There is news out there. Every nuance is interesting. We move on to the challenges of venezuela over the weekend. I would suggest you have in your lead, brexit, front and center. We will talk about the brexit dynamic over the weekend. Francine we have more research and survey saying we should do this or that. Lets get to the first word news. In iraq, a series of attacks have killed at least 29 people. 14 died in the attack. A series of bombings killed 15 others. Dozens more were wounded. It is the fifth straight day of attacks in or around baghdad. In saudi arabia, john kerry met with about conflicts. He is trying to shore up a fragile truce in syria. There have been violations on both sides. Discuss syrial again tomorrow with the Russian Foreign minister. The first time, joint military exercises will be cooperative into missile launches from north korea. Six weeks to go before the votes. The campaign over whether the u. K. Should leave the European Union is growing more caustic. Invokes hitlers name, supporters arehe losing their compass. President obama took another shot at donald trump. He told graduating students ignorance is not a virtue in politics. Trump not mention donald by name, but criticize the campaign for antiladen tech antiintellectualism. Tom says it is going to heat up. We go right on. They blend in with mr. Trump making comments over the weekend. Lets do a data check. It is quiet out there. Euro weaker. The two sentence spread, i will get to it in a moment. 95 basis points. We begin to get near 50. The brazilian riau, weakness. It is important because we will talk about the finance minister in charge. Story saying we should remember the bond bust under his watch. This is the picture for what i am looking at. Asiapacific index rose from a onemonth low. Yen falling a touch. Tom the difference between the 10 year. We are getting back here. , going not seen this back to the slowdown. This is the recession. It gets your attention. Francine it is not sustainable. Go for 10oom to years. You canp it takes hope it expects to widen. This is my char, looking at s p 500 index valuation, this is the fed model. You have earnings yields, the 10 year and white. Is the spread between the s p 500 and the u. S. 10 year yield. Technique referred to as a fed model. Lets get to our guest host. When you look at my chart, i am not sure what this tells us. Central bank action is dampening how we look at risk or when you look at earnings, it has a leg up . What it was trying to achieve, it is trying to take Interest Rates at the floor level and hoping that some of this will translate into a transfer. This will filter back to the real economy. Francine it is not being translated into anything concrete. I would argue you have tons and tons through holdings of equity. It might be why, when it comes to qe, the ecb tried Different Things. The kind of Wealth Effects on which we can count in the u. S. Is probably less powerful in europe. Our german exports goods because they are good or are germany exports good because demand is bad . It is not bad at all. The problem germany has at the moment is how they will react to fact that the demand for german goods is not great at the moment. Corporatereaction of germany to this is to cut costs further. This may reflect slow wage growth. It is modest related to what we had last year. It means we are not going to get any kind of inflation acceleration, even coming from germany. Tom within all of this germany being a good citizen or are they worried about the euro and do seeing exports . Slowdowny is trying to. It is clear they dont want things to go to fast. , probablya warning any ideasrther away of debt neutralization. Theyare clearly feeling a limiteddragged into transfer unit and they are not comfortable with that. Francine they said we just need to give them a little bit of time. How do you look at italian banks resurfacing . It we were not comfortable with that. It was coming back very badly. When it reflects is we do not have enough neutralization on the banking issue. Italians are dealing with their banks as a mutual is asian. They are trying to get the strong banks. For now, there is no banking unit working through. It is not about trying to revive lending. It is trying to protect the weaker link. Tom we will continue. An important interview with tim obrien on mr. From. Coming up, one of our scenes of we. Ck and all shock and a Robert Mellman with an exceptional note. Francine tom keene in new york. Lets get to the Bloomberg Business flash. A recordoogle facing antitrust fine. Is European Commission planning to find google 3. 4 billion. Google will be banned from manipulating search results to favor itself. Norways Sovereign Wealth Fund wants to join a class action suit against volkswagen involving the fake emissions test. Tosays it is acting safeguard its. Initialnsidering an public offering. The timing will depend on how its battle with uber plays out. That is our latest in business flash. Isncine the Brexit Debate long ranging. Sam is our London Business chief. Great to have you on the program. We had an eventful weekend. Thate two months away from referendum. Mark carney came out with comments saying be careful because brexit has an impact. Probrexitersd by. This is a quote saying look, if we are going to answer the other policy,nts of monetary we have a duty to explain that tothe british people and parliament. He is getting flack because he seems to be weighing in politically. Click that would be his argument. That is what you saw a reiterated yesterday. They are saying you should reside. I am amazed at how little airtime the probrexit people get. What is going on . Are they not getting their message out . Them . Media blocking what is the back story on the lack of the messaging by the probrexit people . You have two separate arguments. Are going to keep pounding on what it means to your pocketbook, your chance for employment. On the other side, youre looking at political leadership. Francine the rules mean they need to get 50 of their time. If we did leave the eu, it cuts red tape and makes the u. K. More. Ompetitive those critical of the eu, brussels has tied them up in rules and regulations. Particularly those who do not enjoy the trade benefits. Tom a couple of articles in the telegraph. Where will this debate go over the next two weeks . It is not about math, who is going to win or lose this. Where does it go . We have seen the hitler button pressed over the weekend. You are going to continue to see the camps pursue what they think is the best argument. David cameron decided it is about the economy and you will see that. He is accused of running a project fear. He used it as the best argument. People are worried about income and job prospects. That is the one card he is going to play. Six weeks out, on the day, it will be a gut choice for a lot of british people. How you can shape that is anyones question. Tom we will bring you back. Simon kennedy getting us started on a week of brexit with Bloomberg News in london. Coming up, a conversation for the under secretary for International Chain international trade. We will talk about the spirit of trade and possibly the death of tpp. Francine we talk about the fed and currencies. Tom keene is in new york. Gilles, when you look at the dollar, some better than expected consumer spending. Investors can shift their view on what the fed does next. Things i dont think will shift quickly. The last two or three months, it is consistent with a prudent fed. I do not think things will change. They were counting on a much more hawkish fed. Want from weaker currency. They have been trying to move away from this focus on the currency, which was apparent last year. Has different thresholds. As long as we are there, the ecb can feel fairly comfortable. It is something that is not playing in their camp. Tom let me introduce a chart we are going to use. The wakeup call last week. The white line as amazon, redline is macys. They are in sync and something changes two years ago. Having a little to do that. I am sure you are seeing that in europe, the new consumer, the new consumption, the new retail. Will there be a consumer spirit in europe . There already is. It is one of the things that has changed. In most countries, it is a contribution to growth. Contribution from trade is neutral the negative. Investment is not ready to take the lead. In many cases, it is happening. The key is when you look at the son why we have domestic doing ok, most cases you would find it is a reflection of a fiscal push. Spending is doing well because there is a better sentiment in europe. In most cases, the driving forces because we moved to a fiscal. The thing that we will monitor for the remainder of the year is whether or not we have the means fiscalinue this relaxation. There is no other driving force for us. Tom thank you. A great briefing for the morning. Friday was as, change in retail in america. How lousy retail sales appear to be when you look at Department Stores and how sales are when you look at the data. Francine it is intuitive. If you look at the way we shop, it makes sense, but you overlay the with the risk of economy and it is a challenge for janet yellen. Coming up, the current cfo for the world bank. Catch that interview at 4 00 p. M. In new york, 9 00 p. M. In london. Tom oil at 50 per barrel. Jorgen writing up this morning on 50 per barrel. Were not like there yet, but we are watching. Francine all about nigeria. Tom maybe it is all about nigeria, you know more than i do, but 50 is not between dollars. First word news. Vonnie Hillary Clinton will have a job for her husband. In charge of revitalizing the economy. Donald trump says if he is elected president , he will likely have a very good all not likely have a very Good Relationship with david cameron. He called his plan to ban the visit. Trying,ts have been it wasing to evidence revealed scores of attempted attacks on bus lines, airlines in the u. S. And europe. Greater manchester called an incident at a game of fiasco. Suspiciouson a package was found. T turns out it was not a bomb speaking of soccer, no one will be cheering harder against ludlow. Then the ceo tells bloomberg that they lose 1. 4 million for every game that england wins. Vonnie quinn. Tom francine is betting on whether or not i will screw up bloomberg every morning. Thatine we are betting on shirt. Tom this is lost in translation for our international audience. The president is appealing to rural america. They will split firewood in kentucky if the vote does not go well. The president and secretary clinton are going to split firewood in appellation. Look at that shirt. Francine you know what, it is a very powerful message. I was looking at the papers over the weekend. Bernie sanders came out with a new campaign and basically if accusing, like any art, that Hillary Clinton is out of touch. It s those doing kissed his bit to show he is in touch with the american public. Tom he looks like kenny logins. Francine he looks american. Tom he looks like he is going to launch into johnny cash, or something. Francine fresh data out of china. The april readings on retail. Bloombergshis bit to show he ih with the american public. Tom he looks like kenny logins. Monthly gdp tracker shows that chinas growth has slowed. Lets get to the head of asia research. Great to have you on the program. And you look at china, it is not really playing out on the markets. A worse than expected trio of data. I think this has to be taken into the context of one month ago. The ppi trends have been the best we have seen since 2008. Industrial profits are showing the best trends in two years. There is conflicting data. The picture is opaque. We try to look through the boom and look at things like apparent consumption of commodities. They seem to be robust. Francine your big take away is there will be toms along the road, volatility, but actually, in china we trust. There is a time when significant change is required. Were still looking for reforms to come through. The main question is whether they can deal with the slowdown that will inevitably come in china. The Northern Trust securities, we believe they can. The most liquid centralbank in the world. They have significant firepower behind them to deal with the bumps on the road. Tom you do with they do in chicago you really deal with the minutia. Thats take up one of your of your charts. This is chinas ppi. I always look at food inflation in china. Tell us about the Business Space and china. This is usually important because the diversions we have seen over the last five plus years has held up capacity in china. It is the industrial sector versus the demand environment. The strength we have seen has been a supplyside strength. As you rightly noted, it was on food inflation, pork, and vegetables. On the other hand, ppi, the industrial sector, the trend we are seeing is showing the industrial sector is becoming slightly more profitable on the margins. At the margin, the outlook looks to be improving. Part of it has to do with oil prices. Tom lets summarize that with the understanding that they will completely clear the old industry space and bring a new one in. How did they migrate from a debt induced space now over whatever the new is . That is difficult. I think the market is struggling for the last 10 years, we have been looking at china as a cyclical story. In the think is we are midst of a secular longterm change program. They may not be able to do it. At the margin, were seeing tertiary gdp taking up a greater portion of gdp and primary sectors combined. That is not yet coming down into consumption. There are mechanisms in place to cause this rebounding to happen. We also have to remember, this is the largest most liquid centralbank in the world. Coveragerop the ratios, they have enough cash right now to cover five times mpls than peels being reported. Francine this is a huge transition. It comes down to whether the authorities can manage it. Ithout they crises or risks should we be confident that china can get through this ok . From a very selfish point of view, look at china, what matters to us is what kind of traitor do with them. The improvements we had the beginning of the year was a reflection of a push. They probably can keep things together. The problem is we have gdp growth at 6. 5 , but chinese imports are falling. Problem for us. We have a disconnect between gdp data and imports falling. Already, in the world economy, we have negative traction from china. That is the reality. Francine thank you so much for being on with us today. Douglas stays with us and we will be talking about oil next. This is the data we are looking at. We have a lot of european markets closed. Overall stocks, downside. Crude oil and nigeria, Goldman Sachs admitting the market is rebounding quicker than they thought. Of it will darken the door our world headquarters. We are thrilled, in the next hour, to bring you the smartest guy on the block on oil with a major Public Policy resume. Eger will be here in the next hour. We need a briefing to get up to speed. We do that with michael mckee. What you have on oil . Michael you remember the man camps of north dakota . People flocking to these states for jobs. Good pay. All of that is over. Oil prices plunged, people got laid off, and the legacy is left. On auto loans. 7 produceginia does not oil, but the fracking boom lowered the price of natural gas so much. You see results in West Virginia as well. The National Rate is only under 7 since last year. Remember home foreclosures . Take a look at this other chart. After plunging for years, home foreclosures starting to rise again in north dakota. A real problem. Tom you know this utter than i do better than i do. Has to analysis. One is a better American Economy when you ask out x out West Virginia, north dakota, and texas. Michael texas at least has some offsets. North dakota, a real problem right now. For chile, for the national economy, a very small part. Francine how does this for in i love hearing about north dakota. Goldman sachs basically admitting today that the oil market is rebounding a lot quicker than they thought. How much does this have to do with the flaring up in nigeria . Does it mean we are still fixed in the 40 50 . Michael that is the interesting question that no one seems to know the answer to. I have talked to some analysts who say we are producing more oil than we need, but it is a bet that that could slow down very quickly. The question is how quickly chuckled to be open new wells or drill the ones that are open and then cap chacko it seems to be a question that no one knows the answer to. Francine thank you so much. Douglas, when you look at the oil price i am reading from the terminal. They cheering volumes cut by 30 . Also significant in china. What does this tell us about the supply and demand balance and oil . Ituglas the first point is either a supply and demand issue or a u. S. Dollar and Market Forces kind of issue. Over the last six months, oil has been property for global risk. Having said that, when talking about supply and demand, the supply side has been driving the price over the longterm rather than demand. Demand has held relatively stable when we look at volumes. I think one of the trends happening is in the short and medium term, they are trying to build up stockpiles. The utilize twice the amount of oil per gdp. Francine there should not be such a strong correlation with the markets, right . Is that fair . I think that is unfair. At any point in history this is a commodity that has Something Like five times the amount of open interest rather than the real demand. Francine what is different . ,ouglas in different periods Different Things drive the oil prices. I think we are now approaching a period when oil related supply and demand will drive the forces. Partly because of supply factors. The implications for china, for the ppi, are very positive. Tom if i do my math right, 5 growth in chinas 20 of over seven years. That is way more than developed economies. You just assumed that china keeps gaining . Douglas not at all. There are arguments each way of what the true growth rate is. We are interested in the trend. Is it ge