francine: brexit begins. the u.k. votes to leave the eu. cameron resigns. mr. cameron: the british people have made a decision to take a different path. i think the country requires fresh leadership to take it in this direction. i will do everything i can to steady the ship over the coming weeks and months. but i do not think it would be right for me to try to be the captain that steers our country to its next destination. francine: stocks plunge as brexit triggers world recession fears. says it is ready to provide 250 billion pounds of
extra liquidity and take necessary steps to ensure stability. welcome to -- we are seeing stocks across the world really plunging. the pound at a 45-year low. i want to show you the breakaway for the euro stoxx 50. it all has to do with the safety blanket. there's a clear move, some calling it a shot for the banks and homebuilders. we are live in brussels, paris, and berlin. here in the u.k. capital, anna edwards is in berlin. westminster. we will bring you global coverage throughout the show. let's get you more on those dramatic moves. we have three boards to get through very quickly.
it has been brutal. we know from traders that they haven't slept. 700, but the ftse is above that mark. we had mark carney saying he is ready to act and providing extra liquidity. that has put a little bit of a safety blanket on the ftse 100. this is a picture for euro-pound. this is a very clear bid on to some of the havens. we are seeing losses like we haven't seen since the financial crisis. we haven't seen it since at least 2008. barclays down, unicredit down, dr. sandra banks, we may be expecting some kind of swap to make sure these are ok. we are not insinuating anything, but keep an eye on that.
final board for the homebuilders. if you look at the stocks that are most under pressure, volatility index gaining some 34%. let's get on to the guests. theave anne richards for hour. then, former ecb president jean-claude trichet a speaks to us from paris. joining us later is john. first let's get to anna edwards in westminster, matt miller, and manus. the prime minister saying half an hour ago that he will step down. what is next? triggers a big discussion within the conservative party and a vote for a new leader. bysaid he will be gone october. the next conservative party conference will be in october. he's also talking about when we
travel article 50, the part of the lisbon treaty that sets in motion a time horizon for negotiating britain's exit from the eu. he wanted to reassure the markets and individuals about stability in the weeks and months ahead, or at least the fact that article 50 would not be triggered straight away. this is a monumental event in u.k. history, breaking with 40 years of integration in the eu project. one professor talked about this as the biggest political development in europe since the fall of the berlin wall. it raises questions about the future of the united kingdom. people in scotland voted to stay in the eu. matt miller, let's get to you. matt: it has been extremely energetic here. have beenese traders
here since 8:00 p.m. last night. the moves in the pound started around midnight, dropping further at 2:00 a.m. when it became clear that the leave camp had far more votes than the remain camp. leveragee trying to de- a lot of the clients, but most investors were completely wrong going into this, investing in the remain camp. they've had to unravel those. we're talking about margin calls all night. everything was limit down. u.s. futures can only be down 5%. other assets have come back. the pound came down to 1.33. traders here telling me the bank of england gave them a little stability and cameron's resignation erased some of the uncertainty that still remains. with that, i'll toss it over to
manus cranny. manus: thank you very much. david cameron doesn't want to be the captain any longer, but there's one man steering the ship of the markets, mark carney. 2013, he ran the central bank of canada. many say he was responsible for canada avoiding the disruptions other people had. he said the bank of england will not hesitate to take action. the banks are better capitalized than they were at the height of the crisis. 10 times more capital in the banks around me. a very different banking industry from the crisis that we looked down the barrel when lehman's went under. the bank of england is prepared. it has done extensive planning. they will watch the volatility. we've got to wait and see weather today is the day they
may take action. they are on watch. it was the voice of a very steady captain. wastone and indication resolute. francine, back to you. francine: manus cranny, anna edwards, and matt miller with us throughout the day. let's welcome our guest host, anne richards, the chief executive of m and g prudential investment arm. she's just been in the job three weeks. congratulations and good luck. also with us is chris weaver. what was it like? you have a lot of investments. our people pulling out? is this a lehman type moment? anne: that is not the case, but it is a surprise. the markets weren't expecting this. everybody was in the belief that remain had pretty much won. interestingly, we moved quickly
from panic into starting to find a bottom. francine: chris, when you look at the banks, deutsche bank down 25%, barclays down 25%, are they going to need extra liquidity? >> i'm not convinced by that. i've been asked by your correspondence a lot. what is the bank doing? making sure they have liquidity available. i think that is important. the other big factor is they've told them, get out with your clients. there could be claimants -- francine: rbs down 18%. socgen down 18%. these are companies that have already been battered. >> we are not going to northern rock, i don't think, but what we have is uncertainty about earnings, the economy, recession. what happens in the capital markets?
there will be very little activity in the next few months. what is the earnings impact? francine: stick around. let's go to guy johnson. guy: the gmm function allowing us to see across the face. we've been hearing about the fact that there may be signs of stabilization. continental markets are feeling the pain more than the ftse 100. etaken theas r 6000 level. island down, belgium down, the cac 40 down. the reason for that is a very straightforward one. the drop in the british pound, with so much of the earnings both outside the u.k., making it very clear that they are global businesses.
the revenue streams are global. the reported earnings story should translate positively. going to be interesting to see how that one translates. the pound is still down. it is finding stability. 1.38. around let me show you what is happening with cable. you saw this drop that matt was talking about. mark carney stabilizing the ship as manus was saying. the fact that we're not going to see an instant resignation from david cameron, allows some sort of transition mechanism to take place. article 50 is not going to be called out straight away. the next prime minister will do that. there will be a pre-negotiation period. you've been talking about how the banks have been hit very hard. that is very clear down at the bottom of the stoxx 600.
gold miners are doing well. all trading sharply to the upside. interesting to see some of those stocks getting on the front foot. some of the global for two stocks, rolls-royce in positive territory, glaxosmithkline in positive territory. chartse 100, this is the over the last few days. above where we were back on the 16th. we are trading north of that. the ftse 100 has bounced. francine: i wonder whether it has bounced on what carney said. let's ask anne richards. i just want to quickly look at pound-dollar. this is during the height of the financial crisis in 2008.
this was this morning. brutal moves. we weren't prepared. yesterday, some exit polls thought we would remain. the positioning of the markets was the other way. anne: what you are also getting is, the question in the currency market. because there's this dollar, you yen and are seeing the money go in that direction. what you are seeing in the stock market outside of the banks is people looking through the immediate uncertainty into what will happen to the real economy and who is going to be the long-term beneficiary. you are starting to see the differentiation, short-term versus long-term impact. francine: we are getting some live pictures. we have donald trump arriving. i wasn't expecting them to show it live. he's going to scotland. we heard from nicola sturgeon
this morning. it may put another scottish referendum. how much volatility? we thought this vote was going to decide whether we are in and out, but there are so many questions. anne: it is interesting. i would argue there's more clarity today than there was yesterday. at least we know what the answer is. i think this very strong vote in is very significant. we have a fractured political environment. currentthink the scottish government would have that as its top priority, but now it is going to be to the four. francine: chris, what would be the first priority for bank ceo's today? >> i think they want a message of support, but if i do run into
difficulties, and they are in pretty good shape, that that is going to be there for them. these guys have still got to support the real economy. it is about how they continue to serve the u.k. and the european economy. hopefully that ameliorates some of the concerns about falling growth rates. francine: looking at live pictures of donald trump arriving in scotland to inaugurate a golf course. how does that play into his hand? it was a little unexpected. he wanted brexit. anne: i think it is so interesting that he's coming to scotland today. he's struggled to get any local politicians to engage with him. he has been regarded as a divisive character north of the border. challengesutional have not gone away for the u.k..
as we go into david cameron's news this morning and what that means in terms of leadership elections, we've got an awful lot to be sorted out in the political arena. francine: chris, this feels different to 2008, or does it? if you look at the pound, it is worse than 2008. why does it feel different? >> central banks have been much more prepared for this. we looked at how those banks are compared to before the crisis. that is common across the industry. i just think they are better positioned to deal with it. having said all that, the uncertainty will not go away for some time. what is this going to do to their day-to-day business? francine: i jumped to the conclusion that we're not going
to see a run on the banks, but does it feel different? i think it does. you are not going to worry about which is the next domino to fall. francine: not systemic. >> not at all in my view. anne: i would agree with that. you are seeing the focus switch from u.k. to europe, but it is very much in terms of the solvency and the quiddity of the banks themselves. this is very short-term. nothing evil is going on. then we will find the floor. francine: central banks have been preparing this for at least 12 months. i want to bring in jean-claude trichet, the former european central bank president. he's lived through a couple crises. thank you for joining us from paris.
this is chaos. does it feel as bad as 2008? mr. trichet: it is absolutely normal to say the market would be surprised by what happens. obviously it is difficult to understand why a lot of smart as betting on remain when the result is quite substantially in favor of brexit. i'm not surprised by the hectic market this morning. i think it is a normal reaction and we should not panic. banks, not only bank of --land, which is up to the all the other major central banks cooperate in order to face up with the challenges. i have no short-term anxiety. francine: if you were still head
of the ecb or any central bank, would you press to have activation of swap lines or a blanket of safety, or would you wait until next week? be, ifchet: if need there is a real liquidity problem, which would be confirmed, of course the central banks have all the weaponry necessary to cope with it. they can take decisions rapidly and swiftly if necessary. i don't think that we have to , whichquidity problems would be taken seriously by the central bank. the problems we have are more medium-long-term. both in terms of real economy in the u.k., in the rest of the world, in europe, and the political problem, which is very
big, gigantic in the u.k. not only because the prime minister leaves, but because scotland might leave too. of course we have the repercussions on continental europe. francine: what do you think is going through the minds of central bankers? draghi, butand mr. actually it is governor kuroda and the snb that probably have the toughest job today. mr. trichet: i'm not sure i understand exactly the question. question is, if you have to defend yen and the swiss franc, how would you go out it today? all, it is: first of not my responsibility obviously. as far as the swiss franc is
concerned, you could see that the bank of switzerland has already intervened and i have confidence in their capacity to do what is necessary. the yen is part of the so-called core currencies of the world. i would expect appropriate discussion at the level of the major central banks of the world in order to have some kind of coordinated move if necessary, not erratic individual move, but coordinated move, as we did after the tsunami. we had a consultation at the ,evel of the major currencies the core of the international monetary system, and we had a message for the markets. i would recommend that if need be. we have to let the dust settle down a little bit. francine: what is your biggest concern of art from monetary
policy? can we put the genie back in the box? we had donald trump arriving. do you worry this is an implosion of the eu? mr. trichet: you must remember, the u.k. was not one of the founding fathers of european union. the u.k. hesitated a lot before entering. the u.k. entered only because it thought its own interest were at stake. we are not in the same universe, i would say, from the cultural standpoint in the u.k. and the rest of the european union. we will see what happens. i take it that the european union with its 27 countries now has a lot of historical responsibility. -- historical in never is of historical endeavor is of extreme importance. the reason it started, to have a
big domestic market, to emulate the united states of america. it is even more compelling today because you have china, india, all the emerging world, and so it seems to me that the 27 will interest,eir own which is to remain united. we will see what happens. there are a lot of challenges, enormous challenges, but the u.k. is a special case. was not on the same league as the others because history is at stake. we have to respect what the u.k. people have decided. but it does not represent in my opinion the other countries in the european union. i'm confident personally that
the european union will go on. the 27 will go on. francine: just for our global viewers, tv and radio, i want to keep you up-to-date. banks are following 12%. .e are seeing volatility in pounds, some brutal moves earlier on. there is political crisis in the conservative party. we have a camera standing by in front of boris johnson's house. we may get a statement. we are ready for anything that happens. david cameron saying he will resign. onset with me, chris wheeler and anne richards. you have a question? anne: yes. chet, one of the things we saw in the run-up to the referendum was rhetoric from france that we need to be tough
on the u.k. because they wanted to show that other european countries this is not a path to be followed. do you think the rhetoric will be followed through with action? do you think other countries will make it tough as possible for the u.k. to leave? anne: the -- mr. trichet: the treaty has to be respected. i expect the negotiation to be very tough. the u.k. is looking for one thing, its own interest. it should be the same for the other partners. they should look for their own interest. there is no more affect in this negotiation. the u.k. is no more part of the club. i was public in telling the u.k. people that we were wishing the u.k. to stay for many reasons, but now we are in a different universe.
i expect negotiation to be tough only because it is a question of conflicting interest. francine: mr. trichet, what you are suggesting is what jean-claude junker said a couple weeks ago, that the eu will be tough on what he called the deserters, e u.k. how much worse off will the u.k. be with trade deals, with the eu? the u.k. has several options. the 27 also have several options. one option is norway. another option is switzerland. switzerland whether seems to be the best option. cases, to get the
appropriate access to the market, they will have to live with the other europeans. they will not participate in the decision, but they will have to live with this regulation as norway and switzerland does. this was explained to the british people. this is life as it is. i don't expect any bad will coming either from the u.k. one from the continental europeans. it is a question of defending your own interest. it is clear that it is the option of the united kingdom -- i have no doubt on that. i also expect the u.k. to remain united. risk that was taken is gigantic. that being said, the continental europeans should not demonstrate any bad will, but defend their interest. it is as simple as that. francine: mr. trichet, i want to
get a thought on banks. the one that will lose the most? they will have to deal with new trade, possibly. >> when we talk about u.k. banks, we should talk about banks based in the u.k. there will undoubtedly be jobs losses. there's going to be issues about transporting. , when he was here, talked about 4000 jobs having to be moved. this is a big impact on the financial services sector. francine: jean-claude trichet, do you think this will lead to consolidation in the banking sector? at some point, something will have to be reformed. mr. trichet: we will see. which s aa situation
struggle for change. what is clear is the financial services in london are losing the european passport. it should trigger a lot of changes. we will see exactly what happens. i take it that the u.k. understood perfectly that risk, and even if the city of london is one of the major assets of the economy, they put at risk the city of london. say, on the continental europeans being as open and business-friendly as possible, as in my opinion they should, we will see what happens. losing thet means passport which would permit to ofess from london the bulk the single market of the european union. francine: mr. trichet, thank you
for your time. the former ecb president joining us from paris. we had a couple notes on these banks. we have one bank, jpmorgan, saying that u.k. exposed bank earnings may fall 20% after brexit. what does it mean for your operations? anne: on the short-term, nothing changes. we have been planning for this for a long time. it will take time to work out what the landscape is. interesting, mr. trichet's point about past in. i think one of the key points about any negotiation would be about the mutual benefits of passport in. there are benefits to both sides. i wouldn't say it is as clear cut as mr. trichet shed, but people will be looking at contingency arrangements. francine: the period of
negotiation and last two years, five years. how much volatility are we expecting? anne: market volatility is one thing. business moves at a slower pace than that. there is time to set up operations. i think we will see that. there will be a jobs impact in london. that was discussed through this negotiation, this referendum debate. the world doesn't end, but there will be consequences. francine: and for market volatility? we are waiting on boris johnson possibly to make an announcement. we heard from david cameron. he will step down in october. he said it is up to the new prime minister to invoke article 50. by the end of the year, are the markets going to be more calm? anne: the focus of attention is
going to move from u.k.-based market issues to more broadly across europe in general and euro in particular. you are starting to see differentiation come through between peripheral european bonds and core european bonds. people are saying, what happens next? we've got spanish elections, referendum in italy, and elections in france and germany next year. in all these countries, there are sizable minorities who also want to reconsider the position in the eu. i think the debate is going to move quickly to a european-based situation. francine: thank you so much. ask for any to fresh market reaction. how did the markets get it so wrong? we are monitoring what boris johnson is doing. we understand he's in his house. as soon as he comes out, if he
decides to give some kind of actually, possibly , he'smber one candidate about to give a speech. there seems to be hundreds of reporters out there. i don't know. i think he was going to the middle of the media scrum. if he does decide to do a statement, i don't know whether he's getting in the car or whether he decides to speak to the press and his nation. you have david cameron outside number 10 about 45 minutes ago. he seemed a little bit emotional. he congratulated the side that won. the press are chasing boris johnson down the road. he doesn't seem to be wanting to talk. there's a very large crowd gathering.
he seems to be making a run for it. maybe he will get on his bicycle. how did the markets get it so wrong? thingi think the single the markets got wrong was that at his become a truism that the betting patterns have been more accurate than -- a better predictor of the outcome than the polls. there's been a lot of skepticism about this. the polls have been pretty finely balanced. the betting was very much in favor of remain. the thing that was missed is how london-centric -- the betting odds follow the week of money a london is more pro-remain than the rest of the u.k. the markets followed the betting odds and the betting odds
followed london money. that didn't reflect the country has a. francine: i wonder whether it means the markets will react differently as we approach the u.s. general election. chris, thank you for joining us. anne stays with us. the reaction out of europe has been mostly disbelief. ryan chilcote in brussels. david cameron says it will be the job of britain's next prime minister to negotiate departure from the eu. how does that change the dynamics? ryan: what it means is the divorce is going to take longer.
the long-term, this is an opportunity for all of us. lso for the e.u., as kind of a wake-up call, and we do not assume this has a major impact under european or even the u.k. economy. >> all right. it suffers when central banks decide to put more money. overall, is it going to be more difficult for interest rates because of what happened today with the brexit vote? to sell stock, that is true. however, we assume oil will pick up because of the prices and the american economy will impact further and also the lows in the emerging markets
hopefully over we see improvement in russia as well as brazil and we 40e67 overtall economy improvs and therefore, i do not see rates will stay so low for three to four years, as u said, but maybe for a year or another 1 1/2 years. >> thank you. now john, when you look at the marks are we going to have bargains? companies will have to default or is it all hot air because we just don't know yet and it's just day one? >> first of all, this is not 2008. e don't have that situation. and i think during the period
investors are going to watch the markets volatility and then take stock. it really is not going to change the way one would look t a private equity investment. froins but is it going to have a big impact on -- julie: i think it's going to have a arge impact on companies who have a large industrial market. remember, with the u.k., that's a very small portion of the global market in regards to those categories. people are seeing them as a safe harbor, so i think the people it's going to affect -- there's going to be concern out the car industry and
agricultural sector and until that's clarified in the trade negotiation in terms of the ods and service it's and people there will be volatility there. at 11:30 angela merkel will meet with party leaders. she just issued a statement through her spokesperson that she needs and europe needs to ensure some united fronts or a nice, strong answer to the brexit vote. i don't know what that means. have we seen a master plan we don't know of? is there onesome because at the end of the day they probably have the most to lose as far as equities. i think the rhetoric coming out of germany and france have been
a little bit different running up to the referendum. particularly between germany and the u.k. it's been mutual investing. and although it's been strong, it's been more intense over the years. d for example, the car industry, she doesn't he is thely want to see german companies destabilized by this and we are also big on market goods and there's a balance that is sometimes less fraught. let's face it, we've got quite a few hundreds of years of history between two. about what as you need to see from politicians today? >> well, i think first of all mr. karny has made it clear
that the bells are not withstanding that the share price you're seeing, this is not a re-run of 2008. that message to my mind is eventually of baghdad. the second thing in terms of he politicians, you're hearing at through angela merkel's conversations so far about what there mutual geoff and we are all still really all big markets and the health of each other's economy matters. francine: we understand that we will have a cousin to chat and then you do see, razz i predict, the touring party