Brewing in japan. We have to talk about Interest Rates. Tom Interest Rates is what sets the table. Im really interested in having Mark Halperin join us in the next hour. Last night was the first moment ive seen secretary clinton relaxed. I mean that. Its the first actual moment she has finally looked like herself. I thought it was great. Francine and of course, that may be through her popularity. Popular she how not is amongst many. Lets get more on this with the bloomberg first word news. Caroline thank you. The front runners in both parties scored big victories in new yorks president of primary; first for the republicans, donald trump rebounded from a few weeks of campaign upheaval. Vote, beatingthe john kasich and ted cruz. We dont have much of a race anymore, based on what im seeing on television. Just aboutz bilis mathematically eliminated. Weve won millions of more votes than senator cruz, millions and millions more than governor kasich. Butline trump won all handful of delegates, but the Associated Press says he cannot possible connect all he needs. Meanwhile, clinton put an end to Bernie Sanderss winning streak. Represent won the state represd with 58 of the vote. Today, today, you proved once again, there is no place like home. [cheering] caroline clintons victory makes it almost impossible for sanders to win the nomination; eight states determine his path forward up to the primary fight. Now, the Vice President of brazil plans to downsize the government if president still a is ousted,eff according to a person familiar with the matter. The senate may decide next month whether to open a teacher proceedings. She says she will fight against it. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Im caroline hyde. Tom . Tom equities, bonds, currencies, commodities. Great to have not much going on. Futures take a pause; euro 1113. On to the next screen. Confounding the doom and gloom. Were moving so quickly. Euroyen is interesting, and sterling showing some strength. Euroyen showing euro stronger of the last few days. Francine i also had the yen. This is my data board, the global rally. Down someuities 2. 3 . They were earlier losing as much as 4 , because the pboc doesnt want to do too much. I also looked at yen and crude. Tom very good. A chart and never done before lets go to the terminal and look at real stock market and real inflation. Adjusted real estate. Thaback 20 years; heres inflatn with adjusted housing, the fall over, the recovery. Inflationadjusted. Heres inflationadjusted dow; dow boom, and then we come back to the housing peaks, the dows right there. Heres the falloff in equities and that huge boom we saw, the central bank boom, the earnings boom, the cash flow boom. When the differential over 20 years between real dow and real existing homes. Francine yeah. And i love that you mentioned inflation, because we had some wage growth filtering through in the u. K. This is my board. I did a very simple chart, but whaich quite importantis. But which is quite important. I want to show you that there is a trade we have been trading in that range over the past two months. We broke over the last week. You can see that at least we arent in that lull. Lets get more on the markets and more on Central Banks. The global strategist, joining us, and guest host. Great to have you. Not much going on n. What will go wrong . Anything and everything. Every day there is something new, and the pboc is suggesting they wont ease more, putting markets and if lesser. In a fluster. The most boring thing that could go wrong is fatigue, in the sense that it was working out yesterday, and we had 40 billion euros per month of european buying because of what the ecb is doing. It gives a high correlation between treasuries and bonds. All of this is part of the central bank. Morningimmediately this if any central banker says, hey, you may not get your regular fix. Way, but youlong do sense diminishing returns, even in equities, even in risk appetites. This will play out slowly, because i could come in one morning and think, the world has ended but no new story. Francine i had an important conversation with mervyn king he is a formal Central Bank Governor a former Central Bank Governor. Not only is policy diminishing, its actually creating an environment where governments dont do anything anymore. Yeah. Take the s p are the shanghai composite on the back of easing money, the greater the risk if anything goes wrong. That seems clear or even something as mundane in this as this mornings u. K. Data, just running out of momentum, employment growth slowing down, consumers still piling on consumer debt, now, here . We are not being encouraged to do the most sane things. Ill give you one more from the imf. Tom let me jump in. Francine, help me out. I just stumbled on this chart which is very its eurosterling, and i didnt realize it with a strong euro move we have had, confounding juckes and the rest of the thieves known as strategists, we are about to see it up on the resistance line a strong euro. Would you suggest that euro can breakout through this amazing crisis resistance line, the strong euro, weaker sterling . Think its not surprising that were backing off a little bit. Wed have to get more worried about the vote, more worried about the Economic Uncertainty between now and june 23, and we might need a runup. It might even go back down. But most likely, it is going to be quite hard to push higher unless things go wrong, or less we get really worried about the economy. Tom if its votespecific, how do you, as a pro, position for something as arbitrary as a vote . If no different than going to las vegas and placing a bet at caesars palace. Excuse me, you go to the bellagio. Francine [laughter] its a straight bet. Opinion polls related to close to call; there is probably more weakness on a no. We had a poll here at bloomberg two weeks ago; pretty much everybody thought the u. K. Was bound to stay in. Is guessing the market positioned to some degree for the u. K. Staying in, because that is what professionals in the industry expect. But its a casino bet. Its not very interesting to me. The only thing i would say is that i can see sterling bouncing more than temporarily, covering between now and june, because we will go on being very nervous about the Economic Uncertainty. Tom this is fascinating. I cant say enough how technically correct this chart is. To see strong euro, weaker sterling, it really goes down to what mr. Juckes said, it is nothing more than a bet on the vote to gain euro stronger. We will continue this discussion. Coming up in our next hour, we are really looking forward to seth masters of bernstein, their cio. He joins us at the 6 00 a. M. Hour. Bloomberg surveillance. Francine im Francine Lacqua in london; tom keene is in new york. Lets go to china, where we saw some stock moves. They dropped as much as 4. 5 . Enda currant is our chief economic correspondent and joins us from hong kong. Good morning. These share slides are on the back of the pboc suggesting that it may not move as witches markets are expecting. Enda good morning. Shades of january again lots of jitters in the market with the selloff. It doesnt depend on anything in particular, but when its pointing to is this commentary, which is chinas official news service saying that the pboc can move away from easing bias and guiding the market to expect less Interest Rate. That was followed up by a pboc official who came out last night and told local media in china a similar message. Taking that on the back drop of what has stabilized an economy, it kind of ads to this year that perhaps there will be fewer rate cuts anticipated, and maybe that is what led to the selloff. Francine wrapup for us thats the state of play, and we have better than expected figures in terms of exports. We think the economy is doing a little bit better than we expected. But keep on talking about debt. And wethere is overhang, understand that there are a lot of Chinese Companies that had to wait longer to get it. Enda yeah. This is a divergence in the china story. The headline is that things are stabilizing; thats the narrative. We are seeing improvement, real estate sector showing great strength, a little bit of pick up in exports, consumption holding up reasonably well. Is it is still being driven by credit. There was a huge credit surge in the first quarter, leading people to believe that china has a problem with debt. Peopleing things are worried that we might bring more stress from corporate borrowers. It enda, on a day when seems like there isnt any news, its a quieter day, let me ask you a dumb question. What is the relationship right now with your hong kong in be and beijing . If they are worried about real estate and leverage and debt, how does hong kong fold into the beijing debate . Enda hong kong is very exposed to the china story. It rode the wave of chinas supercharged growth over the last decade, and is now feeling the pinch of the slowdown. It is feeling it in the slower tours of arrival, slower spending in captured goods, and of course hong kong is a highly leverage city in terms of the the amount of borrowing that went on here, betting on it as a oneway train. A lot of borrowing in hong kong to go back to china. There is a view that hong kong is very vulnerable to a slow down, given what is happening in china. Tom enda curra thank youn, so much. Love to have him on on the day where there is a churn to everything going on. One thing we know is that the yuan, the renminbi, will not stay stable. It was widely presumed that we would see managed, orchestrated renminbi depreciation. Is that assumption still true . They try torderly, managed orderly. Tom that worked out. I got volatility. Done now is a deliberate attempt to get control back. We are seeing is the balancing act of maintaining control; if we start seeing the equity market lose its nerve because the pboc has stopped evening because we arent going to pile on more debt, this thing is not stable and the currency in the equity market will be the outward sign of that, or perhaps renewed capital outflows measured in the reserve data each month will be what we see. I think its coming; i think its almost inevitable. Francine do you think this is the path they will definitely take . I think they want to maintain control for as long as possible, and the chinese authorities will choose capital control over disorderly markets any day. They will choose more debt, more easy money, more fiscal expansion over and out of control economy. They still need to maintain the Economic Development of the people. They are not independent of people in china. But its just so unstable. Francine thank you so much. Coming up tomorrow on surveillance, alberto gallo, who has switched votes. He set up a fund to deal with negative rates. It will be an important conversation; thats at 5 00 a. M. Tomorrow. Francine welcome back. Its a sunny day. We wake up a little too early, tom. I dont know what the weather is like in new york. Its time now for our morning must read. Earlier this morning, i spoke with mervyn king; he has a new book out called the end of alchemy. I tried to get into talk about brexit. He says he doesnt want to weigh in out of respect for the Current Governor of the bank of england, but he says that we need to stop sensationalizing. Here he is. British membership in the European Union is not a nexus tension threat to the European Union or europe as a whole. People have calmed down and reflected on that. Francine tom, that was an interesting take. We have had both sides of the debate trying to throw figures out how much it would cost families, how much we have to lose and to gain. Mervyn king being very levelheaded; but i wonder when you go to vote on the referendum , what do you think about . Tom it interesting did he talk about what chancellor osborne said yesterday . Is he going to part of the debate, are is he in a position where he has to stay removed . Francine he has made a choice of staying removed because he doesnt want to influence it, especially because of the bank of englands position, mark carney coming out with a report saying we need to make people aware of the risks. We are is here little bit brexited out. Tom ill say. Francine the neverending referendum is how tom calls it, and yet it is very important. How risky is it . Its the source of uncertainty through june 23, and as i said, the opinion polls are too close to call. I have some sympathy for mervyn king; the world will still go around one way or the other francine but are we sure about that . If not Lehman Brothers . Its not Lehman Brothers . I think most of the stuff that i have seen from all the regular economists i can find insist that its a drag, but the biggest drag is two years of uncertainty to negotiate a new position. Aroundre bigger issues these king his book, chapters on what needs to be done to reform the European Union. I think thats a bigger issue. Immigration in the new world, globalization of and equality, these are bigger issues than where the u. K. Sets. But here for the next few weeks, for sure. Tom kit, i spoke yesterday at new york university, and they let british students at nyu, i dont know what thats about. Brexit was a big topic. Is there any conversation we can calculate, the socalled cost, plus or minus, of these brexit transfers . Is it just a shell game of people talking their book . I think there are a lot of people who will talk their book. It will be hard for campaigners, and for those of us who are not campaigning and therefore trying i just dont see how you can easily come out with a set of data that could save the u. K. Would economically when. Its not the end of the world, but it could give you two years of Economic Uncertainty; you take what the gdp forecasts were and you have a lower one, and the debate for the average voter is in my happier because we left with gdp lower . After that, you do your best. But i think it is to some degree hard for people, and the numbers are less important. Tom thank you so much. We need a briefing on saudi arabia, the changes, the turmoil with the royal family. This is as the president visits saudi arabia. The Gulf ResearchCenter Director for economic research, truly one of the great voices on the domestic dynamics of saudi arabia. Next. Really looking forward to it. Tom good morning. Bloomberg surveillance. Markets churning, futures negative, right now on a wednesday, first word news with caroline hyde. Caroline thank you. Donald trump and Hillary Clinton have ended their losing streaks in a big way. Runners scored doubledigit victories in the new york primary. Trump took more than 60 of the republican primary, with a handful of delegates. John kasich came second. Trump told supporters its not much of a race now. The Associated Press says cruz cannot possibly collect the delegates he needs before the convention. Meanwhile, clinton put an end to Bernie Sanderss winning streak with 86 of the vote. That makes her road to the nomination almost unstoppable. Sanders will determine his path forward after the primaries next tuesday. Criminal charges will be filed against three people in the flint, michigan water case, according to the Associated Press. They say that two state regulators and the employee will be charged almost a year and a half since they used improperly treated water containing lead. The fbi wasnt able to open hundreds of mobile phones over a sixmonth period. The problem is they were encrypted using passwords that couldnt be broken. Fbi officials testified before a committee discussing Law Enforcement and technology. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Im caroline hyde. Francine . Francine thank you. We have breaking news out of the eu. The European Commission accusing of losing its power over the world smartphones. This is something we have heard at th in the past, a concern because googles means of making money is now under threat. Well have more news throughout the day, but the European Commission, tom, the formal antitrust regulator, sent google a letter of complaint. It really does go at the root of what google does. Tom or is this the root of brexit . Americans look at these headlines im by no means an expert, on the dumbest guy on the block but americans look at these headlines like, are you kidding me . Is this like the discussion of britain leaving the eu has occurred . Francine not really. Brexit can be talked in many different things, but google has nothing to do with the u. K. ; the u. S. Is not part of the European Union. The Competition Commission in brussels actually deliberates for worldwide companies. Whether you are in the eu were not. Tom interesting. We will advance that story across all of bloomberg news. The president today touches down in riad the head of history to the united kingdom, i believe for a birthday celebration. In germany, he will be meeting with the king. Of course, heads of state of the Gulf Cooperation Council countries. Theing us now from riyadh, director of economics research. Very important here, john. I will the president be greeted by the royal family in riyadh . Definitely he will be welcomed. Its important visit, the last visit during his administration. But it is a relationship that has been framed not just from saudis but the rest of the world. Obama has to do a lot of explaining to a welcoming group that still needs to see what is the Foreign Policy of the u. S. In the region, and the gcc in particular . Tom years ago, i went to visit you, and i notice the machine gun turrets manned outside your office building. Are there still machine gun turrets in riyadh pointed towards yemen . Still, absolutely. It is a c