Becoming the newest Stock Exchange in the United States. First, jon has a check of the markets. Jon global risk assets rallying across the board. Check out the mood. Here we are, if you hire the United States across the board. Youre adollar at the moment at around 1. 1328. Equities pushing higher with the ftse pushing up, 86 points. It is a strong pound equity rally. Lets go around the world and check in with our Bloomberg Team for an indepth coverage of our top story spirit nejra cehic is in london on the latest brexit poll. Guy johnson has details on the pound rally. And on janet yellen testifying later this week. Lets check in with the london guests. Nejra cehic begins Team Coverage with a shift in the polls. A shift in the polls break it down for me. Nejra we had a couple of polls out over the weekend. The main one the markets are focusing on is this poll showing a three percentage point lead for remain. There was also another poll from the sunday times, showing a one percentage point lead for remaining. Now this shift toward remain has come with the campaigning resuming because that was suspended for a couple of days after the murder of the mp. David cameron will become the july zynga will be capitulating on this capitalizing on this, when he accused his opponents of turkey joining the eu, one being the cost of membership. Whats hear more from David Cameron. David cameron as we choose to leave, we can leave. But if we do, that is it. We are walking out the door, quitting, giving up on this organization, which, even if we leave, will have a huge effect on our lives, on our children, on opportunities, our businesses. Britain in the end is a quitter. We stay and we fight. On theid cameron flipside, you have boris johnson, the former mayor of london, who said they remain cap has nothing to offer voters and he said they should change the whole course of european history by voting to leave. Jon a lot of people have said that the tone has changed. The tone has not shifted that much. David cameron is still passionate about remaining in the European Union. I do not think the message has changed at all. They are still beating the same drum on either side of the campaign. Nejra David Cameron was impassioned in his speech, particularly when he was emphasizing the fact that they were what he called lies from the leave side. But the debate stay very much the same with the remain cap pushing the idea that a brexit would be bad for the economy, and with the league camp with the leave cap focusing on the economy. To bring in the market angle jon to bring in the market angle, why former tv coanchor guy johnson. What a rally we are seeing. Since 2008. Gest that puts it into context. A lot of this has people going a little bit long, and a lot of it is Market Positioning as well. They are taking profits on cash shorts, doing that on poundyen. They have also taken profits on the dollar swisse as well. Jon you mentioned profittaking. I wonder how much of it is and howng off as much is trades coming on. Guy the market has to be hedging heavily against sterling. People put on a lot of positions. Maybe those are the positions that are coming on. On the 17th there was a high. Those moves are being reflected a number of different assets. Appositeou look at the at the absolute position . The absolute position has levels going all the way back to 2008. Guy you are going to get a big movie either side. Today highlights that you will get a big move in sterling if the remain camp wins out. Remember as well, the risk is asymmetric. You have a bigger move on the downside and you will on the upside. Saying le are still today makes it even more important because sterling is now up, so the move could be even bigger. Jon i was listening to comments from one of the big investment banks of the city, and the trade for them was to keep the options where they are to keep them from the downside. I think the uncertainty has come up a little bit. , i think theyyone would say no. Is you look at what happening with the symmetry of the risk, you can take some of those cash positions off, but you have to have that protection out there. Aside from the move on the downside, jpmorgan Still Believes that if we get a brexit 1. 32, target on cable, eurosterling at 83. Some massive moves. Jon what are you looking for in the next couple of days . Guy i think it will be what the undecideds do. Some of these people will not make up their minds until they walk into the voting booth. Nevertheless, over the next few days, they have to figure out what they want to do. If they get a vote, how they get a vote. Polling will become a lot more interesting over the next few days you may get some big swings in that number. Indicator we have been pointing out this all morning. Come back here, and it rallies. Jon i am blaming this one on tom keenes Shopping Habits. He really went long cable when he got into heathrow. The pound continues to move against me. David . David we will turn away from tom keenes Shopping Habits and go to india. Newsupee is falling on that the governor will leave his post in september when his turn when his term expires. Was this an unexpected move . What caused this . Definitely, this came as a everyone, andto you can see that it was invisible on the market. All other emerging markets rallied on optimism that there may be the possibility that the United Kingdom may stay in the European Union. The rupee was the only currency in emerging markets that was in the negative, and it is also because of clearly, this is a worry. Worried about the policies that he had implemented and a result in keeping the rupee very stable. So with a 5 downturn in the rupee, it shows the position of investors. David as if an Indian Central Bank change in brexit was not enough, we will hear from fed chair janet yellen. Our bloomberg columnist. What do you expect janet yellen to testify to tomorrow and wednesday . The tone of her testimony will probably be almost the fo l to that after meeting last week. Followingill be will the election after the testimony. Take does she have to into account the brexit vote on thursday, in toning down whatever she says . Na she said that it will be one of the factors after the june meeting. Definitely this is one of the factors, and we might hear a couple of questions on that as well. David thank you very much. Now lets get an update on what is making headlines outside of business world. Investigators are hoping to move a step closer to solving the mystery of the egyptair plane that crashed into the mediterranean. Test the keyd to memory units of the flight data and black box voice recorders. They were recovered from the ocean last week. In kabul, afghanistan, at least 14 people were killed when a suicide bomber targeted a minibus. Has recently increased its attacks on civilians and afghan security. In pro basketball, cleveland completed a historic comeback by beating golden state in the game 7. The score was 9389. The cavaliers were the first to rally from a three games to one deficit to win the championship. Lebron james had 27 points. It is clevelands first major title in more than 50 years. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus i am amateurrld, andra. Brexit have been seeping into every corner of the market. What will happen come friday . The chilean dollar question. David cotef talk reveals his strategy for a postreferendum market. David this is bloomberg. Lets go to julie hyman. Scotland, bank of lloyds, barclays, are all seeing rebounds, not only rebounds but pretty sizable ones, the 6 to seven percent range the 6 to 7 range. We are seeing a rebound as we see some of the polling swing back in favor of remain in britain. It is affecting not only trading in the u. K. , but trading in stocks around the globe and more. Rebound for stocks broadly, even be on the banks. We are also watching bowling. Is we are also watching boeing. Year to date the stocks down 10 . It may also the company is nearing a 4 billion deal with russias largest airfreight company. It might help expend the life that extend the life of the 747 jumbo jet as there has been waning demand for that kind of jet as well as for aircraft in general. This is all according to people close to the transaction. We could see a formal announcement as soon as an airshow happens in the u. K. Next month. We could be getting confirmation at that point. On this report, we will be looking at the shares potentially to rise today. David global stocks all around the world are rallying as the pound strengthens the most since 2008. This comes after polls show that the odds of brexit are slipping. David kotok joins us. Welcome back to bloomberg. Pleasure, on a solstice and a full nine. David and a full moon. David all we need are druids. Tell us how you are positioning yourself up for thursday and for after the vote. David on the weakness after last week, we bought u. S. Small caps. We owned small caps in europe and japan, the cheapest of the major markets in the world being japan. Because brexit is about a trade union. In the end, if a trade union comes apart, it is tough. If it does not, it is a huge turn in sentiment. We are seeing that this morning. Caps is the buy of small evaluation issue . David yes, and they are outperforming midcaps, which are outperforming large caps since the february bottom. There is a message in the market. After all this turmoil and worry underneath, investors are selectively looking for spaces and taking risk because they see it as being attractive. David do you have a view of whether brexit will happen or not . David i dont know. This is a rapidly changing world when it comes to brexit polls. David what happens to your investments if there is brexit . Have cash reserves. It is prudent to have some and wait this out. 85 , 90 in the market. The cash reserve waits until after the vote. Your positioning in european equities how do you hedge with fx around that . David that is a tough one. If you have to hedge, you have to do with currency risk. Etfs. Etfs can have hedges. We hedge to the weight of the index around the world, and above the index weight, we do not hedge. Jon you have seen investors seek out down sally seek out down side protection. Will they take advantage of the potential birth of volatility if there is a vote to leave the European Union . David there is a Second Derivative here. Brexit, drove money into the yen and japan, and those markets went down. Japan is the cheapest of the three major markets of the world u. S. , germany, japan. I am ignoring the u. K. Because of all the turmoil. Jon in terms of japan, you seem theeasingly exposed to japanese yen moving against the central bank. Is your positioning on Japanese Equities you cannot ignore what is happening in the fx market. Is that the Downside Risk that the yen keeps appreciating . David there is a second part here. The forward earnings in japan are up 14 pe, a seven earnings yield. The Interest Rate is 0 actually minus. When do you ever see the sovereign risk that yield below the earnings yield . 7 for incredible, little Companies Like toyota and mitsubishi. It is cheap, cheap, cheap in japan. Jon i have heard this so many times over the years, and the only time we have had a push higher is off the back of aggressive centralbank policy. If we wake up friday and the u. K. Is still part of the European Union, does anything really change . Does the market than focus on the next risk event . If we witness a fundamental change in markets and receive risk . Witnessingre political change around the world. In this election in the United States, look at the mix we have. What happens in scotland . What happens in spain . Is the newurmoil ingredient in Financial Market pricing, and we do not have models to price political turmoil. We know how to do it with earnings and Interest Rates and inflation, but how do you measure the sentiment of political turmoil . David kotok is sticking around. Later, if the u. K. Decides to stay in the you . Where do you want to be if the u. K. Decides to stay in the eu, where do you want to be invested . Much more bloomberg coming up next. Jon to our viewers worldwide from the beautiful city of london, with the millennium bridge here in the city the pound that is shining bright. Reen, at 1. 4632 it is a global risk rally. Lets get you up to speed very quickly. Futures in the United States much firmer, up 215 on the dow. Up 27. Rally, up by almost 200 points. The dax up by 3. 5 . Risk show you what this rally looks like cross assets. The stronger pound, the euro at 1. 1 325. Upk on as we begin the week, six basis points in the u. S. 10 year of 1. 67 . What an unwind from the position we saw last week. Goes back volatility and forth. There is a lot of green up there, but i do not see much blue. I do not know about the weather there. Jon we do not do summer. David janet yellen will spend the next two days testifying before congress on Monetary Policy. Give it to talk david kotok is still with us. If you were on the panel asking questions of janet yellen, what would you ask her . David i would go right to a technical question right away. The liquidity coverage ratio has changed the use of bank reserves. Two years ago it did not exist. The highquality liquid asset has changed the alternatives for banks. Chair yellen, what is this doing to Monetary Policy . Longer access . How are banks changing decisions . Does that change your credit multiplier . That is a very technical question for general listeners. David implicit in your question is, it is changing how is it changing decisions . David they now have to hold liquid assets to me to test. Do they hold them with reserves at the central bank . That is no caps off, 100 counts, 100 safe, or do they take risk and have haircuts . We see behavioral changes. We see large banks selling fannie mae and freddie mac because there is a haircut. David because they are too risky, ironically. David from a liquidity test point of view. This whole notion of the size of a Balance Sheet is independent now of whether the Interest Rate goes up and down. People are not grasping that yet. David and what is that doing to yields . David it drives yields to a flatter yield curve. We see it all over the world. But it also suggests something else. Maybe the central bank Balance Sheet is too small. Maybe there is a need around the world for more dollars in reserves that we presently stash than we presently see. Half reserves in the United States are there, through the u. S. Subsidiary of foreign banks. Why . Look at the choices they are making. David that is david kotok. Thank you very much for being here, david. Jon coming up, the brexit follow. Thursday posco is sure to have an impact on u. S. Markets and Global Markets and beyond. The stronger pound and a global risk rally. You guys be good. Ill 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 ] partys 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. Jonathan this is bloomberg. A subtle shift in the polls, but a sea change in Financial Markets. Futures firm up and they rarely firm up. Nearly 206. P look at this move in the pound. Higher,est push almost two full Percentage Points. Youll tire on the perceived safety. My producer tells me we cannot talk about the markets all day. Thank you. Public and president ial candidate donald trump is considering whether to shift his strategy. Staff members tell Bloomberg Politics that trumps in a is frustrated with the lack of coordination. He has not filled key campaign roles. The city of paris wants to make sure it no longer takes your breath away. All the cars and motorcycles are banned from presumed streets parisianhe weekdays streets during the weekdays. In cleveland, they have waited 52 years for this. Lebron james led the Cleveland Cavaliers to a win over golden state in game seven of the nba finals. It is clevelands first title since 1964. They came back from a 31 deficit. Global news 24 hours a day, powered by our 2400 journalists in more than a 150 news bureaus around the world. You. Han thank they sent us both to london and i do not know whose decision that was. We are here talking. The brexit potential . even the first election of even ast obama is not close. Jonathan we have witnessed a subtle shift. I want to get to a quote from you. Experienceon the of scotland, there was a long period of Little Movement when ordinary voters did not pay attention. This was followed by a period of favoring yes. Is awere seeing here suggest in this story is about a shift back to the status quo in line with previous referendum. Tom i think it is more new instant. Uanced. Said this is the dumbest thing, going. Stay within the eu. Others are saying be bold, brings it is a good idea. What i am focused on is the group in the middle who say the hysteria is overdone and there will be a workout whichever way the nation goes. Jonathan i will tell you what the approach outside looking in is that this is a binary event, they either state or leave. The conversations i have had are much more nuanced. Stay and it is close, this is not going away for a long time. The consequences are something we have to deal with. With you coming back, what have you noticed is the big difference over the last three months . Jonathan in london, a much more outside ofn crowd, london, in my own home town, it was like night and day. I imagine that is what we are going to see in the polls as well. Moveties like london, a towards day. Outs