welcome to the paul's. european headquarters in london, i'm francine lacqua. let's get to the market. friday was brutal. we were talking about convulsions on the market. this is not what we're seeing today. european stocks are holding steady. if you look at individual stock markets, the cap 40 is similar losses. the screen.on the only showing significant gains. may be influenced a little or a lot i brexit. the less extreme socialists will come into power in major and. i will show you quickly the price of gold. a little bit in the safe havens. the pound against the dollar. 102.en at
it does not deal as urgent around 2:00 or 3:00 in the morning. biggest selloff on friday. down 8%. others down by less. bank index by 3.9% low. let's get straight to the bloomberg first word news with taylor. taylor: prime minister has consolidated his position in the general election. away from ant surgeon political forces in favor of the relative security of the people's party. economic uncertainty, told not to jeopardize the country's economic recovery. china's central bank has weekend the daily rates. the lowest in five years. they dropped it by 5.9%, the most since last august.
devaluation following the u.k. referendum decision. the prime minister told the world china wants to see a stable and prosperous in u.k. headlines.is making hillary clinton out a television ad saying they would benefit from his golf courses and scotland. donald trump hit back with a hillary clinton disgraceful. global news 24 hours a day powered by more than 26 hundred journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: george osborne says contingency plans were in place to shore up the economy after britain's of vote to leave the european union. silence, heee-day
stressed there would be no thediate changes to relationship of the europe. >> only the u.k. can trigger. in my judgment, they should only do that when there is a clear view about what new arrangements we are seeking with our european neighbors. in the meantime, during the negotiations that follow, there will be no change to people's rights. no change in the way the goods are traded. francine: let's head to westminster. i down a street this morning. unanswered questions from political parties. what are we expecting from this mornings cabinet meeting? a cabinet ministers are yet to arrive. they will arrive in the next half-hour or so. 9:30 local time. they are going to start conversation pretty quickly
coming up with some kind of land with regard to their conversation with europe. u.k. house ofthe commons was speaking this morning. george osborne said, contingency plans in place and terms of market volatility. although he said he stands by his warning for the consequences for the u.k. economy as a result of this brexit, he does say whether there needs to be an emergency budget would be a question for the next prime minister. suggesting that there was to be one it would not be for another few months or so. he said he was glad he had been fixing the roof while the sun was shining to uses often-quoted message for the economy. the prime minister's are scheduled to arrive for their meeting. francine: the unprecedented mass resignations from the opposition labor party but unclear whether they can force jeremy corbyn, the leader of the party, to step
down. >> it is fascinating. away from downing street, the leader of the opposition very much under pressure to go today. we have seen resignation after resignation since yesterday and into this morning. he cannow wondering if survive. i spoke to the shadow chancellor and he was saying that jeremy would stand at against there was -- again if there were to be a rerun. if you were forced into a vote. swept into power by a wave of support. not by the mps but by party members. it is unclear if they would go with him again. the big thing that has changed is the decision by the u.k. voters to leave the european union. it is unclear to know just how much the members of the labour party hold him accountable for that. some of then as party clearly
doing that is why we are seeing the resignations from the shadow ministers. francine: anna edwards there from downing street. she will be with us route the morning. my guest this morning says brexit might bring europe together but the rest will be bumpy. let's join her. thank you for coming on. i am not sure what is possible, what is legal, and what is desirable. will be therexit rationale for something in october or november. maybe not at all. no country in vaux article 50 and it is quite clear as well johnson has -- doris johnson has in effect the winner's curse. he has the result he probably did not want to end probably did not plan for. it is not clear where we go from here at all. notcine: wire the markets
panicking as much as they could have today? think it is a shock and they are waiting for it to unfold. working out how bad things will get in the u.k.. for the eurozone. people who ran across and recognize this is a major result for the eu. banks in particular remain the focal points. the bcb buying the paper but not thanks. again, that is the issue. >> are you more worried about the banks than the stock market as a whole or the economy? crucial. banks are for the eurozone, they remain key. you are in the u.k. we will probably fall into a recession for a time and then we will have a time of growth. it is whetherne, everything gets sent back in one
or two or three years. >> and 20 seconds, is there anything he can do to avoid recession? david: not really. no. ready to cut rates and do more qe if necessary. francine: david there, thank you. next, plenty coming up. screen takes a popular option with brexit. the spanish party increases its representation. we will have central bankers in portugal and ask how they reacted to brexit. and how the competition holds the union together.
♪ francine: welcome back. let's get straight to the bloomberg business flash. taylor: george soros was long for the pound before the decision to leave. he said because of george soros positive generally bearish lookout, he did profit from other. italy is considering injecting 40 billion euros into some of the nation's banks after shares plunged. europe's vote to
leave the european union. that is according to people with knowledge of the discussions. the amount could still change. often at italian lenders is being squeezed as they grapple with 360 billion euros of bad debt. brexit is having in impact on market.n ipo the most popular messaging service has delayed the setting of a price range for an initial public offering until tomorrow. hopes to raise as much as $1.1 billion from the offering and made the decision after the vote sent markets into turmoil. joined in aas warning that demand for a travel will drop off for the rest of the summer and wake of the brexit vote. consumer uncertainty will mean dropthe second half will by at least the middle single digit percentage from a year earlier. the company share also sharply lowered this morning.
francine: thank you, taylor. streetsooking at the around the edwards. we know there will be a cabinet meeting soon. two of the cabinet members just arrived. we are hoping to bring you more live images as we wait to see what happens and what the outcome of the cap minute meeting is whether they have a plan or not. anna edwards is live on downing street. we will bring you breaking news on politics in turmoil in the u.k.. it managing their says that they need to not punishes the u.k. but not encourage others to follow. >> i hope this it will be a point will be sensible enough to not harm unnecessarily and try to get a revenge against the english and others but also is
not going to be an encouraging to others to look for similar situations. francine: now we will get more with david owens. any more in the immediate see that investors if they were not in such turmoil a lyrically. matt carney did a good job. what can david cameron and the cabinet to? that they areed trying to get a plan in place. them negotiating what they are doing it about. 's power washe pound always in the countries and as the clock ticks, they have to prepare the ground closely and that is what george osborne basically said. they have to be clear what they are going to do. is it better for you
if they invoke article 50 later? we saw this kind of temperance from angela merkel, usually considered the grown up in the room. david: if they rush a end get it wrong it will be worse. thing is, wete probably have until october or early november where we do not happening.s obviously, more businesses will be put on hold. businesses are not going to do anything, everything will be frozen until there is a clear game time. we still don't know where this is going and there are two-year limits. you know, the u.k. it leaves. on the way there is the risk and obviously with the eurozone. francine: what could be eurozone
do to keep it together. i was a little that the wilderness at times yesterday. scornedmed like a partner. david: of course. they're going to play hardball. ity meet -- need to make clear to other countries that leaving is not an easy option. but behind the scenes they will probably have a deal that works for everyone. it is interesting. it is notcountries, as important. germany is embroiled. other countries are less directly exposed. risk is usually for the banking sector. they want to keep and send check will stop meanwhile, it could happen in july. it did frontload. maybe that will continue. they will announce they are extending out kiwi through next march. francine: david owen, chief european economist thank you. we will be talking about the ecb meeting and janet yellen's it
in the election. economic and the uncertainty, spaniards are in a close call not to jeopardize the country's economic recovery. let's go to madrid. was brexit?how elliott: crowing it this morning. it was the brexit that one it. exaggeration but not really because the people's party won the last election in december. even though the pinion holes -- evenewhat wide, though the opinion polls were somewhat wide, they had him winning this election. find listening. aboutmments warning them the possibility of jeopardizing spain's economic recovery. spain's at
newspapers, the main daily here saying the people's party were otherthening and the losing ground. another newspaper saying the spaniards gave another chance. another saying mr. record is worth a aside they want him to govern. rajoy., a victory for last night they said there was a festive move at the people's party gathering outside the museum. francine: thank you elliott. updates through the day, of course. now a chief economist. what is the chance of knee-jerk referendums? will we see it through as we saw throughout the weekend. some commentators were suggesting. then you look at spain, i know it is not 100% brexit at maybe the people will think twice when they vote.
germany, then netherlands. obviously the whole thing is to keep the whole experiment going and obviously you know, sort of we will have to see. obviously, you know, as you say, it independent at the moment. the u.k. and eurozone goes into recession over the next three months or so. people will think the breakup of the ul -- eu is quite complicated at the spy. we will see. francine: who do you worry about the most? france? france, in terms of for example the banks. very large and important. that is an issue. obviously, the italians are with us and having to put more money into the banks. more bank bail-ins. we will see. at the end of the day, that is probably a fact of life. if the eurozone does back into recession at that point, the
ecb, the rates are almost of the floor. they can cut it a little further . but it is an issue. francine: some live pictures for our viewers of number 10 where a lot of members of the cabinet are going into number 10 for talks with the prime minister. we have not seen yet but as soon as we do we will try to bring you images. i imagine they will talking about the why, when, and hopefully we might get a timetable of something that will happen. avid, italy is said to have 44 billion cash injected for the banks after brexit. brexit happened on thursday. it takes don't need 44 billion because of it i've days later. david: the holding about brexit just puts more focus on the weak spots within the eurozone and some. the banking zone is one of those. hopes, false perhaps, that the italians would come up with a solution before the brexit vote itself. that was in plate before.
they have hatched a plan fairly quickly. the important thing is italy heaping interest rates on the floor, the most important thing to keep the loans in check and obviously try to get to recovery. an importanthave referendum actually in october. david, thank you. chief european columnist at jefferies. markets not doing great but not doing badly as somewhere expecting. we would startht off with this wonderful function. look at rain. 0.03 percent on friday. it set a record 12 point three post exit. reboundseen a small after the election result which elliott was just telling about but generally i'm going to press the button to give you an idea. we are seeing declines across
the benchmark. sweden, 6% lower. ireland, down 4%. onembourg, norway could see or 2% lower. the krone is the worst performing currency against the dollar today followed by the pound which i will come to. we are seeing bond deals following in spain. i will come to that in a second. commodities let up by the price of gold. sterling dollar, down by 9.8 percent in two days. the to-day fall is the worst on record. only the krone is falling against the pound today. betweend differential spain and germany is shrinking. on friday, it rose and widened to the most in two years. this is barton's brexit chart. spectacular. yen pound, gold, ftse, doxsee, down in today's.
francine: welcome to the polls live from headquarters in london. i am francine: coif. we have to tell you about market movement. the 10 year yield dropping below 1% for the first time on record. everything is going back to brexit. in terms of equity, we saw the markets convulsing on friday. we are seeing some very key market movements giving us an indication of how the market is pricing everything. david allen put it beautifully. he said there would be a lot of that volatility on the weak spots. in london after the shares fell to 14.2%. we also had barclays being
halted in london. she is falling 11 .5%. overall, quickly checking the markets or the banks. the index down from 4%. some of the banks almost destroyed. credits on friday. today, losing from four-5%. what we know so far is some halted. we will bring you the latest. brexit concerns. we don't know whether to outsource but these were banks already troubled and if you have interest rates low in makes it difficult for these banks to start making up money through some of their investments again. we will get back to markets and but first let's go to taylor. taylor: u.k. chancellor george osborne has spoken publicly for the first time since it didn't and it voted to leave the european at union.
he said he accepts the decision will only be exit triggered once there is a clear view of the road ahead. judgment, we should only do that when there is a clear view of about what new arrangements we are seeking with meantime, during the negotiations that will follow there will be no change to people's right to travel and work and the way our goods and services are traded or the way our financial system is a regulated. willr: david cameron address today after the shocking decision to leave the european union. robin has announced several new appointments to the shadow cabinet after several members of his top team at resigned over whether he was the right person to lead the party if a snap election was caught.
and a prime minister has consolidated position and spain's general election. backed away from insurgent forces in favor the relative security of the people's party. toniard told them not jeopardize the economic recovery. china's bank has it a reference rates the lowest in more than five years. the most since last august devaluation. decision, itrendum was told the world economic forum that in china once to see stable and prosperous u.k.. headlines in the u.s. presidential campaign as well. addary trump rushed out and criticizing trump for saying it would help his golf course and scotland. by calling herd
disgraceful. global news 24 hours a day powered by our more than 2600 journalists in 120 countries. i am taylor rick, this is bloomberg. francine: let's get with it david a win. david, i want to bring you back to the banks. we understand barclays has started trading. startedthem have trading. this is the year-two-day trading. barclays in year to date. look at that. value.lost half of its brexit amplifies all of this. as you said, david, it is amplifying concerns on the weak spots. what happens to the banks now. do we know they are safe because the ecb is there? david: terms of the ecb they are only buying paper. so, that is an issue. in some countries like italy and
spain and portugal, the banks themselves hold that over the paper. the ecb is doing what it is doing. in terms of the banking sector, you can try it and all-out but the balance sheets are cleaned up on those issues. the banking segment is still not safe. the ecb was there and a sliding four-year financing on friday. it will continue doing this. it has got all these lines the banks can take. askcine: it is unfair to that i will ask you anyway. i know you are not a banking analyst but when you look at that share price, is it because investors are concerned that they will have to relocate out of the u.k. and that would be costly or is it macro economics?
david: the risk of recession brings is bad loans and falling loans. having to go up. compliance issues. having to relocate. all these things in that mix. going to say. francine: let's talk interest. we have had a number of big inking ceos. saying they wanted it normalize. this is the function. basically, you see that rates decemberbove 4% in 2016. look at that. now 70%. really raisecan't rates. david: she can't. the brexit thing pushes everything back. maybe it pushes u.k. towards recession and the eurozone toward recession. we are in this world of increasing rates. not as for investor
necessarily good space to be. more rates goes negative. it will go lower still. just grind lower. that is one thing george was warning. rates are not going up. they are going down. we are seeing that very clearly in the way the markets are moving. francine: the aftershocks of the brexit continue to reverberate. this afternoon, the cabinet meeting at downing street in brussels. leaders are preparing for crisis. now we are joined from the heart of the eu. so much of the global impact. what are we hoping or what is john kerry hoping to achieve? ryan: i think what john kerry is having to achieve is to simply show the u.s. is support for if you will, both sides of the
argument. he is coming to brussels to meet the chiefs and then go to the u.k. and meet the foreign secretaries. the message is, we love you. something like a divorce counselor but not from a disinterested party. the u.s. has huge interest in europe. the u.s. does not need a divided europe. the u.s. has a desire to contain russia and the ukraine. they have been working on a free-trade agreement for the last three years. that was already running into huge troubles. now they think with the world's largest economy exiting the eu that can be dead in the water. francine: the european commission's meeting this afternoon, ryan. can we expect ironworks there? it should be interesting. this is their first meeting since brexit, right?
and effectively what they are supposed to do now is chart the path of the separation. now, the heads of state are still meeting and discussing. givenis no real direction by the member states to the executive arm to the commission. as to how they want that to look. but they will still gather. so the 28 countries in the european union all have their people in the room including jonathan hill. i will be interesting. the british commissioner who effectively resign. he was in charge of financial services and said it would not be appropriate for him to remain on the commission. he was part of the remain camped to the u.k. by the way. people are want to talk to him about how this is going to look because that is a the commission's job. this meeting is going to be presided over by her jean-claude, the president of the european commission, as all the european commissions are. there is increasing chatter out there that in his handling of the brexit affair has not been
stellar. the tough talk. u.k.ps it, the fact the has voted to exit. there is increasing dissatisfaction among some eu countries that jean-claude did not do a better job. i am certain it will. oh, to be a fly on the wall. in brussels. up next, mark carney pulls out of a meeting with the ecb. plan.post exit we are live on the ground. ♪
francine: let's get right to taylor. taylor: bearish outlook on markets. profiting from other investments. soros board referendum on the bed that the u.k. would devalue sterling. italy is considering injecting 40 billion euros into some of the nation's banks after shares plunged following britain's vote to leave the european union. that is according to people familiar with the discussion. the government may enter the
banks capital said one of the people. the amount can also change. it is being squeezed since they grappled with $360 billion of -- 360 billion euros of bad debt. and a warning that demand for travel will drop off for the rest of the summer in the wake of the brexit road. the budget airline said economic and consumer uncertainty would mean that revenue would in the second half by at least a mid-single-digit percentage from a year earlier. the company's shares are sharply lower this morning on that news. shares in london-based and slumped again today after the company lowered 2016 revenue and decision toe uk's leave the eu prolonged uncertainty in the residential property market. the shares are at their lowest level since the company's stock market debut after losing around one third of their value since friday morning. francine: thank you.
the central bankers and portugal for the annual forum. due tor mark carney was appear but they suggested he will not appear. fromgordon joins us portugal. paul, how do central banks respond to brexit? they say they are ready to act. they seem to have been doing a pretty good job. right.hat is we do not know how much liquidity has been requested. was always there. it was not always 100% surprising. repaired in advance. in any case, it has been a extremely hard for some time now. the banks have access to liquidity. the currency swap agreements between central ranks.
british banks with it, for example. and was from the weekend quite likely the same message coming out of centrum. francine: we talk about central banks on a daily, probably hourly basis. that is probably the right message to send to the market that janet yellen said she wants to raise rates but this is now extremely unlikely. paul: yes. i think it depends on how close you are to the u.k. market carney has a lot on his plate. he was supposed to be part of an intriguing panel on wednesday. a conversation between carney, yellen, and draghi. that would've been great to see. as far as we know, draghi and yellen will still be there but carney will not all stop -- carney will not. draghi has quite a challenge
ahead. kindis hard to handle this of shock. trade is likely to suffer and confidence is likely to suffer and that is something he may have to deal with even though he has pointed out that the european central bank cannot do everything alone. francine: this was also said by christine lagarde guest today. jobng, look, it is not the of monetary policy to do the heavy lifting. we were talking about a pretty brexit vote. of a coordinated action seemed extremely unlikely unless we get a violent, disorderly market. paul: my understanding is that of doinged action something would require a very severe situation and we are not quite at that point. it has been a coordinated statement to point out the liquidity measures already in
place. beyond that, each central bank will have to handle things as they see fit. market carney has already said he will do whatever is necessary to meet his liquidity and monetary goals and that should mean a rate cut in july but they are also betting on how many at the ecb has a 50% chance. they may be de-financing. zero. following negative. francine: paul gordon there, our central bank editor. more with chief european economist. i want to point our viewers to two things. first of all, the pound dropping. there you go. the european stuff. we will get pounds up in just a second. are you go, 133 51. we broke the news in the last half hour that the 10 year yields were below 1% -- 10% for
the first time ever. we have germany in white. and japan. can the 10 year u.k. gildan good measures? david: anything is possible. francine: that is a little bit frightening. david: yes, it is. at the end of the day, they could easily cut rates as has been discussed and others will cut rates as well. negative rates would go further into the territory. that means it would go more negative still and obviously, this may not need to widen. basically, it could carry on. stepine: let's take a that. the pound continues lower. to maybe not have found a floor but to stabilize a little bit as continues.al turmoil
yield goes out lower. more stimulus. what is the next crisis? issue with these incredibly low yields has to do with pension funds and so on. but also for companies to find better schemes sitting around them. these pension funds go off. very low rates. you know, this is the systemic issue. these low yields caused troubles. most countries are hoping to exit on this. but will the brexit dollars push this that? probably quite considerably. the other thing is they will be trying to put, i'm sure, pressure on germany and the country'ss, as of the most impacted at the moment. to do a fiscal response. trying to push these countries who are most impacted negatively by yields at the moment to spend more out and
money. so, you know, there will be pressure on germany and the netherlands to do that. you have a colony pound? david: it needs to weaken further. francine: how much further? david: going into the brexit decision, it fell 15% over a time. that would be seen as a reasonable figure. at the end of the day, it is very small. francine: what is the next level? david: 115. i'm hoping at that point it will stabilize. the stage rate for the u.k. is a hugely important adjustment mechanism. we saw in 2007 at 2008 and and 92. we sought. and in anyone. francine: very quickly, the pound, and not bad for exports but terrible for the current deficit? help the, it should current composition. this massive exit. crisis.estment income
the u.k. has 9 trillion in vestments, actually. if the currency goes down, we lose more. it will really improve the current composition. external come decision, the asset liability mix will be seen as a favorable response. francine: what is a negative than? david: there is no negative. if it is a crisis, the currency falls very quickly and that is different. declining sterling is just what they want. francine: it is more expensive going and. david: absolutely. every central bank at the moment. francine: there's no doubt this would sure and inflation. thank you so much. we can keep david for another few hours and still have more to talk about. the chief economist at jefferies joining us for the hour. down 25%, sterling selling off. we bring you the market.
5.5 percent. we have seen a city decline and today we broke through one percent for the first time ever. highlighting the flight to safety. on thursdayxit vote which inspired me to quickly create this chart which is the 10 year yields over the last year. france,, italy, u.k., and germany. the green line is a 0%. only germany is below a zero. francis at three point 33%. you have italy, u.k. and spain just below 1%. spain and italy roughly one point 5%. yields falling after the election results show the leader mariano rajoy did better than expected. last two days. friday and today. against all the major currencies. biggest to-day decline. biggest gain in the end. game.cord to-day
francine: selling sterling. continuing to punish japan. a asian markets rebound along with commodities. breaks theancellor three-day in silence and says stay calm but expected volatility. david cameron speaks at later today. and, what is legal, what is possible, and what is desirable. can merkel hold the center and