6 00from london, just past in the morning here this thursday. The markets taking a pause, perhaps on the global stock rally we talked about in recent sessions. Let us focus in on the data coming up of the region over in asia, despite the fact that a number of markets are closed. This is the chinese number, declining of course for four still negative. That is what the uptick on the chinese ppi chart shows. Overnight showing the deflationary threat from china is substantially diminished. We will talk to our guests about that. Let us turn up the risk radar and talk about the broad Foreign Exchange story. Really about dollar weakness, but today is little different. We have a new Zealand Dollar up why one went for a percent, surging to the highest level in a year. No change Interest Rates, but an upbeat commentary from the central bank to delay further monetary easing. The korean juan in there we saw a big move, currently flat against the move. An unexpected rate hike, despite trade concerned. We have the u. S. 10 year yield note, we hit a twomonth low on the 10 year yield in the last 24 hours. Record demand from in direct auctions. We talked about term premium. Manus will be back to talk about that. Up by 4 10 ofe, 1 . We have a longest run of gains in some six weeks. We see more fires in canada taking the price higher, u. S. Prices decreasing the moving things around for us. Let us in the bloomberg first word news. Stephen engle joins us. Stephen good morning. Chinas Consumer Prices rose less than expected in may, climbing just 2 in may from a year earlier. Factory deflation falls from april, even seeing deflationary trend now continuing in china for 51 straight months. The bank of korea has unexpectedly cut the benchmark Interest Rates to a new record low. And lowered the sevenday repurchase rate i25 basis points to 1. 25 . Seeing increased Downside Risks to growth. Only one of 18 analysts Bloomberg Survey predicted a cut today. Earlier the kiwi jumped to a 12 month high as new zealand Central Banks held steady, but further easing may be required to keep inflation within the middle of the target range. U. K. Chancellor has hit back at claims he is scaremongering in his campaign to keep britain and the European Union. George osborne said there is a lot to be scared about if a brexit takes place. He told the bbc that if we vote to leave, then we lose control. If we lose control of the economy, we lose control of everything. People should be under no illusions. Two palestinian men have been four israelised after opening fire in tel aviv. It is the first major terrorist attack since january. Two gunmen have been arrested with one in serious condition in hospital. They will step up presence in tel aviv in the wake of the shooting. Donald trump has distanced himself from his own fundraising refusingof 1 billion, to commit to collecting even half that amount. He now says his campaign does not need much money to win the white house. Instead, he says he will rely on his own star power to earn free media exposure. Ubs is a limiting some management positions in the u. S. Wealth unit, reducing the number of Financial Advisors recruiting from competitors. The bank says the headcount reduction will mostly hit middle and senior managers, including some at the offices in new jersey and new york. Ubs declined to provide a specific number of job cuts. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more on the bloomberg tocco. Top. Anna David English in hong kong standing by with what the markets are doing. Some of them are closed. David yes, here in hong kong we are close. China and taiwan has dragon boat day. But the story today, chances are, and we have a few hours left in the trade, that today will be the end to the recent rally. Near session lows down 1 5 of 1 . Momentum never quite picked up from where the u. S. Left off. S p closing short of an alltime high. And a lot of and investors a bit wary, looking at the group of stocks in southeast asia, emerging asia and other words, and evaluations here across the bridge at 17. 2 times, one of the favorites parts for investors, seeing a lot of foreign money getting into the market. Especially after the abhorrent jobs number on friday. Even then, we are seeing this either little bit. Dollaryen is the big story, near session lows, the index fell further to a fiveweek low now. We are into asian trade for the most part. And that is really the story here. We have bits and pieces of data. Machine orders were disappointing in japan. Talking about Inflation Numbers out of china. But that is another way of looking at. Emerging markets little bit higher, but i just showed you they are basically have. 225 driving everything lower, first time in three days we see substantial decline there on the japanese stock. Usa David English joining from hong kong. Let us join the conversation with jim mccaughan, great to have you on the program. I want to start with the chinese data we have had. My new show of the data the new show of the data of the Inflationary Forces in china. Many people talk about the pricing number out of china, which has been of course 451 months now. They say this is one of the big headaches they are dealing with. Because they have been exporting deflation. We had this chart that shows we are still in deflation, the factory gate. But not as much as we were. Is this a good news story for global Central Banks and investors . Jim i think we have to get used to a bit of deflation because of technology. That is the reason why prices are coming down. Production, a lot of good reasons why in the supply side of the economy. Also on the demand side, the products that we are now buying have much better product quality and more functionality than before. And a lot of price erosion going on in the World Economy. Anna it was not all about oil, just a temporary thing associated with oil prices. This is something that will be a headache, dealing with this new challenge trying to create Central Banks to come. Should give up on it. I dont think inflation is something easy to create in the technological environment we are in. The sort of thing that is going on at the micro level, you know if you have a car that you get now, compared to 10 years ago, there are all kinds of systems to stop damage, whether it is backing into things in the supermarket carpark or keeping on the highway. The systems will do those things, with prevent damage, which means there are less repairs, which is nominal gdp. That is not necessarily bad. Just reducing the cost of ownership, which is classic deflation beard i think the World Economy has systemic deflation because of the of limitation of digital technology. If i were a central banker, i would try not to worry about this graph. I would try to look at real measures of what real Economic Activity actually is. And perhaps focus a bit on nominal gdp, as well as on rl. Anna a lot of Central Banks have the inflation target. Is it time to rethink . Jim i think so. Part of the problem for the Central Banks is that they have all been given too much to do with Monetary Policy. If you think about the successful recipe for improving an economy right now, what the u. S. Did after the financial crisis included Structural Reforms on bank capital, for example. It included a fiscal stimulus, as well as a monetary stimulus. Japan and europe are trying to do it all with only one tool, only monetary stimulus. And that actually is the fundamental problem, i believe. Rather than necessarily you get the systemic deflation or not. Anna where does that leave you or investments than . We have this fascinating set of circumstances in the last couple of months or so, where it seems that everything is a buy,. Gold rallying because people are nervous about Central Banks, at the same time stocks rallying. It is not the looking at the assets that are down, we have a great chart that shows how this has been brought into the stark relief over recent days. In particular, around the weakness in u. S. Data. Jim that is true. There has been a huge liquidity whom really since the bottom in february. That think that indiscriminate movement of markets is basically annoying, making a rational Investment Strategy have to loan out and really look at the relative valuation. If i am investing for the next five years, what happened the last two months does not really matter to me that much. Whereas what really does matter is all the relative movements over a year or two in the major markets. And i would suggest for example that the u. S. Recovery is not over, in spite of last weeks jobs data. And i would suggest that it is still worth buying u. S. Equities, if they have setbacks. Maybe today is not the day. But there will be opportunities. Nothing the u. S. Equities remain my preferred market on the setbacks. Memberscebook board saying they see the Government Bonds, are you still getting into that market . I have a chart here that shows what he is talking about. Billionaire investor peter seale, are you staying away . Jim i would be a little bit more nuanced than that. I would suggest that the Technology Deflation argument i suggested, together with demographics, means you will continue to have a structural excess of savings over investment in the World Economy. That will tend to keep equilibrium Interest Rates, regardless of Central Banks, at very low lows. I suspect the one and a half 2 10 year is probably here for a while, i suspect a good number of years. It has been your five or six years already. I think we ought to get used to it. Bubble ise may be a the third or so of developed market Government Bonds that are on negative rates. That may very well be somewhat unsustainable. And that is because of the policy imbalance i mentioned earlier. Because they are trying to do too much with Monetary Policy. Anna it is not the new normal. Not that new anymore. Thank you very much. Jim state with us on the program. Here are some your highlights for the day ahead. 8 00 u. K. Time, mario draghi speaks at the brussels Economic Forum. And there will be trade data out from the u. K. Shocking payroll numbers, initial jobless claims out of the u. S. Stay with bloomberg. It is 7 00 u. K. Time. We will be speaking with the u. K. Prime minister, live there , next. Anna welcome back. It is 1 16 in the afternoon in hong kong. In asiathe markets closed today. Be aware of that for the asian equity session. Let us get your bloomberg is the . Here is stephen. Stephen thanks, anna. Chinese regulars could be about to drop the last potential obstacle to the ab Inbev Sab Miller acquisition. People familiar with the matter say the ministry of commerce is close to approving the deal, after the company agreed to divest the maker of the worlds topselling brand. Local sellers reportedly told the ministry they do not object to the takeover. Approval for the transactions could come before the end of the month. Nike says it is sticking with Maria Sharapova despite her being given, a twoyear ban for a performanceenhancing substance. They had suspended ties with the star after failing a drug test. They say she has been using a drug for years, and did not notice it was on the banned list in january. Nike said she did not intentionally break the rules, and is appealing the ban, resuming the relationship. Tesla make it batteries for the energy unit from samsung. Ceo elon musk revealed on twitter that the shares rose on the news. Home Energy Provides for utilities and homes. George soros has become more involved in the family office, according to a person familiar with the matter, they say the billionaire investor is concern about the outlook for the global economy. And the risk that a large market shifts that may be at hand. A spokesman for george soros declined to comment. The film adaptation for the world of warcraft game is raking it in at the box office in china. The movie took in almost 40 million on opening day, making it the biggest debut on the mainland this year. The billionaires Legendary Entertainment produced the film, based on online game with a devoted fan base in china, but it may not generate the same buzz in the u. S. Some are predicting it will only make about 22 million on it stateside debut. And that is your Bloomberg Business flash. Anna . Anna thanks very much, stephen. Joining us from hong kong. Back to europe, the European Commission meets at the Economic Forum in brussels. Mario draghi addresses the forum a day after the central bank started its Corporate Bond buying program. Matt miller is in brussels with more details. Good to see you there. What can we expect to hear from the commissioners, two weeks ahead of the crucial brexit vote . Matt that is definitely the first line of questioning i will have for a number of the commissioners. We are going to talk to multiple commissioners and the director today. , marco buti, they have to make an argument for britain to stay in. They have to hold of the European Union together. A lot of these commissioners were responsible for the enlargement in the first place. So it will be very interesting twoyear what they think about the vote, the most recent polls, and what they think that the European Union should be doing about this. But i am also going to be asking them a number of other questions, involving policy around europe. There is a lot going on right now that is really going to be an historic summit. Anna and greece still on the agenda, matt . Matt yeah, absolutely. Greece is a crucial moment right now. Many of the commissioners have made statement in the past few days that they are confident that the next step in greeces bailout rescue will be completed. But it has not yet. Greece still has to approve some key measures before he gets the next 10 billion euro bailout. And a lot of these commissioners that we are going to be talking ,o today, Valdis Dombrovskis has been responsible for negotiating together with the imf and greek leaders. Interesting to know when this will happen. Anna what are we expected to hear from mario draghi . Will he be surprised or not the amount of his ability he had here at bloomberg about what the ecb and the banks around europe were buying yesterday . Matt well, i doubt he will be surprised, because he knows that we are connected to traders in the bond market, first and foremost. That is bloombergs job. We will hear out in the m open market. We will hear how interesting commissioners react to what mario draghi says. Buying investmentgrade, or at least not rated investmentgrade by all of the Credit Rating agencies. Traded as junk by s p and moodys. And the Deutsche Bank note, and economist saying that Deutsche Bank is not supporting the European Union enough, not supporting britains staying in. And that he is actually lost something there. A lot of controversy surrounding this move, and of course negative Interest Rates. And that is one of the lines of questionings i will have for the commissioners today. Anna matt miller, a busy day ahead for him and everybody in brussels. Jim mccaughan is still with us in the studio. Jim, it was fascinating watching the ecb, rather than national Central Banks out there buying Corporate Bonds, everybody wondering what they will buy. Wideninghope you have, qe to really deliver benefits to the european economy . Jim i think it is marginal. I think youre at the benefit, gone from diminishing returns to perhaps close to zero returns. And that is because of the imbalance in policy. I think, as i talked to european political commentators and politicians, to me the interesting thing is structural reform is what the germans want to do. It is what the northern europeans fall in line with, things like improving the working of the labor market, improving the working of the labor system through capital infusions. And the spaniards have done quite well in this. They have seen a pickup in the economy. And i think that is the gl. If you do a bit of structural reform along the lines, that the germans in particular are urging in europe, perhaps following that, ease up on fiscal policy a bit, which the germans are less prepared to do. But perhaps the germans, french, and italian want to do. If you had a bit of both, you have a better policy. I feel about pessimistic until you get that. Anna the data has been perhaps moving in the right direction out of europe, particularly in the First Quarter of this year. But you still think the recession to be looming . Jim unless they can get the policy straight. And of course with brexit, that would be a lot of uncertainty on trade. And a trade is the driver of much of Economic Growth. If you saw a brexit leading to impediments to trade in the year or so after the vote, if that happens, that is what could tip into recession. Europewide, not just in the u. K. Anna we will tal