Tanks another 98 employees good we are going to see employees. We are going to see the bloomberg taking us out. We are on the euro stoxx up by 1 . The ftse 100 up by 1. 1 . The cac up just shy of 1 . In forive start priced european stocks. Caroline significant moves in the euro stoxx 50. Check out on the fx market. Currently similar moves we saw in asia. On was that risk flooding into the equity market in asia. The british pound up. 4 , up against 31 of its trading partners today. The euro up. 4 higher. They are one of the most accurate forecasters of the british pound. 1. 15. 15 brent crude up 3 . We got a great oil guest coming up. U. S. Pulling back production and boosting overall crisis. Lets get more on what is happening in the wood of business. First word news with selina wang. Caroline could voting has begun in britains the stork referendum. Britains historic referendum. We will be following all of the action with special coverage tomorrow. The ecb has reinstated its waiver on greek banks using the countries junk rated that for collateral. European central bank junk rated debt for collateral. European central bank china is said to be stepping up stimulus by still in its efforts to hit growth targets this year. The fiscal deficit will receive 10 of gdp in 2016, more than triple the governments stated ratio of 3 . According to economists, they say that will strengthen the hand of the state even as policymakers say they want a bigger role for markets. House democrats are staging a sit in on capitol hill, vowing to continue until republicans to agree to vote on to on two the control measures. It put republicans on the defensive on an issue that has extra significance following the orlando massacre and an election year. Global news, 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. This is bloomberg. Caroline. Caroline celina, thank you very much. Janet yellen, is she happy with Market Expectations . It may be difficult to answer but when it comes to communication to market, markets markets, she has done little. A strong dollar, if it is negatively impacting trade exposed sectors, but on the other hand, we do have consumer spending. Balancing everything out, we have an economy that for the. Ast four quarters growing 2 growth was quite slow in the First Quarter, at the end of last year. It looks to be picking up. We are watching things, i dont want to send a message of pessimism about the economy and where we are going. Guy that was day to. That was day two. Satisfying Market Expectations when it comes to rates. If you take a look at your bloomberg this morning. This morning, the yen has not changed a great deal. Hike,ssibility of a rate less than 50 . At the beginning of 2017, less than a 50 chance. The market is expecting not anything for a very long time. Whats lets welcome our guest, Charles Newsome. It is not much chance of anything happening anytime soon. It is interesting i did get the slight feeling and some of Janet Yellens testimony it wasnt much there, but it was some thing that caught my eye when said the key test to keep whether inflation continues to make progress. That seemed to me a slight softening of the language which i thought was interesting. Caroline we were hearing from guy that the probability of a rate hike being pushed out all the way past 2016, not even until 2017. Do you agree guy is janet yellen do you agree . Is janet yellen happy . Charles i shouldnt think she is happy because i would think she would want the market looking for a rate hike. I am fairly convinced we need some we need to move rates up a little bit to make banks slightly more probable, particularly in europe because banks make our lives much easier it we need working banks to work properly easier. We need working banks to work properly. This is the 10 year break yields. We got break yields at 1. 48. Is that miss priced . Idea. S i have no guy where is inflation going . It is not near target. You would think the state of the u. S. Economy, yellen is going to want to see the white of inflations eyes. Maybe even going further before she even considers a hike. She needs inflation. At the moment, it is not going anywhere. Charles inflation is falling which is kind of bad news. About wagehat pressure . Charles i am not an expert on this. I wouldve thought there is an element of wage growth coming through but not a great deal. Caroline sinnott of the mystic about the u. S. Economy or how are you so not all of that optimistic about the u. S. Economy . In a global context, lets face it, the u. S. Equity market probably looks the most attractive. Global equities have been driven by u. S. Equity performance and the ceos and u. S. Businesses to look like the most attractive place to put money. They are the best place for capital. There is an element of trust. Even with the rest of equity markets, europe has put a promise but not delivering. Guy equity versus bonds, do you pile into equities . The bond market is so stretched, but it is the widow maker if you are going to continue to look at a shortening treasury. You have to bang your head against the wall on. Think some Corporate Bonds which is like equity. Youre going to get a better return. More to come plenty more to come from Charles Newsome. Immigrants holding a sit in immigrants holding a sit in on the u. S. House floor. Democrats holding a sit in on the u. S. House floor. We are going to get more next. Guy 41 minutes past the hour. Lets go to Bloomberg Business flash with selina wang. Thank you, guy could Goldman Sachs has told 98 employees in new york that their jobs are being eliminated. It brings the number of dismissals to over 350. Goldman has been reducing staff as it seeks to whether slumps it volkswagenng has refused to sign off on the actions last year of two of the carmakers toward members. At the first Shareholder Meeting since the cheating scandal erupted, the german to ratify winterkorn of martin who was chief executive officer good Current Branch chief officer. Current brand chief linked to the public notification of the scandal. One of africas biggest Renewable Energy developers has raised money to raise its footprint. Isis planning a venture that gigawatts of clean energy in south africa, senegal and gone up by 2018. The ceo told us that the project has made Good Business sense. We are coming in at half the price of new coal in south africa. Al oru want to build co wind and solar. If is it is half the price of new coal. Is your Bloomberg Business flash. Energizeddemocrats are holding a sit in on the u. S. House floor that has the potential to shift the dynamic and a volatile electionyear. In a volatile electionyear. What are the details, billy . Give us a sense on what the sitin is all about . A. M. U. S. About 11 30 eastern time, the democrats led by the lieutenants took to the floor in refused to give up. Not were saying they were going to leave until they got votes on gun control legislation which they have been sinking in the wake of orlando and other shootings. That led to 16 hours so far of and a bige floor quandary for House Republicans who hold the majority. They dont want to give those votes of the have other business to proceed with. Caroline a long day for you, 16 hours. Republicans try to get some sort of actual votes done in other areas regarding the zika virus. How strange has this become . How rare is this . Billy it is unprecedented. The current minority leader, nancy pelosi, turned on the lights turned off the lights on republicans in 2008 on a debate and gas on a debate on gas prices. After getting word that this vote on the zika bill, House Republicans are going to pack their bags. They were supposed to leave town at the end of the week for the fourth of july week off, but they are going to quit after this vote. Tonight, democrats [indiscernible] billy. Anks our congressional reporter joining us. Newsome, reporter give us a sense of how european investors should be reading the line over there and whether it will have impact on portfolio distributors . Gives a sense of how we should play this one. Strauss call it depends of charles it depends on donald sterling. , i canclinton at work see why some americans like her. I can see why some americans dislike her. For me she seems the sensible win. Date to clearly the polls would suggest that. He did seem to have a lead trop, however, you can since having recently been to america does engender quite a lot of support. People like what they have to say because of some of his policies. You can feel they want to support him worryingly. Guy i want to come back to this conversation of bonds versus equities. A lot of people are frustrated with the traits they see in front of them. Here is an interesting chart. With the trades they see in front of them. Here is an interesting chart. , just shy ofead 4 . For people in search of yield, in a low yield environment, and if your income fund the nobrainer of equities is as simple as that . Or when you look at what is happening with the fixed income story and the appreciation youre getting by getting into it youre getting by getting into treasuries, how do i work this one through . Bonds just look like a disaster zone. Charles one should think carefully about this, because i have seen a lot of investors and prominent market professionals make big errors in the hunt for yields. This in 2005 and 2007, people looking for more yields at lower rates and making silly errors about their investment. My firm belief is when you invest, you must invest with the utmost intelligence and looking for yields by try to be clever, buyng i am just going to u. S. Government bonds, because i think i can make a capital appreciation, just strikes me as daft. Ok, have some insurance in the portfolio, but purely hunting for yield because that is where you are likely to get the best returns, strikes me as a dangerous. There been many instances overtime or people have looked for yield, pressed too hard. If youre not sure what to do, you must sit and wait and be patient. Said thereoline you seems to be value in the united states, value in the equities could gives a sense of where the gas equities to give us a sense wherethe equities does the dollar go . Charles i think the dollar will continue to strengthen. That comes from the point there has been such a strong trend of the dollar of late. I think the trend is likely to continue. It was interesting what mangino had to say earlier. I think that is likely to continue. It also seems to me for u. K. And european investors, whats europe has clearly got some attractions, until weve got a Banking System that is properly functioning in europe, allocating too much towards european equities, strikes me as a bit foolish. Guy Charles Newsome from investec with us through it the show. We are minutes away from the european open. Some corporate movers in todays trading. Tesco out with First Quarter sales. Just a reminder that vw goes ex dividend today. If you see a big move on a stock, that is the reason why. Caroline a beautiful morning here in berlin. , big screen to watch football between australia and iceland. The dax futures signaling a flat they. You were talking about ex dividend on volkswagen. Shareholders not agreeing as these two. Lets get into some of the u. K. Stocks. Guy we are going to take a look at tesco. They are out with test numbers. It is going to be interesting to see how the stock opens up. European stocks opening up a little bit higher this morning. Lets bring in Charles Newsome. You are not a fan. Charles i am not a fan of food retail generally, principally because the returns on invested capital in these Food Retailers is not that good. The margins are poor. Tesco has had the best and that is the reason white Warren Buffett reason white Warren Buffett but his. Reason why Warren Buffett bought his. Margins are poor and a lot of competition. Theres a lot of morning thats a lot of money being poured into a lot of money being poured into, and driving down margins. I can see an argument saying they have fallen too far. Maybe there is a principal bounce. As a longterm investors investor, food retail would not be on my list. Guy we think tesco may have been in positive territory. Markets expects to open up around 1 . I want to take you about to the w ei function. This is what we are seeing. A fairly decent bounce being priced in for european equities this morning did the fair value morning. The fair value cancellation. Caroline, were up 1 . Caroline we did see a Risk Appetite out there in asian trading. China being excluded from that. Hurt. Akers being overall, there has been Risk Appetite going into equities in asia, flowing through into europe. Keep an eye on tesco and we are group. Plenty to digest. Pretty gray in the u. K. Futures up. 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. You are watching on the move. Im guy johnson. I have Caroline Hyde come over in the city of berlin. We are moments away from the start of european trading and caroline has your morning for a. For your morning brief. Caroline it is voting day for the brexit. Economists see the economic gap in china. How far will the government go to hit the growth target . And banks under pressure. Lets talk about how this open is going to go. Away and looksds like we will see a reasonably positive open here in europe. So, we are called up on the ftse by. 8 . Continental markets will open up a little bit softer. This is what is happening and as you can see, we that is the ftse 100 beginning to open up. We are beginning to replace some of the losses without towards the back end of the session yesterday. We will see how the cac opens up and look at what is happening surrounding the dax. The cac is beginning to rally a little bit as well. For the london markets, we have a reasonably strong open, followed by the German Market as well. Caroline keep an eye on that cac this morning because we can see french pmi data coming in below expectations. Manufacturing, 47. 9, well below that 50 figure, which signals expansion. This is in contraction territory. We got prillaman are numbers, 29. 9. We got preliminary numbers, 29. 9. That is well below estimates. Matt, give us an idea of what is happening . Matt as far as the broader 0, a strong open this morning with all 10 Industry Groups rising. Telecoms and consumer discretionary, doing the brest. If you take a look into the cac, you will see a different picture. I can pull that up and see how the friends training is broken down. You actually see some pretty with gains here as well only utilities showing this decline. Let me swing across to a couple stocks we are watching today. First off, guy was talking about tesco yesterday. That coming put out store sales that were up by. 3 , rather than the. 2 they were expecting. It is a small and marginal being, but every little bit helps. The stock had taken a big hit, nown by 1 3 since april, o concerns that the price cuts will hurt profitability. The cdc is recommending against flu mist. Azenicecas they said they have got to consider the fact that they will have declining sales because of that. Volkswagen is actually gaining right now. Hasvolkswagen brand head put out a statement. This means to be a bureaucratic thing. They have to wait until the investigations are finished before they can sign off on the actions of those executives. Guy . Guy mr. Miller is making jokes u. K. T you creat supermarkets. Now i have seen it all. Lets focus on the French Economy. The data again, coming through weak. Manufacturing, 47. 9 with the forecast 48. 7. , 49. 9s services pmi with a forecast of 51. 6. The French Economy is not pulling out and you wonder if there is this option of massive fiscal stimulus. How do you deal with the French Economy right now if you are mario draghi or Angela Merkel . The second engine of the eurozone is not firing at all. How do they pull themselves out of this nosedive . I think that, for european investors, obviously, france is not working. We do think there are opportunities, but clearly it is not working just yet. And therefore, be patient. What are they going to do from here . I find it extremely difficult to work out. I am no expert but they are going to have to do something fairly drastic and fairly quickly. Caroline interestingly, charles, we get gdp figures for france tomorrow. We are already expecting that growth for the Second Quarter because of the strikes that we can see. This is so hard for the french government to put into place, the necessary reforms. The evening in labor laws that is necessary. Is it reform that is needed in france right now . It is certainly reformed that they need, but they need to bring the french people with them. Clearly, the french continue to rail against any reforms that the french politicians but through. Until they can gather people up drivingnder people into decisionmaking, it will be difficult to achieve anything in france. Guy this is in the wake of the fact that we do have large plays. When you talk about fiscal stimulus, will they be allowed to deliver that . If you look at the rules under which they are bound, and you look at the pressure put on them from brussels and berlin, is the french government capable of delivering a fiscal push at this point . They are trying structural reform, but that takes ages and they are struggling with that. They are going to have to do something because if the economy continues like this, the whole of the european experiment is goign tng to fail. They are going to have to stimulate these economies and get things moving. For germany and brussels to continue, it is bec