Will the fed chair change your view of the u. S. Economy . Morning, less than half an hour away from the European Equity market open and what is session it was yesterday. The bulk of the European Forces up 3 . Some really stellar gains being posted. Today, this is the fair value column. It looks like london is good to sink a bit but only 1 . Elsewhere it looks like we are going to add to those amazing gains. Starting to see a little bit of the correlation between what is happening in the ftse and the rest of the market. Have a look at some of the assets. The pound coming off of its lows, it was trading lower. Now we see it trading flat. Yesterdays stellar gains that we saw it on the equity market. We saw it in the pound surging 2. 4 . Today, just flat. I signed a light on the dollar index. We are seeing it slip for a fifth day. The longest losing streak and 11 weeks. Yellen takes the hill as testimony starts. Will she sounds more dovish . Stocks rallying on what might be said by the federal reserve. The japanese yen is the main underperformer on the major currencies. The story of the dollar weakness all a part of the yen, climbing. 5 . That helping to light the stock market. Lets get to number first word news. Lets get to bloomberg first word news. Britains referendum on European Union membership remains too close to call todays before the vote. Separate polls show leads for both sides. 42 . Thet remains cofounder of leave eu campaign told a bloomberg that uncertainty reigns and no one knows what the outcome is going to be. It is strong to leave. I doubt anyone really knows. Someone tell you they know what is going to happen, they are lying. The june meeting of australia essential bank shows it held recent positive economic data. Reiterating that inflation would remain low. It cap change jesse cap rates unchanged. It kept rates unchanged. An International Event like britains Eu Referendum plays out. The senate voted down a series of measures intended to prevent terror suspects from buying guns in the wake of the orlando massacre. Two of the defeated proposals were offered by republicans and two by democrats but none reached a 60 vote threshold needed. Some republicans say they are working on a new effort to break the years long deadlock over guns legislate overdone station. Legislation. Global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. This is a bloomberg. Caroline . Caroline thank you very much indeed. We said that the top, billionaire investor sounding the alarm on brexit. Joseph searles says the pound could fall 20 if the eu if the u. K. Votes to leave. He would scale by his sizable investment in the u. K. Earlier this month. Li king to bloomberg, ashing spoke to us. I hope they dont leave. If brexit happens, it will be detrimental to the u. K. And it will have a negative impact on the whole of europe. It is not the end of the world either. Guy lets welcome our guest, s p global ratings. You have indicated that you feel the u. K. Will lose its aaa status were there to be a leave the vote. Is that a binary decision . U. K. Votes that way, the rates changes. We are going to see how it goes the first day. Is it as binary is that . Is not very fuzzy, it is pretty much binary. If brexit wednesday the day, if brexit wins the day, it is more likely that remain will win. If brexit wins, the rating which is still aaa with a negative outlook on the u. K. Would go down. If remain is the winning faction, you need to see what comes thereafter. The initial expectation of hope of the Prime Minister has been this referendum could help to heal old wounds in the party and in society. This may or may not happen right now it looks as if the campaign has become pretty personal. It is hard to see how they can kiss and makeup. We will observe the markets. Guy the politics are affected . Morris it is the part will economic policies be impacted. We are of the view that u. K. Has one of the strongest governance standards and visibility in the world. Will this persist . History has a cautionary tale that goes back a long time. In the 19th century after the repeat of the corn laws. T is pretty similar yet the conservatives in the Prime Minister, forgot his way but a few months later his government was finish. Thes quite difficult from current perspective to see what the politics will be like. That is what we will be watching. There is uncertainty there. Whether those are of decisionmaking and predictability and effectiveness of policymaking can persist after this rather controversial and crisis campaign. Caroline the u. K. Sovereign rating is under threat. Will remain in . Or will we exit . If you have a brexit vote, the rating would go down. Stating that he clearly. Stating that pretty clearly. Clearly, the world does not end there. We have to look at the future and assess what will be the future of policymaking in the u. K. There is a possibility that life will be the same after the referendum that it was before the referendum. On the other hand, this might not be the case. We will have to see whether we can continue to base their aaa rating which is the strongest that there is. There is just a dozen countries left. Whether this is still based on the same strong institutions, it is unknown. This campaign done to change your view of britain . Hasnt changed anything . Anything . Changed hasshifted your view it shifted your view of policy trajectory . Has the world moved on in terms of what you have seen here . The genie could be out of the bottle. We are thinking toward thursday. Lets get the referendum and see the results. The political life will go on. Look at the Scottish Referendum which was relatively clearly one won by the remain camp. Did this with the end put an end to the debate . It did not. Look at quebec which had a referendum on independence from canada. Many years later had another one. I really think we have to look beyond thursday even if remain wins. What does this mean for policymaking in westminster . We think the institutions are strong good they probably have selfhealing capabilities are strong. They probably have selfhealing capabilities. The conservative Party Reunites and that in a semblance of unity and continue to govern like a single party. We dont know that yet. I will hope our hope is that we will go back to the old standards but can we be sure . I dont think anyone can be. Manus guy thank you very much indeed. The secretary that is on the league sides of the fence, get her take on whether she feels the conservative party has the ability to self heal. Brexit is that the only risk out there. Spain has not been half governed for half a year. How to make sense of the bond market next. Caroline welcome back to on the move. A rather jury berlin a rather dreary berlin. The best day on the dax since march 2015 today we can be a little more cautious. Janet yellen, will she be more dovish . Thank you. Frances largest insurer plans to increase possibility to 2020 by seeking 2. 1 billion euros of cost cuts and intensifying digital investments. The Company Wants to tap growing demand for policies protecting savings in health after targeting and adjusted rate over the next four years. Thetions have arisen about space to expand into china. It held its shareholder meeting. We said our mission is to connect everyone in the world and china is a part of everyone in the world did we are learning, study the world. Where learning and studying about the chinese market. Well see what happens. Tidjanet suisse ceo sete Tidjane Thiam says the companys share prices are being hurt by a high level of short positions. Funds were wrong to assume the bank will have to raise Additional Capital or to Credit Suisse has lost half of its market value since he took over last july. Tesla is said to have chosen shanghai as its Production Based in china. It signed a 9 billion deal with the City Government owned firm. Allowld about it would tesla to avoid a 9 a 25 levy. Today the trade is reasonably unchanged. We have seen a big move within the european complex. A brexit is only one factor for many of these nations, certainly spain. The nation goes to the polls on sunday for its second election. Mauritz kraemer still with us. A couple things i wanted to do, we talked a little bit about the brexit. Betweenthe spread germany and spain and it is coming quite sharply over the last few days as we witnessed this move in the polls. Lets come back to this be scenario and talk about what would happen if there were to be a brexit. Do you think you would see significant spread widening echo do you think that is something widening . Do you think that is something the ecb would handle . At the time when the polls the brexit wins today, [indiscernible] it seems to rebalance in the spreads go down. T is no coincidence the same way we would see with currencies, right . You have a brexit, put pressure on some of the safe haven currencies like the swiss franc, etc. That we can assume. The deeper question here on the bond market, Government Bond market in the eurozone is one of our levels, i would say. You have 10 year german bonds basically at zero. That is in the environment of an inflation target of the ecb, of close to 2 . If we have a longterm rate and we are 50 year bonds, belgium and others being sold at yields just at the inflation target, this could signal that markets believe that the inflation target, even in the longer term, maybe decades, if that were to case if this would be to be the case, eurozone would be with problems. It is a call to see how this spreads between the periphery and the core because if we do not go back, if the ecb loses control over the longer term over inflation, the spreads are inexplicably tight. Of ne give me a sense made leaps and bounds in terms of reforms. How much is it in the eye of the storm when it comes to brexit . Because of its significant dependence in terms of trade . Moritz we have measured the other sovereigns in europe. The vulnerability toward brexit. Island is ireland is top of the list. They have a lot of exposure, not only on trade, but it is the most exposed in terms of migration flows so that the share of irish citizens living in the u. K. , compared to the regular population is way off the chart. I had a lot of investment fdis, so ireland is the most exposed. Not even ireland, we would think as far as the rating is concerned would be at risk. In ireland, you have a small open resilient, flexible economy. It has gone through a pretty big shock. Intact. Ome out fairly it is not undamaged, with a black eye, yes. We think it can weather the u. K. Brexit. Man guy you dont think there will be downgrades on these type of countries. You took about this mechanical downgrade that would happen. There is this domino affect referendum clear that is gripping many people in europe. You will see similar copycat scenarios taking place. Are you not worried that is something youll have to look very carefully at . Moritz i dont think so, because of will happen in a brexit scenario, it will be a very long process of trying to figure out a new relationship between britain and the eu. When greenland left, it took three years. That all ofemember the incumbents are facing pressure from the own populace, eurosceptic movements. They have no incentive to negotiate a sweet deal with britain. They are beingnk punished . Moritz this is not a pushover for either party. This will take a long time. If you were to find an agreement, this would be in a treaty form. The treaty would have to be approved by all parliaments and a number of referenda and other countries. Maybe even the u. K. There are a lot of veto players. Maybe a decade of uncertainty where investment is going to be reduced. The u. K. Is more dependent on capital employed because of its Financial Center than any other country in the g7. The demonstration effect would be such that a copycat referenda are quietly are quite unlikely. Us. Stay with minutes away from the European Equity markets open. Eight minutes away and we are to take a look at some of the corporate movers. European forces had a massive day, up 3 . We will dig into the details and tell you what we think is going to happen when the European Markets open. Guy welcome back. Five minutes until the european open. What to be expected in terms of corporate moves . Big costcutting out in asia. The market takes that one. I want to talk about amplatz. Its all wes is falling. It saw prices falling. Years ofing another 10 a difficult times at the eye and or as the Iron Ore Price continues to adjust. We could see some fairly big moves. I mentioned stuff happening within the resources sector. European markets are a little more flat. We softened a bit over the last half hour. As you can see, the ftse is pulled down. 2 . A 3 down 20 . Pulled down. 3 . Keep an eye on exactly what is happening, clearly the bond market story is going to be one to watch out for. Ets flag up what is happening caroline . Caroline interesting story on the german side of the equation. Whether we will see the german court overruled the bond purchasing and stand back from where the bond is back bundesbank plays its role. The volkswagen volkswagen today. The to reject the diesel scandal. Conducting an independent investigation. A gloomy day in germany. Bright and breezy in london. 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. Guy on the move good morning. You are watching on the move. I am alongside caroline hyde. She is in berlin. We are moments from the start of morning trading and caroline as your morning brief. Caroline we have warnings of a black friday for sterling. An exit would hurt everyone, we are told. The polls tighten and fresh doubt is built up. Hill when she ss a speaks to lawmakers later today, guy. Guy lets talk about how we think this European Market open is going to go. Today we think it is going to be slightly negative. Unsurprising, given the scale of the gains yesterday. The polls are vry tight. European markets are opening this tuesday morning. Lets show you where we stand. This is the picture. Lets take you to the terminal. These are the gains with a yesterday. Lets see how the ftse 100 opened. Here we go. Yes, its beginning to trend lower. And you is now opened, can figure is beginning to edge a bit lower. The cac is beginning to follow suit, as is the dax. Markets, allean beginning to soften up. The ftse 100 is down by 0. 5 . What is going on below the surface . Lets find out with matt miller. Matt it looks like a risk on day from what we saw from asia overnight and what we are seeing for example, real weakness in the yen right now. This is fx ip, which is a great screen to follow all parents the information to follow all currency information. Lets take a look at the imap here on the stoxx 600 and see which sectors are moving down and which are moving even further down. Almost all of the sectors we are looking here are broken up on the stoxx 600. Telecoms are the worst. Energy though, the secondlargest. Telecoms are not a huge sector compared to energy. The reason there, we see drops in crude oil and many commodities. So, you will be miners and Energy Companies down today. Lets look at the individual stocks that are moving. Very weak last month, down 21 . Hemont. Is down. 8 , ric axa has come out with bank estimates that were in line with the estimate. For example, 2. 1 billion euros in savings by 2020 and investing one billion euros in savings. And there you see glencore, as i said. Energyand companies are down across the board today. A stronger performance yesterday. This is after the remain rally really kicked in. Today we are softening up a bit. That is the financials of the week. Lets let this reset. On the banking sector, we are down by 0. 5 . Lets bring out guest back into the conversation. Is there i in trying to understand magnitude here. So, you downgrade the u. K. As a sovereign walk me through the read into the Financial Sector. We have been clear on the sovereign. The Financial Sector, look at the banks in the u. K. , they are significantly lower than the sovereigns. Enough have to read across into other sectors here. Guy you dont think, there would be concerned surrounding funding, shortterm funding and mediumterm funding. Certainly, and there are challenges coming up with brexit. That would be because of the uncertainty. Been discussions about what the economic consequences would be, whether there would be a recession or not and what the slowdown would be. This would have an impact on the quality of the banks. But to be honest, i dont know what the economic consequences would be. It is hard to say with any degree of certainty, this is how the banks are going to be affected. On that front, we prefer to the how the situation unravels. Rating action would not be hinging on the economic situation. It would be hinging on the global weakening of the political institution. It is not affect the Financial Sector directly. It does not affect the Financial Sector directly. Caroline if we do see a vote for remain, would there be any up taketicks in any particular areas . Could there be any affect in terms of Credit Ratings on that side of the industry . As i pointed out, our best case from the beginning has been that the u. K. Will remain a member of the eu. Gsat is builtin to our ratin currently. I dont have particular insight from that first active. Caroline you are so focused on the political risks that could affect the United Kingdom in terms of its political rating. Indeed, what about concerns about the current account . Is this an area you have been focusing on for the u. K. . I believe that the u. K. , of all the countries in the eu, is the country that benefits most from inward investment, in the past. It is quite, you know, legitimate to question as to whether or not this will be the case. We have a prolonged period of uncertainty as to what the relationship will be. What will you be investing in brita