Francine on assignment. Vonnie news out of saudi arabia, japan coming back online, lots to talk about today. Tom the quiet after a big jobs day, huge in decision on what the fed will do. Vonnie listening to some more fed speak this week. We will be getting bank of england inflation expectations. Tom i didnt know that. Michael mckee and will join us in this hour to pick up the pieces. Monday, to our bloomberg first word news. Heres vonnie quinn. Tonie in his latest attempt prevent a u. K. Exit from the european union, David Cameron said that the u. K. Has a National Interest in preventing future conflicts in europe and that requires staying in the eu. I understand why many people are wrestling with this decision and why some peoples head and hearts are torn. I understand and respect the views of those who think we should leave even if i believe they are wrong and that leaving would inflict real damage on our country. Vonnie the british referendum on the eu is june 23 and we are expected to hear from current london mayor boris johnson. He is for the u. K. Leaving the eu. Greece has taken a step toward unlocking the next round of bailout money with reforms to the pension and tax system. The reform will raise taxes for most people. Investors will decide whether that is enough to give greece more aid. South korea says if north korea wants to improve relations, it will have to give up its Nuclear Weapons. At the party congress, kim jongun said he would use Nuclear Weapons only if his country comes under nuclear attack. Firefighters in western canada may get a break. A cold front moving through the area may bring rain and forecasts show the fire moving east. The fire had forced a cutback of 40 of the regions oil output. It also led to 80,000 people fleeing the city of fort mcmurray. Russia marks the 71st anniversary of the defeat ofn nazi germany. President Vladimir Putin met with soldiers and spoke with world war ii veterans. Lobal news 24 hours a day i am vonnie quinn. The russian army presenting beautiful pictures. Tom and i saw the death of the oldest world war ii veteran in america. Ancient. Time is marching. Right now, lets move to the data check. A reset for your monday. Features up five. What dynamics on the 10year and twoyear yields did we see at eight 30, 8 31, and 8 32 friday . Xy almost 95 and oil of a little bit. Canadian wildfires, extraordinary. , 14. 89. I put the german twoyear up as well. Nch but that isu your reset. Lets go over to the bloomberg again. Bond, the fedield meetings along the way, higher yield, no, wrong, down we go. Standard here is two deviations and the extension out. We are back to where the markets are distant from where the fed is. Vonnie the market pushing back expectations for a fed hike after the jobs report. The backend didnt react so much. We have spreads widening. It is a fascinating chart. We are back to where we were last year. Tom you need to get to the june meeting. Lets begin the discussion with that framework. Erik nielsen is one of the great euro optimists. He is with unicredit and he has been more than correct about a resilient corporate europe even as policymakers flounder. How do european policymakers adapt and adjust to the jobs report and the feds responsibility in june . Erik on average, the europeans would welcome a gradual normalization by the fed. It would take some of the pressure off from the ecb to keep finding new instruments to push the easing policies still needed in the eurozone. I suspect you have a lot of support for a gradual couple of moves this year. Tom but what is the catalyst for a couple moves . Within the huge debate and indecision, what is the catalyst if it is in jobs for some big report . And saywould step back the odds are that the fed is quite behind the curve. If you look at the United States labor market, it really isnt in good shape. The threemonth average, you are still running at 200,000. The job reports are fine. Unemployment very low. You have seen the quite tight labor market pushing wage growth or income growth, running at about 2 . Interest rates really have no business being down here. It is not so much reacting to a number but having good enough numbers to normalize. Final quarter of last year, the markets and we four all looking for Interest Rate and suddenly most people are saying we will be lucky if we get two. Erik they came into the year hikes, then they got fooled by the market uncertainty , the big selloff in the first six weeks of the year, and that took First Quarter out. ,f you now look at the median it probably was just four, and then they dropped another one. It looked like a big move, but maybe not quite as big as it sounded. Q1 disappeared. As you indicated, i think you have Something Like a june set up. I guess they would go in july, assuming that britain stays in with the market deals with this brexit business. Vonnie if the fed did move in june, would it cause turmoil internationally as well . Is the market looking more than the fed is . Erik i have not met a single Portfolio Manager who thinks theyre going to do anything this year. I wrote this in my notes yesterday and my email has been bombarded with people who say, you are man. I find that peculiar. I think the macro data are good enough. Bill dudley came out on friday night and said, one city was a little low, but it hasnt changed my thinking. Clearly, ifid very the market doesnt get it tom the New York Times with a lead on mr. Dudley and the new york fed chief believing central bank is on the right track. There we go. We are on the level here at bloomberg. This point, doesnt it seem like there has been so much messaging, the fed pushing it out there, the economy doing well, the labor market doing fine. We may moving june. The market is in responding to any of this isnt responding to any of this messaging. Erik that is a big risk. I think the fed is at risk of having lost a bit of credibility because of not doing anything. For it is really high time them to restore the credibility. Could you imagine that we would leave 2016 with no hikes at all . We came into it with them saying probably four. That is going to be an even bigger problem for their credibility. Tom interesting to see. Ive got to go over the bloomberg here. Fomc go. I forgot what date the june meeting is. June 15, i can remember that. Erik nielsen with us. Our reset on a monday with john writing joining us. Two great and different jobs reports at 8 30 that the fed is on the right path. With erik nielsen in london, this is bloomberg surveillance. Tom good morning. Bloomberg surveillance always from new york and london. Francine lacqua scheduled to join us in the next hour. Im here with vonnie quinn. Right now lets get to a Bloomberg Business flash. Vonnie the imf is warning of a real estate double in denmark. The danish and almost four years of negative Interest Rate. The imf says authorities need to lean against the wind on a home price increases. Apartment prices in denmark are up 50 since 2009. In france, total has agreed to , 1. 1 billion. Saft makes batteries for industries that include transportation and civil and military electronics. The ceo of the worlds biggest shipping lines as negative Interest Rates are hurting the industry. Moellermaersk tells bloomberg the Industry Needs consolidation but negative Interest Rates make it easy for banks to keep week shipping companies above water. That is our latest Bloomberg Business flash. Tom thank you so much. Nielsenlsen erik with us from unicredit. Switzerland out with better news, which is deflation, but less deflation. Theres a number of ways that the swiss do inflation. This is the all in cpi yearoveryear back to the beginning of the American Financial crisis. Heres the great battle for stability. Heres the shock and all of downright deflation. As you predicted, the vectors improving. Hasr it escaped europe escaped the fear of deflation . Erik i think they have. I never worried that much about it. I think we understood quite well what he did and where it came from. Debt is filled by households, the risk of men deflation bad deflation is not aiming one. Your chart was very illustrative. Does oil folding to the new europe calculus . Newdoes oil folding to the europe calculus . The oil price is always like a oneyear effect. In has increased the income and basically put a longer term prospect of growth and inflation coming back. Now we get the latest oil price increases, a faster hit into inflation. If there were still some remaining fear of deflation, i think that is going away now. We found great instability within saudi arabia this weekend. See inow, as we seachange over the weekend, im sure many of you have heard the aged oil minister of saudi arabia is out of the door. Shahine is with us. The new minister is lined up with a new regime of royalty. Tell us about the new minister and how he will deal day today with the king and deputy crown prince. Alaa as you said, the new minister is part of the inner circle of the deputy crown prince. We dont expect any fundamental change. Hes going to defend the saudi market share. The change will be more on the domestic side. This is part of the vision to turn around, from an oil and gas company into an energy and industrial conglomerate. Tom behind you in dubai is the fcclaimed and beautiful di building. Im told that riyadh wants to redux this. They want to open their society, c equivalent and become more a part of global capitalism. Is there any met that the traditional royal family can do that . Alaa they are trying to. They are setting up a financial district in riyadh. This project in particular is dotted with a lot of problems. Dubai is, as you said, wellestablished as a Financial Center in the middle east. Others have tried to do that. Abu dhabi tried. They havent been able to unseat dubai. Let alone the challenge domestically for the saudi society. It is a Tall Mountain to climb. You ask yourself how many financial hubs does the middle east need at this stage. Vonnie how much is he a puppet . He did go to the april meeting ha and agree to a freeze only to uturn at the last minute. Alaa so now that deputy crown prince appears to have a greater say in oil policy. The minister who was replaced was negotiating the freeze deal with opec. Before the meeting, deputy crown prince told us in an interview that his position is still the same. Unless everybody agrees, there will be no freeze. When the meeting started, we saw what happened. We saw what the russian and venezuelan counterpart said, that he did not have authority to negotiate. That points to the rising influence of the deputy crown prince. With bloombergne news in dubai. Let me do a data check as we move forward. Futures up. What a turn on friday. 1. 79 . Oil elevated some of that off the massive canadian wildfires heading towards saskatchewan this morning. This is bloomberg surveillance. Tom good morning, everyone. It is exceptionally boring week, which means we have to pick it up. Vonnie it is never boring in economics. Commerzbank writing this morning that the u. S. Central bank does not increase before election is a common prejudice. We have analyzed behavior of two past president ial elections and cannot find prejudice. We are talking about september year, not june. But theres nothing to suggest the fed would move before a u. S. Election. There is no evidence that the fed pulls its punches. Saying,cials have been we are not going to worry about the u. S. Election, but there is an election they are concerned about in june, the brexit vote. Weve had several Officials Say that if theres any indication the british might vote to leave the eu, we dont know what that means for the global economy. Vote is ae brexit week and a day after the meeting. They are going to be looking at the polls. The polls in england have been notoriously unreliable. Tom the Federal Reserve of the United States of america is going to go british poll watching . They are, believe it or not. Something could happen in the global economy. They dont know what. If they can wait until july, they will. Vonnie why isnt the market believing them . Why is a twoyear yield not moving . Over the past week, weve heard fed Officials Say several good the numbers are enough. If they keep going like this, we want to raise rates in june. Tom explained this chart. This is way too complicated for a monday. Come on, mike. The key is, do people spend money . Wages and salaries and average Hourly Earnings have been going up significantly over the past year. Tom the yellow line is the fed line. They have been watching this. They want the numbers to go up and they are doing it. That donnelly suggests strength from the consumer side, but the possibility of some inflation. Tom erik nielsen in london, which of those two lines do you like . Do you look at the yellow line, the headline, or the bluecollar doom and gloom of average Hourly Earnings . Erik we are on the headline, tom. Tom does nielsen know he can give longer answers . What is this, your first time on air . Tell me about the yellow line. Erik as we talked about before, i think theres a real disconnect between economic reality and the market. It is not only in these two lines. It is in so many places where Market Sentiments are more gloomy than the underlying macro numbers have come around to be by now. The u. S. Is a good example. Tom erik nielsen with us. Mike mckee and i will advance this on Bloomberg Radio this morning with oliver chan and dana kelsey. Coming up, we advance the economic discussion. Hes really quite good. Ten of Deutsche Bank on an interesting and nuanced view of what the fed will do. It is monday. It is bloomberg surveillance. Good morning. Tom good morning, everyone. From new surveillance york and london. Lets get first to the first word news. Oil saudi arabias new minister is expected to keep the country pumping oil at a record pace. He was appointed over the weekend. Some higher cost producers out of the market. The philippines voters are casting ballots in a hotly contested election. Is a controversial there who holds mayor who holds tough on crime. Journalists have returned home after being held captive in syria for almost 10 months. Turkey and qatar out in the release. Helped in the release. Donald trump is questioning the need for Republican Party unity. On sunday shows, he was questioned about lack of support from paul ryan and other republicans. Meanwhile, wall street is giving a boost to hillary clinton. 53 ofh, she received oosts from executives, up from 36 in march. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Tom thank you so much. Most no. Path that that is longterm and consistent depreciation of the South African currency. It has moved over 20 years from four to 14. 89 to the dollar. Rhodope is minister to the president and the cabinet member who has lived the South African political experiment. We are honored that the minister joins us this morning. Give us this day of south africa. We have seen depreciation of the rant. Give me the optimistic take on the future of the nation. Thanks for the opportunity. Firstly, we indicate that we are part of the global economy. We are not isolated. We do not live on an island. What is happening in the cloak also affects us directly. Low down in china also, as a nation of coming from 300 years of colonial rule and 40 years of apartheid, we have to do everything in our power to strength the economy. Our plan is an initial Development Plan and it ensures that we reduce levels of unemployment, inequality, and poverty. Doing all of this in the context of the recession. That is the context. Tom we seek global wall street exiting africa. It seems to be part of every strategic business plan. Usually when did too big to fail is a time fort opportunity. What is the opportunity for africa to south africa to reclaim its econom . We are very resilient. You will recall that last year, a statement indicated our aims to consolidate our budget and that we should not increase our expenditure spending. Our financial prudence in managing the economy. You can only do so when working with the private sector. That is why we are working very closely with the private sector to make sure we stay the cause and also invite Foreign Investment into the South African economy. You will recall that our president announced a onestop shop where all investors would come to one window, one door, and which all issues tend to be addressed. Vonnie how do you anticipate to bring stability to the country after so much instability . Weakeningafrican rand over 30 just this year alone. Investors need you to stick around for a while, right . Tech equalle bit of difficulty. Hishink the minister for visit from johannesburg. As we look at the new globalization, i find it interesting, the backdrop of africa with china investment. It is the great unspoken. We all remember the congo deal. China is the marginal investor in these frontier economies. Isnt it . Erik thats right. It has been a phenomenal 10 years of massive investment in africa, but also south america, for the chinese. Clearly to be out there with the pilates are produced and needed for the chinese growth longterm. The story in africa is the same. They come in with previous on the side, whatever the local minister once, you get it from the chinese. Tom i think what is so important here is save the polarity between columbia and nyu the chinese are not having that debate. Vonnie they are all in. One of the companies we have heard recently is going big in south africa is barclays. To ask you, how does a country like south africa deal with the currency that i mean 25 , 23 weakening you can see the dollar to disappear. Gigantic challenge to have. As long as i have done an economist in washington or new york, there is no that wants tot see south africa 60 yea