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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: dot com the radio plus mobile lap and on your radio,

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Speaker 1: this is a Bloomberg business flash and I'm Karen Moscow.

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Speaker 1: The Bloomberg futures are port brought to u BI sector

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Speaker 1: spider e t F. So why buy a single stock

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Speaker 1: when you can invest in the entire sector? Visits Sector

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Speaker 1: spd r S dot com are called one six six

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Speaker 1: sector et F. Global stocks are rallying the pound of

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Speaker 1: strengthening the mosts two thousand eight on size. The campaign

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Speaker 1: for the UK to stay in the EU is gaining momentum.

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Speaker 1: The UN is declining with U S treasuries and gold

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Speaker 1: as haven demand eases. We checked the markets every fifteen

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Speaker 1: minutes throughout the trading day on Bloomberg SNP E many

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Speaker 1: futures have twenty five points now, EMUNY futures have two

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Speaker 1: hundred eight, NASA documity futures have fifty six and the

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Speaker 1: decks in Germany is of three and a half percent,

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Speaker 1: So is the cat in Paris and the ft one

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Speaker 1: hundreds up three point three percent ten your treasury down

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Speaker 1: fourteen thirty seconds. The yelled one point six five per cent.

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Speaker 1: You don the two year point seven one percent. Now

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Speaker 1: I'm excrude oil up two cent or a dollar seven

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Speaker 1: to forty nine oh five of arol. Call my scold

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Speaker 1: on eight tenths per cent or ten dollars eighty cents

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Speaker 1: to twelve eighty four and ounce the euro dollar, the

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Speaker 1: British pounded dollar forty six fifty the n one oh

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Speaker 1: four point four six. That's a Bloomberg business flash. Tom

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Speaker 1: and Mike Karen, thank you very much. Tom and I

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Speaker 1: are in London all week for the Brexit debate. Somebody

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Speaker 1: who already brexited is Danny Blanchflower. He said he left

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Speaker 1: the country. I was a former member of the Monetary

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Speaker 1: Policy Committee. Now hangs out in Hanover, New Hampshire, in

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Speaker 1: the United States of America at Dartmouth College as a

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Speaker 1: professor of economics. UM, clearly, uh, you find an economic

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Speaker 1: reason to leave, But can you make it? Can you

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Speaker 1: make a case for the economics of brexit. There's a

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Speaker 1: lot of emotion, there is a lot of question about

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Speaker 1: European bureaucracy and whether or not the British have their

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Speaker 1: own can make the determine their own destiny. But at

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Speaker 1: an economic basis, can you say there's a way to

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Speaker 1: be better off without the European Unions. Well, my my

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Speaker 1: dear friend Jared Lyons, who's graduate student with me, has

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Speaker 1: made has made a case, as have Roger Bootle and

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Speaker 1: a number of others in the UK. But dominantly the

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Speaker 1: economics profession thinks that this is a dangerous leap in

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Speaker 1: the dark um, going essentially to who knows where. Yesterday

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Speaker 1: in the Guardian, ten Nobel Prize winners in economics led

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Speaker 1: by Chris Piser, readers and Marlies and others said that

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Speaker 1: this was a dangerous thing to do, and economies the

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Speaker 1: other day and with which I was a signatory, said

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Speaker 1: they thought Brexit was a mistake. I think more than

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Speaker 1: anything that you are going to the unknown. Is absolutely

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Speaker 1: unclear what post Brexit vote world would look like. Um.

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Speaker 1: There are sovereign arguments, there are arguments about the fact

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Speaker 1: that you don't want to be associated with the EU,

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Speaker 1: but I think everybody thinks that they look very dangerous.

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Speaker 1: But what's happened, of course, is that people say forecast

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Speaker 1: by economists have been so absolutely terrible. Many of these

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Speaker 1: economists says that the UK should actually not stay with

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Speaker 1: the pound and should join the Euro. So this is

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Speaker 1: a very complex debate. But I would say, you know,

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Speaker 1: on the one hand, on the other hand, economics dominantly

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Speaker 1: economists think that they should the UK should remain, and

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Speaker 1: with the market with the Pole moves towards that. Today,

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Speaker 1: the markets have seemed to follow that and seemed to

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Speaker 1: think that remain is much safer bet. But you know,

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Speaker 1: I think the poles are too close to call. Who

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Speaker 1: knows what direction the biases. Maybe it looks like Scotland,

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Speaker 1: but I think the economics are you should stay where

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Speaker 1: you are, you shouldn't leave. And uh, how would you

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Speaker 1: go about modeling that? I mean, how do you figure

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Speaker 1: it out if it's if it's so complicated. Well, I

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Speaker 1: think the answer is that, um, it's really very hard

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Speaker 1: to do. You think of it as a shock, I mean,

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Speaker 1: I think the answer is that in the short term

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Speaker 1: it would essentially be a surprise. So you know, Will

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Speaker 1: Will we will be watching on Thursday night if there

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Speaker 1: is a Brexit vote. You would imagine that there would

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Speaker 1: be a sharp surprise to the markets. The rise in

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Speaker 1: in in Sterling that we've seen over our four or

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Speaker 1: five days presumably would reverse itself. But the question then

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Speaker 1: in the long run would things be better, But it's

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Speaker 1: certainly true in the short run that the markets would

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Speaker 1: go into a tizzy, would have a major impact on

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Speaker 1: the on the town. And I assume that the MPs,

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Speaker 1: if there's a vote for Brexit by by dawn on

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Speaker 1: for Friday, the MPC will have an emergency meeting that Friday,

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Speaker 1: and their puzzle, of course, is to know whether to

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Speaker 1: raise rates or to lower them. How do you respond

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Speaker 1: to a group of economists that say the whole thing's

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Speaker 1: overwright Granted it's political, granted it's migration, immigration, etcetera. How

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Speaker 1: do you respond to people that say changes won't be

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Speaker 1: that great within the macroeconomics of continental Europe or the

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Speaker 1: United Kingdom. Yeah, I've heard you, and I heard you're

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Speaker 1: talking st Olivia, Blancheard and others of thinking that I mean,

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Speaker 1: I always think as the role of a central banker

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Speaker 1: and a policymaker is always that you should prepare for

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Speaker 1: the worst and hope for the better. The danger, I

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Speaker 1: think for those who say all would really be fined,

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Speaker 1: don't worry about it if they can't really answer the question,

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Speaker 1: what if you're wrong? What if there is a flight

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Speaker 1: just capital? What if there are more companies than four

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Speaker 1: who apparently today have written to their fourteen thousand members

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Speaker 1: and workers in the UK saying abrexive vote would be

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Speaker 1: very dangerous for them. I mean, clearly that would be

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Speaker 1: a worry. But I think the answer to those who say,

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Speaker 1: don't worry about it all would be, well, is they

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Speaker 1: don't really have a counter too, or what if you're

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Speaker 1: wrong and things are much worse than that and there

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Speaker 1: is a flight of capital and the markets, the markets

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Speaker 1: really worry a lot, and the danger could be that

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Speaker 1: this could essentially be a global shocks of the global economy,

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Speaker 1: perhaps even comparable to two thousand and eight. Supposing that

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Speaker 1: is true, you just can't allow for such a major

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Speaker 1: downside risk. Hence why um Janet Yellen, the President of

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Speaker 1: the United States, the I m F, the O E,

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Speaker 1: C D and everyone has come out and said beware, beware, beware. Well,

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Speaker 1: they do have the swap lines in place. Dollars would

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Speaker 1: be available. Mark Karney can issue a statement and soaking

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Speaker 1: Janet Yell and saying you know we stand by to

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Speaker 1: meet any liquidity needs. How much wood markets really panic? Well,

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Speaker 1: I don't know the answer to that, um, I mean,

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Speaker 1: I don't know the answer to the cause and nobody does.

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Speaker 1: UM that in some sense I still think my that

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Speaker 1: a that a Brexit change has not been priced in today.

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Speaker 1: The market has moved away thinking that actually this is

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Speaker 1: going to be like a Scottish event. But supposing on Thursday,

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Speaker 1: Thursday night, we actually get a Brexit vote, I mean,

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Speaker 1: in some sense that would be a shock. I think,

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Speaker 1: um and that concern. I think the shock and the

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Speaker 1: and the fact that it's not priced in by the market.

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Speaker 1: I mean they were pricing in two days ago. Now

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Speaker 1: it's moved the other way. But if it suddenly swings back,

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Speaker 1: presume the advantasy volatility. Let's do this, professor, Let's come back.

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Speaker 1: Danny Blanche of course, former member of the Bank of

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Speaker 1: England from Dartmouth College. We are in London. Stay with

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Speaker 1: us worldwide Bloomberg Surveillance. We're cutting down at the opening bell.

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Speaker 1: Bloomberg to Boston Bloomberg twelve hundreds to San Francisco Bloomberg

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Speaker 1: nine six to the country series Exam General one nineteen

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Speaker 1: and around the globe the Bloomberg Radio plus Apen Bloomberg

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Speaker 1: dot com. This is Bloomberg Surveillance. Good morning. I'm Karen

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Speaker 1: moscown along with Tom Keene and Michael McKee and the

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Speaker 1: opening bell brought to you by s e I imagine

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Speaker 1: when investment operations predictively respond to regulatory change. See how

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Speaker 1: sc has global operating platform can be your catalyst for

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Speaker 1: business transformation at sc i C dot com slash imagine.

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Speaker 1: Stocks are higher at the open the sn P five

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Speaker 1: hundred up eight tenths per cent or sixteen points to

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Speaker 1: eight down Jones Industrial average up eight tenths per center

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Speaker 1: one hundred forty one points to seventeen thousand, eight hundred

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Speaker 1: nineteen and then AZDAC of one point two per cent

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Speaker 1: or fifty seven points to forty eight fifty seven ten.

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Speaker 1: Your treasury down eighteenth at a seconds, the yield one

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Speaker 1: point six six percent yield on the two year point

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Speaker 1: seven one percent nom X screwed oil at one percent

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Speaker 1: or eighty eight cents to forty eighties six of Barrel

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Speaker 1: and comex schoold is down one percent or twelve dollars

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Speaker 1: eighty cents to twelve eighty two and ounce the euro

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Speaker 1: at dollar thirteen forty three, the yen at one oh

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Speaker 1: four point five zero and the British pound a dollar

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Speaker 1: forty six six. Tom and Mike Karen, thanks so much.

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Speaker 1: We continue with David blanche Flower, of course at Dartmouth

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Speaker 1: College uh and also at one point a member of

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Speaker 1: the Bank Bank of England. As all, Professor blanch Flower,

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Speaker 1: your classic book is the Wage Curve, and buried down

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Speaker 1: at the bottom of it is a reality. Each country

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Speaker 1: is different. You've got wage curves and other European countries.

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Speaker 1: You talk of Canada, South Korea, Australia and other nations.

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Speaker 1: This morning in the Times of London there is simply

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Speaker 1: a discussion of Norway and of the Canadian model of

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Speaker 1: a United Kingdom x Europe. What should we be afraid

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Speaker 1: of or worried about in our analysis of the United

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Speaker 1: Kingdom versus Norway or Canada. Well, that's a great question.

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Speaker 1: I mean, I think the reality is that the people

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Speaker 1: who have been advocating leave have been unable to say

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Speaker 1: what a post Brexit world would look like. Is it Norway?

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Speaker 1: Is it Switzlerserland? And actually one of them actually advocated

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Speaker 1: that the model ought to be Albania tom so imagine

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Speaker 1: that rather than Norway or Switzerland. I mean, the question

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Speaker 1: is what sort of arrangements could be made once you

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Speaker 1: leave the external the free market with its external barrier,

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Speaker 1: um what arrangements would be made with it, with the

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Speaker 1: European Union and elsewhere, And the answer is we simply

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Speaker 1: don't know, and the leavers have been unable to enumerate that.

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Speaker 1: So I think, much as anything, that is the dominant

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Speaker 1: argument of why you shouldn't leap into the unknown. I mean,

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Speaker 1: I think it's literally as a leap into the unknown,

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Speaker 1: in many cases, you'd actually have to pay the paider,

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Speaker 1: if you like, pay the prices paid, the cost of

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Speaker 1: being in there and being able to unable to impact

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Speaker 1: and influence what happens. Generally, want to be inside a

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Speaker 1: free trade area, not outside subject to the trade barrier.

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Speaker 1: And let's not forget the parts of the UK you

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Speaker 1: can actually see France, and a big chunk of the

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Speaker 1: UK actually has a land border. With the European Union.

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Speaker 1: It's called Northern and Southern Ireland, and we have to

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Speaker 1: think what would happen there. So I think it's actually

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Speaker 1: the uncertainty. And I think back to Mike's earlier question.

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Speaker 1: I was just looking at the market reaction, as I say,

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Speaker 1: in the last four days, when it starts to look

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Speaker 1: like the remains going to win, and I just think

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Speaker 1: that's what markets are thinking. They think, golly okay, this

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Speaker 1: is looking better. And I do still think we have

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Speaker 1: to think what would happen on Friday morning if a

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Speaker 1: Brexit boat comes, which is a surprise, presumably the markets

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Speaker 1: are going to tank. And I think that's very like

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Speaker 1: that the improvement we see the six days, I've seen

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Speaker 1: one instantly reverse on Friday morning. My tank is an

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Speaker 1: Ivy League phrase senior year, you know, seminars in macroeconomics.

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Speaker 1: We should point out a couple of quick things here.

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Speaker 1: The markets of open in the Dow goes more than

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Speaker 1: two hundred, almost two hundred and fifty points higher, almost immediately.

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Speaker 1: Supreme Court is releasing some decisions there at the end

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Speaker 1: of the term, and they have some major decisions to release,

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Speaker 1: and they have just released one that allows New York

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Speaker 1: and Connecticut's assault weapon bands to remain in place. They

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Speaker 1: did not strike down the assault weapon bands that were

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Speaker 1: passed by New York and Connecticut in the wake of

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Speaker 1: the shooting of the children in Connecticut a couple of

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Speaker 1: years ago. And so that is an interesting development. Remember

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Speaker 1: this court's divided four to four, but they let the

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Speaker 1: assault weapon ban in those states stand. Interesting. Well, I

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Speaker 1: think we'll probably do more of that and a bit.

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Speaker 1: Let us continue with David Blancheflower. Right now, this is

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Speaker 1: all about economic growth. At the end of the day.

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Speaker 1: We can all agree that. You know, I think of

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Speaker 1: the economist Jeffrey M. L to Geo once said, look three,

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Speaker 1: real growth would solve a lot of problems. When's it

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Speaker 1: going to happen, Professor, I don't see it down the

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Speaker 1: pike for America, the United Kingdom, etcetera. Well I don't.

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Speaker 1: I mean, I've probably been one of the people mostly

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Speaker 1: saying I don't see growth coming. I see that the

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Speaker 1: I the idea that the Central Bank should be raising rates,

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Speaker 1: and I pulled the scorn on that for a very

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Speaker 1: long time. Um think in the US we've seen these

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Speaker 1: very bad job numbers, we've seen slowing in the UK

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Speaker 1: and many respects. Particularly in the last twelve months, we've

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Speaker 1: seen a big decline in business and consumer confidence. I

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Speaker 1: think it looks like many of these economies are slowing again. Um.

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Speaker 1: We saw some decent employment numbers in the UK this week,

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Speaker 1: but when you dig deeper, what you find is it's

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Speaker 1: all part time. Can actually total hours has fallen. So

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Speaker 1: I don't think that these economies are in any way

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Speaker 1: resilient to a shock. To think about the shock we've

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Speaker 1: just been talking about. We're not in a position to

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Speaker 1: cut rates. It doesn't look like fiscal authorities are going

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Speaker 1: to leap in and do lots and lots of stimulus.

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Speaker 1: So supposing we have a shock which looked like what

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Speaker 1: happened in two thousand and eight or something like it,

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Speaker 1: how prepared are these authorities And the answer is they're not.

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Speaker 1: Central banks can't cut rates in the way that they did,

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Speaker 1: So resiliency for shocks isn't there. And I just looked

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Speaker 1: at the numbers for the UK. UK GDP per capital

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Speaker 1: today is one percent above what it was in two

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Speaker 1: thousand and eight. So people are hurting, um, and that's

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Speaker 1: a lot of the reason people are You know, people

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Speaker 1: are unhappy about Remain and go on. But the economies

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Speaker 1: are not resilient. We are in in a sense it's

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Speaker 1: an unfortunate timing because I think another shock is on

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Speaker 1: its way. What would bring that shock on? What do

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Speaker 1: you mean a shock? That elation? I think the business

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Speaker 1: cycle turn, Mike, I means we know very well that

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Speaker 1: there are that the business cycle comes um and this

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Speaker 1: potential shock is coming at a time, probably in the UK,

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Speaker 1: when the economy is slowing anyway. So I just think

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Speaker 1: that's that that's a particular problem if and if there

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Speaker 1: is a Brexit vote, I think it's going to have

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Speaker 1: a major shock on the UK, major effect on Europe

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Speaker 1: and probably on the global economy. The question um that

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Speaker 1: one hairs is though, what brings us to the end

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Speaker 1: of the business cycle. The traditional argument is that somebody

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Speaker 1: like a central bank brings you there. Well, I don't know.

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Speaker 1: I mean, I think I've been on your program many

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Speaker 1: times saying I look back at the previous cycles and

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Speaker 1: tightening cycles as here all you're Often times if you here,

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Speaker 1: guests say in the previous cycle, and Blancheman normally says, well,

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Speaker 1: we haven't had a previous cycle like this, We've never

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Speaker 1: been at the zero lower abound before. We've not been

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Speaker 1: in a situation where many central banks around the world

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Speaker 1: are in negative rates. So I just think this is

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Speaker 1: a new one. This is a one where the global

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Speaker 1: such global growth as we have, is being propped up

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Speaker 1: by monetary steamlus particularly, but there's very little room to

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Speaker 1: respond to a really potentially bad shock. It's just not

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Speaker 1: shocked resilience in the way that it was in the past.

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Speaker 1: When you look at the debates that we are having

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Speaker 1: very quickly, your professor, i'm the coming days. What will

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Speaker 1: you listen for from people like you who are pro Brexit?

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Speaker 1: To me, they've been quiet recently. I'm not pro Brexit,

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Speaker 1: but no, no, I want to I mean I really

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Speaker 1: want to hear some serious analysis. I mean I think, um,

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Speaker 1: they have not. There has not been a much serious analysis.

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Speaker 1: I mean. The other thing to that I want to

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Speaker 1: hear is how you're going to deal with the political

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Speaker 1: crisis that will inevitably follow. I mean, if there's a

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Speaker 1: Brexit vote on Thursday night, presuming the government falls on Friday,

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Speaker 1: so there's been to be political crisis, we have to

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Speaker 1: see a new government. We're going to see a new

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Speaker 1: Prime minister Um, how do you deal with an economic

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Speaker 1: policy when the policymakers themselves are in disarrection? Danny, thank

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Speaker 1: you so much. David blanche Flower with Dartmouth College a

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Speaker 1: DOW up to forty two. This hour of Surveillance potty

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Speaker 1: by Palisades Auty. Visit Palisades Auty dot com. Here's Michael

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Speaker 1: Barr with news headlines. Mike Tom, thank you very much.

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Speaker 1: Big donations from Wall Street contributors could leave if presumptive

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Speaker 1: Democratic presidential nominee Hillary Clinton picks Senator Elizabeth Warren as

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Speaker 1: a running mate. That's according to Political Setting a dozen

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Speaker 1: interviews with Democratic donors on Wall Street. Meanwhile, Donald Trump

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Speaker 1: is meeting today with his top advisors in New York.

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Speaker 1: The presumptive Republican presidential nominee will discuss a political strategy

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Speaker 1: after Trump's staff members tell Bloomberg people in Trump's inner

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Speaker 1: circle are frustrated with what they see as a lack

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Speaker 1: of coordination and communication. The FBI plans today to release

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Speaker 1: a part sold transcript of the conversations police in Orlando, Florida,

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Speaker 1: had with the gunman who opened fire on a gay nightclub.

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Speaker 1: Attorney General Lauretta Lynch told a d c S this

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Speaker 1: week that one goal is to build a complete profile

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Speaker 1: of gunman Omar Matine to help prevent similar future attacks.

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Speaker 1: We are going back and scrubbing every contact we had

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Speaker 1: with this killer, or also asking people to come forward

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Speaker 1: with the context they have had with this killer as well.

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Speaker 1: I think what's important though, is to continue to keep

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Speaker 1: our focus on the victims of this tragic crime as well.

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Speaker 1: The shooting left fort nine people dad. The fourth tropical

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Speaker 1: storm of the season has formed off eastern Mexico. The

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Speaker 1: US National Hurricane Center says Danielle formed in the Gulf

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Speaker 1: of Mexico. Global News twenty four hours a day on

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Speaker 1: Michael bar Mike, Tom and Michael, thanks so much, appreciate that. Again,

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Speaker 1: big moves in the market, the VIC sixteen point nine

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Speaker 1: five from London all this week. Michael McKee and Tom

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Speaker 1: Keen Bloomberg surveillance. Coming up on Bloomberg surveillance, how do

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Speaker 1: you invest with all this volatility. We'll talk with Kate

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Speaker 1: Warren from Edward Jones next on Servants