Welcome to the pulse. First things first. It is 9 00 on the dot. Lets check the markets. The one i want to show you is the tenure u. K. Bond yield. We of a fresh record low. Lows forhave record yield. Overall, european stocks are fallen, but they rally after that allimportant u. S. Jobs report last weekend. Brent crude at 52. 31. Lets get to nejra. Nejra chinas Consumer Prices have climbed 2 from a year earlier. 3. 4 cer prices fell from in april. The deflationary trend has now continued for 51 straight months. The bank o f korea has unexpectedly cut its Bank Interest cut rate to a new low. It needs increased Downside Risk to grow. The kiwi jumps to a 12 month high. But further easing might be required to keep inflation in the middle of the target range. U. K. Chancellor has hit back at claims that he is scared mongering to keep britain in the European Union. Eil, if wedrew n vote to leave, we lose control. People should be under no illusions. Two palestinian men have killed four israelis after opening fire in a tel aviv shopping area. First terrorist attack in the area since january. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. You can find more stories on the bloomberg at top. Francine just a day after he fired the gun on the Corporate Bond buying program, maria draghi says while he is confident that the bank can meet the inflation target, they cannot do it alone. And made the case for structural reform at the brussels economic forum. There are many reasons to delay structural reform. But there are very few good economic ones. The cost of delay is simply too high. Given the interactions between the policies i have described, it is in everybodys interest policye very strains of continue, if only because that will shorten the time it takes for it to produce its effects. Francine draghis words follow bond buying action. This, we areon joined from our western European Bank editor out of frankfurt. That was the message from draghi . I cant do this alone . Yes, fire and coal from the head of the European Central bank. We are going to hit our mandate. It is just going to take longer if governments do not help out through structural reforms, through targeted fiscal policies, and measures to increase two key things. One was employment participation and another was productivity. The participation is important. If youre out of the workforce for a long time, particularly if you are young, your productivity is lower for the rest of your life. You might struggle to be efficient in the workplace and that dampens potential growth in the future. So, you need higher productivity. None of those are here in the euro area at the moment. Draghi says basically, time is running out. Francine the problem also was, when it comes to productivity, it is a little bit like what we can see in the states. We dont know if it will ever come back. How to the first day of Corporate Bond buying go . Many are saying, we are finally seeing what draghi is made of. That is the key thing, isnt it . We will do what ever it takes, we will get to the mandate. Corporate bonds is just the latest age in that. The Corporate Bonds program just kicked off. There are a couple of surprises in there. One was telecom italia, which was rated junk by s p. It still has an Investment Grade rating by fitch. They are sticking to the rules they imposed themselves, but they are in some cases, playing at margins. They see this as a signal, we will hear that mandate. But again, draghi has had to go further than anyone wit thought he would have to. Therefore, you have a self reinforcing problem. That has yet to be resolved. Francine we go back to the horse and the carriage. I know that was one of the arguments that Deutsche Bank was arguing yesterday with the chief economist. Paul gordon, thank you. Now lets bring in our our guest from the first half of the show, jonathan bell. Great to see you here because we have so much to talk about and all in about three and a half minutes. No, on getting. The problem is, Central Banks are doing more and more. How do you see that there is not a safety blanket that actually doesnt allow you actually, hold that thought. I give you a teaser. The ecb is also said to be buying some volkswagen bonds now. We were talking about the risk the ecb was trying to take. A quick comment on this, jonathan . The ecb is buying bonds. Without they were buying we thought they were biting bonds that were a little bit safter. As long it has one Credit Rating as Investment Grade, than they can go ahead. So, with utility bonds francine you are right. You would expect them to be buying at the shorter end. And with the other bonds we have talked them out, going up six, seven, or eight years. They want to make an impact across the curve, if they can. That is right at the bottom of the Investment Grade. But they really have a problem and that is what was highlighted this morning. They have taken it as far as they can. We have Interest Rates at negative levels and we are finding out that actually, there is no more room to cut Interest Rates any further. It does not seem to have much of a benefit once you go below zero. Francine but they are buying volkswagen bonds. They can do a lot more. They could use helicopter money. This is a big difference from when they would buy asset security. But they did not get very far. With these Corporate Bonds, they can go a very long way. We have already seen Corporate Bond yields fall. The problem, in my mind, is they are taking them down to very low levels already. You have got this in japan, borrowing 1 on shortterm loans. You cant get lower, presumably, than zero on corporate credit. Unless you are prepared to give money for nothing. Francine this goes back to what i was asking about risk, right . They are most like they need to save the world from the ugliness that it could be. In the you have chief economists, and also other politicians, may be arguing, the Central Banks are doing too much, which is deterring us from doing more. I dont think we are at that stage. Because you can look at the things you have mentioned in terms of positive growth. In the fed 18 months you have had 18 months of exports. They have got an economic problem they need to address. As well as cutting Interest Rates, what they have also done they have this package to help banks to alleviate some of the nonperforming loans. It is all about, can you get money into the real economy . Francine jonathan, thanks for all of that great analysis. We will be talking more also about earnings. Stay with the pulse. More is coming up. Why june has proved to be a month where everything moves higher. Go, tonyh two weeks to blair says britain will vote to remain in the eu. The rest of the exclusive interview. And we will look at one of the prospects for one of the worlds top tech companies. Francine welcome back. This is the pulse. Look at to the Bloomberg Business flash. Nejra shares are trading higher this morning after becoming one of europes biggest Public Offerings this year. 17. 4 of its 17 fo shares. They are transforming themselves into a Renewable Energy jarden with a value of 51. 1 billion. Discussing the purchase of softbanks majority stake in supercell. This could give the game maker 9 billion. This operates china most popular messaging services. Japan softbank has been selling assets to strengthen its balance sheet. Delivery business lobby available to u. K. Users in central and eastern london. This is the first on the service has been offered outside of the u. S. The billionaire investor is concerned about the outlook for the Global Economy and the risk of that large market shift. A spokesperson for soros declined to comment. That is the Bloomberg Business flash. Francine as mario draghi makes the case for structural reform to meet inflation targets president he european says he is confident he also brushed off the brexit risk. Economically speaking, we can see the economy is recovering. What we are now discussing is what needs to be done to strengthen the economy. British referendum, of coarse we hope for a positive outcome. That is much more positive from an economic and political point of view if the u. K. Stays in the eu. Dombrovskisldis will be speaking at the forum and we will bring you the headlines on the bloomberg terminal. Now, lets get more from jonathan bell, the chief Investment Officer at stanhope capital. We spoke about Political Risk and we just mentioned the Monetary Policy risk. First of all, where do you see the bond market . Is being pumped up by Central Banks across the world. That is an area where you have to be concerned about the returns you can get longterm. Francine but a bubble that will remain for five or 10 years . I think it is more about deflating, rather than bursting. It isnt going to burst. What it is going to do is german bonds on average, are giving you a negative yield. You know you are not going to make any money on german bonds. Thee is the risk, of course Interest Rates will go up and he will make it worse returned than that. You can say, yes but yields might go more, negative, but that is a shortterm gain. Longerterm, you are either going to make nothing with the risk that you could lose more. That is a deliberate double. That feeds into other highquality assets. From japanese bonds with negative yield to Investment Grade bonds. And then you have to think, anything that is really highquality has sort of fed into the same kind of bubble. Yields of 2 , for example, that is not a proper yield for a commercial property investment. Francine so, this is not the monetary economic backdrop. How do you add economic risk to this. What about the brexit . The odd thing with the brexit havectually, the odds increased from 18 to 28 over the last 10 days. Sterling has hardly done anything. I think anyone would have said, as the chance for a brexit increases, you would expect sterling to fall. Francine that is because we dont believe the polls anymore. That is not a poll. And it may be that markets actually dont believe the bookies odds either, which in the past have been a good guide. The markets of the moment are saying, the chances will remain. Just looking at stirling, if you have a brexit vote to leave, you will the stirling head towards 1. 30 against the dollar. If we remain, we could bounce to 1. 50, but not much more than that. The impact on other assets in the u. K. , for property is a bit negative. But there is a real economic impact, not only in the u. K. , but in the eurozone as well. Francine we are two weeks away. Do you need to change your portfolio or purchase gold or anything . You need to look at your Currency Exposure because that is where the biggest checks will come. What we have been doing is, we have been looking at portfolios and saying, have people got the right balance given their liability . The interesting thing of course, is what happens the day following the vote . If you vote to remain, i think there will be a bounce in the markets by a couple of percentage points. If we leave, you need to be in the dollar. That asset will bounce. That is the decision you have to make the night before. Francine thank you so much, jonathan bell. , how june has seen a rally in both save havens and risky assets. Than we bring you our chart of the hour. Francine welcome back. I want to show you my chart of the hour. These are the returns on various assets over the first seven days of june, since that weak jobs numbers. You can see risky assets, and save havens, which have rallied. , for are they just betting that Central Banks will bow to keep the policy loose for longer. Jonathan bell is still with us. Jonathan, i love that chart of the hour because it encapsulates what we have been talking about for the last 30 minutes. They are bubbles out there, but we dont see them because of the safety blanket of the central bank. What is the ideal time for people in the market to get out. To get out . Francine you need to get out. When there is a bubble, you think of them bursting and you have to get out. Jonathan you have to think, inre is a bubble commercial and residential property. Francine independent of the brexit . Jonathan i think independent of the brexit and that is almost on a crane count. Whenever there are that many cranes in central london, that has to be a concern. That is independent of the brexit. I dont think there is a bubble in a markets, to the same extent that there is money in the fixed income markets. If you come out of highquality, you can look at areas and find value. In bonds, for example, sure there is high yields over investmentgrade. There isnt a bubble. In equities, you want to look at perhaps, not reducing your quality exposure. It is looking relatively attractive. The markets themselves, they are not in that big a bubble. Slightly expensive compared to history, but compared to where Everything Else is, i dont think that will be much of a problem. Francine when you look at the rates, and i have this other chart showing us for the first time in 12 months, we are seeing more analysts upgrade earnings for companies. Anything below this red line means analysts ve been downgrading the future probability of earnings. Again, this is earnings on cuts. This is not based on real growth. Jonathan in europe, you have seen revenue growth, but that has not turned into profit growth. The yearts start fairly optimistic and during the year, they have had to keep cutting their forecasts. So, you see no growth by the end of the year. It is good to see some upgrades now. But it is worrying. There is still a problem with profit growth. Conversationad a with a fairly large italian businessman. They say that with the ftse they can make longerterm investment. If you dont have the incentive to invest in the future, what happens to these companies . Where are we in five years . Jonathan you are seeing the returns for investors coming through cash flow. Not through the Companies Investing to grow. But that is not surprising when you have overcapacity. When you have overcapacity, companies are going to want to invest. Francine but what does that mean for your stock picks, or the Industry Groups that you like . Equities areyour giving you a Free Cash Flow yield of 7 in a dividend yield of 4 , you dont need much in the way of Capital Growth to get a good real return. Youcine jonathan, thank for coming on. Up next, the former u. K. Prime minister tony blair says britain will flow to stay in the eu. We will bring you the best of that interview. We also speak to labor imp, that mcfadden. We want to ask, where is labor . Can the remain cap vote if labor does not weigh in more . That is our discussion, next. Francine welcome back to the pulse. Were live from bloombergs european and orders in london. We are getting u. K. Train data of bloomberg terminal. The figures are a little different than we were expecting. Getting april eu imports have stagnated. This is the latest. This is in the midst of this Brexit Debate. Weve seen most Economic Indicators affected by this referendum on june 23. Waserday, some of the data better than expected. First quarter trained data gap at it is difficult to actually take these numbers too seriously at the moment. It gives us a little bit of a growing at what investor cash a glimpse a little bit of a glimpse. Weve seen a tiny bit of an impact on this traded cap, total trade gap. Markets generally lower this morning. Lets head to the bloomberg with mark barton for your asset check. Mark i want to show you a lovely chart. Excuse me while i click on it. This is the World Exchange market capitalization index. This is basically the market capitalization of all the worlds stock markets right now. Were at 64 trillion, roughly flat for the year since february 11. Look at that. 56 trillion was the market value then. To 64lion dollars trillion. It shows how far and how fast weve come since february 11. We reached a record high a year ago on june 3 when the market cap of the world stock markets was 73 trillion. Ofes you some perspective where we came from a year ago and how far weve come from those lows in february. Lets get to todays news, big data out of china, inflation data, deflationary pressures eased further in may. Consumer price gains continued to be subdued, offering the central bank some scope to ease further. 8 r prices fell to fell 2. 8 . 2 Consumer Price index rose from a year earlier, less than the median forecast of 2. 2 . This is a very clear chart showing you how both those indices have fared since 2013. The red line is zero. Cpiclearly below zero, above zero. The big news on Central Banks today, not only korea cutting Interest Rates. That was a surprise. But new zealand keeping Interest Rates unchanged. It also said it expects inflation to accelerate. That was the surprise. Maybe some were expecting a more dovish leaning. The kiwi has risen to the highest level in a year. New zealand policymakers keeping the official cash rate at 2. 25 for the second straight meeting. Governor Graham Wheeler saying he expects inflation to reach targetof his 1 to 3 earlier than previously expected, giving him further scope to delay monetary easing