weaker commodity prices and those who are challenged. you see that day today in saudi
versus india, for example. francine: among the emerging markets -- india's oil consumption is gaining. there are shooting stars out there. mike: i think it is relatively clear that the biggest challenges china and understanding how they make that transition from bring -- being a pure mercantile to being more domestically focused. they have had a recent strong increase in debt. when any of us look at the yen, the risk is china and how one understands that transition. tom: let's continue on the global ramifications of some of these markets. no question, the move today is a move of optimism. coming up, a conversation with mohamed el-erian. an important op-ed on "bloomberg view." london. week from francine, myself, michael mckee, john farrell, matt miller, a
francine: welcome back. it is "surveillance." tom keene in london for the week. we are wrapping up our coverage -- ramping up our coverage toward brexit and remain. tom: it is moving coverage. francine: it is time for my morning must-read. tom: please. francine: it goes back to risk and that we do not talk about china as much as we used to. 's risk suddenly
dissipate and might it return? this is asking what has happened to china. nothing has really changed, does it all have to do with the fed? mike amey is with us. everyone was freaked out about china in davos. they add stimulus and then we forget about china. mike: i think there are two things going on. we had the great uncertainty, the devaluation -- nobody expected it. that put it center stage. more recently, i think the stability of the dollar is probably key. china comes into play internationally. the yen rallying hard. the dollar being relatively stable against the other majors is pretty good. unless they make a significant domestic policy mistake or move
-- china is going to be there. china is going to be an issue. it is going to be with us for years, frankly. tom: the word i've been using a lot lately is adjacency. who has the biggest adjacency issues with china? japan, south korea, who is it? mike: you could argue both. you could argue that the u.s. has adjacency with china because of the currency peg. you have a slightly trippy situation whereby everybody wants to manage devaluation in a way that it does not destabilize markets. the u.s. is trying to get itself off the zero lower bound. we continue to operate at a very low pace. you have this tricky threading of the needle through this relatively tricky set of circumstances. i think the key one is how china can break itself away from the
u.s., actually. tom: when we look at the dynamics, i have to go back to our lead, if we were not distracted by the united kingdom. kuroda's comments. those comments and the bank of japan directly affect china. and the salvaging of all been on mac's. -- abenomics. mike: i think it is quite a big deal for the japanese, for a number of other countries. how is it possible to get away from the zero lower bound? i think in terms of the cyclical influence on china, i'm not sure it is the big one. i think the messaging out of japan and whether they can never get themselves out of this particularly difficult period is the interesting one. i don't think that is necessarily china-related. francine: right. you say china has to do with dollar strength.
what happens of chair janet yellen hikes in july? mike: i think if she were to do that, she would want to give us some indication ahead of that. she is not going to say anything until we get the brexit thing out of the way. we do think they want to get rates up this year. hike is a 60% chance of a this year according to the markets. dexcom placet of and is probably the wrong word, but we should all recognize -- there is a bit of -- complacent is probably the wrong word, but we should all recognize that it is coming. we will talk about the impact of brexit coming up. ♪ you guy's be good. i'll see you later
[ bark ] [ bark ] bye. see ya pal. ever wonder what your pets do when you leave home? [ laughing ] aw you cutie pie. aw. aw. aw. aw. [ barking ] [ washing machine running ] party's on! know what your pets are up to with xfinity home. xfinity. the future of awesome. see the secret life of pets, in theaters july 8th. tom: good morning, everyone, from london, francine lacqua and tom keene as we begin coverage of the brexit vote.
the chill towards the sigh relief of the prime minister. first, first word news. >> investigators are hoping to move one step closer to the each of -- the street of the egyptair of airplane that crashed. they are hoping to test key units. the black boxes were recovered from the bottom of the ocean last week. on the japanese island, tens of thousands of people protested u.s. military presence. they host the bulk of u.s. forces stationed in japan. they were also angry about the rape of a local woman. a u.s. contractor is a suspect. the u.s. government will release partial transcripts of calls between the orlando shooter and police. attorney general loretta lynch will go to orlando tomorrow to
meet with victims and people you on the investigation. in pro basketball, historic comeback in the decisive game seven it's of the nba finals. the cavaliers are the first team to rally from a three-game deficit to win the championship. lebron james had 27 points. it is the first major title in more than 20 years. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. thank you so much. i cannot convey to the global audience the importance of this event. 20 6 million for the previous game. we don't have the ratings for this. this was absolutely the triumph of star sports. this was definitive star sports. cleveland,ions to
golden state, and the others. francine: and there is a lot of money involved. from au look at it global perspective, it is a big deal, but it is a business story. tom: lebron james and all sorts of themes going on here. this is a triumph of star power. i know england plays slovakia today. i'm sure there are stars on the field. what do you call the field in football? the turf? .rancine: well done, tom now, let's talk fashion. shoes. views on brexit. with the pimco top
manager. thank you for joining us. you give us a lot of your time, and for that, we thank you. are you ready for a possible brexit? have you put contingency plans in place in case it happens? that in theld say u.k. market, it is a relatively .mall impact i think it would be more the concern of political impacts and europeansn this as see some leaving, and don't know why. of theuch more the mood market rather than the reality of consumption. consumption of the u.k. has always been limited to the city
of london is of course important. what is much more important is the financial side. francine: how much do you look at currency? you look the most of the macroeconomic trends, understand business, you look at currency. will we see more volatility? volatility has been the major movement of the past six months. they will probably stay for the near future. we are going to its spanish thetions, to of course, u.s. elections.
all of these elements combined with currency fluctuation generating conditions quite different from what we have experienced in the past 4-5 years. tom: may i be a skeptic? the idea that francine look while would do for her purchase ankle strap strap -- multicolor sandal. you have to tell me this vote has everything to do with what women in the united kingdom will do on their marginal purchase of ferragamo? i think there is an allegiant to -- allegiance to the ferragamo brand and the bridges culture. i think brands like ferragamo
lookhe family in some way to the british kingdom. there's more on the human sides then the emotional side then the business side. we are all very motivated to try to help and expect good news. to theth great respect heritage of ferragamo, why does it really need the united kingdom to stay in the brussels sphere? >> i think italy has always been admiring the uk's for fairness, the government, and for the sports. also for being such a loyal partner for the past year.
regeneration believes that we forever -- he youth and believe to the u.k. was part of the european union. our children are experiencing lives in the u.k. and the belief in the sense of living injustice. this is something which has been influencing probably a culture more than the business relationship. francine: do you worry about the deglobalization- teco rome is about to elect a female mayor, a first, but from a different party. are you concerned the world will feel very different 5-10 years from now? >> i think we have always
company, and as a country, to get as global as possible. of course, we have been andriencing the roles asia emerging markets. ours impossible to lose moves. 4-5 years will be .haracterized by lower growth it is good to go back to the fundamentals. the mature markets are going to express new innovation. people will be excellent customers. francine: thank you so much for joining us. the ferragamo ceo. we hope to see you before you step down on august the second.
francine: welcome back. this is bloomberg surveillance. we are both in london. tom: and on speaking terms. francine: we are always on speaking terms. diamond jewelthe newsroom. they had all the people separated out yesterday. francine: i ask he worked on my royal knowledge before you came. tom: do you do the wave first?
francine: it is expected to be a fun week, a difficult week, as we turn towards that vote. ,ow, let's turn to mike amy still with us. deadll, negative rates are in the water. can we go into negative territory further? a i think the chance of further delving into negative rates is relatively low. the problem with negative rate is if you asked the financial team, they will tell you the problem is their most detrimental to the weakest financial institutions in the economy. it is the marginal player who determines the economic outcomes. if you engage in something that is dutch mental to the marginal
player, it does not do you good. i think we have got to the point where negative rates is not one we will see much more of. tom: i look at negative rates in the back-and-forth of it. learned thei have basic idea that it is false. we are not transmitted the effect of the negative rates to the system. the deutsche bank chart to me is simple. when you bring it up, we have a little balance in the european banks right now. they really need confidence. >> they do. they need a positive yield curve and they need to be open to make a margin. of negative interest rates when you have excess cash in the system, it is pretty tough to keep the margins up. francine: when does the
helicopter land? >> good question. the helicopter is certainly hovering in japan already. they have big fiscal deficits. the helicopter has certainly left the helipad. bankhere is the tissue chart again. director was a mass of cleveland fan, and basically pulled an all nighter, the reason for some of the tech here. because of balance in european banking. this a massive opportunity? quote isnk the brexit the vote determining the shorter-term dynamics. we would notrm,
argue that brexit is a systemic of it either way. -- event either way. if we were to leave, we think it would be a pretty long and torturous process. there is a minimum two-year negotiation. to hear you say either way this is an opportunity for investors either way? >> yeah. we think there is some pretty cheap assets out there already. u.k. bigs have been hit very hard this year. francine: actually, they go up, why? they have been hit for reasons dealing with background environment. ppi.y have been hit by there is clearly concerned amongst some investors that if we were to leave, that would be seriously detrimental to their balance sheet.
tom: the distinction here is not the equity market, but you are looking at shades of u.k. banking debt. what shade is most attractive? quite like the contingent -- tom: the most risky stuff? >> within the bond market, the most risky stuff. tom: what is the coupon? >> 8%. if they stay at eight, that is fine by us. we think there is that it was parsed in. a debt achieve instrument that s 8%. perfectly, ifout we buy the 8% coupon, those ferragamo's would be years. francine: perfect. tom: there you go. we will continue here.
tom: good morning, everyone. your place for smart conversation through the week on the question and debate of the world right now. should the united kingdom exit phere?ain in the eu sev francine lacqua and i. peoplee: whatever decide, it is up to the citizens of the u.k.. we will look at the market, and of course, the implications. tom: right now, we look to business here at bloomberg. you.ank british housing prices kept climbing this month. according to a property website, asking prices were up almost $440,000. prices fell in london, down 2/10
of a percent. that is blamed on a property taxes and uncertainty on the brexit boat. there is a report that iran has signed a historic deal with boeing. they have agreed to by 100 airliners. it is a record for disney's long awaited sequel, "finding dory." inbrought in $36 million north america, the biggest opening for an animated film. that is the bloomberg business flash. tom: thank you so much. u.k. housing doing well. let's look at the u.k. economy. the gross domestic product is surprisingly better than you would think. moving a four year
average, in white. we are almost back to where we were. of course, you see it in shockingly higher housing prices even though london falls read recently. -- the british prime minister saying he needs to make a better case. he has given us terrific perspective on europe. you have not made up your mind. what does the prime minister need to say to you for you to say you should stay in the eu? >> sorry to say that most of the arguments i hear tend to turn me to the other side from whoever is speaking. i think i will ignore what the prime minister has had to say. his argument so far has been -- have been extremely weak. from my standpoint, the best
thing he can do is keep his mouth shut. francine: are you concerned about who would govern if the country were to brexit? what does it mean for the people in charge of the country? >> there would be a certain amount of turmoil. two thirds of the members tend to be in favor of staying in. the government would have to negotiate an exit. tom: explain to us this morning how polarizing united kingdom people are. describe the polarity of the people. after this graceful murder
last thursday, there are some right,wild people on the as well as the already fairly extreme people on the left. of polarity.gree tom: thank you very much. i'm sure we will speak to you before the thursday vote as well. link for different conversations. differentfour conversations. and, it is extremely difficult to believe the polls. it is people who are undecided, the swing vote. bookies that are more forward-looking than polls? >> the phone pulled at the one that we tend to pay more attention to.
they at least seem to have a better shot at having a reasonable demographic. we tend to look at the phone polls more. other thing is that if you look referenda, there generally is a late swing to the status quo, and polls have generally undershot on the votes to remain, in whatever situation you are. the polls, broadly speaking, are 50-50. francine: the markets are the indication. >> we would agree with that. francine: what is the one uncertainty? think immigration. if you look at the whole of the last week, it has been all about immigration. generally, the outcome pain has to cooker campaign --
unfortunately, the horrific murder has had influence on some people's thinking. ing itind of crystalliz in people's minds. francine: we have another three days to go before the referendum, and on friday, of course, full coverage throughout the day. coming up, we'll talk up thanks, banks and brexit. bloomberg surveillance continues right here. stocks up on this monday morning. ♪
polls. certainly, searching rates are higher. boris johnson could change history. the londonwe are at school of economics. they say that british jobs will be lost. donald trump weighs in. he will travel to scotland, the day after the vote. he suggests brexit. we're live from the european headquarters in london. it is monday, june 20. francine: it is going to be a week.usy the polls seem to be changing. we are seeing more and more people either flip-flopping between brexit and remain. what is so interesting in the nuance, which i think you can only experience by being in the united kingdom, it is not about finance and investment, it
is about the fabric of the nation. francine: it is about sovereignty, and the two camps are not talking at each other, but they have different narratives. tom: let's get started, right now to the bloomberg first word news. >> british prime minister david cameron is trying to regain the initiative as the brexit campaign enters its last few days. cameron is tried to capitulate on a swing towards the remain camp. was johnson, the former mayor of london, says that cameron has nothing to offer the people. the flow is this thursday. in kabul, at least 14 people were killed when a suicide bomber targeted their minibus. the victims were said to be security guards. the taliban has increased attacks on civilians and security forces.
you can call this another stress fest for indian investors. over the weekend, the central banker says he will be on his term ends in november. he has helped to make the rupee stronger and hosted the foreign exchange to her in the. donald trump is considering whether to shift his strategy. he meets with his tough excises today. in inner circle is frustrated with lack of communication. cleveland, they have waited for this for 52 years. scored 27 points to the the cavaliers to a win over golden state in game seven of the nba title. it is their first title in a major sport since the 1960's.
global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. tom: thank you so much. just amazing. over 20 million people watching that. andratulations to the mba cleveland for the show of shows. right now, our show is a data check. is a stay in the eu. down futures down. i know the euro-dollar was strengthened. on to the next board. vix searching. sterling with a massive 2% move. japanese yen really not playing this morning with some weakness. francine: they put us in the e -- aity with the sam
similar data board. as tom was saying, this is because we are seeing more polls that favor staying in the eu. ian onr. larry bloomberg in a bit. it it not the headline, was david cameron and his discussion on the bbc this morning. on winstoncussion churchill. here he is. cabinet: i fit to away from where winston voted -- he did not want to be alone, he wanted to be fighting. he's not quit on europe, on
european democracy, on european freedom. tom: this is not the movies. this was for real. he was livid about what the gentelman said in the audience about mr. chamberlain. let's remind viewers. neil chamberlain had promised peace and what out saying this was peace, and actually -- tom: all of our audience had seen the speech. francine: not everyone, but this goes to the point, you saw david cameron who was almost angry. there have been accusations on both sides of the camp. if you are a voter, you lose the kind of middle ground. economics,rse we do and a bit of british history here. we bring in some terrific european perspective. your thoughts on what the prime minister said their?
for me, that was without question a desolate moment off of the tragic murder of the minister. >> yes. cox,ld say, i knew ms. quite well. really represented the future. you are in england, and look at the rest of the world. you are not looking at what i would call little britain. i think it is very sad that we had to get to this point to actually show the divide the campaign -- of the campaign on the races. you can see, from the pollsters billboards that were put up
this week, ultimately, this is unfortunately, a strong element of bias. cultural and racism inside it. it is not pronounced, but it does there. i think most of the voters will understand this. i think david cameron speech, referring to the key role that england had in europe was key. board was putlow -- i guess, where you see a lot of immigrants. the point we have been trying to understand is the camps are not talking about the same thing. seem to onlyters be talking about immigration, or what they call, sovereignty. the others are focused on the more immediate economy. >> the fact that they think turkey would join the eu is crazy. francine: we don't know. .> it is not an agenda this has been delayed for in the 10 years. for. is no process
every country has a choice. i can guarantee you there are lots of continental european countries with thesis. the fact that you use this as a key argument -- francine: we have to remain neutral. something on the other site, they will say, this is something that the government would want to assess. >>-eight this boat will be against history and what has happened so far. it is a joke too far. it is the speculative argument. the second thing is the imf position. i think the imf position is even more radical. in the case of brexit, the gdp impact is likely around 5%. of people being laid off. a great heritage of
understanding to united kingdom. i like what he says here. the rest of w the european union is worried about a domino effect, perhaps the trauma of brexit could drink about a sputnik moment that would shock political leaders into uniting behind a common vision of high inclusive shared growth. i think you would be skeptic sense of> it is a urgency. too many countries have experienced a rise in populism. that is mainly because politicians at home, when they have failed to introduce reform and their own country, they blame brussels. it is that easy. it is escape goat policy. i think this would be a key test. francine: a you concerned that other european nations -- we
talk about this being possible, , she is from a party that is extremely euro skeptic. >> yes. for me, the rise of populism -- the problem we have at home is because of muscles. you blame the former nurse -- foreigners to justify why things are going poorly at home. du andsiness across the feel it is fairly competitive. as a result, i think when people to be honest, in my case, i have not seen it. tom: we will have a diversity of opinions all week when we bring you the important thursday moment. within this hour, we will speak
has according to people familiar with the matter. it is estimated the sale could bring $11 million. there is a report that iran has signed a store deal with going. according to an iranian newspaper, the government has agreed to buy 100 jetliners. to have reportedly applied for u.s. treasury approval of the deal. it would be the first since trade restrictions were lifted in january. gas prices in the u.s. have fallen. the average price for a gallon of gas dropped less than a penny $2.37o dollars and $.37 -- per gallon. part of the investment in economics is the banking industry. michael moore of bloomberg news has given us to restrict perspective recently. he joins us this morning.
let's bring up the chart right now. michael moore and his team out front. it could not get worse for deutsche bank. what kind of bounce is it for banking this morning? >> it seems to be a vervain balance. ,t is a little bit of risk on the broader fears about what brexit would mean for the eu. brexit with the restructuring costs for all of the banks. tom: i get that, and i get the back-and-forth, but within the net interest margin, the profit machine, none of that would be affected by this. is it? >> no. double still be an issue as long as there are negative rates. francine: what i don't understand, if brexit happens,
and some of the banks have already suggested that they move people out of the u.k., would it -- they could save money on expensive houses. >> the yield curve is more affected in a case of brexit. in the case of her main, we have seen they will take 20 bits, treasury, 13, and yield 40. that would help the balance sheet. secondly, the reality is they will not allow clearing in london. i do not think that would you about. as a result, all would have to move back to the continent. ratinganks need a credit to operate, that mainly means
and germany. they are struggling to cut cost and restructure banks. what do they need to do? is i>> i think a lot of it is showing progress on the cost front. timing and accelerating that. also, they would be held from the yield curve steepening. everything they have laid out, they have had another headwind come on. help fromlittle the market, i think would be good. tom: this morning, in "the telegraph," saying, stay in. let's talk about what people really want to do.
i would suggest, when smart european banks decided to move out of new york and go to stamford, connecticut, after a couple of years, they realized, no one wants to work your. where is the stamford, connecticut of europe? if brexit goes through, i understand jobs go to europe, where did they go? >> first of all, with all due respect, i have been in new tosey -- it is no comparison paris or frankfurt. tom: i think we should really get down to that. the key issue, in my view, is it would be cheaper to run it. welcome the heavy infrastructure to do it. ultimately, it would be fine. it could take a few years, and in between, you have double
cost. you need to migrate people. regulators would be extremely anxious on each facility. year end up doubling the cost base. tom: thank you so much for joining us. that manner.ike -- banner. , a veryberg important and thoughtful op-ed today, billy looking forward to this appearance. on the unknown unknowns for europe and for the united kingdom. from london, i'll be, bloomberg surveillance. ♪
francine: welcome back. it is bloomberg surveillance. tom keene joining me in london as we look ahead to the referendum. only three days to go. three more days until the vote. soccer-football -soccer-football. francine: tom keene abandoning his baseball hat to talk football. he rupee made it steepest declined. this is the chart of the hour. let's welcome simon kennedy. he is of course the bureau chief doug is also here.
you can see the move down. the rupee going back up may be on some kind of intervention. what we make of him stepping down? he was the golden child of central banks. hist seems to suggest from letter that he was willing to stay on. and thernmental members majority to not actually won him. he came under considerable pressure in recent weeks. he was very much a cold and child in india. he was appointed to be chief economist in the imf. they much and internationally known figure. he did a whole series of things that brought india some respect. is -- yourassic book class of books is "fault lines." what are the fault lines now?
we will see the story of independent central banks over the years, questions about whether future assets are good for monetary policy, fighting inflation. francine: what is the greed a cross -- central banks cannot be as independent as before. can you live with this, or to get out of india? literally, he is, in my view, one of the top two or three central bankers in the world. the crisis. particularly in india, he tried to clean up the banking system from this crony relationship between state owned enterprises and some key businessman. he was a man for the people, for the country, and it is very sad to see him going. in my view, it is a loss. tom: in the time we have left,
what is the key for us in looking at the au referendum? what is your key reporting thrust. the probe perfect group on immigration. they will still try to pivot towards a more positive message. tom: i'm sure we will talk to you again. timing kennedy, our bureau chief. ofing up, speaking economics, a laureate from the london school of economics with us. a scathing note saying, the united kingdom should stay within the eu. this is bloomberg surveillance from london. ♪
amazing book. i would suggest it has a -- it is truly remarkable to be in london right now. nuanced: it is less than a possible election. grilled on the airplane coming over, grilled about what do you think on that. here is nejra cehic with "first word news. nejra: investigators are hoping to move a step closer to solving the mystery of the egyptair plane that crashed into the mediterranean. they are preparing to test the key memory units of the plane's black box voice recorders. on okinawa, tens of thousands of people protested the u.s. military presence. okinawa hosts the bulk of the american forces stationed in japan. demonstrators were also angry about the rate of the killing -- the rape and killing of a local
woman. an american contractor is a suspect. paris wants to make sure it no longer takes your breath away. older cars and motorcycles will be banned from parisian streets on weekdays, estimating that it aboutove -- a will remove 5% of vehicles that contribute to pollution. the u.s. government will release partial transcripts of calls between the police and orlando shooter omar mateen. they include what he told negotiators in the midst of the massacre inside the gay nightclub. loretta lynch will go to orlando tomorrow to meet with the victims and be briefed on the investigation. has one dustin johnson 69 inshot a 1 under pennsylvania. the term and officials did not make it easy. they told him midway through his getting aight be
one-stroke penalty. he would not know until he finished. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus i am nejraworld, cehic. tom? tom: maybe there is a disagreement among politicians. you think all economists are on the same page, but they are not. there are those who are pro-brexit, others who say there will be minimal effect, and then there others who say this is serious, do not do it. pissarides of the london school of economics -- tom: he goes on to say this is about jobs. why does this matter? christopher pissarides with the linkage of unemployment to the matching function.
he joins us from the london school of economics. tell me about this note that you wrote with 10 economists. what is the immediacy about jobs within the united kingdom? : the keys to brexit's investment and trade. what we are saying is that if britain were to leave the eu, there would be so much so -- so much uncertainty about relations in trade with european nations, employers would hold investment back. when you hold investment bank, that's when you hold investment back, there will be less employment. francine: but it is said this is not about economics. this is about sovereignty and about immigration. christopher: i just do not see that. it is about economics. when you are a nation in a
global economy, in a globalized world, you have to have trade agreements and other agreements of corporations. let's face it, britain is not as big as china, the united states. very soon, india. traits with to have the european union. what it has now, there are agreements made by the european ,nion, including britain finding various actions. it is something that democratic governments have elected to do. withyour definitive paper they'll mortensen is on job --ation and job destruction job disruption. cyprus.from what was it like when you came to the united kingdom, and why
does that have to continue? christopher: when i came here to study, my university said we need new people to teach, come and apply for a job. i did, and i am here 40 years later, and i hope i have contributed to some education in this country. it was welcoming, in a way, and i can see the same thing here. there are many professions that need new people to come in. when they talk about immigration and people keep thinking that we -- itly going to let in is not the case. .e need maintenance workers anyone who lives in london like to do houseou want maintenance, repairs, plumbing, and all that? where are you going to find the , with eastern european
immigrants? francine: i need to push back because we want to remain fair and balanced. the brexit camp would say it is not halting immigration, we would just choose immigration at how difficult and different is the referent of? be not just one artist type of person who wants to leave. there are obviously many issues involved. the economist looks more at the economic issues. i have no doubt there will be devastating consequences on the economy. there are people who turn a blind eye to the economy, and they look at other things that they say. i want to determine how many have come in, rather than have open gates. i do not really see that as such an important problem as the
future of the economy, job creation, unemployment, and the issues that concern households on a day-to-day basis. es, thankessor pissarid you for joining us on such short notice this morning, on the importance of the united kingdom staying within the eu. you have heard about this before . explain again why brussels needs the united kingdom, and what is the two-do list for brussels, whatever happens on thursday? euengland is critical to the , for the simple reason it is a key partner with germany to put a reform agenda -- if you think about it, they are the ones who are pro-business, pro-export. most of the time they are stuck in red tape, including france, and as a result, the u.k. is critical.
secondly, i was at the u.k.-chinese summit a couple of weeks ago. you have the number one sector represented for china. they said it clearly. u.k. is the door to europe. wants to put investments there is because of the door. -- cine: davide: so far, in my view, it is partly the fault of the member states. the member states wanted a weak eu representative so that they were not outshined. some from portugal, some from luxembourg, you are allowed to be at the head of the council or the commission. they need someone top class to head the eu in order to shore up borders. isondly, what we need to do
to agree on the fiscal policy at it hasl in order to -- been asked for jointly. that is a key step. both central banks are asking. --h bundesbank and automatically, with the finance minister in the budget they can spell it out. otherwise they are just back in red tapes. tom: that is the doubt that the brexit supporters have. davide serra with us. a conversation with ian bremmer of eurasia group. g-zeroder if it is a united kingdom. ♪
francine: tom keene is in london. i am looking at charts. we will also look at brexit. let's get straight to the bloomberg business flash. nejra, you have more news on the businesses we are watching. nejra: shares of volkswagen rose the most in two months in germany. there are signs that it will emerge from the emissions cheating scandal. a $10 billionbmit settlement offer in the u.s. general motors new cadillac is on a collision course with silicon valley. it has gadgets that can track other cars on the road. it can also automatically break to avoid crashes. the tech company wants to claim
-- it could mean that gm and other automakers would have to share some of the frequencies. it is a record for disney's long-awaited sequel, "finding dory." it brought in $136 million in north america, a record opening for an animated film. disney is on track to have its biggest year ever in murray -- in movies. that is the "bloomberg business flash." tom: francine lacqua and myself in london this week. there is other news, and part of it is a jump condition. nigeria put in a floating currency. here is the long-term view of the nigerian currency, with a jump up here and a long-term depreciation, francine, from 1999. you have a shorter-term view. francine: this is a five-day chart. the fixed and the not so fixed.
the central bank governor announced the fix. this is now free-floating. that thises to show is africa's biggest economy. you could probably take some positions on it. let's get to our guest host, davide serra. this goes back to the viability of nigeria overall. how much do you question the fact that oil seems to be going back in line about 50, 55, and the markets are clearing? davide: our view has been that bring oil will between 45 and 55 by the year's end. they were under hedged, then they decided to put hedges on. concerned,igeria is
they were late to the game. their economy went from printing dollars by oil to basically a major deficit, and they had to devalue. i think by letting the currency be in free flow, they will start contracting again because -- contracting again, because that is what they need. welcomed it because it is the largest economy in africa. africa is a key investment theme going forward. they are going to add basically a billion people in the next 20, 30 years. it has been the fastest growth area close to europe, and it needs the largest economy. versus the complexities of brazil, do you need brazil like you need nigeria? my view, andl, in
a lot of it is homegrown. the crisis there has more to do with corporate governance and politics. -- it pays like russia. brazil and russia share the same issue. which is why 30 or 40 years there were no exporters. and then in the last 3, 6 months, it took the decision for being longer rather than short, taking more of the mutual stance. the best way in our view to play the theme for the larger market is to buy europe. you can have exporters to these markets but within european corporate dominance, with the ecb analyzing the balance sheet. basically, you get the best of both worlds. francine: going directly to the currency market, is it too
speculative just because of volatility? davide: and you get double exposure. you get macroeconomic risk and currency risk. right now you cannot say that for russia or brazil. as a result, i think you want to get a better proxy, which are the european/global players who can benefit from the economic climate down there with what i call western corporate dominance. ,rancine: thank you so much davide serra. coming up, we speak with the former director general of the british chamber of commerce. we will talk about brexit as he makes his argument that the u.k. should leave the eu. ♪
francine: coming up shortly, it is "bloomberg " with david westin and jonathan ferro. only three more days to go. jon: i still had to sit in the back of the plane, tom keene at the front with his massive production team. look at the move in the pound. a few percentage point -- a two percentage point move. sterling assets rallying, and sterling with some losses their withr and we will speak mohamed el-erian. tom: thank you so much per let me go to the single best chart. thate trying to remember we are trying to remain balanced. what is not balanced is the pear, cable. this would be dollar-sterling, not to be confused with
euro-sterling. strength over 30 years versus sterling. this is widely presumed, that you will see sterling weakness if we get a brexit vote. i guess it is something to fear. francine: the markets really are looking at the latest poll. let's get straight to john longworth. also still with us is davide serra. john, great to have you on the program. you are pro-brexit. john: the u.k. will do better outside the european union. they will be one point -- are going withwe a single market, we will be better off. francine: so this is not only about immigration and sovereignty. john: it will be the best place to do business in the world, and the you cable do very well. francine: how much do you think
you will get a better deal with the counterparts. it seems to be a lot of acrimony in europe, saying why should we give the u.k. a better deal than if we leave now? 1.7 percentl get a gdp boost even if we do not get a deal with a single market. francine: how? and: by repatriating shaving off 1/10 of the annual cost of regulation. we will get an immediate benefit, and then a benefit within a reasonably short period of time. with initial 1.1% per annum, is quite significant. tom: you are the director general of the chamber of commerce. i was. i chose to resign to be able to speak out. tom: we have a lovely difference of opinion between davide serra and john longworth. you were on the board of tesco.
american, i find the polarity of the united kingdom society is evident as we go to the vote on thursday. how are the elites doing? john: i have done business on every continent in the world. lashes to show that i am an entrepreneur because i created a science tech business in 2010. , have done it from all angles and my view is that the european project is a political project sideline, andic the truth of the matter is that they are incapable -- tom:'s brussels a political project with little idea of economic growth? davide: i think brussels was born as a medical product -- as a political project. we realized it was a lose-lose. the key debate is i think england since 2008 had a 6%
current account deficit. we are still paying that deficit. view, we are getting about 66 million in investment from the eu countries every day. fiscal need a cohesiveness in europe, according to davide. is that enough for you to switch your view? john: there is massive unemployment in southern europe. is any believes that trade losing affair. it is effectively begging its neighbors. in needs a restructuring of the economy, and leaving the eu will help us to do that because at the moment we are relying on capital flow in to pay our debt. francine: if the u.k. leaves the eu, who becomes prime minister a day after?
john: i am not a plan, -- i am not a politician, fortunately. i am a simple businessman. it gives us the options we need to make the u.k. the best economy in the world. tom: thank you so much. greatly appreciated john longworth, we appreciate you coming in this morning. we will continue our discussion tomorrow. we are thrilled to bring you paul de wire -- grauwe. ♪
years without a temperature come with as backup as lebron james leaves the cavaliers in a historic cycle. jon: to our viewers what wide, a warm welcome to "bloomberg ," coming to you from the city of london with me, david westin. we will know the fate of the u.k. and its relationship with the european union maybe by the end of the week, and potentially will take years to sort out. david: absolutely. it is good to see in your hometown of london. right now brexit is moving markets all around the world. we will discuss it live with mohamed el-erian. later we will talk with the ceo and cofounder of ie